People ex rel. Dunbar v. Gym of America, Inc.

• Decision Date: 24 January 1972
• Docket Number: No. 25268,25268
• Citation: 177 Colo. 97,493 P.2d 660
• Parties: , 50 A.L.R.3d 992 PEOPLE of the State of Colorado ex rel. Duke W. DUNBAR, Attorney General, Plaintiffs-Appellants, v. GYM OF AMERICA, INC., a Colorado corporation, d/b/a Gym of Denver, et al., Defendants-Appellees.
• Court: Colorado Supreme Court

Page 660

493 P.2d 660

177 Colo. 97, 50 A.L.R.3d 992

PEOPLE of the State of Colorado ex rel. Duke W. DUNBAR Attorney General, Plaintiffs-Appellants, v. GYM OF AMERICA, INC., a Colorado corporation, d/b/a Gym of Denver, et al., Defendants-Appellees.

No. 25268.

Supreme Court of Colorado, En Banc.

Jan. 24, 1972.

Rehearing Denied Feb. 7, 1972.

Duke W. Dunbar, Atty. Gen., John P. Moore, Deputy Atty. Gen., C. Patrick Carrico Asst. Atty. Gen., Denver, for plaintiffs-appellants.

Alperstein & Plaut, P.C., Arnold Alperstein, Susan G. Barnes, Lakewood, for defendants-appellees.

PRINGLE, Chief Justice.

The parties in this action appear in the same order as in trial court. The Colorado attorney general initiated this lawsuit by filing a complaint in Jefferson County District Court asking for a preliminary and permanent injunction against Gym of America, Inc., for alleged violations of the Colorado Consumer Protection Act, 1969 Perm.Supp., C.R.S.1963, 55-5--1 et seq. The People of the State of Colorado, ex rel. Duke W. Dunbar, Attorney General, who appeal from a decision by the trial court holding the Consumer Protection Act to be unconstitutional, will hereinafter be referred to as appellants. Gym of America, Inc., defendant below, will be referred to as Gym of America or appellee. The Colorado Consumer Protection Act will be cited by Chapter, Article, and Section number or by Section number only.

The complaint filed by the attorney general alleged the following facts and circumstances. Gym of America is a Colorado corporation which is engaged in the business of operating a health club and gymnasium. It provides personal services and the use of special facilities to its customers, whom it refers to as 'members.' From time to time, in order to increase club membership, Gym of America has advertised its services through newspapers, personal phone calls, or direct mailings to potential customers. Occasionally these advertisements have indicated that special reduced rates and free memberships were being offered to those who made further inquiry. In 1969 and 1970, some of those who were interested in these 'bargains' later complained to the state attorney general's office that the advertisements had been misleading or deceptive. Most significantly with respect to this lawsuit, it was claimed that Gym of America had been responsible for at least four distinct types of false advertising.

First, it was alleged that the appellee refused to comply with the terms of its advertised offers when customers agreed to purchase services at the reduced rates. Second, it was claimed that appellee informed those who were interested in the advertised health course that the advertised terms would be available only to those who would agree to thereafter become regular and paying club members. Third, it was contended that appellee stated to those who responded to the advertisements that club privileges on terms as advertised would not be available as the offered membership was too short in duration to be of benefit, but that a membership of a much longer period of time would be helpful. Fourth, it was alleged that after potential customers had been told over the telephone that they had received a 'free' $60 health club membership, they were advised by Gym of America that this membership was not available independently and only applied as a discount on a regular membership.

On the basis of the above allegations, the attorney general has applied for a preliminary and permanent injunction under Section 7(1) of the Colorado Consumer Protection Act seeking to prohibit Gym of America from engaging in the aforementioned advertising methods. In his complaint the attorney general claimed that by advertising in the above manner, Gym of America had engaged in 'deceptive trade practices while in the course of its business' in violation of Section 2 of the Act. Specifically, it was alleged that the four advertising techniques mentioned above were 'deceptive' because Gym of America had (1) advertised goods or services with 'intent not to sell them as advertised;' 1969 Perm.Supp., C.R.S.1963, 55--5--2(1)(a)(j); (2) employed 'bait and switch' advertising, 1969 Perm.Supp., C.R.S.1963, 55--5--2(1)(a)(o)(i); (3) employed 'bait and switch' advertising which was accompanied by 'disparagement' in any respect of the advertised product or the terms of sale, 1969 Perm.Supp., C.R.S.1963, 55--5--2(1)(a)(o)(i), (o)(iii); and (4) employed 'bait and switch' advertising which was accompanied by 'tie-in sales,' 1969 Perm.Supp., C.R.S.1963, 55--5--2(1)(a)(o)(iv).

