Spokeo, Inc. v. Whitepages, Inc. ( 2020 )

IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON
SPOKEO, INC., No. 78897-3-I
Appellant.
v. DIVISION ONE
WHITEPAGES, INC. UNPUBLISHED OPINION
Respondent.
LEACH, J. — Spokeo primarily appeals the trial court’s decision to award
Whitepages’ judgment as a matter of law notwithstanding a jury’s verdict in its favor.
Spokeo also challenges the trial court’s decision not to answer certain jury questions and
its refusal to give Spokeo’s anticipatory repudiation instructions to the jury. Finally,
Spokeo claims the trial court should not have allowed the jury to decide a spoliation issue,
and it should have sanctioned Whitepages for a discovery violation.
Spokeo fails to show that substantial evidence supports the jury’s verdict on its
Consumer Protection Act (CPA) claim, or that it was entitled to an anticipatory repudiation
jury instruction. The record shows the trial court did not abuse its discretion by refusing
to answer some jury questions or by refusing to sanction Whitepages for alleged
discovery violations. Finally, the trial court acted within its discretion by submitting a
spoliation issue to the jury to decide. We affirm.
Citations and pincites are based on the Westlaw online version of the cited material.
No. 78897-3-I / 2
FACTS
Whitepages is a technology company that provides online information about
people. It sold advertising spaces on its website and used an auction process to sell
companies advertising space for a specified time. Some of the companies purchasing
advertising space also provided online information about people such as names, phone
numbers, addresses, and criminal backgrounds. The parties have referred to these
companies as “endemic partners.” Spokeo was one of these companies. When a
customer arrived at Whitepages’ website, and clicked on Spokeo’s advertisement, the
customer would then visit Spokeo’s website. Spokeo would pay Whitepages for the click
or “interaction.”
Over time, Whitepages developed its own product for providing information about
people similar to the product provided by some of the endemic partners. Whitepages
notified its advertisers that it was testing this new product. Later, it informed the endemic
partners, including Spokeo, that it would stop holding auctions. Spokeo considered
Whitepages’ actions a breach of contract. It refused to pay Whitepages’ last invoice for
February 2016 even though Spokeo received clicks and customer interactions from the
Whitepages’ website the whole month.
Spokeo sued Whitepages on April 6, 2016. It asserted claims for breach of
contract and implied duties of good faith, violation of the Washington Consumer
Protection Act (CPA), negligent misrepresentation, fraudulent inducement, statutory
penalties, and injunctive relief. Whitepages responded by suing Spokeo for breach of
contract for not paying its February 2016 invoice.
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No. 78897-3-I / 3
The jury found for Spokeo on the CPA claim, but found that Whitepages did not
breach the contract, did not make any negligent misrepresentations, or commit fraud. It
also found that Spokeo breached the contract.
After the trial, the trial court granted Whitepages’ renewed request for judgment as
a matter of law. It decided the “evidence and the reasonable inferences are legally
insufficient to support the jury’s verdict on Spokeo’s CPA claim.” The trial court awarded
Whitepages’ attorney fees based on Spokeo’s contract breach and awarded Spokeo fees
and costs for Whitepages’ spoliation. Spokeo appeals.
ANALYSIS
Washington Consumer Protection Act Claim1
Spokeo challenges the trial court’s decision under CR 50 to dismiss its CPA claim.
We review a trial court's CR 50 decision de novo. 2 A trial court properly grants a
judgment notwithstanding the jury’s verdict under CR 50 when “‘viewing the evidence
most favorable to the nonmoving party, the court can say, as a matter of law, there is no
substantial evidence or reasonable inference to sustain a verdict for the nonmoving
party.’“3 “Substantial evidence is evidence sufficient to persuade a fair-minded, rational
person that the premise is true.”4
1
Spokeo also claims the trial court’s order denying Spokeo’s motion for a new trial is void
under RAP 7.2(e) because the trial court did not have the authority to decide it. Spokeo
filed an appeal. RAP 7.2(e) states that: “If the trial court determination will change a
decision then being reviewed by the appellate court, the permission of the appellate court
must be obtained prior to the formal entry of the trial court decision.” Because denying
Spokeo a new trial would not “change a decision…being reviewed by the appellate court,”
the trial court had authority to enter this order.
