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THE COURT OF APPEALS FOR THE STATE OF WASHINGTON
STARKIST COMPANY, No. 82725-1-I
Appellant, DIVISION ONE
v. PUBLISHED OPINION
THE STATE OF WASHINGTON,
Respondent,
and
DONGWON INDUSTRIES CO. LTD., AND CHRISTOPHER LISCHEWSKI,
Defendants.
ANDRUS, C.J. — StarKist Company appeals a summary judgment order
holding it jointly and severally liable for the harm it and its competitors, Chicken of
the Sea and Bumble Bee Foods, caused consumers when they conspired to fix
the prices of packaged tuna in violation of RCW 19.86.030.
We reverse the summary judgment order—not because, as StarKist
contends, it can be liable only for its own profits gained through the conspiracy, but
because RCW 19.86.080 does not mandate joint and several liability. The statute
instead confers discretion on the trial court to determine what judgment “may be
necessary” to restore to consumers the money acquired by an unlawful conspiracy. For the current opinion, go to https://www.lexisnexis.com/clients/wareports/. No. 82725-1-I/2
The trial court may impute to one conspirator the actions of all coconspirators and,
as a result, may order StarKist to pay an amount equal to the conspiracy’s gains if
the court deems it necessary to do so.
But the State of Washington settled with coconspirators Chicken of the Sea,
and Bumble Bee’s chief executive officer, Christopher Lischewski, for a fraction of
these alleged consumer losses. And StarKist contends it was an insignificant
player in the overall price-fixing scheme. We therefore reverse the summary
judgment order imposing joint and several liability on StarKist “for the harm caused
by its co-conspirators Bumble Bee and Chicken of the Sea” and remand for the
trial court to enter findings of fact to justify any restitution it orders StarKist to pay
under RCW 19.86.080.
FACTS
In 2016, Chicken of the Sea International (COSI) disclosed to federal
investigators that it had conspired with competitors, including StarKist and Bumble
Bee, to fix prices on packaged tuna products. Following these disclosures, Bumble
Bee and StarKist were charged with and pleaded guilty in federal court to
conspiring to fix prices with competitors in violation of the Sherman Antitrust Act,
15 U.S.C. § 1. Both companies admitted that from November 2011 until December
2013, they “participated in a conspiracy among major packaged-seafood-
producing firms, the primary purpose of which was to fix, raise, and maintain the
prices of packaged seafood sold in the United States.”
In March 2020, the State of Washington, through the Attorney General,
brought an antitrust lawsuit against Chicken of the Sea, seeking an injunction,
damages, restitution, and other relief under the Consumer Protection Act (CPA) -2- For the current opinion, go to https://www.lexisnexis.com/clients/wareports/. No. 82725-1-I/3
for this price-fixing conspiracy. Soon thereafter, Chicken of the Sea entered into
a consent decree in which it agreed to pay $500,000 to the State of Washington in
exchange for a release of liability.
On June 2, 2020, the State of Washington brought a similar antitrust lawsuit
against StarKist, StarKist’s parent company, Dongwon Industries Co. Ltd., and
Bumble Bee Foods LLC’s former chief executive officer, Christopher Lischewski,
alleging these defendants had engaged in a conspiracy in restraint of trade with
Chicken of the Sea.
In October 2020, the State entered into a consent decree with Lischewski
in which he agreed to pay $100,000 to the State of Washington to compensate
consumers allegedly harmed by the conspiracy.
In February 2021, the trial court held StarKist liable as a matter of law under
RCW 19.86.030 for engaging in a price-fixing conspiracy during the period
specified in its federal guilty plea.
On March 9, 2021, the State disclosed the report of its expert economist,
Dr. David Sunding, who opined that the price-fixing scheme between StarKist,
Chicken of the Sea, and Bumble Bee caused Washington consumers to overpay
for packaged tuna by a total of $11,981,526. Sunding attributed $1,074,589 of the
total losses to StarKist’s sales.
