Wade Clark Mulcahy LLP

<p style="text-align: justify;">The Pennsylvania Supreme Court recently overturned decades of established law in the consumer protection area, resulting in increased exposure to defendants in consumer transactions. The 4-3 decision in <em><a href="https://www.wcmlaw.com/wp-content/uploads/2021/03/Gregg-v.-Ameriprise-Financial-Inc..pdf">Gregg v. Ameriprise Financial, Inc.</a> </em>overturned decades of precedent which formerly required a plaintiff to show the state of mind of the actor with respect to a false or misleading representation. Specifically, the Pennsylvania Supreme Court authoritatively opined upon Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (“CPL”). The CPL is a “valuable” claim as it allows for treble damages as well as attorneys fees.</p>
<p style="text-align: justify;">At issue here is the “catch-all” provision, 73 P.S. § 201-2(4)(xxi). This section, prohibits anyone who advertises, sells, or distributes good or services from “[e]ngaging in any . . . fraudulent or deceptive conduct which creates a likelihood of confusion or misunderstanding” during a transaction. Prior to this decision, Pennsylvania required a showing of common law fraud or proof of the actor’s state of mind (e.g., an intent to deceive). S<em>ee, e.g., Hammer v. Nikol</em>, 659 A.2d 617, 619 (Pa. Cmwlth. 1995) (“To be actionable under the catchall provision, however, the ‘confusion or misunderstanding’ created must be fraudulent.”). Pennsylvania no longer requires any showing of duplicitous intent and instead has made a violation of the CPL a strict liability statute. The Pennsylvania Supreme Court approvingly cited the intermediate appellate court indicating that strict liability was the appropriate standard for CPL cases:</p>
<p style="text-align: justify;">"[A]ny deceptive conduct, 'which creates a likelihood of confusion or of misunderstanding,' is actionable under 73 P.S. § 201-2(4)(xxi), whether committed intentionally (as in a fraudulent misrepresentation), carelessly (as in a negligent misrepresentation), or with the utmost care (as in strict liability). Whether a vendor's 'conduct has the tendency or capacity to deceive . . . is a lesser, more relaxed standard than that for fraud or negligent misrepresentation.' <em>TAP</em>, 36 A.3d at 1253. The only thing more relaxed than negligence––regarding a consumer's burden of proof––is strict liability." <em>Gregg</em>, 195 A.3d at 939.</p>
<p style="text-align: justify;">The <em>Gregg</em> Court further stated that “strict liability for such violations is consistent with the legislative mandate to eradicate the use of unfair and deceptive conduct.” To emphasize the increased liability and exposure, in <em>Gregg</em>, the jury returned a defense verdict on the fraud, misrepresentation and negligent misrepresentation claims, but the Judge ruled in favor of the plaintiff on the CPL claim, despite the fact the jury determined that no intent to deceive or confuse was present in the commercial transaction.</p>
<p style="text-align: justify;">Defendants and their insurers should be aware of this new case law and be prepared to defend the CPL under a strict liability regime.</p>
<p style="text-align: justify;">Thanks to Matt Care for his contribution to this post. If you have any questions or comments, please contact <a href="mailto:chayes@wcmlaw.com">Colleen Hayes</a>.</p>