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Court of Appeals Division I State of Washington
Docket Number: 48552-1-I Title of Case: Elwood Hertzog, Iii, Appellant v. Webtv Networks, Inc., Respondent File Date: 07/22/2002
Appeal from Superior Court of King County Docket No: 99-2-18464-5 Judgment or order under review Date filed: 05/14/2001 Judge signing: Hon. Palmer Robinson
Authored by William W. Baker Concurring: H. Joseph Coleman Susan R. Agid
Counsel for Appellant(s) Philip A. Talmadge and Cleveland Stockmeyer of Talmadge & Stockmeyer David E. Breskin and Alex J. Rose of Short Cressman & Burgess
Counsel for Respondent(s) Karl J. Quackenbush of Preston Gates & Ellis Laura K. Clinton Charles B. Casper Charles C. Sweedler Peter Breslauer
IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON
ELWOOD HERTZOG III, Individually, and ) on behalf of all the members of the Class of ) Persons similarly situated, ) NO. 48552-1-I ) Appellant, ) ) vs. ) WEBTV NETWORKS, INC., a corporation, ) ) Respondent. ) )
BAKER, J. - Elwood Hertzog appeals the summary judgment dismissal of his action against WebTV Networks, Inc. for Consumer Protection Act1 (CPA) violations and breach of express and implied warranties of merchantability. He also appeals the decertification of his class. Because WebTV was neither deceptive nor unfair in failing to disclose possible equipment incompatibilities, and made no express or implied warranties that its universal remote control device would operate every type of equipment manufactured without exception, we affirm. I WebTV Networks, Inc. provides internet access to customers through their television sets, without need of a computer.2 The venue is an electronic box, which sits atop the customer's television and is connected to both the television and the customer's telephone line. These set top boxes are manufactured by WebTV's licensees such as Sony and Philips Magnavox. The WebTV software to operate the system is loaded into the boxes at the time of manufacture and customers may periodically download upgrades from the internet into the boxes. Elwood Hertzog was a customer of the Classic WebTV plan. Classic service offers internet access, e-mail, chat, and instant messaging through a specially manufactured 'Classic' receiver. But when WebTV began offering an enhanced 'Plus' plan, Hertzog decided to upgrade. Before doing so, he purchased a new dish satellite system manufactured by EchoStar. The EchoStar system had the capability of using an infrared (IR) remote control device or a radio (UHF) remote control device. Hertzog specifically selected the UHF technology because it, unlike IR, does not require a line of sight between the remote control device and the equipment being controlled. He could thus operate the dish system from any room in the house. To upgrade to the WebTV Plus service, Hertzog was required to purchase a new 'Plus' receiver. The Plus receiver boasts enhanced memory and a faster processor. The Plus service plan also includes additional features, including: a) picture in picture (PIP) viewing,3 b) picture/audio e-mail; c) interactive TV programming;4 d) one touch VCR recording; e) auto program recording; and f) program remind.5 Many of these features are possible through an IR universal remote control device included with the Plus receiver. An IR remote control device controls a particular piece of equipment by use of a code set programmed into the device that matches the code in the equipment. Each manufacturer uses unique code sets for its products. Universal Electronics, Inc. has compiled a code set database of over 80,000 IR codes that can be programmed into one remote control device. This allows the remote control device to operate those thousands of different types of equipment - hence the term 'universal remote.' Universal Electronic's database contains 99 percent of all code sets available in the North American market. WebTV entered into a license agreement with Universal Electronics to use this database for the universal remote control device sold with the Plus system. Universal Electronics updates its database. WebTV, in turn, provides those updates to its customers via download from the Internet. After purchasing the WebTV Plus receiver, Hertzog found that the universal remote control device would not operate his EchoStar system. He consulted the owners manual for the Plus receiver to learn how to program it to control his satellite system and VCR. The manual prefaced its instructions with the statement:
