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The instant adversary proceeding, certified as a class action, has been pending in this court for over five and a half years and is finally ready for a substantially- final disposition. The proceeding was initiated to attack the practices of the United States Consumer Council (hereinafter referred to as "USCC") and was brought against USCC and several individuals allegedly associated with it alleging that USCC was engaged in a variety of unfair and deceptive acts and practices in violation of the New Jersey law prohibiting unfair and deceptive acts and practices, N.J.S.A. 56:8-1, et seq. (hereinafter "NJUDAP"). The exact nature of the services advertised and provided by USCC is hotly disputed by the parties. The Defendants maintain that USCC attempted to negotiate payment plans with its clients' creditors, and, if all else failed, referred clients to an attorney to file a bankruptcy. The Plaintiffs maintain that the Defendants were operating nothing more than a grossly over-priced lawyer referral service soliciting and referring financially distressed consumers to designated attorneys to file Chapter 13 bankruptcies and that no other services or alternatives were presented to consumers contacting USCC. The Plaintiffs further maintain that USCC only referred clients to attorneys with whom it had some sort of referral agreement and who paid USCC for such referrals.The Courts have always avoided hampering themselves by defining or laying down as a general proposition what shall be held to constitute fraud. Fraud is infinite in variety. The fertility of man's invention in devising new schemes of fraud is so great, that the courts have always declined to define it, or to define undue influence, which is one of its many varieties, reserving to themselves the liberty to deal with it under whatever form it may present itself.

Kerr, Fraud and Mistake (7th ed. 1952). . . .

Despite the amorphous nature of the concept of unconscionability, it has been defined as establishing a standard of conduct contemplating "good faith, honesty in fact, and observance of fair dealings." . . . As the Court in Romain noted, "[t]he need for application of the standard is most acute when the professional seller is seeking the trade of those most subject to exploitation—the uneducated, the inexperienced and the people of low incomes." 279 A.2d at 652.* The Uniform Consumer Sales Practice Act (hereinafter "UCSPA") provides that, in determining whether an act or practice is unconscionable, the court should consider, among other factors, whether "the price grossly exceeded the price at which similar property or services were readily obtainable in similar transactions by like consumers." UCSPA, § 4(c)(2). . . .

The Plaintiffs maintain that the fee charged by USCC was an unconscionable price for the services provided. The seminal New Jersey case on price unconscionability is Romain. That case involved the door-to-door sales of so-called educational books for children. . . . Sales efforts were directed at minority group consumers and consumers of limited education and economic means. . . . The seller was charging between $250.00 and $280.00 for books with a value of about $110.00. . . . Evidence was presented that the books sold were of little or no educational value to children in the age-group and socio-economic position targeted by the seller. . . .


*   The court in Romain recognized that "[t]he deception, misrepresentation, and unconscionable practices engaged in by professional sellers seeking mass distribution of many types of consumer goods frequently produce an adverse effect on large segments of disadvantaged and poorly educated people, who are wholly devoid of expertise and least able to understand or to cope with the ' "sale-oriented,' " ' "extroverted' " and unethical solicitors bent on capitalizing upon their weakness, who therefore most need protection against predatory practices." 279 A.2d at 652.




LAW AND ETHICS MATRIX#1 Case: Murray v Vokes[1] (10 marks total)

With respect to the above-referenced case, identify what the company didn't do that was unethical (something it should have done but did not do) Students who write excess text will get a negative score of 0.25 marks per word.

 

 

 

 

 

LEGAL with NO CIVIL LIABILITY

 

 

NOT ILLEGAL but engenders CIVIL LIABILITY (through a violation of an obligation in civil law)

 

 

ILLEGAL (in violation of criminal law)

 

 


Put a single check (√) or X in 1 of the3 above boxes

[2 marks]

 

LAW AND ETHICS MATRIX#1 Case: Fleet v U.S. Consumer Council[2]

With respect to the above referenced case, identify what the company did that was unethical (max 25 words) [3 marks] (something it did that it should not have done) Students who write excess text will get a negative score of 0.25 marks per word.