The State then moved for partial summary judgment, seeking to hold
StarKist “jointly and severally liable for the actions of its co-conspirators.” The trial
court granted the motion, concluding that StarKist “is jointly and severally liable for
the harm caused by its co-conspirators Bumble Bee and Chicken of the Sea as a
result of the price-fixing conspiracy from at least November 2011 continuing -3- For the current opinion, go to https://www.lexisnexis.com/clients/wareports/. No. 82725-1-I/4
through . . . December 2013.” StarKist sought and we granted discretionary review
of this order.
ANALYSIS
StarKist contends the trial court erred in imposing joint and several liability
as a matter of law, arguing that the tort principle of joint and several liability cannot
apply to an equitable action for restitution under RCW 19.86.080. We conclude
that RCW 19.86.080(2) and (3) give the trial court broad discretion to determine
what judgment “may be necessary” to restore to consumers monies acquired by
an unlawful conspiracy. The trial court may impute to one conspirator the actions
of all coconspirators and, as a result, may order StarKist to pay an amount equal
to all consumer losses from the entire conspiracy if the court deems it necessary
to do so. But we reverse the trial court’s summary judgment order because RCW
19.86.080 does not mandate joint and several liability, as the trial court’s order
implies.
Standard of Review
We review a summary judgment order de novo. Seattle Events v. State, 22
Wn. App. 2d 640, 648-49, 512 P.3d 926 (2022). Statutory interpretation of the
CPA presents an issue of law that this court also reviews de novo. State v. LG
Elecs., 186 Wn.2d 1, 7, 375 P.3d 636 (2016).
Conspiracies in Restraint of Trade
RCW 19.86.030 declares unlawful “[e]very contract, combination, in the
form of trust or otherwise, or conspiracy in restraint of trade or commerce.”
Conspiring with competitors to fix prices is a per se illegal restraint of trade under
-4- For the current opinion, go to https://www.lexisnexis.com/clients/wareports/. No. 82725-1-I/5
the Sherman Antitrust Act, 1 Leegin Creative Leather Prods., Inc. v. PSKS, Inc.,
551 U.S. 877, 886, 127 S. Ct. 2705, 168 L. Ed. 2d 623 (2007), and a violation of
the CPA. 2 See Murray Pub. Co., Inc. v. Malmquist, 66 Wn. App. 318, 325, 832
P.2d 493 (1992) (“RCW 19.86.030 is essentially identical to section 1 of the
Sherman Antitrust Act, 15 U.S.C. § 1.”)
The trial court held StarKist liable under this statute and StarKist does not
challenge this ruling. There is no dispute that from November 2011 until December
2013, StarKist engaged in an unlawful conspiracy with Chicken of the Sea and
Bumble Bee to fix the price of packaged tuna in Washington.
The CPA provides two methods for enforcing RCW 19.86.030. RCW
19.86.090 authorizes any person injured in their business or property by a violation
of RCW 19.86.030 to bring a civil action for “actual damages” and to seek treble
damages. It also authorizes the State, when injured directly or indirectly by a
violation of the act, to sue for its actual damages. LG Elecs., 186 Wn.2d at 8.
