Opinion handed down August 4, 2009
Link to Mo. Sup. Ct. Opinion
The Supreme Court of Missouri held that the voluntary payment doctrine was not available as a defense to the Missouri Merchandising Practices Act.[2] When a plaintiff pays money to a defendant due to the defendant’s violation of the Act, allowing the defendant to use this doctrine would circumvent the Act’s purpose of protecting consumers and “regulat[ing] the marketplace to the advantage of those traditionally thought to have unequal bargaining power as well as those who may fall victim to unfair business practices.”[3]
Defendant Charter Communications, Inc. provides television and communication services in Missouri. In their petition, plaintiffs and Charter customers James Huch and Ryan Carstens alleged that Charter mailed television channel guides to them and other Missouri customers and charged about three dollars a month for the guides, even though they were unsolicited.[4] Plaintiffs claimed that Charter neither gave them the ability to opt out of this service nor informed them that these charges would be added to their bills.[5] Plaintiffs sued Charter for monetary damages and a permanent injunction under Missouri Revised Statute Sections 407.025 and 407.200 of the Missouri Merchandising Practices Act[6] and moved to certify a class of Charter customers in the same situation.[7] Charter moved to dismiss, claiming the voluntary payment doctrine as an affirmative defense. The trial court sustained and dismissed the petition with prejudice.[8]
Upon granting transfer from the Missouri Court of Appeals, Eastern District, the Supreme Court of Missouri reversed and remanded the case to the trial court, ordering the court to overrule Charter’s motion to dismiss and allow plaintiffs’ case to proceed.[9] The court determined that, under Missouri administrative rules, “the act of charging for unsolicited merchandise is an unfair practice” as defined in the Act.[10] If Charter were found to have violated the act, the court reasoned that letting Charter assert the defense of voluntary payment doctrine would “nullify the protections of the act and be contrary to the intent of the legislature.”[11]
II. Legal Background
A. Missouri Merchandising Practices Act
Section 407.020 of the Missouri Merchandising Practices Act makes it unlawful to engage in “deception, fraud, false pretense, false promise, misrepresentation, unfair practice or the concealment, suppression, or omission of any material fact in connection with the sale or advertisement of any merchandise in trade or commerce . . . in or from the state of Missouri.”[12] The Act allows for criminal penalties, civil actions from private persons, and even class action lawsuits.[13] Because Section 407.020 does not define deceptive practices, courts must decide when a party failed to practice fair dealing. Furthermore, the defendant’s conduct, but not intent, is determinative for establishing a violation.[14]
The Act grants the attorney general the authority to establish “all rules necessary to the administration and enforcement” of this act.[15] Duly promulgated rules are treated as “hav[ing] independent power as law.”[16] One Missouri administrative rule makes it an unfair practice “‘for any seller in connection with the advertisement or sale of merchandise to bill, charge or attempt to collect payment from consumers, for any merchandise which the consumer has not ordered or solicited.’”[17] Because charging for unsolicited merchandise is treated as an unfair practice under the administrative rules, this conduct is illegal under the Missouri Merchandising Practices Act.[18]
B. Voluntary Payment Doctrine
The voluntary payment doctrine states that, unless there is fraud or duress, a person “with full knowledge of all the facts” who voluntarily pays money “cannot recover it back, though the payment is made without a sufficient consideration, and under protest.”[19] The doctrine can be used as a defense[20] against someone who mistakenly confers a benefit on the defendant to satisfy the defendant’s “‘honest’” claim.[21] The rationale behind the doctrine is that it would unfairly give a plaintiff the ability to sue at any time before the statute of limitations ran, making it difficult for a defendant to defend himself.[22]
In analyzing whether a defendant can raise the voluntary payment doctrine as a defense under the Missouri Merchandising Practices Act, the Supreme Court of Missouri noted that, in claims brought under the act, Missouri courts have refused to enforce a forum selection clause,[23] a mandatory arbitration provision,[24] and the affirmative defense of estoppel “where it would result in fraud.”[25] The rationale is that allowing certain contract provisions and defenses would defeat the purpose of the act: “Having enacted paternalistic legislation designed to protect those that could not otherwise protect themselves, the Missouri legislature would not want the protections of [the Act] to be waived by those deemed in need of protection.”[26] The Supreme Court of Missouri found that rationale to apply to Charter, stating, “To allow Charter to avoid liability for this unfair practice through the voluntary payment doctrine would nullify the protections of the act and be contrary to the intent of the legislature.”[27]
III. Commentary
This case involves a relatively straightforward analysis of the Missouri Merchandising Practices Act. The Supreme Court of Missouri properly followed the intent of the legislature by applying the law with the purpose of consumer protection in mind. Its decision puts large corporations in Missouri on notice that burying hidden services and fees in customers’ bills does not constitute fair dealing and cannot easily be waived by customers through the voluntary payment doctrine. Companies looking to increase profits, however, will still find ways to charge customers more without fully informing them of their options. This case suggests that only when consumers are vigilant and willing to challenge such unfair practices will companies truly learn to cease their deception.
