State Of Washington v. LA Investors, LLC
410 P.3d 1183
| Wash. Ct. App. | 2018Background
- LRO (Local Records Office), a California company operated by Roberto and Laura Romero, mailed solicitations to Washington homeowners offering copies of recorded deeds and a property profile for $89.
- The mailer used official-sounding terms ("Local Records Office," "County Public Information"), an Olympia return address, a detachable reply coupon with a "Please Respond By" date, and several small disclaimers stating it was not a government document.
- From June 2012 to February 2016 LRO sent 256,998 Washington mailers and received 9,695 purchases (≈3.9% response); the State received numerous consumer complaints and alerts describing the mailer as a scam.
- The State sued under Washington’s Consumer Protection Act (CPA) and moved for summary judgment, arguing the mailer had the capacity to deceive consumers into thinking it was a government document or a bill.
- The trial court granted summary judgment for the State, permanently enjoined LRO, awarded restitution and fees, and imposed $2,569,980 in civil penalties by assessing $10 for each mailed solicitation; LRO appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether "capacity to deceive a substantial portion of the public" under the CPA is a question of law or fact | State: It’s a question of law the court may decide on summary judgment | LRO: It’s a factual issue for the jury (relying on federal cases) | Court: Question of law; trial court properly decided it de novo |
| Whether LRO’s mailer had the capacity to deceive consumers into thinking it was a government document | State: Mailer’s net impression, formatting, Olympia address, wording, and expert analysis show capacity to deceive | LRO: Mailer did not resemble government mailings; consumer declarations are not representative | Court: Mailer had capacity to deceive as a matter of law based on net impression and undisputed facts |
| Whether the mailer had the capacity to deceive consumers into thinking it was a bill requiring payment | State: Personalized info, reply coupon, "Please Respond By" deadline, and layout mimicked a bill and created urgency | LRO: These elements are common in solicitations and do not prove deception | Court: Mailer could reasonably be mistaken for a bill; capacity to deceive established |
| Whether LRO’s disclaimers cured any deceptive net impression | State: Disclaimers were small, poorly placed, or overshadowed and therefore insufficient | LRO: Prominent disclaimers eliminated any deception | Court: Disclaimers did not cure deception; prominence and placement were inadequate |
| Whether civil penalties may be assessed per mailed solicitation, including those not resulting in purchases | State: Each deceptive mailing is a separate CPA violation; penalties per mailing appropriate to vindicate law and eliminate benefits | LRO: Penalizing non-responding recipients is excessive and disproportionate | Court: Each mailing constitutes a separate violation; imposing $10 per mailing (within statutory limits) was not an abuse of discretion |
Key Cases Cited
- Panag v. Farmers Ins. Co. of Wash., 166 Wn.2d 27 (2009) (CPA deceptive/unfair act defined by capacity to deceive a substantial portion of the public and net-impression test)
- Mandatory Poster Agency, Inc. v. State, 199 Wn. App. 506 (2017) (court treated capacity-to-deceive as a question of law on summary judgment)
- Reader’s Digest Ass’n v. FTC, 662 F.2d 955 (3d Cir.) (1981) (mass-mailing case treating each mailing as separate violation and listing factors for penalty assessment)
- Ralph Williams’ Nw. Chrysler Plymouth, Inc. v. Brown, 87 Wn.2d 298 (1976) (each deceptive act may be a separate CPA violation; penalties valid without proof of reliance)
- Cyberspace.com LLC v. FTC, 453 F.3d 1196 (9th Cir.) (net-impression doctrine: truthful statements can still be deceptive if overall impression misleads)