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holding defendant's advertisements, which included the seal of the President of the United States and the name "NY/NJ Restoration Leadership" wrongfully implied his conference was associated with the federal government, New Jersey and New York
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DOCKET NO. A-2640-14T3
07-13-2016
JOHN J. HOFFMAN, Acting Attorney General of the State of New Jersey, and STEVE C. LEE, Acting Director of the New Jersey Division of Consumer Affairs, Plaintiffs-Respondents, v. WILLIAM S. LOIRY, d/b/a UNITED STATES LEADERSHIP FORUM, d/b/a US LEADERSHIP FORUM, d/b/a NY/NJ RESTORATION LEADERSHIP and d/b/a ULTIMATE EVENTS, LLC; Defendant-Appellant.
Tsimpedes Law Firm, attorney for appellant. Robert Lougy, Acting Attorney General, attorney for respondents (Andrea M. Silkowitz, Assistant Attorney General, of counsel; Glenn T. Graham, Deputy Attorney General, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Yannotti and Vernoia. On appeal from Superior Court of New Jersey, Chancery Division, Essex County, Docket No. C-289-12. Tsimpedes Law Firm, attorney for appellant. Robert Lougy, Acting Attorney General, attorney for respondents (Andrea M. Silkowitz, Assistant Attorney General, of counsel; Glenn T. Graham, Deputy Attorney General, on the brief). PER CURIAM
Defendant William S. Loiry appeals from a final judgment and order entered by the Chancery Division on December 22, 2014, which found that defendant committed various violations of the New Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -204, and the Advertising Regulations promulgated thereunder, N.J.A.C. 13:45A-9.1 to -9.8; enjoined defendant from committing further violations of the CFA and the Advertising Regulations; and required defendant to pay civil penalties, restitution, attorney's fees, and the costs of investigation and prosecution. We affirm.
I.
This appeal arises from the following facts. On October 29, 2012, Superstorm Sandy struck New Jersey. The following month, defendant began to advertise a "Superstorm Sandy Reconstruction Summit" (Summit) by sending numerous electronic mail messages to consumers under the name "NY/NJ Restoration Leadership." According to defendant's emails, the Summit would provide attendees with "the latest information" on various relief efforts from "top leaders."
The emails also stated that the Summit would "feature local, state, and national government, business, and nonprofit decision-makers providing the latest information on relief, restoration, and reconstruction." A link to the Sandy Reconstruction Website (Sandy Website) was included, and indicated that a registration fee of $175 would be charged to attend the program in person, or a fee of $100 would be charged to view the program online.
The "home page" of the Sandy Website prominently featured the official seal of President Barack Obama next to a quote from the President about rebuilding damaged areas. The bottom of the page stated that the name of the organization was the "United States Leadership Forum."
The "summary page" stated, "Get the latest information at this all-day regional and national conference from top leaders" on a variety of reconstruction topics, including emergency housing, infrastructure reconstruction, and small business support. The summary page identified the types of individuals and organizations that "should" attend. It stated that the Summit would be held on December 17, 2012, in Trenton, but did not provide a specific location.
The Sandy Website also included an "about us" page. This page stated, "The Summit Leadership has spent many years working to facilitate post-disaster reconstruction as well as emergency preparedness and homeland security. Thousands of business, government, military, nonprofit, and community leaders have attended our highly acclaimed forums." The page then listed previous summits held for homeland security, hurricane relief, and BP oil spill reconstruction.
The emails and Sandy Website came to the attention of the New Jersey Division of Consumer Affairs (Division), which traced the Sandy Website to defendant. In December 2012, the Division also accessed the United States Leadership Forum Website (Leadership Website), which utilized a ".us" domain name. The "home page" of the Leadership Website featured the name of the organization displayed across a photo of the United States Capitol Building.