2
Davis v. Microsoft Corp., 149 Wash. 2d 521, 531, 70 P.3d 126 (2003).
3
Davis, 149 Wash. 2d at 531 (quoting Sing v. John L. Scott, Inc., 134 Wash. 2d 24, 29, 948
P.2d 816 (1997)).
4
Jenkins v. Weyerhaeuser Co., 143 Wash. App. 246, 254, 177 P.3d 180 (2008).
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No. 78897-3-I / 4
Spokeo claims the trial court “ignored the law of the case” and applied law different
than stated in the court’s instructions to the jury.
Contrary to Spokeo’s position, a “court must follow Washington law, not jury
instructions” when considering a motion for judgment as a matter of law. 5 This means
that an appellate court looks to controlling case law, and not jury instructions, when
reviewing a trial court’s CR 50 decision.
The CPA declares unlawful “[u]nfair methods of competition and unfair or
deceptive acts or practices in the conduct of any trade or commerce.” 6 To prevail on a
private CPA claim, the plaintiff must prove (1) an unfair or deceptive act or practice,
(2) occurring in trade or commerce, (3) affecting the public interest, (4) injury to a person's
business or property, and (5) causation.7
Unfair or Deceptive Act or Practice and Public Interest Impact
“Whether an action constitutes an unfair or deceptive practice is a question of
law.” 8 An act or practice is unfair or deceptive if it has the capacity to deceive a substantial
portion of the public.9 “Implicit in the definition of ‘deceptive’ under the CPA is the
understanding that the practice misleads or misrepresents something of material
importance.”10
5
Kim v. Dean, 133 Wash. App. 338, 349, 135 P.3d 978 (2006) (quoting Hanson v. Ford
Motor Co., 278 F.2d 586, 593 (8th Cir. 1960).
6
RCW 19.86.020.
7
Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wash. 2d 778, 784–
85, 719 P.2d 531 (1986).
8
Columbia Physical Therapy, Inc., PS v. Benton Franklin Orthopedic Assocs., PLLC,
168 Wash. 2d 421, 442, 228 P.3d 1260, 1270 (2010).
9
State v. Pacific Health Ctr, Inc., 135 Wash. App. 149, 170, 143 P.3d 618 (2006).
10
Holiday Resort Comty. Ass'n v. Echo Lake Assoc., LLC, 134 Wash. App. 210, 226, 135
P.3d 499 (2006).
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No. 78897-3-I / 5
An act or practice is injurious to the public interest if it “(a) [i]njured other persons;
(b) had the capacity to injure other persons; or (c) has the capacity to injure other
persons.” 11 A plaintiff must show “not only that a defendant's practices affect the private
plaintiff but that they also have the potential to affect the public interest.” 12
“Ordinarily, a breach of a private contract affecting no one but the parties to the
contract is not an act or practice affecting the public interest...It is the likelihood that
additional plaintiffs have been or will be injured in exactly the same fashion that changes
a factual pattern from a private dispute to one that affects the public interest.” 13 This
means when a transaction essentially involves a private dispute, a party may have more
difficulty showing that the public has an interest in the subject matter. 14 Here, Spokeo
claims that because Whitepages injured it and the other endemic partners, “the evidence
was more than sufficient to meet [the public interest] test.” But, this evidence does not
prove the public interest prong of the CPA claim. “Only acts that have the capacity to
deceive a substantial portion of the public are actionable.” 15
Our Supreme Court has identified four factors to consider when analyzing public
interest impact:
“(1) Were the alleged acts committed in the course of defendant's
business? (2) Did defendant advertise to the public in general? (3) Did
defendant actively solicit this particular plaintiff, indicating potential
solicitation of others? (4) Did plaintiff and defendant occupy unequal
11
RCW 19.86.093(3).
