By James R. "Sonny" Chastain and Linda Perez Clark
The Louisiana Supreme Court in Cheramie Services, Inc. v. Shell Deepwater Production, 2010 W.L. 1631977 (La. 2010) construed the Louisiana Unfair Trade Practices Act (“LUTPA”) to mean that persons other than business consumers and competitors may sue for alleged violations of the Act. Regardless of the context of the legislation, according to the Supreme Court, the term “any person” means exactly that – any person.
In the action, Cheramie Services, Inc. (“Cheramie”) entered into a contract with Shell to provide personnel to its platforms. Shell placed two Cheramie employees, Kenneth Ward and Kevin Kays, on a platform. Shell paid Cheramie who paid the employees who were placed on these specific platforms. Ward and Kays alternated working fourteen day shifts so one of them was always on the platform. About six months thereafter, Shell stopped making payments to Cheramie and began paying Filco International, Inc. (“Filco”) for the services provided by Kays and Ward. Additionally, Cheramie sent an employee to meet with Shell about filling a position on another platform. The employee met with Shell and was told that if she wanted the position, she would have to work for Filco, because it had submitted the successful bid.
Cheramie and its sole owner, Attecia Cheramie, filed a civil action asserting various causes of action, including breach of contract, violation of LUTPA, and collusion between Shell and Filco regarding the Cheramie workers. In response, Shell filed a motion for summary judgment, which was granted by the trial court, finding no breach of contract and LUTPA did not apply. On appeal, the Fourth Circuit affirmed as to the breach of contract but reinstated the LUTPA claim citing jurisprudence which allows a plaintiff to claim damages when one party conspires with a business competitor to commit an unfair trade practice. However, the Fourth Circuit did not address whether LUTPA limits the availability of a cause of action to only consumers and business competitors.
The Supreme Court granted writs and addressed the specific legal question concerning standing. Plaintiffs were neither a business competitor of Shell nor a consumer and, therefore, Shell urged they lacked standing under LUTPA. In the opinion written by Justice Weimer, the Court stated “The issue is one of first impression with this court. Although we have denied writs as early as 1982 in cases that have rendered contradictory holdings, we have never addressed the conflict.”
LUTPA states that unfair methods of competition and unfair deceptive acts or practices in the conduct of any trade or commerce are declared unlawful. See La. R.S. 51:1405. LUTPA further states that any person who sustains a loss as a result of the use of employment by another person of an unfair deceptive method, act or practice declared unlawful, may bring an action. See La. R.S. 51:1409. The Supreme Court concluded that an examination of the sections of the Act reveals that the legislation contains no language that clearly and expressly bars a person, such as the Plaintiffs in this action, to bring an action for unfair trade practice. LUTPA grants a right of action to any person who sustains a loss by such conduct. Although business consumers and competitors are included in the group afforded this private right of action, they are not its exclusive members. The Court stated “An evaluation of the words of the statute leads to the conclusion that, consistent with the definition and usage of the word ‘person,’ there is no such limitation on those who may assert a cause of action.” The Court stated that the standing limitation that has found its way into the jurisprudence occurred without proper analysis of the statute. Because of the language of the statute, which does not contain a clear, unequivocal and affirmative expression that the private right of action provided extends only to business competitors or consumers, LUTPA does not exclude other persons who assert loss of money or property as a result of the use or employment of the unfair deceptive method.
Although the Court found LUTPA to be available to plaintiffs other than business competitors and consumers, in addressing the merits of the motion for summary judgment, the Court pointed out that the Plaintiffs still have the burden of proving an act to be unfair and deceptive. The range of prohibited practices is extremely narrow. It cited Turner v. Purina Mills, Inc., wherein the U.S. Fifth Circuit stated LUTPA does not prohibit sound business practices, the exercise of permissible business judgment, or free enterprise transaction; businesses are still free to pursue profits so long as the means are not egregious and the Act is not an alternative remedy for simple breaches of contract. The Court further stated that at-will employees are free to exercise their right to change employment, even if they decide to work for a competitor of their former employer. Only egregious actions involving elements of fraud, misrepresentation and deception, or other unethical conduct, will be sanctioned based on LUTPA.
The Court agreed with Shell that there was simply an absence of factual support for the essential element of the Plaintiffs’ claim and that they were unable to show any collusion between Shell and Filco to steal Plaintiffs’ employees. Plaintiffs could produce no evidence to show that the workers were not merely exercising their prerogative of at-will employees to change companies for which they worked. In their affidavits, Kays and Ward testified that they voluntarily left the employ of Cheramie for Filco. Plaintiffs failed to produce evidence of actions by Shell which would be tantamount to unfair or deceptive acts in the conduct of their operations and the LUTPA claim was dismissed.
In a concurring opinion, Justice Johnson agreed with the dismissal of the Petition, but disagreed with the majority’s finding that the Plaintiffs are entitled to bring the action. According to Justice Johnson, (a) LUTPA’s reference to “competition” and “trade or commerce” and (b) the purpose of the Act being to protect consumers, means the legislature intended to limit the action to consumers and business competitors. Justice Knoll concurred only in the results, while Justice Guidry agreed with the results and labeled the standing discussion as mere dicta.
We will have to wait and see if the ruling opens the “litigation floodgates” and/or whether the Louisiana legislature takes any action to further limit the meaning of or redefine the term “any person” in LUTPA.