Commonwealth v. Golden Gate Nat'l Senior Care LLC , 194 A.3d 1010 ( 2018 )

[J-35-2018]
IN THE SUPREME COURT OF PENNSYLVANIA
MIDDLE DISTRICT
SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.
COMMONWEALTH OF PENNSYLVANIA : No. 16 MAP 2017
ACTING BY ATTORNEY GENERAL, :
JOSH SHAPIRO, : Appeal from the Order of the
: Commonwealth Court at No. 336 MD
Appellant : 2015 dated March 22, 2017
:
v. : ARGUED: May 16, 2018
:
GOLDEN GATE NATIONAL SENIOR :
CARE LLC; GGNSC HOLDINGS LLC; :
GGNSC ADMINISTRATIVE SERVICES :
LLC; GGNSC CLINICAL SERVICES LLC; :
GGNSC EQUITY HOLDINGS LLC; :
GGNSC HARRISBURG LP; GGNSC :
HARRISBURG GP, LLC; GGNSC CAMP :
HILL III LP; GGNSC CAMP HILL III GP, :
LLC; GGNSC CLARION LP; GGNSC :
CLARION GP, LLC; GGNSC :
GETTYSBURG LP; GGNSC :
GETTYSBURG GP, LLC; GGNSC :
ALTOONA HILLVIEW LP; GGNSC :
ALTOONA HILLVIEW GP, LLC; GGNSC :
LANSDALE LP; GGNSC LANSDALE GP, :
LLC; GGNSC MONROEVILLE LP; GGNSC :
MONROEVILLE GP, LLC; GGNSC MT. :
LEBANON LP; GGNSC MT. LEBANON :
GP, LLC; GGNSC PHOENIXVILLE II LP; :
GGNSC PHOENIXVILLE II GP, LLC; :
GGNSC PHILADELPHIA LP; GGNSC :
PHILADELPHIA GP, LLC; GGNSC :
WILKES-BARRE II LP; GGNSC WILKES- :
BARRE II GP, LLC; GGNSC :
TUNKHANNOCK LP; GGNSC :
TUNKHANNOCK GP, LLC; GGNSC ERIE :
WESTERN RESERVE LP; GGNSC ERIE :
WESTERN RESERVE GP, LLC; GGNSC :
POTTSVILLE LP; GGNSC POTTSVILLE :
GP, LLC, :
:
Appellees :
OPINION
JUSTICE DONOHUE DECIDED: September 25, 2018
The Office of the Attorney General (“OAG”), on behalf of the Commonwealth,
filed suit against more than two dozen nursing homes and their parent companies
(collectively, “Appellees”),1 alleging violations of the Unfair Trade Practices and
Consumer Protection Law, 73 Pa.C.S. §§ 201-1 - 201.9.3 (“UTPCPL”), and unjust
enrichment. Upon consideration of Appellees’ preliminary objections, the
Commonwealth Court dismissed the claims and this appealed followed.2 For the
reasons discussed herein, we find that the dismissal of the UTPCPL claims was
improper, but the dismissal of the unjust enrichment claim was proper because the
claim was filed prematurely. Accordingly, we reverse the Commonwealth Court’s order
and remand for further proceedings.
Appellees are individual nursing homes located throughout Pennsylvania as well
as their affiliated companies and parent entities. On July 1, 2015, the OAG filed a
complaint and petition for injunctive relief in the Commonwealth Court’s original
jurisdiction alleging violations of the UTPCPL and unjust enrichment. The complaint
named the Parent Companies and fourteen Facilities. Following the filing of preliminary
1 Appellees include five parent companies, GGNSC Administrative Services, LLC;
GGNSC Clinical Services, LLC; GGNSC Holdings, LLC; Golden Gate National Senior
Care, LLC; and GGNSC Equity Holdings, LLC (“Parent Companies”), as the owners of
the individual nursing home facilities (“Facilities”).
2 See 42 Pa.C.S. § 723(a) (providing that this Court has jurisdiction over appeals from
final orders in matters originally commenced in the Commonwealth Court, subject to
three exceptions not implicated here).
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objections, the OAG filed an amended complaint asserting the same claims and naming
an additional eleven Facilities as defendants.3
Although raised under four discrete provisions of the UTPCPL, specifically,
sections (4)(v), (ix), (x), and (xxi), discussed infra, the essence of the OAG’s UTPCPL
claims is that through deceptive advertisements and marketing materials, Appellees
made materially misleading statements about the nature and quality of the care
provided to their nursing home residents. Amended Complaint, 9/8/2015, ¶¶ 6, 11, 77-
88. The OAG further alleged that Appellees knowingly failed to provide the level of care
they advertised, as they purposefully understaffed the facilities so as to maximize their
profits. Id., ¶¶ 13, 16, 106. The OAG alleged that the actionable conduct occurred in
chain-wide and facility-level misrepresentations. Id., ¶¶ 10-11, 77-107. With regard to
the chain-wide misrepresentations, the OAG claimed that through various marketing
materials, including brochures, videos, websites, and video advertisements, Appellees
misrepresented the level of basic care provided to their residents in their facilities. Id., ¶
82. By way of example, the OAG pointed to multiple statements, including the following:
 “Snacks and beverages of various types and
consistencies are available at any time from your
nurse or nursing assistant.”
 “We have licensed nurses and nursing assistants
available to provide nursing care and help with
activities of daily living … . Whatever your needs are,
we have the clinical staff to meet those needs.”
 “Clean linens are provided for you on a regular basis,
so you do not need to bring your own.”
3 The OAG also raised a claim for breach of contract, which it subsequently withdrew.
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 “A restorative plan of care is developed to reflect the
resident’s goals and is designed to improve wellness
and function. The goal is to maintain optimal
physical, mental and psychological functioning.”
 “A container of fresh ice water is put right next to your
bed every day, and your nursing assistant will be glad
to refill or refresh it for you.”’
 “We work with an interdisciplinary team to assess
issues and nursing care that can enhance the
resident’s psychological adaptation to a decrease of
function, increase levels of performance in daily living
activities, and prevent complications associated with
inactivity.”
Id., ¶¶ 83-84. The OAG averred that based on information it received through former
residents and employees of the Facilities, these statements are misleading because
they create the impression that the Facilities will provide care that the Facilities do not in
fact provide. Id. ¶¶ 85-87. In contrast to the impression that these statements give, the
OAG claimed that residents routinely have to wait hours for food, assistance with
toileting, changing of soiled bed linens, and other elements of basic care, and
sometimes must forgo them entirely. See id.
On the individual facility level, the OAG alleged that the Facilities made
misrepresentations not only by providing the marketing materials addressed above, but
also in the resident assessment and care plans created for each resident. Id., ¶¶ 91-92.
These care plans, which are created after an evaluation of the resident and updated
quarterly, detail the types of assistance that the facility will provide each resident based
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upon his or her need.4 Id., ¶ 92. The OAG alleged that the services promised in the
care plans were not provided because of intentional understaffing. Id., ¶ 98.
Further, the OAG contended that the Facilities generated billing statements
which indicated that certain care was provided when it was not. Id. ¶¶ 99-100. Of
importance, for residents who received Medicaid or Medicare, these billing statements
were paid by the Pennsylvania Department of Human Services (“DHS”) with public
funds. Finally, the Commonwealth alleged that the Facilities deceived the Pennsylvania
Department of Health (“DOH”) as to the levels of care they provided by temporarily
increasing the number of staff on hand during DOH inspections and by willfully creating
inaccurate and/or falsified resident care records for DOH’s review. See id., ¶¶ 101-104.
