Recent Court Decisions Have Made It Easier to Bring a Lawsuit Under the Pennsylvania Unfair Trade Practices and Consumer Protection Law

The Pennsylvania Unfair Trade Practices and Consumer Protection Law (the “UTPCPL”) is a statute that has leveled the playing field for consumers suing companies and others for fraudulent or deceptive business practices.  In Pennsylvania, like in many states, parties to a lawsuit are responsible for their own attorney’s fees unless a contract between the parties says otherwise, or unless an applicable statute permits the winning party to recover their attorney’s fees from the losing party. The UTPCPL permits a prevailing consumer, defined as an individual who purchases or leases good or services for personal, family or household purposes, to recover not only reasonable attorney’s fees from the losing party, but also up to triple damages.  Two recent court cases, one from the Pennsylvania Supreme Court, and one from the United Court of Appeals for the Third Circuit, have made it easier for consumers to bring lawsuits under the UTPCPL.

First, in Gregg v. Ameriprise Financial Services, Inc., — A.3d —, 2021 WL 607486 (Pa. Feb. 17, 2021),  the Pennsylvania Supreme Court held that a consumer need not prove that the defendant acted with an intent to deceive to prevail on a claim under the “catchall” provision of the UTCPL.  Instead, “strict liability,” meaning liability without fault or intent, applies.  As a result, merely innocent mistakes that result in consumer confusion can now result in liability for businesses and others subject to the UTPCPL.

Next, in Earl v. NVR, Inc., No. 20-2109 (3d. Cir. Mar. 5, 2021), the United States Court of Appeals for the Third Circuit, overturned nearly 20-year-old precedent regarding the UTPCPL.  In a prior Third Circuit case, Werwinski v. Ford Motor Co., 286 F.3d 661 (3d. Cir. 2002), the Court had held that legal doctrines called the “gist of the action doctrine” and “economic loss doctrine” barred many types of claims under the UTPCPL.  The “gist of the action doctrine” generally prohibits a party from trying to “recast” a breach of contract claim as a “tort” claim like negligence or fraud.  Likewise, the “economic loss doctrine” generally prohibits recovering damages in tort when the right to recover stems from a contract.  In Werwinski, the Court had held that claims under the UTPCPL, if based on a contract, were barred by the “gist of the action doctrine” and “economic loss doctrine.”  Since the time that Werwinski was decided, Pennsylvania state courts have determined that the “economic loss doctrine” does not bar claims under the UTPCPL.  Likewise, since the time that Werwinski was decided, the Pennsylvania Supreme Court has substantially limited the reach of the “gist of the action doctrine.”  Based on these intervening state court decisions, in Earl the Third Circuit reconsidered its precedent in Werwinski and held that the “gist of the action doctrine” and “economic loss doctrine” will no longer bar most UTPCPL claims brought in federal courts sitting in Pennsylvania.

These decisions are good news for consumers, but bad news for businesses.  They will make it more difficult for businesses to get UTPCPL claims dismissed at an early stage of a lawsuit, and it will generally make it more difficult for businesses to defend against claims brought pursuant to the UTPCPL and its powerful consumer remedies.

Donoghue & Picker, LLC brings UTPCPL claims on behalf of consumers and also defends such claims on behalf of businesses and others.

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