12
Indoor Billboard/Wash., Inc. v. Integra Telecom of Wash., Inc., 162 Wash. 2d 59, 74, 170
P.3d 10 (2007) (citing Hangman Ridge, 105 Wash. 2d at 788; Lightfoot v. MacDonald, 86
Wash. 2d 331, 335–36, 544 P.2d 88 (1976)).
13
Hangman Ridge, 105 Wash. 2d at 790–91 (citing Lightfoot, 86 Wash. 2d at 334, and McRae
v. Bolstad, 101 Wash. 2d 161, 166, 676 P.2d 496 (1984)).
14
Hangman Ridge, 105 Wash. 2d at 790.
15
Goodyear Tire & Rubber Co. v. Whiteman Tire, Inc., 86 Wash. App. 732, 744, 935 P.2d
628 (1997) (citing Hangman Ridge, 105 Wash. 2d at 785).
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No. 78897-3-I / 6
bargaining positions? As with the factors applied to essentially consumer
transactions, not one of these factors is dispositive, nor is it necessary that
all be present. The factors in both the “consumer” and “private dispute”
contexts represent indicia of an effect on public interest from which a trier
of fact could reasonably find public interest impact.”[16]
Whitepages’ acts only affected Spokeo and the other endemic partners. These
parties are sophisticated businesses and occupy equal bargaining positions.17 And, while
Whitepages committed the accused acts in the course of its business, it did not target its
actions at the public. They were not likely to injure additional parties, unlike cases where
the courts found the public interest prong satisfied. 18
When an unfair or deceptive act only affects a select few in a niche market, as
here, it does not affect “public interest.” 19 “Significantly, conduct that is not directed at
the public, but, rather, at a competitor, lacks the capacity to impact the public in general.” 20
Spokeo has not explained how Whitepages’ actions did, or had the potential to,
affect a large number of people, and it fails to show how Whitepages’ conduct affected
the public in any way. Because Spokeo fails to establish the public interest element of its
CPA claim, no substantial evidence exists showing Whitepages violated the CPA.
Jury Questions
Spokeo claims the trial court should have answered two jury questions asking
whether the jury must find all the elements in both independent negligent
16
Hangman Ridge, 105 Wash. 2d at 790–91.
17
Broten v. May, 49 Wash. App. 564, 571, 744 P.2d 1085 (1987).
18
Edmonds v. John L. Scott Real Estate, Inc., 87 Wash. App. 834, 847, 942 P.2d 1072
(1997), Stephens v. Omni Ins. Co., 138 Wash. App. 151, 178, 159 P.3d 10 (2007).
19
Goodyear, 86 Wash. App. at 744-45.
20
Evergreen Moneysource Mortg. Co. v. Shannon, 167 Wash. App. 242, 261, 274 P.3d
375 (2012) (citing Goodyear, 86 Wash. App. at 744).
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No. 78897-3-I / 7
misrepresentation instructions to find for Spokeo on the negligent misrepresentation
claim.
The trial court has discretion to decide whether to give further instructions to a jury
after deliberations begin.21 An appellate court reviews for abuse of that discretion by a
trial court's refusal to give an additional instruction. 22 When a jury instruction accurately
states the law, the trial court need not provide further instructions.23 The court has no
duty to answer the jury's question.24
During deliberations, the jury asked two questions related to Spokeo’s negligent
misrepresentation claim involving jury instructions 30 and 32. Jury instruction 30 stated:
Spokeo has the burden of proving by clear, cogent, and convincing
evidence each of the following elements for the claims of negligent
misrepresentation:
(1) that Whitepages supplied information for the guidance of Spokeo in Spokeo’s
business transactions that was false;
(2) that Whitepages knew or should have known that the information was supplied
to guide Spokeo in business transactions;
(3) that Whitepages was negligent in obtaining or communicating the false
information;
(4) that Spokeo relied on the false information;
(5) that Spokeo’s reliance on the false information was reasonable; and
(6) that the false information proximately caused damages to Spokeo…
Jury instruction 32 stated:
Spokeo has the burden of proving by clear, cogent, and convincing evidence each
of the following elements for the claim of negligent misrepresentation:
(1) that Whitepages had a duty to disclose to Spokeo certain information;
21
State v. Ng, 110 Wash. 2d 32, 42, 750 P.2d 632 (1988).
