The unclear scope of unconscionability in FDUTPA.

• Author: Federbush, David J.
• Position: Florida Deceptive and Unfair Trade Practices Act

In 1993, the Florida Deceptive and Unfair Trade Practices Act (FDUTPA) (F.S. [sections] 501.201 et seq.) was amended to, inter alia, extend its prohibitions to unconscionable, as well as deceptive and unfair, acts or practices in the conduct of any trade or commerce. See [sections] 501.204(1). However, this author is not aware of any reported Florida decisions interpreting the meaning of "unconscionable" as used in the statute. The purpose of this article, the second on FDUTPA's prohibitions,[1] is to inquire into the extent of this term's substantive coverage. Its conclusion is that both the language and legislative history of the 1993 amendments leave the legislative intent as to the meaning of "unconscionable" unclear, except in FDUTPA's reference to other, independent unconscionability statutes.

Language and Structure

The language and structure of FDUTPA itself are the primary indicators of legislative intent, the acknowledged polestar of statutory construction.[2] The statute as amended does not define "unconscionable" or provide standards for determining when a practice is unconscionable. Furthermore, FDUTPA's definition of a violation refers to unconscionable practices only in the context of independent laws or regulations. It provides that a violation may be based on a violation of: 1) any rules promulgated pursuant to the Federal Trade Commission Act or FDUTPA; 2) the standards of unfairness or deception set forth and interpreted by the FTC or the federal courts; or 3) any law, statute, regulation, or ordinance which proscribes unfair methods of competition or unfair, deceptive, or unconscionable acts or practices.[3]

With respect to the first prong, the FTC has statutory authority to promulgate Trade Regulation Rules directed at deceptive or unfair, but not unconscionable, acts or practices.[4] The TRRs by their terms thus address only deceptive or unfair practices. While the Florida Department of Legal Affairs has promulgated (and in most cases repealed) rules addressing designated unfair or deceptive practices, it apparently has not issued rules designating practices as unconscionable.[5] As to the second prong, the FTC has indeed promulgated standards of unfairness and deception, but not standards of unconscionability. In fact, the Federal Trade Commission Act[6] contains no mention whatsoever of unconscionable practices or unconscionability. As there are several independent Florida statutes which refer to unconscionable practices, the third prong is the only one which on its face appears to encompass such practices.

There is nevertheless a valid argument, based on the use of the term "may," that the three prongs of [sections] 501.201(3) do not necessarily comprise an exclusive list of the types of practices which may violate FDUTPA.[7] Additional factors support a continued search (below) for some legislatively intended further, independent meaning for "unconscionable" in [sections] 501.204(1)--the unqualified use of the term in that section and [sections] 501.202 (Purposes; rules of construction), together with the general thrust of the principle that, if possible, effect should be given to every word of a statute so that no portion is treated as inoperative or meaningless.[8]

The Florida Supreme Court has held that an undefined term in legislation should be given its plain and ordinary meaning. That court has additionally instructed, however, that in interpreting such an undefined term consideration must also be accorded to its effect on the objectives and purposes of the statute's enactment.[9] Furthermore, all parts of a statute must be read together in order to achieve a consistent whole.[10]

The language of other sections of FDUTPA, including one added with the 1993 amendments, do not support a legislative intent to add a broad new category of violation. Revised [sections] 501.202(3), added with the 1993 amendments, specifies the expanded statutory purpose of "mak[ing] state consumer protection and enforcement consistent with established policies of federal law relating to consumer protection" (as compared to the prior purpose of making state regulation of consumer sales practices similarly consistent).[11] In addition, the 1993 amendments left [sections] 504.204(2) intact, providing that "[i]t 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...."[12] As discussed above, neither the Federal Trade Commission Act nor the FTC's TRRs mention unconscionable acts or practices. There is thus no general "established [p]olicy of federal law," in the area of consumer protection, prohibiting unconscionable acts or practices (although there are a couple of independent federal statutes addressing unconscionable practices).[13]

Furthermore, interpreting unconscionable to cover a broad range of practices falling outside the three designated categories of [sections] 501.201(3) is arguably inconsistent with the substance of those categories themselves. The FTC's standards of unfairness and deception, promulgated in 1980 and 1983 respectively,[14] are in a substantial sense limiting pronouncements. They set forth tests that must be met to make out violations, and in at least one respect indicate that factors previously articulated as grounds for a violation should not prospectively be considered in determining whether a violation has occurred. Specifically, the FTC's 1980 unfairness statement provided that the broad and previously articulated "immoral, unethical, oppressive or unscrupulous" criterion, one actually cited numerous times in Florida decisions,[15] was not to be applied in the future. To permit practices varying widely from those standards (and not covered by either of the other two categories) to constitute violations would arguably vitiate the effect of adopting those standards as bases for violations.

Common Law Meaning?

There is another general principle of statutory construction that use of a common law term is an indicator of legislative intent to adopt its common law meaning. That principle is a rebuttable presumption that can be overcome by the intent reflected in other statutory language and clauses.[16]

Relatively recent Florida common law unconscionability decisions have focused on the courts' equitable powers to refrain from enforcing contracts, or clauses thereof, based (usually, but not necessarily exclusively) on a combination of "procedural unconscionability" and "substantive unconscionability."[17] Procedural unconscionability generally refers to an absence of meaningful choice, determined by analyzing the parties' respective bargaining power, and the ability of the particular contracting party, in light of his or her education, intelligence, or lack thereof, to understand the terms of the contract. Substantive unconscionability generally refers to the unreasonableness and unfairness of the particular terms of the contract.[18]

There do not, however, appear to be any reported Florida decisions applying the above-mentioned principle of construction to any statute's use of "unconscionable." Florida precedent presents an even more specific obstacle to reading common law unconscionability into FDUTPA. In 1979 the Florida Supreme Court addressed an early version (prior F.S. [sections] 83.784) of the mobile home rent control statute's prohibition on unconscionable rent increases. The court held such use constitutionally defective in not "aid[ing] a court or administrative agency in ascertaining the true legislative intent underlying the act" (emphasis added). The court explicitly recognized that ""unconscionability" has an equitable meaning in the common law (citing Point East One Condominium Corp., Inc., v. Point East Developers, Inc., 348 So. 2d 32 (Fla. 3d DCA 1977)), but nevertheless opined that "[n]o such guiding principles are supplied by the legislature here."[19] The legislature, in enacting the 1993 amendments, is presumed to be aware of such preexisting precedent.[20]

Thus, principles of statutory construction, and Florida precedent, do not clearly indicate or support a legislative intent in FDUTPA to adopt the common law meaning of "unconscionable." Furthermore, the discussion in the preceding section suggests that other statutory language and clauses in FDUTPA do not point to an intent to incorporate such a broad legal principle as common law unconscionability into FDUTPA.

[sections] 501.207(3) Meaning?

The term "unconscionable" actually appeared in FDUTPA in one place ([sections] 501.207(3)) prior to the 1993 amendments, and it remains there currently. The term as used there is another arguable source of meaning for "unconscionable" as used in [sections] 501.204(1).

Section 501.207(3), detailing remedies available in FDUTPA government enforcement actions, includes obtaining court orders for the limited purpose of "to strike or limit the application of clauses of contracts to avoid an unconscionable result." However, there is no reference in [sections] 501.204(1) as amended to this other use of the term, and "unconscionable" as used in [sections] 501.204(1) contains no restrictive language concerning contracts, contractual clauses, or results. Principles of statutory construction concerning the use of varying language in different parts of a statute having different purposes suggest that the legislature, in amending [sections] 501.204(1) to add "unconscionable," did not intend to adopt the more restricted (but still arguably...