CHAPTER 46

AN ACT TO AMEND TITLE 6, DELAWARE CODE TO PROTECT THE CONSUMER AGAINST FRAUDULENT AND DECEPTIVE MERCHANDISING PRACTICES.

Be it enacted by the General Assembly of the State Delaware:

Section I. Chapter 25, Title 6, Delaware Code, is amended by adding thereto the following new subchapter:

SUBCHAPTER IL CONSUMER FRAUD

§ 2511. Definitions

As used in this subchapter, unless the context otherwise requires —

(a) "Advertisement" means the attempt by publication, dissemination, solicitation or circulation to induce directly or indirectly any person to enter into any obligation or acquire any title or interest in any merchandise;

(b) "Merchandise" means any objects, wares, goods, commodities, intangibles, real estate or services;

(c) "Person" means an individual, corporation, government, or governmental subdivision or agency, business trust, estate, trust, partnership, unincorporated association, two or more of any of the foregoing having a joint or common interest, or any other legal or commercial entity;

(d) "Sale" means any sale, offer for sale, or attempt to sell any merchandise for cash or on credit.

§ 2512. Purpose; construction

The purpose of this subchapter shall be to protect consumers and legitimate business enterprises from unfair or deceptive merchandising practices in the conduct of any trade or commerce in part or wholly within this State. It is the intent of the General Assembly that such practices be swiftly stopped and that this subchapter shall be liberally construed and applied to promote its underlying purposes and policies.

§ 2513. Unlawful practice

(a) The act, use or employment by any person of any deception, fraud, false pretense, false promise, misrepresentation, or the 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, deceived or damaged thereby, is declared to be an unlawful practice.

(b) This section shall not apply —

(1) to the owner or publisher of newspapers, magazines, publications or printed matter wherein such advertisement appears, or to the owner or operator of a radio or television station which disseminates such advertisement when the owner, publisher or operator has no knowledge of the intent, design or purpose of the advertiser; or

(2) to any advertisement or merchandising practice which is subject to and complies with the rules and regulations of and the statutes administered by the Federal Trade Commission; or

(3) to matters subject to the jurisdiction of the Public Service Commission or of the Insurance Commissioner of this State.

§ 2514. Attorney General's investigative demand; things demanded

(a) Whenever the Attorney General has reason to believe that a person has engaged or, is engaging in, or is about to engage in, any practice declared by this subchapter to be unlawful, he may, pursuant to an order of any Judge of the Superior Court or of the Chancellor or Vice Chancellor, prior to the institution of a civil or criminal proceeding against such person, issue and cause to be served upon such person, an investigative demand requiring such person to —

(1) file a statement or report in writing under oath on such forms as the Attorney General may prescribe as to all the facts and circumstances concerning the sale or advertisement of merchandise by such person;

(2) answer oral interrogatories at such places and times as the Attorney General may reasonably specify as to all the facts and circumstances concerning the sale or advertisement of merchandise by such person; and

(3) produce the original or copy of any advertisement, merchandise or sample thereof, record, book, document, tabulation, map, chart, photograph, report, memorandum, communication, mechanical transcription, account or paper as the Attorney General may specify in his demand.

§ 2515. Contents of demand

Each Attorney General's investigative demand shall be in writing and shall

(a) state the nature of the conduct constituting the alleged violation of this subchapter which is under investigation and the provision of law applicable thereto;

(b) describe the class or classes of material to be produced thereunder with such definiteness and certainty as to permit such material to be fairly identified;

(c) prescribe a return date which will provide a reasonable time within which the material so demanded may be assembled and made available for inspection and copying or reproduction; and

(d) identify the custodian to whom such material shall be made available or the official before whom such oral examination shall take place or with whom such written reports shall be filed.

§ 2516. Limitations on the demand No such demand shall

(a) contain any requirement which would be held to be unreasonable if contained in a subpoena issued by a court of this State in aid of a grand jury investigation of an alleged violation of this subchapter; or

(b) require the production of any evidence which would be privileged from disclosure if demanded by a subpoena issued by a court of this State in aid of a grand jury investigation of an alleged violation of this subchapter.

§ 2517. Issuance of protective order

On motion promptly made by a person who receives such a demand from the Attorney General, the Judge who authorized the issuance of the investigative demand, if available, and if not, another member of his court, upon notice and good cause shown, may make any order which it deems appropriate and just to protect the person from an improper demand from the Attorney General.

§ 2518. Impounding evidence

Pursuant to an order of the Court of Chancery, the Attorney General may impound the original or copy of any document or other material produced in accordance with this section, which material shall be retained in the possession of such custodian and under such circumstances as the court may designate until the completion of all proceedings in connection with which the same is produced.

