Court Opinion

ID: 4660733
Source: CourtListenerOpinion
Date Created: 2021-02-17 14:12:42.189875+00
Date Added: 2024-06-11T09:09:18.327082
License: Public Domain

[J-31-2020] [MO: Wecht, J.]
                      IN THE SUPREME COURT OF PENNSYLVANIA
                                  WESTERN DISTRICT

    GARY L. GREGG AND MARY E. GREGG,                 :   No. 29 WAP 2019
                                                     :
                         Appellees                   :   Appeal from the Order of the
                                                     :   Superior Court entered September
                                                     :   12, 2018 at No. 1504 WDA 2017,
                 v.                                  :   affirming the Judgment of the Court
                                                     :   of Common Pleas of Allegheny
                                                     :   County entered September 27, 2017
    AMERIPRISE FINANCIAL, INC.,                      :   at No. GD 01-006611.
    AMERIPRISE FINANCIAL SERVICES,                   :
    INC., RIVERSOURCE LIFE INSURANCE                 :   ARGUED: May 21, 2020
    COMPANY AND ROBERT A. KOVALCHIK,                 :
                                                     :
                         Appellants                  :

                                      DISSENTING OPINION

JUSTICE TODD                                        DECIDED: FEBRUARY 17. 2021

         In Commonwealth v. Golden Gate National Senior Care, 194 A.3d 1010 (Pa.

2018), our Court held that Section 201-2(4)(xxi) of Pennsylvania’s Unfair Trade Practices

and Consumer Protection Law1 (“CPL”) prohibits all “deceptive conduct” in a consumer

transaction, i.e., all conduct which has “the capacity or tendency to deceive.” I agree with

the majority that this holding should be reaffirmed. Additionally, I agree that Section xxi

can be invoked in either a public enforcement action brought by the Attorney General, or

in a private action such as the one brought by Appellees in the case at bar. However, on

the core question before us, I disagree that the General Assembly, when it amended

Section xxi in 1996 to add the prohibition against “deceptive conduct” in the conduct of

1   73 P.S. § 201-2(4)(xxi) (hereinafter, “Section xxi”).
consumer transactions for goods and services, intended to impose strict liability.

Therefore, I must respectfully dissent.

       As the majority recognizes, the question of whether Section xxi imposes strict

liability is one of statutory interpretation, and thus our objective is to ascertain and

effectuate the intent of the General Assembly. Golden Gate, 194 A.3d at 1023; see also 1

Pa.C.S. § 1921(a).          As we have so oft observed, “[t]he best indication

of legislative intent is the plain language of the statute.” Crown Castle NG East v.

Pennsylvania Public Utility Commission, 234 A.3d 665, 674 (Pa. 2020). When the words

of a statute are free and clear of all ambiguity, they are the best indicator of legislative

intent; hence, in such circumstances, “we cannot disregard the letter of the statute under

the pretext of pursuing its spirit.” Fletcher v. Pennsylvania Property & Casualty Insurance

Guarantee Association, 985 A.2d 678, 684 (Pa. 2009) (citing 1 Pa.C.S. § 1921(b)). In my

view, in concluding that Section xxi imposes strict liability, the majority contravenes these

principles.

       As discussed by the majority, when Section xxi was originally enacted in 1968, it

prohibited    only   “fraudulent   conduct”   creating   a   likelihood   of   confusion   or

misunderstanding. 73 P.S. § 201-2(4)(xv) (effective 1968-1996). The current version of

Section xxi at issue in this appeal was enacted by the legislature in 1996, when that body

added the words “or deceptive” in the phrase “[e]ngaging in any other fraudulent or

deceptive conduct which creates a likelihood of confusion or of misunderstanding.” Id. §

201-2(4)(xxi) (emphasis added).

                               [J-31-2020] [MO: Wecht, J.]- 2
       In Golden Gate, we addressed an enforcement action brought by the Attorney

General to obtain an injunction under Section 201-4 of the CPL2 to prohibit a nursing

home from making what the Attorney General alleged were misleading statements in

advertising materials regarding the nature and quality of care provided by the home to

prospective residents. We interpreted the CPL as not requiring proof of intentional

conduct on the part of the nursing home – a vendor of nursing care services – in order for

it to be liable under Section xxi for creating a likelihood of confusion or misunderstanding

on the part of the consumers of those services, the prospective residents. Noting our

Court’s long-standing recognition of the broad remedial purpose of the CPL in

Commonwealth by Creamer v. Monumental Properties, Inc., 329 A.2d 812, 817 (Pa.

