Pennsylvania’s Highest Court Supports Award of All Available Consumer Remedies in UDAAP, Fraud Case

Pennsylvania consumers just won a remarkable victory when the state’s highest court confirmed that they have the right to recover all available remedies, including punitive damages and statutory treble damages, in the same case, to combat unfair, deceptive, and fraudulent practices.

In 2019, a jury awarded Earl John and Christine Dwyer compensatory damages and punitive damages against Ameriprise Financial, Inc. after finding that the financial planning firm negligently and fraudulently induced them into purchasing a universal life insurance policy in 1985. As a result of the misrepresentations, the Dwyers surrendered other life insurance policies that they had previously held. In addition to the finding of common law negligence and fraud, the trial court also found that Ameriprise violated Pennsylvania’s UDAAP statute, the Unfair Trade Practices and Consumer Protection Law.

Under the state’s UDAAP law, the trial court had discretion to award the Dwyers treble damages. Specifically, the law stated that any person who suffers an “ascertainable loss” from unlawful conduct may bring a private action and may be awarded up to three times the actual damages and additional remedies. However, the trial court declined to do so, claiming that since the Dwyers had been awarded punitive damages, treble damages would be duplicative. It was a narrow and restrictive interpretation of the law.

In its landmark decision decided on April 25, the Pennsylvania Supreme Court reversed the lower court, holding that the trial court erred by failing to exercise its discretion to award treble damages. The state’s highest court held that the availability of damages under the state UDAAP law was not dependent on any other damages a consumer is entitled to, and that restricting damages in this way does not serve the purpose of the law. According to the PA Supreme Court, punitive damages expressly do not serve the same purpose and cannot be a substitute for the remedial statutory damages that the law provides.

Instead, the trial court’s discretion is limited to enforcing the legislative goals of Pennsylvania’s UDAAP law. The purposes of the UDAAP statute to incentivize harmed consumers’ private enforcement of the law, to compensate harmed consumers for their “ascertainable loss,” and to deter wrongful conduct through the imposition of enhanced damages. The Court defined “ascertainable loss” which can include a consumer’s “time, energy, stress, travel, lost work, childcare expenses, and opportunity costs” since actual damages may be insufficient to compensate harmed consumers for these expenditures.

“One of the most important points in the decision relates to the establishment of clear guidelines for the trial courts and attorneys to follow, said NACA member Ken Behrend, attorney for the Dwyers. “While handling consumer protection cases for the past 30 years, every time it came to the question about whether the court would award treble damages there were no clear guidelines, so courts would say they had discretion to do whatever the court deemed to be appropriate, rather than enforce the legislative goals.”

Consumer advocates agreed. The trial court’s reasoning undermined the legislative intent behind the UDAAP law, argued NACA and partner organizations in an amicus brief filed on their behalf while the case was on appeal. In many cases where consumers are harmed, the actual damages a consumer suffers may be too small for them to consider going up against a corporation with significantly more resources in court. As a result, corporations can escape accountability when it inflicts many small harms on consumers. Allowing treble damages in the statute would deter such misconduct. By contrast, punitive damages are meant to punish corporations that act egregiously.

By ruling that statutory treble damages could not be replaced by punitive damages, the Supreme Court reaffirmed the state UDAAP law’s purpose and role in ensuring that Pennsylvania consumers can receive justice after being harmed by illegal corporate conduct. This decision sets an encouraging precedent for Pennsylvania courts’ application of their consumer protection statutes.

NACA members Cary Flitter, Andrew Milz, Jody Lopez-Jacobs, Michael Donovan, Michael Quirk, Irv Ackelsberg, and attorneys at Community Legal Services prepared and submitted the amicus brief on behalf of NACA and partner organizations, which led to this landmark decision.