2003 Montana Legislature

HOUSE BILL NO. 127

INTRODUCED BY FRITZ

BY REQUEST OF THE DEPARTMENT OF ADMINISTRATION

AN ACT GENERALLY REVISING CONSUMER PROTECTION AND UNFAIR TRADE PRACTICES LAWS; DEFINING "CONSUMER" AND DELETING THE DEFINITION OF "NATIONAL ADVERTISING"; CLARIFYING EXEMPTIONS FROM THE PROVISIONS OF THE MONTANA UNFAIR TRADE PRACTICES AND CONSUMER PROTECTION ACT OF 1973; PROVIDING THAT THE DEPARTMENT OF ADMINISTRATION MAY BRING AN ACTION TO RESTRAIN UNFAIR METHODS OF COMPETITION OR UNFAIR OR DECEPTIVE ACTS OR PRACTICES IN LEWIS AND CLARK COUNTY WITHOUT CONSENT OF THE PARTIES; INCREASING THE MINIMUM DAMAGES FOR UNLAWFUL ACTS TO $500; INCREASING THE MAXIMUM CIVIL FINE FOR UNLAWFUL ACTS TO $10,000; MANDATING THAT THE DEPARTMENT HOLD A HEARING TO DECIDE IF A COST SURVEY SHOULD BE PERFORMED; DELETING PROVISIONS RELATING TO CERTAIN REBATES; PROVIDING THAT THE DEPARTMENT OF ADMINISTRATION'S OBLIGATION TO ENFORCE CERTAIN PROVISIONS OF THE UNFAIR TRADE PRACTICES LAWS IS PERMISSIVE RATHER THAN MANDATORY; INCREASING THE MAXIMUM PENALTY FOR A VIOLATION OF A DEPARTMENT ORDER UNDER THE UNFAIR TRADE PRACTICES LAWS TO $10,000; INCREASING THE RECOVERY FOR A PERSON BRINGING AN ACTION UNDER THE UNFAIR TRADE PRACTICES LAWS AND PROVIDING FOR ATTORNEY FEES AND COSTS FOR PREVAILING PARTIES; PROVIDING THAT A VIOLATION OF CERTAIN PROVISIONS OF THE UNFAIR TRADE PRACTICES LAWS MAY BE A FELONY RATHER THAN A MISDEMEANOR; GENERALLY REVISING LAWS REGARDING PERSONAL SOLICITATION SALES; REVISING THE DEFINITION OF "PERSONAL SOLICITATION"; ELIMINATING THE DISCLOSURE OBLIGATION EXEMPTION FOR NONPROFIT ORGANIZATIONS; INCREASING THE BUYER'S RECOVERY UNDER REVOKED PERSONAL SOLICITATION SALES; AMENDING SECTIONS 30-14-102, 30-14-105, 30-14-111, 30-14-131, 30-14-133, 30-14-142, 30-14-211, 30-14-219, 30-14-220, 30-14-222, 30-14-223, 30-14-224, 30-14-501, 30-14-502, 30-14-503, AND 30-14-506, MCA; REPEALING SECTION 30-14-215, MCA; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:

Section 1. Section 30-14-102, MCA, is amended to read:

"30-14-102. Definitions. As used in this part, the following definitions apply:

(1) "Consumer" means a person who purchases or leases goods, services, real property, or information primarily for personal, family, or household purposes.

(1)(2) "Department" means the department of administration created in 2-15-1001.

(2)(3) "Documentary material" means the original or a copy of any book, record, report, memorandum, paper, communication, tabulation, map, chart, photograph, mechanical transcription, or other tangible document or recording, wherever situate.

(3)(4) "Examination" of documentary material includes the inspection, study, or copying of documentary material and the taking of testimony under oath or acknowledgment in respect to any documentary material or copy of documentary material.

(4) "National advertising" means any advertising run simultaneously in five or more states and over which a local advertiser has no control.

(5) "Person" means natural persons, corporations, trusts, partnerships, incorporated or unincorporated associations, and any other legal entity.

(6) "Trade" and "commerce" mean the advertising, offering for sale, sale, or distribution of any services, and any property, tangible or intangible, real, personal, or mixed, and or any other article, commodity, or thing of value, wherever located, and includes any trade or commerce directly or indirectly affecting the people of this state."