For all of these violations, the OAG sought an injunction prohibiting Appellees
from engaging in the alleged misconduct, as permitted by section 4 of the UTPCPL, as
well as restitution (or “restoration”), as permitted by section 4.1 of the UTPCPL,
“including monies paid by consumers and the Commonwealth in the form of per diem
payments[.]” Id., ¶ 272 (citing 73 P.S. §§ 201-4, 201-4.1). It also sought civil penalties
of $1000 to $3000 for each violation (the amount increasing with the age of the victim),
as provided by section 8(b) of the UTPCPL. Id., ¶ 271 (citing 73 P.S. § 201-8(b)).
Regarding its unjust enrichment claim, the OAG asserted that Parent Companies
directed the Facilities to transfer the amounts received as a result of their deceptive
billing practices, including amounts paid by DHS, to them. Id., ¶¶ 279-280. The
4 For instance, the care plans would indicate whether staff is needed to perform various
activities of daily living, and if so, how many staff members were needed. Amended
Complaint, 9/8/2015, ¶ 92.
[J-35-2018] - 5
Commonwealth asked that Parent Companies be ordered to disgorge all money
received through these allegedly unlawful actions. Id., ¶ 281.
Appellees filed numerous preliminary objections, challenging, inter alia, the
OAG’s standing to bring these claims, the failure to state claims upon which relief could
be granted and insufficient specificity in the amended complaint. Following argument,
the Commonwealth Court issued a lengthy opinion in which it overruled a few of
Appellees’ preliminary objections5 but sustained the majority of them, and dismissed the
amended complaint.
Commonwealth Court Decision
UTPCPL Claims
The Commonwealth Court first considered Appellees’ claim that the OAG failed
to establish that the complained-of marketing and advertising materials violated sections
4(v) and (xi) of the UTPCPL because the statements therein were “so vague and
indefinite as to categorically qualify as puffery[,]” which is not actionable under the
UTPCPL. Preliminary Objections, 10/8/2015, ¶¶ 48-49. The Commonwealth Court
agreed, noting that “puffery is an exaggeration or overstatement expressed in broad,
vague, and commendatory language.” Commonwealth v. Golden Gate Nat’l Senior
Care LLC, 158 A.3d 203, 215 (Pa. Commw. 2017). The court then addressed the
identified statements and found each to be so broad and vague, or merely expressive of
5 Appellees’ challenges to the OAG’s standing to bring this action were resolved by the
Commonwealth Court’s decision in GGNSC Clarion LP v. Kane, 131 A.3d 1062
(Pa. Commw. 2016), aff’d per curiam, 152 A.3d 983 (Pa. 2016), and so the court
overruled the two preliminary objections raised on that basis. Commonwealth v. Golden
Gate Nat’l Senior Care, LLC, 158 A.3d 203, 210 (Pa. Commw. 2017). The court also
overruled Appellees’ objection that the Commonwealth failed to state its claim of fraud
under section (4)(xxi) of the UTPCPL with the requisite particularity. Id. at 226.
[J-35-2018] - 6
intent, as to constitute puffery. As such, it concluded that they could not support a claim
of a UTPCPL violation on a chain-wide or facility-level basis. Id. at 217, 219.
With regard to its dismissal of the claims founded on resident assessments, care
plans and bills, the Commonwealth Court relied primarily on a federal case from the
Eastern District of Pennsylvania, Seldon v. Home Loan Serv., Inc., 647 F. Supp. 2d 451
(E.D. Pa. 2009), which involved claims brought pursuant to sections 4(v) and (ix) of the
UTPCPL. The Commonwealth Court read Seldon to provide that for an alleged
misrepresentation to be actionable under these provisions, the misrepresentation must
have been advertised or otherwise made in a manner that impacted a purchasing
decision, and further, that isolated statements to potential customers (as opposed to
widespread dissemination to the public at large) do not constitute advertising. Golden
Gate, 158 A.3d at 220-21 (discussing Seldon, 647 F. Supp. 2d at 466). Adopting this
theory, the Commonwealth Court concluded that because the statements in resident
care plans were made to individual residents of the Facilities, they cannot constitute a
violation. Id. at 222. It also reasoned that because resident care plans are created after
an individual has been admitted to a facility, the statements therein could not have
impacted a purchasing decision, including the decision to enter one of the Facilities. Id.
Having addressed the demurrers, the Commonwealth Court turned its attention
to Appellees’ preliminary objection on the basis of insufficient specificity. Appellees
argued that the allegations in the amended complaint were insufficiently specific
because the OAG failed to identify any particular care plans or resident assessments
from which the care provided by the facility deviated, or to identify any particular
instance when a facility billed a resident or the Commonwealth for services that were
[J-35-2018] - 7
not actually provided. See Preliminary Objections, 10/8/2015, ¶ 63. According to
Appellees, “the only factual support the Commonwealth provided for its conclusory
allegations took the form of vague, general and non-specific statements attributed to
unnamed, former employees and other ‘Confidential Witnesses.’” Golden Gate, 158
A.3d at 223 (quoting Preliminary Objections, 10/8/2015, ¶ 63).
The Commonwealth Court acknowledged that Rule of Civil Procedure 1019
requires a plaintiff to plead all facts that must be proven for recovery and that the
pleading must be sufficiently specific so as to allow the defendant to prepare its
defense. Id. at 223-24. It agreed with Appellees that the OAG failed to meet this
standard because it did not make allegations as to any “particular care plan … from
which the Facility deviated, or … identify[] any specific bill for services that were not
provided.” Id. at 224. The court also agreed with Appellees that the allegations were
insufficiently specific because with regard to the complained-of billing statements, the
OAG did not allege “how a consumer could be misled by a billing statement to believe
that he received services or assistance that he had not in fact received, or how an un-
itemized per diem charge could convey to a consumer that a particular service had
been provided in the first place.” Id. This error was exacerbated, in the court’s view, by
the fact that the OAG did not attach to the amended complaint any of the documents
upon which its claim was based. Id. (citing Pa.R.C.P. 1019(i) (requiring pleader to
attach writing upon which a claim is based to the pleading or explain inability to do so)).
For these reasons, it sustained the preliminary objection.6
6 We note that the Commonwealth Court’s disposition on this point addressed only
Appellees’ claim of lack of specificity with regard to claims asserted under section 4(xxi).
(continued…)
[J-35-2018] - 8
The last preliminary objection relating to the UTPCPL claims challenged the
Commonwealth’s eligibility to recover under section 4.1 of the UTPCPL, which provides
as follows:
Whenever any court issues a permanent injunction to
restrain and prevent violations of this act as authorized in
section 4 above, the court may in its discretion direct that the
defendant or defendants restore to any person in interest
any moneys or property, real or personal, which may have
been acquired by means of any violation of this act, under
terms and conditions to be established by the court.
73 P.S. § 201-4.1.
Appellees argued that section 4.1 limits eligibility to receive restoration to
“persons” as defined in the UTPCPL, and that pursuant to this Court’s decision in Meyer
v. Cmty. College of Beaver County, 93 A.3d 806 (Pa. 2014) (“Meyer II”), the
Commonwealth does not fall within that definition. Preliminary Objections, 10/8/2015,
¶¶ 91-94. In Meyer II, this Court considered whether a political subdivision agency is a
“person” as that term is defined in section 2(2) the UTPCPL, such that it may be subject
to liability thereunder, and decided that it is not. See Meyer II, 93 A.3d at 815.
