HARRISBURG – The Supreme Court of Pennsylvania has affirmed a lower court ruling which declared not only that Amerprise Financial was deceptive in its sale of insurance and financial services, but that proving intent to deceive isn’t required to win such a case filed under the state consumer protection law.
In a 4-3 ruling on Feb. 17, the state’s high court upheld a decision from the Superior Court of Pennsylvania, which also found that protections outlined in the Unfair Trade Practices and Consumer Protection Law applied to plaintiffs Gary and Mary Gregg, in their lawsuit versus Ameriprise Financial, Inc., Riversource Life Insurance Company and Robert A. Kovalchik.
The lawsuit originated in the Allegheny County Court of Common Pleas almost 20 years ago, where the trial court judge determined that Kovalchik, an employee of Ameriprise, was deceptive in his professional conduct when he sold the plaintiffs life insurance policies that damaged the Greggs financially.
The judge awarded them $52,000.
On appeal to the Superior Court, Ameriprise argued that the plaintiffs did not successfully prove that the company had an intent to deceive them.
However, the Superior Court disagreed and ruled in September 2018 that the Unfair Trade Practices and Consumer Protection Law acted in a fashion for strict liability, which did not require proof of intent to deceive. The company then appealed to the state Supreme Court.
The majority complement of four judges from the state Supreme Court’s majority, comprised of justices David N. Wecht, Christine Donohue, Sallie Updyke Mundy and Kevin M. Dougherty, concurred with the Superior Court.
Wecht authored the majority opinion, reiterating that plaintiffs need not prove an intent to deceive under the Unfair Trade Practices and Consumer Protection Law.
“The plain language of the current statute imposes liability on commercial vendors who engage in conduct that has the potential to deceive and which creates a likelihood of confusion or misunderstanding. That is all that is required. The legislature required neither carelessness nor intent when a cause of action is premised upon deceptive conduct,” Wecht stated.
“Accordingly, under the plain meaning of the statute, deceptive conduct during a consumer transaction that creates a likelihood of confusion or misunderstanding and upon which the consumer relies to his or her financial detriment does not depend upon the actor’s state of mind. Liberally construing the CPL as we must, the amended language places the duty of compliance with the CPL on commercial vendors, without regard to their intent.”
Justices Debra Todd, Max Baer and Chief Justice Thomas G. Saylor communicated their disagreement of how the state’s consumer protection law was interpreted in the dissenting ruling, written by Todd.
“In my view, a vendor may be liable under Section xxi for deceptive conduct only when he knows, or reasonably should know, that his conduct, be it his actions or statements, is likely to cause misunderstanding or confusion in a consumer regarding the goods or services the vendor is selling,” Todd stated.
“This standard, in my view, effectuates the paramount goal of the consumer protection law – to eliminate unfairness and deception in consumer transactions – by proscribing, in addition to the intentional deception of consumers, conduct which vendors should recognize is likely to deceive reasonable consumers. However, in contrast to the strict liability standard embraced by the majority, this negligence standard also protects honest businesspeople from incurring unforeseen penalties for statements or acts that no consumer would have been confused or misled by.”
The American Tort Reform Association believes that the ruling not requiring proving an intent to deceive will lead to a proliferation of consumer protection litigation statewide.
“This decision will open the floodgates in Pennsylvania for an explosion of consumer lawsuits based on little more than buyer’s remorse,” American Tort Reform Association (ATRA) President Tiger Joyce said.
“This interpretation of strict liability will lead to more litigation but do nothing to help consumers who have suffered actual injuries. This, in turn, will lead to a rise in litigation costs, which will ultimately be passed on to all consumers. In the end, the Court’s decision will significantly harm consumers, businesses, and the Commonwealth.”
In an amicus brief filed with the state Supreme Court, ATRA advocated that the statute did in fact require that a plaintiff prove an intent to deceive on the part of a defendant and that the legislature did not intend that the consumer protection law establish strict liability. But conversely, the Court concluded that the consumer protection law should be “construed broadly to prevent unscrupulous business practices.”
Supreme Court of Pennsylvania case 29 WAP 2019
Superior Court of Pennsylvania case 1504 WDA 2017
Allegheny County Court of Common Pleas case GD-01-006611
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com