RCW 19.86.080, the statute at issue here, authorizes the attorney general
to bring an enforcement action “in the name of the state, or as parens patriae on
behalf of persons residing in the state” for injunctive relief. 3 In addition, under RCW
19.86.080(2) and (3), the court has “broad, discretionary authority to order
1 15 U.S.C. § 1. 2 The legislature patterned the CPA’s antitrust provisions after federal antitrust analogues and
federal court decisions interpreting substantive violations of the Sherman Act guide Washington courts in constructing the state law. RCW 19.86.920 (in interpreting CPA, courts to be guided by final decisions of federal courts and final orders of Federal Trade Commission interpreting federal statutes dealing with same or similar matters). 3 An action by the State of Washington for injunctive relief and restitution under RCW 19.86.080 is
not subject to the CPA’s four-year statute of limitations, RCW 19.86.120, because that provision by its plain language applies only to “claims for damages.” LG Elects., 186 Wn.2d at 9. Nor is the State subject to the general statute of limitations of RCW 4.16.160 because actions brought in the name of the state are excluded from that statute. Id. at 15. -5- For the current opinion, go to https://www.lexisnexis.com/clients/wareports/. No. 82725-1-I/6
restitution.” State v. Comcast Cable Commc’ns Mgmt., LLC, 16 Wn. App. 2d 664,
686, 482 P.3d 925 (2021). The statute provides:
(2) The court may make such additional orders or judgments as may be necessary to restore to any person in interest any moneys or property, real or personal, which may have been acquired by means of any act herein prohibited or declared to be unlawful.
(3) Upon a violation of RCW 19.86.030, 19.86.040, 19.86.050, or 19.86.060, the court may also make such additional orders or judgments as may be necessary to restore to any person in interest any moneys or property, real or personal, which may have been acquired, regardless of whether such person purchased or transacted for goods or services directly with the defendant or indirectly through resellers. The court shall exclude from the amount of monetary relief awarded in an action pursuant to this subsection any amount that duplicates amounts that have been awarded for the same violation. The court should consider consolidation or coordination with other related actions, to the extent practicable, to avoid duplicate recovery.
RCW 19.86.080; see also LG Elecs., 186 Wn.2d at 17 (Supreme Court described
the attorney general’s claims under RCW 19.86.080(2) and (3) as “restitution
claims”); State v. Ralph Williams’ North West Chrysler Plymouth, Inc., 87 Wn.2d
298, 321, 553 P.2d 423 (1976) (when the attorney general proves a defendant has
acquired possession of property of a customer unlawfully, the court can order
restitution).
When the attorney general seeks a restitution award under RCW
19.86.080(2) or (3), it is not required to prove causation or injury. State v. CLA
Estate Services, Inc., No. 82529-1-I, slip op. at 23 (Wash. Ct. App. Aug. 22, 2022). 4
And the court may calculate restitution based on the amount of illegal gains rather
than net damages sustained by consumers. Id. at 24.
4 https://www.courts.wa.gov/opinions/pdf/825291.pdf
-6- For the current opinion, go to https://www.lexisnexis.com/clients/wareports/. No. 82725-1-I/7
Scope of Restitution under RCW 19.86.080
In this appeal, StarKist argues that any restitution award must be limited to
the illegal gains StarKist itself enjoyed and cannot extend to the illegal gains
realized by its coconspirators. It contends that the tort concept of “joint and several
liability” is a principle applicable only to claims for actual damages under RCW
19.86.090 and cannot apply to RCW 19.86.080’s equitable restitution remedy.
Our analysis of RCW 19.86.080 begins with examining the statute de novo
to determine the legislature’s intent. State v. Hawkins, No. 100060-0, slip op. at
13 (Wash. Oct. 27, 2022). 5 We discern legislative intent “from the plain language
enacted by the legislature, considering the text of the provision in question, the
context of the statute in which the provision is found, related provisions,
amendments to the provision, and the statutory scheme as a whole.” Ass’n of
Wash. Spirits & Wine Distribs. v. Wash. State Liquor Control Bd., 182 Wn.2d 342,
350, 340 P.3d 849 (2015) (citing Dep’t of Ecology v. Campbell & Gwinn, LLC, 146
Wn.2d 1, 9-10, 43 P.3d 4 (2002)). We read each provision of a statute together
with its related provisions to determine the legislative intent underlying the entire
statutory scheme. In re Estate of Kerr, 134 Wn.2d 328, 343, 949 P.2d 810 (1998).