Appellees argued that this determination precludes the Commonwealth from being a
“person” entitled to seek restoration under section 4.1 of the UTPCPL; the thrust of their
argument being that the term “person” should be interpreted consistently throughout the
UTPCPL. Relying heavily on a case from the United States District Court for the
(…continued)
Appellees also objected on this basis to the OAG’s claims raised pursuant to
subsections (v) and (ix), which involve statements in marketing materials and
advertisements. Golden Gate, 158 A.3d at 226. The court did not address that
objection in terms of specificity of the allegations; instead, it sustained the objection
because it had already determined that the statements in the marketing materials and
advertisements were non-actionable puffery. Id.
[J-35-2018] - 9
Southern District of New York that discussed Meyer II in the context of section 4.1, the
Commonwealth Court agreed, and sustained the objection. See Golden Gate, 158 A.3d
at 229-30 (citing In re Methyl Tertiary Butyl Ether (MTBE) Prod. Liab. Litig., 2015 WL
4092326, at *5 (S.D.N.Y. July 2, 2015)).
Unjust Enrichment
Appellees raised two preliminary objections to the Commonwealth’s unjust
enrichment claim. First, Appellees argued that the Commonwealth’s claim was barred
because the General Assembly has provided a statutory remedy in the Human Services
Code, 62 P.S. §§ 101-1503, Act of June 13, 1967, P.L. 31, No. 21. After setting forth
the definition of unjust enrichment (“the retention of a benefit conferred by another,
without offering compensation, in circumstances where compensation is reasonably
expected, for which the beneficiary must make restitution”), the Commonwealth Court
explained that pursuant to this Court’s decisions and the Statutory Construction Act,
where a statutory remedy exists, it must be pursued to the exclusion of all common law
remedies. Id. at 231. Upon consideration of section 206 of the Human Services Code,
62 P.S. § 206, and multiple DHS regulations, the court found that a statutory remedy
exists in the Human Services Code, as it authorizes DHS to seek restitution and
repayment of reimbursements that a provider was not entitled to receive. Id. at 234-36.
As such, it concluded that the Commonwealth was precluded from pursuing an unjust
enrichment claim to recover the same amounts and dismissed the claim. Id. at 236.
Appellees also argued that all claims against Parent Companies must fail
because the Commonwealth did not allege sufficient facts to pierce the corporate veil or
impose vicarious liability. As Parent Companies and the Facilities were incorporated in
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Delaware, the Commonwealth Court found that Delaware law applied to determine
whether the Commonwealth alleged sufficient facts to pierce the corporate veil. See
Broderick v. Stephano, 171 A. 582 (Pa. 1934) (providing that under Pennsylvania law,
shareholder liability for corporate malfeasance is determined by the law of the state of
incorporation). The court recognized that Delaware law requires proof of “exclusive
domination and control” as well as a showing that the corporate form “existed for no
other purpose than as a vehicle for fraud” before the corporate form will be disregarded.
Golden Gate, 158 A.3d at 237 (quoting Wallace v. Wood, 752 A.2d 1175, 1183-84 (Del.
Ch. 1999)). While Delaware law does not strictly require allegations of fraud to meet
this standard, the Commonwealth Court recognized that to pierce the corporate veil
under an alter ego theory, a plaintiff must plead facts to support the inference that the
corporation created a sham entity as its alter ego for the purpose of committing fraud or
a similar injustice. Id. (emphasis added) (citing Crosse v. BCBSD, Inc., 836 A.2d 492,
497 (Del. 2003); In re Foxmeyer Corp., 290 B.R. 229, 236 (Bankr. D. Del. 2003)).
Because the OAG did not allege that Appellees used the corporate form to engage in
“fraud or a similar injustice[,]” and because the amended complaint is bereft of facts that
would support a conclusion that Appellees created the corporate form solely as a
vehicle for fraud, the court sustained the demurrer as to this claim. Id. (quoting
Foxmeyer, 290 B.R. at 236).
Having reached these conclusions, the Commonwealth Court dismissed the
amended complaint.
Judge Cohn Jubelirer filed a concurring and dissenting opinion. She agreed that
the marketing statements at issue were puffery and that the care plans, resident
[J-35-2018] - 11
assessment and bills are not actionable under the sections of the UTPCPL that apply to
advertisements (subsections (v), (ix), and (x)). However, Judge Cohn Jubelirer
recognized that subsection 4(xxi) provides a cause of action for any fraudulent or
deceptive conduct, and concluded that it necessarily encompassed representations
made in ways beyond advertisement. Golden Gate, 158 A.3d at 239 (Cohn Jubelirer,
J., concurring and dissenting). She chastised the majority for recognizing this
distinction and sua sponte raising the Commonwealth’s failure to attach copies of the
writings upon which this claim was based (and then relying on this failure to dismiss the
claim). Id. In her view, Appellees waived any objection to the OAG’s failure to attach
writings to the amended complaint, and, she recognized, because the court chose to
address a preliminary objection that Appellees did not raise, the OAG was robbed of the
chance to remedy this defect. Id. at 239-40 (citing Pa.R.A.P. 1019(i)). Thus, she would
not have dismissed the claim under section (4)(xxi) relative to the allegations involving
bills, resident assessments and care plans, which in her view, could directly impact
purchasing decisions. Id. at 240.
Judge Cohn Jubelirer also disagreed with the majority’s determination that the
Commonwealth cannot receive restoration under section 4.1 the UTPCPL. To begin,
she noted that because the majority disposed of the underlying substantive claims, the
issue of whether the Commonwealth could receive restoration was moot and therefore,
that the court’s pronouncement on the issue was dicta. As to the merits, Judge Cohn
Jubelirer disagreed with the court’s conclusion that the Commonwealth does not fit the
statutory definition of a “person in interest” entitled to restoration. Id. at 240-41.
Although she accepted the tenet of statutory construction (relied on by the majority) that
[J-35-2018] - 12
where the meaning of a word or phrase is clear as used in one section, it will be
construed with the same meaning in another section of the same statute, Judge Cohn
Jubelirer pointed out that this Court has expressly found that the UTPCPL is ambiguous
as to the meaning of “person,” and therefore that this maxim does not apply. Id. at 241
(citing Meyer II, 93 A.3d at 814). She further questioned the majority’s reliance on
Meyer II, noting that it involved the question of whether a political subdivision could be a
subject to liability for punitive damages under the UTPCPL. To Judge Cohn Jubelirer,
“[t]hat reasoning is not applicable here because no liability will be imposed upon a
government entity; instead, the [OAG] is seeking restitution and restoration … for
money the Commonwealth paid as a result of the alleged deception[,]” and “an
interpretation that the Commonwealth can be a ‘person of interest’ in the restoration
provision is permissible and consistent with our mandate to construe the terms of the
UTPCPL ‘liberally to effect its object of preventing unfair or deceptive practices.’” Id.
(quoting Commonwealth v. Monumental Props., Inc., 329 A.2d 812, 817 (Pa. 1974)).
She admonished the court for addressing such a complex issue, on which reasonable
minds can differ, in dicta, and expressed her preference that there had been no
discussion thereof at all. Id.
The OAG’s Appeal
The OAG timely appealed and presents the following five issues challenging the
Commonwealth Court’s rulings:
1. Whether the [OAG] stated a claim under the [UTPCPL] by alleging
that [Appellees] failed to provide residents with material things it
had promised, including basic levels of assistance with daily living?
a. Whether the Commonwealth Court improperly
dismissed the [OAG’s] false advertising claims at the
preliminary objections phase where the [OAG] alleged
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that [Appellees] engaged in unfair methods of
competition and unfair or deceptive acts and practices
under [subsections] (4)(v),(ix),(x) and (xxi) of the
[UTPCPL]?
b. Whether the Commonwealth Court improperly
dismissed the [OAG’s] claims under [subsections]
(4)(v) and (xxi) of the [UTPCPL] on the basis that
[Appellee’s] representations and fraudulent and
deceptive conduct[] did not pertain to advertising –
though neither the [OAG’s] allegations nor these
sections of the [UTPCPL] are limited to “advertising”?
c. Whether the Commonwealth Court improperly
dismissed the [OAG’s] claims at the preliminary
objections phase for lack of specificity and failure to
attach documents to the Amended Complaint under
Pa.R.C[].P. 1019, without leave to amend, where the
[OAG] sufficiently pled fraudulent and deceptive
conduct sufficient to create confusion and
misunderstanding by consumers?
2. Whether the Commonwealth Court erred in holding that the [OAG]
cannot be a “person in interest” entitled to recover damages in
restoration or restitution when it sues as a plaintiff under the
[UTPCPL]?
3. Whether the Commonwealth Court erred in holding, at the
preliminary objections phase, that discovery could reveal no set of
facts that would support the [OAG’s] well-pled allegations
supporting its entitlement to “pierce the corporate veil” and impose
vicarious liability against [Parent Companies]?
4. Whether the Commonwealth Court erred in holding, on preliminary
objections, that the [OAG] could not recover in unjust enrichment
against [Parent Companies] only because [DHS] regulations
supersede the [OAG’s] common law unjust enrichment claims –
even though the regulations apply only to nursing home “providers”
and [Parent Companies], who were unjustly enriched, are not
“providers” under those regulations?
5. Whether the Commonwealth Court erred in holding, on preliminary
objections, that the [OAG] should not be permitted leave to amend,
despite the special status the General Assembly gave to the
Attorney General in [section] 4 of the [UTPCPL] to “bring … action
in the name of the Commonwealth” to protect the “public interest,”
the traditionally broad reading afforded the [UTPCPL] in service of
[J-35-2018] - 14
the public interest, and - though the Commonwealth Court
presumably was not aware of them at the time - the myriad of other
substantive errors in its Opinion and Order?
OAG’s Brief at 5-6 (emphasis in the original).
We begin our review of these issues by recognizing that when this Court reviews
rulings on preliminary objections, we deem all material facts averred in the complaint,
and all reasonable inferences that can be drawn therefrom, to be true. Vattimo v. Lower
Bucks Hosp., Inc., 465 A.2d 1231, 1232 (Pa. 1983). The purpose of our inquiry is to
determine the legal sufficiency of the complaint and whether the pleading would permit
recovery if ultimately proven. Weiley v. Albert Einstein Med. Ctr., 51 A.3d 202, 208-09
(Pa. Super. 2012). “When sustaining the trial court's ruling will result in the denial of
claim or a dismissal of suit, preliminary objections will be sustained only where the case
is free and clear of doubt.” Clemleddy Constr., Inc. v. Yorston, 810 A.2d 693, 696 (Pa.
Super. 2002). With regard to preliminary objections in the nature of demurrer, we
consider “whether, on the facts averred, the law says with certainty that no recovery is
possible. Where a doubt exists as to whether a demurrer should be sustained, this
doubt should be resolved in favor of overruling it.” Bilt-Rite Contractors, Inc. v. The
Architectural Studio, 866 A.2d 270, 274 (Pa. 2005).
UTPCPL Claims
The first three issues presented address the dismissal of the UTPCPL claims.
The UTPCPL provides twenty-one definitions of “unfair methods of competition” and
“unfair or deceptive acts or practices.” See 73 P.S. § 201-2(4). The OAG alleged that
Appellees’ conduct fit four of these definitions, subsections (v), (ix), (xi) and (xxi). These
sections provide, in relevant part, as follows:
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(4) “Unfair methods of competition” and “unfair or deceptive
acts or practices” mean any one or more of the following:
* * *
(v) Representing that goods or services have
sponsorship, approval, characteristics, ingredients,
uses, benefits or quantities that they do not have or
that a person has a sponsorship, approval, status,
affiliation or connection that he does not have;
* * *
(ix) Advertising goods or services with intent not to
sell them as advertised;
(x) Advertising goods or services with intent not to
supply reasonably expectable public demand, unless
the advertisement discloses a limitation of quantity;
* * *
(xxi) Engaging in any other fraudulent or deceptive
conduct which creates a likelihood of confusion or of
misunderstanding.
73 P.S. § 201-2(4)(v), (ix), (x), (xxi).
A. Claims Based on Advertising/Marketing Materials
As explained above, the Commonwealth Court dismissed the OAG’s claims
under sections (4)(v), (ix), (x) and (xxi) related to advertising and marketing materials
based on its conclusion that those statements are puffery and therefore not actionable
under the UTPCPL. The OAG challenges this determination, arguing that the court
applied the wrong standard in reaching its conclusion. OAG’s Brief at 31-32.
The UTPCPL was created to even the bargaining power between consumers and
sellers in commercial transactions, and to promote that objective, it aims to protect the
consumers of the Commonwealth against fraud and unfair or deceptive business
[J-35-2018] - 16
practices. See Commonwealth, by Creamer v. Monumental Props., Inc., 329 A.2d 812,
815-16 (Pa. 1974). As a remedial statute, it is to be construed liberally to effectuate that
goal. Id. at 816. “An act or a practice is deceptive or unfair if it has the capacity or
tendency to deceive[,]” and “[n]either the intention to deceive nor actual deception must
be proved; rather, it need only be shown that the acts and practices are capable of
being interpreted in a misleading way.” Commonwealth ex rel. Corbett v. Peoples
Benefit Servs., Inc., 923 A.2d 1230, 1236 (Pa. Commw. 2007) (internal quotations
omitted). Where the impression created by the statement is one of exaggeration or
overstatement expressed in broad language, it may be deemed non-actionable puffery.
Castrol Inc. v. Pennzoil Co., 987 F.2d 939, 945 (3d Cir. 1993).7 There are two basic
categories of “puffing” statements. The first involves hyperbolic boasting or bluster that
no reasonable consumers would believe to be true; for example, a statement that a
weight loss product will cause the pounds to “melt away in the blink of an eye.” See 5
McCarthy on Trademarks and Unfair Competition § 27:38 (5th ed.). The second
category involves claims of superiority over a competitor’s product, id., such as
statements that a laboratory imaging device provided “unprecedented clarity,” or the
advertisement of a product as “the complete sports drink.” See Cytyc Corp. v.
Neuromedical Systems, Inc., 12 F. Supp. 2d 296, 300-01 (D. Neb. 1995); Stokley-Van
Camp, Inc. v. Coca-Cola Co., 646 F. Supp. 2d 510, 526 (S.D. N.Y. 2003). A salient
7 This Court has ruled that we may look to decisions rendered under the Federal Trade
Commission Act, 15 U.S.C. § 45, and the Lanham Act, 15 U.S.C. § 1114, for guidance
in interpreting the Pennsylvania Consumer Protection Law. Commonwealth, by
Creamer v. Monumental Props., Inc., 329 A.2d 812, 817-18 (Pa. 1974).
[J-35-2018] - 17
characteristic of statements deemed to be “puffery” is that consumers understand that
the statements are not to be taken literally. This is because the law presumes that
[t]here are some kinds of talk which no sensible man takes
seriously, and if he does he suffers from his credulity. If we
were all scrupulously honest, it would not be so; but, as it is,
neither party usually believes what the seller says about his
own opinions, and each knows it. Such statements … are
rather designed to allay the suspicion which would attend
their absence than to be understood as having any relation
to objective truth.
