United States: Pa. Needs Regulatory Compliance Defense To UTPCPL Actions

Pennsylvania's Unfair Trade Practices and Consumer Protection Law can impose additional — and sometimes inconsistent — restrictions on industries already subject to extensive regulation by state and federal authorities. Good arguments can be made that Pennsylvania should embrace, if not a full-blown safe harbor for highly regulated industries, at least a regulatory compliance defense to claims brought under the UTPCPL. In theory at least, regulatory authorities balance the cost of regulation against the value of restricting particular business conduct in promulgating and enforcing regulation. Private UTPCPL litigation does not weigh such considerations, focusing instead on the nature of the parties' conduct and losses in a single or series of transactions. Where a regulatory body has balanced the competing equities and elected to regulate business conduct in a certain manner, a business should be able to rely on its compliance with that regulation to show that its conduct was neither deceptive nor unfair in private UTPCPL litigation.

A regulatory compliance defense should not be confused with an express regulatory exemption from a consumer protection statute. The regulatory compliance defense permits a presumption against unfairness and deception or admits evidence of a defendant's compliance with a statute or regulation that governs the trade practice alleged to be unfair or deceptive. By contrast, a regulatory exemption typically is created by statute, and exempts a regulated industry from the application of the consumer protection statute. About two-thirds of the states have an express exemption for regulated industries in their consumer protection statute, although Pennsylvania is not one of them.

Although no Pennsylvania court has relied exclusively on a regulatory compliance defense, decisions suggest that it is an evidentiary consideration. In Fay v. Erie Ins. Group,1 the Superior Court was troubled by the nature of the plaintiff's claims in that the defendant insurer had complied with Pennsylvania's insurance laws regarding the stacking of first party benefits. The plaintiff in Fay brought a class action for accidental death benefits under more than one insurance policy. Although the plaintiff claimed to have paid for more than one death benefit, the policies did not permit the "stacking" of death benefits. The Superior Court couched its decision on whether the UTPCPL required an express misrepresentation. However, the court also acknowledged the administrative enforcement of the Unfair Insurance Practices Act, which does not contain a private right of action.2 In so doing, the court considered the defendant's compliance with applicable insurance law.

[T]he insurer's practice of offering and collecting premiums for duplicative benefits that cannot be collected may appear to be unfair. However, motor vehicle insurance is a matter that it heavily regulated by both state statute and the Insurance Commissioner. The policy here complied with the [law] and [the insurer] is entitled to charge premiums, the rates of which are approved by the Insurance Commissioner, for first party benefits requested by its insureds. If [plaintiff] deems the practice objectionable, her remedy is to bring the matter to the attention of the legislature or the Insurance Commissioner rather than to seek a judicial solution.3

While perhaps dicta, this language suggests that compliance with applicable laws in a highly regulated arena should be considered in defense of an UTPCPL claim. Similarly, in Grudkowski v. Foremost Ins. Co,4 the court ruled that coverage that complied with the law did not state a claim under the UTPCPL, notwithstanding the plaintiff's contentions that the extent of coverage was misrepresented.5 Other decisions have suggested that lawful conduct should not violate the UTPCPL.6

Closely related to the regulatory compliance defense are the doctrines of implied preemption, primary jurisdiction and judicially construed exemptions. Each of these doctrines act to limit the purview of the UTPCPL over businesses as a result of federal and regulatory oversight, and thus generally support the regulatory compliance defense. By way of example, preemption can preclude enforcement of the UTPCPL either expressly in a federal statute, through a federal statute fully occupying the field or through conflict or impossibility of compliance with both federal and state law.7 Thus, the UTPCPL can be preempted by federal law where what is required under federal law is prohibited as an unfair trade practice under the UTPCPL. However, conflict or impossibility preemption is narrowly applied, and courts breathe life into both state and federal law to the extent possible.8

The primary jurisdiction doctrine also limits the application of the UTPCPL in highly regulated fields and thus supports the concept of a regulatory compliance defense. The primary jurisdiction doctrine counsels courts to refrain from exercising jurisdiction over a claim where an issue is within the jurisdiction of an administrative agency and involves complex subject matter beyond the knowledge of the fact finder.9 The primary jurisdiction doctrine has been applied to prevent UTPCPL claims.10

Finally, as additional support for a regulatory compliance defense, some courts have reasoned that exemption from the UTPCPL covers certain regulated fields, even though the UTPCPL does not contain an express statutory exemption for the field. For example, courts have found that the UTPCPL does not apply to claims against providers of medical services,11 the sale of investment securities,12 attorney misconduct13 and exposure is limited for prescription drug and medical device manufacturers through the learned intermediary rule.14 It should be noted the exemption is limited to the UTPCPL, as parties asserting against such businesses generally can proceed under tort law.

