Purity Supreme, Inc. v. Attorney General

• Decision Date: 03 June 1980
• Citation: 407 N.E.2d 297,380 Mass. 762
• Parties: , 7 A.L.R.4th 771 PURITY SUPREME, INC. v. ATTORNEY GENERAL (and a companion case). 1
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 297

407 N.E.2d 297

380 Mass. 762, 7 A.L.R.4th 771

PURITY SUPREME, INC. v. ATTORNEY GENERAL (and a companion case). ¹

Supreme Judicial Court of Massachusetts, Middlesex.

Argued Feb. 7, 1980.

Decided June 3, 1980.

Jeffrey M. Freedman, Louis C. Miller, Boston, for Purity supreme, inc.

John T. Montgomery, Asst. Atty. Gen., for the Attorney General.

Before HENNESSEY, C. J., and QUIRICO, BRAUCHER, KAPLAN and LIACOS, JJ.

QUIRICO, Justice.

These cases were commenced by two complaints, one filed by the Attorney General seeking to enforce against Purity Supreme, Inc. (Purity), the Attorney General's Regulation XII(A)(1) (regulation), promulgated by him pursuant to his authority under G.L. c. 93A, § 2(c ), and the other filed by Purity against the Attorney General seeking a declaration that the regulation is unconstitutional and otherwise invalid. The cases were submitted to a judge of the Superior Court on the pleadings and on an agreement of all material facts. Thereafter the judge, at the written request of the parties, reported the cases to the Appeals Court, without decision, and they are now before us as the result of our allowance of the request of one of the parties for direct appellate review. ²

The cases present an important question concerning the power of the Attorney General to promulgate substantive rules of law pursuant to G.L. c. 93A, § 2(c ). In our judicial review of the regulation, we do not concern ourselves with its wisdom or expediency, but only with its validity and constitutionality. We hold that the regulation is a valid exercise of the Attorney General's power under G.L. c. 93A, § 2(c ), with the force of law normally accorded to an agency's regulations, and that it is not unconstitutional as applied to Purity.

The regulation, which is sometimes referred to as the Item Price Regulation, was promulgated in 1971. It requires merchants to affix the sale price to each item of consumer goods. ³ In February, 1977, Purity opened a retail store, which it called the Heartland Food Warehouse (Heartland), in Salem, Massachusetts. Heartland offers for sale groceries, household items, dairy products, meat, frozen food and produce. All items except delicatessen items are sold on a self-service basis. At the time the parties agreed to material facts, approximately eighty-one per cent of the items offered for sale had no price affixed to the individual item. Instead, Heartland notified the consumer of prices by signs on cartons or shelves which contained the items. Pencils were provided so that a consumer could mark each item if he so chose.

Heartland utilizes the Universal Product Code (UPC), a computerized checkout system. Imprinted on each item for sale is a symbol unique to that item, consisting of a series of short, black lines varying in width, darkness and density. The coded information identifies each item. Special electronic scanners "read" this information at the checkout counter, and a computer preprogrammed with the price of each item translates the scanned symbol and causes the special cash register to display visually the item description and price, and to print out that information on the register tape. The consumer receives a copy of this tape, and thus, for ninety-one per cent of the items thus sold, his record of purchases contains abbreviated descriptions of each item next to the price, as opposed to the present commonly known register tape showing a list of prices only. ⁴ Price changes can be made only at the computer terminal.

At the time the Attorney General promulgated the regulation, neither the UPC nor any electronic checkout system was commercially available. ⁵ The parties have agreed that the Attorney General knows of no fact tending to prove that the UPC system has caused any consumer to suffer actual financial loss, or that the system is per se "unfair" or "deceptive" within the meaning of any common law or statutory concept, including G.L. c. 93A. Nor has the Attorney General conducted any investigation to ascertain if there are any such facts.

Purity argues that it is technically in compliance with the regulation, because it affixes the price "at the point of customer decision (to purchase)," and visually displays the price on the cash register and the printout tape. Should that argument fail, it asserts that the regulation is "legislative" and not "interpretive" and therefore exceeds the Attorney General's statutory authority. Purity contends that even if the Attorney General has the power to promulgate regulations which are legislative in nature, this regulation fails because it is not aimed at regulating practices which are "unfair" and "deceptive" and because the regulation is inconsistent with decisions of the Federal Trade Commission (FTC) and court decisions interpreting the FTC Act, 15 U.S.C. §§ 41 et seq. (1976). Finally, Purity attacks the procedure through which the regulation was adopted, and raises constitutional objections.

