Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—D. N. Mar. I.: Aviation company’s deceptive practices claims against construction contractor survive motion to dismiss, (Feb 19, 2014)

By Linda O’Brien, J.D., LL.M.

Boeing Company has sufficiently pleaded deceptive practices claims against a construction company for violations of the Commonwealth of Northern Mariana Islands Consumer Protection Act in relation to a construction contract for renovations at the Saipan Airport, the U.S. District Court for the Northern Mariana Islands has decided (Boeing Co. v. Leo A. Daly Co., February 14, 2014, Manglona, R.).

Boeing entered into a contract with the Commonwealth Ports Authority for the renovations and subsequently entered into a subcontract with the Leo A. Daly Company for the design and construction management of the project. Following the completion of the project, Boeing filed an action against Daly alleging deficient performance under the subcontract in violation of the Consumer Protection Act (CCPA), among other claims. The defendant moved to dismiss the complaint.

Deceptive practices claims. The plaintiff’s allegations that Daly’s services were “misleading and deceptive” were deceptive practices claims pursuant to the CCPA and not tantamount to a breach of contract, according to the court. The CCPA prohibits engaging in any act or practice which is unfair or deceptive to the consumer. Although there was no precedent for the determination that the CCPA applied to deliberate deception in commercial transactions, the court found that the Act did apply to such allegations within the plain meaning of the statute. Further, Boeing’s allegations that it was deliberately deceived by Daly were sufficient to state a plausible claim under the CCPA.

Additionally, though the Act does not define “consumer,” the court held that the term includes merchants for purposes of the CCPA. Since Boeing was a merchant and merchants are consumers, the protections of the CCPA extended to those claims, the court concluded.

The case is No. 1:13-cv-00027.

Attorneys: Elizabeth S. Hess (Kirkland & Ellis LLP) for Boeing Co. Joseph E. Horey (O’Connor Berman Dotts & Banes) for Leo A. Daly Co.

Companies: Boeing Co.; Leo A. Daly Co.

Cases: StateUnfairTradePractices