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ARTIE’S AUTO BODY, INC., ET

AL. v. THE HARTFORD FIRE

INSURANCE COMPANY

(SC 19219)

Rogers, C. J., and Palmer, Zarella, Eveleigh, McDonald,

Espinosa and Robinson, Js.

Argued January 13—officially released July 21, 2015

Jonathan M. Freiman, with whom were Aaron S.

Bayer and Benjamin M. Daniels, and, on the brief,

Robert M. Langer and Carolina D. Ventura, for the

appellant (defendant).

David A. Slossberg, with whom were David L. Belt

and, on the brief, Nicole H. Najam, Alan Neigher and

Ronald J. Aranoff, pro hac vice, for the appellees

(plaintiffs).

George Jepsen, attorney general, Gregory T. D’Auria,

solicitor general, and Jane R. Rosenberg, Phillip Rosario, Brendan T. Flynn and Jonathan J. Blake, assistant

attorneys general, filed a brief for the state of Connecticut as amicus curiae.

Michael D. Shumsky filed a brief for Timothy J. Muris

and J. Howard Beales as amici curiae.
Opinion

PALMER, J. The plaintiffs, Artie’s Auto Body, Inc.,

A & R Body Specialty, Skrip’s Auto Body, and the Auto

Body Association of Connecticut (association),1

brought this class action against the defendant, The

Hartford Fire Insurance Company, on behalf of more

than 1000 independent automobile (auto) body repair

shops in Connecticut. They principally claimed that the

defendant had violated the Connecticut Unfair Trade

Practices Act (CUTPA), General Statutes § 42-110a et

seq., by requiring its staff motor vehicle physical damage appraisers (appraisers), who must be licensed in

accordance with General Statutes § 38a-790 (a),2

to use

the hourly labor rates agreed on by the defendant and

the plaintiff auto body shops, instead of rates that more

accurately reflect the actual value of those services,

when appraising auto body damage sustained by the

defendant’s insureds. According to the plaintiffs, the

defendant’s conduct constituted an unfair trade practice because it offended the public policy found in § 38a790-8 of the Regulations of Connecticut State Agencies,3

which requires appraisers to ‘‘approach the appraisal

of damaged property without prejudice against, or

favoritism toward, any party involved in order to make

fair and impartial appraisals . . . .’’ Regs., Conn. State

Agencies § 38a-790-8 (2). Following a trial, the jury

found in favor of the plaintiffs and awarded them

$14,765,556.27 in compensatory damages.4 Thereafter,

the trial court awarded the plaintiffs $20,000,000 in punitive damages and rendered judgment for the plaintiffs

in the total amount of $34,765,556.27. On appeal,5

the

defendant claims, inter alia, that the trial court improperly denied its motion for a directed verdict and its

motion to set aside the verdict and for judgment notwithstanding the verdict because § 38a-790-8 does not

prohibit the insurance practices at issue in this case.

We agree and, accordingly, reverse the judgment of the

trial court.

The following facts, which the jury reasonably could

have found, and procedural history are relevant to our

resolution of this appeal. The plaintiffs commenced this

action in 2003, claiming, inter alia, that the defendant

had engaged in an unfair trade practice by requiring

its appraisers to use artificially low labor rates when

estimating the cost of auto body repairs. The evidence

presented at trial established that the appraisers, when

negotiating with independent auto body repair shops

on behalf of the defendant, used the hourly labor rate

that the defendant paid to shops that were part of the

defendant’s direct repair program (DRP). Under this

program, in return for a steady stream of customer

referrals, auto body repair shops contractually agreed

to perform repairs at an hourly labor rate set by the

defendant. In 2000, that rate was approximately $41 per

hour. In 2009, at the time of trial, the rate had increased
to approximately $46 per hour. The DRP hourly labor

rate was significantly lower than the hourly labor rates

that were posted in the plaintiff auto body shops6 but

were equal to the rates that other insurance companies

in Connecticut paid for auto body repair services. At

the time of trial, the plaintiffs’ posted labor rates were

in the range of $65 to $78 per hour. It also is undisputed

that, with respect to the auto body repair services purchased in this state, almost all of those services are

purchased by insurance companies.7 Thus, as the plaintiff auto body shops conceded at trial, because virtually

all of their business is insurance related, it is exceedingly rare for them to be paid their posted hourly labor

rates. For example, one shop owner testified that he

could recall only one customer ever paying him the

posted hourly rate. The plaintiff auto body shops

adduced testimony that their posted rates nevertheless

reflect the true value of theirlabor, and what they would

receive if the defendant and other insurance companies

were not, by virtue of their market power, suppressing

the hourly labor rate. Testimony presented by the plaintiff auto body shops also established that they agree to

work for the DRP rate because they know that, if they

do not, their competitors will, and they cannot afford

to lose the business. As one shop owner put it, ‘‘[i]f I

said, I’m not going to do it, that car would just go down

the street . . . .’’ Another owner testified that, if he

started demanding that customers pay him the posted

rate, he ‘‘[would] have an empty shop.’’