When his efforts to program the universal remote control device proved unsuccessful, Hertzog called WebTV customer service. WebTV walked him through the set-up process again, to no avail. Hertzog advised the customer service technician that he would call again the next day. In the meantime, WebTV's customer support technician referred the matter to higher level product support to determine whether a code was available for the satellite system. A week later, Hertzog had not called. WebTV left a voice message for Hertzog to call with the make and model number of his satellite system so that it could research the code problem. A month passed before Hertzog returned the call with the information. Two days later, WebTV called Hertzog to say that WebTV probably did not support his Echostar 4000 system. During the preceding seven months, WebTV had received complaints by customers that the universal remote control device did not operate their satellite dish systems. WebTV knew that it did not have the proper code sets for all EchoStar models except for the 1000 series. WebTV resolved to include these models in its request to Universal Electronics for updated codes. Hertzog sued WebTV in a class action for Consumer Protection Act violation, breach of express and implied warranties, and conversion.6 The court dismissed Hertzog's claims on summary judgment and decertified the class. Hertzog appeals. II Hertzog argues that WebTV violated the Consumer Protection Act by deceiving him about the compatibility of its universal remote control device. The Consumer Protection Act prohibits those in trade or commerce from engaging in unfair or deceptive practices in the course of business with consumers.7 Persons injured in their business or property in violation of the Act may bring a civil action to recover their actual damages sustained.8 To prevail on a CPA claim, a plaintiff must prove each of the following five elements: 1) That the defendant engaged in an unfair or deceptive act or practice; 2) occurring in trade or commerce; 3) that affects the public interest; and 4) causes injury; 5) to plaintiff in his or her business or property.9 The trial court granted summary judgment on the first and fourth elements. Whether an act gives rise to a CPA violation is reviewed as a question of law.10 Although the Washington CPA does not define the term 'deceptive,' it is well established that a practice is unfair or deceptive if it has the capacity to deceive a substantial portion of the public.11 Neither intent to deceive nor actual deception is required to violate the CPA.12 The purpose of the capacity-to-deceive test is to deter deceptive conduct before injury occurs.13 A misrepresentation made to only one person can have the capacity to deceive many where it is made in a standard form contract.14 Hertzog claims that WebTV deceptively failed to disclose before purchase that the universal remote control device would not operate his EchoStar satellite dish system. Our courts have held that a seller has a duty to disclose material facts to a transaction when the facts are known to the seller but not easily discoverable by the buyer.15 For example, in McRae v. Bolstad,16 the court held that a real estate agent's failure to disclose his knowledge of sewer and drainage problems to buyers of a residence was deceptive and unfair.17 But in Barstad v. Stewart Title Guaranty Co., Inc.,18 the supreme court held that a title insurance company's failure to disclose a title defect in its preliminary commitment statement was not deceptive or unfair. The court held that although the title insurance company knew of the title defect, it was not required to disclose the information to its insureds in the preliminary statement because a) the statutes governing title insurance do not require the disclosure; and b) Stewart Title reasonably believed that the information would be disclosed via other sources.19 Similarly, in Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., the supreme court held that an escrow agent did not commit a deceptive or unfair act by failing to advise the plaintiffs that they ought to seek advice of counsel.20 In this case, Hertzog has cited no statutory or common law authority for the proposition that WebTV owed an affirmative duty to disclose that its universal remote control would not operate the Echostar 4000 satellite dish system. Moreover, he has not demonstrated how WebTV can ensure that any incompatibility reports it publishes are reliable. Universal Electronics does not provide WebTV with a list of missing code sets. The only source of information about incompatible televisions and peripheral devices is from WebTV customers themselves. At the time of litigation, WebTV had received reports that the universal remote control device could not support 35 different peripherals. But upon verification and testing by Universal Electronics, all but four peripherals could be controlled by the universal remote control device. It is not deceptive to refrain from supplying a potential customer with unverified, possibly inaccurate information concerning product compatibility. That WebTV had certain knowledge that the EchoStar 4000 was incompatible does not change the result. Universal Electronics frequently updates the code set database and sends it to WebTV which, in turn, provides it to its customers. This rapidly changing information, combined with WebTV's lack of information about what codes have been added to the database makes any attempt to post an incompatibility list impracticable. The information contained on the packaging itself should have alerted Hertzog to a possible compatibility problem. The box in which the Plus set top box and universal remote control device are contained lists the contents as including, inter alia: 1. WebEye infrared receiver; 2. Universal remote control with batteries; and 3. Wireless infrared keyboard. (emphasis added).
