On December 10, 2015, the Washington Supreme Court affirmatively answered the following certified questions from the United States District Court for the Western District of Washington:

  1. Does the Washington Consumer Protection Act (“CPA”) create a cause of action for a plaintiff residing outside Washington to sue a Washington corporate defendant for allegedly deceptive acts?
  2. Does the Washington Consumer Protection Act create a cause of action for an out-of-state defendant for the allegedly deceptive acts of its in-state agent?

The Plaintiff, Sandra C. Thornell, in this putative class action lawsuit is a Texas resident. Ms. Thornell’s son was involved in a car accident in Texas, and the other motorist was insured by State Farm Mutual Automobile Insurance Company (“State Farm”), a corporation with its principal place of business in Illinois.   State Farm paid for the damages to its insured’s vehicle, and then pursued Ms. Thornell for an unliquidated claim based on subrogated interest from its insured.  Ms. Thornell alleged that she received three deceptive debt collection letters from Seattle Service Bureau Inc. (SSB), a corporation with its principal place of business in Washington, pursuant to the referral of unliquidated subrogation claims to SSB by State Farm.

The Washington Supreme Court answered both questions in the affirmative.  Addressing Question 1, the Supreme Court noted that the CPA provides “‘[a]ny person’ can sue for a violation”, “‘[c]ommerce’ includes ‘any commerce directly or indirectly affecting the people of the state of Washington’”,  and “the CPA ‘shall be liberally construed that its beneficial purposes may be served’” (emphasis in original). The court stated that a broad reading of this language is appropriate and supported by prior case law, and that it does not matter whether “commerce” is out-of-state if it affects the “people of the state of Washington,” even indirectly.  Therefore, the court held “[t]he CPA does allow claims for an out-of-state plaintiff against all persons who engage in unfair or deceptive acts that directly or indirectly affect the people of Washington”.

Addressing Question 2, the Supreme Court gave a brief summary of the general rule of an agency relationship, and concluded that “[t]he ‘fact’ that the principal in this case is an out-of-state entity does not change this. A principal cannot send agents into a state to commit CPA violations in order to avoid liability by virtue of its out-of-state residence.” The Supreme Court clarified that the United States District Court would have to determine whether an agency relationship existed.

Soha and Lang attorneys are available to assist insurer clients in understanding and addressing the impact of this decision.

Disclaimer: The opinions expressed in in this blog are those of the author and do not necessarily reflect those of Soha and Lang, P.S. or its clients.