New Hampshire

Document Sample
New Hampshire Powered By Docstoc
					                NEW HAMPSHIRE CONSUMER PROTECTION ACT1

I. Overview

        a. Purpose and scope

        The New Hampshire Consumer Protection Act (the Act) regulates business

practices for consumer protection. The Act regulates a wide range of activities relating to

the sale, advertisement, and pricing of goods and services. The courts have identified

boundaries between the fraudulent or deceptive practices contemplated by the Act and

issues that are wholly contained within other areas of the law.2 In interpreting the Act,

New Hampshire courts are guided by the interpretation and construction given Section

5(a)(1) of the Federal Trade Commission Act3 by the Federal Trade Commission and

federal courts. New Hampshire courts are also guided by the interpretations given to

similar sections of the Massachusetts Consumer Protection Act.4, 5

        The Act does not create strict liability, and courts have construed it as requiring

knowledge or intent on the part of any person alleged to be in violation of the Act. In

Kelton v. Hollis Ranch,6 the Court held that a seller‟s failure to disclose a material fact,

where such fact was not known to the seller and not readily discoverable, did not give

rise to a violation of the Act.7 In contrast, the Court in Beer v. Bennett8 found a violation


1
  N.H. REV. STAT. ANN. § 358-A (2010).
2
  See generally McNeal v. Lebel, 157 N.H. 458, 469-70, 953 A.2d 396, 405-06 (2008) (finding no
application of the Act where home builder failed to disclose information and to complete house on time);
Barrows v. Boles, 141 N.H. 382, 390, 687 A.2d 979, 986-87 (1996) (“An ordinary breach of contract claim
does not present an occasion for the remedies under the Consumer Protection Act.”); State v. Moran, 151
N.H. 450, 453-54, 861 A.2d 763, 766-67 (2004) (distinguishing between the defendant‟s failure to perform
under the contract and defendant‟s fraudulent inducement of consumer to pay for materials); Miami Subs
Corp. v. Murray Family Trust, 142 N.H. 501, 516, 703 A.2d 1366, 1375 (1997) (denying application of the
Consumer Protection Act in a dispute involving a partnership or joint venture relationship).
3
  15 U.S.C. 45(a)(1).
4
  MASS. GEN. LAWS ch. 93A (2010).
5
  Herne v. Cooper Industries, 2005 U.S. Dist. LEXIS 24371, at *6 (2005).
6
  Kelton v. Hollis Ranch, 155 N.H. 666, 927 A.2d 1243 (2007).
7
  Id. at 668, 927 A.2d at 1246.


                                                   1
of the Act where the defendant “made representations, knowing he lacked sufficient

knowledge to substantiate them, to induce the plaintiff's purchase.”9

        b. Limitations

        The Act does not cover transactions involving banking, securities, insurance, or

public utilities, as those areas are addressed by discrete regulatory bodies. To the extent

that the Federal Trade Commission is investigating or otherwise handling a complaint

against a person, the Act does not apply to that person.10 Publishers, broadcasters, and

printers of deceptive information are not liable under the Act, if they had no knowledge

of the deceptive nature of the information.11 A three year statute of limitations generally

applies to violations of the Act.12 The practice of law in New Hampshire is also exempt

from the provisions of the Act.13

        In Bell v. Liberty Mutual Insurance Co.,14 the Court resolved a question regarding

the extent of the regulation required to exempt an industry from the Act.15 A regulated

industry is only exempt from the Act if the governing regulations are comprehensive and

carried out by a “statutorily authorized regulatory regime that protects consumers from

the same deception, fraud, and unfair trade practices as intended by [the Act].”16 In Bell,

the Court held that the regulation of the insurance industry is sufficiently comprehensive

to exempt insurance carriers from the Act.17



8
  Beer v. Bennett, 160 N.H. 166, 993 A.2d 765 (2010).
9
  Id. at 171, 993 A.2d at 769-70.
10
   N.H. REV. STAT. ANN. § 358-A:3(III) (2010).
11
   N.H. REV. STAT. ANN. § 358-A:3(IV) (2010).
12
   N.H. REV. STAT. ANN. § 358-A:3(IV-a) (2010).
13
   Rousseau v. Eshleman, 129 N.H. 306, 309, 529 A.2d 862, 864-65 (1987).
14
   Bell v. Liberty Mut. Ins. Co., 146 N.H. 190, 776 A.2d 1260 (2001).
15
   Id. at 193, 776 A.2d at 1262.
16
   Id. (quoting Averill v. Cox, 145 N.H. 328, 332, 761 A.2d 1083, 1088 (2000)).
17
   Id.


