By: Steven M. Williams and Carl L. Engel
The Pennsylvania Supreme Court is currently considering a case that could dramatically alter the Commonwealth’s commercial landscape. In Gregg v. Ameriprise Financial, Inc., the Court agreed to review a decision by the Pennsylvania Superior Court, holding that a company sued by a customer under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (the UTPCPL) is subject to a “strict liability” standard of culpability. The Supreme Court’s ruling will have far-reaching implications for Pennsylvania’s business owners, and could substantially limit the number of future claims brought by consumers under the UTPCPL.
The UTPCPL allows consumers to sue businesses for engaging in unlawful conduct during a business transaction. The law identifies several “unfair methods of competition and unfair or deceptive acts or practices” that are prohibited in Pennsylvania. The UTPCPL’s “catch-all” provision forbids businesses from “engaging in any other fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding.” In 2012, the Superior Court in Bennett v. A.T. Masterpiece Homes held that a consumer was not required to prove that the business acted with the intent to defraud in order to state a claim under the catch-all provision. However, the Court did not address what level of culpability a consumer would have to prove to succeed in a claim under the catch-all provision.
In Gregg v. Ameriprise Financial, Inc., the Superior Court ruled that the catch-all provision imposed strict liability on businesses. In other words, a consumer need not establish that the business was negligent or acted intentionally. Rather, to succeed on a claim under the catch-all provision, a consumer need only prove that the business’s conduct “has the tendency or capacity to deceive.” In reaching its decision, the Superior Court reasoned that if the Pennsylvania General Assembly had intended to limit the catch-all provision to negligent misrepresentation claims, it could have outlawed only “fraudulent or negligent conduct,” rather than “any… deceptive conduct.” The Superior Court also reasoned that a UTPCPL violation “is not amenable to excuses,” because a commercial transaction “occurs in a designed setting entirely of the vendor’s creation via preplanned marketing schemes.” The Court noted that consumers, on the other hand, “may be especially reliant upon a vendor’s specialized skill, training and experience in matters with which consumers have little or no expertise,” and that “[t]herefore, the legislature has placed the duty of UTPCPL compliance squarely and solely on vendors.” Therefore, under the Superior Court’s ruling, a vendor may be found to have violated the UTPCPL’s catch-all provision, even if it took the utmost care to avoid the violation.
Because claims brought under the UTPCPL’s catch-all provision are common in Pennsylvania, the Supreme Court’s decision in Gregg will affect businesses across every industry. The case is so important that a group of industry associations, including the U.S. Chamber of Commerce, the American Tort Reform Association, the National Federation of Independent Businesses, and the Pennsylvania Coalition for Civil Justice Reform have intervened, urging the Supreme Court to refrain from adopting the loosened standard proscribed by the Superior Court. The associations argue that the Superior Court’s standard will create “an explosion of litigation by consumers with nothing more than ‘buyer’s remorse.’”
If the Supreme Court agrees with the Superior Court and rules that consumers do not have to prove that negligent or intentional conduct caused them harm, there could be a significant increase in the number of consumer protection lawsuits filed against Pennsylvania businesses. In these cases, businesses would have no defense against liability if it is determined that their conduct had the tendency or capacity to deceive. However, if the Court disagrees and reverses the decision of the Superior Court, businesses would be free from liability except in cases where it can be shown that they were negligent or intentionally caused harm to a consumer.
We expect that the Supreme Court will issue a decision in the case in the Spring of 2020 and we will continue to monitor the case and report on any developments.
Cohen Seglias’ Consumer Protection & Regulatory Defense Group defends companies that are the subject of government investigations, enforcement actions, and lawsuits alleging violations of various state and federal consumer protection laws and regulations, including the UTPCPL. For more information, please contact Steve Williams at firstname.lastname@example.org or Carl Engel at email@example.com.