Based on these principles of statutory construction, we reject StarKist’s
argument that it cannot be held liable for unlawful gains realized by the conspiracy
under RCW 19.86.080 for three reasons. First, the plain language of RCW
19.86.080 does not limit restitution to monies acquired by a single coconspirator.
Second, although neither RCW 19.86.090 nor 19.86.080 explicitly refers to the
5 https://www.courts.wa.gov/opinions/pdf/1000600.pdf
-7- For the current opinion, go to https://www.lexisnexis.com/clients/wareports/. No. 82725-1-I/8
common law principles of joint and several liability, these statutory provisions must
be read together with RCW 19.86.030, the provision outlawing conspiracies in
restraint of trade. Under well-established Washington common law, a conspiracy
is a single enterprise for which all coconspirators are responsible. Finally, federal
antitrust case law does not require a different result.
1. Plain Text of RCW 19.86.080
StarKist first contends that RCW 19.86.080 limits its liability to profits it
acquired from the conspiracy. But the plain text of RCW 19.86.080 does not
support any such limitation.
RCW 19.86.080(2) states that “[t]he court may make such additional orders
or judgments as may be necessary to restore to any person in interest any moneys
or property, real or personal, which may have been acquired by means of any act
herein prohibited or declared to be unlawful.” The “prohibited” or “unlawful” acts
referred to in this paragraph are the acts explicitly outlawed by other provisions of
the CPA, including RCW 19.86.030 prohibiting conspiracies in restraint of trade.
The court may thus order a party participating in an unlawful conspiracy to pay
“any moneys . . . which may have been acquired” by the conspiracy.
Neither RCW 19.86.080(2) nor .080(3) says restitution must be limited to
any moneys which the defendant may have acquired from their participation in the
conspiracy. We will not add words to a statute where the legislature has chosen
not to include them. Lake v. Woodcreek Homeowners Ass'n, 169 Wn.2d 516, 526,
243 P.3d 1283 (2010).
StarKist directs our attention to a reference to “the defendant” in RCW
19.86.080(3). That provision now reads: -8- For the current opinion, go to https://www.lexisnexis.com/clients/wareports/. No. 82725-1-I/9
Upon a violation of RCW 19.86.030 . . . the court may also make such additional orders or judgments as may be necessary to restore to any person in interest any moneys or property, real or personal, which may have been acquired, regardless of whether such person purchased or transacted for goods or services directly with the defendant or indirectly through resellers. The court shall exclude from the amount of monetary relief awarded in an action pursuant to this subsection any amount that duplicates amounts that have been awarded for the same violation. The court should consider consolidation or coordination with other related actions, to the extent practicable, to avoid duplicate recovery.
(Emphasis added.) StarKist contends that “the natural reading of this clause is
that restitution is limited to the recovery of property that is ‘acquired’ by the
‘defendant,’ regardless of whether the defendant acquires it by transacting directly
with consumers, or indirectly through resellers.” We disagree with this reading.
The legislature added subparagraph (3) to RCW 19.86.080 in 2007, not as
a way of restricting the scope of restitution that a court could order, but as a way
to expand the class of customers on whose behalf the Attorney General could bring
suit. The Final Bill Report for Substitute Senate Bill 5228 explained:
The Attorney General may bring an action to restrain a person from violating the CPA. An action by the Attorney General may seek to prevent violations of the act and may seek relief for persons injured by violation of the CPA. As a result of a federal court ruling, 6 a question has arisen as to whether the Attorney General is authorized to bring an action for a CPA violation on behalf of persons who are “indirect purchasers” of goods or services. . . .
Many states have enacted laws that allow an indirect purchaser to bring a suit directly, while others allow such suits only when brought by the Attorney General on behalf of the indirect purchasers. Washington has not enacted either type of law. However, based in
6 The final House Bill Report on SSB 5228 identified the case as Illinois Brick Co. v. Illinois, 431
U.S. 720, 97 S. Ct. 2061, 52 L. Ed. 2d 707 (1977), in which the United States Supreme Court held that under federal antitrust law, indirect purchasers could not bring an action for damages, but left open the possibility that states enacting their own laws could allow indirect purchasers to sue for unfair business practices. See H.B. REP. ON SUBSTITUTE S.B. 5228, 60th Leg., Reg. Sess. (Wash. 2007), available at 5228-S BRH APH 07.pdf (wa.gov). -9- For the current opinion, go to https://www.lexisnexis.com/clients/wareports/. No. 82725-1-I/10
part on the state court of appeals decision in Blewett v. Abbott Laboratories, 86 Wn. App. 782 (1997), the state Attorney General has brought suits on behalf of indirect purchasers under the common law doctrine of parens patriae . . . . The Attorney General reports, however, that in at least one multi-state case, a federal judge has rejected the Attorney General’s attempts to sue on behalf of indirect purchasers.
FINAL B. REP. ON SUBSTITUTE S.B. 5228, 60th Leg., Reg. Sess. (Wash. 2007). 7 The
addition of RCW 19.86.080(3) was thus intended to give the court the authority to
order restoration for any injured party “regardless of whether the injury was the
result of a direct or indirect purchase of goods or services” from the defendant. Id.
The amendment expanded the consumers protected by the statute; it did not
restrict the amount of restitution the court could order against any particular
defendant.
RCW 19.86.080 is a grant of “broad, discretionary authority” to courts to
order restitution. State v. Comcast Cable Commc’ns. Mgmt., LLC, 16 Wn. App.2d
664, 686, 482 P.3d 925 (2021). In State v. Ralph Williams’ N. W. Chrysler
Plymouth, Inc., 82 Wn.2d 265, 277-78, 510 P.2d 233 (1973), our Supreme Court
affirmed a liberal construction of the restitution provision, as required by RCW
19.86.920, and “decline[d] to limit the traditional equity powers of the court.”
StarKist’s restrictive interpretation of RCW 19.86.080 conflicts with RCW
19.86.920 and our case law liberally interpreting the restitution provision of the
CPA.
2. Common Law of Conspiracy
7 Available at 5228-S.FBR.pdf (wa.gov).
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SkarKist’s interpretation is also unpersuasive because it fails to address the
common law of conspiracy. The word “conspiracy” in RCW 19.86.030 is not
defined in the CPA. But this legal term has a well-understood legal meaning and
we assign a familiar legal term in a statute its familiar legal meaning. Floeting v.
Group Health Cooperative, 200 Wn. App. 758, 764, 403 P.3d 559 (2017).
A conspiracy is “a combination of two or more persons to commit a criminal
or unlawful act, or to commit a lawful act by criminal or unlawful means.” Sears v.
Int’l Bhd. of Teamsters, Chauffeurs, Stablemen and Helpers of Am., 8 Wn.2d 447,
452, 112 P.2d 850 (1941) (quoting Eyak River Packing Co. v. Huglen, 143 Wash.
229, 234, 255 P. 123 (1927)). Under Washington common law, “[e]very person
who enters into a conspiracy, no matter whether at its beginning or at a later stage
of its progress, is in law a party to every act of the conspirators, and is liable for all
of the acts done in pursuance of the conspiracy in the same manner that they
would be had they been a party to all of the wrongful acts.” Id. We presume the
legislature enacted the CPA “with full knowledge of existing laws.” Maziar v. Dep’t
of Corr., 183 Wn.2d 84, 88, 349 P.3d 826 (2015) (quoting Thurston County v.
Gorton, 85 Wn.2d 133, 138, 530 P.2d 309 (1975)).
We can find no basis for limiting the application of this conspiracy case law
to cases in which the plaintiff seeks monetary damages under RCW 19.86.090,
rather than equitable relief under RCW 19.86.080. In Washington, all distinctions
between actions at law and actions in equity have been abolished. Hotchkin v.
