Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—W.D. Wash.: Engineering consulting firm was not trade or business under Washington statute, (Nov 24, 2014)

By Edward L. Puzzo, J.D.

A claim against a professional engineering consulting firm could not be brought under the Washington Consumer Protection Act (CPA) because an article written by the firm’s licensed engineer did not qualify as an entrepreneurial activity that would overcome the exclusion of professional practices from the trade or business element of a CPA action, the federal district court in Seattle has ruled (Pacific Boring, Inc v. Staheli Trenchless Consultants, Inc., November 21, 2014, Martinez, R.).

Plaintiff Pacific Boring, a trenchless construction firm, was a subcontractor on a project in Kirkland, Washington involving the installation of a sewer bypass line. After Pacific Boring began its work on the project, it ran into the unanticipated condition of a wet flowing ground, which caused a sinkhole, impeding progress. Pacific Boring eventually completed the project, but at additional time and expense. Subsequently, Pacific Boring brought a lawsuit against licensed engineer Kimberlie Staheli Louch and her consulting business, Staheli Trenchless Consultants (STC). They had allegedly solicited Pacific Boring to bid on the project. Pacific Boring alleged that the ground conditions which led to the project delay were known to STC, but that its geotechnical reports were “manipulated” so as to “shed liability” for those conditions.

Consumer Protection Act claim. Pacific Boring brought a number of claims against Staheli and STC, including the allegation that STC had violated the Washington Consumer Protection Act (CPA) by engaging in unfair competition by manipulating contract documents in order to withhold information from bidders and by supplying false information to Pacific Boring which was material to its bid, and which resulted in damages.

A private claim brought under the CPA, the court explained, required proof of (1) an unfair or deceptive act or practice; (2) occurring in trade or commerce; (3) with a public interest impact; (4) with injury to plaintiff in his or her business or property; and (5) causation. STC argued that the claim should be dismissed because the acts complained of did not occur in a trade or business. The court agreed.

Pacific Boring’s claim was based on STC’s alleged violation of its professional duties. However, the court explained, Washington law precluded CPA claims based on professional practices unless the issues were related to “entrepreneurial” aspects of the professional’s practice. The only such activity cited by Pacific Boring was that Staheli had co-authored an article that allegedly advised contractors on how to avoid application of longstanding case law pertaining to differing geotechnical site conditions. Pacific Boring claimed that this report was a “marketing activity,” and thus fit within the “entrepreneurial” exception to the preclusion of CPA claims based on professional practices. However, the court noted, the plaintiff’s CPA claim had made no mention of the publication as a basis for the claim, nor how the article was related to the sewer project in question or to the alleged damages. Therefore, the court ruled, the plaintiff failed to allege a plausible CPA claim. The court dismissed the claim, and finding that it could not be cured by amendment, denied Pacific Boring leave to amend the complaint.

The case is Civil Action No. C14-0187 RSM.

Attorneys: Bradley L. Powell (Oles Morrison Rinker & Baker LLP) for Pacific Boring, Inc. Carson R. Cooper (Lane Powell PC) for Staheli Trenchless Consultants, Inc.

Companies: Pacific Boring, Inc.; Staheli Trenchless Consultants, Inc.

Cases: StateUnfairTradePractices WashingtonNews