State Ex Rel. Horne v. Autozone, Inc.

SUPREME COURT OF ARIZONA
En Banc

STATE OF ARIZONA ex rel. THOMAS ) Arizona Supreme Court
C. HORNE, Attorney General, ) No. CV-11-0291-PR
)
Plaintiff/Appellant/Cross- ) Court of Appeals
Appellee, ) Division One
) No. 1 CA-CV 09-0759
v. )
) Maricopa County
AUTOZONE, INC., a Nevada ) Superior Court
corporation, ) No. CV2006-010186
)
Defendant/Appellee/Cross- )
Appellant. )
) O P I N I O N
__________________________________)

Appeal from the Superior Court in Maricopa County
The Honorable Larry Grant, Judge

VACATED AND REMANDED
________________________________________________________________

Opinion of the Court of Appeals, Division One
227 Ariz. 471, 258 P.3d 289 (App. 2011)

VACATED IN PART
________________________________________________________________

THOMAS C. HORNE, ARIZONA ATTORNEY GENERAL Phoenix
By Carolyn R. Matthews, Assistant Attorney General
Attorneys for State of Arizona

RENAUD COOK DRURY MESAROS, PA Phoenix
By William W. Drury, Jr.
James L. Blair
Ronald I. Rubin
N. Todd McKay
Kevin R. Myer
And

PAUL G. ULRICH, P.C. Phoenix
By Paul G. Ulrich
Melinda K. Cekander
Attorneys for Autozone, Inc.
FENNEMORE CRAIG, P.C. Phoenix
By Timothy J. Berg
Alexander R. Arpad
Attorneys for Amicus Curiae Arizona Retailers Association
________________________________________________________________

H U R W I T Z, Vice Chief Justice

¶1 We are asked in this case to interpret the Arizona

Consumer Fraud Act (“CFA”), A.R.S. §§ 44-1521 to -1534.

I.

¶2 In 2001, the Arizona Department of Weights and

Measures began investigating AutoZone, Inc., an automobile parts

and accessories retailer. The investigation concerned

AutoZone’s compliance with A.R.S. § 41-2081 (the “Pricing Act”),

which prohibits mispricing and requires a seller to display

prices on merchandise or at the point of display. As a result

of this investigation, the Department fined AutoZone for

violating the Pricing Act several times between 2001 and 2006.

See A.R.S. § 41-2115 (authorizing civil penalties).

¶3 In 2006, the State sued AutoZone under the CFA. The

State alleged that, by violating the Pricing Act, AutoZone had

also violated A.R.S. § 44-1522(A), which provides as follows:

The act, use or employment by any person of any
deception, deceptive act or practice, fraud, false
pretense, false promise, misrepresentation, or
concealment, suppression or omission of any material
fact with intent that others rely upon such
concealment, suppression or omission, in connection
with the sale or advertisement of any merchandise
whether or not any person has in fact been misled,

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 deceived or damaged thereby, is declared to be an
unlawful practice.

The State requested injunctive relief, civil penalties, and

restitution to consumers. See A.R.S. § 44-1528(A)(2)

(authorizing restitution remedy).

¶4 The State moved for partial summary judgment, arguing

in relevant part that the clause in § 44-1522(A) prohibiting

“any . . . deceptive act or practice . . . in connection with

the sale or advertisement of any merchandise” (the “Act Clause”)

imposes strict liability for not pricing goods as required by

the Pricing Act. AutoZone cross-moved, arguing in part that any

failure to price goods was governed by another clause in § 44-

1522(A) (the “Omission Clause”) which prohibits “omission of any

material fact with intent that others rely upon such . . .

omission.”

¶5 AutoZone also sought summary judgment with respect to

the State’s restitution claim. In response, the State abandoned

its claim for restitution to consumers under § 44-1528(A)(2).

Instead, it sought disgorgement to the Attorney General of sums

acquired in violation of the CFA under § 44-1528(A)(1), which

allows a court to “make such orders or judgments as may be

necessary to . . . [p]revent the use or employment by a person

of any unlawful practices.”

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¶6 The superior court denied both parties’ motions. The

court agreed with AutoZone that the Omission Clause governed the

alleged non-pricing, but found disputed issues of fact as to

whether AutoZone had acted with the intent to mislead required

by that Clause. The court also held that disgorgement to the

State may, under some circumstances, be appropriate under § 44-

1528(A)(1).

¶7 AutoZone and the State each again moved for summary

judgment based on sharply different interpretations of the

superior court’s rulings. A new judge heard those motions and,

although finding disputed issues of material fact, nonetheless

entered summary judgment in AutoZone’s favor “by necessity,”

ostensibly to obtain appellate guidance on interpretation of the

CFA.