-Kimberly E. Naguit
[1] 290 S.W.3d 721 (Mo. 2009) (en banc).
[2] Id. at 727.
[3] Id. at 725 (quoting High Life Sales Co. v. Brown-Forman Corp., 823 S.W.2d 493, 498 (Mo. 1992) (en banc).
[4] Id. at 722-23.
[5] Id.
[6] See generally Mo. Rev. Stat. §§ 407.010 – 407.1129 (2000 and Supp. 2006). Amendments made in 2008 are not relevant because they were made after the trial court ruled. See Huch, 290 S.W.3d at 722 n.2.
[7] Id. at 723.
[8] Id.
[9] Id. at 722.
[10] Id. at 725. See Mo. Code Regs. Ann. tit. 15, § 60-8.060(1); Mo. Rev. Stat. § 407.020.1.
[11] Id. at 727.
[12] Id. at 724 (citing Mo. Rev. Stat. § 407.020.1).
[13] Id. at 725 (citing § 407.025).
[14] Id. at 724 (quoting State ex rel. Webster v. Areaco Inv. Co., 756 S.W.2d 633, 635 (Mo. App. E.D. 1988)).
[15] Id. (quoting Mo. Rev. Stat. § 407.145).
[16] Id. at 725 (quoting see United Pharmacal Co. v. Mo. Bd. of Pharmacy, 159 S.W.3d 361, 365 (Mo. 2005) (en banc)).
[17] Id. (quoting Mo. Code Regs. Ann. tit. 15, § 60-8.060(1)).
[18] Id. (citing State ex rel. Nixon v. Telco Directory Pub., 863 S.W.2d 596, 601 (Mo. 1993) (en banc)).
[19] Am. Motorists Ins. Co. v. Shrock, 447 S.W.2d 809, 812 (Mo. App. 1969).
[20] Carpenter v. Countrywide Home Loans, Inc., 250 S.W.3d 697, 703 (Mo. 2008) (en banc).
[21] Huch, 290 S.W.3d at 726 (quoting Am. Motorists Ins. Co., 447 S.W.2d at 813).
[22] Id. (quoting Am. Motorists Ins. Co., 447 S.W.2d at 812)).
[23] Id. at 725 (citing High Life Sales Co. v. Brown-Forman Corp., 823 S.W.2d 493, 498 (Mo. 1992)).
[24] Id. at 726 (citing Whitney v. Alltel Comm’cns, Inc., 173 S.W.3d 300, 314 (Mo. App. W.D. 2005)).
[25] Id. (quoting Pointer v. Edward L. Kuhs Co., 678 S.W.2d 836, 844 (Mo. App. E.D. 1984)).
[26] Id. at 727 (quoting High Life Sales, 823 S.W.2d at 498 (citation omitted)).
[27] Id.
