Luskin's Inc. v. Consumer Protection Div.

• Decision Date: 01 September 1994
• Docket Number: No. 90,90
• Citation: 338 Md. 188,657 A.2d 788
• Parties: LUSKIN'S INC. v. CONSUMER PROTECTION DIVISION. ,
• Court: Maryland Court of Appeals

Page 188

338 Md. 188

657 A.2d 788

LUSKIN'S INC. v. CONSUMER PROTECTION DIVISION.

No. 90, Sept. Term, 1994.

Court of Appeals of Maryland.

May 5, 1995.

Thomas M. Wood, IV (Cynthia L. Leppert, Neuberger, Quinn, Gielen, Rubin & Gibber, P.A., on brief), Baltimore, for petitioner.

John H. Nethercut, Asst. Atty. Gen., (J. Joseph Curran, Jr., Atty. Gen., Rebecca Bowman, Asst. Atty. Gen., on brief), Baltimore, for respondent.

Argued before ELDRIDGE, RODOWSKY, CHASANOW, KARWACKI, BELL, RAKER, JJ., and JOHN F. McAULIFFE, Judge (retired) Specially Assigned.

KARWACKI, Judge.

We issued a writ of certiorari in this case to consider whether the Circuit Court for Harford County erred in failing to dismiss a declaratory judgment action, otherwise properly before the court, because a state administrative agency had concurrent jurisdiction in the matter, and the case involved subject matter questions in the area of the agency's expertise. We shall hold that it did.

I

During the summer of 1992, Luskin's, Inc. ran newspaper and television advertisements (the past advertisements) in Maryland offering customers free airfare for two to various locations if the consumer made a certain minimum purchase of goods from Luskin's. On July 27, 1992, the Consumer Protection Division of Office of the Attorney General (the CPD) wrote to Luskin's, advising it that the advertisements violated Maryland Code (1975, 1990 Repl.Vol., 1992 Cum.Supp.), § 13-305 OF THE COMMERCIAL LAW ARTICLE¹. ²

The CPD met with Luskin's several times to discuss the advertisements. During this period of negotiations, Luskin's presented an advertisement to the CPD that it proposed to run in the future (the proposed advertisement). The proposed advertisement contained minor wording changes from the past advertisements, but it continued to offer the same airfare certificate conditioned upon the same qualifying purchase. Based on this similarity, the CPD informally advised Luskin's that the proposed advertisement would also violate § 13-305.

On September 11, 1992, Luskin's filed a complaint for declaratory judgment in the Circuit Court for Harford County. Luskin's sought a declaration that the proposed advertisement did not violate § 13-305 and an injunction prohibiting the CPD from interfering with its use of that advertisement.

On September 28, 1992, the CPD filed an administrative enforcement action against Luskin's. The CPD charged that the past advertisements contained misrepresentations and omissions of material facts as defined in § 13-301(1), (3) and (9), ³ and prohibited by § 13-303, ⁴ and involved an unlawful prize promotion under § 13-305. The CPD sought injunctive relief, to prohibit Luskin's from violating §§ 13-303 and 13-305, and restitution for aggrieved consumers.

Also, on September 28, 1992, the CPD moved to dismiss the declaratory judgment action. The CPD advised the court, inter alia: 1) that the past and proposed advertisements were identical in all material respects; 2) that the CPD had filed the administrative enforcement action against Luskin's; and 3) that the same § 13-305 issue was present in both cases.

Administrative Law Judge Melanie Vaughn (the ALJ) heard the enforcement action on November 13 and December 8, 1992. ⁵ The ALJ then reserved her decision pending post-hearing briefing.

On November 19, 1992, the circuit court began a hearing on the declaratory judgment action and the CPD's motion to dismiss. ⁶ On December 11, 1992, the court issued a memorandum opinion denying the CPD's motion to dismiss and declaring that the proposed advertisement did not violate § 13-305. On December 22, 1992, the court entered a declaratory judgment consistent with that opinion. The CPD noted an appeal to the Court of Special Appeals, arguing, inter alia, that the circuit court erred in denying CPD's motion to dismiss.

On May 18, 1993, the ALJ issued her decision in the administrative enforcement action. She concluded that the past advertisements did violate the Consumer Protection Act. Luskin's filed exceptions to the ALJ's decision.

On September 21, 1993, the CPD issued its final order, confirming the ALJ's conclusion that the past Luskin's advertisements misrepresented that consumers would receive free airfare tickets, and failed to clearly and unambiguously disclose the cost, terms, and restrictions of the airfare certificates, in violation of §§ 13-301(1), (3) and (9) and 13-303. The order also confirmed the ALJ's finding that the past advertisements constituted an unlawful promotion under § 13-305 because Luskin's offered the airfare certificates as a prize conditioned on the purchase of unrelated merchandise. The order included injunctive relief and a claims process to determine the relief due consumers.