                                                    2
II. Enforcement

        a. Authority of Attorney General

        The Consumer Protection and Antitrust Bureau of the New Hampshire

Department of Justice has authority to enforce the provisions of the Act.18 Upon an

alleged violation of the Act, the Attorney General may bring an action on behalf of the

State, seeking injunctive relief and restitution to the consumer. The Attorney General

may petition the court to dissolve, suspend, or forfeit the franchise of any corporation

determined to be a habitual violator of injunctions issued pursuant to the Act.19

        The venue for an action by the Attorney General is the superior court of the

county of residence or principal place of business of the person alleged to be in violation

of the Act.     If such person is a nonresident and has no place of business in New

Hampshire, then venue is in the superior court of Merrimack County.20 The Attorney

General may, in lieu of bringing an action in superior court, accept an assurance of

discontinuance of any act or practice which violates the Act.            The assurance of

discontinuance generally functions as a settlement between the State and the person

alleged to be in violation of the Act. Such an assurance may include payment by the

alleged violator of costs incurred by the Attorney General in investigating the matter, an

amount to be held in escrow pending the outcome of the action, an amount to be paid as

restitution to a consumer, or all three.21

        The Attorney General must provide notice to a person alleged to be in violation of

the Act at least ten days prior to commencement of an action. This notice includes an


18
   N.H. REV. STAT. ANN. § 358-A:4(I) (2010).
19
   N.H. REV. STAT. ANN. § 358-A:9 (2010).
20
   N.H. REV. STAT. ANN. § 358-A:4(III)(a) (2010).
21
   N.H. REV. STAT. ANN. § 358-A:7 (2010).


                                                    3
opportunity for such person to confer with the Attorney General prior to commencement

of the action. This notice requirement may be waived if the Attorney General has reason

to believe that the notice may cause the recipient to move or destroy assets, leave the

state, cause material witnesses to leave the state, or otherwise take any actions which may

cause immediate and irreparable harm to the public.22

        b. Penalties

        In an action by the Attorney General, the court may award to the State civil

penalties not to exceed $10,000 per violation of the Act. Payment of such a penalty is not

required until the appeals process has been exhausted.23 The Attorney General may also

petition the court to appoint a receiver to take charge of the business of any person

alleged to be in violation of the Act. In lieu of appointing a receiver, the court may

permit the person alleged to be in violation of the Act to post a bond payable to the State.

The bond may only be distributed to the State after a trial on the merits and exhaustion of

the appeals process. 24 If any person is found to be in violation of the Act, the court may

award to the State all legal costs and expenses incurred.25

        Any natural person convicted of a violation under the Act, or who violates an

injunction issued pursuant to the Act, is guilty of a misdemeanor; any other person

committing such a violation is guilty of a felony. 26 In addition to the prohibited acts

enumerated,27 any subversion of the intent and purposes of the Act is also considered a

violation thereof.28


22
   N.H. REV. STAT. ANN. § 358-A:5 (2010).
23
   N.H. REV. STAT. ANN. § 358-A:4(III)(b) (2010).
24
   N.H. REV. STAT. ANN. § 358-A:4(III)-a (2010).
25
   N.H. REV. STAT. ANN. § 358-A:6(IV) (2010).
26
   N.H. REV. STAT. ANN. § 358-A:6(I), (II) (2010).
27
   See N.H. REV. STAT. ANN. § 358-A:2 (2010).
28
   N.H. REV. STAT. ANN. § 358-A:6(III) (2010).


                                                     4
        c. Civil investigation

        The Attorney General has the power to issue subpoenas, oaths, and affirmations

for the purposes of investigating an alleged violation of the Act. 29 This power includes

the authority to examine any person or documents pursuant to such an investigation. The

Attorney General may require such a person to appear at the person‟s residence, place of

business, or any place within the state.30 The Attorney General must serve notice of such

an examination at least ten days prior to the date of the examination.31 This notice

requirement may be waived if the Attorney General has reason to believe that, upon

receipt of the notice, the recipient may move, alter, conceal, or destroy any of the

documents sought, or conceal any person whose testimony is sought. In such a case, the

notice may require immediate production or examination of any document or person

referenced therein.32

        d. Private right of action

        Any person injured by another‟s use of a practice prohibited by the Act may bring

an action for damages and equitable relief. If the plaintiff prevails in such an action,

recovery is the greater of actual damages or $1,000. If the court determines that the

violation was willful or knowing, it is required to award as much as three times actual

damages, but not less than two times actual damages.33 The prevailing plaintiff is also

awarded costs and reasonable attorney‟s fees.34 In Nault’s Auto Sales, Inc. v. American

Honda Motor Co.,35 the Court held that the private right of action applies to both natural


29
   N.H. REV. STAT. ANN. § 358-A:8(I) (2010).
30
   N.H. REV. STAT. ANN. § 358-A:8(II) (2010).
31
   N.H. REV. STAT. ANN. § 358-A:8(III)(a) (2010).
32
   N.H. REV. STAT. ANN. § 358-A:8(III)(b) (2010).
33
   N.H. REV. STAT. ANN. § 358-A:10(I); Simpson v. Young, 153 N.H. 471, 476, 899 A.2d 216, 221 (2006).
34
   N.H. REV. STAT. ANN. § 358-A:10 (2010).
35
   Nault‟s Auto Sales, Inc., v. American Honda Motor Co., Acura Auto. Div., 148 F.R.D. 25 (1993).


                                                  5
persons and corporations.36 An action may be certified as a class action, pursuant to the

requirements of the Act.37

III. Recent cases

        a. Publicity campaigns

        In Green Mountain Realty Corp. v. Fifth Estate Tower, LLC,38 the New

Hampshire Supreme Court followed the federal courts‟ interpretation of the Federal

Trade Commission Act in determining that the Noerr-Pennington doctrine, which

protects political lobbying activities from liability under the Sherman Antitrust Act,39 was

applicable to the Act.40 The Court held that the defendant wireless service operator did

not violate the Act by disseminating postcards to the general electorate in opposition to a

ballot measure that would allow the plaintiff wireless service operator to construct a new

cell tower.41

        b. Measure of damages and prohibited acts

        In Beer v. Bennett,42 the Court held that the trial court‟s award was an equitable

grant of rescission, rather than an award of actual damages. The trial court had ordered

the defendant to make payments amounting to a “refund of the purchase price and

shipping costs, plus payment of the plaintiff's reasonable air fare and expenses for

attendance at trial, and attorney's fees and costs.”43 Because the trial court‟s award was

equitable, there were no actual damages to be doubled or trebled pursuant to the “willful



36
   Id. at 48.
37
   N.H. REV. STAT. ANN. § 358-A:10-a (2010).
38
   Green Mountain Realty Corp. v. The Fifth Estate Tower, LLC, 2010 N.H. LEXIS 129 (2010).
39
   15 U.S.C. § 1 (2006).
40
   Green Mountain Realty Corp., 2010 N.H. LEXIS 129, at *16.
41
   Id. at *24.
42
   Beer v. Bennett, 160 N.H. 166, 993 A.2d 765 (2010).
43
   Id. at 168, 993 A.2d at 767.


                                                 6
or knowing violation” provision of the Act.44, 45 The Court declined to decide whether

the Act grants district courts the power to award rescission, but held that rescission was

properly ordered under the plaintiff‟s Uniform Commercial Code claim.46

         The Court in Beer also described the “rascality test”, which is used in determining

“which commercial actions, not specifically delineated, are covered by the [Act].”47

“The test requires the plaintiff to show „that the defendant's acts attained a level of

rascality that would raise an eyebrow of someone inured to the rough and tumble of the

world of commerce.‟”48              Finally, the Court held that “even if the individual

representations could be read as literally true, the advertisement could still violate the

[Act] if it created an overall misleading impression.”49

         c. Right to a jury trial

         In Hair Excitement, Inc. v. L’Oreal U.S.A., Inc.,50 the Court held that claims under

the Act are not entitled to a trial by jury.51 The Court recognized that, although many

claims under the Act “ha[d] been tried before juries, we note that the issue of whether a

right to a jury trial existed was never raised or addressed in those cases.”52 To resolve the

question of the right to a jury trial, New Hampshire courts look to “the nature of the case

and the relief sought, and ascertain whether the customary practice included a trial by




44
   N.H. REV. STAT. ANN. § 358-A:10(I) (2010).
45
   Beer v. Bennett, 160 N.H. 166, 175, 993 A.2d 765, 772 (2010).
46
   Id. at 174, 993 A.2d at 771-72.
47
   Id. at 171, 993 A.2d at 769-70.
48
   Id. at 171, 993 A.2d at 769-70 (quoting Hair Excitement, Inc. v. L‟Oreal U.S.A., Inc., 158 N.H. 363, 370,
965 A.2d 1032, 1039 (2009)).
49
   Id. at 170, 993 A.2d at 768.
50
   Hair Excitement, Inc. v. L‟Oreal U.S.A., Inc., 158 N.H. 363, 965 A.2d 1032 (2009).
51
   Id. at 370, 965 A.2d at 1038.
52
   Id.


                                                     7
jury before 1784.”53 The Court held that the Act “creates new statutory rights which did

not exist in New Hampshire common law in 1784 when this state adopted its

constitution.”54 “Moreover, nothing in the language of [the Act] specifically provides for

a right to a jury trial.”55




53
   Id. at 368, 965 A.2d at 1037 (quoting Franklin Lodge of Elks v. Marcoux, 149 N.H. 581, 591, 825 A.2d
480, 489 (2003).
54
   Id. at 368, 965 A.2d at 1037.
55
   Id.


                                                   8

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:5
posted:8/1/2011
language:English
pages:8