The evidence at trial further established that the

hourly labor rate for auto mechanical service work in

Connecticut, the vast majority of which is purchased

by consumers rather than by insurance companies, is

almost twice that of auto body repair work, even though

both types of repairs require comparable training, skills

and equipment. Mike O’Mara, a licensed appraiser who

worked for the defendant for twenty years, testified

that, if the defendant had allowed him to do so, he

would have used a higher hourly labor rate when estimating the cost of auto body repairs because he

believed the prevailing rate was too low, a state of

affairs that he attributed to the ability of the insurance

companies to effectively dictate that rate. O’Mara testified that, if he and an auto body repair shop could not

agree on a labor rate, he would call his supervisor, who

would either authorize an increase or tell the shop that

the insured would have the repair done elsewhere.

In 2002, O’Mara and three of his colleagues wrote a

letter to the attorney general, expressing concern that

they could be exposing themselves to liability by using

the prevailing labor rate in their negotiations with independent auto body repair shops because, in their view,

§ 38a-790-8 required them to write estimates that were

fair and reasonable, and they did not believe that the

prevailing rate was fair and reasonable.8 O’Mara subsequently met with representatives of the state Insurance
Department (department), which assured him that he

could continue using the prevailing rate when negotiating on behalf of the defendant. At the time of trial,

O’Mara, who by then was working as an appraiser for

one of the plaintiff auto body shops, testified that,

although he no longer worked for the defendant, he

still used DRP labor rates when estimating the cost of

auto body repairs and did not believe that he was violating § 38a-790-8 in doing so.

At the close of evidence, the trial court instructed the

jury that, to prevail on their CUTPA claim, the plaintiffs

were required to prove that the defendant’s practices

violated at least one prong of the so-called ‘‘cigarette

rule,’’ which is the test that this court has adopted for

determining liability under CUTPA.9 Specifically, the

court stated: ‘‘Certain guidelines have been established

as to what constitutes an unfair trade practice under

CUTPA. The plaintiffs must establish that one or more

of the defendant’s alleged practices [meet] at least one

of the three following criteria: (1) it offends public policy, as it has been established by statutes, the common

law or other established concept of unfairness; or (2)

it is immoral, unethical, oppressive or unscrupulous;

or(3)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 to a

lesser extent it meets all three.’’

With respect to the first criterion, the court explained

that the plaintiffs were relying on three indicia of public

policy to support their claim that the defendant’s labor

rate practices violated CUTPA. The first such policy,

the court explained, is found in General Statutes § 38a816, a provision of the Connecticut Unfair Insurance

Practices Act (CUIPA), General Statutes § 38a-815 et

seq., that includes within the scope of unfair insurance

claim settlement practices, ‘‘not attempting in good

faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear . . . .’’ General Statutes § 38a-816 (6) (F).

The second policy, the court stated, is found in § 38a790-8, the code of ethics for motor vehicle physical

damage appraisers, which requires an appraiser to

‘‘approach the appraisal of damaged property without

prejudice against, or favoritism toward, any party

involved in order to make fair and impartial appraisals,’’

to ‘‘disregard any efforts on the part of others to influence his judgment in the interest of the parties

involved,’’ and to ‘‘prepare an independent appraisal of

damage.’’ Regs., Conn. State Agencies § 38a-790-8 (2)

through (4). The third policy, the court stated, is found

in certain guidelines that the department has issued to

assist insurance companies in determining appropriate

hourly labor rates to pay independent auto body repair

shops. See Insurance Department, Insurance Depart-
ment Guidelines Concerning Labor Rates (January 29,

2007), available at http://www.ct.gov/cid/lib/cid/

GuidelinesJan292007.pdf (last visited July 8, 2015). The

court also explained, however, that the introduction to

those guidelines, entitled ‘‘Scope and Methodology,’’

provides: ‘‘ ‘To be clear, the [d]epartment has no statutory or regulatory authority to regulate [l]abor [r]ates.

These guidelines are being issued in response to

requests to advise insurers and auto body repair shops

on what the [d]epartment considers to be the ‘‘best

practices’’ with regard to the setting of [l]abor [r]ates.’ ’’

The court further explained that the guidelines then

identify specific factors that the department ‘‘encourages’’ insurance companies to consider when negotiating hourly labor rates, including, inter alia, the cost of

doing business in the geographic area where a shop is

located, whether the shop is an independent auto body

repair shop or a DRP shop, and the prevailing labor

rates in the geographic area where the shop is located.

In the course of its deliberations, the jury submitted

two questions to the court concerning § 38a-790-8. First,

the jury inquired whether § 38a-790-8 governs an

appraiser’s determination of hourly labor rates because

the regulation provides that an appraiser must approach

the appraisal of damaged property without prejudice

against, or favoritism toward, any party, but does not

say anything about labor rates. Second, the jury asked

whether the words ‘‘party involved’’ and ‘‘parties,’’ as

used in the regulation, refer to insureds and insurers

only, or to auto body repair shops, as well. In response

to these questions, the trial court instructed the jury in

relevant part as follows: ‘‘Section 38a-790-8 is a regulation of the [department] promulgated by the [Insurance

Commissioner (commissioner)]. All administrative regulations must be authorized by enabling legislation. In

this case, the legislat[ure] has required that any person

acting as an appraiser for motor vehicle physical damage claims on behalf of any insurance company or firm

or corporation engaged in the adjustment or appraisal

of motor vehicle claims must be licensed every two

years by the . . . commissioner. That statute, which

is § 38a-790 . . . then provides [that] the commissioner

may adoptreasonable regulations concerning standards

for qualifications, suspension or revocation of such

licenses and the methods by which licensees shall conduct their business. . . .

