Order Imposing Sanctions and Penalties in State Consumer Protection Lawsuit Affirmed by Alaska Supreme Court
August 15, 2006
(Anchorage) - Attorney General David Márquez announced today that the Alaska Supreme Court affirmed a Superior Court ruling imposing $30,000 in civil penalties plus costs and attorneys fees against Dennis Lee, d/b/a United Community Services of America and Better World Technologies ("Lee") for violating the state's Consumer Protection Act. In 2001 Lee advertised on the Internet and in an ad in the Anchorage Daily News that he would be demonstrating at a presentation in Anchorage various "new revolutionary technologies," including a generator that was so efficient that it could provide "free electricity." Attendees at the presentation would have the opportunity to "possibly" receive free electricity for the rest of their lives.
The state filed a complaint against Lee for deceptive advertising in violation of the Consumer Protection Act. The state also obtained a temporary restraining order to prevent Lee from soliciting consumers at the presentation to pay him for products, memberships, or other investments related to his "free energy" scheme. Lee proceeded with his presentation, including handing out materials in violation of the TRO.
Lee refused to participate in discovery - the information exchange that takes place as part of the litigation process - claiming that the state's discovery requests were overbroad and irrelevant. He wanted to demonstrate his products instead. After Lee refused numerous opportunities to respond or raise appropriate legal objections to those requests the superior court issued a ruling that the facts as alleged in the state's complaint would be deemed true. This order was requested by the state as a sanction for Lee's failure to comply with discovery orders.
"Advertisers who make claims about the performance of their products must be able to substantiate those claims with scientific evidence," said Márquez. "The Consumer Protection Unit, through its diligence, recognized that Dennis Lee was making product claims without a scientific basis for doing so, and moved quickly to prevent him from defrauding Alaskans with his "free electricity" scheme."
The state then requested and received a summary judgment and sought civil penalties for Lee's violations of the TRO and for the deceptive advertising claims. The court ordered Lee to pay $30,000 in civil penalties and prohibited him from making unsubstantiated claims about products offered for sale and from advertising or soliciting programs related to those products. Lee appealed the order imposing liability-establishing sanctions and the civil penalties award. In its decision, Lee. v. State, Docket # S-11396, the Alaska Supreme Court affirmed the earlier order.
- Supreme Court Decision - PDF (125KB)
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