There is no reference to UHF technology. The packaging also specifically mentions that the universal remote will control broadcast television and cable network systems. It makes no reference to satellite dish systems. These descriptions accurately describe the product. They cannot be construed as misleading simply because they do not affirmatively list all the various equipment that might be incompatible. Further, Hertzog cannot show that the omission is both material and not readily discoverable in light of the 30-day refund policy. This 30-day window allows Hertzog significant time to set up the system and to discover any compatibility problems. Indeed, the owners manual specifically advised in the set-up procedure not only that the TV must be operated by an infrared signal, but also that there was no guarantee that the WebTV universal remote control would operate a customer's brand of TV. If the Plus system does not operate a customer's equipment, it can be returned for a full refund. It was reasonable for WebTV to believe that Hertzog would quickly and easily discover any incompatibility problems and make use of his opportunity for a full refund. Hertzog contends that WebTV deprived him of his opportunity for a refund because its customer support staff delayed helping him until the 30-day refund period had lapsed. But he has offered no evidence to support his contention. It is true that WebTV had the knowledge to advise Hertzog instantly that his equipment was probably incompatible (i.e., that other customers had reported compatibility problems and any subsequent code set updates from Universal Electronics have apparently have not resolved the issue). But the delay was not so long as to cause Hertzog to miss the refund deadline. Hertzog called the day he purchased his equipment and eventually terminated the call because he wanted to let time pass to see if the problem would resolve itself. With no call from Hertzog, WebTV called a week later and left a message asking him for the make and model number of his satellite dish system. Had Hertzog promptly returned the call, three weeks would still have been available to him in which he could have returned the system. Instead, he waited a month before supplying WebTV with the information. Two days later, WebTV informed him that his system was incompatible. This sequence does not evidence a pattern of stringing customers along for the purpose of avoiding the 30-day refund window. Hertzog has failed to prove any unfair or deceptive act by WebTV. Hertzog next argues that WebTV expressly warranted, by the use of the term 'universal' to describe its remote control device, that the device would operate all peripheral devices. A seller, by describing a good in a manner that becomes part of the basis of the bargain, creates an express warranty that the goods will conform to the description.21 For example, in Jolly v. C.E. Blackwell & Co.,22 the court held that an express warranty was created when the seller of spring seed grain told the buyers it was fall seed grain.23 In Hall v. Puget Sound Bridge & Dry Dock Co.,24 the supreme court held that a seller of aggregate, who assured the buyer that he could meet the buyer's specifications for type and quality, constituted prima facie evidence that he created an express warranty that the aggregate would be as promised.25 In this case, WebTV decided to call its remote control device a 'universal' remote. Hertzog offers no authority for his contention that this name constitutes an express warranty that the device will operate every type of equipment manufactured without exception. His claim that 'Plus Service' also creates an express warranty that all customers may use all Plus features with no problems likewise lacks merit. Both the remote control device and the Plus service operate correctly in all respects, so long as the customer has compatible hardware. WebTV is guilty of no failure to provide what it advertised. Hertzog also claims that WebTV breached an implied warranty of merchantability. A merchant's sale of goods creates an implied warranty that the goods are merchantable.26 Goods are merchantable, inter alia, if they 'are fit for the ordinary purposes for which such goods are used;' or if they 'conform to the promises or affirmations of fact made on the container or label if any.'27 In this case, Hertzog can point to no defect in the universal remote control device that causes it not to operate correctly. The fact that it is not compatible with each and every piece of equipment manufactured does not constitute a defect. Similarly, the packaging of the set top box advertised the contents as including infrared devices. It made no mention of UHF compatibility. The owners manual, available to Hertzog before he accepted the terms of service, stated clearly that the universal remote control might not operate his brand of TV. Hertzog can show no promises or affirmations of fact made by WebTV to which the universal remote control failed to conform. Because Hertzog failed as a matter of law to show any breach of express or implied warranties, we need not address his contention that WebTV's warranty disclaimers in its Terms of Service contract are invalid. The trial court properly dismissed the case and decertified the class. AFFIRMED.
