State ex rel Rosenblum v. Living Essentials, LLC ( 2021 )

176
Argued and submitted February 26, 2019; on appeal, general judgment
affirmed; on cross-appeal, supplemental judgment reversed and remanded
July 14; petition for review allowed November 24, 2021 (368 Or 787)
See later issue Oregon Reports
STATE ex rel Ellen F. ROSENBLUM,
in her official capacity as Attorney General
for the State of Oregon,
Plaintiff-Appellant
Cross-Respondent,
v.
LIVING ESSENTIALS, LLC,
a Michigan limited liability company;
and Innovation Ventures, LLC,
a Michigan limited liability company,
Defendants-Respondents
Cross-Appellants.
Multnomah County Circuit Court
14CV09149; A163980
497 P3d 730
In this action under Oregon’s Unlawful Trade Practices Act (UTPA), ORS
646.605 to 646.656, the state appeals a judgment in favor of defendants, manu-
facturers and sellers of 5-hour Energy® (5-HE) energy drinks, and defendants
cross-appeal a supplemental judgment denying their petition for attorney fees
under ORS 646.632(8). In its first two assignments of error on appeal, the state
contends that the trial court erred in interpreting ORS 646.608(1)(b) and (e) to
require proof that defendants’ allegedly unlawful trade practices were “material
to consumer purchasing decisions.” In its third assignment, the state contends
that the court erred in not entering judgment for the state on Count 3, involving
its decaf formulation of 5-HE, arguing that the court’s amended verdict demon-
strates that the court found the state’s evidence sufficient to establish all of the
elements necessary to prove a violation of ORS 646.608(1)(e) as alleged in that
count. On cross-appeal, defendants contend that the trial court erred in deny-
ing their attorney-fee petition under ORS 646.632(8) because they prevailed at
trial and had submitted a satisfactory assurance of voluntary compliance (AVC)
prior to institution of the action. Held: On the state’s appeal, the trial court did
not err in concluding that ORS 646.608(1)(b) and (e) implicitly require proof of
materiality to consumer purchasing decisions, when those provisions are read
in their historical context and in light of constitutional protections on speech.
Further, the court’s verdict, considered in its entirety and in the context of the
parties’ arguments, does not demonstrate that the court necessarily found the
state’s evidence sufficient to establish a violation of ORS 646.608(1)(e) as alleged
in Count 3. On defendants’ cross-appeal, the trial court erred in concluding that
defendants’ AVC was not satisfactory within the meaning of ORS 646.632(8);
accordingly, the court erred in denying defendants attorney fees.
On appeal, general judgment affirmed; on cross-appeal, supplemental judg-
ment reversed and remanded.
Cite as 313 Or App 176 (2021) 177
Kelly Skye, Judge.
Carson L. Whitehead, Assistant Attorney General, argued
the cause for appellant-cross-respondent. Also on the briefs
were Ellen F. Rosenblum, Attorney General, and Benjamin
Gutman, Solicitor General.
Michael J. Sandmire argued the cause for respondents-
cross-appellants. On the combined answering and cross-
opening brief were Lori Irish Bauman, Nena Cook, and Ater
Wynne LLP; and Joel A. Mullin and Stoel Rives LLP. On
the reply brief on cross-appeal were Michael J. Sandmire,
Nena Cook, and Ater Wynne LLP; and Joel A. Mullin and
Stoel Rives LLP.
Trenton H. Norris, Raqiyyah R. Pippins, Said O. Saba,
Jr., and Arnold & Porter Kaye Scholer LLP; and R. Daniel
Lindahl and Bullivant Houser Bailey PC filed the brief
amici curiae for Council for Responsible Nutrition.
Before Lagesen, Presiding Judge, and DeVore, Judge, and
James, Judge.
DeVORE, J.
On appeal, general judgment affirmed; on cross-appeal,
supplemental judgment reversed and remanded.
178 State ex rel Rosenblum v. Living Essentials, LLC
DeVORE, J.
The state initiated this action against the defen-
dant producers and sellers pursuant to the Unlawful Trade
Practices Act (UTPA), ORS 646.605 to 646.656, alleging that
defendants had engaged in a variety of unlawful practices
in advertising 5-hour ENERGY® (5-HE) energy drinks. The
state generally alleged two types of misrepresentations by
defendants: first, that defendants had made misrepresenta-
tions concerning the effects of the noncaffeine ingredients in
their products, and, second, that defendants had misrepre-
sented the results of a survey of physicians in several “Ask
Your Doctor” advertisements, falsely implying that physi-
cians recommended 5-HE to their patients.
After a lengthy bench trial, the trial court entered
a verdict and general judgment in favor of defendants on all
counts. In a supplemental judgment, the court ruled that,
despite prevailing, defendants were not entitled to attorney
fees under ORS 646.632(8). The state appeals the general
judgment, asserting seven assignments of error; defendants
cross-appeal the supplemental judgment denying fees.
On appeal, as explained below, we reject the state’s
first, second, and fourth assignments of error, obviating the
need to address the remaining assignments, and we affirm
the general judgment.1 On cross-appeal, we agree with
defendants that the trial court erred in denying attorney
fees and therefore reverse and remand the supplemental
judgment.
I. BACKGROUND
We begin with an introductory discussion of the
facts and the history of the case. We elicit more facts as they
become appropriate in the analysis of the issues.
Defendants manufacture, market, and sell 5-HE,
a two-ounce “energy shot,” available in Original, Extra-
Strength, and Decaf formulations. At the time of this action,
it was being sold nationwide at a rate of approximately nine
1
Because of that disposition, we need not reach defendants’ cross-
assignments of error raising, among other things, facial and as applied chal-
lenges to the UTPA under Article I, section 8, of the Oregon Constitution.
Cite as 313 Or App 176 (2021) 179
million bottles a week. Original and Extra-Strength 5-HE
contain 200 milligrams and 230 milligrams of caffeine,
respectively, and a proprietary blend of noncaffeine ingre-
dients (NCI), including B-vitamins, enzymes, amino-acids,
and other ingredients. Decaf 5-HE contains six milligrams
of caffeine and a different formulation of NCI.
In 2014, the state filed a complaint against defen-
dants alleging violations of the UTPA based on defendants’
false or misleading promotional claims with regard to its
5-HE products. The complaint sought civil penalties, dis-
gorgement, restitution, injunctive relief, attorney fees, and
costs. See ORS 646.632 (authorizing officials to bring action
in name of the state; injunctive relief); ORS 646.642 (civil
penalties); ORS 646.636 (authorizing court to “make such
additional orders or judgments as may be necessary to
restore to any person in interest any moneys or property,
real or personal, of which the person was deprived by means
of any practice declared to be unlawful in ORS 646.607
or 646.608, or as may be necessary to ensure cessation of
unlawful trade practices”); see also Pearson v. Philip Morris,
Inc., 358 Or 88, 116, 361 P3d 3 (2015) (“A public official bring-
ing an enforcement action may seek, among other possible
relief, injunctions, imposition of statutory penalties, and
loss of licenses and franchises.”). Defendants asserted sev-
eral affirmative defenses and counterclaimed for attorney
fees under ORS 646.632(8), ORS 20.075, and ORS 20.105.
The case proceeded to a bench trial on the state’s
second amended complaint, which asserted claims for relief
under ORS 646.608(1)(e) (counts 1 to 4), ORS 646.608(1)(g)
(count 5), ORS 646.608(1)(b) (count 6), and ORS 646.607(1)
(count 7).2 The complaint generally alleged two categories
of claims—“(1) claims regarding what [5-HE] does; and
(2) claims regarding whether [5-HE] is recommended by
doctors.” With respect to the first category, the state alleged
that defendants misrepresented, in print, internet, televi-
sion, and radio advertisements, that the NCI contained in
2
The trial court dismissed several of the state’s counts before trial on defen-
dants’ motions to dismiss. The court denied defendants’ several motions for sum-
mary judgment as to the claims alleged in the second amended complaint. And,
the court agreed to bifurcate the issues of liability and damages.
180 State ex rel Rosenblum v. Living Essentials, LLC
[5-HE] provided consumers with energy, alertness, and
focus, when “any meaningful effect from using [5-HE] as
directed comes only from a concentrated shot of caffeine.
[5-HE] is simply a caffeine delivery device, and in its Decaf
formulation, it is not even that.” The second category of
claims relate to an “Ask Your Doctor” (AYD) advertising
campaign that included website advertising and 30-, 15-,
and 10-second television advertisements, which, according
to the state “misleadingly implied that doctors had recom-
mended [5-HE] by name in a way that they had not,” and,
with regard to the online advertising, “made claims about
benefits provided by certain ingredients in [5-HE].” The
AYD campaign ran for approximately 10 weeks in 2012.
At the close of the state’s case, the trial court
granted defendants’ motion for involuntary dismissal as to
two of the counts (counts 5 and 7). Defendants also moved to
dismiss the complaint under the free expression guarantee
of Article I, section 8, of the Oregon Constitution, asserting
facial and as applied challenges; the trial court deferred rul-
ing on those arguments.
The bench trial proceeded to its conclusion on the
remaining counts and culminated in a verdict—complete
with findings of fact and conclusions of law—in favor of
defendants. The state objected to the verdict on various
grounds, and defendants requested additional special find-
ings. The trial court issued an order amending the verdict,
but the court adhered to its rulings for defendants. The
court entered a general judgment in favor of defendants on
all of the state’s claims.
Defendants filed a statement for attorney fees, costs,
and disbursements, alleging an entitlement to fees under
ORS 646.632(8) (discussed below). After a hearing, the trial
court denied defendants an award of fees and allowed costs
and disbursements limited to those not associated with the
claim for attorney fees. The court entered a supplemental
judgment reflecting that ruling.
The state appeals the general judgment in favor of
defendants, and defendants cross-appeal the supplemental
judgment denying fees and limiting costs.
Cite as 313 Or App 176 (2021) 181
II. THE STATE’S APPEAL
A. Materiality (First and Second Assignments of Error)
The state’s first and second assignments of error
challenge whether, as the trial court held, “materiality” is
a requirement in proof of an unlawful trade practice under
ORS 646.608(1)(b) and (e). We conclude that it is and, there-
fore, that the trial court did not err. The state’s challenge
implicates the trial court’s verdicts on counts 1, 4, and 6.3
We begin by describing those counts and the trial court’s
resolution of them.
In counts 1 and 4, the state asserted violations of
ORS 646.608(1)(e),4 which makes it an unlawful trade prac-
tice to represent that goods “have sponsorship, approval,
characteristics, ingredients, uses, benefits, quantities or
qualities” that the goods do not have. Count 1 alleged that
defendants falsely or misleadingly claimed that the NCI in
Original and Extra Strength 5-HE “provide consumers with
benefits like energy, alertness, or focus.” A sample of one of
the 5-HE print advertisements at issue reads, in part:
“To get in the zone—no matter what you’re doing—try
5-Hour ENERGY®. It contains the powerful blend of
B-vitamins for energy, and amino acids for focus. The two-
ounce shot takes seconds to drink and in minutes you’re
feeling bright, alert and ready for action. And the feeling
lasts for hours—without the crash or jitters.”
3
As the state recognizes in these assignments of error, the court’s applica-
tion of a materiality requirement also implicates count 3, related to Decaf 5-HE.
However, as to that count, the court ruled that any false implications about the
NCI in Decaf 5-HE “would necessarily be material to consumer purchasing deci-
sions” because the NCI are the primary ingredients in that product. The court,
therefore, did not decide count 3 on the basis of lack of materiality. We address
the court’s disposition of count 3 when we reach the state’s fourth assignment of
error.
