State v. Reader's Digest Ass'n, Inc.

Decision Date28 September 1972
Docket NumberNo. 42252,42252
Citation81 Wn.2d 259,501 P.2d 290
Parties, 1972 Trade Cases P 74,203 The STATE of Washington, Appellant, v. READER'S DIGEST ASSOCIATION, INC., Respondent.
CourtWashington Supreme Court

Slade Gorton, Atty. Gen., of Washington, Alison Morey Barden, Thomas L. Boeder, Seattle, for appellant.

MacDonald, Hoague & Bayless, Francis Hoague, Seattle, for respondent.

STAFFORD, Associate Justice.

This appeal raises questions under Washington State's Consumer Protection Act. The state appeals the trial court's determination that the Reader's Digest Sweepstakes is not a lottery and does not constitute unfair and deceptive conduct in violation of RCW 19.86.020.

The respondent, Reader's Digest Association, Inc., is a mail-order house selling the Reader's Digest Magazine, condensed books, special books and record albums. Since 1962 it has engaged in a promotion program known as the Reader's Digest Sweepstakes. Sweepstakes information is mailed directly to Washington state residents. The enclosures advertise products sold by respondent and inform the addressee that he has been selected for a chance to win a valuable prize. In order to qualify, however, the addressee must respond. He may return a 'yes' form, by which he agrees to purchase advertised goods and enter the drawing, or a 'no' form, by which he only enters the drawing. Postage is prepaid by respondent. The mailing states that the Sweepstakes may be entered without making a purchase, and that the addressee's chance of winning is not increased by making a 'yes' rather than a 'no' reply. All prizes are awarded by chance.

Respondent disseminates two and one half millon Sweepstakes advertisements in Washington annually. Depending upon the county, between 31 and 51 percent of all households subscribe to its magazine.

The Sweepstakes is a highly successful advertising vehicle. The scheme not only has increased sales enough to be more profitable than other forms of advertising, but respondent's advertising revenues have increased concurrently.

The Attorney General brought this action seeking: (1) a declaratory judgment that respondent has violated the Consumer Protection Act, RCW 19.86, and that the Sweepstakes constitutes a lottery and an unfair method of competition; (2) an injunction against conducting or advertising the Sweepstakes in Washington or accepting or receiving Sweepstakes entries from within the state; and (3) and order that respondent pay a 'civil penalty' of $2,000 for each advertisement disseminated after May 14, 1970. The trial court suspended the matter of respondent's liability for the 'civil penalty' pending trial.

Respondent moved to quash service of process alleging its insufficiency as well as lack of personal jurisdiction. Respondent also moved to dismiss for failure to state a claim and for lack of subject matter jurisdiction. All motions were denied.

Respondent's answer admitted that its prizes are distributed to winners by chance but denied that consideration passes from the Sweepstakes entrant to the Digest. Respondent also denied violations of RCW 19.86.020.

The trial court empaneled an advisory jury. At the end of the state's case, the court denied respondent's motion to dismiss for failure to prove a claim. Thereafter, the state moved for judgment arguing that: (1) as a matter of law it had established a lottery constituting an unfair method of competition; and, (2) the advertisements on their face are deceptive as a matter of law. The state's motion was denied.

At the end of the case the advisory jury returned a special verdict consisting of answers to six interrogatories submitted by the court. The state moved to reject the special verdict and for judgment notwithstanding the special verdict or for a new trial. The motion was denied. Thereafter, the court entered findings of fact, conclusions of law, and judgment dismissing the complaint.

The state appeals. Error is assigned to the denial of the state's motion for judgment as a matter of law, the trial court's failure to make sufficient findings of fact, to its rulings that the 'neighbor copy' issue was moot, 1 to its suspension of 'civil penalties,' and to its exclusion of certain testimony. No error is assigned to the findings of fact.

Respondent cross-appeals, assigning error to the trial court's denial of its pretrial motions to dismiss for lack of subject matter jurisdiction asserting that (1) RCW 19.86.020 is unconstitutionally vague, (2) the field has been pre-empted by the United States Postal Department, (3) the acts sought to be enjoined are regulated by the Federal Trade Commission (hereinafter called FTC) and are therefore exempted from the Consumer Protection Act by RCW 19.86.170. The issue of personal jurisdiction is also appealed.

At the threshold we are confronted by respondent's contention that the state has improperly perfected its appeal. Respondent, citing Thorndike v. Hesperian Orchards, Inc., 54 Wash.2d 570, 343 P.2d 183 (1959), asserts that since the state has assigned no error to the trial court's findings of fact we must accept them as verities. We agree. Respondent argues that since the findings of fact support the conclusions of law and judgment, there is nothing left for us to consider on appeal. We disagree with respondent's conclusion.

First, the state contends the trial court erred by denying its 'motion for judgment as a matter of law.' 2 Respondent argues that an assignment of error to 'motions for judgment as a matter of law' which does not refer to the record does not sufficiently point out the action or actions of the trial court assigned as the basis of the appeal. Williams v. Andresen, 63 Wash.2d 645, 651, 388 P.2d 725 (1964); Hill v. Tacoma, 40 Wash.2d 718, 719, 246 P.2d 458 (1952); ROA I--43. Respondent asserts that in Williams we said 'pointing out' error involves pointing to the place in the record where it occurred. The rule is designed to apprise the court and respondent of the precise grounds upon which appellant relies. Hill v. Tacoma, Supra.

Normally we will not consider an assignment of error that does not specifically designate the place in the record where the trial court's action can be found. In this case, however, appellant's brief, in a section immediately preceding the assignments of error, discusses the motions referred to and makes reference to their location in the record. The references sufficiently apprise us of the basis for assignment of error No. 1, and respondent's brief makes it clear that it, too, was sufficiently informed of the precise nature of the assignment. All issues raised in the assignment of error are discussed by the respondent. Thus, respondent is not prejudiced by our considering it.

The two state motions in question are (1) the state's motion made at the end of its case and (2) its motion to reject the advisory jury's special verdict and for judgment notwithstanding said special verdict or for new trial. The first motion was inappropriately made and properly denied. Such a motion, made at the end of plaintiff's case, cannot be considered a motion for summary judgment. See CR 56 (c); Trautman, Motions for Summary Judgment, 45 Wash.L.Rev. 1, 13 (1970); Comment, Summary Judgment, 34 Wash.L.Rev. 204, 205 (1959). Further, it cannot be treated as a motion for judgment on the pleadings. See CR 12(d). We can only conclude that it must have been made in the nature of a motion to dismiss. A trial court can grant a plaintiff's motion to dismiss, made at the end of his own case, if a motion to dismiss or for nonsuit made by the defendant has been denied and the defendant stands on his motion and refuses to proceed with the case. Pacific Nat'l Bank v. Aetna Indem. Co., 33 Wash. 428, 74 P. 590 (1903); Clancy & Clancy v. Reis & Lombradina, 5 Wash. 371, 31 P. 971 (1892). Such a motion should not be granted, however, if the defendant elects to proceed with the case as respondent did in this instance. See 5A J. Moore, Federal Practice 50.04 (2d ed. 1971); Trautman, Motions Testing the Sufficiency of Evidence, 42 Wash.L.Rev. 787, 793 (1967); Sunderland, Directing a Verdict for the Party Having the Burden of Proof, 11 Mich.L.Rev. 198 (1913).

The second motion is, in effect, a motion to amend the findings of fact or to make additional findings and to amend the judgment accordingly, pursuant to CR 52(b). See Stewart v. Atlantic Ref. Co., 235 F.2d 570, 571 (3d Cir. 1956); Greenwood v. Greenwood, 234 F.2d 276, 278 (3d Cir. 1956). When error is assigned to an order denying such a motion, the federal courts treat the assignment as one going to the judgment. State Farm Mut. Auto. Ins. Co. v. Palmer, 350 U.S. 944, 76 S.Ct. 321, 100 L.Ed. 823 (1956), rev'g 225 F.2d 876 (9th Cir. 1955); United States v. Stromberg, 227 F.2d 903 (5th Cir. 1955); Annot., 2 A.L.R.Fed. 545 (1969).

The fact that the state mistakenly appealed from the order denying its motion rather than from judgment is purely a technicality. The state's obvious and overriding intent was to appeal from the judgment. Our rules admonish us to decide cases on the merits, disreparding mere technicalities, where possible. ROA I--63; compare Kane v. Klos, 50 Wash.2d 778, 314 P.2d 672 (1957) with Riblet v. Ideal Cement Co., 57 Wash.2d 619, 358 P.2d 975 (1961). Thus, we treat this as an appeal from the judgment.

In making its first assignment of error the state claims that the trial court erred:

(a) . . . in failing to hold . . . that the prize drawing constitutes a lottery as a matter of law . . .

(b) . . . in failing to find as a matter of law that use in trade of conduct which is unlawful or deceptive is contrary to the public interest and constitutes an unfair practice in trade.

(c) . . . in failing to hold that the sweepstakes . . . are therefore deceptive and misleading as a matter of law.

(d) . . . in failing to hold that defendant's neighbor copy ads . . . are therefore an unfair...

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