Investors, LLC, d/b/a Local Records Office (LRO), appeals
from the trial court's order granting partial summary
judgment to the Washington State Attorney General's
Office (State), and denying LRO's cross-motion for
partial summary judgment.
conclude that the trial court properly analyzed whether
LRO's mailer had a capacity to deceive a substantial
portion of the public as a matter of law and that the trial
court properly granted the State summary judgment. We also
conclude that the trial court did not err by imposing civil
penalties against LRO for each mailer sent to consumers. We
a California based company that solicits business in a number
of jurisdictions, including Washington. LRO engages in the
sale of goods and services, including marketing and selling
copies of real property deeds. It is registered as a foreign
limited liability company in Washington and has a mailbox at
a United Parcel Service store in Olympia. Roberto Romero and
his wife, Laura Romero, own, manage, and operate LRO.
2012, LRO began sending mailers to Washington consumers who
had either recently purchased or refinanced a home. LRO also
sent similar mailers to consumers in other states. In its
mailer, LRO offered its product, a copy of the consumer's
property deed, "the only document that identifies [you]
as the property owner of [your home] by a recently recorded
transferred title on the property" and a "property
profile" that provided the "property address,
owner's name, comparable values, and legal description or
parcel identification number, property history, neighborhood
demographics, public and private schools report."
Clerk's Papers (CPO at 24. LRO charged $89 for its
product. A copy of the mailer envelope follows.
OMITTED) CP at 22.
envelope contained LRO's two page mailer. It had no
graphics or logos, only text.The first page listed LRO's
Olympia address at the top of the page and, underneath, the
consumer's name, address, and a barcode.
of the first page follows.
OMITTED) CP at 24.
the disclaimer was a detachable coupon. The coupon included a
"PROPERTY ID NO., " a reference to the $89
"SERVICE FEE, " a "PLEASE RESPOND BY"
date, and "CHECK NO." CP at 24.
second page of the mailer contained a list of largely
irrelevant legal definitions related to real property and
property ownership. Near the bottom of the page, a fourth
disclaimer read in the same type:
DISCLAIMER: * Local Records Office is not affiliated with any
State or the United States or the County Records. Local
Records Office is an analysis and retrieval firm that uses
multiple resources that provide supporting values, deeds, and
evidence that is used to execute a property reports [sic] and
deliver a requested deed.
Local Records Office is not affiliated with the county in
which your deed is filed in, nor affiliated with any
government agencies. This offer serves as a soliciting for
services and not to be interpreted as bill due.
CP at 25.
tracked the total number of mailings, complaints, stop
payment requests, and refund requests it received, but did
not track information as to customer satisfaction with its
June 2012 and February 2016, LRO mailed 256, 998
solicitations to Washington consumers. Nine thousand six
hundred ninety-five Washington consumers purchased LRO's
product, a 3.9 percent response rate.
this time, the State received numerous complaints regarding
LRO's solicitations. Numerous government offices, media
outlets, and consumer watchdog agencies nationwide
disseminated consumer alerts regarding LRO's mailer, many
of which characterized the mailer as a scam.
November 2013, the State filed a lawsuit against LRO and the
Romeros, alleging a violation of the Consumer Protection Act
(CPA). Two years later, the State moved for
summary judgment. It argued that LRO's mailer was a
deceptive act that created a net impression that it was from
a government agency or was a bill consumers had to pay. The
State further argued that no material issues of fact were in
dispute, and that the only disputed issue involved a question
of law. The issue was whether LRO's mailer was unfair or
deceptive. The State requested that LRO be enjoined from
their allegedly deceptive practices and moved for
restitution, civil penalties, and attorney fees and costs.
filed a cross-motion for partial summary judgment. It argued
that, as a matter of law, LRO's mailer was not a bill and
was not deceptive in that regard; neither LRO's envelope
nor mailer as a whole resembled a mailing from a government
agency or title company; and, that the disclaimers LRO used
were sufficient to counter any net impression that the mailer
was a bill or from a government agency or title company.
