Deception: State Regulation

1. True or false: Vermont's main consumer protection law, the "consumer fraud act," is really mistitled because it does not require proof of the elements of "fraud."

See sec. 2453 (linked in lecture notes)
compate to FTCA
note UDAP or "little-FTC Act"



2. In a suit brought by the attorney general, the remedy/remedies available include:
a. an injunction
b. a civil penalty of up to $10,000 per violation
c. restitution for consumers
d. all of the above, plus reimbursement for its costs

see sec. 2458 (linked in lecture notes)
note each ad and/or each sale could be a separate violation



3. Martha purchases a used, 2000 Lexus from George's dealership for $25,000. At her first inspection she discovers that the car is really a 1998 Lexus, with a book value of $20,000. If Martha sues George under the Vermont consumer fraud act, she can recover
a. nothing, because consumers cannot sue under the cfa
b. nothing, if she bought the car to use in her business as a real estate agent
c. nothing, if George was not a dealer and was selling his own car
d. none of the above are true

a. consumers can sue under the "private right of action"
----see 2461(b)
b. she's still a consumer, even if using it for her business, as long as not "for resale" in business
----see 2451(a)
c. applies to "casual sales"
----2451 defines seller to include someone regularly engaged in sales of goods
----but 2461(b) says "seller, solicitor or other violator"



4. Same facts as #3. If Martha wins, she can recover
a. her attorney's fees
b. $5,000 or $20,000 in damages
c. "exemplary" damages of up to $75,000 at the court's discretion
d. all of the above

Exemplary damages are same thing as punitive damages



<>5. The following questions relate to the case of Pennington v. Singleton
Was the seller a merchant or a private seller?
--private seller
Under what two laws did Pennington sue?
----common law fraud
----Texas Deceptive Trade Practices Act
What did the trial court decide on each of the two laws?
---for plaintiff on statute
---against on common law
What element was missing from the common law claim?
---Scienter (defendant made the statement believing it was true; innocent misrepresentation)
What did the Texas Court of Appeals decide and why?
---reversed cuz defendant was not a merchant
What did the Texas Supreme Court decide?
---applies to non-merchants
The court gave two reasons for its decision;  what was the policy reason given for the decision?
---private action was created to give a remedy for one-time abuses that law enforcement was unlikely to act on (other reason was statutory construction)



<>6. What does the Pennington case say about how far we've come from "caveat emptor"?  Has the law now become "caveat vendor" (seller beware)?  Do you think this is good or bad?  Is it fair to punish a seller, especially one who is not a merchant, for making a statement that he believes is true but turns out to be false?

It's really an allocation of risk issue. Somebody has to suffer the loss. As between two innocent parties, policy requires that it be the person who made the false statement. It's "strict liability" for false statements.
 
 
 
 

7. The following questions relate to the case of Poulin v. Ford Motor Co. and Hayes Ford
Who was Poulin and what did he buy?
---1979 Ford Mustang Pace car
What representations about the car had been made by Hayes Ford that induced Poulin to buy?
---limited production
---less than one per dealer
---it would go up in value
Were those representations true?
---no
---other dealers were selling at a discount
---production continued after the Indy 500
---Hayes Ford was getting another one
Under what laws did Poulin sue?
---warranty law
---common law fraud
---consumer fraud act
What did the lower court find and how much did they award Poulin?
---Defendant liable
---$40,000
Based on the amount awarded, do you think the Court awarded him "exemplary" damages?


On appeal in Poulin, the Vermont Supreme Court raised three issues. How would you respond to them?
a. Was the plaintiff a consumer?  What about the fact that he bought and sold cars as an investment?
---good question; he bought as an investment, not for re-sale
b. Was there sufficient evidence of unfair or deceptive practices?  What precedents did the court say it would follow in making this decision?
(Did the court use the traditional definition of deception or the more recent three-part test adopted by the FTC?)
----Court mentioned both tests
---Said it didn't matter, since violated either standard
---also said the jury had been given a common law fraud charge, which is a higher standard
c. Was it necessary to prove intent? What did the defendant argue?  Did the court accept that argument?
---No



8. The following questions relate to the case of Peabody v. PJ’s Auto Village
What did plaintiff purchase from PJ’s and what did she discover about the vehicle after she purchased it?
---"clipped vehicle"
---front of '74 Saab
---back of '72 Saab
 ---sold as "74
Under what law did she sue?
---consumer fraud act (only)
What did the lower court find as to PJ’s knowledge of the vehicle's condition?
---the knew about it
Did PJ’s disclose the condition of the vehicle to Peabody?
---no
Did Peabody have any problems with the car?  How did she discover the unique nature of the car?
---no problems
---routine maintenance (weld was visible on routine inspection)
For whom did the lower court rule and why?
 ---PJ's
---missing one element
What did the lower court say was a missing element and why?
---materiality
---she hadn't had any problems with the car
But didn’t the court find that the plaintiff would not have purchased the car had she known of the defect?  Does it appear to you that the trial court messed up here?
---yes
---equated materiality with damage or injury
---would be required under common law but not little-FTC Act




9. Martha pays George $5,000 in advance to put aluminum siding on her house. George promises to complete the job within six weeks. George never shows up to do the work. Six months go by and George has still not shown up. He evades Martha's phone calls, and when she does reach him he says he'll be there "next week." Although he cashed the check immediately, he never, ever shows up. Martha asks the attorney general to file criminal charges.

If you were the A.G., would you file criminal charges under Vermont's false pretenses law? Why or why not?
---no 
---one of the elements of fale pretenses is missing
What element do you need to prove that is lacking here?
---go to sec. 5 of lecture notes
---"specific intent to defraud"
---even a higher standard than scienter
---how do you prove that at the time he took the money, he didn't intend to do the work? Maybe he did.
What evidence would you need to make your case?
---pattern of practices indicating that when he took the money he had no intention of doing the work
---or a false statement about a past fact (mobile home insulation case here)
Would you bring the case under Vermont's 2003 criminal home repair fraud statute?
---law creates a presumption of knowledge under certain circumstances
 
 
 
 


10. The following questions relate to the case of State v. Bissonnette
Who were the various parties involved here?
---Clara Carlson (93; homeowner)
---Nellie Irish (87; sister)
---Mrs. Lawrence (POA)
---Norman Bevins
---James Blackmer
---Ralph Bissonnette
What were the false statements made by the defendant?
---had been working across the street and noticed shingles were missing
---needed immediate repair
---pretend conversation between Bissonnete and Mrs. Lawrence
What did the defendant claim was missing from the list of required elements?
---Reliance
---go back to lecture notes for elements
---said reliance was on Mrs. Irish's instructions
What false statement did the court find Mrs. Carlson relied on?
---the pretend conversation
Did the court say the victim had to rely solely on the false representation, or was material reliance good enough?

---Describe Bissonnette's fraud while on work release