McNaught-Collins Imp. Co., 102 Wash. 161, 165, 172 P. 864 (1918). The nature
of one’s claim may govern whether there is a right to a jury trial, Brown v. Safeway
Stores, Inc., 94 Wn.2d 359, 365, 617 P.2d 704 (1980) (constitutional right to jury - 11 - For the current opinion, go to https://www.lexisnexis.com/clients/wareports/. No. 82725-1-I/12
trial applies to civil actions purely legal in nature and not to actions purely equitable
in nature), but does not preclude a court from holding one conspirator liable for the
actions of its coconspirators.
Our Supreme Court has applied conspiracy concepts in cases brought in
equity. In Lyle v. Haskins, 24 Wn.2d 883, 168 P.2d 797 (1946), the purchasers of
a sawmill, Lyle and Nelson, sought to enjoin the sellers, the Haskins, and another
couple, the Johnsons, from operating a competing sawmill based on their
conspiracy to violate a noncompetition agreement, to which the Haskins had
agreed. The court, noting that the case had been brought in equity, affirmed an
injunction for the purchasers, finding the evidence sufficient to support the
conclusion that the seller violated the restrictive covenant in the sales agreement
and “that Harold Haskins and [his] wife entered into a conspiracy with [several
people] to violate the restrictive covenant, and that Johnson and [Haskins’ son,
Robert] were aiding, abetting, conspiring and confederating with Harold Haskins in
the violation of such covenant.” Id. at 899. Citing 11 Am. Jur. § 45, our Supreme
Court stated that “the liability of the conspirators is joint and several.” Id. at 900. It
held that Johnson, “entering into the conspiracy after it was formed . . . became
liable for all acts committed by any of the other parties, either before or after their
entrance, in furtherance of the common design.” Id.
Also instructive is Newton Ins. Agency & Brokerage, Inc. v. Caledonian Ins.
Grp, Inc., 114 Wn. App. 151, 52 P.3d 30 (2002). In that case, an insurance agency
brought suit against a competitor for tortious interference and civil conspiracy after
the competitor hired its former employee, with whom it had a noncompetition
agreement. The agency obtained an arbitration award against the former - 12 - For the current opinion, go to https://www.lexisnexis.com/clients/wareports/. No. 82725-1-I/13
employee for lost revenue based on the employee’s diversion of insurance
business to the competitor. Id. at 157. The court of appeals held that the
competitor, as a coconspirator of the former employee, was collaterally estopped
from relitigating the amount of damages assessed by an arbitrator against the
former employee, despite the fact the competitor had not participated as a party in
the arbitration. Id. at 161. Collateral estoppel is an equitable doctrine. Weaver v.
City of Everett, 194 Wn.2d 464, 472, 450 P.3d 177 (2019). Yet, this court had no
difficulties in invoking that doctrine to impute liability of one conspirator to another.
Because we presume the legislature knows the law in the area in which it
is legislating, we will not construe a statute in derogation of that common law
absent an express legislative intent to change the law. Wynn v. Earin, 163 Wn.2d
361, 371, 181 P.3d 806 (2008). We have no such expression of legislative intent
here. We therefore conclude that when the legislature made conspiracies in
restraint of trade unlawful and gave courts the authority to restore monies acquired
through such a conspiracy, that authority included the pre-existing power under
common law to hold one conspirator liable for all of the acts done in pursuance of
the conspiracy, even if they were not a party to all of the wrongful acts. 8
3. Federal Antitrust Case Law
StarKist finally contends that requiring it to pay restitution based on the
actions of its coconspirators is inconsistent with federal antitrust law. RCW
8 StarKist also contends the State should be judicially estopped from arguing that StarKist’s liability
is joint and several based on the State’s characterization of its claim as equitable when it moved to strike StarKist’s jury demand. StarKist contends that this argument is “flatly inconsistent with its argument now that the court should apply the tort doctrine of joint and several liability based on antitrust law.” StarKist’s argument is based on the erroneous premise that a trial court cannot, in equity, order one conspirator to pay restitution for profits realized by a coconspirator. The State’s arguments are not inconsistent and judicial estoppel does not apply. - 13 - For the current opinion, go to https://www.lexisnexis.com/clients/wareports/. No. 82725-1-I/14
19.86.920 does provide that we should look to federal antitrust case law in
interpreting the CPA:
The legislature hereby declares that the purpose of this act is to complement the body of federal law governing restraints of trade, unfair competition and unfair, deceptive, and fraudulent acts or practices in order to protect the public and foster fair and honest competition. It is the intent of the legislature that, in construing this act, the courts be guided by final decisions of the federal courts and final orders of the federal trade commission interpreting the various federal statutes dealing with the same or similar matters . . . . To this end this act shall be liberally construed that its beneficial purposes may be served.