1974), to halt “unfairness and deception in all consumer transactions,” we stated in

Golden Gate that, under Section xxi, “[a]n act or a practice is deceptive or unfair if it has

the capacity or tendency to deceive, and neither the intention to deceive nor actual

deception must be proved; rather, it need only be shown that the acts and practices are

capable of being interpreted in a misleading way.” Golden Gate, 194 A.3d at 1023

(quotation marks and citation omitted).

2 Section 201-4 provides:
             Whenever the Attorney General or a District Attorney has
             reason to believe that any person is using or is about to use
             any method, act or practice declared by section 3 of this act
             to be unlawful, and that proceedings would be in the public
             interest, he may bring an action in the name of the
             Commonwealth against such person to restrain by temporary
             or permanent injunction the use of such method, act or
             practice.
73 P.S. § 201-4 (footnote omitted).

                              [J-31-2020] [MO: Wecht, J.]- 3
       Consequently, the majority appropriately rejects Appellants’ argument that the

phrase “deceptive conduct” in Section xxi should be construed in a manner consistent

with Section xxi’s pre-amendment form, so as to require a showing of intentional

fraudulent conduct by the vendor.3 Such a construction would render inoperative the

1996 amendment which added the terms “or deceptive” to the type of conduct which is

prohibited by Section xxi. Had the General Assembly wished to prohibit only intentional

conduct constituting “fraud,” this added language would not have been necessary,

inasmuch as the version in effect prior to the 1996 amendment already contained such a

prohibition.

       Critically, however, unlike the majority, I do not view our Golden Gate decision as

dispositive of the strict liability inquiry presented by this appeal, as we did not address in

Golden Gate what state of mind, if any, must be shown under Section xxi to impose

liability on a vendor such as Ameriprise for deceptive conduct, as that question was not

before us in that case. In examining the text of Section xxi, and in tension with the

majority’s conclusion that Section xxi imposes strict liability, it is noteworthy that Section

xxi differs markedly from other regulatory statutes which protect the public by imposing

strict liability with language that expressly and unmistakably declares that such conduct

is absolutely or strictly prohibited. See, e.g., 35 P.S. § 6018.606(i) (“with respect to the

offenses specified . . . the legislative purpose is to impose absolute liability for such

3 Fraudulent conduct as reflected in the tort of intentional misrepresentation is comprised
of the following elements: (1) a representation; (2) which is material to the transaction at
hand; (3) made falsely, with knowledge of its falsity or recklessness as to whether it is
true or false; (4) with the intent of misleading another into relying on it; (5) justifiable
reliance on the misrepresentation; and (6) the resulting injury was proximately caused by
the reliance. Gibbs v. Ernst, 647 A.2d 882, 889 (Pa. 1994).

                              [J-31-2020] [MO: Wecht, J.]- 4
offenses”); 52 P.S. § 1396.4b(f)(2) (“It shall be presumed, as a matter of law, that a

surface mine operator or owner is responsible without proof of fault, negligence or

causation . . . ”); 30 Pa.C.S. § 2504 (“No person, regardless of intent, shall: (1) Put or

place in any waters . . . any electricity, explosives or any poisonous substances . . . (2)

Allow any substance, deleterious, destructive or poisonous to fish, to be turned into or

allowed to run . . . into any waters . . . .”); 4 Pa.C.S. § 1518.1 (“A person required under

this section [of the Gaming Act] to file a report of a suspicious transaction who fails to [do

so] shall be strictly liable for his actions . . . .”). Notably absent from Section xxi is any

similar language indicating a legislative intent to impose strict liability on a vendor of goods

and services for violating its prohibition against engaging in deceptive conduct.

       Indeed, in my view, it would be incongruous for the General Assembly to prohibit

a vendor from engaging in fraudulent conduct in Section xxi, which indisputably requires

an intentional state of mind on the part of the vendor to deceive, see, e.g., Rohm and

Haas Company v. Continental Casualty Company, 781 A.2d 1172, 1179 (Pa. 2001) (fraud

requires a “deliberate intent to deceive”), while simultaneously strictly prohibiting a vendor

from engaging in deceptive acts without regard to mens rea, as doing so would reduce

the fraud prohibition to mere surplusage. This would contravene the well established

principle of statutory interpretation that in drafting a statute “the legislature is presumed

to have intended to avoid mere surplusage, [and] every word, sentence, and provision of

a statute must be given effect.” Independent Oil & Gas Association of Pennsylvania v.