Alpine Bank v. Hubbell, 555 F.3d 1097, 1106 (10th Cir. 2009) (quoting Vulcan Metals
Co. v. Simmons Mfg. Co., 248 F.2d 853, 856 (2d Cir. 1918)). It is these characteristics
– the patently hyperbolic or excessively vague character that dissuades any reasonable
consumer from placing reliance thereon as fact – that render puffery non-actionable
under the UTPCPL. Id. In contrast, where a plaintiff establishes that a statement
contains believable, inaccurate statements of fact, the statement falls beyond the reach
of a puffery defense. See Vincent N. Palladino, Lanham Act “False Advertising” Claims:
What Is A Plaintiff to Do?, 101 Trademark Rep. 1601, 1668 (2011).
State and federal courts are united in the principle that the determination as to
whether a statement is deemed puffery is a question of fact to be resolved by the finder
of fact except in the unusual case where the answer is so clear that it may be decided
as a matter of law. See, e.g., In re Chrysler-Dodge-Jeep Ecodiesel Mktg., Sales
Practices & Prod. Liab. Litig., 295 F. Supp. 3d 927, 1004-05 (N.D. Cal. 2018); Snyder v.
Farnam Cos., Inc., 792 F. Supp. 2d 712, 721–22 (D.N.J. 2011); United Concrete &
Constr., Inc. v. Red-D-Mix Concrete, Inc., 836 N.W.2d 807, 819 (Wisc. 2013). We
[J-35-2018] - 18
cannot conclude that the statements to which the OAG has referred8 are so clearly
understood to be hyperbolic bluster that a consumer would understand that they are
meant to be discounted. Determination of whether a statement is puffery requires
consideration of the overall impression of the statement and the context in which it is
made. Peoples Benefit, 923 A.2d at 1236; see also Alpine Bank, 555 F.3d at 1106–07.
We hesitate to conclude that consumers seeking a nursing home would necessarily find
statements promising to provide food, water, and clean linens to be hyperbolic in any
respect, or to be vague statements of optimism or intent. To the contrary, for residents
of nursing homes, many of whom are physically compromised and require assistance
with day-to-day living activities, regular access to these items is essential, and there is
no reason to think that a consumer would not take these statements seriously. The
Commonwealth Court’s declaration that the statements were puffery as a matter of law
was improper.
Compounding its error, it is evident that the Commonwealth Court did not
consider the overall impressions created by the statements at issue from the view of the
consumer when reaching its conclusions that they amounted to mere puffing. See
Peoples Benefit, 923 A.2d at 1236. Contrary to the applicable standard, the court
rendered its decisions as to each statement based on particular isolated words or
phrases contained therein and ignored entirely the context in which these statements
were made. For example, the court found that the statement, “We believe that
respecting your individuality and dignity is of utmost importance[,]” qualified as puffery
“based on the preface alone” – that is, based on the use of the phrase “we believe.”
8 See supra, pp. 3-4.
[J-35-2018] - 19
Golden Gate, 158 A.3d at 218 (emphasis in original). This conclusion is erroneously
based on an isolated component of the statement and ignores both the overall
impression of the statement (that the Facilities will respect their residents’ individuality
and dignity) and the context in which it was made (as a representation to people looking
for a nursing home facility to provide care for their loved ones, or even perhaps for
themselves). The Commonwealth Court also found the statement that “[a] container of
fresh ice water is put right next to your bed every day, and your nursing assistant will be
glad to refill or refresh it for you” to be puffery because it merely expressed “general
statements of optimism” and is an exaggeration or overstatement phrased in vague
language. Id. at 217. While it is difficult to see how this statement is a mere expression
of “optimism,” it is clear that the court did not consider the overall impression made by
this statement (a resident will have ready access to water every day) or the context in
which the statement is made (to allay the concerns of immobile residents). While these
are but two examples, it is evident from the Commonwealth Court’s decision that it
failed to apply the proper standard in its consideration of all of the complained-of
statements.
B. Claims Based on Non-Advertising/Marketing Materials
The Commonwealth Court also dismissed the OAG’s claims under subsections
(v) and (xxi) based on patient assessments, care plans and billing statements on the
basis that these materials are not advertisements and could not have impacted a
purchasing decision, and therefore, were not actionable. See Golden Gate, 158 A.3d at
222. In challenging the dismissal of these claims, the OAG argues that the
[J-35-2018] - 20
Commonwealth Court failed to appreciate that subsections (v) and (xxi) of the UTPCPL
encompass conduct other than advertising. OAG’s Brief at 42.
In contrast to subsections (ix) and (x), which address advertisements of goods or
services, subsection (v) prohibits conduct “[r]epresenting that goods or services have
sponsorship, approval, characteristics, ingredients, uses, benefits or quantities that they
do not have or that a person has a sponsorship, approval, status, affiliation or
connection that he does not have,” and subsection (xxi) prohibits “[e]ngaging in any
other fraudulent or deceptive conduct which creates a likelihood of confusion or of
misunderstanding.” 73 P.S. § 201-2(4)(v), (xxi) (emphasis added). It is the OAG’s
position that representations contained in the resident assessments, care plans and
bills, as well as oral statements made by the Facilities in connection therewith,
constitute “representations” that fraudulently or deceptively created expectations of
services that would be provided, but were false, and therefore are actionable. OAG’s
Brief at 43.
The Commonwealth Court’s decision to the contrary was guided by the federal
district court decision in Seldon. Seldon involved allegations by homeowners regarding
representations made by a mortgage lender in connection with a payment plan that
would allow the homeowners to catch up on their delinquent mortgage. The
homeowners sued the mortgage lender, raising claims under various provisions of the
Truth in Lending Act, Pennsylvania’s Fair Credit Extension Uniformity Act, and, of
relevance here, subsections 4(v) and (ix) of the UTPCPL.9 Seldon, 647 F. Supp. 2d at
9 Recall that subsection (v) prohibits “[r]epresenting that … services have sponsorship,
approval, characteristics, ingredients, uses, benefits or quantities that they do not have,”
(continued…)
[J-35-2018] - 21
466. Addressing the UTPCPL claims, the district court determined that both
subsections (v) and (ix) apply only to claims of false advertising and dismissed the
claims on the basis that they were not founded on false advertisements, but rather on
statements made by individual bank employees to individual homeowners. Id.
In the present case, the Commonwealth Court adopted the holding in Seldon that
subsection (v) applies only to claims of false advertising. See Golden Gate, 158 A.3d at
220 (quoting Seldon, 647 F. Supp. 2d at 466). Noting that the UTPCPL does not define
“advertising,” the Commonwealth Court turned to the definition ascribed to the same
term under the Lanham Act by the District Court for the Eastern District of Pennsylvania
in Synthes, Inc. v. Emerge Med., Inc., 25 F. Supp. 3d 617, 716-17 (E.D. Pa. 2014). In
Synthes, Inc., the district court determined that “commercial advertising” is comprised of
four discernable components, including, most relevantly, broad dissemination as part of
an organized campaign to penetrate the relevant market. Synthes Inc., 25 F. Supp. 2d at
716. In a similar vein, the court in Seldon emphasized the requirement of wide
dissemination of a statement before it can be categorized as an advertisement. As
such, it concluded that statements made by individuals, employees, or agents of an
employer cannot constitute false advertising under the UTPCPL. Seldon, 647
F. Supp. 2d at 466.
Based on Synthes, Inc. and Seldon’s similar conclusions, the Commonwealth
Court determined that an “advertisement” for purposes of the UTPCPL requires a
widely-disseminated statement made for the purpose of influencing a purchasing
(…continued)
and subsection (ix) prohibits “[a]dvertising goods or services with intent not to sell them
as advertised.” 73 P.S. § 201-2(4)(v), (ix).