‘‘The regulation you have asked about, § 38a-790-8,

is part of a series of regulations entitled ‘Conduct of

Motor Vehicle Physical Damage Appraisers.’ And § 38a790-8 is the code of ethics, which specifies certain

requirements for the conduct of appraisers. . . . It is

not a code of conduct for insurance companies generally [or] for auto body repair shops. . . .

‘‘It is, therefore, the conduct of the licensed appraiser

that is regulated. This regulation expresses a public
policy that licensed appraisers must conduct fair and

honorable dealings without prejudice against or favoritism toward any party involved in the appraisal process

and must disregard any efforts on the part of others to

influence [their] judgment. . . .

‘‘My answer [to your first question] is an appraiser’s

responsibility to appraise is not limited solely to damaged property. He or she must assess the extent of

physical damage and also appraise the cost of repairing

that damage, which necessarily involves estimating the

cost of replacement of parts, the number of hours

needed to complete the repairs, and a reasonable hourly

rate to be applied to those hours.

‘‘Now, you have . . . a separate exhibit from the one

you asked about, a statement from the commissioner

. . . [in which] he says, to be clear, ‘the department

has no statutory or regulatory authority to regulate

labor rates.’ An insurance company such as [the defendant], therefore, has a right to state a labor rate [that]

it is willing to pay to repair damage to the automobile[s]

of its insureds or other claimants. The issue you must

determine is whether or not, or to what extent, the

public policy of the regulation . . . is offended by [the

defendant’s appraisers] . . . . In that regard, you can

consider whether or not any conduct of [the defendant]

has interfered with the independence of the . . .

appraisers or has caused prejudice against orfavoritism

toward any party involved in the appraisal procedure,

or whether or not any . . . appraiser has disregarded

any efforts on the part of others, which . . . could

include the efforts of an insurance company such as

[the defendant], to influence his or her judgment in the

interest of the parties involved.

‘‘If you . . . do find that appraiser independence has

been interfered with or has caused favoritism toward or

prejudice against any party involved orthat an appraiser

has disregarded any efforts by any party such as but

not limited to an insurance company to influence his

or her judgment, then you may find on that basis that

the public policy of . . . § 38a-790-8 has been offended.

‘‘Now, I just made reference several times . . . to

the term ‘parties involved,’ which brings me to your

[next question, regarding the meaning of that term].

. . . My answer is [as] follows. The regulatory scheme

of [§§ 38a-790-1 through 38a-790-8 of the Regulations

of Connecticut State Agencies]—not just § [38a-790-8]

. . . but the whole regulatory scheme—is broad. It

implicates the appraisers’ dealings with insureds, with

other drivers or claimants involved in accidents with

the insureds, insurance companies and repair shops.

All [of] the foregoing would be included within the

ambit of the term ‘parties involved.’ ’’

The defendant took exception to the trial court’s

instruction that § 38a-790-8 applies to an appraiser’s
determination of hourly labor rates and that the term

‘‘party,’’ as used in the regulation, encompasses auto

body repair shops. The defendant contended that the

regulation was not concerned with the determination

of labor rates because the agency that promulgated it

has no statutory or regulatory authority with respect

to such rates. The defendant further maintained that,

for purposes of applying § 38a-790-8, the term ‘‘parties

involved’’ can refer only to the insurer and the insured

because an appraiser could not possibly owe a duty of

impartiality or reasonableness to the very shops with

whom he is negotiating on behalf of an employer.

The jury returned a verdict in favor of the plaintiffs,

stating in a response to interrogatories that the plaintiffs

had proven by a preponderance of the evidence that

the defendant’s hourly labor rate practices offend the

public policy embodied in § 38a-790-8. The jury, however, expressly rejected the plaintiffs’ claim that the

defendant’s conduct offended the public policy embodied in CUIPA or the department’s guidelines for

determining hourly labor rates. The jury also rejected

the plaintiffs’ claim that the defendant’s labor rate practices satisfied the second and third prongs of the cigarette rule. Specifically, the jury found that the defendant’s hourly rate practices were not immoral, unethical, unscrupulous or oppressive, and did not cause substantial injury to the plaintiffs that was not outweighed

by the countervailing benefits to consumers and competition.

Thereafter, the defendant filed a motion to set aside

the verdict and for judgment notwithstanding the verdict, arguing, inter alia, that liability under CUTPA may

not be predicated on a public policy reflected in a regulation or in the regulation’s penumbra that does not

apply to insurance companies and does not proscribe

the conduct at issue. The defendant also asserted that

the plaintiffs had failed to meet their burden under the

cigarette rule because, under that test, a trade practice

is deemed to be unfair based on the degree to which

it meets one prong of the rule or because, to a lesser

extent, it meets all three, and the plaintiffs in the present

case had failed to establish that the defendant’s conduct

violated any prong of the test.10 The trial court rejected

these arguments and thus denied the defendant’s

motion.

