STATE of Alaska, Appellant and Cross-Appellee, v. O‘NEILL INVESTIGATIONS, INC., Appellee and Cross-Appellant.
Nos. 4109, 4165.
Supreme Court of Alaska.
March 28, 1980.
James D. Rhodes and Spencer Sneed, Cole, Hartig, Rhodes, Norman & Mahoney, Anchorage, for appellee and cross-appellant.
Before RABINOWITZ, C. J., CONNOR and MATTHEWS, JJ., DIMOND, Senior Justice, and BLAIR, Superior Court Judge.
OPINION
CONNOR, Justice.
In recent years, unscrupulous acts and practices of independent debt collection agencies1 have come under increasing scrutiny from both the public and private sector. Consumer groups,2 state law enforcement agencies,3 private industry,4 and former members of the debt collection profession itself5 have collectively called for protection for consumers from unfair collection practices, including use of obscene or profane language, threats of violence or imprisonment, telephone calls at unreasonable hours, misrepresentation of consumer‘s legal rights, disclosure of consumer‘s financial status to third parties, and feigned use of legal process.6
This appeal requires us to decide whether the Alaska Unfair Trade Practices and Consumer Protection Act,
The keystone of the Alaska Act is
The Attorney General is charged with enforcement of the Act;8 he may adopt interpretative regulations subject to the strictures of the Administrative Procedure Act;9 he has broad investigatory powers in connection with ferreting out the use of deceptive trade practices;10 and he is empowered to seek injunctive relief when he has reason to believe “that a person has used, is using, or is about to use an act or practice declared unlawful in § 471 and [such] proceedings would be in the public interest.”
In a suit for injunctive relief brought by the Attorney General, a civil penalty of not more than $5,000 may be recovered for each unlawful act or practice.
In March of 1977, the Attorney General filed a complaint pursuant to § 501 of the Act for injunctive relief and civil penalties against O‘Neill Investigations, Inc., the appellee/cross-appellant. O‘Neill is a corporation organized and existing under the laws of the State of Alaska. It is engaged in the business of collecting debts, under assignment, for creditors. Debt collection is a regulated industry and O‘Neill has the requisite state license mandated by Chapter 24 of Title 8 of the Alaska Statutes.
The complaint claimed that O‘Neill had employed wide-ranging false and deceptive misrepresentations in attempting to collect monies from alleged debtors or their spouses. The state charged O‘Neill with misrepresenting to the debtor that failure to pay by a certain date would result in: criminal prosecution, incarceration or apprehension by law enforcement officials; civil liability; impairment of the debtor‘s credit rating; referral of the debtor‘s account to an attorney for collection; and an exaggerated increase in the debtor‘s obligation after judgment. The State also charged that O‘Neill
Further, the State alleged that O‘Neill falsely and deceptively misrepresented the consequences flowing from an alleged debtor‘s refusal or failure to sign a confession of judgment, and misrepresented that debtors had committed crimes by the mere fact of their debt. Other unfair practices pleaded include telephoning employers of alleged debtors before entry of judgment or threatening to expose the alleged indebtedness to employers and business associates. These allegations and proof elicited at trial are discussed at length in part IV of this opinion. The complaint also averred that O‘Neill‘s refusal to disclose its credit files upon proper demand by a consumer constitutes a violation of the Fair Credit Reporting Act,
O‘Neill‘s request for a jury trial, and its motion for summary judgment were denied. The court specifically found that the activities of debt collection agencies are within the scope of § 471 of that Act, and that the language of § 471(a) affords reasonable and adequate notice of the proscribed conduct. The lower court concluded, therefore, that the Alaska Act was not unconstitutionally vague as applied to third party debt collection agencies. We denied O‘Neill‘s petition for review of this ruling. A bench trial commenced on June 5, 1978 before Superior Court Judge Peter Kalamarides.