Not at issue on appeal is the trial court’s ruling in favor of defendants on
count 2 (alleging that defendants violated ORS 646.608(1)(e) by falsely claiming
that Original and Extra Strength 5-HE were superior to consuming an equiva-
lent amount of caffeine from coffee or other sources), dismissal of count 5 (alleging
violations of ORS 646.608(1)(g), which prohibits misrepresenting that goods “are
of a particular standard, quality, or grade”), and dismissal of count 7 (alleging
violations of ORS 646.607(1), which bars “unconscionable tactic[s] in connection
with” the sale of goods).
4
Although ORS 646.608(1) has been amended since the events giving rise to
this case, those amendments are immaterial to our analysis. We therefore cite
the current version throughout this opinion.
182 State ex rel Rosenblum v. Living Essentials, LLC
Count 4 also alleged a violation of ORS 646.608(1)(e),
but did so with reference to defendants’ AYD campaign.
Count 4 alleged that defendants “presented the results of
a survey [of doctors] in a deceptive manner that would lead
consumers to believe doctors had approved of [5-HE] in a
way that they had not.” As an example, the transcript of the
30-second AYD television advertisement reads:
“We asked over 3,000 doctors to review Five-Hour Energy
and what they said is amazing. Over 73% who reviewed
Five-Hour Energy said that they would recommend a
low-calorie energy supplement to their healthy patients who
use energy supplements. 73%. Five-Hour Energy has four
calories and is used over 9 million times a week. Is Five-
Hour Energy right for you? Ask your doctor. We already
asked 3,000.”
Based on the same AYD campaign, count 6 alleged
a violation of ORS 646.608(1)(b), which prohibits “[c]aus[ing]
likelihood of confusion or of misunderstanding as to the
source, sponsorship, approval, or certification of * * * goods.”
The trial court ruled in favor of defendants on all
counts. As relates to the first and second assignments of
error, the court determined that the state was required to
prove that defendants’ unlawful practices, involving misrep-
resentations (subsection (1)(e)) or causing likely confusion
or misunderstanding (subsection (1)(b)), were “material to
consumer purchasing decisions,” relying on our decision in
State ex rel Rosenblum v. Johnson & Johnson, 275 Or App
23, 33-34, 362 P3d 1197 (2015), rev den, 358 Or 611 (2016).
The trial court concluded, as to counts 1, 4, and 6, that the
state had failed to carry its burden of proving the material-
ity of defendants’ alleged unlawful practices.
With regard to count 1, the court found that the
state failed to prove that defendants’ “false representations
by implication about the effects of the NCI in [5-HE] were
material to consumer purchasing decisions as to the caf-
feinated versions of [5-HE].” After weighing the competing
testimony of the parties’ experts, the court found more per-
suasive defendants’ expert, who offered a consumer survey
demonstrating that the NCI blend in defendants’ caffeinated
products is not a significant factor in consumer purchasing
Cite as 313 Or App 176 (2021) 183
decisions; that most consumers were repeat customers who
were satisfied with their experience with the product; that
consumer buying was influenced by a multitude of factors,
including product effectiveness, taste, convenience, and
price.
With respect to counts 4 and 6, the court found that
the substantive message in the AYD advertising campaign
was not misleading or confusing, nor was it material to con-
sumer purchasing decisions. The trial court weighed com-
peting expert and survey evidence and found more persua-
sive that advertising is not highly influential to consumer
purchasing decisions in general; that, in particular, the
cessation of the AYD advertising campaign did not cause a
drop in sales; that consumers expect bias in a survey touted
in advertising; and that the doctors’ survey was not repre-
sented to be conducted in a scientific or unbiased manner.
In its combined first two assignments of error, the
state does not challenge the trial court’s ultimate findings
that the state failed to prove that defendants’ trade prac-
tices materially influenced consumer decisions. Instead, the
state challenges the trial court’s determination that ORS
646.608(1)(e) and ORS 646.608(1)(b) impose that “material-
ity” element at all. Nothing in the statute, the state asserts,
explicitly “requires the state to prove that an unlawful
trade practice was ‘material to consumer purchasing deci-
sions.’ ” By requiring such an element, the state contends,
the trial court’s interpretation violates a core principle of
statutory interpretation—“not to insert what has been omit-
ted.” ORS 174.010. The state argues that the trial court’s
reliance on Johnson & Johnson was misplaced and that the
correct approach is the plain text approach used in Daniel
N. Gordon, PC v. Rosenblum, 361 Or 352, 357, 393 P3d 1122
(2017) (Gordon), which, in the state’s view, leads to the con-
clusion that materiality is not an element of the UTPA vio-
lations alleged here. According to the state, the legislature
already determined that the types of misrepresentations set
out in ORS 646.608(1) are necessarily (just by being listed)
material to consumer purchasing decisions as a matter of
law. The state contends that the legislature “did not intend to
require specific proof of materiality in each individual case,
184 State ex rel Rosenblum v. Living Essentials, LLC
which can be difficult and expensive.” The state urges us to
reverse the trial court’s judgment as to counts 1, 4, and 6
and remand for the court to apply the state’s view of the
legal standard.
Defendants respond that the trial court properly
applied Johnson & Johnson and that the court’s ruling is not
inconsistent with Gordon. Defendants urge that a require-
ment of materiality to consumer purchasing decisions is
“simple common sense,” because, otherwise, “all representa-
tions about a product would be actionable under the UTPA,
regardless of how trivial they may be.” Defendants point
to decisions from other jurisdictions that “materiality is
required to prove deception” under other states’ consumer
protection statutes.
In a bench trial, an argument that the trial court
applied an incorrect legal standard “is akin to an asser-
tion that a trial court delivered an incorrect jury instruc-
tion”; accordingly, we review to determine whether the
court instructed itself incorrectly as to the law, and, if so,
whether the erroneous self-instruction was harmless. State
v. Zamora-Skaar, 308 Or App 337, 353, 480 P3d 1034 (2020).
In this case, that question reduces to whether the trial court
properly construed ORS 646.608(1)(b) and (1)(e).
In interpreting a statute, our primary goal is to
determine the legislature’s intent in enacting it. State v.
Gaines, 346 Or 160, 171, 206 P3d 1042 (2009); ORS 174.020.
We do so by considering the text and context, along with
any pertinent legislative history offered by the parties that
we find helpful to our analysis. Gaines, 346 at 171-72. If
the legislature’s intent remains unclear, we apply “general
maxims of statutory construction.” Id. at 172. Text and con-
text are the best evidence of the legislature’s intent. Ogle
v. Nooth, 355 Or 570, 578, 330 P3d 572 (2014). Context
includes, among other things, prior opinions interpreting
the relevant statutory wording and other provisions of the
same or related statutes. Polacek and Polacek, 349 Or 278,
284, 243 P3d 1190 (2010); State v. Bluel, 285 Or App 358,
362, 397 P3d 497 (2017). The court’s “prior construction of a
statute at issue is an important consideration.” Halperin v.
Cite as 313 Or App 176 (2021) 185
Pitts, 352 Or 482, 491, 287 P3d 1069 (2012) (citing State v.
Cloutier, 351 Or 68, 100, 261 P3d 1234 (2011)).
“Oregon’s UTPA, like those of many other jurisdic-
tions, was enacted as a comprehensive statute for the protec-
tion of consumers from unlawful trade practices.” Pearson,
358 Or at 115; see also Denson v. Ron Tonkin Gran Turismo,
Inc., 279 Or 85, 90 n 4, 566 P2d 1177 (1977) (describing leg-
islative history of UTPA as “support[ing] the view that it is
to be interpreted liberally as a protection to consumers”);
Johnson & Johnson, 275 Or App at 32 (“[T]he UTPA is a
remedial statutory scheme that should, to the extent conso-
nant with the Gaines construct, be construed so as to effec-
tuate its consumer protection purposes.”). It allows for both
public and private enforcement. See ORS 646.632 (authoriz-
ing state enforcement of UTPA provisions and describing
state enforcement processes); ORS 646.638(1) (authorizing
action by private party to enforce UTPA). In a public enforce-
ment action—in contrast to a private action—the state need
not prove that “any consumer has suffered economic loss or
other injury as a result of the unlawful practice.” Pearson,
358 Or at 116; ORS 646.638(1) (setting out “ascertainable
loss” requirement for private actions); ORS 646.608(3) (state
not required to prove “actual confusion or misunderstand-
ing” to prevail).
ORS 646.608(1) sets out a myriad of unlawful trade
practices,5 two of which are put at issue in this case by
counts 1, 4, and 6. Specifically, ORS 646.608(1) provides, as
relevant:
“A person engages in an unlawful practice if in the
course of the person’s business, vocation or occupation the
person does any of the following:
“* * * * *
“(b) Causes likelihood of confusion or of misunder-
standing as to the source, sponsorship, approval, or certifi-
cation of real estate, goods or services.
“* * * * *
5
At present count, ORS 646.608(1) lists approximately 79 such practices. See
Pearson, 358 Or at 115 (“The trade practices declared unlawful under the UTPA
are extensive, too much so for description.”).
186 State ex rel Rosenblum v. Living Essentials, LLC
“(e) Represents that real estate, goods or services have
sponsorship, approval, characteristics, ingredients, uses,
benefits, quantities or qualities that the real estate, goods
or services do not have or that a person has a sponsorship,
approval, status, qualification, affiliation, or connection
that the person does not have.”
The opening clause of ORS 646.608(1) thus describes trans-
actions subject to the UTPA, while subsections (1)(b) and
(1)(e) describe the particular wrongs at issue here.
As the state emphasizes, neither (1)(b) nor (1)(e)
explicitly refers to practices that are “material to consumer
purchasing decisions,” consistent with the trial court’s inter-
pretation.6 We are not unmindful of the admonition that, in
interpreting statutes, we are “not to insert what has been
omitted.” ORS 174.010. However, that statute also requires
us, if possible, to adopt a construction that will “give effect
to all” of the statute’s provisions. Id. And, as always, our
ultimate goal is to discern the most likely intent of the legis-
lature. IAFF, Local 3564 v. City of Grants Pass, 262 Or App
657, 661, 326 P3d 1214 (2014) (“Where * * * the resolution of
a dispute requires us to determine the meaning of a stat-
ute, our ‘paramount goal’ is to determine the legislature’s
intent.” (Quoting Gaines, 346 Or at 171.)).
As the Supreme Court has recognized, in that pur-
suit of legislative intent, there are times when the legisla-
ture’s choice of words naturally implies a requirement that
is not otherwise expressly stated in the text. For instance, in
Pearson, the court held that “reliance” was required to prove
causation in a private UTPA claim, given the nature of the
unlawful conduct and ascertainable loss alleged, notwith-
standing the fact that ORS 646.638(1) does not, “at least by
its terms,” contain such a requirement. 358 Or at 124-27.
The court reasoned that, “[a]s a function of logic, not statu-
tory text, when the claimed loss is the purchase price, and
when that loss must be ‘as a result of’ a misrepresentation,
reliance is what ‘connects the dots’ to provide the key causal
6
Elsewhere in ORS 646.608(1), the word “material” appears only once:
Subsection (1)(t), added to the statute after the provisions at issue here, see Or
Laws 1977, ch 195, § 2, makes it an unlawful practice to, “[c]oncurrent with ten-
der or delivery of any real estate, goods or services[,] fail[ ] to disclose any known
material defect or material nonconformity.”
Cite as 313 Or App 176 (2021) 187
link between the misrepresentation and the loss.” Id. at 126.
