Consumer Protection. Operator of a web site containing forms with contractual provisions that, if used by third parties at their election, may cause violations of the CFA is not “other violator” liable under CFA because web site operator is not one who directly participates in the unfair or deceptive acts, who directly aids the actor, or who is in a principal/agent relationship with the actor.

 Knutsen v. Dion, 2013 VT 106 (08-Nov-2013).

 DOOLEY, J.   Plaintiff appeals the decision of the superior court denying her motion for summary judgment and granting defendant Vermont Association of Realtors, Inc.’s (VAR) motion for summary judgment on her consumer fraud claim arising out of her purchase of a home .  Plaintiff argues that the limited liability clause and the mandatory mediation clause of VAR’s form purchase and sale agreement that  was used in her real estate purchase were unfair and deceptive, and that by providing the form contract and representing on its website that the template is fair to all parties, VAR violated the CFA The trial court ruled that the clauses, either alone or in conjunction, were not “unfair or deceptive under the CFA.”  and that “VAR’s sole connection to this case—drafting the template clauses that [plaintiff] and her buyer’s broker eventually used—cannot support a consumer fraud claim” We affirm.

VAR was not involved in the transaction between plaintiff and sellers, nor in the actions of the real estate brokers who represented sellers and plaintiff and brought them to agreement. VAR’s sole involvement was to post on its website a model purchase and sales contract that could be used by member real estate brokers and was used by plaintiff’s real estate broker  Narrowly stated, the first issue in this case is whether, under plaintiff’s allegations, VAR is an “other violator” pursuant to § 2461(b)(permitting a consumer “who sustains damages or injury as a result of any false or fraudulent representations or practices prohibited by section 2453 of this title” to “sue and recover from the seller, solicitor or other violator….”).   

In Sawyer v. Robson, 2006 VT 136, 181 Vt. 216, 915 A.2d 1298, a private CFA suit, we stated “The plain meaning of ‘other violator’ is anyone engaged in an unfair or deceptive commercial practice in violation of the CFA’s prohibition on such activity.”  Id. ¶ 12.  We explained that “our focus in determining applicability of the CFA is the nature of the alleged violator’s activities, not whether the violator falls into a defined statutory category.”  Id.     In State v. Stedman, 149 Vt. 594, 547 A.2d 1333 (1988), a public CFA suit, we  held that derivative liability for consumer fraud could not be imposed “absent direct participation in the unfair or deceptive acts, direct aid to the actor, or a principal/agent relationship.”  Id. at 598, 547 A.2d at 1335-36. In various contexts under comparable statutory schemes, other courts have required some direct involvement for derivative liability to attach under a consumer protection act.

We conclude that the Stedman holding applies both to public CFA suits and to private CFA suits like the one before us.  Thus, VAR cannot be found liable “absent direct participation in the unfair or deceptive acts, direct aid to the actor, or a principal/agent relationship.”  Stedman, 149 Vt. at 598, 547 A.2d at 1335-36. The application of this test in private CFA cases is appropriate because it looks to “the nature of the alleged violator’s activities, not whether the violator falls into a defined statutory category.” Sawyer, 2006 VT 136, ¶ 12.  VAR had no direct involvement in the drafting of the contract used here and did not act as a principal with respect to plaintiff’s broker.  Thus, it may only be held liable if it provided “direct aid” to the broker.  The trial court correctly held that “VAR’s sole connection to this case—drafting the template clauses that [plaintiff] and her buyer’s broker eventually used—cannot support a consumer fraud claim.”