At the close of the State‘s case, the defendant moved for dismissal under Alaska Rule of Civil Procedure 41(b) and renewed its earlier motion for summary judgment. The court granted defendant‘s motion to dismiss on the ground that § 471(a), without interpretative regulations, was unconstitutionally vague. The trial court denied the renewed motion for summary judgment. Findings of fact and conclusions of law were entered. The State has taken an appeal and O‘Neill has cross-appealed. We will address first the issues raised by the cross-appellant.
I
We turn our attention initially to O‘Neill‘s argument, which it characterizes as “[p]erhaps the single most important issue presented in this case“, that the civil penalties authorized by the Alaska Act are so severe as to render them “penal” in nature. If this conclusion is correct, the imposition of civil penalties for violation of the Act would require all the constitutional safeguards against arbitrary deprivation of liberty and property afforded criminal defendants.
The common law distinguished between civil and criminal statutes by contrasting the rights of individuals with those rights belonging to society qua society Blackstone noted:
“The distinction of public wrongs from private, of crimes and misdemeanors from civil injuries, seems principally to consist in this: that private wrongs, or civil injuries, are an infringement or privation of the civil rights which belong to individuals, considered merely as individuals; public wrongs, or crimes and misdemeanors, are a breach and violation of the public rights and duties, due to the whole community, considered as a community, in its social aggregate capacity.”
5 W. Blackstone, Commentaries *5.
While that distinction may have served well when it was developed in the eighteenth century, it has become blurred in the rapid expansion of the domain of public law.11 The result is offenses which are “quasi-criminal,” State v. Clayton, 584 P.2d 1111, 1114 (Alaska 1978), and statutes which are neither purely civil nor criminal, but, rather, a hybrid.12 The use of civil monetary penalties, woven into the fabric of
O‘Neill‘s contention is not novel. In Atlas Roofing Co. v. Occupational Safety and Health Review Commission, 518 F.2d 990 (5th Cir. 1975), aff‘d on other grounds, 430 U.S. 442, 97 S.Ct. 1261, 51 L.Ed.2d 464 (1977), the court addressed a challenge to the constitutionality of the Occupational Safety and Health Act of 1970,14 on grounds identical to those advanced here by O‘Neill. Atlas was cited for violating that Act and was assessed a $600 civil fine. The Act provided for both civil and criminal monetary penalties; Atlas claimed the distinction between the two was blurred because either could be applied to essentially the same conduct. The court concluded that the civil sanctions did not constitute criminal penalties:
“[T]aken as a whole, we think that Atlas has failed to demonstrate that Congress meant the statute to reprimand rather than regulate. The focus of the statute—the control of job site safety practices and health conditions—has a demonstrable and legitimate government concern. The fact that the civil enforcement sanctions are inherently disabilities does not alter the nature of the Congressional purpose. And finally the Congressional purpose carefully to establish both civil and criminal sanctions and distinguishable procedures for imposing and reviewing them eliminate any question of Congressional intent.” (footnote omitted).
An identical claim was carefully considered and rejected in Frank Irey Jr., Inc. v. Occupational Safety and Health Review Commission, 519 F.2d 1200 (3rd Cir. 1975), aff‘d on other grounds, 430 U.S. 442, 97 S.Ct. 1261, 51 L.Ed.2d 464 (1977).15 Irey was cited for violations of the Occupational Safety and Health Act and, after a hearing conducted by an OSHA examiner, was found guilty of willful violation of the Act and assessed a civil penalty of $5,000, onehalf of the maximum amount allowed. Irey challenged the constitutionality of the Act on the grounds, inter alia, that as to corporations, the criminal penalties were precisely the same as the civil, and that, therefore, the latter could not be imposed without benefit of the rights of criminal defendants under the Fourth, Fifth, Sixth, and Seventh Amendments to the United States Constitution. The Court said:
“There is force and logic to these arguments, and we do not dismiss them lightly. Fatal to the petitioner‘s view, however, is a series of Supreme Court decisions which have validated the position that Congress has a wide range of alternatives available to it for enforcing its legislative policy . . . . [T]he same conduct may subject a person to both civil
and criminal sanctions, if the civil aspects are considered remedial. In the case sub judice, candor compels us to concede that the punitive aspects of the OSHA penalties, particularly for a ‘willful’ violation, are far more apparent than any ‘remedial’ features. However, a deliberate and conscious refusal to abate a hazardous condition may bring about a situation where a heavy civil penalty might be needed to effect compliance with safety standards. In any event, we have now come too far down the road to hold that a civil penalty may not be assessed to enforce observance of legislative policy. Although the label attached by Congress does not preclude judicial review of a statute which transgresses a constitutional right, no such infraction has occurred here.”