1. Source of Attorney General's power. The Attorney General's power to seek injunctive relief derives from G.L. c. 93A, § 4. Jurisdiction is also conferred on this court by § 4, and by G.L. c. 231A, § 1. Also, G.L. c. 30A, § 7, as appearing in St.1974, c. 361, § 3, provides that with certain exceptions not here material, "judicial review of any regulation . . . may be had through an action for declaratory relief in the manner and to the extent provided under chapter two hundred and thirty-one A." See Cambridge Elec. Light Co. v. Department of Pub. Utils., 363 Mass. 474, 502, 295 N.E.2d 876 (1973).

General Laws c. 93A is a comprehensive statute for the regulation of consumer and business transactions. "It is a statute of broad impact which creates new substantive rights and provides new procedural devices for the enforcement of those rights." Slaney v. Westwood Auto, Inc., 366 Mass. 688, 693, 322 N.E.2d 768, 772 (1975). Section 1 of c. 93 A provides certain definitions, and § 2(a ), as inserted by St.1967, c. 813, § 1, states the substantive core of the act: "Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful." Neither § 1 nor § 2 defines "unfair" or "deceptive," however, or indicates what "acts" are prohibited. Rather, § 2(b ) provides that "courts will be guided by the interpretations given by the Federal Trade Commission and the Federal Courts to section 5(a)(1) of the Federal Trade Commission Act (15 U.S.C. § 45(a)(1)), as from time to time amended." Further, § 2(c ) states that "(t) he attorney general may make rules and regulations interpreting the provisions of subsection 2(a) of this chapter." The Attorney General's power to promulgate rules and regulations is limited by § 2(c ) only to the extent that such rules shall not be inconsistent with FTC and Federal court interpretations of the FTC Act mentioned in § 2(b ).

Chapter 93A was enacted in 1967, partly in response to an FTC policy to stop unfair practices on a State level before they become interstate problems. H. Alperin & R. Chase, Consumer Rights and Remedies, § 111 at 253 & n.1 (1979). Section 2(a ) of c. 93A contains language identical to that of § 5(a)(1) of the FTC Act (15 U.S.C. § 45(a)(1) (1976)). The Massachusetts statute thus incorporates the extensive body of Federal administrative and decisional law under the FTC Act, Slaney, supra at 694 n.8, 322 N.E.2d 768, at least in so far as it relates to definitions of "unfair" and "deceptive."

2. Status of Federal Trade Commission rules. In 1973 the United States Court of Appeals for the District of Columbia held that the Federal act confers on the FTC the power to promulgate trade regulations which have the force and effect of substantive law. National Petroleum Refiners Ass'n v. Federal Trade Comm'n, 482 F.2d 672 (D.C. Cir. 1973), cert. denied, 415 U.S. 951, 94 S.Ct. 1475, 39 L.Ed.2d 567 (1974). ⁶ The court examined concededly ambiguous legislative history from the time the FTC Act was first passed in 1914, and concluded that § 6(g) of the Act, 15 U.S.C. § 46(g) (1970), which stated that the Commission "shall also have power . . . (f)rom time to time . . . to make rules and regulations for the purpose of carrying out the provisions of sections 41 to 46 and 47 to 58 of this title," should be liberally construed consistent with the background and purpose of the FTC Act. Id. at 689, 698. That purpose was to create a commission with independent enforcement powers against unfair or anticompetitive business practices. Id. at 687, 691. ⁷ Partly in response to National Petroleum, Congress in 1975 passed the FTC Improvements Act, Pub.L. No. 93-637, 88 Stat. 2193 (1975) codified at scattered sections of 15 U.S.C. The 1975 act granted the FTC new power to seek civil penalties for violation of its own rules and cease and desist orders, to seek restitution for consumers, and to make "rules which define with specificity acts or practices which are unfair or deceptive" and rules "for the purpose of preventing such acts or practices." ⁸

3. Status of Attorney General's regulations. Before National Petroleum, Federal courts had held that FTC rules were only guides, e. g., Federal Trade Comm'n v. Mary Carter Paint Co., 382 U.S. 46, 47-48, 86 S.Ct. 219, 220-221, 15 L.Ed.2d 128 (1965), and directory rather than mandatory, e. g., Floersheim v. Weinburger, 346 F.Supp. 950, 952-953 n.4 (D.D.C.1972). Purity is in effect asking us to adopt the position of the Federal courts prior to the National Petroleum decision. That position is that, while the definitions of "unfair competition" or "unfair or deceptive acts" promulgated by the designated agency are entitled to deference, courts ultimately are responsible for giving substantive content to the applicable enabling statute. See Federal Trade Comm'n v. Texaco, Inc., 393 U.S. 223, 226, 89 S.Ct. 429, 431, 21 L.Ed.2d 394 (1968). We believe this position is inconsistent with the...