(Emphasis added.) But we may also decline to follow federal law where the
language and structure of the CPA departs from otherwise analogous federal
statutes. L.G. Elecs., 186 Wn.2d at 10 (Supreme Court refuses to interpret statute
of limitations provision in CPA similarly to statute of limitations in Clayton Act, 15
U.S.C. § 15c, because the provisions were not parallel).
StarKist relies on Honeycutt v. United States, 581 U.S. 443, 137 S. Ct. 1626,
198 L. Ed. 2d 73 (2017), to argue that requiring it to pay for the actions of
coconspirators is impermissible. In Honeycutt, after a hardware store owner and
his brother, the sales manager, were convicted of conspiring to distribute iodine
used to manufacture methamphetamine, the Sixth Circuit held that the brothers,
as coconspirators, could be held jointly and severally liable for “any proceeds of
the conspiracy.” 137 S. Ct. at 1631. The Supreme Court reversed, holding that
the language of the applicable statute did not authorize a defendant to be held
jointly and severally liable for property that anyone other than the defendant
derived from the crime. Id. at 1630. The holding in Honeycutt was based on the
language of the federal criminal forfeiture statute, 21 U.S.C. § 853, that clearly
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limited forfeiture to “proceeds the person obtained, directly or indirectly, as the
result of such violation.” 21 U.S.C. § 853 (emphasis added). There is no similar
limiting language in either RCW 19.86.080(2) or (3).
StarKist also asks us to follow Liu v. SEC, __ U.S. __, 140 S. Ct. 1936, 207
L. Ed. 2d 401 (2020). In that case, the Securities and Exchange Commission
(SEC) brought a civil enforcement action against developers of a cancer treatment
center, alleging they engaged in a scheme to defraud foreign nationals investing
in their center in violation of the Securities Act of 1933, § 77a et seq. and the
Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq. Id. at 1941-42. The
SEC sought disgorgement of the total amount of money the developers had raised
from investors under 15 U.S.C. § 78u(d)(5), which authorizes federal courts to
grant “any equitable relief that may be appropriate or necessary for the benefit of
investors.” Id. at 1940. The district court rejected the developers’ arguments that
the disgorgement award should be reduced by their legitimate business expenses.
It entered an order making the developers jointly and severally liable for the gross
amount the developers had raised from investors. Id. at 1942.
The Supreme Court granted certiorari to determine whether 15 U.S.C. §
78u(d)(5) authorized the SEC to seek disgorgement “beyond a defendant’s net
profits from wrongdoing.” Id. It determined that the “equitable relief” allowable
under the statute was limited to the wrongdoer’s net profits after deducting
legitimate business expenses. Id. at 1946.