The page listed defense, homeland security, energy, and the Gulf Coast cleanup as areas covered by the organization. The Leadership Website's "about us" page stated:
The United States Leadership Forum is an independent organization working to identify solutions to our most critical problems. We work closely with Congress; federal, state, and local government officials; nonprofit organizations and professional associations; the business community; and the military . . . . [W]e literally bring leaders together in a non[-]confrontational approach to discuss solutions to our critical problems. . . . We catalog the best ideas, present them to leaders, and track their implementation over time.
The Division conducted a further investigation of defendant and his organizations. The investigation revealed that defendant had not registered United States Leadership Forum, US Leadership Forum, NY/NJ Restoration Leadership, or Ultimate Events, LLC as corporate entities, LLCs, trade names, or assumed names in New Jersey. The Division also learned that Ultimate Events, LLC had previously been granted corporate status in Nevada, but that status had been revoked.
On November 29, 2012, someone acting on behalf of the Division registered for the Summit and paid the $175 registration fee. The "payment confirmation" page did not list a location for the Summit. On November 30, 2012, the Division's agents mailed a letter to the United States Leadership Forum and NY/NJ Restoration Leadership and provided copies to defendant. The letter asked defendant to attend a meeting on December 6, 2012, to address questions about the Summit.
The letter also requested that defendant provide "the name of the venue [for the Summit] and contracting parties, the names and qualifications of the speakers, the schedule of speakers and other activities, and the names and addresses of the exhibitors." The letter stated that failure to provide such information supporting defendant's claims about the Summit "may subject [defendant] to further investigation and legal action."
Defendant responded to the Division's letter on December 3, 2012. His letter listed the Trenton Marriott Hotel as the site for the Summit. It also provided a "working program," which identified five confirmed speakers: the President of Humanitarian Services of the American Red Cross; the Chief Executive Officer of the American Red Cross, Northern New Jersey Region; the President of Plaquemines Parish in Louisiana; a professor and member of the New York State Response Committee; and the former Chief of Staff of the Federal Emergency Management Agency (FEMA) during Hurricane Katrina. The program also listed eleven "invited" speakers, including Governor Chris Christie. According to defendant, only one exhibitor had confirmed its attendance.
On December 4, 2012, defendant met with representatives of the Division. Defendant stated that he sent numerous emails under the name of the United States Leadership Forum advertising the Summit: one batch of approximately 70,000 emails, and another of approximately 300,000 emails.
Defendant provided evidence that he had reserved space for the Summit at the Trenton Marriott Hotel that same day. Defendant also informed the Division that at the time of the meeting he had collected the $175 registration fee from approximately thirty registrants, and two sponsorship fees of $1000 each. Defendant collected the fees through Ultimate Events, LLC.
Defendant also presented the Division with a business card listing himself as "Chairman" of the United States Leadership Forum and the World Leadership Forum. According to the Division's representatives, defendant conceded that the United States Leadership Forum and NY/NJ Restoration Leadership Forum did not exist as entities, but were assumed names under which defendant was conducting business.
Immediately following the meeting, the Division contacted the persons defendant had identified as speakers and discovered that the person identified as a member of the New York State Response Committee did not hold any such position. The Division was only able to verify that two of the five "confirmed" speakers would be attending the Summit.
On December 7, 2012, the Attorney General and the Acting Director of the Division filed a complaint and an order to show cause in the trial court, naming defendant and his organizations as defendants. Plaintiffs alleged that defendant had engaged in business practices that violate the CFA and the Advertising Regulations. On December 10, 2012, defendant informed the court he was cancelling the Summit. Defendant asserted that the Division's "irrational hostility" to the summit left him no other option.
The court entered an order to show cause with temporary restraints on December 10, 2012. The order enjoined defendant from: violating the CFA; advertising or selling admission to the Summit; using funds from the Summit; and altering any of the Summit records. The order also required defendant to notify the public, exhibitors, and confirmed attendees that the Summit had been cancelled. Defendant was required to show cause why the court should not enter a preliminary injunction.
On January 30, 2013, after hearing oral argument, the court entered an order granting plaintiffs' application for a preliminary injunction. The court restrained defendant from: engaging in acts that violate the CFA; advertising or conducting the Summit or any similar summit in New Jersey; removing or using the assets identified in the complaint; and destroying any relevant documents. Thereafter, the parties were afforded time for discovery.
In July and August 2014, the parties filed motions for summary judgment. After hearing oral argument, the motion judge placed his oral opinion on the record. The judge found that there was no genuine issue as to any material fact and that plaintiffs were entitled to judgment as a matter of law on their claims that defendant violated the CFA and the Advertising Regulations. Accordingly, the judge granted plaintiffs' motion for summary judgment.
On December 22, 2014, the judge entered an order which permanently enjoined defendant from engaging in further activities that violate the CFA and the Advertising regulations; ordered defendant to cancel the Summit; and required that he pay $12,500 in restitution, $10,000 in penalties, $22,500 for the Division's attorney's fees, and $1,384.20 for the Division's investigative costs. This appeal followed.
On appeal, defendant argues that: plaintiffs failed to prove that he violated the CFA or the Advertising Regulations; his use of unregistered trade names was lawful; he did not falsely represent that he was associated with the United States government or any other governmental entity; he did not violate the CFA by making any false promises or misrepresentations regarding the Summit; and he did not violate the Advertising Regulations because no person viewing his websites would reasonably believe defendant was associated with a governmental entity.
II.
Summary judgment is warranted where "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c). "An issue of fact is genuine only if, considering the burden of persuasion at trial, the evidence submitted by the parties on the motion, together with all legitimate inferences therefrom favoring the non-moving party, would require submission of the issue to the trier of fact." Ibid.
The court "should not hesitate to grant summary judgment" if "'the evidence is so one-sided that one party must prevail as a matter of law.'" Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252, 106 S. Ct. 2505, 2512, 91 L. Ed. 2d 202, 214 (1986)). When reviewing a decision to grant summary judgment, we apply the same standard that the trial court applies when ruling on the motion. Davis v. Brickman Landscaping, Ltd., 219 N.J. 395, 405 (2014); Murray v. Plainfield Rescue Squad, 210 N.J. 581, 584 (2012).
A. Violations of the CFA.
Defendant argues that the motion judge erred by finding that he violated the CFA. Defendant asserts that: his use of unregistered trade names was lawful; he did not falsely represent that he was associated with the United States government or any other governmental entity; and he did not make any false promises or misrepresentations regarding the Summit.
The CFA states in pertinent part that
[t]he act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation, or the knowing, concealment, suppression, or omission of any material fact with intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby, is declared to be an unlawful practice . . . .
[N. J.S.A. 56:8-2.]
The CFA was enacted in order to provide New Jersey with one of the most stringent consumer protection laws in the country. Cox v. Sears Roebuck & Co., 138 N.J. 2, 15 (1994) (citations omitted). The purpose of the CFA is "to prevent deception, fraud or falsity, whether by acts of commission or omission, in connection with the sale and advertisement of merchandise and real estate." Fenwick v. Kay Am. Jeep, Inc., 72 N.J. 372, 376-77 (1977). Under the CFA, the term "merchandise" includes "any objects, wares, goods, commodities, services or anything offered, directly or indirectly to the public for sale." N.J.S.A. 56:8-1(c).
1. Unregistered Trade Names.
Here, the motion judge found that defendant violated the CFA by using unregistered trade names when marketing the Summit. Defendant argues his use of the assumed names United States Leadership Forum, US Leadership Forum, and NY/NJ Restoration Leadership was lawful. He contends that the use of such names was not an unconscionable commercial practice under the CFA. We cannot agree.
As the motion judge noted, N.J.S.A. 56:1-2 prohibits a person from conducting business under an unregistered assumed name. The statute provides:
No person shall conduct or transact business under any assumed name, or under any designation, name or style, corporate or otherwise, other than the real name or names of the individual or individuals conducting or transacting such business, unless such person shall file a certificate in the office of the clerk of the county or counties in which such person conducts or transacts, or intends to conduct or transact, such business, together with a duplicate thereof for filing in the office of the Secretary of State . . . .