Board of Assessment Appeals of Fayette County, 814 A.2d 180, 183 (Pa. 2002); see also

1 Pa.C.S. § 1922(2) (“the General Assembly intends the entire statute to be effective and

certain”). The majority’s construction of Section xxi – imposing strict liability for deceptive

                               [J-31-2020] [MO: Wecht, J.]- 5
conduct – obviates the need for a consumer to ever allege fraudulent conduct in order to

prevail under this section. By this interpretation, the legislature’s addition of the language

“deceptive conduct” effectively swallows Section xxi’s companion prohibition against

fraudulent conduct which immediately precedes it, rendering that companion provision

meaningless. Thus, the majority’s construction fails to give effect to the full language of

the statute, and such a reading should be avoided. Allegheny County Sportsmen's

League v. Rendell, 860 A.2d 10, 19 (Pa. 2004).

       The Superior Court below seems to have derived its conclusion that Section xxi is

a strict liability statute from its reading of the Commonwealth Court’s decision in

Commonwealth v. TAP Pharmaceuticals, 36 A.3d 1197 (Pa. Cmwlth. 2011), a view the

majority shares. See Majority Opinion at 16. In TAP, the Commonwealth Court rejected

the argument that a jury’s verdict, which found the defendant did not commit fraudulent

or negligent misrepresentation, was dispositive of the Section xxi claim. Rather, it held

that “[t]he test for deceptive conduct under [Section xxi] is essentially whether the conduct

has the tendency or capacity to deceive, which is a lesser, more relaxed standard than

that for fraud or negligent misrepresentation.” TAP, 36 A.3d at 1253. Like the Superior

Court below, the majority deems TAP to establish that a consumer is not required to prove

even negligent conduct by a vendor that has the tendency or capacity to deceive; rather,

the vendor is strictly liable for such conduct. See Majority Opinion at 16 (“This test is, as

the Commonwealth Court has recognized, a lesser, more relaxed standard than that for

fraudulent or negligent misrepresentation. As the Commonwealth Court concluded, all

that the statute requires the plaintiff to prove is that “the acts or practices are capable of

                              [J-31-2020] [MO: Wecht, J.]- 6
being interpreted in a misleading way.” (citation omitted)). In my view, this reasoning is

misguided.

       The Commonwealth Court in TAP, in arriving at the holding relied on by the

majority, recognized that the 1996 amendment to Section xxi nullified its previous

interpretation of that section as requiring a consumer to demonstrate that the vendor

committed the common law tort of fraud. See TAP, 36 A.3d at 1253-1254 (discussing,

inter alia, Commonwealth v. Percudani, 825 A.2d 743 (Pa. Cmwlth. 2003) (rejecting

Superior Court’s continuing requirement of proof of common law fraud under Section xxi,

given that it would render the addition of the phrase “deceptive conduct” superfluous and

contrary to our Court’s view that Section xxi should be liberally construed)). In developing

its “lesser, more relaxed standard,” the Commonwealth Court specifically characterized

its post-amendment interpretation as “hav[ing] the effect of eliminating the common law

state of mind element (either negligence or intent to deceive), and of softening or

eliminating the common law reliance and causation elements implicated in actual

deception.” Id. at 1254 (emphasis added). However, the court did not define the state of

mind required under its “lesser” standard.

       As discussed above, the common law tort of fraudulent – i.e., intentional –

misrepresentation requires a material representation which is made falsely, with

knowledge by the maker of its falsity or recklessness as to its truth, and with the intent of

misleading another into relying on it. Gibbs, 647 A.2d at 889. The tort of negligent

misrepresentation requires proof of: (1) a misrepresentation of a material fact; (2) made

under circumstances in which the misrepresenter ought to have known its falsity; (3) with

an intent to induce another to act on it; and (4) which results in injury to a party acting in

                              [J-31-2020] [MO: Wecht, J.]- 7
justifiable reliance on the misrepresentation. Bortz v. Noon, 729 A.2d 555, 561 (Pa.

1999). In both cases, the focus is on the actor’s knowledge of the truth or falsity of the

statement (or expressive act) conveyed to its recipient.

