Report Title:

Trade regulation; Indirect purchasers

Description:

Allows indirect purchasers to recover no less than the full consideration or sum paid for products or services purchased under chapter 480, Hawaii Revised Statutes. Allows indirect purchasers in private class actions to recover treble damages. Clarifies definition of consumer.

HOUSE OF REPRESENTATIVES

H.B. NO.

2768

TWENTY-SECOND LEGISLATURE, 2004

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to trade regulation.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Because of Hawaii’s isolated geographic location and for other economic reasons, Hawaii consumers and businesses have sometimes been the targets of unreasonable pricing by various industries, particularly those that have a monopoly or near monopoly on the sale of certain goods or services.

Indirect purchasers are those who do not buy products directly from their original source but rather from other parties further down the chain of distribution. They are more susceptible to paying unreasonably high prices due to unfair or deceptive acts or practices by those higher up the distribution chain.

The legislature has taken several steps to strengthen laws that protect Hawaii consumers and businesses. This Act proposes three changes to chapter 480, Hawaii Revised Statutes, to further protect indirect purchasers.

First, consistent with other damages provisions of chapter 480, an indirect purchaser should recover no less than the full consideration or sum paid for the product or service purchased. The existing provision may be interpreted by courts to mean that the indirect purchaser is limited to only a portion of the total amount paid. This amendment clarifies that the legislature intends indirect purchasers to recover the full amount paid.

Second, indirect purchasers who take part in private class actions should receive treble damages. It is inconsistent to allow indirect purchasers whose cases are pursued by the attorney general to obtain treble damages, while indirect purchasers whose cases are pursued by private attorneys at no cost to the state may recover only compensatory damages.

Third, the definition of "consumer" has been changed to make clear that indirect purchasers may bring actions for unfair and deceptive acts or practices.

SECTION 2. Section 480–1, Hawaii Revised Statutes, is amended by amending the definition of "consumer" to read as follows:

""Consumer" means a natural person who, primarily for personal, family, or household purposes[, purchases, attempts]:

(1) Directly or indirectly:

(A) Purchases;

(B) Attempts to purchase[, or is]; or

(C) Is solicited to purchase

goods or services; or [who commits]

(2) Commits money, property, or services in a personal investment."

SECTION 3. Section 480–13, Hawaii Revised Statutes, is amended as follows:

1. By amending subsection (a) to read:

"(a) Except as provided in subsections (b) and (c), any person who is injured in the person's business or property by reason of anything forbidden or declared unlawful by this chapter:

(1) May sue for damages sustained by the person, and, if the judgment is for the plaintiff, the plaintiff shall be awarded a sum not less than $1,000 or threefold the damages sustained by the plaintiff [sustained], whichever sum is [the] greater, and reasonable attorneys fees together with the costs of suit[; provided that indirect purchasers injured by an illegal overcharge shall recover only compensatory damages, and reasonable attorneys fees together with the costs of suit in actions not brought under section 480-14(c)]; and

(2) May bring proceedings to enjoin the unlawful practices, and if the decree is for the plaintiff, the plaintiff shall be awarded reasonable attorneys fees together with the cost of suit."

2. By amending subsection (c) to read:

"(c) The remedies provided in subsections (a) and (b) shall be applied in class action and de facto class action lawsuits or proceedings including actions brought on behalf of direct or indirect purchasers; provided that:

(1) The minimum $1,000 recovery provided in subsections (a) and (b) shall not apply in a class action or a de facto class action lawsuit;

(2) In class actions or de facto class actions where both direct and indirect purchasers are involved, or where more than one class of indirect purchasers are involved, a defendant shall be entitled to prove as a partial or complete defense to a claim for compensatory damages that the illegal overcharge has been passed on or passed back to others who are themselves entitled to recover so as to avoid the duplication of recovery of compensatory damages;

(3) That portion of threefold damages in excess of compensatory damages shall be apportioned and allocated by the court in its exercise of discretion so as to promote effective enforcement of this chapter and deterrence from violation of its provisions;

(4) [In] Notwithstanding any other provision to the contrary, in no event shall an indirect purchaser be awarded less than the full [measure of compensatory damages attributable to] consideration or sum paid by the indirect purchaser;

(5) In any lawsuit or lawsuits in which claims are asserted by both direct purchasers and indirect purchasers, the court is authorized to exercise its discretion in the apportionment of damages, and in the transfer and consolidation of cases to avoid the duplication of the recovery of damages and the multiplicity of suits, and in other respects to obtain substantial fairness;

(6) In any case in which claims are being asserted by a part of the claimants in a court of this State and another part of the claimants in a court other than of this State, where the claims arise out of the same or overlapping transactions, the court is authorized to take all steps reasonable and necessary to avoid duplication of recovery of damages and multiplicity of suits, and in other respects, to obtain substantial fairness;

(7) In instances where indirect purchasers file an action and obtain a judgment or settlement prior to the completion of a direct purchaser's action in courts other than in this State, the court shall delay disbursement of the damages until such time as the direct purchaser's suits are resolved to either final judgment, consent decree or settlement, or in the absence of a direct purchaser's lawsuit in the courts other than in this State [by direct purchasers], the expiration of the statute of limitations, or in such manner that will minimize duplication of damages to the extent reasonable and practicable, avoid multiplicity of suit, and obtain substantial fairness; and

(8) In the event damages in a class action or de facto class action remain unclaimed by the direct or indirect purchasers, the class representative or the attorney general shall apply to the court and such funds shall escheat to the State upon showing that reasonable efforts made by the State to distribute the funds have been unsuccessful."

SECTION 4. This Act shall be liberally construed to effectuate its remedial purpose.

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect on July 1, 2004.

INTRODUCED BY:

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