WE CONCUR:
FOOTNOTES 1. Ch. 19.86 RCW. 2. WebTV's product is distinguished from internet service providers, who provide physical connectivity to the internet. 3. Television can be viewed in small square of television screen while customer views internet sites on the main television screen. 4. Allows customers to participate in television programs such as Wheel of Fortune, and the weather channel. 5. System will remind viewer when favorite television program is starting and automatically tune into the correct channel. 6. Hertzog later abandoned his conversion claim. 7. 'Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.' RCW 19.86.020. 8. RCW 19.86.090. 9. Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wn.2d 778, 780, 719 P.2d 531 (1986). 10. Leingang v. Pierce County Med. Bureau, Inc., 131 Wn.2d 133, 150, 930 P.2d 288 (1997); see also Sing v. John L. Scott, Inc., 134 Wn.2d 24, 29-30, 948 P.2d 816 (1997). 11. Sing, 134 Wn.2d at 30. 12. Sing, 134 Wn.2d at 30; Nelson v. Nat'l Fund Raising Consultants, Inc., 120 Wn.2d 382, 392, 842 P.2d 473 (1992). 13. Hangman, 105 Wn.2d at 785. 14. Edmonds v. John L. Scott Real Estate, Inc., 87 Wn. App. 834, 845, 942 P.2d 1072 (1997). 15. Griffith v. Centex Real Estate Corp., 93 Wn. App. 202, 214, 969 P.2d 486 (1998). 16. 101 Wn.2d 161, 676 P.2d 496 (1984). 17. McRae, 101 Wn.2d at 166. See also, Griffith v. Centex Real Estate Corp., 93 Wn. App. 202, 969 P.2d 486 (1998) (failure to disclose the lack of proper application of exterior paint possibly deceptive); Testo v. Russ Dunmire Oldsmobile, Inc., 16 Wn. App. 39, 554 P.2d 349 (1976) (used car sales associate's failure to disclose to purchasers that car purchased had been modified to racing car status was deceptive and unfair); Washington State Physician Ins. Exch. & Ass'n v. Fisons Corp, 122 Wn.2d 299, 858 P.2d 1054 (1993) (parties agreed that drug company's failure to disclose dangers of a drug to a physician prescribing it was deceptive and unfair.). 18. 145 Wn.2d 528, 39 P.3d 984 (2002). 19. Barstad, 145 Wn.2d at 543-44. 20. Hangman Ridge, 105 Wn.2d at 793. Hertzog's cite to Travis v. Washington Horse Breeders Ass'n, Inc., 47 Wn. App. 361, 734 P.2d 956 (1987) is inapposite because that was a case about false representation. Hertzog abandoned his false representation claim on appeal. 21. RCW 62A.2-313. Article 2 of the Uniform Commercial Code (U.C.C.), chapter 62A RCW, applies to transactions in goods. The parties agree in their briefing that Article 2 applies to this case. See M. A. Mortenson Co., Inc. v. Timberline Software Corp., 140 Wn.2d 568, 578, 998 P.2d 305 (2000) (citing Aubrey's R.V. Ctr., Inc. v. Tandy Corp., 46 Wn. App. 595, 600, 731 P.2d 1124 (1987)); Advent Sys. Ltd. v. Unisys Corp., 925 F.2d 670, 675-76 (3d Cir. 1991) (licensing of software treated as a 'good' under U.C.C. Article 2). 22. 122 Wash. 620, 211 P. 748 (1922). 23. Jolly, 122 Wash. at 623. 24. 66 Wn.2d 442, 403 P.2d 41 (1965). 25. Puget Sound Bridge, 66 Wn.2d at 443, 448. 26. RCW 62A.2-314. 27. RCW 62A.2-314. |
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