The defendant subsequently filed a motion for reconsideration and for sanctions based on the plaintiffs’

failure to disclose two letters that the commissioner

previously had written to the attorney general,

explaining the scope and meaning of § 38a-790-8. The

defendant argued that the letters expressly addressed

the pivotal issue in this case, as reflected in the jury’s

two questions during deliberations, and made clearthat,

as a matter of law, § 38a-790-8 does not support the

plaintiffs’ CUTPA claim.
With respect to the two letters, the record reveals

that, while this case was pending in the trial court, the

association contacted the attorney general and asked

him to bring a parallel CUTPA enforcement action

against the defendant based on the defendant’s purported violation of § 38a-790-8. See General Statutes

§ 42-110m (providing for CUTPA enforcement actions

by attorney general). The attorney general, in turn,

wrote to the commissioner, requesting authorization to

commence legal action against the defendant and any

other insurers ‘‘whose appraisers have [a] . . . bias

when determining the cost of repairs’’ and who ‘‘are

failing to negotiate reasonable and fair prices for [such]

repairs.’’ Letter from Richard Blumenthal, Attorney

General, to Thomas R. Sullivan, Insurance Commissioner (August 27, 2007) p. 1. By letter dated September

27, 2007, the commissioner declined the attorney general’s request, explaining that § 38a-790-8, and its enabling

statute, § 38a-790, did not support such an action. Specifically, the commissioner stated: ‘‘In orderto construe

the statute and the regulation together, one must be

cognizant of the scope of the motor vehicle physical

damage appraiser’s license. The appraiser does not have

any authority, pursuant to his license, to establish a

labor rate for auto body repair work. Appraisers do not

have particular expertise in the economics and development of labor rates, and those matters are not part of

their licensing qualification. Their expertise is limited

to an assessment of the auto parts in need of repair

and the number of hours to do the auto body repair

job. The rate at which a body shop is to be paid is

handled by negotiation between the insurer and the

body shop. The [c]ode of [e]thics as described . . .

must be analyzed consistent with the work the motor

vehicle physical damage appraiser is licensed to perform and consistent with its enabling legislation that

specifically contemplates an appraiser operating on

behalf of an insurance company.’’ Letter from Thomas

R. Sullivan, Insurance Commissioner, to Richard

Blumenthal, Attorney General (September 27, 2007)

p. 5.

On February 25, 2008, the commissioner sent a second letter to the attorney general, in which he stated

in relevant part: ‘‘Please accept the following in

response to your request for additional information on

the manner in which steering complaints are investigated and the role of the appraiser in disputes concerning auto body physical damage. . . .

* * *

‘‘As the [d]epartment has said in the past, it does not

have any authority or expertise to determine the rate

at which insurance companies (or the appraisers

employed by them) should be paying auto body shops.

. . . We are not and should not be the ultimate arbiter

of what a ‘fair’ labor rate should be in a specific
instance. . . .

‘‘The rate an auto body shop is paid by an insurer

can be determined in two ways: (1) through negotiation

between the appraiser (who is lawfully allowed to work

for an insurer pursuant to . . . § 38a-790 and [the]

accompanying regulations) and the body shop, and (2)

by contract entered into by an insurer and an auto body

shop, commonly referred to as a direct repair program

or DRP. Determining the appropriate labor rate to be

paid under a contractual arrangement can be done with

relative ease. On the other hand, the negotiated labor

rate, by its very nature, tends to be more contentious.

As you know, a negotiation does not necessarily mean

that an appraiser and an auto body shop split the difference between the shop’s posted rate and the rate offered

by the insurer.

‘‘When appraisers are determining the labor rate they

will offer to the auto body shop during a negotiation,

it is my understanding that they consider the labor rate

paid in the marketplace in general, including those paid

to DRPs with whom the insurer has a contractual relationship. This would appear to explain why the labor

rate is relatively consistent [statewide].

‘‘I would also like to point out at this time that the

[d]epartment does not believe there is anything

improper about DRP contracts. We believe that they

are legally permitted based on the informal opinion we

received from your office related to auto glass repair

networks and case law throughout the nation . . . . In

fact, courts have sanctioned [DRP] shop contractual

agreements as being [procompetitive] and not [in violation] of antitrust laws. Such [DRP] agreements have

the [procompetitive] effect of keeping auto repair costs

as low as possible for consumers because insurers can

charge . . . lower insurance rates and premiums than

they might otherwise be allowed to charge if they were

required to pay the shop’s posted labor rate. I do not

believe that it is prudent policy to sacrifice the interests

of the general public in Connecticut, which benefits

from one of the healthiest auto insurance markets

nationwide, for the interests of a handful of auto body

shops [that] are finding it difficult to compete with

DRPs, particularly when some have made their own

business decision to not become a DRP.’’ Letter from

Thomas R. Sullivan, Insurance Commissioner, to Richard Blumenthal, Attorney General (February 25, 2008)

pp. 1–2.

The commissioner further observed that, in his opinion, ‘‘a small, but vocal, number of auto body repair

shop owners are trying to apply pressure to insurers

to pay their posted labor rate, much to the detriment

of [the insurers’] policyholders. Requiring companies

to pay a body shop’s posted labor rate would not only

be outside the [d]epartment’s jurisdiction and bad for

consumers, but could also implicate the [antitrust] stat-
utes, including the prohibitions on price fixing. . . .

‘‘The [association] has also pointed to the [d]epartment’s regulation governing the code of conduct for

[appraisers] as justification for the payment of a higher

labor rate by insurers. It is the [d]epartment’s position

that this regulation is intended to protect consumers

from unscrupulous appraisers seeking to charge them

more for auto body repair work than is economically

justified in an arms-length transaction. A handful of

auto body repair shop owners, however, have sought

to use this regulation to demand that insurers pay [their]

posted labor rate[s]. In effect, these few auto body

shops would like the [d]epartment to use this regulation

as a ‘sword’ to protect their own economic interests in

a competitive industry rather than as a ‘shield’ for the

protection of insureds. We do not believe that taking

such action would be in the best interest of the insurance buying public and decline to enforce it in the

manner suggested by [the association].’’ (Emphasis

omitted.) Id., pp. 2–3.