§ 2519. Service of demand

Service of any demand by the Attorney General hereunder shall be made personally within this State, if the person can be

found herein; but if such service cannot be made, substituted service may be made in the following manner:

(1) personal service outside of this State; or

(2) the mailing by registered mail to the last known place of business, residence or abode within or without this State of the person to whom such demand is directed; or

(3) as to any person other than a natural person in the manner provided in Title 8 and in the manner provided in the Rules of the Court of Chancery; or

(4) such service as the Court may direct in lieu of personal service within this State.

§ 2520. Failure to respond; order; penalties

If any person fails to respond to any investigative demand issued by the Attorney General hereunder, the Attorney General may, after due notice, apply to the Court of Chancery for an order, and the Court of Chancery, after a hearing on said application, may enter an order —

(1) requiring said person to respond to the demand;

(2) grant injunctive relief restraining any act or practice declared by this subchapter to be unlawful;

(3) vacating, annulling or suspending the corporate charter of a corporation created by or under the laws of this State or revoking or suspending the certificate of authority to do business in this State of a foreign corporation or revoking or suspending any other licenses, permits or certificates issued pursuant to law to such person which are used to further the allegedly unlawful practice; and

(4) granting such other relief as may be required to obtain compliance with the Attorney General's investigative demand.

§ 2521. Cease and desist agreements

At any time prior to institution of a suit against a person for violation of Section 2513 of this Title, the Attorney General may enter a cease and desist agreement with any person who is alleged to have engaged in, or be about to engage in an activity declared by this subchapter to be unlawful providing for the immediate discontinuance of all practices set forth in the agreement, and for such other action deemed necessary to correct the results of such practices. No proceeding shall be instituted thereafter by the Attorney General on the specific activities covered by such an agreement unless the agreement shall have been breached or violated.

§ 2522. Proceedings in the Court of Chancery

Whenever it appears to the Attorney General that a person has engaged in, is engaging in, or is about to engage in practices declared by this subchapter to be unlawful, he may institute an action in the Court of Chancery to enjoin such person from engaging in or continuing such practices or doing any acts in furtherance thereof. The complaint shall state the nature of the conduct constituting a violation of this subchapter and the relief sought thereunder. Service shall be obtained in accordance with Section 2514 or this Title. Such action shall be brought in the Court of Chancery of any county in which the alleged unlawful practice has been or is to be partially or completely performed.

§ 2523. Restraining orders; injunctions

In actions filed under this subchapter, the Court of Chancery after a hearing may grant relief by issuing temporary restraining orders, preliminary or permanent injunctions, and such other relief as may be necessary to prevent any person from engaging in activities declared by this subchapter to be unlawful or which may be necessary to restore to any person in interest any money or property, real or personal, which may have been acquired by means of any practice declared to be unlawful by this subchapter. Unless otherwise specified in this subchapter, the procedure for all such proceedings shall be as

provided in the Rules of Procedure of the Court of Chancery or as established by the usual practice and procedure in said Court.

§ 2524. Appointment of receiver; powers; damages; administration of estate; jurisdiction

(a) If it should appear to the Court of Chancery after a hearing, that a receiver should be appointed in cases of substantial and wilful violations of the provisions of this subchapter, the Court may appoint such a receiver.

(b) The receiver shall have the power to sue for, collect, receive and take into his possession, all the goods and chattels, rights and credits, moneys and effects, lands and tenements, books, records, documents, papers, choses in action, bills, notes and property of every description, acquired by means of any practice declared to be unlawful by this subchapter, including property with which such property has been mingled if it cannot be identified in kind because of such commingling, and to sell, convey, and assign the same and hold and dispose of the proceeds thereof under the direction of the Court.

(c) Any person who has suffered damages as a result of the use or employment of any such unlawful acts or practices and submits proof to the satisfaction of the Court that he has in fact been damaged may participate with general creditors in the distribution of the assets to the extent he has sustained out-of-pocket losses.

(d) The receiver shall settle the estate and distribute the assets under the direction of the Court.

(e) The Court shall have jurisdiction of all questions arising in such proceedings and may make such orders and judgments therein as may be required.

§ 2525. Savings clause for private claims against persons who acquired property by unlawful practices

Subject to an order of the Court terminating the business affairs of any person after receivership proceedings held pursuant to this subchapter, the provisions of this subchapter shall not bar any claim against any person who has acquired any money or property, real or personal, by means of any acts or practices declared by this subchapter to be unlawful.

§ 2526. Costs

In any action brought under the provisions of this subchapter in which any person is found to have engaged in or be about to engage in a practice declared by this subchapter to be unlawful, the Court may in its discretion entitle the Attorney General to recover costs for the use of the State.

§ 2527. Severability

If any provision of this subchapter or the application thereof to any person or circumstance is held invalid, the invalidity shall not affect other provisions or applications of this subchapter which can be given effect without the invalid provisions or application, and to this end the provisions of this subchapter are severable.

Approved May 3, 1965.