Garrard v. Civil Process Services

2009 UT 22
This opinion is subject to revision before final
publication in the Pacific Reporter.
IN THE SUPREME COURT OF THE STATE OF UTAH
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Ray William Garrard, No. 20070968
Plaintiff and Appellant,
v.
Gateway Financial Services, Inc.;
Civil Process Services &
Investigations, LLC; and F I L E D
Granite Furniture Company,
Defendants and Appellees. April 17, 2009
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Third District, Salt Lake
The Honorable Deno G. Himonas
No. 040912063
Attorneys: James E. Magleby, Jason A. McNeill, Christopher M.
Von Maack, Salt Lake City, for plaintiff
Reed R. Braithwaite, St. George, John D. Richards,
Salt Lake City, for defendant
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DURHAM, Chief Justice:
INTRODUCTION
¶1 The Utah Legislature enacted the Unfair Practices Act,
codified in Utah Code sections 13-5-1 to -18, to “safeguard the
public against the creation or perpetuation of monopolies and to
foster and encourage competition, by prohibiting unfair and
discriminatory practices by which fair and honest competition is
destroyed or prevented.” Utah Code Ann. § 13-5-17 (2005).
Similarly, the Federal Trade Commission Act declares “unfair
methods of competition in or affecting commerce, and unfair or
deceptive acts or practices in or affecting commerce” unlawful.
15 U.S.C. § 45(a)(1) (2006). To determine whether an act is
unfair or deceptive under the federal Act, the United States
Supreme Court adopted what is now known as the Cigarette Rule--a
three-part test that considers whether the act is unlawful or
violates public policy, whether it is immoral or unethical, and
whether it injures consumers. Ray Garrard, the appellant in this

No. 20070968 2
matter, asks us to incorporate this test into the Utah Unfair
Practices Act. We decline to do so. The Utah Act is unambiguous
in its focus on competition and monopolistic behavior; therefore,
we do not look to outside sources to define the practices the
Utah Act would deem unfair or deceptive.
BACKGROUND
¶2 In reviewing the district court’s grant of a directed
verdict, we review the facts in the light most favorable to the
losing party. Goebel v. Salt Lake City S. R.R. Co., 2004 UT 80,
¶ 10, 104 P.3d 1185.
¶3 In July 1999, Ray and Marva Garrard purchased a bedroom
set for $2,419.95 from Granite Furniture Company. On the advice
of a sales associate, they agreed to a six-month financing
agreement. The Garrards understood this financing agreement to
waive any finance charges if the balance of the account was paid
within six months. However, the contract required monthly
minimum payments, which the Garrards failed to make. Instead,
the Garrards made two sporadic payments and then paid the
remaining amount due on January 11, 2000, believing the six-month
financing period to expire on January 24.
¶4 On March 5, 2004, the Garrards received a letter with
an enclosed copy of a default judgment of $897.52 for unpaid
interest and finance charges from Gateway Financial Services,
Inc. (Gateway), a collection agency. Prior to this letter, the
Garrards were unaware that any legal action had been taken
against them. The Garrards immediately contacted legal counsel
to resolve the matter. A few days later, the Garrards’ legal
counsel requested that Gateway provide proof of service for a
small claims affidavit delivered to the Garrards. Gateway
responded the same day by faxing a proof of service, which
indicated that a service processor from Civil Process Services &
Investigations, LLC (Civil Process Services) had personally
served Marva Garrard on November 28, 2003 at 12:10 p.m. This was
impossible; Marva Garrard passed away November 13, 2002, over a
year before the reported date of service. In response to Mr.
Garrard’s challenge to the proof of service, on March 26, 2004,
Gateway produced another proof of service. This second proof of
service indicated that a service processor had instead personally
served Ray Garrard on November 28, 2003 at 12:10 p.m. Again,
this was impossible; Mr. Garrard was not home at that time.
Gateway eventually agreed to remove the judgment and an order
vacating the judgment was entered on September 30, 2004.

1 Garrard also sued Gateway. Gateway settled and was
dismissed as a party to the suit.
2 Granite Furniture Company did not participate in this
appeal.
3 No. 20070968
¶5 Garrard sued Civil Process Services1 to recover treble
damages under the Unfair Practices Act arguing that falsifying
the civil process documents constituted unfair competition
because it violated public policy, was unethical and immoral, and
caused substantial injury to consumers. See Utah Code Ann. § 13-
5-14 (2005). Garrard also sued Granite Furniture Company for
violating the Unfair Practices Act. The matter was tried to a
jury. Following the close of evidence, Civil Process Services
and Granite Furniture Company moved for a directed verdict on the
basis that Garrard failed to prove that they had violated the
Unfair Practices Act. The district court granted the motion for
directed verdict, and Garrard now appeals.2 We have jurisdiction
pursuant to Utah Code section 78A-3-102(3)(j). We review the
trial court’s grant of a directed verdict for correctness.
Goebel, 2004 UT 80, ¶ 10.
ANALYSIS
¶6 The Utah Unfair Practice Act makes unlawful “[u]nfair
methods of competition in commerce or trade.” Utah Code Ann.
§ 13-5-2.5(1) (2005). Specifically, the Act prohibits
anticompetitive discriminatory pricing and advertising goods the
retailer is not prepared to supply. See id. §§ 13-5-3, -8.
Additionally, the Act gives the Division of Consumer Protection
authority to prevent the use of unfair methods of competition and
to enforce the prohibitions of the chapter through agency
adjudications. Id. § 13-5-2.5(2)-(3).
¶7 Mr. Garrard urges us to expand the reach of the Unfair
Practice Act beyond anticompetitive methods to unfair and
discriminatory practices as defined by the federal Cigarette
Rule. The Federal Trade Commission uses the Cigarette Rule,
which was originally adopted to regulate unfair or deceptive
advertising or labeling of cigarettes, to determine whether an
act is unfair under the federal Act. FTC v. Sperry & Hutchinson
Co., 405 U.S. 233, 244 n.5 (1972) [hereinafter Sperry]. Under
the rule, the federal agency considers three factors in
determining whether an act is unfair or discriminatory:
(1) whether the act offends public policy as established by
statute, common law, or otherwise; (2) whether the act is
immoral, unethical, oppressive, or unscrupulous; and (3) whether
it causes substantial injury to consumers or competitors. Id.