519 F.2d at 1204 (footnotes and citations omitted).
In reaching this conclusion, the court relied on a decision of the second circuit, United States v. J. B. Williams Co., 498 F.2d 414 (2d Cir. 1974) (Friendly, J.). There the Federal Trade Commission had issued a cease and desist order against Williams and another advertising agency requiring them to refrain from making certain representations about the effectiveness of the product Geritol as a general curative for tiredness and loss of strength. After a determination that the agencies had failed to comply with the terms of the order, the F.T.C. commenced enforcement proceedings, demanding a judgment of $500,000 against each defendant.16 The government‘s motion for summary judgment was granted and the defendants appealed on the theory that an action to recover penalties under
“[W]hen Congress has characterized the remedy as civil and the only consequence of a judgment for the Government is a money penalty, the Courts have taken Congress at its word.
Appellants urge us to overlook Congress’ express characterization of § 5(l) as a ‘civil’ action and to hold the sanction imposed in this case criminal because of its allegedly punitive purpose. While Congress could not permissibly undermine constitutional protections simply by appending the ‘civil’ label to traditionally criminal provisions, the statute here at issue is plainly not of that class. In the face of a long line of contrary authority, appellants have not directed our attention to any civil penalty provision that has been held sufficiently ‘criminal’ in nature to invoke the protections of the Sixth Amendment.”
498 F.2d at 421. (citations and footnotes omitted)17
We find the reasoning of the Williams court dispositive of O‘Neill‘s claim. The Attorney General sought injunctive relief pursuant to
We do not address the question of whether O‘Neill has a right to jury trial, for we find the briefing on this point inadequate. When, in the argument portion of a brief, a major point has been given no more than cursory statement, we will not consider it further. Failure to argue a point constitutes an abandonment of it.21
II
Next, O‘Neill challenges as erroneous the trial court‘s ruling that the Alaska Act embraces independent debt collection practices.22 This argument is in large part predicated upon O‘Neill‘s claim, which we have rejected in Part I of this opinion, that the Alaska Act must be strictly construed.23 As a second ground for reversal of the lower court ruling, O‘Neill contends that the exemption contained in
“(1) an act or transaction regulated under laws administered by the state, by any regulatory board or commission, or officer acting under statutory authority of the state or of the United States, unless the law regulating the act or transaction does not prohibit the practices declared unlawful in § 471 of this chapter.”
Debt collection agencies are regulated by Title 8, Chapter 24. Mere regulation under a separate and distinct statutory scheme, however, satisfies only one prong of
First, it is beyond dispute that the Federal Trade Commission has asserted its jurisdiction over unfair or deceptive acts and practices of debt collection agencies, by administrative rule-making28 and administrative adjudication.29 Contrary to O‘Neill‘s assertion, adjudications which are resolved by consent decree constitute an administrative interpretation of the
In summation, we conclude that the above grounds urged for reversal of the denial of the motion for summary judgment are without merit.