In its memorandum of decision on the defendant’s

motion for reconsideration and for sanctions, the trial

court concluded that the plaintiffs had committed a

discovery violation by virtue of their failure to disclose

the commissioner’s September 27, 2007 letter (2007 letter). With respect to that violation, the court found that

the plaintiffs had knowledge of the 2007 letter but not

the commissioner’s February 25, 2008 letter, and that

they had violated their continuing duty of disclosure

by failing to bring the 2007 letter to the defendant’s

attention. With respect to the motion for reconsideration, the court treated it as a petition for a new trial

based on newly discovered evidence. The court

explained that, in order to prevail on such a petition,

the defendant must prove that the 2007 letter (1) could

not have been discovered sooner in the exercise of due

diligence, (2) was material to the issues at trial, (3) was

not cumulative of other evidence, and (4) was likely to

produce a different result in the event of a new trial.

The court then concluded that the defendant could not

satisfy the first and fourth prongs of this test. In particular, the court determined that the 2007 letter was not

newly discovered because the defendant could have

obtained it in the exercise of due diligence by filing a

Freedom of Information Act request with the department or the Office of the Attorney General, requesting

the disclosure of any documents relating to § 38a-790-8.

The court also concluded that the 2007 letter would

not have led to a different result at trial because there

was nothing in it that would have caused the court to

instruct the jury any differently with respect to the law.

The court explained: ‘‘The jury was well aware that the

[d]epartment . . . has no statutory or regulatory

authority to regulate hourly labor rates at body

shops. . . .
‘‘It must be [noted] that this is not a regulatory proceeding [in which] someone is accused of violating the

regulation. If that were the case, [the defendant] could

not be the respondent. The regulation does not directly

control the conduct of an insurance company. It regulates the conduct of licensed appraisers. . . . This case

is a claim of an unfair trade practice by an insurance

company, which is the employer of licensed appraisers.

By established case law—the cigarette rule—an unfair

trade practice can be found when conduct of the defendant offends—not necessarily violates—the public policy expressed [in] a statute or regulation or other

established concept of unfairness. An offense merely

to the penumbra of that public policy can be sufficient.

The public policy or the penumbra of the public policy

of the code of ethics regulation is deeply rooted in the

appraiser’s independence from outside influence—even

from the company that employs the appraiser. He or

she must approach the appraisal of damaged property

without . . . favoritism toward any party involved

. . . and disregard any efforts on the part of others to

influence his [or her] judgment in the interest of the

parties involved. In this larger sense of offense to the

public policy or its penumbra, any party who interferes

with the appraiser’s independence could be committing

an unfair trade practice in violation of CUTPA. In that

sense, labor rates are involved, and body shops with

whom appraisers negotiate labor rates are interested

parties. Despite what [the commissioner] says in his

letter, appraisers have to determine labor rates. There

is no other way the appraiser could get to the bottom

line dollar amount of the appraisal. If the [2007] letter

means to say that appraisers have nothing at all to do

with labor rates, the court would have disregarded the

letter on that point. . . .

‘‘So, even though the [d]epartment . . . cannot regulate labor rates in the sense that it cannot take action

against an appraiser based on the amount of the labor

rate [that] he has determined to use, it is undisputed

that the appraiser must make that determination of a

labor rate [that] reflects the cost of repairing the car,

and, in making that determination, [t]he code of ethics

requires him to do so fairly and honestly without outside

influence from anyone. That policy is offended by anyone who interferes or attempts to interfere with that

independence. The court therefore feels that there was

no error in the answers given to the jury questions and

would stay with those answers in any future proceeding,

and would not change its ruling [on the motion to set

aside the verdict and for judgment notwithstanding

the verdict].’’11

Thereafter, the trial court granted the plaintiffs’

motion for a permanent injunction, precluding the

defendant from interfering with the independent judgment of the defendant’s appraisers and from taking
or threatening to take any adverse employment action

against them on the basis of their determination of

hourly labor rates.12 The trial court also declined to

modify the jury award of $14,765,556.27 in compensatory damages or the award of punitive damages in the

amount of $20,000,000.

On appeal, the defendant claims that the trial court

improperly failed to acknowledge that CUTPA liability

for insurance related business practices may not be

predicated on conduct that does not violate CUIPA, as

this court recently confirmed in State v. Acordia, Inc.,

310 Conn. 1, 33–35, 37–38, 73 A.3d 711 (2013) (Acordia).

The defendant further claims that, even if Acordia does

not bar the plaintiffs’ CUTPA claim as a matter of law,

that claim still must fail because the defendant’s labor

rate practices do not violate § 38a-790-8. To the contrary, the defendant argues, the statutory and regulatory

scheme of which § 38a-790-8 is a part contemplates and

condones the defendant’s labor rate practices, and that

scheme consistently has been interpreted by the agency

charged with its enforcement, namely, the department,

as permitting those practices.13 The plaintiffs contend

that, although the conduct at issue does not violate

CUIPA, Acordia held out the possibility that insurance

related conduct that does not violate CUIPA may still

violate CUTPA if it offends some other law regulating

the insurance industry, and the trial court properly

determined that § 38a-790-8 is such a provision. We

agree with the defendant that neither its conduct nor

the conduct of its appraisers offends § 38a-790-8 or any

other public policy of this state.