No. 20070968 4
The United States Supreme Court acknowledged and implicitly
approved of the Cigarette Rule in Sperry. Id. at 244.
¶8 Utah’s Unfair Practices Act, Garrard argues, is so
similar to the Federal Trade Commission Act that this court
should interpret it in the same manner as the United States
Supreme Court interpreted the federal Act in Sperry. In Sperry,
the Court found that the Federal Trade Commission Act was broad
in scope and could allow the Federal Trade Commission to prohibit
practices that are not per se antitrust law violations. See id.
There is a critical difference, however, between the language in
the Federal Trade Commission Act, as interpreted by Sperry, and
Utah’s Unfair Practices Act. The federal Act makes unlawful
“[u]nfair methods of competition in or affecting commerce, and
unfair or deceptive acts or practices in or affecting commerce.”
15 U.S.C. § 45(a)(1) (2006)(emphasis added). In reviewing the
scope of the Federal Trade Commission Act, the Sperry court found
that the addition of this language indicated that the scope of
the Act extended beyond anticompetitive practices. Sperry, 405
U.S. at 244. In fact, the Court noted, the House Report for the
amendment explicitly said so. Id. The Report summarized
Congress’s purpose for the amendment as “mak[ing] the consumer,
who may be injured by an unfair trade practice, of equal concern,
before the law, with the merchant or manufacturer injured by the
unfair methods of a dishonest competitor.” Id.
¶9 In contrast to the Federal Trade Commission Act, Utah’s
Unfair Practices Act makes unlawful only “[u]nfair methods of
competition in commerce.” Utah Code Ann. § 13-5-2.5(1). Lacking
an independent reference to unfair acts or practices, there is no
indication that the Utah Legislature intended the Act to reach
any practices beyond anticompetitive behavior.
¶10 Garrard argues that the legislature did intend the Act
to have a broader scope and points to the purpose stated in Utah
Code section 13-5-17 as proof. This section states:
The Legislature declared that the
purpose of this act is to safeguard the
public against the creation or perpetuation
of monopolies and to foster and encourage
competition, by prohibiting unfair and
discriminatory practices by which fair and
honest competition is destroyed or prevented.
This act shall be liberally construed that
its beneficial purposes may be subserved.
Utah Code Ann. § 13-5-17 (emphasis added).

5 No. 20070968
¶11 While this section does indicate the Division of
Consumer Protection may prohibit unfair and discriminatory
practices, the phrase is modified by a reference to preserving
competition. Thus, we find it unambiguous that the legislature
intended the Act to apply only to anticompetitive behavior.
Garrard urges us to look to the authority of our sister states on
this subject, some of whom have adopted the Cigarette Rule under
their statutes, usually in reliance on expansive language similar
to that contained in the Federal Trade Commission Act. Because
the language of this statute is unambiguous, we will not do so.
Brinkerhoff v. Forsyth, 779 P.2d 685, 686 (Utah 1989) (“Where
statutory language is plain and unambiguous, this Court will not
look beyond the same to divine legislative intent. Rather, we
are guided by the rule that a statute should generally be
construed according to its plain language.”). For this same
reason, we do not look to the language of other Acts under the
same title, such as the Consumer Sales Practices Act, or
administrative rules adopted pursuant to these additional Acts to
interpret the plain language of the Unfair Practices Act.
¶12 Accordingly, we hold that the Unfair Practices Act
makes unlawful only unfair methods of competition. The Act
contains no language prohibiting unfair or deceptive practices in
commerce, and therefore we decline to adopt the reasoning of the
Supreme Court in Sperry. Further, because the language of the
Act unambiguously addresses unfair methods that impact fair
competition, we do not look to the jurisprudence of our sister
states to interpret the statute. The district court’s decision
is affirmed.
¶13 We note that in interpreting the current statute, we
make no judgment on the wisdom of a legislative expansion of the
Unfair Practices Act to protect consumers as well as commercial
competitors. The legislature has already adopted an extensive
framework of consumer protection laws in other areas, and there
are numerous public policy reasons for extending the Unfair
Practices Act to also protect consumers. We leave it to the
legislature to consider those policy concerns.
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¶14 Associate Chief Justice Durrant, Justice Wilkins,
Justice Parrish, and Justice Nehring concur in Chief Justice
Durham’s opinion.