Section 2. Section 30-14-105, MCA, is amended to read:

"30-14-105. Exemptions. Nothing in this This part shall does not apply to:

(1) actions or transactions permitted under laws administered by the Montana public service commission or the state auditor acting under statutory authority of this part or the United States; or

(2) acts done by the of a retail merchants merchant, publisher, owner, agent, or employee of a newspaper, periodical, or radio or television station or advertising agency in the publication or dissemination of an advertisement, when the merchant, publisher, owner, agent, or employee did not have knowledge of the false, misleading, or deceptive character of the advertisement and did not have a direct financial interest in the advertised product or service;.

(3) national advertising."

Section 3. Section 30-14-111, MCA, is amended to read:

"30-14-111. Department to restrain unlawful acts. (1) Whenever the department has reason to believe that any a person is using, has used, or is about to knowingly use any method, act, or practice declared by 30-14-103 to be unlawful and that proceeding would be in the public interest, the department may bring an action in the name of the state against such the person to restrain by temporary or permanent injunction or temporary restraining order the use of such the unlawful method, act, or practice, upon the giving of appropriate notice to that person.

(2) The notice must state generally the relief sought and be served in accordance with 30-14-115 at least 20 days before the hearing of the action where in which the relief to be sought is a temporary or permanent injunction. The notice for a temporary restraining order is governed by 27-19-315.

(3) The An action under this section may be brought in the district court in the county in which such a person resides or has his the person's principal place of business or, with consent of the parties, may be brought in the district court of Lewis and Clark County.

(4) The courts are A district court is authorized to issue temporary or permanent injunctions or temporary restraining orders to restrain and prevent violations of this part, and such injunctions shall be issued without bond, and an injunction must be issued without bond."

Section 4. Section 30-14-131, MCA, is amended to read:

"30-14-131. Restoration -- court orders. (1) The court may enter make such additional orders or judgments as may be necessary to restore to any a person any moneys money or property, real or personal, which that may have been acquired by means of any practice in this part declared to be unlawful, including the appointment of a receiver or the revocation of a license or certificate authorizing that person to engage in business in this state, or both.

(2) The court may enter any other order or judgment required by equity to carry out the provisions of this part."

Section 5. Section 30-14-133, MCA, is amended to read:

"30-14-133. Damages -- notice to public agencies -- attorney fees -- prior judgment as evidence. (1) Any person who purchases or leases goods or services primarily for personal, family, or household purposes and thereby A consumer who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment by another person of a method, act, or practice declared unlawful by 30-14-103 may bring an individual but not but not a class action under the rules of civil procedure in the district court of the county in which the seller, or lessor, or service provider resides or has his its principal place of business or is doing business to recover actual damages or $200 $500, whichever is greater. An individual claim may be brought in justice's court. The court may, in its discretion, may, in its discretion, award up to three times the actual damages sustained and may provide such any other equitable relief as that it considers necessary or proper.

(2) Upon commencement of any action brought under subsection (1) of this section, the clerk of court shall mail a copy of the complaint or initial pleading to the department and the appropriate county attorney and, upon entry of any judgment or decree in the action, shall mail a copy of such the judgment or decree to the department and the appropriate county attorney.

(3) In any action brought under this section, the court may award the prevailing party reasonable attorney fees incurred in prosecuting or defending the action. A person who brings an action on the person's own behalf without an attorney may receive attorney fees at the judge's discretion.

(4) Any permanent injunction, judgment, or order of the court made under 30-14-111 shall be is prima facie evidence in an action brought under this section that the respondent used or employed a method, act, or practice declared unlawful by 30-14-103."

Section 6. Section 30-14-142, MCA, is amended to read:

"30-14-142. Penalties. (1) A In addition to any fine that a person might be subject to under subsection (2), a person who violates the terms of an injunction or temporary restraining order issued under 30-14-111 shall forfeit and pay to the state a civil fine of not more than $10,000 for each violation. For the purposes of this section, the district court issuing an injunction or temporary restraining order retains jurisdiction and the cause must be continued, and in those cases, the department, acting in the name of the state, may petition for recovery of civil penalties.

(2) In an action brought under 30-14-111, if the court finds that a person is willfully using or has willfully used a method, act, or practice declared unlawful by 30-14-103, the department, upon petition to the court, may recover on behalf of the state a civil fine of not more than $1,000 $10,000 for each violation. The fine provided for in this subsection is in addition to any liability that a person might be subject to under subsection (1).