[Ibid.]
It is undisputed that defendant intended to conduct the Summit in New Jersey, and sought registrants for the Summit using the assumed names United States Leadership Forum, US Leadership Forum, and NY/NJ Restoration Leadership. However, defendant never registered those names pursuant to N.J.S.A. 56:1-2.
Defendant also argues that his use of the name Ultimate Events, LLC was permissible. We note, however, that Ultimate Events was not mentioned in defendant's websites and the Summit was not marketed under this name, although the registration fees were collected through this entity. In any event, we are convinced that the undisputed evidence that defendant used other unregistered assumed names to solicit attendees for the Summit provides sufficient support for the trial court's determination that defendant violated N.J.S.A. 56:1-2.
The evidence also supports the judge's finding that by using those unregistered trade names, defendant engaged in an "unconscionable commercial practice, deception, fraud, false pretense, false promise or misrepresentation" in violation of N.J.S.A. 56:8-2. We are convinced that the judge correctly determined that defendant's use of the unregistered assumed names constituted an unconscionable commercial or deceptive practice in violation of the CFA because defendant misled prospective attendees into believing that defendant was conducting the Summit using validly-registered names.
2. Implying Association with the United States Government and Other Governmental Entities.
The judge also found that defendant violated the CFA by operating under unregistered assumed names that implied he was associated with the United States government and other governmental entities. The CFA makes it unlawful
for any person to operate under a name or in a manner which wrongfully implies that such person is a branch of or associated with any department or agency of the United States government or of this State or any of its political subdivisions, or use any seal, insignia, envelope or other format which simulates that of any governmental department or agency.The judge also found that, by implying he is associated with federal, state and local governmental entities, defendant engaged in deceptive acts or practices that violate N.J.S.A. 56:8-2.
[N. J.S.A. 56:8-2.1.]
In his decision, the judge noted that the Sandy Website included the seal of the President of the United States and a quote from the President. The Leadership Website also included a photo of the United States Capitol Building. The judge found that the use of these symbols implied that defendant was associated with the United States government.
The judge also noted that defendant used the name NY/NJ Restoration Leadership, which implied an association with the governments of New York or New Jersey. In addition, defendant used ".us" in the Leadership Website's domain name, which also implied a relationship to government agencies.
On appeal, defendant argues that his use of the Presidential seal along with a quote from the President could not possibly lead a reasonable person to believe that he was associated with the United States government. Defendant asserts that use of the name United States Leadership Forum does not imply an association with the United States government. He also asserts that use of ".us" in a website's domain name is a common practice. He claims it is well known that government agencies use ".gov" in their internet addresses.
These arguments are unavailing. An advertisement for the sale of merchandise violates the CFA if it is misleading to the average consumer. Barry, supra, 100 N.J. at 69. We are convinced that the average consumer viewing the Sandy Website or the Leadership Website could reasonably assume that defendant and the Summit were associated with the United States government or the governments of New York or New Jersey.
3. False Promises and Misrepresentations.
In addition, the motion judge determined that defendant made various false promises and misrepresentations regarding the Summit which violated the CFA. The judge found that defendant falsely represented that government officials would attend the Summit, and that they would provide attendees with information on Sandy relief operations.
The judge pointed out that when defendant issued the advertisements for the Summit, a location had not yet been secured for the conference. Indeed, defendant did not book the hotel for the Summit until he met with the Division's representatives on December 4, 2013. Furthermore, by the time the complaint was filed in this matter, no government officials had been confirmed to speak at the Summit.
