Unfair and Deceptive Acts and Practices: 2.3.3.3.1 Mainstream precedent
Certain UDAP statutes exclude from UDAP coverage practices “permitted” by law1665 or “authorized” by a regulatory agency.
Certain UDAP statutes exclude from UDAP coverage practices “permitted” by law1665 or “authorized” by a regulatory agency.
An all too common mistake courts have made is to interpret UDAP language exempting “permitted” or “authorized” practices as if the statute exempted “any regulated practice.” Usually the problem is that the court for ad hoc reasons does not want to apply the UDAP statute to an area that is already extensively regulated.
Even if a UDAP statute does not specifically exclude acts permitted under law, there is still an argument that practices permitted by law should not be found unfair or deceptive, and a number of courts have so held.1768 It would seem unreasonable to penalize a merchant for complying with the law.
If a UDAP statute does not specifically exclude practices regulated by other statutes, a defendant may still argue that other state or federal laws displace a UDAP statute’s coverage.
In determining if a state statute displaces that state’s UDAP statute, a good starting place is to examine the language of the two statutes at issue. Does the UDAP statute specifically indicate whether its remedies are cumulative with other state statutes?
Some courts generally reject the view that other regulation displaces a UDAP statute’s applicability, no matter the extensiveness of the alternative regulatory scheme.1789 Thus, Pennsylvania decisions hold that a statute that regulates a particular transaction overrides the state’s UDAP law only if the statute explicitly states that it supplies the exclusive remedy or if the two statutes are in irreconcilable conflict.1790 For example, federal and state banking legislation did not preempt th
While certain courts almost never find the UDAP statute displaced by more specific state regulation, other courts adopt a balancing approach. They look to see the legislative intent behind the other state law,1798 how extensive is the regulation,1799 what kind of private remedies are offered by that other state law, and what the other state law says about the specific challenged practice.
Whether a court rejects displacement of UDAP statutes outright or adopts a balancing approach, most decisions hold that the UDAP statute is not displaced by other state regulation. UDAP statutes have been found not to be displaced by the following:
Even if a regulatory scheme does not preempt the UDAP statute, some courts may require litigants to exhaust administrative remedies. In some states this issue may be resolved by explicit statutory language. For example, the Massachusetts UDAP statute specifically indicates that exhaustion of administrative remedies is not required.1837
Another important scope issue is whether consumers can bring UDAP claims against other consumers, or just against merchants.
There should be little doubt that a student is a consumer and can bring a UDAP claim against an educational institution unless it is exempt for other reasons.1920 An educational program is a transaction for personal, family, or household use even if it is intended to further the buyer’s professional career.1921 Indeed, it is hard to imagine a transaction that is more “personal” than the acquisition of personal knowledge and skills.1922
Questions often arise as to whether a UDAP statute can reach practices by wholesalers or manufacturers who do not sell directly to consumers. This is an especially important issue when the retailer dealing directly with the consumer is judgment-proof or is not entirely responsible for the unfair or deceptive practice.
In general, lawyers’ activities in providing legal services can be within the scope of a UDAP statute that applies to practices “in trade or commerce.”2010 Many courts also find that these activities involve a consumer’s purchase of “goods or services.”2011 An out-of-state attorney who purports to provide debt settlement services is a “supplier” subject to the Kansas UDAP statute.2012 An attorney collector is also a “supplier” subject to Utah
Of course, UDAP applicability to lawyers can be limited by an explicit statutory exemption.
Another special concern about attorney UDAP coverage is whether the regulation of attorneys by courts or bar associations displaces the UDAP statute. For example, after finding attorneys to be in trade or commerce, the Connecticut Supreme Court still had to determine whether the state judiciary’s pervasive supervision of attorneys prevents application of the UDAP statute to the profession.
Even if an attorney’s conduct in providing legal services is not covered by a UDAP statute, other attorney conduct may be covered.2054 It is the lawyer-client relationship that is outside the statute’s scope; there is no blanket immunity from deceptive conduct for those graduating from law school.2055 Coverage is more likely if the attorney is fulfilling more than one role, e.g., is acting not just as a lawyer but also as an investor.2056 Mor
The Massachusetts Supreme Court holds that only the client, or someone acting on the client’s behalf, can assert a UDAP claim against an attorney.2060 Thus, an attorney who prepared a will cannot be subjected to a UDAP claim by relatives that the client excluded from inheritance.2061 On the other hand, the attorney for the administrator of an estate may owe a duty to the heirs akin to that in an attorney-client relationship, and thus be subject to the heirs’ UDAP suit.
The FTC considers doctors and other medical professionals to fall within the FTC Act’s coverage of “trade or commerce.”2067 Similarly, many UDAP decisions hold that there is no blanket exemption for medical professionals.
Dentists offer “goods or services” and are also engaged in a “business, vocation, or occupation,” so they are covered by the Oregon UDAP statute.2112 But Illinois and Pennsylvania courts have extended the judicially created exemption for physicians to dental care providers.2113 A federal court decision2114 interprets dentistry to fall within an exemption to Virginia’s UDAP statute because it is regulated, but it fails to follow a state suprem
UDAP statutes typically do not exempt hospitals.2117 However, some courts extend an exemption for medical professionals to entities such as hospitals2118 and HMOs.2119 Nursing homes provide a service, so are also subject to UDAP statutes that cover sales of goods or services2120 and those that apply to “trade or commerce.”2121 Several decisions
Even if the UDAP statute applies to the provision of medical services, a claim may be subject to special procedural requirements applicable to health care claims.2134 Two courts have held that special medical malpractice statutes creating a pre-litigation screening panel or setting standards of proof displace UDAP actions that are based on medical malpractice.2135
Where a state UDAP statute is found to apply to lawyers or doctors, it should also apply to other professionals.2136 Thus a Texas court held that architects and architectural malpractice were covered by the UDAP statute.2137 (However, a statutory amendment five years later exempted those providing professional services from many types of UDAP actions.2138) The converse, of course, may not be true because of the special treatment courts may gi
There is a split among courts (often within the same jurisdiction) about whether an automobile accident victim or a person claiming under someone else’s insurance policy is a consumer who can bring a UDAP action against the insurer. A number of cases hold they cannot,2158 but an almost equal number of cases say they can.2159