NMSC: Unfair Practices Act protects consumers, not competitors

GandyDancer, LLC and Rock House CGM, LLC are business competitors that provide services to railroad companies. GandyDancer believed that Rock House CGM was not properly licensed in New Mexico, and had misrepresented the nature of its services, which enabled it to obtain contracts with a railroad company. GandyDancer sued Rock House under the Unfair Practices Act, arguing that Rock House’s actions constituted unfair competition that allowed it to acquire work that should have gone to GandyDancer.

In GandyDancer, LLC v. Rock House CGM, LLC (opinion by Justice David Thomson), the New Mexico Supreme Court held that the Unfair Practices Act does not create a cause of action for competitive injury. As originally enacted in 1967, the Act prohibited “unfair methods of competition,” but the Legislature removed that language in 1971. The Court therefore held that the Act no longer allows businesses to sue each other for unfair competition.

In addition, the Court held that allowing business competitors to obtain treble damages awards might make it more difficult for consumers to get relief from an offending business.

The oral argument in this case is worth a listen. Although Justice Thomson’s opinion does not mention this, it turns out that the attorneys for both parties were unaware both that the Act originally prohibited unfair competition and that the Legislature had deleted that provision. The Court found this out by doing its own research, which created an awkward and embarrassing situation for the advocates as they tried to deal with this new information on the spot. Thorough preparation and analysis of the statute’s history could have prevented this situation.

This entry was posted in New Mexico Supreme Court, Opinions and Analysis, Oral Argument and tagged , , . Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *