Opinion ID: 2241832
Heading Depth: 1
Heading Rank: 2

Heading: the chapter 93a issues.

Text: Chapter 93A of the General Laws is designated as the Regulation of Business Practice and Consumer Protection Act. St. 1967, c. 813, § 2. It is a statute of broad impact which creates new substantive rights and provides new procedural devices for the enforcement of those rights. We recently had occasion to comment on the far-reaching effects of this statute in our opinion in Commonwealth v. DeCotis, ante, 234, 244, in. 8 (1974), where we said: We would not concur with the ... argument that ... [by enacting G.L.c. 93A] `the Legislature did not confer new substantive rights on consumers,'.... Although G.L.c. 93A admittedly established new procedural devices to aid consumers and others ..., it also created new substantive rights by making conduct unlawful which was not unlawful under the common law or any prior statute. We also quoted with approval the statement that the statutory words `[u]nfair and deceptive practices' [in G.L.c. 93A, § 2] are not limited by traditional tort and contract law requirements. Ibid. Chapter 93A as presently in force consists of five segments which combine to form a comprehensive substantive and procedural business and consumer protection package: (a) Section 1 provides definitions for some of the terms employed in the remainder of the chapter. [6] (b) Sections 2 and 3 indicate the proscribed conduct and enumerate the transactions which are exempt from those proscriptions. [7] The burden of establishing exemptions, none of which is at issue here, is on the person claiming them. Commonwealth v. DeCotis, supra, at 239-240. Section 2, the substantive heart of c. 93A, declares that unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are unlawful. Two methods are given for construction of the terms unfair methods of competition, unfair or deceptive acts or practices, and in the conduct of any trade or commerce. First, the courts are directed by the Legislature to be guided by the interpretations given by the Federal Trade Commission (FTC) and the Federal courts to § 5 (A) (1) of the Federal Trade Commission Act, 15 U.S.C. § 45 (a) (1) (1970) (Federal act). [8] Second, the Attorney General is empowered to make interpretive rules and regulations consistent with the FTC's and the Federal courts' construction of the Federal act. (c) Sections 4 through 8 include the public remedy provisions, i.e., the procedures and relief available to the Attorney General when he has reason to believe that anyone is committing, or is about to commit, any act which is unlawful under § 2. [9] These public remedy sections, as they relate to the conduct proscribed by the chapter, provided the focus of our recent examination in the DeCotis case. (d) Sections 9 and 11 (the latter section having been inserted by St. 1972, c. 614, § 2) provide the chapter's private remedies and procedures. [10] These are available to the individual consumer [11] or businessman [12] (or class of consumers or businessmen in appropriate cases) who suffers a loss, in the case of the consumer, as a result of the employment of an unfair or deceptive act or practice by a businessman, or, in the case of a businessman, as a result of the employment by another businessman of either an unfair or deceptive act or practice or of an unfair method of competition. Section 9  the consumer remedy section , along with the substantive provisions of § 2, is at the center of our inquiry in the instant case. (e) Finally, § 10 provides for the interrelationship between the public and private remedy sections by requiring the clerk of court to notify the Attorney General of the entry and disposition of private remedy actions, and by making certain court orders entered in public actions admissible in private actions as prima facie evidence that the defendant engaged in proscribed acts or practices.
Chapter 93A contained no private remedy provisions when it was originally inserted by St. 1967, c. 813, § 1. Unfair methods of competition and unfair or deceptive acts or practices were declared unlawful, but only the Attorney General could bring enforcement proceedings. Moreover, unless he could obtain a consent decree or voluntary agreement to that effect, even the Attorney General had no power to ensure that reparations were made to injured persons. G.L.c. 93A, §§ 4, 5, inserted by St. 1967, c. 813, § 1 (later revised by St. 1969, c. 814, § 3). Rice, New Private Remedies for Consumers: The Amendment of Chapter 93A, 54 Mass. L.Q. 307, 309 (1969) (hereinafter Rice, New Private Remedies). [13] The limited scope of the Attorney General's powers of litigation caused the Consumer Protection Division (Division) to rely more and more on attempts at conciliation. Relatively few cases were settled by the use of voluntary agreements, and even fewer ever reached litigation. Rep. A.G., Pub. Doc. No. 12 (1969) 11. Rice, New Private Remedies, at 309. As the existence of the Division became more widely known by the public, the number of complaints received reached flood proportions. [14] In the year ending June 30, 1969, 2,473 written and incalculable telephone complaints were received by the Division. Rep. A.G., Pub. Doc. No. 12 (1969) 12. Volume disposition of these complaints by telephone and letter was required for expediency; staff time and effort were consumed in this mass project at the expense of the institution of formal proceedings. Consumers whose complaints could not be settled by informal methods, therefore, often could not obtain relief. Rice, New Private Remedies, at 309, 311. The problems of the Division are mirrored by those of comparable offices in other jurisdictions. It has been observed that most such agencies are woefully understaffed and underfinanced, morrassed in a sea of red tape, and unbearably slow acting. Travers and Landers, The Consumer Class Action, 18 U. of Kans. L. Rev. 811, 812 (1970). See comment, 67 Northwestern U.L. Rev. 413, 415-416 (1972), and sources cited therein. Because of the inability of the Division to handle all the complaints it was receiving, it became clear that private remedies were needed under c. 93A. Moreover, it was apparent that for these private remedies to be effective, several problems would have to be overcome in the enabling legislation. It is a central premise of our legal system that professional advocates will represent the parties to a dispute. Indeed, the complexities of the machinery of justice are often severe enough to discourage even the seasoned attorney. In sum, causes for which advocates cannot be obtained are, in effect, not adjudicable. Consumer grievances usually involve small amounts which are substantially less than the fee required to compensate members of the private bar. Eovaldi and Gestrin, Justice for Consumers: The Mechanisms of Redress, 66 Northwestern U.L. Rev. 281, 286 (1971). [15] The Attorney General sought to meet the pressing need for an effective private remedy under c. 93A by proposing the bill which evolved into 1969 Senate Doc. No. 1259. While this bill was awaiting final approval, the Attorney General discussed its import in his annual report: Some significant legislation was proposed and supported during this period.... Two important amendments to Chapter 93A are pending and favorable action is anticipated. One ... provides the consumer with a private remedy, including a minimum recovery of $25.00, attorney's fees, a class action provision, [16] and, in certain cases, treble damages. In substantially the form proposed by the Attorney General, a private remedy bill was enacted. St. 1969, c. 690, inserting G.L.c. 93A, § 9.