[J-35-2018] - 22
decision, and therefore does not include claims or assurances made discretely to
particular individuals. Golden Gate, 158 A.3d at 222. Applying that definition to the
present case, the Commonwealth Court concluded that the resident assessments and
care plans, which, according to the allegations in the amended complaint, are made on
an individual basis with each resident, do not meet the definition of an advertisement.
Id. The court further reasoned that because resident assessments, care plans, and
billing statements are created only after a person has become a resident of a facility,
they do not impact a purchasing decision, i.e., the decision whether to become a
resident of a facility. Id. (quoting Synthes, Inc., 25 F. Supp. 3d at 717).
The Commonwealth Court’s analysis is flawed. Its conclusion that claims raised
under subsection (v) are limited to claims of false advertising is not supported by a
reading of the UTPCPL in its entirety and consequently, reliance on Seldon is
misplaced. The court in Seldon cited only one Superior Court case in support of its
assertion that Pennsylvania courts have ruled that claims under subsections (v) and (ix)
“apply only to claims of false advertising.” Seldon, 647 F. Supp. 2d at 466. The cited
case, Weinberg v. Sun Co., 740 A.2d 1152, 1167 (Pa. Super. 1999), rev’d on other
grounds, 777 A.2d 442 (Pa. 2001), involved an attempt by gasoline consumers to bring
a class action suit against Sunoco for allegedly deceptive advertisements that extolled
the benefits of higher octane gasoline. The plaintiffs sought to assert claims under
subsections (v), (vii), (ix) and (xvii) of the UTPCPL. The plaintiffs’ request for class
certification was denied, and it was this denial that was before the Superior Court on
appeal. In the course of reviewing whether class certification was properly denied, the
Superior Court considered the class certification requirements found in Rule of Civil
[J-35-2018] - 23
Procedure 1702, and in particular, the certification judge’s determination that the
plaintiffs must establish reliance on the allegedly false advertisements to meet the Rule
1702 criteria because all of their claims sounded in fraud. Weinberg, 777 A.2d at 1165.
The Superior Court examined the language of the UTPCPL provisions at issue and
determined that only two of these (subsections (vii) and (xvii)) sounded in fraud, while
subsections (v) and (ix) “are in the nature of false advertising[,]” such that there is no
requirement for a showing of reliance in order to state a claim upon which relief may be
granted. Id. at 1167. It is plain that the Superior Court’s inquiry in Weinberg was not
geared toward, and that it did not consider, the scope of conduct encompassed by
subsection (v); rather, it considered the language thereof only so far as to determine
whether it established a claim in the nature of fraud. The Superior Court’s consideration
of subsection (v) was limited to this inquiry and should not be understood as a
conclusive pronouncement regarding the breadth of conduct that falls within its terms.10
10 The District Court in Seldon also pointed to Karlsson v. F.D.I.C., 942 F. Supp. 1022
(E.D. Pa. 1996), as authority for its conclusion that subsection (v) claims are limited to
claims of false advertising. Karlsson is a curious decision in that it quotes the language
of subsection (v) providing that it applies to deceptive representations, but cites the
Commonwealth Court’s 1971 decision in Commonwealth v. Hush-Tone Indus., Inc., for
the proposition that subsection (v) claims must involve advertisements. Id. at 1023.
In Hush-Tone, the OAG brought suit against a company that was selling a hearing aid
and made numerous demonstrably false statements about the hearing aid’s capability.
Specifically at issue in that case were television and radio advertisements, print
advertisements, pamphlets and brochures created by Hush-Tone and provided to
retailers and prospective customers, and oral statements made by salesmen to
prospective customers. Commonwealth v. Hush-Tone, 4 Pa. Commw. 1, 4-8 (1971).
The OAG alleged violations of subsections (v), (ix) and (xiii) of the UTPCPL. Of these
three provisions, only subsection (ix) addressed advertisements; subsection (v)
addressed representations and subsection (xiii), at that time, prohibited “engaging in
any other fraudulent conduct” that creates a likelihood of confusion or
misunderstanding. Despite explicitly acknowledging that subsection (v) prohibits false
representations, when setting forth the elements required to establish a violation of
(continued…)
[J-35-2018] - 24
The question of what conduct is prohibited by sections (v) and (xxi) of the
UTPCPL is a matter of statutory interpretation, the rules of which are well established.
The paramount goal of statutory interpretation is to give effect to the intentions of the
General Assembly. 1 Pa.C.S. § 1921(a). To accomplish this, we consider the statutory
language at issue not in isolation, but in the context in which it appears.
Commonwealth v. Kingston, 143 A.3d 917, 922 (Pa. 2016); see also Rossi v.
Commonwealth, 860 A.2d 64, 66 (Pa. 2004) (“[I]ndividual statutory provisions must be
construed with reference to the entire statute of which they are a part[.]”). The best
indication of legislative intent is the plain language of a statute. Commonwealth v.
Gilmour Mfg. Co., 822 A.2d 676, 679 (Pa. 2003). Words and phrases ordinarily should
be understood according to their common and approved usage. White Deer Twp. v.
Napp, 985 A.2d 745, 760 (Pa. 2009) (citing 1 Pa.C.S. § 1903(a)). When the words of a
(…continued)
subsection (v), the Commonwealth Court stated that the OAG must show, inter alia, that
“defendants’ advertisement is a false representation of a fact” and that the “false
representation is likely to make a difference in the purchasing decision.” Id. at 21.
This pronouncement conflates the terms “advertisement” and “representation,” or,
alternatively, conflates the particulars of subsections (v) and (ix). In any event, the court
ultimately concluded that all of Hush-Tone’s conduct – the advertisements, pamphlets
and brochures, and oral statements to prospective customers – violated subsection (v).
Id. at 23. In casting so wide a net, an argument could be made that despite using the
term “advertisement” when setting forth the elements for a violation of subsection (v),
the Commonwealth Court in Hush-Tone actually considered whether the complained-of
conduct fell under the broader category of “representations,” which subsection (v)
addressed. That would be the correct inquiry. Accordingly, to the extent that Hush-
Tone has been read and relied upon to support the principle that subsection (v) applies
only to advertisements, see, e.g., Weinberg v. Sun Co., Inc., 740 A.2d 1152, 1167 (Pa.
Super. 1999), we disavow that interpretation as incorrect. As discussed herein, the
plain language of subsection (v) indicates that it applies to conduct not limited to
advertisements.
[J-35-2018] - 25
statute are clear and unambiguous, we must give effect to the plain language, and we
cannot ignore the text of the statute in pursuit of its spirit. 1 Pa.C.S. § 1921(b).
With these precepts in mind, we first recognize that the statutory provisions at
issue are part of section 2 of the UTPCPL, which contains the definitions of terms used
therein. See 73 P.S. § 201-2. Subsection (4) of section 2 defines “unfair methods of
competition” and “unfair or deceptive acts or practices” in twenty-one enumerated
subparts. The fifth and twenty-first of these enumerations are the focus of our
consideration. Subsection (v) defines as prohibited conduct “representing that goods or
services have sponsorship, approval, characteristics, ingredients, uses, benefits or
quantities that they do not have or that a person has a sponsorship, approval, status,
affiliation or connection that he does not have.” 73 P.S. § 201-2(4)(v). Subsection (xxi)
prohibits “[e]ngaging in any other fraudulent or deceptive conduct which creates a
likelihood of confusion or of misunderstanding.” 73 P.S. § 201-2(4)(xxi). In contrast, in
subsections (ix) and (x), the General Assembly expressly addresses “advertising.”
Unlike subsections (ix) and (x), neither subsections (v) nor (xxi) employ the term
“advertising,” but describe prohibited conduct in other, more general, terms. We cannot
ignore this distinction or interpret the statute in such a way as to eliminate this
distinction. See 1 Pa.C.S. § 1921(b); Halko v. Bd. of Dirs. of Sch. Dist. of Foster Twp.,
97 A.2d 793, 794 (Pa. 1953) (providing that a court may not rewrite a statute when
interpreting it).11 The Commonwealth Court’s decision to the contrary does, and in that
respect, it erred.
11 Indeed, other definitions contained in section 2(4) speak to “disparaging” the goods
or services of another and “making false or misleading statements of fact” concerning
(continued…)
[J-35-2018] - 26
Of relevance here, subsection (v) prohibits “representing that goods or services
have sponsorship, approval, characteristics, ingredients, uses, benefits or quantities
that they do not have[,]” and subsection (xxi) prohibits “[e]ngaging in any other
fraudulent or deceptive conduct” that is likely to cause confusion or misunderstanding.
73 P.S. § 201-2(4)(v), (xxi). It is clear that the terms “representing” and “engaging in
any other fraudulent or deceptive conduct” encompass activities other than
“advertising,” as that phrase has been interpreted under the Lanham Act in Synthes and
Seldon. This is evidenced by the General Assembly’s use of different terms. The
UTPCPL prohibits more than false advertising and the alleged untrue statements in
internal documents at issue here may support claims under subsections (v) and (xxi).
The OAG’s claims of, inter alia, false representations regarding the extent and quality of
services to be provided, clearly fit within the deceptive action descriptors in sections (v)
and (xxi) -- "representing…" in section (v) and "deceptive conduct" in section (xxi).
These terms both describe broad ranges of impermissible behaviors that extend well
beyond advertising-related claims. We therefore conclude that claims under sections
(v) and (xxi) of the UTPCPL are not limited to claims based on advertising. The
dismissal of the OAG’s claims on this basis, therefore, was improper.
(…continued)
price reductions. See 73 P.S. § 201-2(4)(viii), (xi). Further still, subsections (xiv) and
(xvii) define prohibited conduct as “failing to comply with the terms” of a written
guarantee or warranty and “making solicitations for sales of goods or services” without
first providing certain information, respectively. 73 P.S. § 201-2(4)(xiv), (xvii). It is clear
from these varied definitions that the General Assembly intended the UTPCPL to apply
to conduct not limited to advertising. This context underscores the conclusion that
subsection (v) is not meant to be limited to false advertisements.
[J-35-2018] - 27
The Commonwealth Court also dismissed the OAG’s claims raised under
subsection (4)(xxi) on the basis that they were insufficiently specific. Appellees
challenged the specificity of the claims based on alleged deviations from care plans,
resident assessments, and billing statements because the OAG did not identify any
“single instance” of such conduct, and that its “vague, general and non-specific
statements” were impermissibly attributed to “confidential witnesses” and “unnamed
former employees[.]” Golden Gate, 158 A.3d at 223 (quoting Preliminary Objections,
10/8/2015, ¶¶ 62-63). The court agreed, finding that the lack of allegations “specifically
identifying any particular resident care plan or MDS from which [a] Facility deviated, or
any allegation identifying any specific bill for services that were not provided” proved
fatal to the OAG’s claim. Id. at 224. The court concluded that the OAG’s “general
allegations of wrongdoing … are not sufficiently specific to meet the pleading
requirement, especially given that the documents were not attached to the [a]mended
[c]omplaint, and neither the patients nor the documents were sufficiently described to
permit [Appellees] to prepare a defense.” Id.
On appeal, the OAG argues that its detailed factual allegations based on
information received in interviews with former employees of the Facilities and family
members of residents, and on information obtained from the Centers for Medicare and
Medicaid Services, were sufficient to meet the specificity requirements of Pennsylvania
Rule of Civil Procedure 1019. OAG’s Brief at 45. According to the OAG, the
Commonwealth Court wrongly interpreted the relevant pleading requirement to mean
that the OAG was required to identify the specific evidence – for instance, the
[J-35-2018] - 28
individuals who were deceived by the alleged fraudulent or deceptive conduct, as well
as when and how the deceptions occurred – in its amended complaint. Id. at 44-46.
Appellees, for their part, generally argue that the Commonwealth Court did not
err in its determination that the OAG was required to allege the specific dates and
identify the specific documents that support its claims, and that the absence of such
allegations left them unable to adequately prepare a defense. Appellees’ Brief at 21-23.
Pennsylvania is a fact-pleading jurisdiction; as such, a complaint must provide
notice of the nature of the plaintiff’s claims and also summarize the facts upon which the
claims are based. Youndt v. First Nat. Bank of Port Allegany, 868 A.2d 539, 544 (Pa.
Super. 2005). Rule of Civil Procedure 1019(a) and (b) encapsulate this theory. Rule
1019(a) provides that in pleadings,“[t]he material facts on which a cause of action or
defense is based shall be stated in a concise and summary form[.]” Pa.R.C.P. 1019(a).
Rule 1019(b) requires that “[a]verments of fraud or mistake shall be averred with
particularity. Malice, intent, knowledge, and other conditions of mind may be averred
generally.” Pa.R.C.P. 1019(b). The purpose of these rules is to require the pleader to
disclose material facts sufficient to notify the adverse party of the claims it will have to
defend against. Martin v. Lancaster Battery Co., Inc., 606 A.2d 444, 448 (Pa. 1992);
Landau v. W. Pa. Nat. Bank, 282 A.2d 335, 339 (Pa. 1971).
While our rules require the pleading of all material facts upon which claims are
based, there is no requirement to plead the evidence upon which the pleader will rely to
establish those facts. United Refrigerator Co. v. Applebaum, 189 A.2d 253, 255 (Pa.
1963); Unified Sportsmen of Pa. v. Pa. Game Comm'n, 950 A.2d 1120, 1134 (Pa.
Commw. 2008) (holding that to be sufficiently specific, “the complaint need not cite
[J-35-2018] - 29
evidence but only those facts necessary for the defendant to prepare a defense”). We
have long recognized that “the line between pleading facts and evidence is not always
bright[,]” but distilled the specificity requirement into two conditions that “must always be
met: [t]he pleadings must adequately explain the nature of the claim to the opposing
party so as to permit him to prepare a defense and they must be sufficient to convince
the court that the averments are not merely subterfuge.” Bata v. Cent.-Penn Nat. Bank
of Philadelphia, 224 A.2d 174, 179 (Pa. 1966); see also Martin, 606 A.2d at 448. To
assess whether a claim has been pled with the requisite specificity, the allegations must
be viewed in the context of the pleading as a whole. See Yacoub v. Lehigh Valley Med.
Assocs., P.C., 805 A.2d 579, 589 (Pa. Super. 2002) (en banc).
The amended complaint avers that the Facilities falsely represented in care plans
and patient assessments that particular care would be given to residents; that no such
care was provided; and that the Facilities billed residents for services that were not
provided. Amended Complaint, 9/8/2015, ¶¶ 266-269. The amended complaint
contains numerous allegations of specific incidents of care that was not provided to
residents in each facility. See id., ¶¶ 118-239.12 Further, the OAG identifies the precise
statutory provisions it believes the Facilities’ actions violated, id. ¶ 270(d), which
definitively informs Appellees of the claims against them.
