Arizona Court of Appeals Division One Holds That the Arizona Consumer Fraud Act’s Prohibition Against Deceptive Acts or Practices Only Requires the State to Establish the Minimal Intent That the Defendant Acted Voluntarily.

In 2001, the State began inspecting AutoZone’s Arizona stores and discovered numerous violations of Arizona’s pricing statute, A.R.S. § 41-2081, which prohibits a seller from misrepresenting the price of a good offered for sale, and requires a seller to display the price of goods.  After finding violations over the next five years and fining AutoZone over $170,000, the State sued AutoZone under Arizona’s Consumer Fraud Act, A.R.S. § 44-1522.  The State and AutoZone twice moved summary judgment, and the trial court ultimately granted AutoZone summary judgment. The State timely appealed, and AutoZone cross-appealed.

The Arizona Appeals Court affirmed in part, vacated in part, and remanded.  The Court first held that the Consumer Fraud Act’s “act” clause does not impose strict liability, but also does not require the State to prove an intent to deceive.  Instead, the clause only requires the State to prove that the retailer acted voluntarily.  A.R.S. § 44-1522(A) has two clauses: (1) the “act” clause, which governs “any deception, deceptive act or practice, fraud, false pretense, false promise, misrepresentation,” and (2) the “omission clause”, which proscribes “any concealment, suppression or omission of any material fact with intent that others rely upon such concealment, suppression or omission.”  Although the “act” clause does not incorporate an intent requirement, it describes conduct that by nature requires voluntary action.  This minimal level of intent was first described in Babbitt v. Goodyear Tire & Rubber Co., 128 Ariz. 483, 626 P.2d 1115 (App. 1981), which explained that the State must only show that the defendant had “an intent to do the act involved.”  As set forth in Goodyear, the State was required to make a prima facie showing that AutoZone voluntarily offered mispriced and non-priced goods for sale, but was not required to show that AutoZone intended to post a price that was inaccurate and potentially misleading.  The burden then would shift to AutoZone to show that it lacked the requisite intent.  Because the State had made a prima facie showing, AutoZone was not entitled to summary judgment.  Likewise, because AutoZone had not been afforded the opportunity to rebut the State’s prima facie showing, the State was not entitled to summary judgment.       

The Court next rejected AutoZone’s argument that its non-pricing of goods fell under the “omission clause” of A.R.S. § 44-1522(A), which would require a higher showing of intent, rather than the “act” clause.  The Court explained that the non-pricing fell under the “act” clause because the Pricing Statute imposed a duty to disclose certain information.  Again, the Court held that the State was not entitled to summary judgment because AutoZone had not been afforded an opportunity to rebut the State’s prima facie showing of intent.

The Court next addressed AutoZone’s cross-appeal issues.  It first rejected AutoZone’s argument that the State sought duplicative civil penalties, explaining that the Consumer Fraud Act provides additional avenues of relief and does not authorize penalties for the same conduct as Arizona’s Pricing Statute.  The Court also rejected AutoZone’s argument that Consumer Fraud Act does not allow disgorgement, explaining that the Consumer Fraud Act is worded expansively, allowing a court to “make such orders or judgment as may be necessary to: 1. Prevent the use or employment by a person of any unlawful practices.”

Finally, the Court awarded the State its attorneys’ fees and costs.

Judge Gemmill concurred in part and dissented in part, explaining that he did not believe the Consumer Fraud Act authorizes disgorgement.

Presiding Judge Norris authored the opinion; Judge Orozco concurred; Judge Gemmill concurred in part and dissented in part.