¶8 The court of appeals vacated that judgment and

remanded the case for further proceedings. State ex rel. Horne

v. AutoZone, Inc., 227 Ariz. 471, 485 ¶ 46, 258 P.3d 289, 303

(App. 2011). The court held that because the Pricing Act

imposes a statutory duty to price items, any failure to do so

was not an omission, but rather an “act,” id. at 482 ¶ 32, 258

P.3d at 300, and thus governed by the Act Clause. The court

concluded that under State ex rel. Babbitt v. Goodyear Tire &

Rubber Co., 128 Ariz. 483, 486, 626 P.2d 1115, 1118 (App. 1981),

the Act Clause required proof only of “intent to do the act

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involved.” AutoZone, 227 Ariz. at 478 ¶¶ 18-19, 258 P.3d at

296. The court of appeals also held that the CFA permits

disgorgement to the State, id. at 483-84 ¶ 39, 258 P.3d at 301-

02, and awarded the State attorney’s fees and costs pursuant to

A.R.S. § 44-1534, id. at 485 ¶ 44, 258 P.3d at 303. Judge

Gemmill dissented in part, arguing that the CFA does not

authorize disgorgement to the State. Id. at 485-86 ¶¶ 47-53,

258 P.3d at 303-04 (Gemmill, J., concurring in part and

dissenting in part).

¶9 We granted review on three issues: (1) whether the Act

Clause or the Omission Clause governs the State’s “non-pricing”

claims; (2) whether the CFA authorizes disgorgement to the

State; and (3) whether the court of appeals erred by awarding

the State interlocutory attorney’s fees.1 We exercise

jurisdiction pursuant to Article 6, Section 5(3) of the Arizona

Constitution and A.R.S. § 12–120.24 (2003).2

1
We did not grant review of other aspects of the opinion
below, including the holdings that remedies under the CFA are
not duplicative of those under the Pricing Act and that proof of
violations of the Act Clause, including the allegations of
mispricing in this case, require only a showing of intent to do
the act involved.
2
We do not approve the trial judge’s granting of a judgment
“by necessity” to obtain appellate review in a case in which the
judge found disputed issues of material fact. Under those
circumstances, parties may seek special action relief, and trial
judges should not issue judgments simply to evade the general
requirement of a final judgment for appellate review. But on
its face, the judgment in this case was final, ordering
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 II.

¶10 AutoZone argues that a non-pricing allegation

necessarily involves an omission that is governed by the

Omission Clause, which requires proof that the omission is

material and made with intent that a consumer rely thereon. The

State argues that because the Pricing Act imposes a duty to

price, the sale of non-priced goods should instead be evaluated

under the Act Clause, which requires only proof of intent to do

the alleged act. Both parties thus view the two clauses as

describing mutually exclusive categories of prohibited conduct,

and they ask us to pigeonhole AutoZone’s alleged non-pricing

into one or the other.

¶11 We accept neither argument. Because the clauses

require different elements of proof, we conclude that the

legislature intended generally to distinguish an “omission” from

an “act.” In common parlance, “[o]mission denotes the negative.

Act is the expression of will, purpose. Omission is inaction.

Act carries the idea of performance. Omission carries the idea

of refraining from action.” Terry v. Lincscott Hotel Corp., 126

Ariz. 548, 553, 617 P.2d 56, 61 (App. 1980) (quoting Randle v.

Birmingham Ry., Light & Power Co., 53 So. 918, 921 (Ala. 1910));

_______________________________ 
dismissal with prejudice of all claims raised by the State. The
court of appeals thus appropriately exercised jurisdiction under
A.R.S. § 12-2101(A), even though the trial judge’s reasons for
entering the judgment were misguided.
6
see A.R.S. § 1-213 (“Words and phrases shall be construed

according to the common and approved use of the language.”). An

omission does not always constitute an act. See W. Page Keeton

et al., Prosser and Keeton on Torts § 56 at 373 (5th ed. 1984)

(“In the determination of the existence of a duty, there runs

through much of the law a distinction between action and

inaction. . . . that is to say, between active misconduct . . .

and passive inaction.”).

¶12 We find no indication in the text of the CFA that the

legislature intended to blur the generally recognized

distinction between an act and an omission. Nor does the CFA

provide that failure to perform a duty imposed by a separate

statute, such as the Pricing Act, should be automatically

covered by the Act Clause. Rather, the CFA itself imposes the

actionable duty – to refrain from a “deceptive act or practice”

or an “omission of any material fact with intent that others

rely” thereon. A.R.S. § 44-1522(A).3

¶13 In concluding that “a party has committed a deceptive

act if it failed to disclose information it was under a duty to

disclose,” AutoZone, 227 Ariz. at 481 ¶ 31, 258 P.3d at 299, the

3
The Pricing Act, in contrast, has no apparent mens rea
requirement, nor does it require that a failure to price be
material to a sale.    The opinion below noted that “AutoZone and
Amicus argue, and the State does not dispute, the State is
entitled to assess civil penalties under the Pricing Act without
any showing of intent or mental state.” AutoZone, 227 Ariz. at
483 ¶ 37, 258 P.3d at 301.
7
court of appeals relied in part on Fenwick v. Kay American Jeep,

Inc., 371 A.2d 13 (N.J. 1977). That case construed New Jersey’s

consumer fraud act and held that a car dealer’s failure to

disclose odometer readings in advertisements constituted a

“deception.” Id. at 15-16. But under the New Jersey act, the

attorney general is authorized to promulgate “rules to further

the purpose of the act,” and had adopted a regulation requiring

disclosure of the odometer readings. Id. at 16. The New Jersey

court relied expressly on the regulation in rejecting the

dealer’s argument that failure to post the readings was not a

deceptive act. Id. The CFA, in contrast, does not confer

rulemaking power on the Arizona Attorney General, nor does it

provide that failure to comply with some other statute is always

evaluated under the Act Clause.

¶14 If the State’s complaint had alleged only a single

instance or isolated instances of non-pricing, the Omission

Clause would provide the appropriate standard for adjudicating

CFA liability. The complaint, however, alleged routine and

repeated instances of non-pricing. The Act Clause prohibits not

only acts, but also “practice[s].” The court of appeals

correctly defined a practice as “a habitual action and something

more than an accumulation of a number of individual instances of

conduct.” AutoZone, 227 Ariz. at 483 ¶ 38 & n.18, 258 P.3d at

301 & n.18. If AutoZone repeatedly failed to price items, a

8
finder of fact could well find a practice subject to the Act

Clause.4

¶15 Neither party disputes that whether AutoZone had the

intent required by the CFA is an issue of fact, regardless of

whether the Act or the Omission Clause applies to the non-

pricing allegations. Thus, albeit for different reasons than

those we rely upon here, the court of appeals correctly held

that neither side was entitled to summary judgment.

III.

¶16 The Attorney General may seek injunctive relief to

prevent violations of the CFA. A.R.S. § 44-1528(A). The

superior court may also issue orders and judgments “as may be

necessary to:”

1. Prevent the use or employment by a person of any
unlawful practices.

2. Restore to any person in interest any monies or
property, real or personal, which may have been
acquired by means of any practice in this article
declared to be unlawful, including the appointment of
a receiver.

Id.

¶17 The State does not seek restitution to consumers under

§ 44-1528(A)(2), but rather disgorgement of monies received by

AutoZone in violation of the CFA, to go to the Attorney General

4
  The Act Clause also requires that the relevant practice be
“deceptive.” A.R.S. § 44-1522(A). Whether AutoZone’s alleged
non-pricing was deceptive is not before us today. 
9
for use in the consumer protection revolving fund, A.R.S. § 44-

1531.01. The State argues, and the court of appeals held, that

such disgorgement is authorized by § 44-1528(A)(1).

¶18 We disagree. As an initial matter, if the legislature

intended in § 44-1528(A)(1) to authorize disgorgement to the

State simply because that remedy “[p]revent[ed] the use or

employment . . . of any unlawful practices,” it is difficult to

understand why § 44-1528(A)(2), which provides for restitution

to consumers, is necessary, because restitution surely also

serves such a purpose. We do not interpret statutes so as to

render any provision redundant. State ex rel. Dep’t of Econ.

Sec. v. Hayden, 210 Ariz. 522, 523 ¶ 7, 115 P.3d 116, 117

(2005).

¶19 The State argues that disgorgement is generally within

the court’s equitable powers. But we deal here with statutory,

not equitable, remedies. See Blankenbaker v. Jonovich, 205

Ariz. 383, 387 ¶ 18, 71 P.3d 910, 914 (2003) (“When . . . a

statute ‘creates a right and also provides a complete and valid

remedy for the right created, the remedy thereby given is

exclusive.’” (quoting Valley Drive-In Theatre Corp. v. Superior

Court, 79 Ariz. 396, 400, 291 P.2d 213, 215 (1955))). The CFA

expressly provides for restitution to consumers, but not

disgorgement to the State. “[I]t is an elemental canon of

statutory construction that where a statute expressly provides a

10
particular remedy or remedies, a court must be chary of reading

others into it.” Lancaster v. Ariz. Bd. of Regents, 143 Ariz.

451, 457, 694 P.2d 281, 287 (App. 1984) (quoting Transamerica

Mortg. Advisors, Inc. (TAMA) v. Lewis, 444 U.S. 11, 19 (1979)).

Moreover, the legislature plainly knew how to provide for

disgorgement to the State. For example, A.R.S. § 44-7111

Section 7(e), which applies to the State’s tobacco litigation

settlement, provides that “the court shall order any profits,

gain, gross receipts or other benefit from the violation to be

disgorged and paid to the state general fund.” The absence of a

similar provision in the CFA suggests that no such remedy was

intended in that statute.

¶20 Moreover, other provisions of the CFA dealing with the

disposition of awards to the State also do not mention

disgorgement. The attorney general’s revolving fund, to which

the State proposes to direct any disgorgement, consists of

“investigative or court costs, attorney fees or civil penalties

recovered for the state by the attorney general as a result of

enforcement.” A.R.S. § 44-1531.01(B); see also A.R.S. § 44-1532

(providing for payment of penalties for violations of

injunctions and orders to the general fund). The absence of any

reference in these provisions to disgorgement cuts against the

judicial implication of such a remedy into § 44-1528(A)(1).

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¶21 The State also relies on § 44-1522(C), which states

that “in construing subsection A . . . the courts may use as a

guide interpretations given by the federal trade commission and

the federal courts to 15 United States Code §§ 45, 52 and

55(a)(1),” and argues that because courts have found

disgorgement to the federal government permissible under the

Federal Trade Commission Act, we should interpret Arizona’s CFA

similarly. But federal courts ordering disgorgement have relied

not on the code sections cited in § 44-1522(C), but instead on a

provision not cited in the CFA: 15 U.S.C. § 53, the general

remedies provision of the federal act. See, e.g., FTC v.

Pantron I Corp., 33 F.3d 1088, 1102 (9th Cir. 1994); FTC v. QT,

Inc., 448 F. Supp. 2d 908, 974 (N.D. Ill. 2006), amended on

reconsideration in part, 472 F. Supp. 2d 990 (N.D. Ill. 2007),

aff’d, 512 F.3d 858 (7th Cir. 2008). The United States Code

sections cited in § 44-1522(C) define the acts, practices, and

omissions prohibited by the federal act, not the remedies

available to a court finding a violation, and thus do not

support implication of a disgorgement remedy into the CFA.

¶22 The CFA was based on legislation developed by the

Council on State Government’s Committee on Suggested State

Legislation. See William A. Lovett, State Deceptive Trade

Practice Legislation, 46 Tul. L. Rev. 724, 731-32 (1972). Iowa

was among the states adopting this model legislation, and its

12
supreme court held that Iowa’s original version of the statute,

which contained language similar to § 44-1528(A), did not allow

for disgorgement to the state. State ex rel. Miller v. Santa

Rosa Sales & Mktg., Inc., 475 N.W.2d 210, 219 (Iowa 1991). The

Iowa act was later amended specifically to provide for

disgorgement. 1992 Iowa Legis. Serv. 1062 (West) (S.F. 2276).

Unless and until our legislature follows suit, we agree with the

Iowa court that this remedy should not be read by the courts

into the existing statute.

IV.

¶23 The State sought and was awarded attorney’s fees by

the court of appeals and also seeks them from us. “In any

action brought under the provisions of this article, the

attorney general is entitled to recover costs, which in the

discretion of the court may include a sum representing

reasonable attorney’s fees for the services rendered, for the

use of the state.” A.R.S. § 44-1534. The court of appeals

awarded the State attorney’s fees under this provision.

AutoZone, 227 Ariz. at 485 ¶ 44, 258 P.3d at 303.

¶24 Although § 44-1534 does not expressly require that the

State be the prevailing party to recover fees and costs, that

requirement is surely implicit in the statute; we cannot imagine

that the legislature would authorize an award of fees to the

State for an unsuccessful suit. The opinion below did not

13
mandate judgment for the State, but rather remanded the case for

trial. We cannot conclude that the State has yet prevailed in

this litigation, particularly because it acceded to the judgment

“by necessity” despite the original superior court ruling that a

trial was warranted.

¶25 In limited instances, a successful interlocutory

appeal may qualify a party as prevailing for purposes of a fee

award, particularly when a new or important principle of law is

established. Wagenseller v. Scottsdale Mem’l Hosp., 147 Ariz.

370, 392–94, 710 P.2d 1025, 1047–49 (1985). But that is not the

case here. The court of appeals did not explain why it found an

interlocutory award of fees appropriate, but to the extent the

award was based on the State’s success in espousing its

disgorgement theory, our opinion today compels a different

conclusion. We therefore vacate the award of fees and costs in

the court of appeals and deny the State’s similar request in

this Court, without prejudice to the State renewing its

application should it eventually prevail.

V.

¶26 For the reasons above, we vacate the opinion of the

court of appeals with respect to the three issues on which

review was granted, and we remand to the superior court for

proceedings consistent with this opinion and the remaining

portions of the opinion below.

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 _____________________________________
Andrew D. Hurwitz, Vice Chief Justice

CONCURRING:

_____________________________________
Rebecca White Berch, Chief Justice

_____________________________________
W. Scott Bales, Justice

_____________________________________
A. John Pelander, Justice

_____________________________________
Robert M. Brutinel, Justice

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