(3) A person who engages in a fraudulent course of conduct declared unlawful by 30-14-103 shall upon conviction be fined an amount not more than $5,000, imprisoned for not more than 1 year, or both, in the discretion of the court. Nothing in this This subsection limits does not limit any other provision of this part.

(4) For purposes of this section, a willful violation occurs when the party committing the violation knew or should have known that the conduct was a violation of 30-14-103."

Section 7. Section 30-14-211, MCA, is amended to read:

"30-14-211. Establishing cost survey. (1) The department shall, whenever application has been made by 10 or more persons within a particular trade or business, establish the cost survey provided for in 30-14-210. When petition for a cost survey has been so presented to the department, the department shall, as soon as possible, fix a time for a public hearing upon the question of whether the cost survey should be established and, if so, upon the matter of establishing such the cost survey. The hearing shall must be held at the office of the department and upon that notice which that the department may require by rule. However, notice of the hearing shall must be published for at least 2 successive weeks in the daily newspaper or newspapers as designated by the department may designate as the most commonly circulated in the counties to be affected by the cost survey. The notice shall must further state the locality or area in respect to which the cost survey is proposed to be established and the particular trade or business to be affected by it.

(2) At the time fixed in the notice any person may appear and be heard by the department upon all questions to be determined by it the department as provided in this section. If the department determines that a cost survey should be established, it shall at the same hearing proceed to classify and define the particular trade or business, or parts thereof of a particular trade or business, to be affected, determine and delimit the particular area within which the trade or business will be affected, and find and determine the probable cost of doing business or overhead expense, stated in percentage of invoice or replacement cost which that would probably be incurred by the most efficient person in the trade or business within the area.

(3) If the department determines that the probable cost of doing business or overhead expense stated in percentage of invoice or replacement cost which that would probably be incurred by the most efficient person in the trade or business is the same for the entire state, then the department may, upon proper notice given as provided in this section, create one trade area embracing the entire state.

(4) The percentage so determined shall must be presumed to be the actual cost of doing business and overhead expense of any person in the trade or business and within the area affected by the cost survey."

Section 8. Section 30-14-219, MCA, is amended to read:

"30-14-219. Recovery on illegal contracts forbidden. A contract, express or implied, made by a person in violation of any of the provisions of 30-14-205 through 30-14-214 or 30-14-216 through 30-14-218 is an illegal contract and no upon which a recovery thereon may not be had."

Section 9. Section 30-14-220, MCA, is amended to read:

"30-14-220. Enforcement by department. (1) The department shall may prevent a person from violating any of the provisions of this part.

(2) Upon receiving notice that a person is violating or has violated any of the provisions of this part, the department shall immediately direct the person giving the notice either to appear before the director of the department or to make a written reply to show probable cause of a violation. If probable cause is shown, the department shall: may

(a) make its own investigation;.

(b) within 60 days of the finding of probable cause make a written report of its investigation; and

(3) (a) If the department, after an investigation, has reason to believe that the person has been or is engaging in any course of conduct or doing any act in violation of this part and or if it appears to the department that a proceeding by it would be in the interest of the public, it shall may issue and serve upon the person a complaint stating the charges and containing a notice of a hearing, at a place the location of the hearing, and upon a day the date of the hearing, which may not be less than 5 days after the service of the complaint.

(b) A complaint may be amended by the department in its discretion at any time 5 days prior to the issuance of an order based on it.

(c) The A person so complained against who is the subject of a complaint may appear at the place and time so fixed hearing and show cause why an order should not be entered by the department requiring such the person to stop the violation of the law charged in the complaint.

(d) Any person may make application apply and upon showing good cause shown may be allowed by the department to intervene and appear in the proceeding by counsel or in person.

(e) The testimony in the proceeding shall must be reduced to writing and filed with the department.

(f) If upon the conclusion of the hearing the department believes determines that the act or conduct in question is prohibited by this part, it shall make findings of fact in writing and issue and cause to be served on the person charged an order requiring such the person to stop the acts act or conduct.

(g) Until a transcript of the record in the hearing has been filed in a district court, the department may at any time, upon the notice and in the manner it considers proper, modify or set aside, in whole or in part, a report or an order made or issued by it under this section.

