Tungate v. MacLean-Stevens Studios, Inc., LEAN-STEVENS

• Decision Date: 26 June 1998
• Docket Number: Docket No. C,LEAN-STEVENS
• Citation: Tungate v. MacLean-Stevens Studios, Inc., 714 A.2d 792 (Me. 1998)
• Parties: 128 Ed. Law Rep. 1109, 1998 ME 162 Zagonyi TUNGATE v. MacSTUDIOS, INC. um-97-706.
• Writing for the Court: Before WATHEN; CLIFFORD
• Court: Maine Supreme Court

Page 792

714 A.2d 792

128 Ed. Law Rep. 1109, 1998 ME 162

Zagonyi TUNGATE v. MacLEAN-STEVENS STUDIOS, INC.

Docket No. Cum-97-706.

Supreme Judicial Court of Maine.

Argued April 9, 1998.

Decided June 26, 1998.

Jon Holder (orally), Holder & Grover, P.A., Portland, for Appellant.

John H. Rich (orally), Perkins, Thompson, Hinckley & Keddy, Portland, for Appellee.

Before WATHEN, C.J., and CLIFFORD, RUDMAN, DANA, LIPEZ and SAUFLEY, JJ.

CLIFFORD, Justice.

¶1 Zagonyi Tungate appeals from a summary judgment entered in the Superior Court (Cumberland County, Calkins, J.) in favor of defendant MacLean-Stevens on both counts of Tungate's complaint. Tungate contends that the summary judgment was erroneously granted because MacLean-Stevens engaged in unfair trade practices: (1) by failing to disclose to students and parents that commissions were paid to the schools in exchange for the school's permission to photograph the students, and (2) by maintaining a price differential for allegedly indistinguishable "finishes" on the photos. ¹ We disagree and affirm the judgment.

¶2 Tungate is the parent of children in the Falmouth school system. MacLean-Stevens sells student photographs to families throughout New England, including those in the Falmouth School system. For schools that so choose, MacLean-Stevens provides an option by which the school receives a 20% commission on the company's sales of photos to parents. For portraits taken at the schools receiving a commission, MacLean-Stevens charges a higher amount for the portraits than it charges at schools that do not take the commission. Portrait prices at schools receiving a commission are, on average, approximately 24% higher, so that parents effectively pay for the commission. In Maine, approximately 70% of the schools choose to take the commission. MacLean-Stevens believes that if it did not offer commissions to schools, it would lose a substantial portion of its business. Tungate purchased portraits from MacLean-Stevens, and her children attended schools in the Falmouth system that accepted the commission. ²

¶3 In the flier/order form it sends to parents, MacLean-Stevens offers four "finishes" for each of its portrait packages: standard, deluxe, classic, or premier. The price difference between the most expensive option, the premier, and the lease expensive option, the standard, is approximately $10. Among all four finishes, there is actually no difference in the chemical process, surface texture, paper type, vignetting or tendency not to fade. There is a tangible photographic difference, however, between portraits ordered with the standard or classic finish, that do not have "soft touch filtering," and the deluxe and premier finishes. For the deluxe and premier finishes, the photographer uses another lens that tends to soften facial blemishes. Further, the premier and classic packages provide 12 additional wallet portraits. Although the actual finishes of the photos are identical, each option has attributes that are different from each of the others.

I.

¶4 Tungate first contends that the court erred in concluding that MacLean-Stevens did not violate the Charitable Solicitations Act on the basis that the parents' payments were not "contributions" pursuant to the Act. ³ A violation of the Charitable Solicitations Act, 9 M.R.S.A. §§ 5001-5016 (1997) is a per se violation of the Unfair Trade Practices Act (UTPA). ⁴ See id. § 5014. ⁵ The Charitable Solicitations Act requires all persons who solicit contributions to disclose fully the name of the charitable organization for whom the solicitation is being conducted. See id. § 5012(1). ⁶ The court held that the sale of portraits by MacLean-Stevens did not meet the definition of "solicitation" because the parents did not make "contributions" as defined by the Charitable Solicitations Act.

¶5 When reviewing the grant of summary judgment, we "view the evidence before the court in the light most favorable to the party against whom the judgment was granted to determine if the trial court committed an error of law." Guiggey v. Bombardier, 615 A.2d 1169, 1171 (Me.1992).

¶6 Our review of the Charitable Solicitations Act leads us to conclude that the Act does not apply to transactions when the payor does not know that a purported charitable recipient ⁷ is receiving any benefit, and the payor and seller are in substance parties to a commercial transaction. Both the history of the Act and a straightforward reading of its language make clear that its overriding purpose is to protect Maine consumers from professional fund raisers or those who would exploit a charitable cause for personal benefit. In enacting the Charitable Solicitations Act, the Legislature intended that the public's charitable instincts not be exploited for noncharitable purposes. ⁸ The Act contains language aimed at preventing abuses by professional fund raisers and curbing what was described as "continued solicitations by organizations or corporations that fraudulently pocket contributions for purposes other than charitable causes." State v. Events Int'l, Inc., 528 A.2d 458, 461 (Me.1987). There is nothing to indicate that section 5012 is directed at transactions lacking a philanthropic purpose.

