Punctuation counts! State wins by a comma in consumer protection appeal

By Gretchen Schuldt

The inclusion of the simple, humble comma won out-of-state consumers and the state itself an important victory from the state Court of Appeals last week when the court ruled that a law prohibiting fraudulent representations applied to ads and information shown to people outside of Wisconsin.

The statute, §100.18(1), lays out who cannot do certain things and what they cannot do when trying to get members of the public to buy goods or services. Specifically, the statute says individuals and firms may not "publish, disseminate, circulate, or place before the public, or cause, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in this state..." ads or information that include false representations.

The verbs in the statute focus on the advertiser's conduct, not the consumer's, Appellate Judge M. Joseph Donald wrote for the  panel.

"After a comma, the statute provides that these actions may not take place 'in this state,' " he said. "The statute does not proscribe where the recipient or consumer must be or reside. Thus, based on the plain language of the statute, we conclude that the state can enforce against Wisconsin businesses that reach consumers outside of the state." 

​"There is a comma that separates the phrase 'before the public' and 'in this state.' If 'in this state' modified 'before the public,' then there would be no need for a comma," he wrote.

The mighty comma.

​The opinion, joined by Appellate Judges William W. Brash III and Maxine A. White, overturned a ruling by Milwaukee County Circuit Judge William Sosnay. The panel ordered a new trial.

The case arose out of allegedly deceptive advertising practices by Midwest Auto Recycling and a number of related entities, referred to collectively in the opinion as "Midwest."

The firm relied heavily on the internet for its sales, Donald wrote. "To expand the business, Midwest Auto Recycling created various websites and companies...to advertise and sell the auto parts to people and businesses throughout the United States."

Those companies are also named as respondents in the case and include Remanns LLC; Quality Used Engines, LLC; Engine Recycler, LLC; Quality Used Transmissions, LLC; Engine Shopper, LLC; Engine & Transmission World, LLC; Belden Mfg, LLC; APLS Acquisition, LLC; SW Engines, LLC; SW Transmissions, LLC; and U Need Engines, LLC. Several unnamed managers of those entities also were named. 

The state received hundreds of complaints about the business and sued Midwest in 2017, alleging that the company had committed fraudulent misrepresentations in marketing and selling; fraudulent misrepresentations regarding where their business was located; and unfair billing practices.

As litigation advanced, the state said it wanted to call three out-of-state customers as witnesses to testify "regarding how the engines they received did not match up with the representations that had been made," Donald wrote. 

Sosnay ruled that evidence about “incidents that occurred outside Wisconsin, meaning dealing with residents of other states, is not admissible.” He also ruled the state would have to show that any Wisconsin resident who was a customer of Midwest would have had a monetary loss.

Just one in-state customer testified, along with some people associated with Midwest.

The jury found that four Midwest websites misrepresented the business locations but also found that advertisements to Wisconsin consumers were not untrue, deceptive, or misleading, and that representations in sales quotes were not untrue, deceptive, or misleading in relevant respects.

In rejecting Sosnay's interpretation of the law, Donald wrote for the panel: "As the state asserts, all Wisconsin businesses must do to comply with the law is refrain from making misrepresentations in their advertising. If Midwest has to follow the law for in-state residents, there should be no issue following the law for out-of-state residents given that both view the same websites. ... The circuit court erred when it prohibited the state from introducing evidence that Midwest made misrepresentations reaching consumers outside Wisconsin"

The appellate panel also found that the state did not have to show pecuniary loss. The state brought the suit under a statute that does not request such a showing, Donald wrote.