See also Johnson & Johnson, 275 Or App at 33-34 (conclud-
ing that misrepresentation of material “risk” of product
defect is actionable misrepresentation of “fact” under ORS
646.608(1)(b), (e), and (g), based largely on legislative intent
“manifest[ ]” in “sweep and scope” of those provisions, and
court’s obligation to effectuate consumer protective pur-
poses of UTPA to extent possible).
With that in mind, we turn back to the text of the
statutory provisions at issue. ORS 646.608(1)(b) makes it
unlawful to “cause[ ] likelihood of confusion or of misunder-
standing” as to a product’s “source, sponsorship, approval,
or certification.” The ordinary meaning of the verb “cause”
is “to serve as cause or occasion of : bring into existence
: make” and “to effect by command, authority, or force.”
Webster’s Third New Int’l Dictionary 356 (unabridged ed
2002). The definitions of “confusion” include, as potentially
relevant here, “a state of being discomfited, disconcerted,
chagrined, or embarrassed esp. at some blunder or check”;
“state of being confused mentally : lack of certainty, orderly
thought, or power to distinguish, choose, or act decisively
: perplexity”. Id. at 477. Relatedly, “misunderstanding”
means “a failure to understand : misinterpretation.” Id. at
1447.
Putting all of that together, for a seller’s unlawful
trade practice to “bring into existence” or “effect by author-
ity” a “state of being discomfited, disconcerted, chagrined,
or embarrassed” or a “lack of certainty” or “power to distin-
guish, choose, or act decisively” with respect to its product,
the unlawful conduct necessarily must be material to the
consumer’s decision to buy the product. Said another way,
if a seller’s allegedly unlawful practice is immaterial to the
consumers’ purchasing decisions, it is unlikely to create a
state of discomfort, chagrin, or uncertainty, or affect the
consumer’s power to distinguish, choose, or act decisively
with respect to that product.
ORS 646.608(1)(e) makes it unlawful to “represent[ ]”
that products have certain attributes—that is, “sponsor-
ship, approval, characteristics, ingredients, uses, benefits,
quantities or qualities”—that they “do not have.” The word
188 State ex rel Rosenblum v. Living Essentials, LLC
“representation” is defined in the UTPA as “any manifes-
tation of any assertion by words or conduct, including, but
not limited to, a failure to disclose a fact.” ORS 646.608(2).7
Thus, the crux of the violation under ORS 646.608(1)(e) is
a misleading assertion about various attributes that, by
their nature, can have the potential to affect a purchas-
ing decision, such as sponsorship, approval, characteris-
tics, ingredients, uses, benefits, quantities, or qualities.
The statute does not expressly say whether it is limited to
attributes that actually do have that potential, or whether
it reflects a legislative judgment that every misrepresented
characteristic—regardless of how innocuous—has the
potential to mislead and should constitute a violation of the
UPTA. At the very least, the plain text does not foreclose the
former interpretation.
Although the text in isolation provides little guid-
ance as to whether the legislature had in mind a materi-
ality requirement, other parts of the UTPA provide addi-
tional assistance in determining the legislature’s intended
meaning. See Stevens v. Czerniak, 336 Or 392, 401, 84 P3d
140 (2004) (“[T]ext should not be read in isolation but must
be considered in context.”); see also Gordon, 361 Or at 359(interpreting the UTPA “as a whole” to determine whether
it “applies only to conduct between persons in a customer
relationship”). Among the introductory definitions, ORS
646.605(8) provides:
7
In Searcy v. Bend Garage Company, 286 Or 11, 14, 592 P2d 558 (1979),
the plaintiff brought a claim under ORS 646.608(1)(f) (unlawful practice to
“[r]epresent[ ] that real estate or goods are original or new if they are deterio-
rated, altered, reconditioned, reclaimed, used or secondhand) in connection with
an automobile purchase. Among other things, the defendant assigned error to the
denial of its requested jury instruction that would have defined “representation”
in terms of materiality instead of relying on the definition in ORS 646.608(2).
The proposed instruction would have stated, “ ‘A representation is an actual defi-
nite statement or actual definite conduct that is material and that was relied
upon by the plaintiffs. It can also include concealment of a material fact that
would normally have been relied upon by the plaintiffs and that defendant had a
duty to disclose to plaintiffs.’ ” Id. at 16 (emphases in original). The court rejected
that instruction, explaining that “in the section defining ‘representation’ the leg-
islature did not require that a concealed fact be material.” Id. at 17. The court
stated that “[m]any of the enumerated unlawful trade practices involve represen-
tations,” including ORS 646.608(1)(e), but Searcy did not purport to interpret the
elements of a claim under any of those paragraphs; its holding was limited to the
definition of the term “representation” under ORS 646.608(2) and does not other-
wise inform our analysis. Id.Cite as 313 Or App 176 (2021) 189
“  ‘ Trade’ and ‘commerce’ mean advertising, offering or dis-
tributing, whether by sale, rental or otherwise, any real
estate, goods or services, and include any trade or com-
merce directly or indirectly affecting the people of this state.”
(Emphasis added.) The term “trade” thus generally guides
our understanding that the “trade” or “commerce” governed
by the UTPA is that which “directly or indirectly affect[s]”
consumers. Id. (emphasis added).
Relatedly, in relevant part, ORS 646.632(1) provides:
“[A] prosecuting attorney who has probable cause to believe
that a person is engaging in, has engaged in, or is about
to engage in an unlawful trade practice may bring suit in
the name of the State of Oregon in the appropriate court to
restrain such person from engaging in the alleged unlaw-
ful trade practice.”
(Emphases added.) And, ORS 646.636 provides:
“The court may make such additional orders or judg-
ments as may be necessary to restore to any person in inter-
est any moneys or property, real or personal, of which the
person was deprived by means of any practice declared to
be unlawful in ORS 646.607 or 646.608, or as may be nec-
essary to ensure cessation of unlawful trade practices.”
(Emphases added.) Thus, the UTPA “as a whole” appears
to envision that the acts to be remedied as unlawful trade
practices are ones that have affected consumers—in other
words, ones that materially bear on consumer purchasing
choices.
As noted, prior judicial interpretations of a statute
can also provide relevant context. Both parties rely heavily
on that context here. However, contrary to their respective
positions, neither Johnson & Johnson (relied on by defen-
dants) nor Gordon (advanced by the state) controls the out-
come in this case.
Johnson & Johnson involved some of the same pro-
visions of the UTPA that are at issue here.8 275 Or App at
8
In addition to claims under ORS 646.608(1)(b) and (e), the state also alleged
claims under ORS 646.608(1)(g) and ORS 646.607(1). But “[t]he gravamen of each
of those closely related claims was that defendants’ misrepresentation of the risk
that the product was defective constituted actionable conduct under the UTPA.”
Johnson & Johnson, 275 Or App at 29.
190 State ex rel Rosenblum v. Living Essentials, LLC
29. But, the question in that case was whether the failure to
disclose a material risk of a defective product (specifically,
that some units of defendants’ painkiller Motrin did not dis-
solve at the required rate for full effectiveness) was action-
able under the misrepresentation provisions of the UTPA,
specifically, ORS 646.608(1)(b), (e), and (g). Id. at 31. We
rejected the defendants’ position that the UTPA “does not
prohibit representations that are ‘merely at risk’ of being
untrue,” id., and held that the risk of product defect was
instead a “fact” under those provisions and the failure to
disclose it was therefore actionable, id. at 34. Along the way,
we observed that the wide array of factual misrepresenta-
tions encompassed in the statutory language “manifests the
legislature’s intent to broadly prohibit misrepresentations
materially bearing on consumer purchasing choices.” Id. at
33-34 (emphasis added). We did not, however, hold that the
state was required to prove the same as an element of a
UTPA violation. We stated:
“The sweep and scope of those provisions—both with
respect to the form and content of misrepresentations—
manifests the legislature’s intent to broadly prohibit mis-
representations materially bearing on consumer purchasing
choices. A material risk that a product has a latent defect is
exactly the kind of inherent feature of a product implicated
under ORS 646.608(1) and (2). If a product is advertised
and sold as effective for its intended use, notwithstanding
a known risk that the product may not be fully effective,
that risk itself is a ‘fact’ for purposes of the UTPA, and its
nondisclosure is actionable under the UTPA.”
Id. Thus, although it provides some support for defendant’s
(and the trial court’s) reading of the statute, Johnson &
Johnson does not compel the conclusion that “material to
consumer purchasing decisions” is a required component of
a violation under subsections (1)(b) or (e).
Gordon, to which the state points, is also not dis-
positive of that question. In Gordon, the Supreme Court
considered whether the UTPA applied to the debt collection
activities of a lawyer and his law firm. As relevant here,
the issue involved only ORS 646.608(1)(b), on causing likely
“confusion” or “misunderstanding,” as it applied to loans and
credit. 361 Or at 354. In summary, the court agreed with the
Cite as 313 Or App 176 (2021) 191
state that the statute, on its face, required three elements:
“(1) ‘a person’ (2) ‘in the course of the person’s business, voca-
tion or occupation’ (3) ‘[c]auses likelihood of confusion or of
misunderstanding as to the source, sponsorship, approval,
or certification of, among other things, a ‘loan or extension of
credit.’ ” Id. at 367 (brackets in Gordon). Although the court’s
summary recitation of the elements did not include mate-
riality, the court was not asked to consider whether such a
requirement may be implicit in a claim under the statute.
That question was not before the court.
With that uncertain landscape, we turn to the legis-
lative history. Although neither party refers us to any history
pertaining to ORS 646.608(1)(b) and (e), those subsections,
in substantially the same form,9 were part of the original
enactment of the modern version of the UTPA in 1971.10 Or
Laws 1971, ch 744, § 7. The language of the unlawful prac-
tices listed in ORS 646.608(1)(a) to (j) was “largely borrowed”
from the Uniform Deceptive Trade Practices Act (UDTPA).11
Denson, 279 Or at 90 n 4. As the court noted in Denson, the
UDTPA focused on “identifying business conduct which is in
unfair competition with other businesses,” while the history
of the UTPA indicates that the Oregon legislature was con-
sumer protective. Id. (“[T]he legislative history of the Oregon
Unlawful Trade Practices Act supports the view that it is
to be interpreted liberally as a protection to consumers.”).
Because of those different policy underpinnings, the Denson
court also indicated that interpretations of the UDTPA were
9
There have been some changes since, for example, the addition of “real
estate” to the description of deceptive practices listed in ORS 646.608(1), includ-
ing in paragraphs (b) and (e). See Or Laws 1973, ch 235, § 2. However, for our
purposes, the changes are immaterial.
10
For a brief description of Oregon’s consumer fraud statute prior to 1971,
see Ralph James Mooney, The Attorney General as Counsel for the Consumer: The
Oregon Experience, 54 Or L Rev 117, 118-19 (1975).
11
One writer has commented that Oregon adopted a “somewhat amended
version” of the Federal Trade Commission’s proposed Unfair Trade Practices and
Consumer Protection Law (UTPCPL), which was recommended by the Council of
State Governments. Mooney, 54 Or L Rev at 119-20, 119 n 13 (citing UTPCPL,
reprinted in Council of State Governments, 1970 Suggested State Legislation
141); see also id. at 121 (noting that Oregon chose the third alternative offered by
the UTPCPL and that subsections (a) through (j) of ORS 646.608(1) were adopted
“nearly verbatim” from the UTPCPL). Apparently, in that respect, the language
of the UDTPA and the UTPCPL were the same.
192 State ex rel Rosenblum v. Living Essentials, LLC
therefore “of limited value” in discerning the legislature’s
intent with respect to Oregon’s UTPA.12 Id.
