State v. International Collection Service, Inc.

• Decision Date: 24 May 1991
• Docket Number: No. 89-300,89-300
• Citation: 594 A.2d 426,156 Vt. 540
• Parties: STATE of Vermont v. INTERNATIONAL COLLECTION SERVICE, INC.
• Court: Vermont Supreme Court

Page 426

594 A.2d 426

156 Vt. 540

STATE of Vermont v. INTERNATIONAL COLLECTION SERVICE, INC.

No. 89-300.

Supreme Court of Vermont.

May 24, 1991.

Jeffrey L. Amestoy, Atty. Gen., and Elliott M. Burg and Lisa L. Barrett, Asst. Attys. Gen., Montpelier, for plaintiff-appellant.

M. Jerome Diamond and Kimberly R. Elia of Diamond & Associates, P.C., and David S. Putter of Saxer, Anderson, Wolinsky & Sunshine, Montpelier, for defendant-appellee.

Jay C. Shaffer, Acting Gen. Counsel, and Ernest J. Isenstadt, Asst. Gen. Counsel, Washington, D.C., and Phoebe D. Morse, Director, Boston Regional Office, Boston, Mass., for amicus curiae F.T.C.

Before ALLEN, C.J., and PECK, GIBSON, DOOLEY and MORSE, JJ.

DOOLEY, Justice.

The State of Vermont appeals from the Washington Superior Court's dismissal of its consumer fraud action against defendant, International Collection Service, Inc. (ICS). The court held that the actions complained of did not fall within the Consumer Fraud Act, 9 V.S.A. §§ 2451-2479. We hold that the dismissal was erroneous and reverse.

Defendant ICS is a debt collection agency based in Williamstown, Vermont. All of its customers are businesses, the majority of which are located out-of-state. The State of Vermont brought this action, alleging that ICS engaged in unfair and deceptive practices in its efforts to solicit new clientele. The trial court granted defendant's motion to dismiss, concluding that the Attorney General had no authority to bring an action to restrain unfair or deceptive practices by a business in its transactions with business customers. The court concluded: "The overall and interwoven fabric of the statute persuades this court that the Attorney General was not authorized by the legislature to bring a suit on behalf of businesspersons for consumer fraud." The sole issue on appeal is whether the trial court erred in this conclusion.

The State argues that the Act on its face authorizes the Attorney General to bring an action regardless of the status of the victim and that relevant federal and state precedent supports this view. We look first to the language of the relevant statutes.

Two sections of the Act are central to this action. First, the basic prohibition of the Act is contained in 9 V.S.A. § 2453(a), which provides that "[u]nfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce, are hereby declared unlawful." Nowhere does the statute expressly limit the terms "unfair or deceptive acts or practices in commerce" to transactions between businesses and consumers. The second is the public enforcement mechanism for the Act, 9 V.S.A. § 2458(a), which provides:

Whenever the attorney general or a state's attorney has reason to believe that any person is using or is about to use any method, act or practice declared by section 2453 of this title to be unlawful, ... and that proceedings would be in the public interest, the attorney general, or a state's attorney if authorized to proceed by the attorney general, may bring an action in the name of the state against such person to restrain ... the use of such method, act or practice....

Nothing in this section limits the Attorney General's power to bring an action based on the status of the victim. Under the plain wording of the section, the Attorney General is authorized to bring an action on behalf of aggrieved victims when (1) he has reason to believe that any person is using or is about to use any method, act or practice declared unlawful, and (2) such an action would be in the public interest. There are no other express limitations on the types of activities against which the attorney general may take action.

Although our overall aim is to give effect to the intent of the legislature, we must look first to the plain meaning of the statutory wording. See Wolfe v. Yudichak, 153 Vt. 235, 239, 571 A.2d 592, 595 (1989). Nothing in the statutory wording limits the victims who may be protected by the Attorney General to exclude businesses.

Recognizing that a statutory scheme must be read in pari materia, id. at 240, 571 A.2d at 595, defendant advances two main reasons why the Act protects only individual consumers: (1) the title and other sections of the Act show that it is intended to protect only individual consumers but not business persons, and (2) § 5(a)(1) of the Federal Trade Commission Act, to which Vermont courts must look in interpreting the Vermont Consumer Fraud Act, see 9 V.S.A. § 2453(b), protects individual consumers but not businesses.

The title containing the Act is entitled "Consumer Fraud." It contains numerous references to consumers and a definition of the term "consumer." ¹ Although the public enforcement section, § 2458(a), makes no reference to consumer victims, the private remedy section, § 2461(b), is specifically limited to consumer plaintiffs. The latter statute provides:

Any consumer who contracts for goods or services in reliance upon false or fraudulent representations or practices prohibited by section 2453 of this title, or who sustains damages or injury as a result of any false or fraudulent representations or practices prohibited by section 2453 of this title ... may sue for appropriate equitable relief and may sue and recover from the seller, solicitor or other violator the amount of his damages, or the consideration or the value of the consideration given by the consumer, reasonable attorney's fees, and exemplary damages not exceeding three times the value of the consideration given by the consumer.

Based on the definition of "consumer," see 9 V.S.A. § 2451a(a), it is clear that there is no private right of action under § 2461(b) for business victims of deceptive or unfair acts or practices. ² Further, restitution, one of the remedies available to the Attorney General in a § 2458(a) action, is expressly provided for consumer victims. ³ Thus, the Attorney General can seek "restitution of cash or goods" but only on behalf of "a consumer or a class of consumers." 9 V.S.A. § 2458(b)(2). ⁴

Although certain parts of the Act apply only to consumers, we are unable to conclude that the entire Act is so limited. ⁵ The stated purpose of the Act is broader, to "protect the public, and to encourage fair and honest competition." 9 V.S.A. § 2451. It is reasonable for the legislature to determine that business persons have adequate private remedies in existing laws, while special, new remedies are necessary to protect individual consumers. See Gramatan Home Investors Corp. v. Starling, 143 Vt. 527, 536, 470 A.2d 1157, 1162 (1983) ("The relief available under § 2461(b) to a consumer who has been victimized by an unfair or deceptive commercial practice was fashioned in order to promote and encourage prosecution of individual consumer fraud claims."). For example, the legislature may have concluded that individual consumer plaintiffs need the incentive of being able to recover attorney's fees as provided in § 2461(b) while businesses do not need this assistance or can contract for this recovery. Further, we note that enforcement actions brought by the Attorney General must be found to be "in the public interest," 9 V.S.A. § 2458(a), although private enforcement actions brought by consumers do not have to meet this standard. The legislature may have decided that business-to-business disputes do not ordinarily have a public interest component to warrant a statutory private remedy. See Lightfoot v. MacDonald, 86 Wash.2d 331, 334, 544 P.2d 88, 90 (1976) (en banc) (discussing "public interest" requirement for both public and private actions under statute substantially similar to Vermont Act: "A breach of a private contract affecting no one but the parties to the contract, whether that breach be negligent or intentional, is not an act or practice affecting the public interest.").

Nothing in the provisions of the Act that reference consumers persuades us to abandon the plain meaning of the words on which the State relies. Accordingly, we turn to defendant's second argument.

The Act prohibits "unfair or deceptive acts or practices in commerce." 9 V.S.A. § 2453(a). These terms are nowhere defined. Rather, the legislature stated that "in construing subsection (a) of [section 2453], the courts of this state will be guided by the construction of similar terms contained in section 5(a)(1) of the Federal Trade Commission Act as from time to time amended by the Federal Trade Commission and the courts of the United States." 9 V.S.A. § 2453(b). Section 2451, the purpose clause, notes that "[t]he purpose of this chapter is to complement the enforcement of federal statutes and decisions."

Defendant fails to point to, nor are we able to locate, any federal precedent which indicates expressly that the prohibition against "unfair or deceptive acts or practices" contained in § 5(a)(1) of the Federal Trade Commission Act, 15 U.S.C. § 45(a)(1) (1973), does not apply to fraudulent transactions where the victim is a business. In contrast, the State and the Federal Trade Commission (FTC), as amicus, cite a wealth of federal cases involving exactly this class of transactions. See, e.g., FTC v. World Wide Factors, Ltd., 882 F.2d 344, 346-47 (9th Cir.1989) (affirming preliminary injunction against seller of promotional merchandise to small businesses); Lee v. FTC, 679 F.2d 905 (D.C.Cir.1980) (affirming FTC cease-and-desist order against firm providing promotional services to inventors); United State Retail Credit Ass'n v. FTC, 300 F.2d 212 (4th Cir.1962) (upholding cease-and-desist order against corporation offering debt collection services to businesses and professionals); United States Ass'n of Credit Bureaus v. FTC, 299 F.2d 220 (7th Cir.1962) (modifying, but otherwise enforcing, FTC cease-and-desist order against provider of collection services to businesses and professionals); FTC v. Kitco of Nevada, Inc., 612 F.Supp. 1282, 1296-97 (D.Minn.1985) (ordering permanent injunction against seller...