Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—4thCir: Award against furniture manufacturer for engaging in deceptive business practices upheld, (Jun 24, 2013)

By Jody Coultas, J.D.

A jury award in favor of Colonial Trading, LLC on its North Carolina Unfair and Deceptive Trade Practices Act (UDTPA) claims against Bassett Furniture Industries, Inc. was left in place by the U.S. Court of Appeals in Richmond, Virginia. The jury awarded Colonial $41,472.08 for the UDTPA claims, and the court trebled the UDTPA damages to $124,416 (Colonial Trading, LLC v. Bassett Furniture Industries, Inc., June 21, 2013, per curiam).

Colonial imported furniture from Chinese companies and sold to American furniture distributors, including cribs manufactured and sold by Bassett. After receiving customer complaints about Bassett cribs let to a recall, Bassett attempted to “charge back” its recall costs by crediting those costs against invoices from Colonial, including invoices for furniture other than the cribs in question. Colonial filed UDTPA claims based on, among other things, Bassett allegedly inducing Colonial’s suppliers to deal with Bassett instead of Colonial by bribery or coercion.

A jury found for Colonial and the trial court granted Colonial’s motion for treble damages under the UDTPA. Bassett argued on appeal that the court should vacate the award because its dispute with Colonial was contractual, the award duplicated Colonial’s recovery for breach of contract ($1,312,665.35), and a jury instruction (Jury Instruction 16) affected the jury’s assessment of the alleged unfair trade practices.

The court declined to overturn the jury’s finding that Bassett violated the UDTPA. Bassett argued that the UDTPA claim was merely a breach of contract claim and should have been dismissed. A breach of contract, without more, does not rise to the level of a UDTPA violation. However, the jury found that the UDTPA claim went beyond a contract dispute because Colonial claimed that Bassett paid Colonial’s suppliers not to deal with Colonial, induced Colonial’s suppliers to deal with Bassett instead of Colonial through bribery and coercion, and otherwise misused its unequal financial power against Colonial.

Bassett argued that Colonial should have been required to choose between collecting contract or UDTPA damages, but should not have recovered both. Because the claims were not based on the same course of conduct, there was no issue of duplicative recovery, according to the court.

Colonial’s argument that the entire award should be trebled was dismissed by the court. The jury verdict form required the jury first to determine contract damages, then to assess the UDTPA claim and determine related damages. The district court’s decision to treble only the UDTPA damages, rather than the entire jury award, was not in err. Only damages proximately caused by a UDTPA violation may be trebled, not damages on every claim that arose in a case involving a UDTPA claim.

The cases are Nos. 12-2296 and 12-2358.

Attorneys: June K. Allison (Wishart, Norris, Henninger & Pittman) for Colonial Trading, LLC. Robert Walker Fuller, III (Robinson Bradshaw & Hinson, PA) for Bassett Furniture Industries, Inc.

Companies: Colonial Trading, LLC; Bassett Furniture Industries, Inc.

Cases: StateUnfairTradePractices MarylandNews NorthCarolinaNews SouthCarolinaNews VirginiaNews WestVirginiaNews