That does not tell the entire story, however. As the
court recognized in Denson, Oregon, in any event, largely
adopted the list of deceptive trade practices from the UDTPA.
More particularly, in enacting ORS 646.608(1)(b) and (e),
the legislature very closely tracked the language of sections
2(a)(2) and (5) of the UDTPA. Uniform Deceptive Trade
Practices Act, 54 Trademark Rep 897, 899-901 (1964).13 And
those provisions, in turn, were derived from, among other
sources, the Restatement (Second) of Torts and section 43(a)
of the federal Lanham Act, 15 USC § 1125(a) (1958). See
Uniform Deceptive Trade Practices Act § 2(a)(2) comment,
54 Trademark Rep at 899 (noting that “[t]he ‘likelihood of
confusion’ test is referred to in the Restatement (Second),
Torts § 729, comment a (Tent. Draft No. 8, 1963) as ‘a phrase
which has long been used in statutes, Federal and State,
and in court opinions’ ”); Uniform Deceptive Trade Practices
Act § 2(a)(5) comment, 54 Trademark Rep at 900 (explaining
that the subsection “deals with false advertising of goods,
services or businesses,” referencing, inter alia, “Restatement
(Second), Torts § 712, comment d (Tent. Draft No. 8, 1963),”
12
Although, as the court observed in Denson, the UDTPA’s emphasis was
on the protection of businesses from unfair competitive advertising practices; it
effectively protected consumers as well. See Richard F. Doyle, Jr., Merchant and
Consumer Protection: The Uniform Deceptive Trade Practices Act, 76 Yale L J 485,
489 (Jan 1967) (suggesting that UDTPA required a showing, among other things,
that the misrepresentation “actually deceives or has the tendency to deceive a
substantial segment of its audience, that the deception is likely to make a differ-
ence in the purchasing decision, and that the particular plaintiff has been, or is
likely to be injured by the deception”).
13
Section 2(a) of the UDTPA provided, as relevant:
“A person engages in a deceptive trade practice when, in the course of his
business, vocation, or occupation, he:
“* * * * *
“(2) causes likelihood of confusion or of misunderstanding as to the
source, sponsorship, approval, or certification of goods or services;
“* * * * *
“(5) represents that goods or services have sponsorship, approval, char-
acteristics, ingredients, uses, benefits, or quantities that they do not have or
that a person has a sponsorship, approval, status, affiliation, or connection
that he does not have[.]”
54 Trademark Rep at 899-900. In contrast to section 2(a)(5), ORS 646.608(1)(e)
also includes misrepresentations as the “qualities” of a product or the “qualifica-
tion” of a person.
Cite as 313 Or App 176 (2021) 193
and noting that section 43(a) of the Lanham Act “authorizes
similar private actions”).
Those sources are consistent with what the text
and context suggest to us, which is that the legislature
would have understood unlawful trade practices to be
ones that have the potential to affect consumers—in other
words, ones that materially bear on consumer purchasing
choices. In particular, section 43(a) of the federal Lanham
Act contemplated that the prohibited deception be material
to a consumer’s purchasing decisions. As one commentator
has noted, “despite the unqualified language” of the “false
advertising sections” of the UDTPA
“decisions under analogous § 43(a) of the federal Lanham
Trademark Act [14] suggest that a person who invokes these
false advertising provisions will have to show that the
defendant’s advertisement is a false representation of ‘fact,’
that it actually deceives or has the tendency to deceive a
substantial segment of its audience, that the deception is
likely to make a difference in the purchasing decision, and
that the particular plaintiff has been, or is likely to be
injured by the deception.”
Richard F. Doyle, Jr., Merchant and Consumer Protection:
The Uniform Deceptive Trade Practices Act, 76 Yale L J 485,
489 (Jan 1967) (emphasis added; footnote omitted).15
14
At the time, section 43(a) of the Lanham Act provided:
“Any person who shall affix, apply, or annex, or use in connection with any
goods or services, or any container or containers for goods, a false designation
of origin, or any false description or representation, including words or other
symbols tending falsely to describe or represent the same, and shall cause
such goods or services to enter into commerce, and any person who shall with
knowledge of the falsity of such designation of origin or description or repre-
sentation cause or procure the same to be transported or used in commerce
or deliver the same to any carrier to be transported or used, shall be liable
to a civil action by any person doing business in the locality falsely indicated
as that of origin or in the region in which said locality is situated, or by any
person who believes that he is or is likely to be damaged by the use of any
such false description or representation.”
60 Stat 441 (1946), 15 USC § 1125(a) (1952).
15
Doyle references Gilbert H. Weil, Protectability of Trademark Values
against False Competitive Advertising, 44 Calif L Rev 527, 537 (1956), in support
of that position. Doyle, 76 Yale L J at 489 n 22. Tracing the development of case
law following the enactment of section 43(a) of the Lanham Act, Weil asserts that,
for a plaintiff to prevail on a claim of false competitive advertising based upon a
showing of likelihood of damage, the plaintiff must be prepared to establish the
factors suggested by Doyle, including that the false advertising has a tendency
194 State ex rel Rosenblum v. Living Essentials, LLC
In light of the clear purpose behind the UTPA to
protect consumers, it is likely that the legislature intended a
similar materiality requirement to be implicit in the subsec-
tions drawn from the UDTPA, including ORS 646.608(1)(b)
and (e). All sources agree that Oregon’s UTPA is first and
foremost a consumer protection statute. See 313 Or App
at 185 (citing cases stating that principle). The UTPA and
cases from Denson, through Johnson & Johnson, to Pearson,
recognize that the UTPA is intended to protect consumers
in their purchasing decisions. As a consequence, it is diffi-
cult to imagine how making actionable immaterial misrep-
resentations under ORS 646.608(1)(b) and (e) would serve to
accomplish the purpose of the UTPA to prevent consumers
from harm. There is no need to provide a remedy for misrep-
resentations that are irrelevant to consumers’ purchasing
decisions to accomplish the goal of protecting consumers.16
To the extent that there is any remaining uncer-
tainty after examining the legislative history, however, can-
ons of statutory construction resolve the question. See State
v. Rodriguez, 217 Or App 24, 33, 175 P3d 471 (2007) (“Even
assuming that the legislative history is not sufficiently illu-
minating of the legislature’s intentions, all that means is
that we resort to canons of construction to resolve the ambi-
guity.”). The canon calling for the avoidance of constitu-
tional issues is especially apt here. Under that canon, “when
one plausible construction of a statute is constitutional and
another plausible construction of a statute is unconstitu-
tional, courts will assume that the legislature intended the
constitutional meaning.” State v. Kitzman, 323 Or 589, 602,
920 P2d 134 (1996). It is not necessary that the constitu-
tional argument would necessarily prevail; rather, it may be
invoked where “there is even a tenable argument of uncon-
stitutionality. Westwood Homeowners Assn., Inc. v. Lane
County, 318 Or 146, 160, 864 P2d 350 (1993), adh’d to as
modified on recons, 318 Or 327, 866 P2d 463 (1994) (rejecting
to deceive, and that “the deception is material, in the sense that it is likely to make
a difference in the purchasing decision.” Weil, 44 Calif L Rev at 533-37 (emphasis
added).
16
For that reason and those above, we disagree with the state that the leg-
islature already defined those aspects of goods that are necessarily material to
consumer purchasing decisions in its description of unlawful practices in the
statute.
Cite as 313 Or App 176 (2021) 195
proposed interpretation that ‘arguably would infringe on
the constitutional rights’ of parties).” Rodriguez, 217 Or App
at 34.
Here, reading ORS 646.608(1)(b) and (e) as the state
suggests—that is, without a materiality requirement—
raises more than just a tenable possibility that the statute
would run afoul of Article I, section 8.17 Under Article I,
section 8, a statute “written in terms directed to the sub-
stance of any ‘opinion’ or any ‘subject’ of communication” is
invalid on its face, unless it fits “wholly * * * within some
historical exception.” State v. Robertson, 293 Or 402, 412,
649 P2d 569 (1982). Regardless of whether subsections (1)(b)
or (e) fit within the historical exception for fraud if we were
to read a materiality requirement into the statute, without
that requirement, serious constitutional questions are pat-
ent; common-law fraud is a tort of deception and has always
required that a representation or omission have some poten-
tial to deceive.18 See, e.g., Conzelmann v. N. W. P. & D. Prod.
Co., 190 Or 332, 350, 225 P2d 757 (1950) (“Comprehensively
stated, the elements of actionable fraud consist of: (1) a rep-
resentation; (2) its falsity; (3) its materiality; (4) the speak-
er’s knowledge of its falsity or ignorance of its truth; (5) his
intent that it should be acted on by the person and in the
manner reasonably contemplated; (6) the hearer’s ignorance
of its falsity; (7) his reliance on its truth; (8) his right to rely
thereon; (9) and his consequent and proximate injury.”); see
also State ex rel Redden v. Discount Fabrics, 289 Or 375,
384-85, 615 P2d 1034 (1980) (examining differences between
fraud and UTPA); Wolverton v. Stanwood, 278 Or 709, 713,
565 P2d 755 (1977) (“The elements of common law fraud are
17
Article I, section 8, provides, “No law shall be passed restraining the free
expression of opinion, or restricting the right to speak, write, or print freely on
any subject whatever; but every person shall be responsible for the abuse of this
right.”
18
In connection with defendants’ cross-assignments of error—which we are
not required to reach—the parties dispute whether ORS 646.608(1)(e) and (b)
are within the historical exception for fraud because subsection (1)(e) does not
require proof that speech about a product is knowingly false and subsection (1)(b)
does not require a false statement. Given our disposition, we are not required
to reach those cross-assignments of error. Further, we emphasize that we are
not conclusively resolving the question whether, in the absence of a materiality
requirement, subsection (1)(b) or (1)(e) would violate Article I, section 8, only that
interpreting the provisions in that fashion would present such a stark possibility
of constitutional infirmity that we are called upon to avoid the question.
196 State ex rel Rosenblum v. Living Essentials, LLC
distinct and separate from the elements of a cause of action
under the Unlawful Trade Practices Act and a violation of
the Act is much more easily shown.”).
Without a materiality requirement, the effect of the
statute would be to punish commercial speech that has no
potential to mislead a reasonable consumer. For purposes of
Article I, section 8,
“[i]f the enactment’s restraint on speech or communication
lies outside an historical exception, then a further inquiry
is made—whether the actual focus of the enactment is on
an effect or harm that may be proscribed, rather than on
the substance of the communication itself. If the actual
focus of the enactment is on such a harm, the legislation
may survive scrutiny under Article I, section 8. * * * If such
a statute expressly prohibits certain forms of expression, it
must survive an overbreadth inquiry before it can be found
constitutional.”
State v. Stoneman, 323 Or 536, 543, 920 P2d 535 (1996). To
the extent subsection (1)(b) or (1)(e) would be considered such
a “Robertson category two” law—that is, aimed at prevent-
ing harm to consumers—absent an element of proof that the
prohibited speech was “material to consumer purchasing
decisions,” it would be susceptible to an overbreadth chal-
lenge. See State v. Moyle, 299 Or 691, 701-02, 705 P2d 740(1985) (category two statute violates Article I, section 8, if
it “potentially reaches substantial areas of communication
that would be constitutionally privileged and that cannot be
excluded by a narrowing interpretation or left to a case-by-
case defense against the application of the statute”).19
In sum, although the phrase “material to consumer
purchasing decisions” does not appear in ORS 646.608
(1)(b) or (e) when viewed in isolation, for all of the reasons
discussed above, we conclude that it is necessarily implicit
19
Arguably, the absurd-results canon also comes into play. Punishing a seller
for any misrepresentation or cause of confusion about a product, even where that
conduct would have no bearing on consumers’ purchasing decisions, is nonsensi-
cal, and especially so, when viewed in the light of the purposes behind the UTPA.
See State v. Vasquez-Rubio, 323 Or 275, 282-83, 917 P2d 494 (1996) (explaining
that absurd results maxim is “best suited for helping the court to determine
which of two or more plausible meanings the legislature intended,” and, “[i]n such
a case, the court will refuse to adopt the meaning that would lead to an absurd
result that is inconsistent with the apparent policy of the legislation as a whole”).
Cite as 313 Or App 176 (2021) 197
in the provisions when they are read in their historical con-
text and in light of constitutional protections on speech. An
allegation that an unlawful practice “causes likelihood of
confusion” (ORS 646.608(1)(b)) or involves misrepresenta-
tion (ORS 646.608(1)(e)) requires proof that the unlawful
practice is one that would materially affect consumers’ buy-
ing decisions.
As to the first two assignments of error involving
counts 1, 4, and 6, we determine that the trial court did
not err in considering the evidence to determine whether
defendants’ representations materially affected consumer
decisions. We conclude that the trial court did not err in
reaching a verdict and dismissing counts 1, 4, and 6.20
B. Decaf 5-HE (Fourth Assignment of Error)
Our conclusion that the trial court did not err in
imposing a materiality requirement under ORS 646.608(1)(b)
and (e) disposes of the need to address all but one of the
state’s other assignments of error on appeal. We still must
address the fourth assignment. The state contends that the
trial court erred in failing to enter a verdict in the state’s
favor on count 3, which alleged misrepresentations about the
effects of Decaf 5-HE. We address that assignment because,
as noted earlier, the court concluded, as to count 3, that any
false implications about the NCI in that product would nec-
essarily be material to consumer purchasing decisions. Our
conclusion as to materiality (regarding counts 1, 4, and 6)
does not forestall the need to address the state’s challenge
to the court’s disposition of count 3.
In count 3, the state alleged that defendants repre-
sented that Decaf 5-HE has “characteristics, uses, benefits,
and qualities that it does not have when they falsely or mis-
leadingly claimed that it provides benefits like energy, alert-
ness, or focus,” in violation of ORS 646.608(1)(e). Realleging
and incorporating its earlier allegations for purposes of
count 3, the complaint further alleged:
20
As noted, the state does not argue that, if proof of materiality is required
to establish a UTPA violation under ORS 646.608(1)(b) or (e), the trial court erred
in determining that the state failed to satisfy that element of proof as to counts
1, 4, and 6.
198 State ex rel Rosenblum v. Living Essentials, LLC
“Another way in which Defendants misrepresent the way
that [5-HE] works (or does not work) is by claiming that
the Decaf formulation of the product provides any of the
promoted benefits, when it does not. These claims are
misleading because Decaf [5-HE] provides no feeling of
extra energy, alertness, or focus. The only ingredient in
Defendants’ line of products that provides any meaningful
effect when taken as directed is caffeine, and the amount
of caffeine in Decaf [5-HE] is insufficient to have a physio-
logical effect in most consumers.”
(Emphasis added.) The complaint also alleged that defen-
dants’ website claims (with respect to all of its formulations
of 5-HE, including Decaf 5-HE)—that 5-HE lasts longer
than other canned energy drinks, and “can help you feel
bright, alert and focused for hours without the crash,” were
misleading, “because in reality, it is only caffeine that pro-
vides any claimed effect for [5-HE] consumers.” (Emphasis
added.)
As discussed earlier, after trial, the court filed an
initial “Verdict, Findings of Fact and Conclusions of Law”;
the parties filed objections; and the court issued an order
with revised findings and conclusions. Some of the court’s
initial findings about the NCI in Decaf 5-HE were made in
examination of count 1 and later referenced in the exam-
ination of count 3. Both counts involved the allegation that
the NCI fail to provide consumers with benefits like energy,
alertness, or focus. As noted, the NCI refer to, among other
things, B-vitamins and amino-acids. The expert evidence
presented at trial primarily consisted of the testimony of
Dr. Martindale and Professor Kennedy. The court observed,
“Both experts agree that B-vitamins and amino-acids play
essential roles in the human body’s production of energy.”
The court found, however, that the experts differed on
whether the NCI would “provide any noticeable or measur-
able feeling of energy during the five hours following inges-
tion of the product.” (Emphasis added.) The trial court was
persuaded by the state’s view that NCI do not produce feel-
ings of energy and alertness “during the five hours follow-
ing consumption.” (Emphasis added.) The court then made
a careful distinction that the difference between immediate
effect and potential long-term benefit depended upon the
Cite as 313 Or App 176 (2021) 199
nature of the allegation presented. Speaking of the differ-
ence, the court explained:
“Nevertheless, the truth or falsity of Defendants’ adver-
tising claims and whether they are actionable as related
to B-vitamins and amino-acids depends specifically on
how each claim is presented. For example, ‘B-vitamins for
energy,’ is not an inherently false representation, as the
body does require B-vitamins in order to produce energy.
What may be false is the implication that the specific
dosage of B-vitamins in a given bottle of 5HE will have a
noticeable effect on the energy level of a consumer, absent
caffeine, during the five hours following consumption.
Similarly, ‘Amino Acids for alertness,’ is not an inherently
false representation, but the implication that the specific
dosage of amino-acids in the bottle of 5HE will produce
measurable alertness during the five hours following con-
sumption is, more likely than not, false.”
(Emphases added.)
Turning from count 1 to count 3, the trial court
found that only one shipment of Decaf 5-HE was delivered
in Oregon.21 That shipment was one case containing 216 bot-
tles, which sold for $302.40. The trial court made findings as
to Decaf 5-HE that referred back to the prior findings about
B-vitamins and amino-acids. The court made the following
findings about count 3—initial findings, which, after objec-
tions, it would revise:
“The State alleges that Defendants made false repre-
sentations in Oregon about the effect of Decaf 5HE. * * *
Neither of those representations about Decaf 5HE are nec-
essarily false following the previous analysis, but they do
carry some false implications as to the effect of the spe-
cific NCI in a bottle of Decaf 5HE. The greater weight of
the evidence establishes that the NCI, or B vitamins and
21
The court referenced two exhibits, Exhibits 83 and 252. Exhibit 83 is the
“Supplement Facts” panel on the bottle label, which lists the product’s ingredi-
ents and their “% Daily Value.” Exhibit 252 is the label itself; it states:
“SENSITIVE TO CAFFIENE? Still need extra energy to get you through
your day? Decaf 5-Hour Energy can provide hours of alertness and focus
without making you feel jittery.”
The label also says, “Hours of energy now—No crash later”; “Feel it in minutes ·
Lasts for hours”; “Drink one half (1/2) bottle for moderate energy”; “Drink one
whole bottle (two ounces) for maximum energy.”
200 State ex rel Rosenblum v. Living Essentials, LLC
amino-acids in Decaf 5HE do not provide five hours of
energy following consumption. The false implications about
the NCI in the Decaf 5HE would necessarily be material to
consumer purchasing decisions as the NCI are the primary
ingredients, other than five milligrams of caffeine.
“To recover civil penalties for a violation of the UTPA,
the State must prove that a violation was willful. For the
same reasons indicated in Count 1, I find that any implica-
tions of falsity in Defendants’ advertising claims about the
NCI in Decaf 5HE were not willful.”
(Footnote omitted.)
The state objected to those findings in the verdict,
arguing that the court had essentially found all of the ele-
ments of a UTPA violation as alleged in count 3; that will-
fulness is only an element for obtaining the remedy of civil
penalties,22 and that, therefore, the court should enter a ver-
dict for the state on count 3.23
Defendants contended in response that the court
correctly ruled in their favor, because the state failed to
prove that the alleged misrepresentations were objectively
false. Acknowledging the court’s adverse finding that the
“greater weight of the evidence” was that the NCI in Decaf
5-HE “do not provide five hours of energy following con-
sumption,” defendants asserted that the state had never
alleged that defendants’ representations about the duration
of benefits from Decaf 5-HE were false. Rather, defendants
argued—pointing to the complaint, the state’s trial memo-
randum, and the state’s argument at trial—that the state’s
allegations were based on the theory that the statements
were false because NCI have no effect at all, and the dura-
tion of benefits from the NCI was beyond the scope of the
allegations of count 3. See Hurlbutt v. Hurlbutt, 36 Or App
721, 725, 585 P2d 724 (1978), rev den, 285 Or 73 (1979) (“In
22
See ORS 646.642(3) (“In any suit brought under ORS 646.632, if the court
finds that a person is willfully using or has willfully used a method, act or prac-
tice declared unlawful by ORS 646.607 or 646.608, the prosecuting attorney,
upon petition to the court, may recover, on behalf of the state, a civil penalty to be
set by the court of not exceeding $25,000 per violation.”).
23
As mentioned earlier, the court bifurcated the penalty and remedy phases
of the trial. Having found in favor of defendants on all counts, the trial never
reached a remedy phase.
Cite as 313 Or App 176 (2021) 201
law or equity, a decree or judgment must be responsive to
the issues framed by the pleadings and a trial court has
no authority to render a decision on issues not presented
for determination.”); see also Central Oregon Fabricators,
Inc. v. Hudspeth, 159 Or App 391, 403, 977 P2d 41, rev den,
329 Or 10 (1999) (concluding that trial court erred in grant-
ing plaintiff relief on an unpleaded theory, citing Hurlbutt).
According to defendants, the court ultimately held that
defendants prevailed on count 3, and that holding was sup-
ported by the court’s overall findings.
After considering the objections from both parties,
the trial court issued an order confirming the verdict for
defendants, but “amend[ing] and clarif[ying]” its finding of
fact in the paragraph quoted above. The revised paragraph
found (new wording in italics):
“Neither of those representations about Decaf 5HE are nec-
essarily false following the previous analysis, but they may
carry some false implications as to the effect of the specific
NCI in a bottle of Decaf 5HE. The greater weight of the evi-
dence establishes that the NCI, or B vitamins and amino-
acids in Decaf 5HE do not provide the claimed effects during
the five hour period following consumption. This phrase is
intended to specify that the period of time during which the
claimed effect would be measured is one that is immediately
following consumption[.]”
On appeal, the state reprises its argument from
below, contending that the trial court legally erred in
not entering judgment for the state on count 3, because
the amended verdict establishes that the court found all
of the elements necessary to establish a violation of ORS
646.608(1)(e), i.e., that defendants represented that Decaf
5-HE has “characteristics, ingredients, uses, benefits, quan-
tities, or qualities” that it does not have. In particular, the
state contends that the court found the state’s evidence suf-
ficient to establish that defendants’ claims about the effects
of NCI were false. As they did below, defendants disagree
with the state’s reading of the findings made in the verdict.
In addition, they argue that, even if the state is correct, the
representations at issue are nonactionable puffery.
On appeal from a bench trial, “we review the trial
court’s findings of fact for any evidence to support them,
202 State ex rel Rosenblum v. Living Essentials, LLC
Illingworth v. Bushong, 297 Or 675, 694, 688 P2d 379 (1984),
and its legal conclusions for errors of law.” Allco Enterprises
v. Goldstein Family Living Trust, 183 Or App 328, 330, 51
P3d 1275 (2002). Here, the state does not challenge the suffi-
ciency of the evidence to support the court’s findings; rather,
it insists that those findings compel—as a matter of law—a
verdict in the state’s favor. We disagree.