The following legal principles guide our analysis of

the defendant’s claim. ‘‘CUTPA is, on its face, a remedial

statute that broadly prohibits unfair methods of competition and unfair or deceptive acts or practices in the

conduct of any trade or commerce. . . . [CUTPA] provides for more robust remedies than those available

under analogous common-law causes of action, including punitive damages . . . and attorney’s fees and

costs, and, in addition to damages or in lieu of damages,

injunctive or other equitable relief. . . . To give effect

to its provisions, [General Statutes] § 42-110g (a) of

[CUTPA] establishes a private cause of action, available

to [a]ny person who suffers 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 [General Statutes §] 42-110b . . . .’’ (Citations

omitted; footnote omitted; internal quotation marks

omitted.) Marinos v. Poirot, 308 Conn. 706, 712-13, 66

A.3d 860 (2013). CUIPA, which specifically prohibits

unfair business practices in the insurance industry and

defines what constitutes such practices in that industry;

see General Statutes § 38a-816; does not authorize a

private right of action but, instead, empowers the commissioner to enforce its provisions through administrative action. See General Statutes §§ 38a-817 and 38a-
818. ‘‘In Mead v. Burns, 199 Conn. 651, 663, 509 A.2d 11

(1986), [however] this court determined that individuals

may bring an action under CUTPA for violations of

CUIPA. In order to sustain a CUIPA cause of action

under CUTPA, a plaintiff must allege conduct that is

proscribed by CUIPA.’’ Nazami v. Patrons Mutual Ins.

Co., 280 Conn. 619, 625, 910 A.2d 209 (2006). Thus,

under Mead, ‘‘if a plaintiff brings a claim pursuant to

CUIPA alleging an unfair insurance practice, and the

plaintiff further claims that the CUIPA violation constituted a CUTPA violation, the failure of the CUIPA claim

is fatal to the CUTPA claim.’’ State v. Acordia, Inc.,

supra, 310 Conn. 31.

In Acordia, after observing that Mead had ‘‘strongly

suggested’’ but not expressly resolved whether the ‘‘legislative determinations as to unfair insurance practices

embodied in CUIPA are the exclusive and comprehensive source of public policy in this area’’; id., 35; we

concluded that, as a general rule, a plaintiff cannot

bring a CUTPA claim alleging an unfair insurance practice unless the practice violates CUIPA.14 Id., 31, 35–37.

‘‘Because CUIPA provides the exclusive and comprehensive source of public policy with respect to general

insurance practices, we conclude[d] that, unless an

insurance related practice violates CUIPA or, arguably,

some other statute regulating a specific type of insurance related conduct, it cannot be found to violate any

public policy and, therefore, it cannot be found to violate CUTPA.’’ Id. 37.

On appeal, the plaintiffs contend that, even though

the defendant’s labor rate practices are not prohibited

by CUIPA, § 38a-790-8 provides a proper basis for liability under CUTPA. More specifically, the plaintiffs argue

that the holding in Acordia ‘‘should be extended to

reach the conduct complained of [in the present case],

which reflects a clear violation of the deeply-rooted

public policy mandating fair and unbiased appraisals

by physical damage appraisers.’’

Although § 38a-790-8 reasonably may be characterized as regulating insurance related conduct insofar as

it prescribes a standard of conduct for appraisers who

estimate the cost to insurers of auto body repairs, we

fully agree with the defendant that that provision simply

does not purport to regulate the conduct at issue in the

present case. Cf. Mead v. Burns, supra, 199 Conn. 665

(‘‘[a]lthough . . . CUTPA may authorize a cause of

action that builds [on] the public policy embodied in

specific statutory provisions, such a CUTPA claim must

be consistent with the regulatory principles established

by the underlying statutes’’). To the contrary, as the

trial court instructed the jury, insurance companies in

this state have the right to negotiate the hourly labor

rate that they are willing to pay for auto body repairs

and to refuse to give their business to an auto body

repair shop with which they are unable to agree on
such a rate. They also are entitled, under § 38a-790 (a);

see footnote 2 of this opinion; and its accompanying

regulations, to employ appraisers to negotiate the labor

rate for such repairs on their behalf. Notably, the plaintiffs do not claim otherwise. In such circumstances, it

would be an anomalous result, to say the least, if we

were to endorse the position of the plaintiffs that every

time an insurance company exercises its right to negotiate with an auto body repair shop for an hourly labor

rate, and then proceeds to have its appraisers estimate

the cost of repairing its insureds’ vehicles on the basis

of that agreed on rate, it is somehow committing an

unfair trade practice under CUTPA. As the commissioner cogently explained in his 2007 and 2008 letters to

the attorney general on the subject, there is a perfectly

logical and reasonable way to reconcile the defendant’s

right to negotiate labor costs with the appraiser’s ethical

duty to ‘‘disregard any efforts on the part of others to

influence his judgment in the interest of the parties

involved’’; Regs., Conn. State Agencies § 38a-790-8 (3);

and that is to recognize that the appraiser’s role is

limited to an assessment of the auto parts in need of

repair and the number of hours to complete the auto

body repair job, whereas the rate that an auto body

repair shop is to be paid is the subject of negotiation

between the insurer and the shop, with the appraiser

sometimes acting as a negotiator on behalf of his or

her employer, the insurer. There is nothing about this

division of authority that is suspect or unfair, or that

otherwise contravenes the requirement of § 38a-790-8

that appraisers conduct themselves in an upstanding

and independent manner.

