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Unfair and Deceptive Acts and Practices: 11.4.4.4 Can a Complaint Serve As the Notice Letter?

A number of courts have rejected the argument that a UDAP count in a complaint can serve as the demand letter for the claim, usually on the ground that the purpose of the demand letter requirement is to avoid a legal complaint by giving the seller an opportunity to resolve the dispute.789 A complaint brought by a different plaintiff or a different class is likely to fail to serve this purpose, because it gives the defendant no notice that it is facing suit by the current plaintiff or class.790 C

Unfair and Deceptive Acts and Practices: 11.4.4.5 Delivery

Courts have held that actual notice is not sufficient; the consumer must actually send the notice letter.793 A Texas court held that notice had not been properly delivered where the consumer sent the notice to the correct address by certified mail, the notice was returned undelivered, and the consumer made no further efforts to deliver the notice.794 This suggests it is safer to send notice both by first class and certified mail, and to follow up on an undelivered certified mail notice.

Unfair and Deceptive Acts and Practices: 11.4.4.7 Content of the Notice Letter

The Alabama, Maine, Massachusetts, and Georgia UDAP statutes require that the demand letter identify the claimant and reasonably describe the unfair or deceptive practice and the injury caused thereby.815 A demand letter satisfies this requirement where it gives the defendants enough information to enable them to review the facts and the law, evaluate whether the requested relief should be granted, and make a reasonable tender of settlement.816 But a notice was insufficient where it described th

Unfair and Deceptive Acts and Practices: 11.4.4.8 Notice Letters and Class Actions

The highest court in Massachusetts has held that a demand letter by one class member suffices for other members if no reasonable offer is made in response.850 If the defendant makes an offer that is reasonable for the named plaintiff but not for the class, the named plaintiff may proceed with the class action and is entitled to attorney fees for the class action work if the case is successful.851 It is not necessary to have a second round of demand letters and offers after the class is certified

Unfair and Deceptive Acts and Practices: 11.4.4.9 Pleading Notice and Proving Notice Was Sent

As a general rule, where a notice letter is a prerequisite to bringing a UDAP action, the timely sending of the notice should be pleaded and proven.861 Where court rules such as Federal Rule of Civil Procedure 9(c) allow pleading that all conditions precedent have been met, such an averment may be sufficient and the defendant must specifically deny notice to create a fact issue.862 If the consumer pleads proper notice, this fact is taken as admitted if the merchant defaults, and the seller canno

Unfair and Deceptive Acts and Practices: 11.4.4.10 If Notice Was Not Sent

Unless the UDAP statute explicitly requires dismissal, failure to send a required notice letter should not bar the suit. Maine’s Supreme Court has ruled that the failure to send the statutorily required notice letter is not a jurisdictional defect and does not preclude the plaintiff from maintaining a UDAP suit. The court suggested other remedies for failure to send the notice, such as imposing a delay in the suit or denying attorney fees and costs.867

Unfair and Deceptive Acts and Practices: 11.5.2.1 Introduction

One issue in many UDAP actions is that potential defendants are out of state. In the typical consumer case, it is neither practical to bring an action in the seller’s state nor to enforce, in the seller’s state, a judgment obtained in the consumer’s state. Consumer litigants are advised to name as defendants, in addition to the out-of-state corporation, other participants in the deceptive scheme who have assets in the consumer’s state.909

Unfair and Deceptive Acts and Practices: 11.5.2.3 Internet Transactions

The basic analysis of jurisdictional issues applies equally to UDAP violations engaged in over the internet.943 Maintaining a website that enables customers to place orders, and then shipping a product into the state, is likely to give the state jurisdiction.944 Courts may examine the extent of interaction between the customer and the host computer to determine jurisdiction.945 A passive website that does no more than post advertisements that are a

Unfair and Deceptive Acts and Practices: 11.5.2.4 Jurisdiction over Out-of-State Individuals

As to individuals, personal involvement in directing the in-state deception may give a court a sufficient basis for the exercise of jurisdiction over an out-of-state defendant.948 A principal who spent four to six months a year in Pennsylvania promoting the joint business enterprises of their out-of-state company and a Pennsylvania affiliate was subject to Pennsylvania’s long arm jurisdiction, as was their company.949 But personal jurisdiction was lacking for an out-of-state auditor and out-of-s

Unfair and Deceptive Acts and Practices: 11.5.3 Choice of Law Issues

In a case involving activity in more than one state, a threshold issue is what state law applies. The analysis differs depending on whether there is an effective contractual choice of law clause. Whether the UDAP statute itself is limited to in-state acts or parties is a separate question, discussed at § 2.2.11, supra.

Unfair and Deceptive Acts and Practices: 11.5.7 Bankruptcy Court Jurisdiction

Another way to obtain federal court jurisdiction for a UDAP count is to litigate the claim in bankruptcy court. There are two different situations where UDAP claims may be litigated in bankruptcy court. Where the seller has filed for bankruptcy, the consumer has no choice but to bring UDAP claims before the bankruptcy court or at least ask the bankruptcy court for relief from the automatic stay so the consumer can bring or continue a state court UDAP action.

Unfair and Deceptive Acts and Practices: 11.5.8.1 General

A major impediment to consumers vindicating their rights under UDAP statutes is the widespread use of mandatory, binding arbitration clauses in consumer agreements. These clauses seek to force consumers out of court and into an arbitration forum designated by the seller or creditor. Typically, they also prohibit class-wide relief either through a court or arbitration proceeding. Proceedings are generally kept secret and discovery may be limited.

Unfair and Deceptive Acts and Practices: 11.5.8.2.3 Credit transactions involving military personnel

Federal law prohibits arbitration clauses in consumer credit agreements with military personnel or their dependents, or the enforcement of such a consumer credit agreement.1075 An arbitration requirement is unenforceable even after the consumer is no longer a servicemember or a dependent of a servicemember, as long as the consumer was covered by the Act when the credit was originated.1076 When determining if a borrower is a covered servicemember, the creditor is entitled to a safe harbor if

Unfair and Deceptive Acts and Practices: 11.5.8.2.4 Lasting effect of now-repealed federal limit on schools’ arbitration clauses

A Department of Education rule, repealed effective July 1, 2020, prohibited arbitration agreements and class action waivers involving schools that participate in the federal Direct Loan Program, when the legal claims concerned the school’s acts or omissions regarding the educational services for which the Direct Loan was obtained or the school’s actions in making the loan.1087 The rule applied to arbitration requirements found in enrollment agreements entered into even before the rule’s effective date.