Unfair and Deceptive Trade Practices in Connecticut

Each state generally has some type of consumer protection or trade protection law that seeks to prohibit and punish unfair conduct and deceptive acts in trade or commerce.   Most states, including Connecticut, model their laws after section 5 of the Federal Trade Commission Act.  Section 5 of the FTC Act prohibits unfair or deceptive acts and unfair competition in the marketplace. 

Connecticut’s Unfair Trade Practices Act (commonly referred to as CUTPA by attorneys and judges), is codified at Connecticut General Statutes section 42-110b.  CUTPA states, in relevant part, that:

(a) No person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.

(b) It is the intent of the legislature that . . . the courts of this state shall be guided by interpretations given by the Federal Trade Commission and the federal courts to Section 5 . . . .

(c) The commissioner may . . .establish by regulation acts, practices or methods which shall be deemed to be unfair or deceptive. . . Such regulations shall not be inconsistent with the rules, regulations and decisions of the federal trade commission and the federal courts . . .

(d) It is the intention of the legislature that this chapter be remedial and be so construed.

CUTPA’s provisions can be far reaching for businesses and consumers.  For example, under section 42-110g, attorneys who successfully prove a CUTPA violation in Connecticut business litigation may be able to recover attorneys fees, punitive damages, and costs for their clients.  CUTPA’s provisions also provide for the ability of attorneys to bring class action lawsuits in Connecticut for unfair or deceptive acts. Additionally, courts can order injunctive relief or other equitable remedies for CUTPA violations.

CUTPA’s provisions may be enforced by the various State’s Attorneys and the Attorney General, such as the AG’s recent lawsuit against Net Health over its loss or exposure of personal identifiers (date of birth, social security number) of Connecticut residents.  Private citizens and businesses may also bring actions for unfair competition or deceptive acts under CUTPA, including class action lawsuits such as the recent case against AT&T over Internet access.

To establish a violation of CUTPA, attorneys in Connecticut have to prove that their clients suffered "any ascertainable loss of money or property, real or personal, as a result of the use or employment of a method, act or practice prohibited by section 42-110g. . ." Generally speaking, this requirement means Connecticut attorneys have to show that their clients sustained damages as a result of an unfair or deceptive act in trade or commerce. 

To determine what constitutes an unfair or deceptive act, Connecticut courts specifically refer back to the Federal Trade Commission and what is commonly referred to as the "cigarette rule."  The cigarette rule defines what type of conduct may qualify as unfair and deceptive justifying an award of compensatory or punitive damages.   This rule dates back to 1964 and comes from legislative policy making by the Federal Trade Commission concerning requirements for warning labels on cigarette packages. 

 The three prongs of the cigarette rule are as follows:

  1. whether the practice, without necessarily having been previously considered unlawful, offends public policy as it has been established by statutes, the common law, or otherwise-in other words, it is within at least the penumbra of some common law, statutory, or other established concept of unfairness;
  2. whether it is immoral, unethical, oppressive, or unscrupulous;
  3. whether it causes substantial injury to consumers, [competitors or other business persons]. . . .

All three criteria do not need to be satisfied to support a finding of unfairness. A practice may be unfair because of the degree to which it meets one of the criteria or because to a lesser extent it meets all three.


It is important to note that not every act or conduct that might seem to fit the criteria will be a violation of CUTPA. For example, generally speaking, mere negligent acts or simple breaches of a contract do not constitute unfair or deceptive acts under CUTPA. It is also important to note that some conduct automatically violates CUTPA or is considered a per se violation, such as failure to follow the Home Improvement Act or to register a trade name.


There are many nuances to CUTPA and the above is only a brief summary. Any business or consumer trying to determine whether they were damaged by conduct constituting a violation of CUTPA should contact a business litigation attorney or the Attorney General’s office.

 

Firestorm Over Whether Bysiewicz Legally Qualified To Be Connecticut Attorney General

As many of us know, the Connecticut Attorney General, Richard Blumenthal, is stepping down and running for Chris Dodd’s U.S. Senate seat. Several candidates have stepped forward indicating that they are going to run for Attorney General.   The Connecticut Attorney General has a significant impact on businesses in this state.  For one thing, the Attorney General often brings lawsuits to protect businesses and consumers related to unfair trade practices.  For example, within the last few days,  Attorney General Blumenthal filed a lawsuit on behalf of over 400,000 Connecticut residents related to the Health Net data breach.  The old saying in legal circles is that the Attorney General runs the largest law firm in the state. 

Secretary of State Susan Bysiewicz is one of the candidates running for Attorney General.  Ryan McKeen, at A Connecticut Law Blog, has a very interesting post today about whether Susan Bysiewicz has the legal resume to meet the statutory qualifications to be elected Attorney General based on needing 10 years in "active" law practice.  The media has jumped on his blog post and there are several reports on it already in the news.     The Bysiewicz campaign has responded and claims that she is qualified despite only six years of practice in the state based on her years of "supervising" attorneys at the Secretary of State’s office.   Now that the issue has been joined, everyone is waiting for Ryan to respond, including me. 

Auto Body Association Wins 15 Million Dollar Verdict For Unfair Trade Practices

On November 17, a superior court jury in Stamford returned a 15 million dollar verdict in favor of the Auto Body Association of Connecticut (and three other auto body repair shops) arising out of claims againt the Hartford for unfair trade practices. The case docket goes back to 2003 and was filed based on claims that the Hartford was supressing auto body labor rates by steering customers to preferred appraisers and auto body shops.

The website search-autoparts.com provided some insights into the case stating that the claims were supported by "extensive documentation including internal memoranda detailing company policies, as well as several depositions by company employees."  In addition to the 15 million dollar verdict, the Association is now looking to obtain injunctive relief, and potentially punitive damages according to a article in the Hartford Courant by Kenneth Gosselin.  According to an article by Rob Varnon on newstimes.com  the problem started when the Association believed that customers with damaged cars were being steered to preferred shops with lower rates according to terms of the insurance company, not the customer.

The Auto Body Association of Connecticut has taken issue with the practices of appraisals and auto body repair rates for years now.  At one time, even before this current case, I represented one of several independent appraisal companies sued by the Association seeking discovery of documents related to the same set of issues.  Our group of defendants was successful in defending the discovery lawsuit, but it was clear then that the Association intended to bring additional claims.  The Attorney General is also getting into the dispute now seeking federal intervention after having sided with the Association in the past

The Hartford intends to continue defending its appraisal and repair program on appeal and with post trial motions.  The Hartford stated "we are disappointed with the verdict and plan to appeal.  We remain confident that our auto-body repair program is fully consistent with Connecticut law . . ." 

This litigation seems far from over.   Only time will which side will eventually prevail.