22
A.C. v. Bellingham Sch. Dist., 125 Wash. App. 511, 516, 105 P.3d 400 (2004).
23
Ng, 110 Wash. 2d at 42–44; State v. Sublett, 156 Wash. App. 160, 184, 231 P.3d 231
(2010).
24
State v. Langdon, 42 Wash. App. 715, 718, 713 P.2d 120, review denied, 105 Wash. 2d
1013 (1986).
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No. 78897-3-I / 8
(2) that Whitepages did not disclose this information to Spokeo;
(3) that Whitepages was negligent in failing to disclose this information;
(4) that Plaintiff was damaged by the failure to disclose this information.
On February 20, 2018, the jury’s first question asked was if it must “find [whether]
all of the elements in both [i]nstructions are true to give a verdict for Spokeo?” The court
replied, “Please read both instructions carefully and follow both instructions as
applicable.”
On February 22, 2018, the jury asked again for “clarification on whether one or
both sets of criteria need to be satisfied in order for our verdict to be for Spokeo,” stating
that “[s]everal of our votes depend on this.” The court instructed, “The jury instructions
and the admitted exhibits contain all of the information that is relevant for purposes of
reaching your verdict regarding the plaintiff[’]s claims. Please read the instructions
carefully and follow them as applicable.” The jury found for Whitepages on Spokeo’s
negligent misrepresentation claim.
Spokeo analogizes this case to State v. Campbell.25 There, the court held that the
instructions “did not accurately inform the jury of the law.” 26 Spokeo’s analogy has a fatal
flaw. The court’s original instructions accurately informed the jury of the applicable law.
Spokeo does not dispute the accuracy of these instructions. Instead, Spokeo contends
the court should have clarified whether the jury had to find all elements described in each
instruction to find for Spokeo on the negligent misrepresentation claim.
25
163 Wash. App. 394, 260 P.3d 235, rev'd on other grounds, No. 66732–7–I, 2012 WL
5897625 (Wash. Ct. App. Nov. 26, 2012).
26
163 Wash. App. at 401.
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Because Spokeo does not assign any error to any actual jury instruction or cite to
conflicting controlling law, 27 and because a trial court is not required to further instruct a
jury about accurate jury instructions, the trial court did not abuse its discretion in failing to
answer the jury’s questions.28
Waiver of Affirmative Defense
Spokeo challenges the trial court’s ruling that because Spokeo did not affirmatively
plead the anticipatory repudiation defense it waived this defense. Where the parties do
not dispute the facts, we review waiver as a question of law subject to de novo review. 29
Assuming, without deciding, that Spokeo did not waive the anticipatory repudiation
defense, it fails to show it was entitled to a jury instruction on this defense. For a party to
be entitled to have the jury instructed about an affirmative defense, the record must
include sufficient evidence “to permit a reasonable juror to conclude that the defendant
has established the defense…by a preponderance of the evidence.”30
First, Spokeo does not challenge the jury’s finding that Whitepages did not breach
the contract. So, we accept this unchallenged finding as true for purposes of this
appeal.31 A Whitepages breach would be required for Spokeo to succeed on the
anticipatory repudiation affirmative defense. Since Spokeo accepts the finding that
27
State v. Logan, 102 Wash. App. 907, 10 P.3d 504 (2000) (quoting DeHeer v. Seattle
Post-Intelligencer, 60 Wash. 2d 122, 126, 372 P.2d 193 (1962)).
28
Spokeo also fails to provide any controlling case law on this issue in its 30-page reply
brief.
29
Brundridge v. Fluor Fed. Servs., Inc., 164 Wash. 2d 432, 440–41, 191 P.3d 879 (2008).
30
State v. Trujillo, 75 Wash. App. 913, 917, 883 P.2d 329 (1994).
31
State v. O’Neill, 148 Wash. 2d 564, 571, 62 P.3d 489 (2003).