       Thus, TAP recognized that, for a plaintiff to establish that a vendor engaged in

“deceptive conduct” in violation of Section xxi, the plaintiff need not prove that the vendor

knew, or should have known, of the falsity of his or her statement. See Bortz, 729 A.2d

at 561 (in order for a plaintiff to succeed on that claim, he must establish that an individual

made a statement misrepresenting a material fact). However, rather than eliminating any

state of mind requirement for liability to attach, in my view, TAP recognized that the

addition of “or deceptive” conduct merely broadens the focus of Section xxi’s state of mind

requirements.

       Specifically, by its plain terms, Section xxi no longer requires a plaintiff to establish

the tort of fraudulent misrepresentation to recover thereunder. Rather, as I read it, with

the 1996 addition of “or deceptive” conduct, Section xxi now broadly prohibits all

“deceptive conduct which creates a likelihood of confusion or of misunderstanding.” 73

P.S. § 201-2(4)(xxi). The use of this language reveals that it is not the state of mind of

the vendor regarding the truth or falsity of a particular statement that is determinative;

rather, the focus has been expanded to include the vendor’s state of mind with respect to

the misleading or confusing effect his statements or actions are likely to have on a

consumer. See Webster’s Unabridged Dictionary 516 (2d ed. 1998) (defining deceptive

as “apt or tending to deceive”); American Heritage Dictionary 371 (2d ed. 1982) (defining

deceptive as “tending to deceive, misleading”). In my view, then, a violation of Section

xxi may be established merely by showing that the vendor is aware, or should be aware,

                               [J-31-2020] [MO: Wecht, J.]- 8
that his statements are “capable of being interpreted in a misleading way” by a consumer,

regardless of the vendor’s belief regarding the truth or falsity of the statements. See

Golden Gate, 194 A.3d at 1023 (emphasis added). This is, in essence, a negligence

standard. See generally Restatement (Second) of Torts § 303 (1965) (“An act is negligent

if the actor intends it to affect, or realizes or should realize that it is likely to affect, the

conduct of another . . . in such a manner as to create an unreasonable risk of harm to the

other.”). Under my construction, for example, a vendor could be liable under Section xxi

even if his statements are technically true, if he knows or should know that those

statements will create a likelihood of confusion or of misunderstanding on the part of a

consumer.

       Critically, unlike the majority’s construction, my interpretation gives meaning to all

of the words in Section xxi and allows a plaintiff to prevail whenever the vendor either

intentionally engages in fraud with respect to a consumer transaction, or whenever the

vendor negligently engages in conduct that creates a likelihood of the type of harm that

the CPL was intended to prevent – that is, confusion or misunderstanding on the part of

a consumer. Stated another way, 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. This standard, in my

view, effectuates the paramount goal of the CPL — 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,

                               [J-31-2020] [MO: Wecht, J.]- 9
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.4

       For all these reasons, I disagree that Section xxi imposes strict liability, and thus I

respectfully dissent.

       Chief Justice Saylor and Justice Baer join this dissenting opinion.

4  The majority cites decisions from other jurisdictions construing similar consumer
protection statutes prohibiting “deceptive conduct” which have held that these statutes do
not require proof of intent to establish deceptive conduct. Majority Opinion at 16.
However, those decisions do not address whether the implicated statutes require proof
of the lesser mens rea of negligence. Indeed, other state courts interpreting their own
consumer protection laws which, like Section xxi, proscribe deceptive conduct, have
found that their statute’s prohibitions against deceptive conduct are violated whenever a
party to a consumer transaction negligently engages in conduct or actions which deceive
reasonable consumers. See, e.g., Drakopoulos v. U.S. Bank, 991 N.E.2d 1086, 1094
n.15 (Mass. 2013) (“negligence, where it results in an unfair or deceptive act, may give
rise to [Massachusetts Consumer Protection Act] liability”); Grove v. Huffman, 634 N.E.2d
1184 (Ill. Ct. App. 1994) (negligent misrepresentation by seller of property as to its
condition established violation of Illinois Consumer Protection Act); Poole v. Union
Planters Bank, 337 S.W.3d 771 (Tenn. Ct. App. 2010) (Tennessee Consumer Protection
Act extends to negligent conduct).

                              [J-31-2020] [MO: Wecht, J.]- 10