Storer Communications, Inc. v. State, Dept. of Legal Affairs, 91-1556

• Citation: 591 So.2d 238
• Decision Date: 31 July 1991
• Docket Number: No. 91-1556,91-1556
• Parties: STORER COMMUNICATIONS, INC., a Delaware corporation, SCI 17, Inc., a Delaware corporation, Storer Cable TV of Florida, Inc., a Florida corporation, and TCI Storer, Inc., a Delaware corporation, Appellants, v. STATE of Florida, DEPARTMENT OF LEGAL AFFAIRS, State Attorney, Seventeenth Judicial Circuit, Pembroke Pines, a municipal corporation of the State of Florida, and City of Hollywood, a municipal corporation of the State of Florida, Appellees. 591 So.2d 238, 16 Fla. L. Week. D1977
• Court: Court of Appeal of Florida (US)

Page 238

591 So.2d 238

STORER COMMUNICATIONS, INC., a Delaware corporation, SCI 17, Inc., a Delaware corporation, Storer Cable TV of Florida, Inc., a Florida corporation, and TCI Storer, Inc. a Delaware corporation, Appellants, v. STATE of Florida, DEPARTMENT OF LEGAL AFFAIRS, State Attorney, Seventeenth Judicial Circuit, Pembroke Pines, a municipal corporation of the State of Florida, and City of Hollywood, a municipal corporation of the State of Florida Appellees.

No. 91-1556.

591 So.2d 238, 16 Fla. L. Week. D1977

District Court of Appeal of Florida Fourth District.

July 31, 1991.

Terry S. Bienstock, James C. Cunningham, Jr. and Philip J. Kantor of Frates Bienstock & Sheehe, Miami, David Marx, Jr., James E. Betke, Carol H. Berman and Paula Krasny of McDermott, Will & Emery, Chicago, for appellants.

Robert A. Butterworth, Atty. Gen., Tallahassee, and Sarah B. Mayer, Asst. Atty. Gen., West Palm Beach, for appellee-State of Florida, Dept. of Legal Affairs.

Steven L. Josias, City Atty., Samuel S. Goren, Deputy City Atty., Yamilie M. Trehy and Scott J. Frank, Asst. City Attys., Fort Lauderdale, for appellee-City of Pembroke Pines.

John J. Copeland, Jr., County Atty., Fort Lauderdale, for amicus curiae-Broward County.

EXPEDITED APPEAL

PER CURIAM.

Appellants seek review of the trial court's order that granted the Florida Department of Legal Affairs' [Department] motion for temporary injunction. We reverse.

The Department filed a complaint which alleged that appellants had violated provisions of chapter 817, the Florida Communications Fraud Act, and section 501.201 et seq., the Florida Deceptive and Unfair Trade Practices Act. The complaint alleged that appellants' method of marketing ENCORE, an all new cable channel, in Pembroke Pines and Hollywood was unlawful because the marketing plan was deceptive and misleading. The Department also moved for a temporary injunction. The motion sought to enjoin appellants from continued marketing of ENCORE and from providing the ENCORE channel. After a hearing, the trial judge granted the motion and issued the temporary injunction. Appellants were enjoined from broadcasting ENCORE to a cable subscriber before the subscriber expressly gave prior approval to receive the new channel. This appeal followed and we granted appellants' motion for emergency relief which we treated as a motion to expedite their appeal.

The parties refer to appellants' method of marketing ENCORE as a negative option plan. ¹ The marketing technique involved mailing at least eight different notices to existing cable subscribers about the new channel. The notices were in various forms including bill stuffers, direct mailing, notices on the customers' bills and a detailed letter. These notices informed subscribers that they would receive ENCORE free of charge in June of 1991. After that, from July 1991 until May 1992, they would be billed $1.00 a month for this optional channel. They also advised subscribers that they could cancel ENCORE to avoid this $1.00 monthly charge and how to go about cancelling ENCORE. Subscribers were provided with a postpaid, pre-addressed form and with a toll-free telephone number they could use to cancel ENCORE. They were also informed that they could contact their local customer service representative to cancel ENCORE.

The Department presented three witnesses. Charles Flanagan, the Mayor of Pembroke Pines and one of appellants' customers, testified that he did not understand the one notice that he had read. However, on cross examination he admitted that he had read only a portion of the notice and fully understood the notice once he read the entire notice. He further testified that he found nothing false in the notice, but felt that the rate schedule printed on the notice was "confusing." However, after reading the bold print on the notice he testified that he understood the rate schedule. Also, the Mayor understood that as a cable customer he could cancel ENCORE or the entire cable service if he wanted and as appellants had done in the past they could change their services and raise their prices without advance consent from a customer. He testified that he received about twenty calls about the marketing of ENCORE, out of the fifteen to twenty thousand cable subscribers in Pembroke Pines. The Department concluded its case by calling two expert witnesses. Walter Dartland, a practicing attorney and a consumer advocate, testified that the notice was misleading or confusing or tended to mislead or confuse people, especially, the elderly, uneducated and non-English speaking. Richard A. Hausler, an attorney and professor at law at the University of Miami School of Law, testified that he questioned the legality of the contract the notice created.

BURDEN OF PROOF

Generally, to obtain a temporary injunction with notice a party must establish:

a) irreparable harm;

b) a clear legal right to the relief requested;

c) the lack of an adequate remedy of law; and

d) public interest However, because section 501.207(1)(b) authorizes the Department to seek injunctive relief, it did not have to establish irreparable harm, lack of an adequate remedy at law or public interest. See, Harvey v. Wittenberg, 384 So.2d 940 (Fla. 3d DCA 1980) and U.S. v. Sene X Eleemosynary Corp., 479 F.Supp. 970 (S.D.Fla.1979). The Department's sole burden at the temporary injunction hearing was to establish that it had a clear legal right to a temporary injunction. We conclude that the Department failed to meet that burden. ²

A court should sparingly and cautiously grant temporary injunctions and only in clear cases, reasonably free from doubt. Ordinarily, a temporary injunction should not issue where the legal rights of the parties are in substantial dispute. We hold that the trial court erred when it granted the Department's motion for temporary injunction.

CHAPTER 817

The trial court could not have found that the Department had a clear right to an injunction pursuant to chapter 817. That chapter only applies to goods and merchandise, not cable television services. See Satellite Television v. Continental Cablevision, 714 F.2d 351, 353 (4th Cir.1983) (cable television programming is a service, not goods or merchandise). ³

SECTION 501.204

Section 501.204 et seq., Florida Statutes, also may not apply to the ENCORE marketing plan. That section does not govern the modification of contracts and appellants' marketing of ENCORE and their decision to add the ENCORE channel to the list of channels may be a modification of the existing contract with their customers. The trial court never addressed that issue.

Nevertheless, section 501.204(2), Florida Statutes, clearly states that in construing what an unfair method of competition is or what constitutes an unfair or deceptive act or practice in the conduct of any trade or commerce, Florida courts should give due consideration and great weight to the Federal Trade Commission's [FTC] interpretations of the equivalent federal law. "Negative option plan" is a term of art used in the FTC regulations, however, no federal rule exists that addresses the ENCORE-type marketing plan. Nor does section 501.204, Florida Statutes, mention negative option plans:

Unlawful acts and practices

(1) Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.

(2) It is the intent of the Legislature that, in construing subsection (1), due consideration and great weight shall be given to the interpretations of the Federal Trade Commission and the federal courts relating to s. 5(a)(1) of the Federal Trade Commission Act, 15 U.S.C. 45(a)(1), as amended and in effect on April 1, 1983.

The FTC regulation that governs negative option marketing plans is 16 C.F.R. 425. According to the FTC record, the proceedings it held before adopting 16 C.F.R. 425 failed to demonstrate that negative option plans are so oppressive to consumers and so lacking in redeeming virtues that they should be banned outright. Statement of Basis and Purpose of rule 425, 38 Fed.Reg. 4907 (1973). Thus, neither state nor federal laws prohibit the use of negative option plans. The trial court's order also recognized that negative option plans are not illegal per se.

Both parties rely on the provisions of 16 C.F.R. 425 to support their arguments. However, that rule was promulgated to regulate a specific type of negative option plan and does not apply to the ENCORE-type marketing plan. The FTC has ruled that 16 C.F.R. 425 is applicable only to "so-called prenotification negative option merchandisers, i.e., those plans which send out a notice of selection prior to shipment and ship and bill the merchandise if the subscriber to the plan does not send back a rejection notice within a prescribed time." Id. at 4908. ⁴ Thus, the plan contemplated in rule 425 is one in which there is a prior monthly selection notice. The ENCORE marketing plan does not consist of monthly selection notices which if not acted upon result in mailing the merchandise, or, in this case, providing the programing. ENCORE is a one time offer. In other words, the ENCORE plan does not contemplate mailing a list of movies each month which the subscriber must reject each and every month. Thus, appellants' marketing of ENCORE does not qualify as a negative option plan as that term is used in the FTC regulations. Accordingly, we conclude that 16 C.F.R. 425 cannot serve as a basis on which to determine whether the marketing scheme in question constitutes a deceptive and unfair business practice.

Therefore, to obtain the temporary injunction pursuant to section 501.204 the Department had to clearly establish that the ENCORE marketing plan was unfair or deceptive. However, our view of the record reveals that the Department failed to establish that the ENCORE marketing plan was an unfair or deceptive act or practice. We find a lack of competent and substantial evidence to support ...