III
In granting O‘Neill‘s motion for Rule 41(b) dismissal, the superior court held that
“Alaska Statutes 45.50.471(a) standing alone is vague and uncertain in application to the Defendant‘s activities, as set forth above, and as evidenced during the trial, in that said provision does not afford Defendant equal protection of the law and due process of law as required by the Fourteenth Amendment to the U.S. Constitution and Article I, Section 7 of the Constitution of the State of Alaska. The failure by the State to adopt regulations spelling out the intent of the unfair and deceptive practices it seeks to condemn precludes the Defendants and others similarly situated from being apprised as to what conduct is prohibited or otherwise prescribed. It is not the Court‘s prerogative to intervene in the legislative area or the executive branch by guessing as to what acts or practices the legislature had in mind in adopting AS 45.50.471 et seq.”36
It is well established that “a statute which either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application violates the first essential of due process of law.”37 There are three principal considerations in determining whether a statute is unconstitutionally vague.38 First, the statute may not operate to inhibit the exercise of first amendment rights.39 Second, the statute must provide adequate notice of what conduct is forbidden.40 Third, the statute may not be drawn so imprecisely that it encourages arbitrary and discriminatory enforcement of the law.41 We must address each of these considerations in deciding whether
The state urges us to view “as an oversight” the court‘s language with respect to equal protection of the law and to reverse the conclusion of law because it was “included by mistake.” Neither side has properly briefed this argument. We therefore will not consider it as an issue properly preserved on appeal. See cases cited in note 13, supra.
The challenged language reads: “Unfair methods of competition and unfair or deceptive acts and practices are declared unlawful.” We find that this statute does not, as applied to the facts, chill constitutionally protected speech. The speech in question involves communications regarding alleged debts and thus, as O‘Neill concedes, falls within the rubric of commercial speech. Commercial speech enjoys a lesser first amendment protection than noncommercial speech. Thus, some forms of commercial speech regulation are permissible because commercial speech is hardier—less subject to chill.42 The United States Supreme Court has upheld state restrictions against false, deceptive and misleading commercial statements. In Friedman v. Rogers, 440 U.S. 1, 99 S.Ct. 887, 59 L.Ed.2d 100 (1979), quoting Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council, 425 U.S. 748, 777-78, 96 S.Ct. 1817, 1833, 48 L.Ed.2d 346, 368 (1976) (concurring opinion).
“Untruthful speech, commercial or otherwise, has never been protected for its own sake. Gertz v. Robert Welch, Inc., 418 U.S. 323, 340, 94 S.Ct. 2997, 3007, 41 L.Ed.2d 789, 805-806 (1974); Konigsberg v. State Bar, 366 U.S. 36, 49, and n.10, 81 S.Ct. 997, 1005-1006, 6 L.Ed.2d 105, 116 (1961). Obviously, much commercial speech is not provably false, or even wholly false, but only deceptive or misleading. We foresee no obstacle to a State‘s dealing effectively with this problem. The First Amendment, as we construe it today, does not prohibit the State from insuring that the stream of commercial information flow cleanly as well as freely.”43
Diminished protection for commercial speech is a logical extension of the “marketplace theory” of the First Amendment. T. Emerson, The System of Freedom of Expression 6-7 (1971); T. Emerson, Toward a General Theory of the First Amendment 3-15 (1966). The crux of the theory is that truth is discovered through its competition with falsehood for acceptance. The Supreme Court has consistently relied upon the marketplace of ideas to determine what speech is protected. See e. g., Red Lion Broadcasting Co. v. F. C. C., 395 U.S. 367, 390, 89 S.Ct. 1794, 1806, 23 L.Ed.2d 371, 389 (1969); New York Times Co. v. Sullivan, 376 U.S. 254, 269, 84 S.Ct. 710, 720, 11 L.Ed.2d 686, 700 (1964); Roth v. U. S., 354 U.S. 476, 484, 77 S.Ct. 1304, 1308, 1 L.Ed.2d 1498, 1506 (1957). If the pursuit of truth is the touchstone for First Amendment protection of speech, that protection will not be extended to the content of deceptive commercial speech. Bates v. State Bar of Arizona, 433 U.S. 350, 383-84, 97 S.Ct. 2691, 2708-09, 53 L.Ed.2d 810, 835-36 (1977); Linmark Associates, Inc. v. Township of Willingboro, 431 U.S. 85, 96, 97 S.Ct. 1614, 1620, 52 L.Ed.2d 155, 164 (1977); Young v. American Mini Theaters, Inc., 427 U.S. 50, 68, 96 S.Ct. 2440, 2451, 49 L.Ed.2d 310, 325 (1976); Bigelow v. Virginia, 421 U.S. 809, 828, 95 S.Ct. 2222, 2235, 44 L.Ed.2d 600, 615 (1975). The Alaska Act does not attempt to suppress truthful commercial speech, for its prohibition extends only to unfair or deceptive speech. We think that the regulations imposed by the Act are permissible and even necessary to ensure that the stream of information regarding alleged debts will flow “cleanly.”
Second, we find that the words of
The
“It is impossible to frame definitions which embrace all unfair practices. There is no limit to human inventiveness in this field. Even if all known unfair practices were specifically defined and prohibited, it would be at once necessary to begin over again. If Congress were to adopt the method of definition, it would undertake an endless task.”
H.R.Conf.Rep.No.1142, 63rd Cong., 2d Sess. (1914). To the same effect is the Senate Report which states:
“The committee gave careful consideration to the question as to whether it would attempt to define the many and variable unfair practices which prevail in commerce and to forbid their continuance or whether it would, by a general declaration condemning unfair practices, leave it to the commission to determine what practices were unfair. It concluded that the latter course would be the better, for the reason, as stated by one of the representatives of the Illinois Manufacturers’ Association, that there were too many unfair practices to define, and after writing 20 of them into the law it would be quite possible to invent others.”
Senate Report No. 597, 63rd Cong., 2d Sess., 13 (1914).
In 1938, Congress adopted the Wheeler-Lea Amendment, 52 Stat. 111, which added the phrase “unfair or deceptive acts and practices” to the original language. This was a legislative abnegation of the holding of F. T. C. v. Raladam Co., 283 U.S. 643, 51 S.Ct. 587, 75 L.Ed. 1324 (1930), restricting the coverage of the original enactment to “protection of the public from the evils likely to result from the destruction of competition or the restriction of it in a substantial degree . . . .” Id. at 647, 51 S.Ct. at 590, 75 L.Ed. at 1329. In F. T. C. v. Brown Shoe Co., 384 U.S. 316, 321, 86 S.Ct. 1501, 1504, 16 L.Ed.2d 587, 591 (1966), a unanimous Supreme Court recognized that the Federal Trade Commission is endowed with “broad powers to declare trade practices unfair.” The Federal Trade Commission has used both its legislative and adjudicatory powers to find deceptive collection practices unfair. It has adopted guidelines against debt collection deception.47 It has found acts and practices of debt collection agencies identical to those charged by the State here to be unfair and deceptive acts and practices prohibited by
The failure of the State to adopt regulations fleshing out the contours of the Alaska Act is, in light of
Finally, arbitrary enforcement is not a proper due process consideration where a statute is challenged as vague not on its face, but as applied. “[O]ne to whom application of a [statute] is constitutional will not be heard to attack the [statute] on the ground that impliedly it might also be taken as applying to other persons or other situations in which its application might be unconstitutional.” U. S. v. Raines, 362 U.S. 17, 21, 80 S.Ct. 519, 522, 4 L.Ed.2d 524, 529 (1960). As we said in Stock v. State, 526 P.2d 3, 12 (Alaska 1974): “While we may be able to conceive of instances in which the statute could be arbitrarily and capriciously enforced, we cannot on the basis of such mere hypothesis, in the absence of any history of actual arbitrary application, invalidate the statute.” (quoted in State v. Marathon Oil Co., 528 P.2d 293, 298 (Alaska 1974)). Absent a history or “strong likelihood of uneven application,” Stock v. State, 526 P.2d 3, 8, the Alaska Act cannot be said to be unconstitutionally vague.
The trial court erred in concluding that the Alaska Act was unconstitutionally vague, and we must reverse its holding.
IV
We are left now to consider whether it was error for the superior court to grant the motion to dismiss at the close of the State‘s evidence. The standard for granting a motion for involuntary dismissal under Alaska Rule of Civil Procedure 41(b) is whether the plaintiff has failed to present a prima facie case. Correa v. Stephens, 429 P.2d 254, 256 (Alaska 1967); Pope v. Anderson, 370 P.2d 185, 187 (Alaska 1962). At this stage of the proceedings, the evidence must be viewed in the light most favorable to the plaintiff. Correa v. Stephens, 429 P.2d 254, 265. Where the court is sitting as a trier of fact, it may not resolve the motion to dismiss by weighing the evidence; if the plaintiff has put on a prima facie case based upon unimpeached evidence, the motion to dismiss must be denied. King v. Alaska State Housing Authority, 512 P.2d 887, 890 (Alaska 1973); Trusty v. Jones, 369 P.2d 420, 422 (Alaska 1962); Rogge v. Weaver, 368 P.2d 810, 813 (Alaska 1962).
Two elements must be proved to establish a prima facie case of unfair or deceptive acts or practices under the Alaska Act: (1) that the defendant is engaged in trade or commerce; and (2) that in the conduct of trade or commerce, an unfair act or practice has occurred.
As to the first element, the trial court properly found that O‘Neill is engaged in trade or commerce as a business entity, regulated under the Department of Commerce. As to the second, we must determine whether the proof adduced at trial demonstrates that unfair acts or practices were perpetrated by O‘Neill. An act or practice is deceptive or unfair if it has the capacity or tendency to deceive. Federal Trade Commission v. Raladam Co., 316 U.S. 149, 152, 62 S.Ct. 966, 968, 86 L.Ed. 1336, 1340 (1942).50 Actual injury as a result of
(1) whether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise—whether, in other words, it is within at least the penumbra of some common-law, statutory, or other established concept of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; (3) whether it causes substantial injury to consumers (or competitors or other businessmen).
Threats by debt collection agencies of imminent legal action when no such action is actually contemplated is a deceptive act or practice. Trans World Accounts v. F. T. C., 594 F.2d 212, 215 (9th Cir. 1979); Hearst Corp., 82 F.T.C. 951, 954 (1966). There was ample evidence at trial that such threats were made and never carried out.55
Threats to debtors that failure to pay would result in immediate arrest or jail or the filing of a criminal complaint are unfair acts, if the threats were actually believed by the debtors. The record is replete with testimony that O‘Neill made such threats to alleged debtors and their spouses and that such threats were believed.56
A misrepresentation by a debt collection agency that failure to pay an alleged debt will result in impairment of one‘s credit rating has been held to be an unfair and deceptive act or practice. Hearst Corporation, 82 F.T.C. 1792, 1797 (1973); Neighborhood Periodical Club, Inc., 81 F.T.C. 93, 101 (1972); Key Learning Systems, Inc., 81 F.T.C. 296, 306 (1972); Book Club Guild, Inc., 65 F.T.C. 785, 790 (1964). There was testimony that O‘Neill made such misrepresentations.58
The use by collection agencies of simulated legal documents59 or collection forms labelled “Final Demand Before Legal Action”60 when no legal action is in fact taken constitutes a deceptive act. Trans America Collections, Inc., 83 F.T.C. 525, 532 (1973); Neighborhood Periodical Club, Inc., 81 F.T.C. 93, 101 (1972); Liquidation Corp. of America, 69 F.T.C. 628, 636 (1966). There was testimony at trial that such notices were sent to debtors by O‘Neill without regard to O‘Neill‘s intentions either to file suit or to recommend that merchants file criminal complaints.
In short, there was substantial evidence presented by the State to demonstrate a prima facie case that O‘Neill engaged in unfair or deceptive acts or practices. Under these circumstances, it was error to grant the motion to dismiss. The decision of the superior court must be vacated and the case remanded for completion of the trial. King v. Alaska State Housing Authority, 512 P.2d 887, 890 (Alaska 1973).61
REVERSED and REMANDED.
BOOCHEVER and BURKE, JJ., not participating.
DIMOND, Senior Justice, with whom Chief Justice RABINOWITZ joins, concurring.
I concur in the result reached by Justice Connor in his opinion in this case. However, the authorities on which he relies1 suggest that a statute should not be considered penal so long as the legislature labels the penalties for its violation “civil,” and so long as the provision so labeled is not of the class of “traditionally criminal provisions.” See United States v. J. B. Williams, 498 F.2d 414, 421 (2d Cir. 1974) (quoted in Justice Connor‘s opinion). To the extent that Justice Connor‘s opinion carries that implication, I disagree.
Complete deference to the legislature‘s labeling of a statute or sanction as civil is inconsistent with prior decisions by this court. In Baker v. City of Fairbanks, 471 P.2d 386, 390 (Alaska 1970), we noted that it is “‘the nature of the offense, and the amount of punishment prescribed, rather than its place in the statutes, [which] determine whether it is to be classed among serious or petty offenses‘” (quoting Schick v. United States, 195 U.S. 65, 68, 24 S.Ct. 826, 827, 49 L.Ed. 99, 101 (1904)). By the same token, it is the nature of the act penalized and the amount of the penalty prescribed which should determine whether the sanction involved in this case is civil or penal. As this court indicated in Gwynn v. Gwynn, 530 P.2d 1311, 1312 n.6 (Alaska 1975), the possibility of a punitive sanction may give rise to the need for procedural safeguards such as the right to a jury trial, even though the sanction may be designated civil in nature. I agree with the commentator who said that complete deference to the legislative label
is a gross abdication of the judicial role. . . . [I]t avoids the substantive question of whether [the legislature] has exceeded its constitutional authority. . . . When constitutional safeguards are involved, it is the function of the courts ultimately to decide whether and under what circumstances these protections apply.
Charney, The Need for Constitutional Protections for Defendants in Civil Penalty Cases, 59 Cornell L.Rev. 478, 494 (1974).
Furthermore, this court has held that it will not be bound by tradition in determining whether a statute is criminal or civil. “[C]ontemporary social values, rather than historical categorizations, should determine whether a prosecution is criminal . . . .” State v. Browder, 486 P.2d 925, 936 (Alaska 1971) (citing Baker, 471 P.2d at 396).
Thus, I believe that neither the legislative label nor the fact that the unlawful act is not traditionally criminal is sufficient reason for the conclusion that the statute involved in this case is remedial rather than punitive. A more reasoned analysis is available.
In Baker we excluded from the category of criminal prosecutions “legal measures which can be considered regulatory rather than criminal in their thrust, so long as incarceration is not one of the possible mod-
In Alaska Public Defender Agency v. Superior Court, 584 P.2d 1106 (Alaska 1978), we used a three-part test to determine whether a proceeding was a criminal prosecution. The inquiry for one part was whether a statutory violation “‘connote[s] criminal conduct in the traditional sense of the term.‘” Id. at 1110 (quoting Baker, 471 P.2d at 402). This part of the test is not favorable to O‘Neill‘s argument that the statute involved here is penal in nature because, like the petitioner in Alaska Public Defender Agency, O‘Neill has not shown that unfair trade practices are traditional offenses “in the sense that social condemnation of such behavior has been long established as part of the common law proscribing criminal conduct.” 584 P.2d at 1110.
The other two parts of the test as set forth in Alaska Public Defender Agency relate (1) to whether the unlawful act so offends contemporary social values as to be considered criminal and (2) to whether the monetary penalty is so heavy that it indicates a community judgment of criminality.3 Id.
Contemporary social values may be severely offended by unfair or deceptive trade practices, particularly those alleged in this case. Furthermore, the argument that a penalty of $5,000 per violation indicates criminality deserves consideration. However, the reason that the court has used contemporary social values and heaviness of the authorized penalty as measures of criminality is that they are a gauge of the community‘s ethical and social judgment of persons who commit the unlawful act. In turn, the reason for determining the community‘s judgment of such persons is that the extent and nature of that judgment helps one predict the severity of collateral consequences which may be suffered by the defendant. Baker, 471 P.2d at 395. In discussing potential collateral consequences of a conviction under the ordinance in Baker, we noted that “one convicted under this ordinance might suffer severe disabilities in obtaining future employment or in having heaped upon him a certain amount of social opprobrium.” Id.
The collateral consequences of a finding that a debt collection agency or other business has committed “unfair or deceptive acts or practices in the conduct of trade or commerce”4 are not of this nature. In O‘Neill‘s case, the unlawful acts alleged harmed debtors but not O‘Neill‘s customers, for whom debts were collected. Therefore, a finding of unfair practices by O‘Neill with respect to debtors is unlikely to have severe collateral consequences for O‘Neill‘s business.
For these reasons, I agree that
MATTHEWS, Justice, dissenting.
For the reasons expressed by Justice Dimond in his concurring opinion I agree that the penalties to be exacted under
The question whether there is a right to a civil trial by jury in this case is raised, but not briefed very well, in O‘Neill‘s opening brief. The state‘s brief on this point is adequate, however, and O‘Neill‘s reply brief addresses it with reference to some authorities. On balance I believe that the briefing
Article I, section 16 of the constitution of Alaska provides, in part:
In civil cases where the amount in controversy exceeds two hundred fifty dollars, the right of trial by a jury of twelve is preserved to the same extent as it existed at common law.
In Loomis Electronic Protection, Inc. v. Schaefer, 549 P.2d 1341 (Alaska 1976), we interpreted this provision as affording a right to trial by civil jury to one accused of a discriminatory hiring practice. The statute involved in Loomis required the court to enjoin any illegal discriminatory act and allowed such “other relief, including the payment of money, that is appropriate.”
[W]here part of the relief sought is compensatory and punitive damages, we believe that Art. I, Sec. 16, of the Constitution of Alaska guarantees the parties the right to a jury trial. [Footnote omitted].
Id. at 1344. The court also noted with approval the observation “that the right to a jury trial ‘cannot be abridged by characterizing the legal claim as “incidental” to the equitable relief sought.‘” Id. at 1344 n. 15 quoting Curtis v. Loether, 415 U.S. 189 at 196, n. 11, 94 S.Ct. 1005 at 1009 n. 11, 39 L.Ed.2d 260 at 267 n. 11 (1974).
I do not think that the result in Loomis would have been any different if only punitive damages had been sought. Likewise, I can see no meaningful distinction between punitive damages and a civil penalty. Therefore I think Loomis controls, and O‘Neill is entitled to a civil jury trial.
In reaching this conclusion I do not challenge the majority‘s statement that the Alaska Unfair Trade Practices and Consumer Protection Act “stands as a sentinel against unethical and unscrupulous conduct,” (opinion p. 523) or the salutary purposes of the Act. However, any statute is capable of being abused, especially where its language is broad and the plaintiff has the resources of the government. The right to a trial by a jury is a safeguard against the possibility of abuse. I do not think it should be abandoned here.
Accordingly, I would reverse and remand and put the state to an election. If the state persists in its request for monetary relief, a new trial before a civil jury is necessary; if it chooses to pursue only injunctive relief, the trial which was terminated at the close of the state‘s case may be continued before a judge sitting without a jury, unless the judge decides to order a new trial under Alaska Rule of Civil Procedure 63(c).
No. 4195.
Supreme Court of Alaska.
April 11, 1980.