Opinion ID: 2750655
Heading Depth: 3
Heading Rank: 2

Heading: Ch. 93A Legal Standard

Text: Chapter 93A proscribes unfair or deceptive acts or practices in the conduct of any trade or commerce. Mass. Gen. Laws ch. 93A, § 2 (emphasis added). The statute provides a cause of action to [a]ny person who engages in the conduct of any trade or commerce and who suffers any loss of money or property . . . as a result of the use or employment by another person . . . [of] an unfair or deceptive act or practice. Id. § 11. If successful, a plaintiff is entitled to actual damages, or double or treble damages if the defendant's violation of § 2 was willful or knowing. Id. Here, the district court found that Goldman's conduct was not unfair or deceptive under ch. 93A.7 7 The Roth plaintiffs argue that they are in a different position than the Baker plaintiffs. They argue that this is because the trial court failed to make an express finding as to whether or not Goldman's acts were unfair or deceptive as to the Roth plaintiffs. We not persuaded for two reasons. First, the district court's statement in its order on plaintiffs' motion for reconsideration that Goldman's conduct was not unfair or deceptive under ch. 93A is most naturally read as applicable to all plaintiffs, since it is not by its terms limited to the Bakers. Second, because the district court dismissed the Roth plaintiffs' ch. 93A claims, it logically must have found that Goldman's conduct was not unfair or deceptive as to the Roth plaintiffs. -20- Here, plaintiffs essentially do not dispute the district court's factual determinations -- indeed, both sets of plaintiffs base the statement of facts in their briefs almost entirely on the district court's findings of fact. Instead, plaintiffs argue that there is a disconnect between the district court's factual findings and its ultimate conclusion that Goldman was not liable under ch. 93A. The latter conclusion, plaintiffs contend, was both wrong as a matter of law and clearly erroneous as a matter of fact. Specifically, plaintiffs' briefs argue that the district court applied the wrong legal standard to its findings of fact when it held that, in order for a defendant's conduct to violate ch. 93A, it must be not only wrong, but also egregiously wrong.8 Plaintiffs offer an extensive catalogue of Massachusetts cases in which the court found liability under ch. 93A without mentioning an egregiousness standard. Goldman responds that cases from both the Massachusetts state courts and this Circuit have been consistent in requiring a heightened showing of egregiousness or rascality in adjudicating ch. 93A claims. 8 Contrary to Goldman's assertion, neither the Baker plaintiffs nor the Roth plaintiffs have waived the argument that ch. 93A does not require a showing of egregiousness. Although the plaintiffs occasionally used the term egregious in their submissions and arguments to the district court, they have maintained throughout this litigation that ch. 93A goes well beyond the common law and encompasses a wide range of conduct, from egregious negligence to simple half-truth[s] or unscrupulous and unethical conduct. -21- Chapter 93A was 'designed to encourage more equitable behavior in the marketplace.' Commercial Union Ins. Co. v. Seven Provinces Ins. Co., 217 F.3d 33, 40 (1st Cir. 2000) (quoting Arthur D. Little, 147 F.3d at 55). However, it 'does not contemplate an overly precise standard of ethical or moral behavior. It is the standard of the commercial marketplace.' Id. (quoting Ahern, 85 F.3d at 798). The language that courts have used to describe the ch. 93A standard has varied considerably over the years. See id. (collecting cases). Early Massachusetts decisions suggested that, in order to violate ch. 93A § 11, conduct must attain a level of rascality that would raise an eyebrow of someone inured to the rough and tumble of the world of commerce, Levings v. Forbes & Wallace, Inc., 396 N.E.2d 149, 153 (Mass. App. Ct. 1979); see also Spence v. Bos. Edison Co., 459 N.E.2d 80, 88 (Mass. 1983), or have a rancid flavor of unfairness, Atkinson v. Rosenthal, 598 N.E.2d 666, 670 (Mass. App. Ct. 1992). The First Circuit followed the Massachusetts courts' lead in articulating the ch. 93A standard, as it is required to under Erie. See, e.g., Quaker State Oil Ref. Corp. v. Garrity Oil Co., 884 F.2d 1510, 1513 (1st Cir. 1989). In 1995, the Supreme Judicial Court of Massachusetts stated that it found uninstructive phrases such as 'level of rascality' and instead would focus on the nature of challenged conduct and on the purpose and effect of that conduct as the -22- crucial factors in making a [ch.] 93A fairness determination. Mass. Emp'rs Ins. Exch. v. Propac-Mass, Inc., 648 N.E.2d 435, 438 (Mass. 1995) (citation omitted). But even after Propac-Mass, Massachusetts courts, when addressing claims that a defendant's negligent act constituted a violation of ch. 93A, continued using labels akin to the level of rascality phrase to describe the level of negligence necessary for a finding of liability. See, e.g., Ross v. Cont'l Res., Inc., 899 N.E.2d 847, 861 (Mass. App. Ct. 2009). Moreover, the SJC has repeatedly held that mere negligence, standing alone, is not sufficient for a violation of ch. 93A -- something more is required. E.g., Klairmont, 987 N.E.2d at 1257; Darviris v. Petros, 812 N.E.2d 1188, 1192 (Mass. 2004); Swanson v. Bankers Life Co., 450 N.E.2d 577, 580 (Mass. 1983). In Marram v. Kobrick Offshore Fund, Ltd., 809 N.E.2d 1017 (Mass. 2004), which the district court relied on for the legal standard that it applied in this case, the SJC described that something more as extreme or egregious negligence.9 See id. at 1032; accord Lily Transp. Co. v. Royal Institutional Servs., Inc., 832 N.E.2d 666, 687 n.15 (Mass. App. Ct. 2005); cf. Stonehill Coll. v. Mass. Comm'n Against Discrimination, 808 N.E.2d 205, 229–30 (Mass. 2004) (in order for breach of contract to constitute a ch. 93A 9 This reading of the statute does not render § 11's provision for double and treble damages superfluous. Double or treble damages are authorized if a violation is willful or knowing. Mass. Gen. Laws ch. 93A, § 11. Conduct can be egregiously negligent without being willful or knowing. -23- violation, there must be some egregious circumstance surrounding that breach). And our Circuit has again followed the Massachusetts courts' lead in using the term egregious to state the standard of ch. 93A liability. See, e.g., In re Pharm. Indus., 582 F.3d at 185 (quoting Mass. Sch. of Law at Andover, Inc. v. Am. Bar Ass'n, 142 F.3d 26, 41 (1st Cir. 1999)); In re TJX Cos. Retail Sec. Breach Litig., 564 F.3d 489, 497 (1st Cir. 2009).10 Thus, while we share the SJC's sentiment in Propac-Mass that phrases such as level of rascality are uninstructive, we find no legal error in the district court's analysis. It drew the egregious standard directly from caselaw from the SJC and this Circuit. If the standard for ch. 93A liability requires clarification, the SJC can provide it in an appropriate case. See Gill v. Gulfstream Park Racing Ass'n, Inc., 399 F.3d 391, 402 (1st Cir. 2005) (A federal court sitting in diversity cannot be expected to create new doctrines expanding state law.). 10 Plaintiffs are correct that the first mention of the term egregious in the ch. 93A caselaw is found, not in a Massachusetts case, but rather in a First Circuit opinion, Massachusetts School of Law. 142 F.3d at 41 (stating that the general meter of ch. 93A claims is that the defendant's conduct must be not only wrong, but also egregiously wrong -- and this standard calls for determinations of egregiousness well beyond what is required for most common law claims). But the SJC's adoption of that term in its own ch. 93A jurisprudence shows that it concurs with the Massachusetts School of Law formulation. -24-