After the attorney general's complaint was filed, appellee filed its answer and moved for dismissal. The trial court thereupon ordered dismissal of the complaint on the grounds that the Colorado Consumer Protection Act was unconstitutional. Without citation of authority or further elaboration of its reasoning, the trial court concluded that the Act was unconstitutional because: '(1) the statute is unconstitutionally vague and fails to set an adequate standard by which one's conduct can be measured . . . to the extent that it fails to inform an individual as to what acts are allowed and what acts are prohibited; (2) the statute is an attempted exercise of power in excess of that which a state may lawfully do under its police powers; and (3) the procedures provided for enforcement of the statute are violative of the equal protection clause of the Fourteenth Amendment of the United States Constitution in that no guidelines or standards are provided to the attorney general relative to enforcement thereof and enforcement thereunder can be and in the instant case is, arbitrary.'

We disagree with the trial court's ruling. We hold the Colorado Consumer Protection Act is sufficiently definite to withstand the constitutional onslaught made here; that it is a proper exercise of police power; and that its enforcement procedure does not violate the equal protection clause of the federal and state constitutions.

I.

The trial court held that the Colorado Consumer Protection Act is so vague and uncertain that it does not furnish a standard sufficiently definite to give notice of meaning to persons affected thereby and is thus in contravention of state and federal due process. In support of this conclusion, appellee claims that certain key words in four sections of the statute are either not defined at all, or are so inadequately defined that one cannot determine which trade practices are allowed and which are prohibited.

First, appellee is alleged to have violated Section 2(1)(a)(j), which makes it a deceptive trade practice to 'advertise goods or services with intent not to sell them as advertised.' 'Advertisement' is defined in the 'definitions' section of the statute as including 'the attempt by publication, dissemination, solicitation, or circulation, visual, oral, or written, to induce directly or indirectly any person to enter into any obligation or to acquire any title or interest in any property.' 1969 Perm.Supp., C.R.S.1963, 55--5--1(10). However, appellee claims that although the legislature has defined the noun 'advertisement,' it has not defined the verb 'advertise' or 'advertised.' Since Section 2(1)(a)(j) makes it a deceptive trade practice to 'advertise' goods with intent not to sell them 'as advertised,' since 'advertise' and 'as advertised' are not defined by the statute, and since the definition of the noun 'advertisement' in the statute is considerably broader than the 'commonly accepted' definition of the verb 'advertise,' appellee asserts that it is accused of engaging in a particular deceptive trade practice the meaning of which cannot be ascertained.

Second, Gym of America is alleged to have employed 'bait and switch' advertising accompanied by 'disparagement' of the advertised product or terms of sale in violation of Sections 2(1)(a)(o)(i) and (o)(iii). Appellee successfully argued in trial court that 'bait and switch' advertising is not a standard of prohibited conduct which meets the constitutional requirements of specificity and certainty. Appellee also contends that 'disparagement' is not defined anywhere in the statute, does not have any one widely understood meaning, and is therefore too vague to provide a measurable standard of conduct.

Finally, the attorney general seeks to enjoin Gym of America from employing 'bait and switch' advertising in connection with required 'tie-in sales' in contravention of Sections 2(1)(a)(o)(i) and (o)(iv). Again, appellee attacks the statute's 'tie-in sales' terminology on the basis that it is not adequately defined in the Colorado Consumer Protection Act, has no commonly accepted meaning, and is not susceptible to judicial interpretation. Like 'advertise,' 'bait and switch,' and 'disparagement,' the term 'tie-in sales' is thus claimed to be so vague and uncertain as to violate the due process clauses of the state and federal constitutions.

Appellee claims that a statute such as the Colorado Consumer Protection Act, which acts as a guide to future conduct, is too indefinite because, it contends, 'men of common intelligence' must necessarily guess at the meaning of the Act. Connally v. General Construction Co., 269 U.S. 385, 46 S.Ct. 126, 70 L.Ed. 322; Winters v. New York, 333 U.S. 507, 68 S.Ct. 665, 92 L.Ed. 840; Champlin Refining Co. v. Corporation Commission of Oklahoma, 286 U.S. 210, 52 S.Ct. 559, 76 L.Ed. 1062. It further claims that Colorado has followed the 'men of common intelligence' standard in Memorial Trusts, Inc. v. Beery, 144 Colo. 448, 356 P.2d 884. Appellant counters this test by asserting that the standard for unconstitutional vagueness is an 'adjudicative' test--one which measures a statute's vagueness according to whether it furnishes a guide to enable lawyers to contest the applicability of rules to their clients and which permits courts to adjudicate rights and duties. Appellant cites the Colorado case of Flank Oil Co. v....