Update: Businesses May Now be Entitled to Damages for Unfair and Deceptive Practices
In February, two Florida appellate courts ruled for the first time that businesses acting as competitors, producers, and manufacturers are entitled to actual damages under the Florida Deceptive and Unfair Trade Practices Act, (“FDUTPA”). Following the trend of Florida federal court decisions and a 2015 opinion from the Fourth District, Florida’s Second and Third District Courts of Appeal have decided the 2001 revisions to FDUTPA allow more plaintiffs to seek damages.
FDUTPA protects consumers and businesses from “those who engage in unfair methods of competition, or unconscionable, deceptive, or unfair acts or practices in the conduct of any trade or commerce.” First enacted in 1973, it established a private right of action for declaratory and injunctive relief for “anyone” harmed by a violation of the Act. However, it also allowed “consumers” injured by violations of the Act to recover actual damages and attorneys’ fees. In 2001, the Florida legislature revised FDUTPA, replacing “consumer” with “person” and courts have reached different conclusions regarding the effect of that change. Is a competitor or “person” allowed to seek damages?
Previous Decisions on FDUTPA Claims
Prior to the 2001 revision, there was a scarcity of state court decisions defining which plaintiffs were eligible to seek FDUTPA damages. In 2004, the Fourth District Court of Appeal remarked that decisions determining the circumstances under which business entities could seek damages were “rare events in FDUTPA litigation.” These few cases made clear that, pre-2001, a business-entity could not recover actual damages under FDUTPA if it had acted as a “competitor,” “provider of services,” “producer,” or “manufacturer.”
The question of whether a non-consumer plaintiff could sue for damages under FDUTPA was litigated repeatedly in Florida’s federal courts after 2001, primarily in the Southern and Middle Districts, without an emerging consensus. Kelly v. Palmer, Reifler & Associates, P.A. represents the predominant view that emerged from Florida’s federal courts: “replacing the term ‘consumer’ with ‘person’ served to broaden the reach of the statute … a non-consumer may maintain an action for damages under FDUTPA.”
In 2012, the issue first appeared in a state appellate court decision. The Fifth District’s opinion in Wyndham Vacation Resorts, Inc. v. Timeshares Direct, Inc. appeared to indicate that despite the revision to the statute, non-consumer plaintiffs may still be limited to declaratory and injunctive relief. Wyndham implied that some FDUTPA plaintiffs entitled to injunctive relief may not be entitled to damages. It remained the only state appellate court decision touching upon the issue for several more years. Not until 2015 did a Florida state court squarely address the issue and adopt the federal district court’s majority view.
In Caribbean Cruise Line, Inc. v. Better Bus. Bureau of Palm Beach County, Inc., Caribbean Cruise Lines sought an injunction and damages against the Better Business Bureau after receiving an “F” grade from the agency. The trial court granted BBB’s motion to dismiss Caribbean’s FDUTPA claim for lack of standing because Caribbean was not a consumer. The Fourth District looked to U.S. district court decisions on non-consumer standing in post-2001 FDUTPA claims and found the reasoning of Kelly persuasive, holding that an entity does not have to be a consumer in order to have standing to bring a FDUTPA damage claim. While the claimant would have to prove that there was an injury or detriment to consumers in order to satisfy all of the elements of a FDUTPA claim, the injured business does not have to be a consumer to bring the claim.
February 2016 Opinions from Florida’s Second and Third Districts
The Second and Third Districts have now expressly held that non-consumers—and more particularly, business entity non-consumers—may pursue damages under FDUTPA.
The trial court in Bailey v. St. Louis allowed a spinal surgery center’s FDUTPA claim for injunctive relief against a competing surgery center, but denied its damages claim. The trial court denied the damages claim because the plaintiff business was a competitor to the defendant, rather than a consumer. The Second District followed the prevailing federal approach, agreed that damages are not available only to consumers injured by FDUTPA violations, and reversed the judgment as to damages.
Several weeks later, the Third District followed suit in Off Lease Only, Inc. v. LeJune Auto Wholesale, Inc. In a footnote, the court distinguished its decisions interpreting the pre-2001 version of FDUTPA and acknowledged that the current statute “no longer requires one to be a ‘consumer’ to maintain an action for damages under FDUTPA.
One Potential Impact of Caribbean Cruise Line, Bailey, and Off Lease
Florida’s Antitrust Act of 1980 mirrors federal law and prohibits of variety of anticompetitive behavior. But the resources required for a successful antitrust lawsuit often make such actions prohibitively expensive. These recent FDUTPA decisions may provide an alternate path to recovery for Florida business harmed by antitrust violations or other anticompetitive behavior.
Any conduct that violates Florida’s antitrust laws also violates FDUTPA, but the evidentiary bar for a FDUTPA claim is significantly lower than that for an antitrust claim. Most antitrust claims require extensive market analysis. Before Caribbean Cruise Line, Bailey, and Off Lease, it remained an open question whether a victim of anticompetitive practices who could not provide sufficient market analysis could recover in state court. With these recent decisions on FDUTPA standing, more businesses harmed by anticompetitive and unfair business practices should be able to recover actual damages.