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Unfair and Deceptive Acts and Practices: 11.5.8.2.7 State law where claim involves no interstate commerce

Consumer transactions are typically in interstate commerce so that the Federal Arbitration Act (FAA) applies, making arbitration agreements generally enforceable despite state law to the contrary.1101 But where a court finds a transaction is not in interstate commerce, the FAA does not apply.1102 Then a state law that limits arbitration, such as by prohibiting waiver of the right to bring an action in court, should be effective to defeat the arbitration requirement.

Unfair and Deceptive Acts and Practices: 11.5.8.4 A Threshold Issue: Who Determines Arbitrability—the Court or the Arbitrator?

A key issue for any consumer challenge to the enforceability of an arbitration agreement is a determination as to whether the arbitration agreement has a clear and unmistakable provision delegating to the arbitrator any dispute as to the enforceability of the arbitration agreement. These are often called “delegation” clauses and are surprisingly common in consumer agreements.

Unfair and Deceptive Acts and Practices: 11.5.8.5 Contract Law Defenses

The FAA provides that arbitration clauses are enforceable “save upon such grounds as exist at law or in equity for the revocation of any contract.” Thus, contract defenses are enough to defeat an arbitration requirement. But the Supreme Court has added an additional wrinkle. The contract defense must be applicable to the arbitration provision and not just to other aspects of the consumer agreement apart from the arbitration provision.1110

Unfair and Deceptive Acts and Practices: 11.6.3 Framing the Nature of the Suit

Early on in a case, the consumer’s attorney should carefully consider the possible damage award. This will shape the complaint and help determine the legal resources devoted to a case. Not only out-of-pocket damages, but also loss-of-bargain damages and such consequential damages as emotional distress should be investigated. If an item is represented as worth $200, is sold for $50, and is worth $25, consider seeking $175 damages, not $25.

Unfair and Deceptive Acts and Practices: 11.6.5.1 The Benefits of Specificity

General allegations avoid tipping the litigant’s hand too early. However, a definite, specific, organized complaint assists the consumer litigant in organizing the case and increases the credibility of the consumer’s case for the judge and opposing attorneys.1217 This is particularly important since many UDAP statutes themselves are so general and broad.

Unfair and Deceptive Acts and Practices: 11.6.5.2 Rule 9(b) vs. Rule 8(a)

Many courts apply Federal Rule of Civil Procedure 9(b) or a state equivalent to UDAP claims, requiring that averments of each element of the claim be pleaded with particularity.1224 This holding is unnecessarily restrictive, in light of the liberal construction required of UDAP statutes and the clear distinction between UDAP statutes and common law fraud.1225 This position is also inconsistent with the Supreme Court’s admonition that “[t]he liberal notice pleading of Rule 8(a) is the startin

Unfair and Deceptive Acts and Practices: 11.6.5.3 Treatment of Omitted Claims

Failure to plead UDAP claims or defenses may waive them.1242 However, where UDAP claims have been inadvertently omitted from a pleading, they may still be decided by the trial court if they are presented by consent or without objection.1243 A complaint that merely pleads fraud, but sets out facts sufficient to show a UDAP violation, may be sufficient to raise the UDAP claim.1244 On the other hand, it is error for a trial court to decide a cas

Unfair and Deceptive Acts and Practices: 11.6.6 Adding Non-UDAP Counts

The drafter of a UDAP pleading should always consider a common law deceit or fraud claim where a practice is egregious.1246 The UDAP claim may provide attorney fees, while the common law action may provide substantial punitive damages. An excellent example of the utility of adding a common law fraud claim is a used car case in which the individual plaintiff received $210,000 in punitive damages on a fraud claim, plus attorney fees on the UDAP claim.1247

Unfair and Deceptive Acts and Practices: 11.6.8 Preparing for Settlement

Being prepared for settlement efforts is critical.1271 The consumer’s attorney should be ready to take advantage of an opening to resolve the case favorably. Having an analysis of the settlement value of the case helps avoid settling it for much less than it is worth or much less than the opposing side is willing to pay.

Unfair and Deceptive Acts and Practices: 11.7.1 Starting Discovery Early

Immediately upon accepting a case, the consumer’s attorney should begin to plan for discovery. Sales representatives and even certain companies are highly mobile, and if discovery does not take place early, it may never take place. Moreover, the longer the consumer litigant delays taking depositions, the longer the seller has to cover its tracks. A fraudulent dealer’s fear of being examined at a deposition may also speed settlement.

Unfair and Deceptive Acts and Practices: 11.7.3 Document Requests and Admissions

Documents in the hands of the seller are often critical to proof of the consumer’s case. A document preservation letter can be sent even before discovery is permitted. Document discovery should begin immediately upon filing of the case if permitted by applicable rules. The federal rules, however, require preliminary steps before discovery can commence, such as a conference with opposing counsel.

Unfair and Deceptive Acts and Practices: 11.7.4 Depositions

Interrogatories, while useful to ferret out cut-and-dried facts such as dates, names, addresses, job duties, and licensure information, are no substitute for depositions in UDAP cases, which are often highly fact dependent. Interrogatory answers are usually artfully phrased by the defendant’s attorney to give as little information as possible to the plaintiff. A deposition, in contrast, allows the consumer to get the witness’s answers in the witness’s own words while also assessing the witness’s demeanor.

Unfair and Deceptive Acts and Practices: 11.7.6 Other Approaches to Obtaining Evidence

The state attorney general, the FTC, local consumer or district attorney offices, Better Business Bureaus and, most importantly, the state, federal or local regulatory agencies with responsibility for the seller’s activities may have collected consumer complaints, records, data, or reports concerning the seller and may also impose special requirements the seller must follow.

Unfair and Deceptive Acts and Practices: 11.8.1.2 Other Bad Acts

Evidence of the seller’s unfair or deceptive acts toward others is powerful evidence. There are at least nine ways to introduce this evidence, even though the general rule is that a consumer cannot introduce such evidence to prove the defendant’s character:

Unfair and Deceptive Acts and Practices: 11.8.1.3 Expert Testimony

The consumer’s attorney should determine whether expert testimony is necessary to establish any elements of the UDAP claim.1320 Even if expert testimony is not essential to the claim, it may be helpful on key issues such as whether the seller’s price was reasonable, whether work was performed properly, or whether a service was necessary or valuable.