Insurance Agents & Brokers Liability

The Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL) provides consumers with broad protection from fraud and unfair or deceptive business practices, and it authorizes private causes of action to recover actual damages along with attorneys fees and treble damages. The 1996 amendment of this law widened the scope of actionable conduct under the “catchall” provision to include “deceptive conduct” that creates a likelihood of confusion or misunderstanding, as a prohibited practice. 73 P.S. § 201-2(4)(xxi).

The courts in Pennsylvania have liberally interpreted deceptive or unfair conduct to mean anything that “has the capacity or tendency to deceive, and neither the intention to deceive nor actual deception must be proved; rather it need only be shown that the acts and practices are capable of being interpreted in a misleading way.” Commonwealth by Shapiro v. Golden Gate National Senior Care, LLC, 194 A.3d 1010, 1023 (Pa. 2018). Recently, the Supreme Court held that the UTPCPL imposes “strict liability on commercial vendors who engage in conduct that has the potential to deceive and which creates a likelihood of confusion or misunderstanding.” Gregg v. Ameriprise Fin., Inc., 245 A.3d 637, 649 (Pa. 2021). 

On April 25, 2024, the Supreme Court further determined that the “availability of up to treble damages under [UTPCPL] is not dependent upon other damages to which the plaintiff is also entitled,” such that a court must consider awarding treble damages even if punitive damages are separately granted on other claims. Dwyer v. Ameriprise Fin., Inc., 313 A.3d 969, 982 (Pa. 2024).

Given the expansive scope of potential liability and damages under the UTPCPL faced by any business that provides goods and services to consumers, it is critical that defendants encountering such claims avail themselves of the defenses that can be asserted. A recent court case illustrates important elements of a plaintiff’s burden of proof under the UTPCPL that need to be emphasized in these cases.

In McMahon v. Chipotle Mexican Grill, Inc., -- F.Supp.3d --, 2024 WL 1932319 (W.D. Pa. May 1, 2024), the United States District Court for the Western District of Pennsylvania rejected claims brought under several sections of the UTPCPL and the catchall provision. In that case, the plaintiffs purchased meals at Chipotle restaurants and paid with cash, but Chipotle was unable to provide exact change for the purchases due to a nationwide coin shortage. The plaintiffs accepted the return of less than the full amount of change due, but then brought suit claiming violations of the UTPCPL. In asserting counts under the statute’s catchall and other provisions, the plaintiffs claimed that Chipotle advertised prices of goods with the intent not to sell them as advertised, provided a receipt for purchases that indicated exact change was given when it was not, and charged a higher price than the cost of the order. 

The McMahon court rejected the plaintiffs' claims, finding that they could not prove that Chipotle’s alleged false representations, deceived them or affected their purchasing decision, and the plaintiffs failed to show that they suffered harm as a result of justifiably relying on a false representation. In emphasizing the requirements for establishing a UTPCPL claim under the catchall provision, the District Court acknowledged the law imposes strict liability, but it still requires a plaintiff to establish justifiable reliance based on a defendant’s “direct recommendation to their detriment.” 2024 WL 1932319 at * 9, citing Gregg, 245 A.3d at 645. The court in McMahon found the plaintiffs did not rely on Chipotle’s alleged false representations when purchasing food at the restaurant in granting summary judgment on the UTPCPL claims. 

The federal court decision in McMahon is consistent with Pennsylvania state court rulings that, “[e]ven with the broadening of the applicability of the catchall provision, in order to prevail on such a cause of action, the UTPCPL plaintiff must still prove justifiable reliance and causation….” Kirwin v. Sussman Automotive, 149 A.3d 333, 336 (Pa. Super. 2016); Gregg, 245 A.3d at 646 (“Regardless of which unfair method of competition a plaintiff challenges in a private cause of action, ... Section 201-9.2 [of the UTPCPL] requires the plaintiff to establish justifiable reliance.”).

Defendants facing claims brought under the expansive catchall provision of the Unfair Trade Practices and Consumer Protection Law maintain a viable defense to liability based on the plaintiff’s burden of proving the elements of such a cause of action, particularly the necessity of proving both conduct that is deceptive and which creates a likelihood of confusion or misunderstanding, and justifiably reliance on such conduct that causes harm. The importance of challenging the plaintiff’s factual assertions of such claims is critical to avoiding the imposition of liability and damages under the UTPCPL. 

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_{Legal Update for Insurance Agents & Brokers, August 2024, is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2024 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.}