State supported its motion with 25 declarations from
Washington consumers who received LRO's mailer. Some
consumers stated that the timing of the mailer coupled with
the "official looking" envelope and the Olympia
address made it seem like it demanded attention and came from
a government organization. CP at 625. Some stated that, upon
receiving the mailer, they believed there was a problem with
their property transaction. Others believed the mailer either
came from a government agency or was a bill. Some believed
that the sender would penalize them for failing to pay $89.
Consumers also stated that the "respond by" date
created a sense of urgency to comply. Even after reading the
mailer and its disclaimers in full, some believed the mailer
was suspicious, and that LRO was attempting to mislead or
deceive homeowners. Others declared that only after paying
and receiving a "very unofficial looking property
profile" from LRO did they realize they were
"scammed" and they asked for a refund. CP at 635,
State also submitted evidence that deeds were typically one
to two pages in length, and that, by law, the Auditor's
Office charged nominal amounts for certified and
non-certified copies of deeds. It also submitted evidence that
companies such as HouseFax.com offered detailed
property profile reports for free and charged $19 thereafter
for additional reports.
the State submitted evidence of enforcement actions or
settlements multiple other states entered into with LRO
regarding the same or similar deceptive conduct. It also
submitted evidence that in 2011, Romero voluntarily
surrendered his California real estate license to settle an
action by the California Department of Real Estate which
alleged "misrepresentations" and "fraud and/or
dishonest dealing[s]" with consumers. CP at 415.
parties supported their motions with their respective
experts' reports and deposition testimony. The State
retained Dr. Anthony Pratkanis, a psychology professor at the
University of California, Santa Cruz. Pratkanis taught
courses in social psychology, research methods, consumer
psychology, marketing management, and buyer behavior. His
primary area of research and study involved social influence
and belief formation, including deceptive advertising and
sales practices. He published numerous books and articles on
reviewed the consumer declarations and complaints, consumer
alerts from various government authorities, LRO's mailer,
and LRO's response rate. Citing to studies and articles,
Pratkanis opined that the response rate for LRO's mailers
in Washington was "two to three times the expected rate
of average response for comparable mailers." CP at 353.
He noted that LRO's mailer enjoyed a high response rate,
even though it failed to use many of the most effective
methods used in direct mail to increase response rates,
"such as offering free gifts and free trials, providing
money-saving offers, highlighting testimonials concerning the
value of the product, and featuring prominently money-back
guarantees of satisfaction." CP at 353. As to the
significance of complaint rates, he cited to a number of
studies and opined:
In general, consumers do not often complain even when
dissatisfied with a purchase and rarely complain to third
parties such as the government. . . . When confronted with a
defective service or product, the two most common responses
by consumers ... is to (a) do nothing or (b) take private
action such as quit purchasing the product or engage in
negative word of mouth of the product.
CP at 370.
opined that LRO engaged in a deceptive sales practice by
leading consumers to believe they received a bill from a
government agency or a title company, or that they needed to
have a copy of a deed to prove ownership of their home. In
reaching his opinion, Pratkanis used established theories,
his knowledge of influence tactics, and the science of
consumer behaviors and social influence. While he did not
conduct an independent survey or focus group, he conducted a
"social influence analysis" by reviewing the mailer
and the influence tactics LRO used. CP at 993. In its
response to the State's motion, LRO objected to
Pratkanis's opinion, arguing that it was
"demonstrably unscientific" and "not
admissible under ER 702." CP at 1009.
retained Dr. Albert Bruno, a marketing professor at Santa
Clara University. Bruno taught courses in marketing,
marketing research, and marketing strategy. Bruno opined that
LRO's response rate was not necessarily an indication of
a deceptive marketing strategy. He further noted that
LRO's complaint rate was "relatively low" ...