In dicta, the court addressed, but did not decide, whether joint and several
liability was appropriate. Id. at 1947. It noted that while joint and several liability
“sometimes [seems] at odds with the common-law rule requiring individual liability - 15 - For the current opinion, go to https://www.lexisnexis.com/clients/wareports/. No. 82725-1-I/16
for wrongful profits,” the common law also permitted liability for “partners engaged
in concerted wrongdoing.” Id. at 1949 (citing Ambler v. Whipple, 87 U.S. 546, 20
Wall. 54, 22 L. Ed. 403 (1874)). It went on to state:
The historic profits remedy thus allows some flexibility to impose collective liability. Given the wide spectrum of relationships between participants and beneficiaries of unlawful schemes—from equally culpable codefendants to more remote, unrelated tipper-tippee arrangements—the Court need not wade into all the circumstances where an equitable profits remedy might be punitive when applied to multiple individuals.
Id. It noted that the defendants were married and both were involved in the
businesses that misappropriated investor funds. Id. It chose to “leave it to the
Ninth Circuit on remand to determine whether the facts are such that petitioners
can, consistent with equitable principles, be found liable for profits as partners in
wrongdoing or whether individual liability is required.” Id.
Lui does not advance StarKist’s argument on appeal. First, the Supreme
Court discussion regarding joint and several liability is dicta. Second, the court
explicitly recognized that “partners” can, under certain circumstances, be held
jointly and severally liable for the actions of other partners. To the extent Lui
applies here, it is consistent with Washington common law on conspiracy liability.
Referencing Lui’s discussion regarding partnership liability, StarKist argues
that the State did not allege or prove that it was in a legal partnership with COSI
or Bumble Bee. This argument misreads Lui. The court’s reference to “partners
in wrongdoing” can hardly be understood as a requirement of an actual legal
partnership. Amber v. Whipple, the case cited by the Liu court for the principle that
partners engaged in concerted wrongdoing are jointly and severally liable,
contained no such pleading or proof requirement. The Amber court simply - 16 - For the current opinion, go to https://www.lexisnexis.com/clients/wareports/. No. 82725-1-I/17
recognized that participants in a fraudulent patent scheme would be liable for “the
profits realized by them, or either of them, from the use or sale, or otherwise,
arising from said patents.” 87 U.S. at 559. Lui does not require the existence of a
legal partnership as a precondition to joint and several liability.
StarKist’s argument has the additional flaw of disregarding both federal and
Washington cases describing a conspiracy as “a partnership in a criminal
purpose.” United States v. Kissel, 218 U.S. 601, 608, 31 S. Ct. 124, 54 L. Ed. 1168
(1910); State v. Dent, 123 Wn.2d 467, 475, 869 P.2d 392 (1994). It is undisputed
that StarKist conspired with Bumble Bee and COSI in a price fixing scheme—
StarKist pleaded guilty in federal court to being a member of this conspiracy. To
the extent Lui requires the existence of a “partnership,” the State has established
the existence of such a partnership here as a matter of law.
We conclude that RCW 19.86.080 gives the trial court the authority to hold
StarKist liable for the actions of its coconspirators but it does not mandate such a
result. The trial court has the discretion to decide that StarKist should be liable for
the full amount of the conspiracy’s illegal gains but it also has the discretion to tie
StarKist’s liability to the extent of its participation in the common enterprise.
Summary Judgment Order
The summary judgment order, however, did not represent an exercise of
the trial court’s discretion under RCW 19.86.080. Instead, the trial court held
StarKist liable for the conspiracy’s profits without explaining its rationale for
exercising its discretion in this manner and appears to have rendered this ruling as
a matter of law. The failure to exercise discretion is itself an abuse of discretion.
Bowcutt v. Delta North Star Corp., 95 Wn. App. 311, 320, 976 P.2d 643 (1999). - 17 - For the current opinion, go to https://www.lexisnexis.com/clients/wareports/. No. 82725-1-I/18
We therefore reverse the summary judgment order and remand to the trial court to
allow it to determine, in the exercise of discretion, the amount of restitution it deems
necessary under RCW 19.86.080.
Reversed.
WE CONCUR:
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