The plaintiffs make no effort to defend the trial

court’s contrary understanding of the relevant regulatory scheme—a primary focus of which is to protect

the consumer of auto body repair services—except to

assert, in conclusory fashion, that the court’s instructions to the jury—in particular, the instructions suggesting that it may be unfair or unreasonable for an

appraiser to use a predetermined or negotiated hourly

rate in arriving at an estimate of the cost of auto body

repairs—represent ‘‘the [o]nly [r]easonable [i]nterpretation’’ of that scheme. In support of their contention,

the plaintiffs also assert that the trial court properly

concluded that the opinions expressed in the commissioner’s letters were entitled to no deference because

they were not promulgated in accordance with the

appropriate rule-making procedures, they bear no indication of being an official agency interpretation of § 38a790-8, and they have never been subject to judicial

review. The plaintiffs, however, do not explain why,

even if the opinions that the commissioner espouses

in those letters are not entitled to any deference by this

court, the interpretation of § 38a-790-8 set forth therein

is in any way unreasonable, unworkable or unjust. For

the reasons outlined in the commissioner’s letters, and
as we previously have indicated, quite the opposite is

true: it would be patently unreasonable, and result in

an inherently contradictory regulatory scheme, for us

to conclude both that the defendant is lawfully permitted to determine the hourly labor rate that it is willing

to pay for auto body repairs and that the defendant’s

appraisers are ethically required to disregard that determination when negotiating on the defendant’s behalf.

See, e.g., Barrett v. Montesano, 269 Conn. 787, 797, 849

A.2d 839 (2004) (‘‘we interpret statutes to avoid bizarre

or nonsensical results’’ [internal quotation marks omitted]). Indeed, we are unable to discern why appraisers,

when negotiating for the cost of auto repairs on behalf

of their employers, would ever owe a duty of impartiality to the auto body repair shops with whom they are

negotiating. Under our regulatory provisions, those

businesses are deemed to be capable of representing

their own interests, and certainly are under no obligation to accept insurance related work that is not sufficiently remunerative. We therefore agree with the

defendant that the trial court incorrectly concluded that

§ 38a-790-8 supports the plaintiffs’ CUTPA claim alleging unfair labor rate practices.15 In light of that conclusion, the plaintiffs’ CUTPA claim cannot stand, and the

defendant is therefore entitled to judgment as a matter

of law.16

The judgment is reversed and the case is remanded

with direction to render judgment for the defendant.

In this opinion the other justices concurred.

1 Artie’s Auto Body, Inc., A & R Body Specialty, and Skrip’s Auto Body

are businesses licensed to perform auto body repairs in Connecticut. We

refer to these plaintiffs collectively as the plaintiff auto body shops. The

association is a not-for-profit association comprised of more than 100 automobile body repair shops in Connecticut dedicated to the advancement of

the automobile body repair industry.

2 General Statutes § 38a-790 (a) provides in relevant part: ‘‘No person shall

act as an appraiser for motor vehicle physical damage claims on behalf of

any insurance company or firm or corporation engaged in the adjustment

or appraisal of motor vehicle claims unless such person has first secured

a license from the Insurance Commissioner. . . . The commissioner may

adopt reasonable regulations concerning standards for qualification, suspension or revocation of such licenses and the methods by which licensees

shall conduct their business.’’

3 Section 38a-790-8 of the Regulations of Connecticut State Agencies provides: ‘‘Every appraiser shall: (1) Conduct himself in such a manner as to

inspire public confidence by fair and honorable dealings; (2) approach the

appraisal of damaged property without prejudice against, or favoritism

toward, any party involved in order to make fair and impartial appraisals;

(3) disregard any efforts on the part of others to influence his judgment in

the interest of the parties involved; (4) prepare an independent appraisal

of damage. No appraiser shall: (A) Receive directly or indirectly any gratuity

or other consideration in connection with his appraisal services from any

person except his employer or, if self-employed, his customer; (B) traffic

in automobile salvage if such salvage is obtained in any way as a result of

appraisal services rendered by him.’’

4 The plaintiffs also alleged that the defendant improperly had steered its

insureds to a preferred provider network of auto body repair shops that

charged labor rates well below reasonable market value, in violation of

General Statutes § 38a-354 (b) (1), which prohibits insurance companies

from ‘‘requir[ing] any insured to use a specific person for the provision of

automobile physical damage repairs . . . .’’ The jury found in favor of the

defendant on this claim, and the plaintiffs have not challenged that finding

on appeal.
5 The defendant appealed to the Appellate Court, and we transferred the

appeal to this court pursuant to General Statutes § 51-199 (c) and Practice

Book § 65-1.

6 Auto body repair shops in Connecticut are required by law to post their

hourly labor rate in a visible location on their premises. See General Statutes

§ 14-65i (b).

7 Robert Skrip, the owner of Skrip’s Auto Body, acknowledged at trial

that ‘‘almost all of [his] business comes from insurance companies . . . .’’

Harold Platz, the owner of Artie’s Auto Body, Inc., testified that his business

is ‘‘99 percent insurance.’’ Michael Walsh, the owner of T & J Auto Body

of East Hartford, also testified that ‘‘99 percent of [his] work, maybe more,

is . . . insurance work.’’

8 The letter provided in relevant part: ‘‘Considering the widening gap

between [auto body] repair rates and mechanical service rates, we [cannot]

honestly say that we believe the current prevailing rate of [$40 to $42 per]

hour is fair. In fact, we believe that [it] is very low due to [i]nsurer influence,

and not due to market influence.

‘‘The problem is obvious. If we were to write estimates at a rate we believe

to be fair and reasonable, as we believe the law mandates, we would be

terminated.’’ (Internal quotation marks omitted.) Letter from Timothy Davis

et al. to Richard Blumenthal, Attorney General (February 12, 2002) p. 1.

9 General Statutes § 42-110b (a) provides: ‘‘No person shall engage in unfair

methods of competition and unfair or deceptive acts or practices in the

conduct of any trade or commerce.’’

‘‘[I]n determining whether a practice violates CUTPA we have adopted

the criteria set out in the cigarette rule by the [F]ederal [T]rade [C]omission

for determining when a practice is unfair: (1) [W]hetherthe 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 businesspersons]. . . .

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.’’ (Internal quotation marks omitted.) Harris v. Bradley Memorial Hospital & Health Center,

Inc., 296 Conn. 315, 350–51, 994 A.2d 153 (2010).

10 In addition, the defendant maintained that the undisputed evidence also

demonstrated that its labor rate practices, which keep such rates relatively

low, actually benefited consumers because they make it possible for it and

other insurance companies to charge lower premiums.

11 As a sanction forfailing to disclose the 2007 letter, the trial court ordered

the association to reimburse the defendant for one half of its reasonable

attorney’s fees and costs incurred in connection with the filing and presentation of its motion for reconsideration and for sanctions.

12 The trial court subsequently granted the defendant’s motion for a stay

of the permanent injunction.

13 On appeal, the defendant also claims that it was improper for the trial

court to instruct the jury that the cigarette rule is the proper standard for

determining whether conduct violates CUTPA because the federal courts

have abandoned that rule in favor of a more stringent test known as the

substantial unjustified injury test. See 15 U.S.C. § 45 (n) (2012). Under that

standard, an act or practice is unfair if it causes substantial injury, it is not

outweighed by countervailing benefits to consumers or competition, and

consumers themselves could not reasonably have avoided it. See 15 U.S.C.

§ 45 (n) (2012). Approximately ten years ago, in Glazer v. Dress Barn, Inc.,

274 Conn. 33, 873 A.2d 929 (2005), this court observed that, ‘‘[a]lthough we

consistently have followed the cigarette rule in CUTPA cases . . . when

interpreting ‘unfairness’ under CUTPA, our decisions are to be guided by

the interpretations of the Federal Trade Act by the Federal Trade Commission and the federal courts. See General Statutes § 42-110b [b]. Review of

those authorities indicates that a serious question exists as to whether the

cigarette rule remains the guiding rule utilized under federal law.’’ Id., 82

n.34. Recently, in Ulbrich v. Groth, 310 Conn. 375, 422–29, 78 A.3d 76 (2013),

we declined to review a claim that we should abandon the cigarette rule in

favor of the substantial unjustified injury test because the claim was not

preserved. Since Glazer, the legislature has given no indication that it disapproves of our continued use of the cigarette rule as the standard for determining unfairness under CUTPA, notwithstanding the federal courts’ aban-
donment of that rule in favor of the substantial unjustified injury test and

the legislative directive in § 42-110b (b) that we are to be guided by federal

law when construing CUTPA. In light of our conclusion in the present case

that the plaintiffs’ CUTPA claim fails even under the more lenient cigarette

rule, it is unnecessary for us to decide whetherthatrule should be abandoned

in favor of the federal test. Because of the likelihood that this court will be

required to address this issue in a future case, however, the legislature may

wish to clarify its position with respect to the proper test.

14 In reaching that determination in Acordia, we explained that ‘‘the legislative history of CUIPA reveals that the legislature intended to set out specifically the types of actions that constitute unfairinsurance practices in a highly

detailed manner . . . [and] viewed accomplishing that task as essential to

the underlying purpose of CUIPA: enabling the commissioner to better

protect consumers. The many subsequent amendments incorporating additional practices as violative of CUIPA demonstrate an ongoing legislative

effort to keep the list of prohibited practices as current as possible and

provide further evidence of the legislature’s intent to provide in CUIPA a

comprehensive list of unfair insurance practices. . . . The legislative history of CUIPA, therefore, demonstrates that the legislature intended to

occupy the field of defining unfair insurance practices, thereby precluding

courts from incorporating common-law principles as a basis for finding an

unfair insurance practice.’’ (Emphasis omitted; internal quotation marks

omitted.) State v. Acordia, Inc., supra, 310 Conn. 36.

15 Because we conclude that § 38a-790-8 does not support the plaintiffs’

CUTPA claim, it is unnecessary to address the defendant’s contention that

the trial court abused its discretion in awarding punitive damages and in

granting the plaintiffs’ motion for a permanent injunction.

16 The plaintiffs argue that, in the event that the defendant is successful

on appeal, this court should order a new trial rather than direct the trial

court to render judgment in favor of the defendant because the plaintiffs

were unfairly prejudiced by the trial court’s exclusion of certain evidence

that they sought to introduce in support of their labor rate claim under

CUTPA. Even if we were to assume, arguendo, that the trial court had

abused its discretion in excluding this evidence, that error is immaterial in

light of our determination that the defendant’s labor rate practices do not

violate public policy.