Although the trial court’s initial and revised find-
ings invite misunderstanding, we consider the verdict in its
entirety and its place in the context of the parties’ argu-
ments. Accordingly, we do not understand the court to have
found that defendants’ representations with regard to Decaf
5-HE were objectively false in the way in which count 3 was
alleged. See, e.g., State v. Spieler, 302 Or App 432, 439-40,
460 P3d 535 (2020) (concluding that court’s speaking ver-
dict, although not entirely clear, did not reveal a fundamen-
tal misunderstanding of the law considering the verdict as
a whole and the parties’ arguments; in light of the emphasis
on the issue at trial, it was “highly unlikely” that the court
misunderstood the legal standard); State v. Reed, 299 Or
App 675, 689, 452 P3d 995 (2019), rev den, 366 Or 382 (2020)
(“[T]he court’s speaking verdict and other comments must
be considered in context, taking into account the circum-
stances in which the court made its observations and the
extent to which the court’s explanation of its verdict sheds
light on how it viewed the evidence.”).
When the initial and revised findings are read
together, they indicate that the court found that the claims
on the label were not “necessarily false,” referencing its
analysis in connection with count 1 (involving Regular and
Extra Strength 5-HE). In that discussion, after reviewing
the expert evidence presented at trial, the court explained
that the truth or falsity of defendants’ advertising claims
related to B-vitamins and amino acids would depend on
how each claim was presented. “For example,” the court
observed, “ ‘B-vitamins for energy’ is not an inherently false
representation, as the body does require B-vitamins in order
to produce energy. What may be false is the implication
that the specific dosage of B-vitamins in a given bottle of
5HE will have a noticeable effect on the energy level of a
Cite as 313 Or App 176 (2021) 203
consumer, absent caffeine, during the five hours following
consumption.”
The court recognized that defendants’ represen-
tations “may carry some false implications as to the effect
of the specific NCI in a bottle of Decaf 5HE.” (Emphasis in
original.) In response to precisely the same point that the
state now makes on appeal—that the court should have
entered judgment for the state because it had found all of
the elements necessary for a UTPA violation—the trial court
revised its finding in that regard from the definitive to the
merely possible (replacing “do” with “may”), and confirmed
its verdict for defendants. That strongly suggests that the
court found the state’s evidence as to falsity lacking.
The state, predictably, focuses on the court’s next
statement—that “[t]he greater weight of the evidence estab-
lishes that the NCI, or B vitamins and amino-acids in Decaf
5HE do not provide the claimed effects during the five hour
period following consumption”—to advance the contrary
position. (Emphasis omitted.) However, again, that find-
ing was revised in response to the parties’ arguments in
objection to the verdict. The court had originally found that
the NCI “do not provide five hours of energy following con-
sumption.” The court revised that language to reference the
claimed NCI effects during the five-hour period after con-
sumption. And, again significantly, the court in its amended
verdict specifically clarified that the phrase, as revised, was
meant to specify that the relevant time period for assessing
the claimed effects is that immediately after consumption.
Together, we think those amendments indicate the court’s
acceptance of defendants’ argument—which the state does
not address, much less dispute—that the state’s theory of
liability in count 3 was not that defendants falsely repre-
sented the duration of the effects from the NCI, but that the
NCI have any effect on alertness or energy at all.24 In other
words, we understand the trial court to have found the evi-
dence sufficient to establish that the NCI provide some ben-
efit to energy, alertness, and focus immediately following
24
We note that that is borne out by the record—as noted above, the state
alleged that the NCI provide no feeling of extra energy or alertness, and that it is
only caffeine that provides any of the claimed effects.
204 State ex rel Rosenblum v. Living Essentials, LLC
consumption, such that defendants’ representations were
not false in the manner advanced by the state.
Finally, as it did below, the state suggests that the
court may have denied it relief—even though it had found all
the elements for a violation—because the court found that
the state had failed to prove that the violation was willful,
although willfulness is required only for the state to obtain
civil penalties, not for the other forms of relief it sought. We
are not taken by that argument either. The court’s finding
explicitly recognizes the limitation emphasized by the state:
“To recover civil penalties for a violation of the UTPA, the
State must prove that a violation was willful.” (Emphasis
added.) And, as the state acknowledges, the court also made
a finding as to willfulness with respect to count 1, in which,
as discussed above, the court found no violation because the
state’s proof failed on the materiality element. In the con-
text of the entire verdict, we understand the court to have
adopted a “belt and suspenders” approach in its verdict—
not surprisingly, given the complexity of the case, the inter-
related issues, and the likelihood that one or more of the
court’s rulings were likely to be appealed. We do not under-
stand the court to have improperly based its verdict on a
misunderstanding that, although the state had proved that
defendants’ representations were false, it was also required
to prove that defendants acted willfully for anything other
than the purpose of obtaining civil penalties.
In sum, although the trial court’s particularity
of findings could be misunderstood, we are not convinced,
after considering, in the context of the record as a whole,
the parties’ arguments in objection to the verdict, and the
court’s ensuing response, that the trial court misunderstood
or misapplied the law. Therefore, we reject the state’s fourth
assignment of error and do not disturb the verdict for defen-
dants on count 3.
III. DEFENDANTS’ CROSS-APPEAL
Defendants cross-appeal the supplemental judgment
denying them attorney fees under ORS 646.632(8). The stat-
ute provides, in part:
“If the defendant prevails in [an action brought by the pros-
ecuting attorney under ORS 646.632] and the court finds
Cite as 313 Or App 176 (2021) 205
that the defendant had in good faith submitted to the pros-
ecuting attorney a satisfactory [AVC] prior to the institu-
tion of the suit * * *, the court shall award reasonable attor-
ney fees at trial and on appeal to the defendant.”
Defendants contend that they are entitled to fees because
their AVC was satisfactory and that, in concluding other-
wise, the trial court applied an incorrect legal standard. The
state responds that the trial court was correct—either as a
matter of law or according to the standard the court used.
As we explain below, we agree with defendants and, there-
fore, reverse and remand the supplemental judgment.25
Generally, before filing a public UTPA action under
ORS 646.632(1), “the prosecuting attorney shall in writing
notify the person charged of the alleged unlawful trade prac-
tice and the relief to be sought.”26 ORS 646.632(2). The person
charged then has ten days to submit to the prosecuting attor-
ney an AVC “set[ting] forth what actions, if any, the person
charged intends to take with respect to the alleged unlawful
trade practice.” Id. The AVC is not considered an admission
of a violation. Id. Essentially, it is a settlement offer. Then, if
the prosecuting attorney is satisfied with the AVC, it may be
submitted to the court for approval; upon signature by the
court, it is entered in the register and thereafter constitutes
a judgment in the favor of the state, enforceable as provided
in ORS chapter 18. Id. Under ORS 646.632(3), the prosecut-
ing attorney may reject as unsatisfactory an AVC:
“(a) Which does not contain a promise to make restitu-
tion in specific amounts or through arbitration for persons
who suffered any ascertainable loss of money or property as
a result of the alleged unlawful trade practice; or
25
Defendants conclude that the case must be remanded to the trial court for
“application of the proper legal standard.” Defendants’ principle argument, in
substance, however, is that the AVC was satisfactory as a matter of law. That is,
defendants contend that there was no legal basis for the court to have concluded
otherwise. With that, we agree, and, therefore, we remand for the trial court to
determine the amount of defendants’ reasonable attorney fees and costs.
26
There are exceptions to the notice requirement that do not apply here. See
ORS 646.632(5), (6). Also, “ ‘[p]rosecuting attorney’ means the Attorney General
or the district attorney of any county in which a violation of [the UTPA] is alleged
to have occurred.” ORS 646.605(5). In this case, the prosecuting attorney is the
Attorney General. Accordingly, we refer to “the state” and “the prosecuting attor-
ney” interchangeably.
206 State ex rel Rosenblum v. Living Essentials, LLC
“(b) Which does not contain any provision, including
but not limited to the keeping of records, which the pros-
ecuting attorney reasonably believes to be necessary to
ensure the continued cessation of the alleged unlawful
trade practice, if such provision was included in a proposed
assurance attached to the notice served pursuant to this
section.”
Violation of an approved AVC constitutes contempt
of court. ORS 646.632(4). And, “[a]ny person who willfully
violates any provision of an [AVC] approved and filed with
an appropriate court under ORS 646.632 shall forfeit and
pay to the state a civil penalty to be set by the court of not
more than $25,000 per violation.” ORS 646.642(2).
If the prosecuting attorney rejects the AVC, and
the defendant ultimately prevails in the UTPA action, “the
court shall order reasonable attorney fees at trial and on
appeal to the defendant” if, as relevant here, “the court finds
that the defendant had in good faith submitted to the prose-
cuting attorney a satisfactory [AVC] prior to the institution
of the suit.” ORS 646.632(8) (emphasis added).27
Consistent with that statutory scheme, the state
notified defendants of the alleged UTPA violations and
its intention to seek civil penalties, restitution “to anyone
harmed by [defendants’] acts,” injunctive relief, and attor-
ney fees and costs. Defendants timely submitted an AVC
in which, in paragraph 11, they agreed to “obey Oregon’s
Unlawful Trade Practices Act, ORS 646.605 to ORS 646.656.”
The AVC also provided, in paragraph 12, that defendants
“shall not make any express or implied claim, statement, or
representation in connection with the marketing or adver-
tising of [5-HE] Products in the United States, including
through the use of an endorsement, depiction, or illustra-
tion, that contains material representations that are false or
mislead consumers acting reasonably to their detriment; or
omits material information such that the express or implied
claim, statement, or representation deceives consumers act-
ing reasonably to their detriment.”
27
ORS 646.632(8) also provides for a discretionary award of attorney fees to
the prevailing party, which defendants here also requested, and the court like-
wise denied. That ruling is not at issue on appeal.
Cite as 313 Or App 176 (2021) 207
(Emphasis added.) As to payment of restitution, paragraph 21
of defendants’ AVC stated:
“Within 30 days of execution of the AVC, and as consid-
eration for DOJ’s role on the Executive Committee of states
evaluating [defendants’] compliance with the various con-
sumer protection laws, [defendants] shall pay the sum of
$250,000 to the DOJ to be used by the State of Oregon as
allowed by law, including, but not limited to, restitution,
consumer education, the Consumer Protection & Education
Account established pursuant to ORS 180.095, or charita-
ble purposes. In the event the DOJ joins the Assurance of
Voluntary Compliance entered into between [defendants]
and the Attorney General of the State of Ohio (the ‘Ohio
AVC’), and pursuant to the Ohio AVC the DOJ is entitled
to a sum larger than $250,000, [defendants] shall pay the
larger of the Ohio AVC amount or $250,000 to the DOJ in
full satisfaction of this AVC and the Ohio AVC.”28
(Emphasis added.)
The state rejected the AVC on the grounds that
“it does not provide restitution for Oregon consumers and
because it does not provide sufficient assurances that [defen-
dants] will not re-offend.” The state explained that the pro-
posed injunctive terms were problematic because they would
hold defendants to a different standard for future conduct
than the UTPA requires—in particular, that the “consum-
ers acting reasonably to their detriment” test would hold
defendants to a lower standard than that of most state con-
sumer protection laws, including the UTPA. The state also
explained that, relative to defendants’ size and income, the
proposed payment was “insufficient to provide meaningful
deterrence to future misconduct.” In its email rejecting the
AVC, the state suggested terms that would be required for
settlement, including “a mechanism for consumer restitu-
tion of [5-HE’s] decaffeinated product.”
