OLYMPIA, WA – The Washington State Supreme Court has ruled in favor of TVI Inc., a Bellevue-based business that is the largest for-profit thrift retailer in the world, generating more than $1 billion in annual revenue. It runs 330 stores worldwide and 20 Value Village stores in Washington State.
The State had brought multiple claims alleging that TVI Inc. was using deceptive advertising and marketing in violation of the Consumer Protection Act and the Charitable Solicitations Act. The business argued that these claims infringe on its First Amendment right to solicit charitable contributions on behalf of nonprofit organizations. The Supreme Court today agreed with the business.
“Accordingly, we remand to the trial court for dismissal of the State’s claims,” the ruling says.
Washington Attorney General Bob Ferguson has pursued the case against TVI Inc. since 2017. He accused the business of “hiding its for-profit status behind a veneer of charitable goodwill.”
The lawsuit claimed Value Village misled customers and gave them the impression that their purchases benefited nonprofit partners and that every time someone donated clothing or other goods, charities received a donation.
“If a for-profit company asked you to donate your couch so it could donate zero dollars to charity, you might think twice and decide to donate your couch to an actual charitable organization,” Ferguson said in 2017. “Value Village made millions by deceiving consumers and donors.”
Ferguson said an independent study commissioned as part of his office’s investigation showed that Value Village’s conduct deceived Washingtonians. More than 75% of those surveyed in a test group believed that the company was a charity or nonprofit organization.
The King County Superior Court ruled against TVI Inc. on three Consumer Protection Act claims in 2019, but that ruling was overturned in 2021 by the Court of Appeals. The state Supreme Court then agreed to hear the case, hearing arguments in October.
A joint amicus brief supporting TVI was filed by two of its charity partners, Northwest Center and Big Brothers Big Sisters of Puget Sound. Amici briefs supporting the State were filed by Truth in Advertising Inc., the University of California Berkeley Center for Consumer Law and Economic Justice, and Professor Rebecca Tushnet; the Washington State Association for Justice Foundation; along with 14 states and the District of Columbia.
“TVI must solicit charitable donations on behalf of nonprofits to maintain its retail inventory. At the same time, these charitable solicitations necessarily advance TVI’s own commercial interests. Under this arrangement, it is impossible for TVI to separate the commercial and charitable elements of its marketing. Because we cannot apply different levels of scrutiny to different parts of the same speech, we must treat all of the marketing in this case as charitable solicitations. Thus, each of the State’s CPA claims must survive exacting scrutiny” the Supreme Court says.
“Exacting scrutiny requires the State to make “properly tailored” allegations and satisfy “[e]xacting proof requirements.” Madigan, 538 U.S. at 619-20. The CPA ordinarily imposes strict liability, which the parties agree cannot satisfy exacting proof requirements. To address this concern, the trial court added a “knew or should have known” mens rea element to the State’s claims in this case. However, even with this additional element, the State’s CPA claims cannot survive exacting First Amendment scrutiny because they are not supported by properly tailored allegations and exacting proof,” today’s ruling says.
As a result, the Supreme Court ruled that the State has not met its burden of proving that its CPA claims target only unprotected, deceptive commercial speech.
“To the contrary, the State relied on TVI’s charitable solicitations to prove each of its claims at the trial court. The record shows that it would have been “impossible” for TVI to separate these charitable solicitations from its commercial speech,” the ruling says. “Thus, in the context of the claims presented here, TVI’s commercial speech and charitable solicitations are “inextricably intertwined,” and we must treat all of the speech in this case as “fully protected expression.”
The Supreme Court says the State’s CPA claims infringe on TVI’s First Amendment right to engage in charitable solicitation.
“Therefore, we affirm the Court of Appeals in result. We remand to the trial court to dismiss the State’s CPA claims and to rule on attorney fees and costs,” the ruling says.
Read the Supreme Court’s Opinion below or here.
