Apprentice Info. Sys., Inc. v. Datascout, LLC

Counsel

Friday, Eldredge & Clark, LLP, Little Rock, by: William A. Waddell, Jr., and Robert S. Shafer ; and Ryan Owsley, for appellants., H. Clay Fulcher ; The Lingle Law Firm, Rogers, by: James G. Lingle ; and Brian G. Brooks, Attorney at Law, PLLC, by: Brian G. Brooks, for appellee., A bench trial was held on the issue of damages on October 31, 2016. The circuit court entered its amended findings of fact and conclusions of law on January 26, 2017,1 and its judgment on January 27, 2017.2 The court awarded DataScout $632,526 in compensatory damages for AIS's violation of the ADTPA and its intentional interference with a valid contractual relationship or business expectancy. The court awarded punitive damages in the amount of $1,265,052. AIS presents the following points on appeal: the circuit court clearly erred in (1) finding that AIS violated the ADTPA; (2) finding that AIS engaged in tortious interference with a valid business expectancy; (3) awarding punitive damages; (4) finding that AIS is an undeclared de facto custodian of records for the counties it serves; and (5) concluding that county officials are not indispensable parties to this case. AIS challenges the circuit court's findings on liability, and for the reasons set out in Case No. CV-16-575, we reverse the findings that AIS engaged in tortious interference with a valid business expectancy and that it violated FOIA., The remaining claim, violation of the ADTPA, is also reversed for the reasons that follow. The circuit court concluded that AIS had violated the ADTPA "by engaging in unconscionable, false or deceptive acts, in conducting its business with county collectors and assessors across the State of Arkansas." The court went on to find as follows:, On appeal, AIS contends that it did not engage in any false or deceptive conduct and that the circuit court erroneously rested its decision on perceived wrongful conduct toward the counties, not DataScout. Furthermore, AIS argues that the ADTPA applies only to consumer-oriented practices, and none was proven here. The ADTPA prohibits any "unconscionable, false, or deceptive act or practice in business, commerce, or trade." Ark. Code Ann. § 4-88-107(a)(10) (Repl. 2011). The elements of such a cause of action are (1) a deceptive consumer-oriented act or practice which is misleading in a material respect and (2) injury resulting from such act. Skalla v. Canepari , 2013 Ark. 415, at 14, 430 S.W.3d 72, 82 (citing Ark. Code Ann. § 4-88-113(f) ). Here, the circuit court clearly erred in finding that DataScout was a consumer for purposes of the ADTPA. AIS and DataScout were competitors in the market of selling counties' public data, and there is simply no "consumer-oriented act" as required for a cause of action under the ADTPA. See Skalla , supra ; Stonebridge Collection, Inc. v. Carmichael , 791 F.3d 811 (8th Cir. 2015) (trial court properly dismissed ADTPA claim where the plaintiff failed to establish that defendants' acts of conversion and fraud were consumer-oriented or impacted consumers in any way). DataScout argues for a broader interpretation of the ADTPA and relies on Baptist Health v. Murphy , 365 Ark. 115, 226 S.W.3d 800 (2006). In that case, this court affirmed the circuit court's finding of an ADTPA violation for the "unconscionable" policy of denying practice rights to physicians who held ownership interests in another local hospital, where Baptist Health had the "upper hand because of exclusive-provider contracts" and the "power to disrupt the relationships between patients, who are at Baptist's mercy, with their physicians." We find that case to be distinguishable in that the patient-consumers' rights were at the heart of the unconscionable conduct, *540whereas here, DataScout sued over its thwarted business model, not a specific harm to consumers. Accordingly, we reverse the circuit court's finding that AIS violated the ADTPA and the award of compensatory damages., Finally, having no basis to award compensatory damages, the circuit court erred in awarding punitive damages to DataScout. Bayer CropScience LP v. Schafer , 2011 Ark. 518, at 13, 385 S.W.3d 822, 831 ("[P]unitive damages are dependent upon the recovery of compensatory damages, as an award of actual damages is a predicate for the recovery of punitive damages."). The judgment is reversed in its entirety.