United States: Key Updates Regarding the Massachusetts Consumer Protection Act – Chapter 93A

Brett D. Carroll and Michael T. Maroney are Partners in our Boston office .

HIGHLIGHTS:

  • Litigation involving claims of unfair or deceptive business practices under Chapter 93A of the Massachusetts General Laws remain a favorite for the plaintiffs' bar, particularly given the potential recovery under the statute for multiple damages and attorneys' fees.
  • Companies doing business in Massachusetts should be cognizant of how Chapter 93A claims are being used in their industry, as well as the various efforts to expand liability and damages for violations of the statute.
  • Courts have recently issued several significant decisions in this area, including ones that impact consumer pre-suit notice requirements, whether postjudgment interest can be included in the amount of a judgment to be multiplied and whether Chapter 93A demand letters are the functional equivalent of filing a lawsuit.

Litigation involving claims of unfair or deceptive business practices under Chapter 93A of the Massachusetts General Laws is constantly evolving, and these claims remain a favorite for the plaintiffs' bar, particularly given the potential recovery under the statute for multiple damages and attorneys' fees. Companies that do business in Massachusetts need to be cognizant of how Chapter 93A claims are being used in their industry, as well as the various efforts to expand liability and damages for violations of the statute. Below is a summary of some key recent decisions in this area.

Consumer Pre-Suit Notice Requirements

In late December 2016, the Massachusetts Supreme Judicial Court (SJC) provided further clarification concerning when a consumer must send a pre-suit demand letter to a business allegedly engaged in unfair and deceptive trade practices. The Court concluded that, consistent with the express statutory language under Chapter 93A, a consumer is not required to send a pre-suit letter in order to maintain a claim if the relevant company either does not have a place of business in Massachusetts or does not have assets in Massachusetts.

In Moronta v. Nationstar Mortgage, LLC, 476 Mass. 1013 (2016), the Court considered whether a mortgagor was required to give his mortgage servicer a demand letter 30 days prior to filing suit in order to allow the business the opportunity to respond to the allegations with a reasonable settlement offer. Typically, most attorneys understood, or at least followed, the practice that to file a consumer suit under Chapter 93A and have the ability to collect multiple damages and fees, the consumer must serve a pre-suit demand letter on the defendant. After being served, the business/defendant had 30 days to prepare a response with a reasonable settlement offer. If the business/defendant failed to do so, it could be punished for allegedly failing to make a good faith effort to resolve the matter early.

The mortgage servicer argued that the complaint should have been dismissed because the consumer had failed to send a pre-suit demand letter. The consumer argued that, pursuant to the unambiguous language of the statute, a pre-suit demand is unnecessary if either: a) the business does not have an office in Massachusetts, or b) the business has no assets in Massachusetts.

The SJC – employing the long-held rule that "a statute must be interpreted according to the intent of the Legislature ascertained from all its words construed by the ordinary and approved usage ..." – concluded that the plain language of Chapter 93A §9(3) required only that the defendant either "not maintain a place of business" or "not keep assets within the Commonwealth ... " and stated that the absence of "either [prong] would be sufficient on its own and that it is not necessary to establish both." The Court concluded that a contrary result would be inconsistent with 93A's purpose as a "broad remedial statute" intended to "deter misconduct" and "to encourage vindictive lawsuits" since the consumer would be obligated to "undertake the formidable task of verifying the [business] has no assets in Massachusetts before being relieved" of the burden of sending a demand.

The impact of this decision is more significant than simply whether a consumer's claim can be dismissed pre-suit if the notice is not served. Instead, if an out-of-state company has no office in Massachusetts (or no assets – which is typically more difficult to assert), the business may have limited ability to try to resolve the matter pre-suit, or limit the award of multiple damages or fees. Instead, as the SJC noted, the business can otherwise "employ the provisions of [93A and try to limit multiple damages and fees] by making a written offer of relief and paying the rejected tender into court as soon as practicable after receiving notice of an action commenced ..." In other words, only after the suit is filed can a business respond with a settlement offer. But, unlike in the pre-suit phase, the business must pay into the court registry the "rejected tender." This is a burden some companies may not want to incur, especially if the "offer" is relatively substantial.

Postjudgment Interest Not Part of Multiple Damages Award

In February 2017, the SJC held that postjudgment interest should not be included in the amount of the judgment to be doubled or trebled for a willful or knowing violation of Chapter 93A. See Anderson v. National Union Fire Ins. Co., SJC-12108, 2017 WL 445244, at *1 (Mass. Feb. 2, 2017).

In Anderson, the plaintiffs filed a personal injury action for serious injuries suffered after one of the plaintiffs was struck by a bus owned by Partners HealthCare Systems Inc. (Partners). The plaintiffs sought to reach a settlement with Partners' insurers but the insurers rejected the plaintiffs' demand and declined to enter into settlement negotiations. After the plaintiffs obtained a multimillion-dollar jury verdict in the personal injury action, they filed a separate action against the insurers for unfair and deceptive insurance settlement practices in violation of M.G.L. Chapter 176D, §3, and Chapter 93A, §9(3).

The Superior Court judge found that the defendants violated Chapter 176D, §3(9)(d) by failing to conduct a reasonable investigation; by failing to effectuate a prompt, fair and equitable settlement in which liability had become reasonably clear; and by pursuing an unreasonable appeal of the underlying personal injury judgment. The judge also concluded that these violations were willful and egregious, warranting an award of punitive damages under Chapter 93A, §9(3). Accordingly, he awarded the plaintiffs treble damages, using the combined amount of the underlying tort judgment and the accrued postjudgment interest on that judgment as the "amount of the judgment" to be multiplied.

The issue before the SJC was whether postjudgment interest was properly included in the "amount of the judgment" to be multiplied under Chapter 93A, §9(3). The Court concluded that it was not. The Court reasoned that, although prejudgment interest is added to the underlying amount of damages and becomes an integral part of the judgment itself, postjudgment interest is separate and distinct from the underlying amount of damages because it serves to provide compensation to a prevailing party for delay in payment after the underlying obligation has been established.

Chapter 93A Demand Letters Not Functional Equivalent of a Suit

In another case that should be of interest to insurers and insureds, the U.S. Court of Appeals for the First Circuit in December 2016 declined to hold that Chapter 93A demand letters are the functional equivalent of filing a lawsuit. See Sanders v. Phoenix Ins. Co, 843 F.3d 37 (1st Cir. 2016).

In Sanders, the homeowners insurance policy at issue provided the insurer with a duty to defend, which applied to lawsuits, and a right to investigate, which applied to both lawsuits and claims. Based on the policy language, the insurer claimed that it had no obligation to provide a defense in the absence of a suit. The plaintiff argued that his pre-suit Chapter 93A demand letter triggered the duty to defend because it was similar to a notice letter under the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), which the SJC held in Hazen Paper Co. v. U.S. Fid. & Guar. Co., 407 Mass. 689 (1990) triggered a duty to defend. The First Circuit rejected the plaintiff's argument, noting that the SJC's decision in Hazen Paper was narrow and case specific, and that Chapter 93A demand letters are more comparable to demand letters sent in garden-variety personal injury actions. Because a suit was never filed triggering the insurer's duty to defend, the First Circuit affirmed the dismissal of the plaintiff's complaint.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.