¶7 This case does not involve the solicitation of charitable contributions. MacLean-Stevens did not fraudulently use a "charitable cause" to profit, nor were purchasers of photos making payments in the belief that they were supporting a charitable purpose. ⁹ We agree with the Massachusetts Supreme Judicial Court's construction of the similar, though even broader, statutory definition of "contribution," ¹⁰ in the case of a company that sought sponsorships from advertisers on behalf of a charitable organization. See Attorney General v. International Marathons, Inc., 392 Mass. 370, 467 N.E.2d 51 (1984). Holding that the sale of sponsorships, advertising, and promotional rights was not a solicitation of contributions for charitable purposes, the court looked to the substance of the transaction and the donor's lack of a philanthropic goal:

While we agree that getting something in return does not automatically disqualify a donation as "charitable," ... there must be a substantial element of charitable intent.... This [payment by a sponsor] is a commercial transaction. It is not a gift. It is a corporate opportunity. It has nothing to do with philanthropy. It is not a charitable contribution.

Id. 467 N.E.2d at 54. So, too, the sale of photos in the absence of any identification of the school as a benefactor "has nothing to do with philanthropy," id. It is a business transaction between the parents and MacLean-Stevens that is not regulated by the Charitable Solicitations Act. ¹¹

¶8 Tungate further argues that MacLean-Stevens violated 9 M.R.S.A. § 5012(2) that requires any professional fund-raising counsel, ¹² professional solicitor ¹³ or commercial coventurer ¹⁴ to identify itself in a specific manner to prospective donors. MacLean-Stevens was not a commercial coventurer, because its activities in this case were not "advertised in conjunction with the name of any charitable organization." ¹⁵ 9 M.R.S.A. 5003(3). Neither do the definitions of professional fund-raising counsel and professional solicitor apply, because MacLean-Stevens did not solicit contributions on behalf of a charitable organization.

II.

¶9 Tungate also contends that the court erred in concluding that the failure of MacLean-Stevens to disclose the commissions was not unfair or deceptive. We look to federal precedent in analyzing the Maine Unfair Trade Practices Act. See 5 M.R.S.A. § 207(1) (1989) ("It is the intent of the Legislature that in construing this section the 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...."). See also Binette v. Dyer Library Ass'n, 688 A.2d 898, 906 (Me.1996).

To justify a finding of unfairness [pursuant to the UTPA] the injury must satisfy three tests. It must be substantial; it must not be outweighed by any countervailing benefits to consumers or competition that the practice produces; and it must be an injury that consumers themselves could not reasonably have avoided.

Suminski v. Maine Appliance Warehouse, Inc., 602 A.2d 1173, 1174 n. 1 (Me.1992). ¹⁶ The court correctly concluded that Tungate's injuries were not substantial enough to merit a violation of the UTPA.

¶10 The substantial injury requirement is designed to weed out "trivial or merely speculative harms." Legg v. Castruccio, 100 Md.App. 748, 642 A.2d 906, 917 (1994) (citing Letter from Federal Trade Comm'n to Senators Ford and Danforth (Dec. 17, 1980), reprinted in H.R.Rep. No. 156, Pt. 1, 98th Cong., 1st Sess. 33-40 (1983)). The difference between some portrait packages in schools that received a commission and those that did not is as little as $1.25, in the case of a $7 package. Such a difference would clearly be insubstantial, and there is nothing in the record to indicate which portrait package Tungate actually purchased.

¶11 Moreover, to the extent that her complaint is based on what she considers unfair pricing, Tungate's reliance on the UTPA is further misplaced. In pricing cases under the Act the inquiry is whether the price has the effect of deceiving the consumer, or inducing her to purchase something that she would not otherwise purchase. See Kazmaier v. Wooten, 761 F.2d 46, 51 (1st Cir.1985) (quoting Purity Supreme, Inc. v. Attorney Gen., 380 Mass. 762, 407 N.E.2d 297, 307 (1980) (a practice may be deceptive if it "could reasonably be found to have caused a person to act differently from the way he otherwise would have acted")); Resort Car Rental Sys., Inc. v. F.T.C., 518 F.2d 962, 963 (9th Cir.1975) (Federal Trade Act is violated if it induces the first contact through deceptive price); F.T.C. v. World Travel Vacation Brokers, Inc., 861 F.2d 1020, 1029 (7th Cir.1988) ("In order to...