 

 

 

 

 

LEGAL with NO CIVIL LIABILITY

 

 

NOT ILLEGAL but engenders CIVIL LIABILITY (through a violation of an obligation in civil law)

 

 

ILLEGAL (in violation of criminal law)

 

 


Put a single check (√) or X in 1 of the3 above boxes


[1] See case Murray v Vokes uploaded on MOODLE along with this exam

[2] See case Fleet v U.S. Consumer Council uploaded on MOODLE along with this exam

Image transcription text

At one point, while she still had to her credit about 900 unused hours of Fraud and Deceit $ 28; Kitchen v. Long, 67 Fla. 72 (1914). As stated by Judge Allen of Audrey E. Yokes v. Arthur Murray, Inc. instructions, she was induced to purchase an additional 24 hours of lessons to this Court in Ramel v. Chasebrook. Construction Co., 185 So.2d 876 (El- app, 1961): participate in a trip to Miami at her own expense, where she would be "given the Dictatet Count of Appeal of Florida, Seeand District, 1965. opportunity to dance with members of the Miami Studio". "* * *A statement of a party having * * * superior knowledge may be regarded as a statement of fact although it would be considered as opinion if the parties She was induced at another point to purchase an additional 126 hours of lessons in were dealing on equal terms." order to be not only eligible for the Miami trip but also to become "a life member of the . PIEROE, JUDGE. This is an appeal by Audrey E. Wokes, plaintiff below, from a final Arthur Murray Studio", carrying with it certain dubious emoluments, at a further cost of It could be reasonably supposed here that defendants had "superior knowledge" as order dismissing with prejudice, for failure to state a cause of action, her fourth $1,762.30. to whether plaintiff had "dance potential" and as to whether she was noticeably amended complaint, hereinafter referred to ab plaintiff's complaint. improving in the art of terpsichore. And it would be a reasonable inference from the At another point, while she still had over 1,000 unused hours of instruction she was undenied averments of the complaint that the flowery eulogiume heaped upon her by Defendant Arthur Murray, Inc., a corporation, authorizes the operation throughout induced to buy 151 additional hours at a cost of $2,049.00 to be eligible for a "Student defendants as a prelude to her contracting for 1944 additional hours of instruction in the nation of dancing schools under the name of "Arthur Murray School of Dancing" Trip to Trinidad", at her own expense as she later learned. order to attain the rank of the Bronze Standard, thence to the bracket of the Silver through local franchised operators, one of whom was defendant J.P. Davenport whose Also, when she still had 1100 unused hours to her credit, she was prevailed upon to Standard, thence to the class of the Gold Bar Standard, and finally to the crowning dancing establishment w purchase an additional 547 hours at a cost of $4,258.74, to qualify her to receive a "Gold plateau of a Life Member of the Studio, proceeded as much or more from the urge to Plaintiff Mrs. Audrey E. Volts, a widow of 51 years and without family, had a yen Medal for achievement, indicating she had advanced to "the Gold Standard". "ring the cash register" as from eat or realistic appraisal of her dancing prowess to be "an accomplished dancer" with the hopes of finding "new interest in life". So, on On another occasion, while she still had over 1200 unused hours, she was induced to or a factual representation of her progress. February 10, 1961, a dubious fate, with the assist of a motivated acquaintance, procured a cost of 12,472.75 to be eligible "to take a Even in contractual situations where a party to a transaction owes no duty to her to attend a "dance party" at Davenport's "School of Dancing" where she whiled away buy an additional 176 hours of instruction the pleasant hours, sometimes in a private room, absorbing his accomplished sales trip to Mexico". disclose facts within his knowledge or to answer inquiries respecting such facts, the law is if he undertakes to do so he must disclose the whole truth. .. technique, during which he -. From the face of the e and poise upon and her rosy future Finally, sandwiched in between other lesser sales promotions, she was influenced to buy an additional 481 hours of instruction at a cost of $6,523.81 in order to "be classified complaint, it should have been reasonably apparent to defendants that her vast outlay o as "an excellent dancer" was painted for her in vivid and glowing colors. As an incident cash for the many hundreds of additional hours of instruction was not justified by her to this interlude, he sold her eight *-hour dance lessons to be utilized within one as a Gold Bar Member, the ultimate a of the da slow and awkward progress, which : , which she would have been made well aware of if they had calendar month therefrom, for the sum of $14.50 cash in hand paid, obviously a baited All the foregoing sales promotions, illustrative of the entire fourteen separate poken the "whole truth." "come-on". contracts, were procured by defendant Davenport and Arthur Murray, Inc., by false representations to her that she was improving in her dancing ability, that she had In Hirschman v. Hodges, etc., 89 Fla. 617 (1910), it was said that- Thus she embarked upon an almost endless pursuit of the terpsichorean art during which, over a period of less than sixteen months, she was sold fourteen "dance courses" excellent potential, that she was responding to instructions in dancing grace, and that " what is plainly injurious to good faith ought to be considered as a fraud totalling in the aggregate 2802 hours of dancing lessons for a total cash outlay of they were developing her into a beautiful dancer, whereas in truth and in fact she did sufficient to impeach a contract," 151,090.48, all at Davenport's dance emporium. All of these fourteen courses were not develop in her dancing ability, she had no fact had difficulty and that an improvident agreement may be avoided- evidenced by execution of a written "Enrollment Agreement A in "hearing the musical beat". The complaint alleged that such representations to her "were in fact false and known by the defendant to be false and contrary to the plaintiff's "* * because of surprise, or mistake, want of freedom, undue influence, the Dancing" with the addendum in heavy black print, "No one will be informed that you are true ability, the truth of plaintiff's ability being fully known the defendants, but suggestion of falsehood, or the suppression of truth." (Emphasis supplied.) taking dancing lessons. Your relations with us are held in strict confidence", setting forth the number of "dancing lesson lessons in " currently withheld from the plaintiff for the sole and specifi live and defraud the We repeat that where parties are dealing on a contractual basis at arm's length sold to her from time to time, and always of course accompanied by payment of cash of plaintiff and to induce her in the purchasing of additional hours of dance lessons". It was with no inequities or inherently unfair practices employed, the Courts will in general the realm. averred that the lessons were sold " were sold to her "in total disregard licregard to the true phys rue physical, rhythm, leave the parties where they find themselves." But in the case sub judice, from the allegations of the unanswered complaint, w cannot say that enough of th These dance lesson contracts and the monetary consideration therefor of over and mental ability of the plaintiff". In other words, while she first exulted that she was 151,000 were procured from her by means and methods of Davenport and his associates entering the "spring of her life", she finally was awakened to the fact there was "spring" accompanying ingredients, as mentioned in the foregoing authorities, were not present neither in her life nor in her feet. which otherwise would have barred the equitable arm of the Court to her. In our view, which went beyond the unsavory, yet legally permissible, perimeter of "sales puffing" from the showing made in her complaint, plaintiff is entitled to her day in Court. and intruded well into the forbidden area of undue influence, the suggestion of The complaint prayed that the Court decree the dance contracts to be null and void falsehood, the suppression of truth, and the fa and the free exercise of rational judgment, if w and to be cancelled, that an accounting be had, and judgment entered against the It accordingly follows that the order dismissing plaintiff's last amended complaint plaintiff alleged in her complaint was true. From the time of her first contract with the defendants "for that portion of the $51,090.45 not charged against specific hours of with prejudice should be and is reversed. dancing school in February, 1 was influenced u instruction given to the plaintiff". The Court held the complaint not to state a cause of Reversed. continuous barrage of flattery, false praise, excessive compliments, and panegyric action and dismissed it with prejudice. We disagree and reverse. encomiums, to such extent that it would be not only inequitable, but unconscionable, for The material allegations of the complaint must, of course, be accepted as true for a Court exercising inherent chance the purpose of testing its legal sufficiency. Defendants contend that contracts can only She was incessantly subjected to overreaching blandishment and cajolery. She was be rescinded for fraud or misrepresentation when the alleged misrepresentation is as to assured she had "grace and poise"; that she was "rapidly improving and developing in a material fact, rather than an opinion, prediction or expectation, and that the her dancing :kill"; that the additional lessons would "make her a beautiful dancer, statements and representations set forth at length in the complaint were in the category capable of dancing with the most accomplished dancers"; that she was "rapidly of "trade puffing", within its legal orbit. progressing in the development of her dancing skill and gracefulness", etc., etc. She was It is true that "generally a misrepresentation, to be actionable, must be one of fact given "dance aptitude test:" for the ostensibly purpose of "determining" the number of rather than of opinion." Tomkovich v. South Florida Citrus Industries, Inc., 185 So.2d remaining hours of instructions needed by her from time to time. 710 (Elawarn, 1966); Kutner v. Kalich, 173 So.2d 765 (Els.App, 1965). But this rule has At one point she was sold 845 additional hours of dancing lessons to be entitled to significant qualifications, applicable here. It does not apply where there is a fiduciary award of the "Bronze Medal" signifying that she had reached "the Bronze Standard", a relationship between the parties, or artifice or trick supposed designation of dance achievement by students of Arthur Murray, Inc. employed by the representor, or where the parties do not in general deal at "arm's Later she was sold an additional 926 hours in order to gain the "Silver Medal", length" as we understand the phrase, or where the represented does not have equal indicating she had reached "the Silver Standard", at a cost of $12,501.$5. opportunity to become apprised of the truth or falsity of the fact represented 14 Flower. 867 words X English (United

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