Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—E.D. La.: Lack of false or misleading statements barred LUTPA claim, (Aug 2, 2016)

By Edward L. Puzzo, J.D.

A company that leased grandstand equipment for motor racing could not maintain an action against the equipment lessees under the Louisiana Unfair Trade Practices and Consumer Protection Law because it failed to plead that any of the lessees made any false or misleading statements to the lessor, the federal district court in New Orleans has ruled (NUSSLI US, LLC v. NOLA Motorsports Host Committee, Inc., July 29, 2016, Brown, N.).

Plaintiff NUSSLI alleged that it was owed money under an agreement it had entered into to rent grandstand equipment for motor racing to defendants, including the NOLA Motor Club, Motor Realty, and Laney Chouest and his companies, Laney C and Laney C Racing. NUSSLI alleged that the defendants engaged in unfair or deceptive conduct, in violation of the Louisiana Unfair Trade Practices and Consumer Protection Law (LUTPA), by making false and misleading statements misrepresenting the financial backing behind the motor racing event, failing to distribute the full amount appropriated by the State of Louisiana for grandstand installation, and by promising to guarantee payments to Andretti Sports Marketing Louisiana, and by extension NUSSLI, under its agreement with the NOLA Motorsports Host Committee (NMHC).

LUTPA allegations. The defendants argued that, in order to state a LUTPA claim, NUSSLI must show the alleged conduct "offends established public policy and is immoral, unethical, oppressive, unscrupulous or substantially injurious." They argued that their promise to guarantee payments to Andretti and subsequent failure to pay Andretti was not egregious conduct because Andretti could have simply chosen not to sign the agreement. They further argued that NUSSLI failed to allege any action that the defendants took directly against NUSSLI, and therefore the conduct could not be considered an egregious act against NUSSLI.

In response, NUSSLI argued that it would be improper to grant defendants’ motion to dismiss at this time because it would require the court to resolve factual issues at the pleading stage. Additionally, as the defendants claimed they were not bound by the terms of the lease agreement, their extra-contractual course of conduct constituted a LUTPA claim.

LUTPA treble damages allegations. The defendants also argued that NUSSLI’s claim for treble damages under LUTPA should be dismissed because treble damages are only permitted when the court finds an unfair or deceptive practice after being put on notice by the Attorney General, and NUSSLI could not allege that the Louisiana Attorney General provided any such notice to the defendants. NUSSLI countered that defendants were served with the notice on July 28, 2015, and were liable for treble damages to the extent they continued the same course of conduct after the receipt of the notice.

Ruling. LUTPA, the court explained, affords a cause of action to a person who suffers any ascertainable loss of money or property as a result of the use by another person of an unfair or deceptive method, act or practice declared unlawful by state law. Under LUTPA, a business action is deemed "unfair" when it offends established public policy and is immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers, and is "deceptive" when it amounts to fraud, deceit, or misrepresentation. However, the court warned, the range of prohibited practices under LUTPA is extremely narrow.

Here, the court found NUSSLI did not plead any false or misleading statements made directly to NUSSLI by any of the defendants. The claim also appeared to rely upon Andretti acting as the agent of defendants. In view of these facts, the court concluded that NUSSLI failed to plead sufficient facts to show that Andretti was acting as the agent of the defendants when it communicated allegedly false statements to NUSSLI. Therefore, the court granted the defendants’ motion to dismiss the LUTPA claims.

The case is No. 2:15-cv-02167-NJB-DEK.

Attorneys: Ashley L. Belleau (Lugenbuhl, Wheaton, Peck, Rankin & Hubbard) for NUSSLI US, LLC. Joseph M. Bruno (Bruno & Bruno) for NOLA Motorsports Host Committee, Inc. Thomas J. Cortazzo (Baldwin, Haspel, Burke & Mayer, LLC) for NOLA Motor Club, LLC, Motor Realty, LLC, Lancy C Racing, LLC and Laney C, LLC.

Companies: NUSSLI US, LLC; NOLA Motorsports Host Committee, Inc.; NOLA Motor Club, LLC; Motor Realty, LLC; Lancy C Racing, LLC; Laney C, LLC

Cases: StateUnfairTradePractices LouisianaNews