(4) A court reviewing an order of the department may issue such writs as that are ancillary to its jurisdiction or that are necessary in its judgment to prevent injury to the public or to competitors pending the outcome of the suit.

(5) To the extent that the order of the department is affirmed, the court shall thereupon issue its own order commanding obedience to requiring compliance with the terms of the order of the department.

(6) Proceedings under this section shall must be given precedence over other civil cases pending in the district court and shall must be in every way expedited.

(7) A person who violates an order of the department after it has become final and while the order is in effect shall forfeit and pay to the state a penalty of not more than $1,000 $10,000 for each violation.

(8) The remedies and method of enforcement of this part provided for in this section are concurrent and in addition to the other remedies provided in this part."

Section 10. Section 30-14-222, MCA, is amended to read:

"30-14-222. Injunctions -- damages -- production of evidence. (1) Any person, if who is or will be injured thereby, the department, or the attorney general may maintain an action to enjoin a continuance of an act that is in violation of 30-14-205 through 30-14-214 or 30-14-216 through 30-14-218 and for the recovery of damages. If in such action the court finds that the defendant is violating or has violated any of the provisions of 30-14-205, 30-14-214 or 30-14-216 through 30-14-218, it shall enjoin the defendant from a continuance thereof. It is not necessary to allege or prove actual damages to the plaintiff.

(2) (a) In addition to such injunctive relief, the plaintiff is entitled to recover from the defendant the greater of three times the amount of actual damages sustained or $1,000.

(b) In addition to any amount recovered pursuant to subsection (2)(a), a plaintiff who proves a violation of 30-14-209 is entitled to $500 a day for each day that a violation of 30-14-209 occurred.

(3) A defendant in an action brought under this section may be required to testify under the Montana Rules of Civil Procedure. In addition, the books and records of any such the defendant may be brought into court and introduced into evidence by reference. No information so Information obtained pursuant to this subsection may not be used against the defendant as a basis for a misdemeanor prosecution under 30-14-205 through 30-14-214, 30-14-216 through 30-14-218, and or 30-14-224.

(4) In an action brought by a party other than the state, the prevailing party is entitled to attorney fees and costs."

Section 11. Section 30-14-223, MCA, is amended to read:

"30-14-223. Department to institute Department's institution of suit. Upon the third violation of any of the provisions of 30-14-205, 30-14-214 or 30-14-216 through 30-14-218 by any business, the department shall may institute proper suits or quo warranto proceedings a proceeding in a court of competent jurisdiction for the forfeiture of its the business's charter, rights, franchises or privileges, and powers exercised by such the business and to permanently enjoin it from transacting business in this state. If in such action the proceeding the court finds that the business is violating or has violated any of the provisions of 30-14-205, 30-14-214 or 30-14-216 through 30-14-218, it the court shall enjoin the business from doing business in this state permanently or for such a period of time as that the court orders or the court shall annul the charter or revoke the franchise of such the business."

Section 12. Section 30-14-224, MCA, is amended to read:

"30-14-224. Penalties. (1) Except as otherwise provided in this section, a A person, whether as principal, agent, officer, or director, who purposely or knowingly violates any of the provisions of 30-14-206 through 30-14-218 30-14-207 through 30-14-214 or 30-14-216 through 30-14-218 is guilty of a misdemeanor an offense for each single violation and upon conviction thereof shall may be fined an amount not less than $100 or more than $1,000 $10,000 or or imprisoned for a term not to exceed 6 months 2 years, or both, or both.

(2) A violation of 30-14-205 is punishable by imprisonment in the county jail for a period of not less than 24 hours or more than 1 year 5 years or by, and the offender may be subject to a fine in an amount not exceeding $25,000, or both.

(3) When there is a violation of 30-14-216, in addition to the penalty specified in subsection (1), the court before which a conviction is had shall, within 10 days after judgment of conviction is given, forward a certified copy of the judgment to the department of agriculture and that department shall revoke any license issued to the convicted person so convicted. In such case no A new license may not be granted to the person whose license is revoked or to anyone either directly or indirectly engaged with him that person in such that business for a period of 1 year 5 years."

Section 13. Section 30-14-501, MCA, is amended to read:

"30-14-501. Purpose. The purpose of this part is to afford consumers persons subjected to high pressure personal solicitation sales tactics a cooling-off period."

