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PA Supreme Court Finds “Strict Liability” Applies to Catch-All UTPCPL Provision

In a 4-3 decision, the Supreme Court of Pennsylvania recently held that a “strict liability” standard applies to a claim under the “catch-all” provision of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) because a finding of deceptive conduct is not dependent upon proof of the actor’s state of mind.  Accordingly, liability under the catch-all provision will be imposed on sellers who engage in conduct that has the potential to deceive and which creates a likelihood of confusion or misunderstanding.  See Gregg v. Ameriprise Fin., Inc., 2021 WL 607486 (Pa. Feb. 17, 2021).

In Gregg, the plaintiffs alleged that the defendant, a financial advisor and insurance agent, made material representations to the plaintiffs to induce the plaintiffs to buy certain insurance policies.  The plaintiffs asserted a claim against the defendant for violation of the UTPCPL under the “catch-all” provision.  The catch-all provision 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.  73 P.S. § 201-2(4)(xxi).  The plaintiffs also asserted several common law claims, including negligent misrepresentation and fraudulent misrepresentation.  A jury trial on the common law claims resulted in a defense verdict, and the UTPCPL claim proceeded to a bench trial.  The trial court ruled in favor of the plaintiffs on the UTPCPL claim after finding that the evidence demonstrated that the defendant’s conduct created a likelihood of confusion or misunderstanding in the plaintiffs’ dealings with the defendant.  The trial court reasoned that there was no state of mind requirement to sustain a cause of action under the catch-all provision of the UTPCPL.

On appeal to the Superior Court, the defendant argued that the defense verdict on the common law claims of fraudulent and negligent misrepresentation precluded liability under the UTPCPL by application of res judicata and collateral estoppel principles.  The Superior Court rejected the defendant’s argument and affirmed the trial court’s decision, holding that the plaintiffs could prevail on their UTPCPL claim without proof of the defendant’s state of mind.

On appeal, the Supreme Court of Pennsylvania agreed with the Superior Court and held that a strict liability standard applies to a claim under the catch-all provision of the UTPCPL, even though the provision expressly requires proof of “fraudulent or deceptive conduct.”  In reaching its decision, the Supreme Court of Pennsylvania noted that the catch-all provision prior to its 1996 amendment only imposed liability for fraudulent conduct, which was dependent upon proof of the actor’s state of mind and required proof that the actor acted intentionally.  The 1996 amendment to the catch-all provision expanded the unlawful conduct so as to also prohibit deceptive conduct.  The Supreme Court of Pennsylvania found that “[i]t is the capacity to deceive rather than the actor’s state of mind that renders conduct actionable under the amended catch-all provision of the [UTPCPL].”  The Supreme Court of Pennsylvania further found that the test for deceptive conduct is “a lesser, more relaxed standard than that for fraudulent or negligent misrepresentation” and “all that the statute requires the plaintiff to prove is that the acts or practices are capable of being interpreted in a misleading way.”  Thus, the Supreme Court of Pennsylvania concluded that the Superior Court was correct in its characterization of the catch-all provision as a strict liability provision and that a finding of liability did not depend on the defendant’s state of mind.