March 20, 2014

Use of the Florida Deceptive Unfair Trade Practices Act In A Competitive Dispute

The Florida Deceptive and Unfair Trade Practices Act is often referenced with regard to violations against consumers. But the FDUTPA can also be used in filing a Miami commercial litigation lawsuit where two competitors are in a dispute.

The key is that competitors bringing the action need to show not only that there was a violation, but that their firm sustained some degree of harm as a result.  That harm could be in the form of actual dollars, but it might also pertain to something like reputation or loss of trust.

In the case of Wyndham Vacation Resorts v. Timeshares Direct, Inc. ,  the state’s Fifth District Court of Appeals ruled that these kinds of damages are as worthy of redress under the state’s fair trade law as monetary losses.  Here, we have two competitors in the commercial vacation rental property business providing advertising services to help timeshare owners rent and resell their properties. Wyndham develops vacation resorts and also sells timeshares to consumers.

In the course of doing business, Wyndham – as many businesses do – collected sensitive personal information from its clients. This included names, addresses and telephone numbers, which the company protected by requiring workers to sign confidentiality agreements. Misappropriation of this information in any form was deemed grounds for firing.

However, there was a breach of this sensitive personal information.  Wyndham learned that one of its employees, during his two years of employment with the firm, had been taking the information from Wyndham’s customer account databases and selling it to Timeshare Direct, which in turn would use these leads to solicit customers. In doing so, it would lead customers to believe it was in some way affiliated with Wyndham when in fact the two companies were competitors.

Wyndham only learned of the breach after it began to receive complaints from customers about unsolicited contact.  Soon afterwards, Wyndham filed a lawsuit against Timeshare, basing its five-count complaint on alleged violations of the FDUTPA as well as the FUTSA. Wyndham asserted that there had been misappropriation of trade secrets and wrongful acquisition and use of company records. Wyndham wanted an injunction to stop Timeshares from using the confidential information it had obtained from the former employee.

Initially, the lower court determined that Wyndham was not entitled to injunctive relief under the state’s fair trade laws because no actual damages had been sustained. Upon appeal, however, Wyndham asserted that deceptive and unfair trade practices had caused injury to the business in the form of its reputation and the goodwill of its customers.

The appellate court noted that the purpose of FDUTPA, which broadly prohibits deceptive acts and practices in trade and commerce, is to protect both consumers and legitimate businesses from those who engage in unfair methods of trade.

Further, Florida Statute 501.211(1) allows injunctive relief for anyone who has been harmed –regardless of whether the aggrieved party is entitled to collect “actual damages.”  So the only question to determine here was whether Wyndham was an aggrieved party. The court ruled in the affirmative.

Anytime a company engages in practices that are deemed unfair or deceptive, it inflicts harm on those firms that are working hard to play by the rules. Those companies may be entitled to seek compensation or injunctive relief.