Summary of a Recent
Judicial Development in
Environmental Law

Protections Provided by Unfair and Deceptive Trade Practices Act
Can Extend to Businesses

Eric H. Foy
National AgLaw Center Research Associate

Summary of Decision

In Oxley v. Asplundh Tree Expert Co., Civil No. 1:06CV60, 2006 WL 1642152 (W.D.N.C. June 12, 2006), the United States District Court for the Western District of North Carolina denied defendant CSX Transportation's (CSX) motion to dismiss the plaintiffs' cause of action for unfair and deceptive trade practices. The defendants argued that the plaintiffs failed to state a claim under North Carolina law.

Background

The plaintiffs, who were engaged in the nursery business, grew rare plants from root stock or mother plants that relied on water from spring boxes located on the plaintiffs' property. Id. at *1. The defendant operated a rail transportation business, and ran rail cars across an easement partly located on the plaintiffs' property. Id. To protect its easement right of way from excess foliage, the defendant sprayed the herbicide Picloram along its tracks. Id. at *2. The plaintiffs alleged that the defendant's spraying contaminated its spring boxes. Id. The plaintiffs also alleged that the defendant's applicator, as a result of previous litigation, entered into a settlement agreement with North Carolina agreeing not to use Picloram "along the railroad and one-half mile in both directions from the We-Du Nursery spring box." Id. According to the plaintiffs, the settlement agreement applied to the defendant as well. Id. The plaintiffs sued the defendant for violating the Unfair and Deceptive Trade Practices Act (UDTPA) and damaging their plants.

Arguments

The plaintiffs argued that the defendant was informed of the restrictions imposed by the settlement agreement entered into by its applicator, but took no action to assure that the allegedly illegal spraying would not be repeated. Id. Additionally, the plaintiffs alleged that the defendant's applicator "repeated the illegal spraying in 2004, injuring the plaintiffs by killing their plants and root stock, contaminating their land, and poisoning their spring box." Id.

The defendant asserted that the plaintiffs failed to state a claim according to Federal Rule of Civil Procedure 12(b)(6) because, at most, the plaintiffs only alleged breach of contract, which is not covered by the UDTPA, and moved to dismiss. Id. at *1, *4.

Analysis and Holdings

North Carolina General Statute Chapter 75-1.1(a) states in pertinent part: "Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are declared unlawful." Id. at *2. Its purpose is

to declare, and to provide civil legal means to maintain, ethical standards of dealings between persons engaged in business and between persons engaged in business and the consuming public within this State to the end that good faith and fair dealings between buyers and sellers at all levels of commerce be had in this State.
Id.

To state a claim under North Carolina's UDTPA, a plaintiff must allege the following: (1) conduct that is an "unfair or deceptive act or practice," (2) conduct "in or affecting commerce," and (3) that "such conduct proximately caused actual injury to plaintiff." Id. at *4.

In the instant case, the plaintiffs alleged: (1) "that CSX misrepresented to the state, the marketplace, and the plaintiffs that they would not spray Picloram . . . near the plaintiffs' property"; (2) "the transaction between them and CSX [was] that of a grantor and grantee of an easement . . . and that the transaction concerned maintenance of a railroad right-of-way with an obligation on the grantee of maintaining its easement, supposedly in a manner that is not injurious to the grantor's land," and (3) the defendant's applicator told the plaintiffs that the damages at issue were caused by the herbicides it sprayed on behalf of the defendant in 2004. Id. at *4-5. Because the plaintiffs alleged each of the prima facie elements necessary to maintain a cause of action under the UDTPA, the court denied the defendant's motion to dismiss. Id. at *6.

Also of note, in response to the defendant's assertion that the UDTPA was only intended to benefit consumers, the court stated that the UDTPA's "protections extend to businesses in appropriate situations." Id. at *5. Ultimately, that court held that "the relationship between a railroad and an adjoining commercial enterprise engaged in agricultural production" was one such "appropriate situation." Id. at *6.

The case was decided on June 12, 2006.