Two weeks later, the state filed its initial UTPA
complaint against defendants. As we know now, the case
went to trial on the state’s second amended complaint and
defendants ultimately prevailed on all claims. Defendants
28
The Ohio AVC, which apparently provided for a $1,000,000, charitable
donation to a mutually agreed upon hospital, was not finalized until after the
state rejected defendants’ AVC in this case.
208 State ex rel Rosenblum v. Living Essentials, LLC
subsequently petitioned for $2,171,085 in attorney fees, as
well as costs, contending that they were entitled to fees
under the mandatory fee award provision of ORS 646.632(8)
because they prevailed at trial and they had in good faith
submitted a satisfactory AVC. The state objected, assert-
ing that the AVC was not satisfactory because it “(1) did not
include a promise to make restitution, (2) contained inade-
quate and problematic injunctive terms, and (3) offered an
inadequate payment.”
After a hearing, the trial court denied defendants’
claim for mandatory fees under ORS 646.632(8), agreeing
with the state that defendants’ AVC was not satisfactory
“given the state’s claims and the relief that they were seek-
ing at the time.” The trial court’s reasoning appears to be
premised on the theory that it was reasonable for the state
to litigate the case. Noting that the UTPA is subject to var-
ious interpretations and “not a lot of developed case law,”
the court found that, despite not prevailing, not all of the
state’s claims were unreasonable, there were contested legal
theories involved, and the case was one that “probably needs
to be litigated.” The court entered a supplemental judgment
denying defendants’ attorney-fee statement and excluding
from recoverable costs those based on defendants’ claimed
entitlement to fees.
Defendants contend on appeal that the trial court
erred in failing to find that the AVC was satisfactory under
ORS 646.632(8). In their view, the state did not have a basis
to reject the AVC as unsatisfactory under ORS 646.632(3)(a),
because it did provide for restitution, and it is undisputed
that ORS 646.632(3)(b) does not apply.29 Defendants further
contend that the AVC contained injunctive provisions beyond
what would be required to meet the “satisfactory” standard.
Defendants point out, among other things, that they prom-
ised more in that regard than the state could attain at trial.
Defendants conclude that the court applied incorrect legal
standards in ruling otherwise.
In the state’s view, the trial court correctly denied
defendants’ request for fees, as a matter of law, because the
29
The parties agree that the state did not include a proposed AVC with their
notice of violation, which is necessary to invoke subsection (3)(b).
Cite as 313 Or App 176 (2021) 209
AVC was not satisfactory for two reasons. First, according
to the state, “[a] promise to pay a lump sum to the state
to use for lawful purposes that might include restitution
is qualitatively different from a promise ‘to make restitu-
tion in specific amounts’ to injured persons” as provided
in ORS 646.632(3)(a). (Emphasis in state’s brief.) Second,
the state argues that ORS 646.623(3) does not provide the
exclusive reasons for rejecting an AVC, and the AVC was not
satisfactory because it contained terms that conflict with
the UTPA—proof of materiality and detrimental reliance.
Alternatively, the state contends that the trial court cor-
rectly applied a “reasonableness” standard in determining
that defendants’ AVC was unsatisfactory.
The proper interpretation of ORS 646.632(8) is
a legal question that we review for legal error. We do so,
considering the text and context of the statute, as well as
any useful legislative history, to determine the legislature’s
intent in enacting it. Gaines, 346 Or at 171. In full, ORS
646.632(8) provides:
“The court may award reasonable attorney fees to the
prevailing party in an action under this section. If the
defendant prevails in such suit and the court finds that
the defendant had in good faith submitted to the prosecut-
ing attorney a satisfactory assurance of voluntary compli-
ance prior to the institution of the suit or that the prose-
cuting attorney, in a suit brought under subsections (5)
and (6) of this section, did not have reasonable grounds
to proceed under those subsections, the court shall award
reasonable attorney fees at trial and on appeal to the
defendant.”
(Emphases added.) The state does not dispute that defen-
dants prevailed in the action and that their AVC was sub-
mitted in good faith. It is also undisputed that the AVC was
submitted “prior to institution of the suit.” The question
thus reduces to whether defendants’ AVC was “satisfactory,”
within the meaning of ORS 646.632(8), such that the court
was required to award defendants their reasonable attorney
fees.
Because the legislature did not define the term
“satisfactory,” we look to its “plain, natural, and ordinary
210 State ex rel Rosenblum v. Living Essentials, LLC
meaning.” PGE v. Bureau of Labor and Industries, 317 Or
606, 611, 859 P2d 1143 (1993); see also State v. Dickerson,
356 Or 822, 829, 345 P3d 447 (2015) (same). We often con-
sult dictionary definitions for that purpose, assuming that,
if the legislature did not provide a specialized definition,
“the dictionary definition reflects the meaning that the leg-
islature would naturally have intended.” DCBS v. Muliro,
359 Or 736, 746, 380 P3d 270 (2016). The dictionary defines
“satisfactory” to mean, as relevant, “sufficient to meet a con-
dition or obligation,” and “adequate to meet a need or want.”
Webster’s at 2017.
We glean two clues from the context in which the
term is used, including the other subsections of the statute.
State v. Langdon, 330 Or 72, 80-81, 999 P2d 1127 (2000)
(“Context includes other provisions of the same statute
* * *.”). First, although ORS 646.632(2) provides that an AVC
is submitted to the court only if the state finds it satisfactory,
it is evident that, for purposes of determining eligibility for
mandatory attorney fees under ORS 646.632(8), the trial
court must make an independent determination whether an
AVC is satisfactory. To conclude otherwise would render the
legislature’s inclusion of the word “satisfactory” in subsec-
tion (8) meaningless surplusage; defendants’ attorney fees
would be a matter of prosecutorial fiat. See State v. Clemente-
Perez, 357 Or 745, 755, 359 P3d 232 (2015) (“As a general
rule, we * * * assume that the legislature did not intend any
portion of its enactments to be meaningless surplusage.”);
ORS 174.010 (instructing courts to construe statutes so as
to “give effect to all” provisions). To conclude otherwise could
effectively eliminate the entitlement to fees altogether; that
is, a defendant who prevailed after the state deemed the
AVC unsatisfactory would never be entitled to a mandatory
award of fees. Although the initial assessment whether an
AVC is “satisfactory” is the state’s, the state makes that
assessment under ORS 646.632(2) knowing that it may be
responsible for the defendant’s attorney fees if the defen-
dant prevails and a court later disagrees with the state’s
assessment. ORS 646.632(8); see Ralph James Mooney, The
Attorney General as Counsel for the Consumer: The Oregon
Experience, 54 Or L Rev 117, 125 (1975) (observing that,
“[a]lthough the Act may not oblige a prosecuting attorney to
Cite as 313 Or App 176 (2021) 211
accept a tendered assurance, it does place great pressure on
him to do so,” referencing the mandatory attorney fee provi-
sion now in ORS 646.632(8)).
Second, the legislature’s wording and choice of verb
tense in subsection (8) indicate that the court’s determi-
nation, although made after trial, is based on the circum-
stances existing at the time the AVC was submitted, not
through the lens of hindsight. Subsection (8) provides that,
to be entitled to fees, court must find that the defendant
“had” in good faith “submitted” a satisfactory AVC to the
prosecutor “prior to the institution of the suit.” We assume
that the legislature’s use of the past tense is deliberate. See
State v. Gonzalez-Valenzuela, 358 Or 451, 461, 365 P3d 116
(2015) (“We do not lightly disregard the legislature’s choice
of verb tense, because we assume the legislature’s choice
is purposeful.” (Internal quotation marks and brackets
omitted.)).
We consider the legislative history. The parties do
not offer any history of the enactment of the AVC procedure
generally, or the mandatory attorney fee provision in ORS
646.632(8) in particular. What we have been able to access
is sparse. Both were enacted in 1971 as part of the original
UTPA, through House Bill (HB) 3037. See Or Laws 1971,
ch 744, § 11. HB 3037 was itself the result of a composite of
several other bills making their way through the legislature
that session, including HB 1088 (1971), which is where the
mandatory attorney fee provision now in subsection (8) orig-
inated.30 Minutes, Senate Committee on Consumer Affairs,
HB 3037, May 12, 1971, 1-2; Exhibit File, House Judiciary
Committee, HB 3037, Memorandum, William R. Canessa,
“Comparison of Senate Bill 50 with House Bill 1088, House
Bill 1250, House Bill 1330 (DCCC) and Senate Bill 123,”
Mar 1, 1971.
HB 1088 was proposed at the request of then
Attorney General Lee Johnson and was the product of a
30
What is now in subsection (8) is substantively the same as it was when
enacted, except that, as originally enacted, it did not specifically include an enti-
tlement to fees on appeal. And, if the state prevailed, the “reasonable expenses
of investigation, preparation and prosecution” were taxed against the defendant.
Compare ORS 646.632(5) (1971) with ORS 646.632(8) (2019).
212 State ex rel Rosenblum v. Living Essentials, LLC
committee composed of labor, industry, legal, law enforce-
ment, and lay representatives. Minutes, House Committee
on Judiciary, HB 1088, Feb 10, 1971, 1. As relevant here,
Attorney General Johnson explained that
“HB 1088 sets out procedures whereby an offender would be
given the opportunity to voluntarily comply with the law,
within a specified period, in which case no action would be
commenced against him, and provides for payment of attor-
ney’s fees of the defending party when the defendant prevails
in such actions. This provision would reduce the possibility
that an irresponsible prosecutor might bring an unjustified
action against an individual or firm.” 31
Id. (emphasis added). Similarly, in his written proposal, the
Attorney General stated:
“A unique provision of the bill concerns the ‘assurance of
voluntary compliance.’ Under this procedure before a pros-
ecutor can institute a suit against the seller, except in an
emergency situation, he must first seek from the merchant
an assurance of voluntary compliance. The purpose of this
section is to reduce unnecessary litigation and protect the
merchant against an irresponsible prosecutor who might
bring a suit solely for publicity purposes. The merchant has
10 days in which to file an assurance of voluntary compli-
ance. If the prosecuting attorney then proceeds to prosecute
and the court finds that the merchant had in good faith com-
plied with the law, then the merchant can obtain attorney’s
fees against the state.”
Exhibit File, House Judiciary Committee, Subcommittee
on Consumer Protection, HB 1088, Attorney General Lee
Johnson, “Consumer Protection Act Proposal”, at 6 (empha-
ses added).
Although it appears that the legislature did not dis-
cuss the particulars of what might be required for a “satisfac-
tory” AVC, the history does reflect—not surprisingly—that
the process was designed to reduce unnecessary litigation.
More to the point, the mandatory attorney fee provision was
intended to protect sellers by deterring the state from bring-
ing “unjustified” actions.
31
We quote from the minutes of the committee hearings because the audio
recordings are essentially inaudible.
Cite as 313 Or App 176 (2021) 213
In this case, subsection (3) of the statute, although
enacted four years after subsection (8), also informs our
analysis. Cf. Aleali v. City of Sherwood, 262 Or App 59, 73,
325 P3d 747 (2014) (“Although amendments to ORS 197.830
do not strictly provide ‘context’ for the legislature’s intended
meaning of ‘without providing a hearing’ in the original
version of the 1989 statute, the subsequent history of the
statute is nonetheless material to our analysis.”). To repeat,
subsection (3) provides:
“The prosecuting attorney may reject as unsatisfactory any
assurance
“(a) Which does not contain a promise to make restitu-
tion in specific amounts or through arbitration for persons
who suffered any ascertainable loss of money or property as
a result of the alleged unlawful trade practice; or
“(b) Which does not contain any provision, including
but not limited to the keeping of records, which the pros-
ecuting attorney reasonably believes to be necessary to
ensure the continued cessation of the alleged unlawful
trade practice, if such provision was included in a proposed
assurance attached to the notice served pursuant to this
section.”
(Emphasis added.)
With those terms, subsection (3) provides two per-
missible reasons for the state to reject an AVC as unsatisfac-
tory. It follows that, as a matter of law, an AVC that fails in
those specifics is not satisfactory for purposes of the court’s
determination under subsection (8). However, subsection (3)
does not purport to be exclusive; that is, it does not provide
that the prosecutor may “only” reject an AVC in the circum-
stances listed. See ORS 174.010. More significantly, nothing
about it or the statute as a whole would permit us to conclude—
by negative implication—that subsection (3) defines the uni-
verse of what constitutes a satisfactory AVC for purposes of
the court’s determination under subsection (8). Said another
way, nothing in the statutory scheme indicates that any
AVC other than one that is deficient in the specifics listed
in subsection (3) necessarily meets the “satisfactory” stan-
dard of subsection (8). Cf. Hays v. DMV, 230 Or App 559,
214 State ex rel Rosenblum v. Living Essentials, LLC
562-63, 216 P3d 902 (2009) (noting that the statement in
ORS 813.410(5)(e)—“if the driver is informed according to
the statute, the breath test failure requires suspension”—
does not “necessarily, as a matter of pure logic, imply its
converse”—that is, “if the driver is not informed accord-
ing to the statute, the failure does not lead to suspension,”
although, in that context, it was “strongly implied” (empha-
ses in original; internal quotation marks omitted)).
The legislative history of subsection (3) confirms
that understanding. It was added to the statute in 1975
through Senate Bill (SB) 37, again at the request of Attorney
General Johnson. Or Laws 1975, ch 437, § 3. In a written
summary of the bill, the Attorney General explained that
what is now codified at ORS 646.632(3)
“is probably the most important provision of the bill relat-
ing to the [AVC] procedures. It has been the practice of
this office where we accept an [AVC] to demand restitution
be made to the injured consumer and on occasion we also
insist upon the keeping of records so that we can monitor
compliance with the law. The present statute, however,
does not make it clear whether the Attorney General has
the authority to include such requirements as part of an
[AVC], although the law does provide that the court may
require restitution if the matter is litigated. The purpose of
the amendments is simply to make it clear that we do have
such authority.”
Appendix F at 4-5, Senate Committee on Consumer and
Business Affairs, SB 37, Feb 5, 1975 (Summary of Senate
Bill 37) (emphasis added). As with the text, nothing in the
legislative history indicates that subsection (3) was intended
to otherwise prohibit the Attorney General from rejecting
an AVC as unsatisfactory or to so limit the court’s deter-
mination in subsection (8). In short, although it provides
some guidance, subsection (3) does not conclusively define
what is meant by a “satisfactory” AVC for the purposes of
determining a party’s entitlement to attorney fees under
subsection (8), and we reject defendants’ argument to the
contrary.
With that much in mind, we turn back to the parties’
arguments. As noted, the state contends that defendants’
Cite as 313 Or App 176 (2021) 215
AVC was not satisfactory for two reasons—(1) it failed to
provide for restitution as required under ORS 646.632(3)(a),
and (2) it contained terms that conflict with Oregon’s UTPA,
thereby holding defendants to a lower standard than the
UTPA requires. Neither argument is persuasive.
Beginning with the issue of restitution, paragraph
21 of the AVC provides that defendants “shall pay the sum
of $250,000 to the DOJ to be used by the State of Oregon
as allowed by law, including, but not limited to, restitution,
consumer education, the Consumer Protection & Education
Account established pursuant to ORS 180.095, or charitable
purposes.” (Emphasis added.) The state contends that the
provision is insufficient to meet the requirements of ORS
646.632(3)(a)—that is, “a promise to make restitution in spe-
cific amounts or through arbitration for persons who suf-
fered any ascertainable loss of money or property as a result
of the alleged unlawful trade practice”—and, therefore, it is
unsatisfactory as a matter of law.
According to the state, “[a] promise to pay a lump
sum to the state to use for lawful purposes that might
include restitution is qualitatively different than a promise
‘to make restitution in specific amounts’ to injured persons.”
(Emphasis in original.) Defendants rejoin that the AVC’s
provision for the payment of restitution was not tentative,
as the state’s argument suggests. The AVC offered a specific
amount—$250,000—and it expressly authorized the state to
use it to pay restitution, referencing the account established
under ORS 180.095. Defendants have the better argument.
The state fails to explain precisely why defendants’
offer was “qualitatively different” from what the statute
requires. To the extent the state suggests that the restitu-
tion promise was tentative, we agree with defendants that,
by its terms, it was not—it requires that defendants “shall
pay.” See Preble v. Dept. of Rev., 331 Or 320, 324, 14 P3d 613
(2000) (“ ‘Shall’ is a command: it is ‘used in laws, regula-
tions, or directives to express what is mandatory.’ ” (Quoting
Webster’s Third New Int’l Dictionary 2085 (unabridged ed
1993).)). That the AVC also permitted the use of the funds
for purposes other than restitution does not, as a matter
of logic, negate defendants’ agreement to pay $250,000 in
216 State ex rel Rosenblum v. Living Essentials, LLC
restitution. In other words, that the state, at its choosing,
could use all or some of the funds for other than the pay-
ment of restitution does not mean that defendants failed to
promise restitution in that amount.
Further, to the extent we can understand the state
to argue that, to satisfy subsection (3), the AVC was required
to set up a mechanism for defendants themselves to iden-
tify and pay restitution to individual injured persons, the
statute’s text and context does not bear that out, and the
state presents no other basis for us to reach that conclusion.
Notably, the statute does not reference the payment of res-
titution “to” specific persons, it requires a promise of resti-
tution “for” persons who suffered an ascertainable loss as a
result of the unlawful practice.
Moreover, ORS 180.095(1) establishes the Depart-
ment of Justice Protection and Education Revolving Account.
Generally, any money received by the department under an
AVC, including restitution, is to be credited to that account.
ORS 180.095(3). And, the funds from the account may be
used by the department to pay restitution in a proceed-
ing under the UTPA. ORS 180.095(1)(a). If the department
“cannot determine the persons to whom the restitution * * *
should be paid or the amount of the restitution * * * payable
to individual claimants is de minimis,” the funds are then
deposited in the General Fund. ORS 180.095(4).
In a case such as this, involving a small-scale con-
sumable product, in which it may be difficult, if not impos-
sible, to identify specific individuals who may have been
injured by the alleged violation, and in the absence of any
argument by the state that the restitution amount promised
was inadequate,32 we fail to see how defendants’ promise
to pay the sum of $250,000, for the state to use for restitu-
tion, referencing the account established pursuant to ORS
32
The state does not argue on appeal, as it did below, that the amount of
restitution provided in the AVC was insufficient and that the trial court should
have concluded that the AVC was not satisfactory for that reason. Moreover, we
decline to infer such an argument from the state’s attempt to refute defendants’
suggestion that their exposure to liability for restitution was limited to Decaf
5-HE (of which a very small amount was sold in Oregon), when the state does not
endeavor to make that argument itself.
Cite as 313 Or App 176 (2021) 217
180.095,33 is an insufficient “promise to make restitution in
specific amounts * * * for persons who suffered any ascer-
tainable loss of money or property as a result of the alleged
unlawful trade practice.” (Emphasis added.)
We are also not persuaded by the state’s second
argument—that the AVC was not satisfactory because it
was contrary to Oregon law. The state contends that defen-
dants’ promise in paragraph 12 to decline from making
material misrepresentations or omissions about 5-HE that
consumers would reasonably rely on to their detriment would
hold defendants to a less demanding standard than what
is required under the UTPA. However, even assuming the
correctness of that premise,34 the AVC contains other provi-
sions that effectively neutralize any conflict. Paragraph 11
of the AVC states that defendants will obey the UTPA in its
entirety—“[defendants] shall obey Oregon’s Unlawful Trade
Practices Act, ORS 646.605 to ORS 646.656.” In addition—
and significantly—the AVC also contains a severability
clause, paragraph 29, which provides, in relevant part:
“The Parties further acknowledge that this AVC consti-
tutes a single and entire agreement that is not severable
or divisible, except that if any provision herein is found to
be legally insufficient or unenforceable, the remaining provi-
sions shall continue in full force and effect.”
(Emphasis added.) Thus, to the extent paragraph 12 con-
flicts with Oregon law, it would be “legally insufficient or
unenforceable,” and paragraph 11, requiring defendants to
obey the UTPA, would “continue in full force and effect.”
And, the state could apply to the court for recovery of sub-
stantial civil penalties for any willful violation of that pro-
vision. ORS 646.642(2). Thus, we conclude that defendants’
AVC does not fail that test for either of the “matter of law”
reasons that the state asserts.
33
Although the AVC misidentifies the precise name of the account estab-
lished under ORS 180.095(1), that discrepancy does not affect our analysis.
34
We have concluded in this opinion that materiality is an element of the
UTPA violations asserted in this case, see 313 Or App at 196-97); it is fair to
say, however, that the law in that regard was unsettled at the time the AVC was
submitted.
218 State ex rel Rosenblum v. Living Essentials, LLC
Finally, we address the state’s alternative argument
that the trial court properly found that the AVC presented
in this case was not satisfactory because it was “reasonable”
for the state to have rejected it and proceeded to trial. The
problem with that approach is that it does not comport with
the text of the statute nor with what we know of the legisla-
tive history. As noted, the plain meaning of “satisfactory” is
“sufficient to meet a condition or obligation,” or “adequate to
meet a need or want.” Webster’s at 2017. Given the undispu-
table purpose underlying the UTPA, the obligation or need
at issue here is consumer protection. See 313 Or App at 185
(discussing the purposes of the UTPA). In other words, the
standard by which an AVC must be measured is in its “ade-
quacy” or “sufficiency” in protecting consumers from unlaw-
ful practices. Likewise, the legislative history indicates
that including a threat of liability for attorney fees in the
AVC scheme was designed to deter the state from bringing
“unjustified” actions. Again, given that the underlying pur-
pose of the UTPA is consumer protection, assessing whether
the state is “justified” (i.e., “prove[n] or show[n] to be just,
desirable, warranted, or useful,” Webster’s at 1228) in reject-
ing an AVC and pursuing an action logically must be con-
sidered in light of that purpose. And that, of course, is quali-
tatively different from assessing, as the trial court did here,
whether the state’s claims were “reasonable” or whether the
state made a “reasonable” choice to proceed to trial.
Having rejected the state’s legal arguments in sup-
port of the trial court’s conclusion that the proffered AVC
was not satisfactory, we conclude that the trial court erred
in denying defendants reasonable attorney fees and limit-
ing the cost award on that basis. Therefore, we reverse and
remand the supplemental judgment.
IV. CONCLUSION
With respect to the state’s appeal, we conclude that
the trial court did not err in entering judgment for defen-
dants on the state’s UTPA claims. We affirm the general
judgment. With respect to defendants’ cross-appeal, we con-
clude that the court erred in denying defendants’ petition
for attorney fees under ORS 646.632(8). We reverse and
remand the supplemental judgment for a determination
Cite as 313 Or App 176 (2021) 219
of the amount of reasonable attorney fees and costs due
defendants.
On appeal, general judgment affirmed; on cross-
appeal, supplemental judgment reversed and remanded.