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Whitepages did not breach its contract with Spokeo, it cannot show that the court’s refusal
to instruct on anticipatory repudiation harmed it.
Also, Spokeo does not identify evidence in the record that shows it was entitled to
the defense. It claims an anticipatory repudiation occurred because Whitepages charged
Spokeo for clicks and impressions after it terminated the Marketplace Program. But,
Spokeo does not dispute it continued receiving clicks after Whitepages discontinued
Marketplace. So, Spokeo fails to explain how Whitepages anticipatorily repudiated the
contract. The trial court did not abuse its discretion by refusing to give Spokeo’s proposed
anticipatory repudiation jury instructions.
Discovery Violations
Spokeo asserts the trial court should not have allowed the jury to decide a
spoliation issue about evidence related to Whitepages’ messaging platform “Yammer.”
If a party commits spoliation, the fact finder may infer the evidence was harmful to
the party’s case.32 After Spokeo sued Whitepages, both parties agreed on a Stipulated
Protective Order and Confidentiality Agreement. Spokeo then asked the court to compel
discovery. The trial judge granted this request in part by ordering Whitepages to “fully
respond” to Spokeo’s discovery requests “as modified.”
Whitepages’ employees used a Microsoft messaging platform called Yammer to
communicate with each other. Whitepages ended its Yammer license agreement and
Microsoft informed Whitepages that it deleted Whitepages’ communications. Spokeo
requested copies of “Yammer.com conversations from Whitepages’ employees.” In April
32
Pier 67, Inc. v. King Cty, 89 Wash. 2d 379, 385-86, 573 P.2d 2 (1977).
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No. 78897-3-I / 11
2017, Whitepages responded that it had no such documents in its possession, custody,
or control, and because Whitepages’ had discontinued use of Yammer, it could not
produce documents.
After Spokeo made numerous requests about discovery, the court ordered
Whitepages to “make the Yammer files available to a third-party vendor chosen by
Plaintiff’s counsel on an expedited basis.” Although Whitepages only produced 31
Yammer messages, a third-party discovery vendor found 187 Yammer messages using
the same search terms used by Whitepages, which was 156 more messages than
Whitepages produced.
Spokeo claimed that Whitepages’ withholding of the Yammer messages
“substantially prejudiced” it. The trial court made the following find about this issue:
“At a minimum, the Defendant’s actions and omissions kept the
native Yammer files out of the Plaintiff’s reach during the discovery phase
of this case, and prevented the Plaintiff from having any reasonable
opportunity to evaluate the files and follow up on any leads that there may
be in those files during discovery. The court finds that the serious
investigative disadvantage that the Defendant’s conduct caused the Plaintiff
is substantial prejudice. As noted above, it is not possible to quantify
precisely the amount of prejudice because it cannot be known how many
files have been deleted, corrupted, fragmented, omitted, or otherwise lost.
It also cannot be known where possible leads from any of the native
Yammer files might have taken the Plaintiff during discovery, what
additional written discovery requests the Plaintiff may have served, or what
additional depositions the Plaintiff might have taken, or what additional
relevant evidence the Plaintiff might have pursued and found.”
When discussing sanctions, the court stated, “the Plaintiff is entitled to recover its
reasonable costs, including its reasonable attorneys’ fees and costs, incurred in litigating
Plaintiff’s CR 37(b) discovery violation, which necessarily includes the fees and costs
incurred in litigating the spoliation issue.” The trial court also ruled it would give the jury
an instruction “allowing (but not requiring) the jury to infer that the Yammer.com account
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No. 78897-3-I / 12
was terminated for the reason that the Defendant was concerned that some information
in the native Yammer files was (or might be) adverse to the Defendant’s case” and an
instruction “allowing (but not requiring) the jury to infer that, had the native Yammer files
been turned over during discovery, the files would have contained relevant admissible
evidence favorable to the Plaintiff’s claims and harmful to Whitepages’ defense.”
Spokeo asks this court to hold that whenever a party fails to produce evidence, the
court must draw a spoliation inference. But, it provides no authority to support its claim.
Rather, the one case it does cite, Pier 67, Inc. v. King Cty., states that when a party
destroys evidence, the only inference that the fact-finder may draw is that such evidence
would be unfavorable to him. 33 This does not mean when a party destroys evidence the
court is required to draw this inference. It simply means, that at most, a fact-finder may
conclude the evidence is unfavorable. Spokeo does not support with any authority its
claim that the trial court should not have allowed the jury to decide the spoliation issue.
The trial court did not abuse its discretion by allowing the jury to decide what inference to
draw.
PowerPoint Slides
Spokeo next claims the trial court should have sanctioned Whitepages when it
learned it failed to disclose certain PowerPoint slides from a January 2015 Board meeting.
A trial court has discretion to impose sanctions for discovery violations and we will
not reverse those decisions absent a showing of abuse of discretion.34 A trial court
33
89 Wash. 2d 379, 385-86, 573 P.2d 2 (1977).
34
Henderson v. Tyrrell, 80 Wash. App. 592, 604, 910 P.2d 522 (1996) (citing to Washburn
v. Beatt Equip. Co., 120 Wash. 2d 246, 283, 840 P.2d 860 (1992); Hampson v. Ramer, 47
Wash. App. 806, 813, 737 P.2d 298 (1987).
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No. 78897-3-I / 13
abuses its discretion when its order is manifestly unreasonable or based on untenable
grounds.35 A trial court would necessarily abuse its discretion if it based its ruling on an
erroneous view of the law. 36
To decide whether spoliation requires a sanction, courts weigh: “(1) the potential
importance or relevance of the missing evidence; and (2) the culpability or fault of the
adverse party.” 37
Spokeo claims Whitepages “withheld 54 slides from the January 2015
PowerPoint.” But, Spokeo does not cite where the record it shows this.38 More
significantly, Spokeo does not show that the nondisclosure of the PowerPoint slides
prejudiced it.
The trial court found that the documents Spokeo claims Whitepages withheld were
in Spokeo’s possession, and Spokeo failed to complain about incompleteness when they
were in their possession. The trial court stated, during a February 7, 2018 hearing, that
it did not see any prejudice at that time and again at a February 12, 2018 hearing stated,
“I don’t think there is sufficient evidence of prejudice on the record.” The court also noted
that Whitepages made a prima facie case showing its failure to produce the missing slides
was a mistake. Because Spokeo provides no basis for the assertion that the trial court
abused its discretion in failing to impose sanctions, this claim fails.
35
Holbrook v. Weyerhaeuser Co., 118 Wash. 2d 306, 315, 822 P.2d 271 (1992); Watson v.
Maier, 64 Wash. App. 889, 896, 827 P.2d 311, review denied, 120 Wash. 2d 1015, 844 P.2d
436 (1992).
36
Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S. Ct. 2447, 2460–61, 110
L. Ed. 2d 359 (1990).
37
Henderson, 80 Wn. App at 607.
38
RAP 10.3(a)(6); Cowiche Canyon Conservancy v. Bosley, 118 Wash. 2d 801, 809, 828
P.2d 549 (1992).
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Attorney Fees
Spokeo requests attorney fees and costs under the CPA claim. Because we affirm
the dismissal of Spokeo’s CPA claim, we deny its request for attorney fees. Whitepages
also requests attorney fees and costs for “defending the verdicts on the breach of contract
claims.” Because Spokeo did not appeal the jury verdict on the breach of contract claim,
we deny Whitepages’ request for attorney fees.
CONCLUSION
We affirm. The record contains insufficient evidence to support the jury’s verdict
on Spokeo’s CPA claim. Also, the trial court did not abuse its discretion by declining to
respond to the jury’s questions with additional instructions. Spokeo identifies no evidence
in the record showing how Whitepages anticipatorily repudiated the contract. And,
Spokeo fails to show the trial court abused its discretion by allowing the jury to decide
what inference to draw from spoliation. Finally, Spokeo fails to show how the trial court
abused its discretion in failing to sanction Whitepages.
WE CONCUR:
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