On September 21, 1993, Luskin's sought judicial review of the CPD's order to the Circuit Court for Harford County. The circuit court stayed the administrative order pending the appeal by the CPD from the declaratory judgment, and stayed the judicial review of the administrative enforcement action, pending the final resolution of this appeal. ⁷

On April 27, 1994, the Court of Special Appeals reversed the circuit court's granting of the declaratory judgment, holding that the circuit court should have granted the CPD's motion to dismiss. Consumer Protection Div. v. Luskin's, Inc., 100 Md.App. 104, 640 A.2d 217 (1994). The intermediate appellate court vacated the judgment of the Circuit Court for Harford County and remanded the case to that court with instructions to dismiss the action. We agree and shall affirm the judgment of the Court of Special Appeals.

II

The Court of Special Appeals and the respondent rely on the doctrine of primary jurisdiction to support the conclusion that failure to dismiss the petitioner's declaratory judgment action was an abuse of discretion. We have explained that

"the doctrine of primary jurisdiction ... is a judicially created rule designed to coordinate the allocation of functions between courts and administrative bodies. The doctrine is not concerned with subject matter jurisdiction or the competence of a court to adjudicate, but rather is predicated upon policies of judicial restraint: 'which portion of the dispute-settling apparatus--the courts or the agencies--should, in the interests of judicial administration, first take the jurisdiction that both the agency and the court have.' It comes into play when a court and agency have concurrent jurisdiction over the same matter, and there is no statutory provision to coordinate the work of the court with that of the agency.

* * * * * *

"[P]rimary jurisdiction is relevant only ... where the claim is initially cognizable in the courts but raises issues or relates to subject matter falling within the special expertise of an administrative agency."

Maryland-National Capital Park & Planning Comm'n v. Washington National Arena, 282 Md. 588, 601-02, 386 A.2d 1216, 1225-26 (1978) (citations omitted).

Luskin's argues that the doctrine of primary jurisdiction does not apply in this case because a.) there were no disputed facts in the declaratory judgment action; b.) § 13-407 of the Commercial Law Article makes the doctrine inapplicable to the CPD; c.) the CPD was a party to the declaratory judgment action; and d.) there was no concurrent jurisdiction due to the CPD's lack of authority to address future advertising and the lack of any administrative remedy from an adverse informal opinion of the CPD.

a.

We disagree with the assertion that there were no disputed facts in this case. There was, inter alia, the question of similarity between the past and present advertisements and the question of the deceptiveness of the advertisements. Luskin's argues that these are purely legal issues, but, at a minimum, they clearly contain factual elements. Even where the facts are undisputed, however, a remand to the agency may be required where different inferences may be drawn from those facts or where the agency's judgment must be exercised in applying the law to the facts. See Friends School v. Supervisor of Assessments, 314 Md. 194, 200, 550 A.2d 657, 660 (1988); Ramsay, Scarlett & Co. v. Comptroller of the Treasury, 302 Md. 825, 837-38, 490 A.2d 1296, 1302-03 (1985); see also State Admin. Bd. of Election Laws v. Billhimer, 314 Md. 46, 62, 548 A.2d 819, 827 (1988) ("we are mindful that the heart of the fact-finding process often is the drawing of inferences from the facts"). Whether or not there were disputed facts in this matter before the circuit court is not dispositive as to whether the primary jurisdiction doctrine should have been applied. We find that the mere nature of this dispute indicates the need for the interpretation of the facts and the application of the law to the facts to be done, in the first instance, by the agency with special expertise in the area, the CPD.

b.

Section 13-407 of the Commercial Law Article provides:

"If a person is aggrieved by an order or decision of the Division, he may institute any appropriate proceeding he considers necessary."

Luskin's argues that the Legislature intended by this section to grant exclusive jurisdiction to the circuit court to entertain declaratory judgment actions against the CPD, and that the primary jurisdiction doctrine is therefore inapplicable. We do not agree with this conclusion. While the CPD does not dispute that the circuit court had proper subject matter jurisdiction over the declaratory judgment action, ⁸ the CPD argues that it also has subject matter jurisdiction over matters arising under the Consumer Protection Act. We agree, as the CPD's jurisdiction is clearly evidenced by numerous provisions of the Consumer Protection Act. See, e.g., §§ 13-204 and 13-205 (defining the broad powers and duties of the CPD including, inter alia, receiving complaints, initiating investigations, settling consumer protection matters, issuing cease and desist orders, assessing costs of investigations,...