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Murray, Stok & Co. v. Recall Secure Destruction Services

January 19, 2010

MURRAY, STOK & COMPANY, PLAINTIFF AND APPELLANT,
v.
RECALL SECURE DESTRUCTION SERVICES, INC., DEFENDANT AND RESPONDENT.



(City & County of San Francisco Super. Ct. No. CGC-07- 464704).

The opinion of the court was delivered by: Pollak, J.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

Plaintiff Murray, Stok & Company (Murray) appeals from a judgment entered in favor of defendant Recall Secure Destruction Services, Inc. (Recall) on its complaint for restitution and injunctive relief under the unfair competition law (Bus. & Prof. Code,*fn1 § 17200 et seq.) and the false advertising law (§ 17500 et seq.). Murray contends that the trial court erred in concluding that Recall's addition of a "security administration fee" on its invoices was not a deceptive business practice. We shall affirm.

Factual and Procedural Background

Murray is a certified public accounting firm located in San Francisco. Recall is a national document and data storage and destruction company. In June 2001, Murray entered into a service agreement with Recall for the secure destruction of its documents and data. Under the terms of the agreement, Recall placed a 64-gallon bin at Murray's office and returned to pick up and destroy its contents on a regular basis. Recall sent Murray an invoice following each collection or "bin tip" certifying that the contents had been destroyed under "strict security conditions." Between July 2001 and March 2003, the invoices received and paid by Murray indicated that Murray had been charged $45 per bin tip. Beginning in March 2003, Recall began adding to each invoice a $15 "security administration fee" in addition to the $45 bin tip charge. The $15 was a flat fee applied per invoice. Until March 2007, without making any objection or raising any questions concerning the additional fee, Murray paid the invoices in full, including the security fee.

On November 3, 2007, Murray filed a complaint against Recall alleging causes of action under sections 17200 and 17500. Murray purported to represent a class of consumers who obtained document and data destruction services from Recall and who were deceived into paying the security administration fee in connection with those services. The complaint alleges that "The inclusion of the security fee on the invoices and service agreements was and is fraudulent, unfair and deceptive because, among other things: (a) it expressly or impliedly represents that the security fee bears a direct relationship to defendants' costs for security, when it does not; (b) it expressly or impliedly represents that the amount charged to each customer was and is based on defendants' actual security costs for that customer's service, when it bears no rational relationship to said costs; (c) it expressly or impliedly represents that defendants are providing security services above and beyond the security services included within the service charge the customer has agreed to pay; (d) it expressly or impliedly represents that the revenue from the security fee pays and paid only for security costs rather than for defendants' general overhead costs or profit; (e) it expressly or impliedly represents that the security fee was proportionate to defendants' actual security costs, when in fact, it was not; and (f) it expressly or impliedly represents that the security fee is authorized, imposed or somehow required by local, state or federal law, when in fact, it is not."

In the first phase of a bifurcated court trial, the court was asked to decide the following "threshold question[] of law...: [¶] (a) Can the placement by Recall of a charge labeled `security administration fee' on Murray's invoices be a deceptive practice in violation of [sections 17200 and 17500]?" The parties stipulated to certain facts and to the authenticity of certain documents and agreed that "the parties do not intend that the first-phase bifurcated trial will involve any disputed fact questions..., but rather questions of law only."

The stipulated exhibits include numerous invoices submitted by Recall to Murray. The December 2002 invoice shows that Murray was charged $45 for one bin tip that occurred on December 20. The March 2003 invoice shows that Murray was charged $45 for one bin tip that occurred on March 14 and an additional $15 for the security administration fee. The fee appears on the invoice as a line item, directly below the charge for the bin tip, in the same typeface and font as the charge for the bin tip. The November 2003 invoice shows that Murray was charged $45 each for bin tips on November 5 and November 19, $25 for an additional bin tip on November 5, and a single $15 security administration fee. Each of the charges is separately itemized on the invoice for a total due of $130. The stipulated facts include the following: (1) "At all relevant times, Murray Stok continued to use the same bin provided by Recall, with the same padlock. Recall continued to pick up the contents of the bin on the regular basis, and take them away for destruction. Recall continued to provide a certificate, with every invoice, stating that Recall had destroyed all materials received, and that `these materials were destroyed pursuant to Recall's standard security and operating proceedings.' (2) "The security administration fee listed on the invoices does not change with the number of visits, the volume of material destroyed, or the cost or amount of fuel used to transport the materials to be destroyed." (3) "Add-on fees and surcharges have become a common fact of consumer transactions in the United States. Consumers routinely see government mandated fees, such as the September 11th Security Fee. Consumers also see `convenience fees' added on to concert ticket prices such as Ticketmaster. Consumers see fuel surcharges attached to package shipments by Federal Express."

Having considered the parties' trial briefs and the stipulated facts and exhibits, the court concluded that "[t]he placement by Recall of a charge labeled `security administration fee' on Murray Stok's invoices, as a matter of law, cannot be deceptive under [sections 17200 and 17500]." The court explained, "Where a buyer is not a member of a vulnerable subgroup of consumers and there is freedom of choice for the buyer to shop elsewhere, a seller does not commit a deceptive business practice by charging an amount that is disclosed to the buyer." The court rejected Murray's claim that the term "security administration fee" falsely represents that Recall provides security services in addition to the services for which the parties originally contracted. The court explained, "The words `security administration fee' are vague and do not reasonably convey any specific meaning. It cannot be ascertained what the security is that is being administered (indeed, the entire contract is solely about the secure destruction of paper), nor is there any clue as to what administrative activities are being performed. There was no evidence to establish that the new charge could have had an accepted meaning in any relevant community that would lead a reasonable customer to believe that it is paying for an ascertainable specific service." The court entered judgment in favor of Recall and Murray filed a timely notice of appeal.

Discussion

1. Standard of Review

In general, "what constitutes `unfair competition' or `unfair or fraudulent business practice' under any given set of circumstances is a question of fact." (Californians for Population Stabilization v. Hewlett-Packard Co. (1997) 58 Cal.App.4th 273, 286, overruled on another ground in Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 175; McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1472, but see Lavie v. Procter & Gamble Co. (2003) 105 Cal.App.4th 496, 503 ["The standard to be used in evaluating whether an advertisement is deceptive under the [unfair competition law] is purely a question of law"].) "However, where... there is no dispute or conflict in the evidence, the finding of the trial court that the defendant's conduct is not in violation of section 17200 amounts to a conclusion of law. [Citation.] Such conclusions of law are reviewed de novo." (Californians for Population Stabilization v. Hewlett-Packard Co., supra, at p. 286; see also Chern v. Bank of America (1976) 15 Cal.3d 866, 872 [Where no material dispute exists concerning the relevant facts, the principal issue "is essentially a legal one, namely, whether defendant's ...


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