Section 14. Section 30-14-502, MCA, is amended to read:

"30-14-502. Definitions. As used in this part, the following definitions apply:

(1) "Buyer" means anyone who gives a consideration for the purchase or use of goods or services.

(2) "Personal solicitation" means any attempt by a seller who regularly engages in transactions of the same kind to sell goods or services which are primarily for personal, family, or household purposes, when either the seller or a person acting for him the seller contacts the buyer by telephone or in person other than at the place of business of the seller, except:

(a) an attempted sale in which the buyer, prior to the attempted sale, personally knows the identity of the seller, the name of the business, firm, or organization he that the seller represents, and the identity or kinds of goods or services offered for sale;

(b) an attempted sale in which the buyer has initiated the contact with the seller;

(c) an attempted sale of a newspaper subscription in which the seller is a minor engaged in both the delivery and the sale of the newspaper; or

(d) an attempted sale of an insurance policy; or

(e) an attempted sale of more than $5,000 of goods or services that are not primarily for personal, family, or household purposes.

(3) "Personal solicitation sale" means the purchase, lease, or rental of any goods or services following a personal solicitation by the seller or a person acting for him the seller, provided if the buyer is required to give consideration in excess of $25 in cash or credit therefor.

(4) "Seller" means a lessor, renter, or anyone offering goods or services for consideration, including an assignee of a seller."

Section 15. Section 30-14-503, MCA, is amended to read:

"30-14-503. Disclosure obligation. Before any personal solicitation, each seller shall, at the time of initial contact or communication with the potential buyer, clearly and expressly disclose the individual seller's name, the name of the business, firm, or organization he that the seller represents, and the identity or kinds of goods or services he that the seller wishes to demonstrate or sell, and that he wishes to demonstrate or sell the identified goods or services. When the initial contact is made in person, the seller shall also show the potential buyer an identification card which that clearly states the seller's name and the name of the business or organization he that the seller represents. The disclosures required by this section shall must be made before asking any questions or making any statements except an initial greeting. Nonprofit organizations are exempt from the requirements of this section. Failure to provide the information required by this section may be punished by a civil fine of not more than $1,000 for each violation."

Section 16. Section 30-14-506, MCA, is amended to read:

"30-14-506. Repayment to buyer -- retention of goods by buyer -- court award, costs, and attorney fees. (1) Except as provided in this section, within 10 days after a personal solicitation sale has been canceled or an offer to purchase revoked, the seller shall tender to the buyer any payments made by the buyer and any note or other evidence of indebtedness.

(2) If the down payment downpayment includes goods traded in, the goods shall must be tendered in substantially as good condition as when received by the seller. If the seller fails to tender the goods as provided by this section, the buyer may elect to recover an amount equal to the trade-in allowance stated in the agreement.

(3) If the seller refuses within the period prescribed by subsection (1) to return the cash down payment downpayment or goods tendered as down payment downpayment, he the seller shall be is liable to the buyer for the entire down payment downpayment, and if the buyer is successful in his a court action therefor for recovery, the court shall also award him the buyer $100 $500 plus reasonable attorneys' attorney fees and costs.

(4) Until the seller has complied with this section, the buyer may retain possession of goods delivered to him by the seller and shall have has a lien on the goods in his possession or control for any recovery to which he the buyer may be entitled."

Section 17. Repealer. Section 30-14-215, MCA, is repealed.

Section 18. Coordination instruction. (1) If House Bill No. 571 and [this act] are both passed and approved, then subsection (1) of 30-14-133 in [section 4 of House Bill No. 571] is amended to read:

"(1) Any person who purchases or leases goods or services primarily for personal, family, or household purposes and thereby A consumer who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment by another person of a method, act, or practice declared unlawful by 30-14-103 may bring an individual but not a class action under the rules of civil procedure in the district court of the county in which the seller, or lessor, or service provider resides or has his its principal place of business or is doing business to recover actual damages or $200 $500, whichever is greater. An individual claim may be brought in justice's court. The court may, in its discretion, award up to three times the actual damages sustained and may provide such any other equitable relief as that it considers necessary or proper."

(2) If House Bill No. 571 and [this act] are both passed and approved, then [section 5] of House Bill No. 571, amending 30-14-142, is void.

(3) If House Bill No. 571 and [this act] are both passed and approved, then [section 8] of House Bill No. 571, amending 30-14-220, is void.

Section 19. Effective date. [This act] is effective on passage and approval.

- END -

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