The defendant's demurrer was sustained in this case for failure to state an equitable cause of suit under c. 93A. One of the grounds of demurrer, that the plaintiff had a complete and adequate remedy at law, is clearly inapplicable here. If the plaintiff has any claim at all under the chapter, § 9 (1) directs that suit be brought in the superior court in equity. It has long been the law that where equity jurisdiction is specifically conferred by statute, it is no objection that the plaintiff also has a plain, adequate, and complete remedy at law. Bernard v. Barney Myroleum Co. 147 Mass. 356, 359 (1888). Powers v. Heggie, 268 Mass. 233, 241-242 (1929). Salvucci v. Sheehan, 349 Mass. 659, 661-662 (1965). Moreover, now that there is but one form of action in this Commonwealth, Rule 2 of the Mass. R.Civ.P. 365 Mass. 733 (1974), we must scrutinize carefully any action which tends to declare or perpetuate the supremacy of technical law-equity distinctions over the accomplishment of substantial justice. Another ground of the demurrer, that the plaintiff did not set forth a cause of suit within the jurisdiction of equity, seems to amount merely to a less specific statement of the ground accepted by the trial judge: that the facts pleaded did not set forth a cause of suit under c. 93A. We therefore turn to a consideration of what is necessary to establish such a claim. What is said in this regard is, except where indicated otherwise, generally applicable to practice under the new rules, which require that a complaint set forth (1) a short and plain statement of the claim showing that the pleader is entitled to relief, and (2) a demand for judgment for the relief to which he deems himself entitled. Rule 8 (a) of the Mass. R.Civ.P. 365 Mass. 749 (1974). The first and third paragraphs of § 9 indicate the matters which must be alleged if a c. 93A claim is to be maintained. The § 9 private remedy is available only to a consumer, that is, a person who purchases or leases goods or services or property, real or personal, primarily for personal, family or household purposes. We believe two pleading requirements are indicated here. First, there must be alleged an included transaction, i.e., a purchase or lease of goods, services, or real or personal property. Second, the included transaction must have been undertaken primarily for personal, family, or household purposes. It appears from the plaintiff's bill that the first of these requirements has been clearly met, but the second has not. This second element, however, could be found at least inferentially present in the allegation that § 9 of c. 93A had been violated. That is to say, because the section protects only consumers, one who asserts rights under the section must be claiming to be a consumer. A similar inference could be drawn from the reference in the bill to G.L.c. 106, § 2316A, pertaining to the exclusion or modification of warranties, since that section is also expressly limited in applicability to consumer transactions. Such inferences would not satisfy the former requirement of G.L.c. 231, § 7, Second (amended by St. 1973, c. 1114, § 157, to apply only to District Courts), that a pleading state concisely and with substantial certainty the substantive facts necessary to constitute the cause of action. See Becker v. Calnan, 313 Mass. 625, 630 (1943); Brighams Cafe Inc. v. Price Bros. Co. 334 Mass. 708 (1956). Although under the new rules reliance on inferences or conclusory statements may not necessarily render a pleading defective, the pleader may be well advised to avoid undue reliance on inferences which can only invite a motion to dismiss for failure to state a claim on which relief can be granted. Rule 12 (b) (6) of the Mass. R.Civ.P. 365 Mass. 755 (1974). See Conley v. Gibson, 355 U.S. 41, 45-48 (1957). Perhaps most important of all, § 9 (1) requires that the plaintiff allege and prove that the defendant used or employed an unfair or deceptive act or practice declared unlawful by section two or by any rule or regulation issued under paragraph ( c ) of said section two. There can be no sound argument that this requirement was not met. As we stated at the beginning of this opinion, the plaintiff alleged that the defendant failed to fulfil promises made as part of the sale transaction to repair specified parts of the automobile and to align the front end, and refused to fulfil a promise, relied on by the plaintiff in making his purchase, to repair all other defects in the automobile subsequent to the expiration of the thirty-day warranty provided in the car order form. Section VII (B) of the rules and regulations promulgated by the Attorney General pursuant to c. 93A, § 2 (c), provides in pertinent part: It shall be an unfair and deceptive act or practice to fail to perform or fulfill any promises or obligations arising under a warranty. The definitions of warranty in these rules and regulations include the following: An express warranty ... or guarantee includes any affirmation of fact or promise made by the seller to the buyer which relates to the goods and becomes part of the basis of the bargain. [17] It is clear that the plaintiff has alleged a failure to fulfil warranty obligations as thus defined in the above quoted rule and that such failure gives rise to a § 9 claim for relief. Furthermore, the plaintiff's bill asserted, albeit with something less than clarity, that the defendant knew or should have known that the engine was defective at the time of sale and did not disclose this fact to the plaintiff. Section IV (A) of the rules and regulations of the Attorney General provides: No claim or representation shall be made by any means concerning a product which directly, or by implication, or by failure to adequately disclose additional relevant information, has the capacity or tendency or effect of deceiving buyers ... in any material respect. This prohibition includes, but is not limited to, representations or claims relating to the construction, durability, reliability, manner or time of performance, safety, strength, condition, or life expectancy of such product, or financing relating to such product, or the utility of such product or any part thereof, or the ease with which such product may be operated, repaired, or maintained or the benefit to be derived from the use thereof. A failure to disclose a defect of the nature alleged by the plaintiff is unlawful under this standard, and is actionable under § 9. [18] The absence from the foregoing discussion of any mention of the common law action for fraud and deceit is entirely intentional. The specific elements of that cause of action include proof that the defendant made a false representation of a material fact with knowledge of its falsity for the purpose of inducing the plaintiff to act thereon, and that the plaintiff relied upon the representation as true and acted upon it to his damage. Barrett Associates, Inc. v. Aronson, 346 Mass. 150, 152 (1963), quoting from Kilroy v. Barron, 326 Mass. 464, 465 (1950). As numerous FTC cases have made clear, the definition of an actionable unfair or deceptive act or practice goes far beyond the scope of the common law action for fraud and deceit. To cite only a few distinctions, in the statutory action proof of actual reliance by the plaintiff on a representation is not required, United States Retail Credit Assn. Inc. v. Federal Trade Commn. 300 F.2d 212, 221 (4th Cir.1962), and it is not necessary to establish that the defendant knew that the representation was false, Montgomery Ward & Co. v. Federal Trade Commn. 379 F.2d 666, 670 (7th Cir.1967). The § 9 claim for relief is the creation of that statute. It is, therefore, sui generis. It is neither wholly tortious nor wholly contractual in nature, and is not subject to the traditional limitations of preexisting causes of action such as tort for fraud and deceit. In some respects, however, this new statutory claim for relief does have special elements which must be alleged. One of these elements is set forth in paragraph (3) of § 9. At least thirty days before commencing suit, the plaintiff, with an exception not applicable to this case, must send a demand letter to the prospective defendant. [19] This letter must identify the claimant and describe, reasonably, the unfair or deceptive act or practice and the injury caused thereby. The plaintiff in the instant case, by alleging that he sent such a demand letter, satisfied this prerequisite to suit. The demand letter serves a dual function. The first of these functions is to encourage negotiation and settlement by notifying prospective defendants of claims arising from allegedly unlawful conduct. This gives the addressee an opportunity to review the facts and the law involved to see if the requested relief should be granted or denied. See Rice, New Private Remedies, at 318. The second function of the letter is to operate as a control on the amount of damages which the complainant can ultimately recover if he proves his case. If the addressee makes a reasonable tender of settlement which is rejected by the complainant, the damages recoverable are limited to the amount of the tender. If the addressee either fails to make a tender of settlement, or makes an unreasonable tender in relation to the injury suffered, a finding for the plaintiff will lead to a recovery in the amount of actual damages or of $25, whichever is greater. This amount is to be doubled or trebled if the court finds that the addressee's failure to grant relief on demand was made in bad faith with knowledge or reason to know that the act or practice complained of violated § 2. These are matters to be left to allegations and proof at trial. [20] The interlocutory decree sustaining the demurrer was erroneous at least as to the request for rescission based on the plaintiff's alleged minority. Since a demurrer cannot be upheld where the plaintiff's bill sets out any cause of suit, Pirrone v. Boston, 364 Mass. 403, 405 (1973), the final decree dismissing the bill must be reversed. Because of the unsettled nature of the law concerning private actions under c. 93A prior to this case, moreover, we believe the plaintiff should be allowed amendment on remand as to all claims for relief. See Nissenberg v. Felleman, 339 Mass. 717, 726 (1959). The decree is reversed and the case is remanded to the Superior Court where the plaintiff may, on request made within sixty days from rescript, be permitted to amend in conformity with this opinion and with the new Rules of Civil Procedure. [21] The plaintiff is to have costs of appeal. So ordered.