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1.8 Determining Whether a UDAP Claim Should Be Pursued

In a case of first impression, how compelling the facts are may have an important impact on the development of UDAP law in the state. Similarly, the opposing attorney, the defendant, and the court deciding the case may all have an important impact on the case’s outcome and thus the creation of UDAP precedent.

Consider whether the statute provides for attorney fees and multiple, minimum, or punitive damages.98 If the UDAP statute does not authorize punitive damages, explore whether there are grounds for adding a common law deceit count.

Most UDAP statutes provide for fee awards to prevailing consumers, but some do not provide for any fee-shifting and some provide for a fee award to a prevailing defendant on the same basis as to the consumer. The latter type of provision greatly magnifies the risk for a consumer, and can deter legitimate consumer claims. In jurisdictions with two-way UDAP fee provisions, it may be wise in some circumstances for consumers to avoid UDAP claims.

Another factor is the posture in which the case begins. In collection cases, if a UDAP count is not brought as a counterclaim, state compulsory counterclaim rules may foreclose the consumer’s subsequent assertion of the claim.

When a consumer complaint involves a small amount of damage, the deception is not widespread or egregious, and the issues are essentially factual, not legal, the consumer may decide to go to small claims court on his or her own. An attorney can assist the client in drafting a complaint and other documents necessary for the small claims court action. Another option is referring the client to a consumer action group or similar self-help consumer organization.

Sending a forceful demand letter to the seller before drafting a complaint may result in a favorable settlement offer, eliminating the need to determine whether to pursue a case to litigation. However, some advocates believe that demand letters tip a litigant’s hand too early. Some states require a demand letter before a UDAP claim can be filed.99

If a consumer’s debt is roughly equal to the possible UDAP recovery, and the client has stopped paying the debt, one course of action is to await a collection action, bringing UDAP counterclaims at that time. If the UDAP statute of limitations is an issue, the consumer attorney must be clear about state courts’ treatment of recoupment claims before advising this approach.100 In addition, a recoupment claim cannot exceed the amount being sought on the debt, which may diminish the consumer’s potential recovery when treble or punitive damages are available. Bringing an affirmative suit may also be a stronger posture for a litigant in the eyes of the court.

Determine if a class action is a practical way to pursue a case even if an individual case is not feasible. UDAP minimum statutory damages are available for each class member in some states,101 and attorney fees are available in most states. It is often easier to show a common UDAP fact pattern than a common pattern in a common law fraud case. Standard form contracts, media advertising, print claims, widespread nondisclosure, or standardized sales pitches may make a UDAP class action appropriate.102