If a statute or regulation addresses the specific conduct at issue, a defendant should be able to show that it complied with statutes or regulations pertaining to the conduct alleged to violate the UTPCPL. Similarly, a defendant should be able to introduce evidence that a regulatory body has determined that conduct under the UTPCPL is legal. If a regulatory body decides that certain conduct is permitted, it would follow that the permitted conduct could not be "unfair" or "deceptive" within the meaning of the UTPCPL. Certainly, businesses should be permitted to present this evidence to the fact finder in the UTPCPL claims.

Originally published by Law360, May 14, 2014.


1 723 A.2d 712, 715 (Pa. Super. 1999).

2 723 A.2d at 714.

3 Id. at 715 (emphasis added).

4 No. 3:cv-12-1847, 2013 U.S. Dist. LEXIS 30567 (M.D. Pa. Mar. 5, 2013), aff'd, 2014 U.S. App. LEXIS 3738 (3d Cir. (Pa.) Feb. 27, 2014).

5 Id. at *20 (noting that the policies "sold by [defendant] complied with Pennsylvania law"); Id. at *30 (the policies contained "clear, lawful coverage limitations").

6 Fisher v. Aetna Life Ins. & Annuity Co., 39 F. Supp. 2d 508, 512 n.2 (M.D. Pa. 1998), aff'd, 176 F.3d 472 (3d Cir. 1999); Porter v. NationsCredit Consumer Discount Co., No. 03-03768, 2006 U.S. Dist. LEXIS 83161 (E.D. Pa. Nov. 14, 2006), aff'd, 285 Fed. Appx. 871 (3d Cir. 2008)(noting compliance with required disclosures); Commonwealth ex rel. Zimmerman v. Nickel, 26 Pa. D. & C.3d 115, 124 (Mercer Co. 1983) ("Ordinarily, where acts are lawful individually, their combination does not become unlawful . . ..")

7 Mwantembe v. TD Bank, N.A., 669 F. Supp. 2d 545, 550 (E.D. Pa. 2009); Neill v. State Farm Fire & Cas. Co, 159 F. Supp. 2d 770 (E.D. Pa. 2000).

8 See Dougherty v. Wells Fargo Home Loans, Inc., 425 F. Supp. 2d 599, 608 (E.D. Pa. 2006).

9 See, e.g. in re Insurance Stacking Litigation , 754 A.2d 702 (Pa. Super. Ct. 2002).

10 Pettko v. Pennsylvania American Water Co., 39 A.3d 473 (Pa. Commw. Ct. 2012), appeal denied, 51 A.3d 839 (2012).

11 Walter v. Magee-Womens Hospital of UPMC Health System, 876 A.2d 400 (Pa. Super. Ct. 2005), aff'd, 906 A.2d 1194 (2006).

12 Algrant v. Evergreen Valley Nurseries, Ltd., 126 F.3d 178 (3d Cir. 1997).

13 Beyers v. Richmond, 937 A.2d 1082 (Pa. 2007).

14 Kee v. Zimmer, Inc., 871 F. Supp. 2d. 405 (E.D. Pa. 2012).

This article is for general information and does not include full legal analysis of the matters presented. It should not be construed or relied upon as legal advice or legal opinion on any specific facts or circumstances. The description of the results of any specific case or transaction contained herein does not mean or suggest that similar results can or could be obtained in any other matter. Each legal matter should be considered to be unique and subject to varying results. The invitation to contact the authors or attorneys in our firm is not a solicitation to provide professional services and should not be construed as a statement as to any availability to perform legal services in any jurisdiction in which such attorney is not permitted to practice.

Duane Morris LLP, a full-service law firm with more than 700 attorneys in 24 offices in the United States and internationally, offers innovative solutions to the legal and business challenges presented by today's evolving global markets. Duane Morris LLP, a full-service law firm with more than 700 attorneys in 24 offices in the United States and internationally, offers innovative solutions to the legal and business challenges presented by today's evolving global markets. The Duane Morris Institute provides training workshops for HR professionals, in-house counsel, benefits administrators and senior managers.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions