§21.3 - Basic Principles of Trade Regulation Law Applicable to CPA Cases

• Jurisdiction: Washington

§21.3 BASIC PRINCIPLES OF TRADE REGULATION LAW APPLICABLE TO CPA CASES

A CPA cause of action is not governed by the more restrictive legal principles applicable to such traditional claims as contract, tort, common law fraud, or unfair competition. See, e.g., Aungst v. Roberts Constr. Co., 95 Wn.2d 439, 443-44, 625 P.2d 167 (1981); Robinson v. McReynolds, 52 Wn.App. 635, 638 n.2, 762 P.2d 1166 (1988); Testo v. Russ Dunmire Oldsmobile, Inc., 16 Wn.App. 39, 554 P.2d 349 (1976). CPA causes of action are instead governed by the specialized body of federal and state trade regulation law.

(1) General rules of construction

The CPA is intended to "complement the body of federal law governing restraints of trade, unfair competition and unfair, deceptive, and fraudulent acts or practices in order to protect the public and foster fair and honest competition." RCW 19.86.920. Consequently, the legislature has directed courts to be guided by precedents under comparable federal laws dealing with the same or similar matters. Short v. Demopolis, 103 Wn.2d 52, 60, 691 P.2d 163 (1984). RCW 19.86.920 directs state courts to be guided by federal decisions under similar statutes. Short, 103 Wn.2d at 60. However, Washington courts are not bound, but instead are to be guided, by such federal precedents. Klem v. Wash. Mut. Bank, 176 Wn. 2d 771, 787, 295 P.3d 1179 (2013); State v. Black, 100 Wn.2d 793, 676 P.2d 963 (1984); State v. Reader's Digest Ass'n, Inc., 81 Wn.2d 259, 501 P.2d 290 (1972), appeal dismissed, 411 U.S. 945 (1973). The legislature has further provided that the CPA should be "liberally construed [so] that its beneficial purposes may be served." RCW 19.86.920; Indoor Billboard/Wash., Inc. v. Integra Telecom of Wash., Inc., 162 Wn.2d 59, 74, 170 P.3d 10 (2007); Short, 103 Wn.2d at 60; Aungst, 95 Wn.2d at 442; State v. Ralph Williams' Nw. Chrysler Plymouth, Inc. (Ralph Williams' I ), 82 Wn.2d 265, 510 P.2d 233 (1973).

However, the liberal construction mandate in RCW 19.86.920 is balanced to some extent by the further provision in this section of the CPA that the Act "shall not be construed to prohibit acts or practices which are reasonable in relation to the development and preservation of business or which are not injurious to the public interest, nor be construed to authorize those acts or practices which unreasonably restrain trade or are unreasonable per se." The scope of this reasonableness defense is particularly unclear when applied outside the antitrust context (where the distinction between rule of reason and per se violations is defined by an extensive body of federal case law) and will require clarification on a case-by-case basis.

Nevertheless, this reasonableness defense would seem to reflect an intent by the legislature that the CPA be interpreted somewhat more narrowly than its federal counterparts. Thus, for example, the Washington Supreme Court has directed courts in CPA cases to weigh the public interest in prohibiting anticompetitive conduct with the recognition that businesses need some latitude within which to conduct their trade. Travis v. Wash. Horse Breeders Ass'n, Inc., 111 Wn.2d 396, 408, 759 P.2d 418 (1988); Black, 100 Wn.2d 793 (involving alleged antitrust and consent decree violations by real estate broker).

On the other hand, the legislature and courts also have viewed the CPA as having a broad scope to protect the public by eliminating acts or practices that are injurious to consumers. The CPA is intended to have broad application and to be liberally construed to accomplish its beneficial purpose. RCW 19.86.920; Short, 103 Wn.2d at 60; Aungst, 95 Wn.2d at 442; Ralph Williams' I, 82 Wn.2d 265. The purpose of the statute is to protect the public by eliminating acts or practices that are injurious to consumers. Fisher v. World-Wide Trophy Outfitters, Ltd., 15 Wn.App. 742, 551...