The CFA may be violated through an affirmative misrepresentation, that is "material to the transaction and which is a statement of fact, found to be false, [and] made to induce the buyer to make the purchase." Mango v. Pierce-Coombs, 370 N.J. Super. 239, 251 (App. Div. 2004) (quoting Ji v. Palmer, 333 N.J. Super. 451, 462 (App. Div. 2000). The misrepresentation of fact must exist at or shortly before the representation is made. See Suarez v. E. Int'l Coll., 428 N.J. Super. 10, 29 (App. Div. 2012), certif. denied, 213 N.J. 57 (2013). "Affirmative acts do not require a showing of knowledge of the falsity of the misrepresentation, negligence, or the intent to deceive." Mango, supra, 370 N.J. Super. at 251 (citing Gennari v. Weichert Co. Realtors, 148 N.J. 582, 605 (1997).
Here, the record supports the judge's determination that defendant made affirmative false statements or misrepresentations regarding the Summit in violation of the CFA. Defendant's email solicitations and websites stated that the Summit would "feature local, state, and national government, business, and nonprofit decision-makers providing the latest information on relief, restoration, and reconstruction." These statements were made to induce persons to register for the Summit and pay the registration fee.
Defendant argues, however, that he stood by all of his promises and representations regarding the Summit. He claims the Summit was only cancelled because plaintiffs filed this action, and this action precluded "any possibility of a successful conference." Defendant asserts that the truth and accuracy of his plans for the Summit were shown by his alleged "proven record of performance in the past." Defendant claims he has conducted various successful conferences in the fields of homeland security, energy, infrastructure and clean technologies.
Defendant cites, among other programs, a Sandy summit, which was held in Washington, D.C. as a substitute for the cancelled New Jersey Summit. According to defendant, federal, state and local government officials attended that summit, and provided attendees with information regarding relief operations, post-Sandy reconstruction programs, and damage assessments. Defendant claims that persons who attended the Washington, D.C. summit "received exactly what was advertised for the New Jersey Summit."
We are not persuaded by these arguments. As the motion judge pointed out in his decision, when defendant issued his solicitations for the New Jersey Summit, he made promises and representations that were false at that time. In those solicitations, defendant asserted that federal, state and local government officials would attend the Summit. However, when these statements were made, no federal, state or local government officials had committed to attending the program.
Defendant had no assurance that any such official would actually attend the program. Even so, individuals were asked to register for the Summit and pay a registration fee based on the promise that such officials would attend. It is irrelevant that defendant may have conducted a successful Sandy relief program in Washington, D.C. The record supports the trial court's determination that defendant made affirmative misrepresentations regarding the New Jersey Summit that violated the CFA.
B. Advertising Regulations.
Actions in contravention of regulations adopted pursuant to the CFA are per se violations of the CFA. Leon v. Rite Aid Corp., 340 N.J. Super. 462, 468 (App. Div. 2001) (citing Cox, supra, 138 N.J. at 17). In this case, plaintiffs alleged that defendant violated N.J.A.C. 13:45A-9.2(a)(9), which states that it is unlawful to make "false or misleading representations of facts concerning the reasons for, existence or amounts of price reductions, the nature of an offering or the quantity of advertised merchandise available for sale." (Emphasis added).
The motion judge found that defendant violated this regulation because "a reasonable person could infer that defendant — the website, the [S]ummit, [and] the assumed names were affiliated with an instrumentality of government." Defendant argues, however, that no reasonable person could confuse the name United States Leadership Forum with the United States government.
Defendant further argues that a reasonable person could not confuse the name NY/NJ Restoration Leadership with the governments of New York and New Jersey. He contends that a reasonably prudent consumer could not believe that he or she would be dealing with an instrumentality of government.
These arguments are without sufficient merit to warrant extended comment. R. 2:11-3(e)(1)(E). We are convinced that the undisputed facts concerning the Summit, the solicitations, the websites, and the assumed names used by defendant in connection therewith support the trial court's determination that defendant violated N.J.A.C. 13:45A-9.2(a)(9). A reasonable person viewing defendant's websites and his solicitations for the Summit would assume defendant was affiliated with the federal government, or the governments of New Jersey and New York.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION