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West Virginia Accused a Catholic Diocese of Deceiving Consumers. Did the West Virginia Legislature Intend this Result?

We recently wrote about one state’s novel and high-profile use of its consumer-protection laws. In West Virginia, the state attorney general sued a Roman Catholic Diocese, alleging that it had deceived consumers—more specifically, parents who send their children to diocesan schools and camps. The lawsuit concerns allegations of sexual abuse and the Diocese’s response to those allegations.

This follow-up post looks at whether a recent decision from the West Virginia Supreme Court might foreclose the attorney general’s theory. That decision is called State ex rel. Morrisey v. Copper Beech Townhome Communities Twenty-Six, LLC. (Hat tip to our reader who directed us to this case.)

Copper Beech, like the new case against the Diocese, was an enforcement action under the West Virginia Consumer Credit and Protection Act. The attorney general attacked a landlord’s imposition of unusual fees against its tenants, including fees for “redecorating” and paying rent with “multiple checks.”

You might fairly ask: Why does a landlord-tenant case matter to the new case against the Diocese?

Because, in Copper Beech, the state supreme court provided a framework for analyzing whether the Act applies to a particular subject matter in the first instance.

Characterizing the Act as “ambiguous,” the court examined three factors to determine whether the Act applied to landlord-tenant disputes: (1) whether the statute includes explicit direction about the landlord-tenant relationship, (2) the legislature’s intent, and (3) the Act’s “origin, history, and purposes.”

In Copper Beech, the court concluded that the Act does not reach the landlord-tenant relationship. The court was persuaded by the landlord’s argument that “residential leases are already subject to extensive statutory and regulatory oversight.” The court noted that “when the legislature intends for a particular statute to apply to the landlord-tenant relationship, it does so explicitly.” The legislature had not done so in this case.

(This framework and reasoning bear some similarity to how some North Carolina courts have assessed whether a subject matter is “pervasively regulated,” such that conduct falls outside the reach of N.C. Gen. Stat. § 75-1.1.)

Copper Beech, then, might preview the Diocese’s anticipated argument that the West Virginia Consumer Credit and Protection Act was never intended to apply to the advertisement or provision of private religious education. How might that argument fare?

For starters, the Act does explicitly refer to “education.” The Act defines trade or commerce to mean “the advertising, offering for sale, sale or distribution of any goods or services.” The term “services,” in turn, includes “privileges with respect to” multiple topics, including “education.”

The Act’s explicit reference to “education” might appear to end the inquiry. If education is a “service,” then the sale or distribution of education is “trade” or “commerce.”

On the other hand, the phrase “privileges with respect to . . . education” is not at all clear.

And, not surprisingly, private, parochial, or church education is the subject of extensive regulation in West Virginia—separate and apart from the consumer-protection laws. In fact, that regulation applies to the express exclusion of other laws. “No private, parochial or church school . . . which complies with the requirements of this article shall be subject to any other provision of law relating to education except requirements of law respecting fire, safety, sanitation and immunization.” This language and regulation could be central, if not dispositive, to discerning the legislature’s intent for the Act.

Finally, Copper Beech’s procedural posture may foretell what is in store for the case against the Diocese.  The Act’s applicability to private religious education might reach the West Virginia Supreme Court in short order. In West Virginia, even a state trial court can certify a question to the state supreme court. That’s what happened in Copper Beech.

The novelty of the case against the Diocese would seem to make it a likely candidate for a certified question. And, if it does, we anticipate an important decision on the elasticity of statutes like section 75-1.1. Given these statutes’ potent remedies, decisions on their scope are important legal developments.

Author: Tom Segars

April 16, 2019 Thomas H. Segars
Posted in  Other 75-1.1 Issues