12 For instance, the amended complaint sets forth the allegations of a former Certified
Nurse Aide (“CNA”) in the Blue Ridge Mountain facility that although residents were
supposed to be given showers twice a week, several times a month the CNAs had to
skip showering residents because they were understaffed; that incontinent residents
were routinely left in soiled clothes because there was insufficient staff to attend to
them; and that some residents’ care plans indicated that they be taken for walks, but
CNAs did not have time to do so. Amended Complaint, 9/8/2015, ¶ 120.
[J-35-2018] - 30
The Commonwealth Court’s determination to the contrary was based on the
OAG’s failure to identify the particular patients and attach care plans, assessments, and
bills upon which these allegations are based. See Golden Gate, 158 A.3d at 224
(stating that although the amended complaint contains “numerous examples of
instances where [the Facilities] failed to comply with resident care plans … there are no
allegations specifically identifying any particular resident care plan or [patient
assessment] from which the Facility deviated, or any allegation identifying any specific
bill for services … not provided”). The OAG alleges a widespread practice of
misrepresentations based upon interviews with family members of patients, confidential
informants and government inspectors and sets forth allegations as examples of the
types of omissions of care in each of the more than two dozen Facilities. It is clear from
the pleading that the OAG’s allegations are based upon its investigation and facts
derived from it. The amended complaint meets the specificity requirements of Rule
1019. Read as a whole, the amended complaint adequately details the nature of the
claims so as to permit the Appellees to prepare a defense and satisfies this Court that
the claims are not baseless subterfuge. Bata, 224 A.2d at 179. As the case
progresses, the discovery process will afford the OAG and Appellees with the
opportunity to provide evidentiary documentation. The Commonwealth Court erred in
dismissing the claims based on insufficiency of the pleadings. The OAG’s subsection
(xxi) claims should have survived this preliminary objection, so we reverse the
Commonwealth Court’s ruling to the contrary.
[J-35-2018] - 31
Eligibility for Statutory Remedy
Section 4 of the UTPCPL gives the Attorney General and District Attorneys the
authority to seek an injunction against any person it believes is engaging in or is about
to engage in, any of the conduct prohibited under the UTPCPL. 73 P.S. § 201-4.
Section 4.1 provides for a remedy where an injunction has been entered pursuant to
section 4. It provides as follows:
Whenever any court issues a permanent injunction to
restrain and prevent violations of this act as authorized in
section 4 above, the court may in its discretion direct that the
defendant or defendants restore to any person in interest
any moneys or property, real or personal, which may have
been acquired by means of any violation of this act, under
terms and conditions to be established by the court.
73 P.S. § 201-4.1.
The OAG sought restoration under section 4.1, which Appellees opposed on the
theory that the OAG was ineligible to receive it. The Commonwealth Court agreed with
Appellees. In reaching its conclusion, the Commonwealth Court considered this Court’s
decisions in Meyer II and TAP Pharmaceuticals, as well as the Southern District of New
York’s decision in MTBE. Golden Gate, 158 A.3d at 229-30.
Presently, the OAG focuses its argument on the court’s reliance on Meyer II,
which addressed whether a local governmental entity (in that case, a county community
college) was subject to liability for monetary damages under the UTPCPL. OAG’s Brief
at 52. In the OAG’s view, the very fact that Meyer II dealt with the question of
governmental liability renders the analysis therein inapposite. Id. It challenges the
Commonwealth Court’s willingness to conclude that “if a sovereign government entity
could not be a ‘person’ against whom one could recover monetary relief under the
[J-35-2018] - 32
[UTPCPL], then it must not be a ‘person in interest’ entitled to receive monetary relief
under the [l]aw either.” Id. at 53. According to the OAG, this analysis ignores the
“obvious and compelling reasons” to treat government entities differently in
circumstances where they are attempting to obtain restitution or restoration on behalf of
the government and taxpayers, as opposed to situations in which they are claiming an
immunity from liability to provide such relief. Id.
In response, Appellees argue that the UTPCPL defines “person” as only private
persons and associations,13 which shows that the General Assembly did not intend
“person” to include public entities. Appellees’ Brief at 32. They argue that where a
statute uses the word “person” without including the government in the definition, the
term is “ordinarily” construed to exclude government agencies. Id. (citing Will v. Mich.
Dep’t of State Police, 491 U.S. 58, 64 (1989) and Clipper Pipe & Serv., Inc., v. Ohio
Cas. Ins. Co., 115 A.3d 1278, 1283 nn. 5-6 (Pa. 2015)). They also cite to the principle of
ejusdem generis (general expressions used in a statute are restricted to persons and
things similar to those enumerated in the language preceding the general expression)
as supporting their position that because every entity explicitly identified in the
UTPCPL’s definition of “person” is private, the “any other legal entities” phrase must be
construed as referring to any other private legal entities. Id. Echoing Judge Cohn
Jubelirer’s concurring and dissenting opinion, Appellees further point out that the
General Assembly has included governmental entities in other statutory definitions of
“person,” and that the UTPCPL uses the terms “person” and “Attorney General”
13 Under the UTPCPL, “‘[p]erson’ means natural persons, corporations, trusts,
partnerships, incorporated or unincorporated associations, and any other legal entities.”
73 P.S. § 201-2.
[J-35-2018] - 33
explicitly and conspicuously when establishing relief available, and who may obtain
such relief. Id. at 32-33.14
With regard to Meyer II, Appellees endorse the Commonwealth Court’s reliance
thereon, and reiterate the Commonwealth Court’s reasoning that “person” cannot have
a different meaning in different subsections of the same statute, nor should it have a
different meaning depending on whether the Commonwealth is the plaintiff or defendant
in an action. Id. at 35-36. Appellees endorse the Commonwealth Court’s conclusion
that the arguments presently raised by the OAG were rejected by the federal district
court in New York in MTBE. Finally, Appellees claim that the Commonwealth has no
right to restoration for payments made by the federal government or residents as a
further bar to their eligibility under section 4.1. See id. at 37-39.
We agree with the OAG that the Commonwealth Court’s reliance on Meyer II,
Tap Pharmaceuticals and MTBE is misplaced, based upon the pervasive and critical
procedural and substantive differences between those cases and the case presently
before the Court. In Meyer II, former students of the Community College of Beaver
County (“College”), a political subdivision agency, sued the College after state officials
decertified the College’s police training program. The students asserted multiple claims,
including a claim under section 9.2 of the UTPCPL, which provides “a private cause of
action for ‘persons’ injured by other ‘persons[’]’ employment of unfair trade practices.”
Meyer II, 93 A.2d at 807 (quoting 73 P.S. § 201-9.2). Seeking summary judgment, the
14 As an example, Appellees point to multiple sections of the UTPCPL that authorize
action by the “Attorney General,” as opposed to a “person”; for example, section 201-4
states that the Attorney General or a district attorney (as opposed to a “person”) may
seek an injunction to restrain acts that violate the UTPCPL. Appellees’ Brief at 33-34.
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College argued, of relevance here, that the UTPCPL’s definition of “person” excludes
community colleges. Id.
The Commonwealth Court affirmed the trial court’s order denying summary
judgment, concluding that political subdivision agencies like the College are not immune
from suit under the UTPCPL. We granted the College’s request for review and
reversed, identifying three bases for our decision. First, at the time the UTPCPL was
adopted, the common law provided for sovereign immunity and a presumption against
taking rights or property from the sovereign state. Id. We reasoned that the General
Assembly did not intend to depart from these pervasive doctrines with the very general
term, “any other legal entities.” Id. Second, we briefly noted that the General Assembly
enacted the UTPCPL to address the “fundamental inequality between buyer and seller,
and to protect consumers from exploitative merchants[,]” and that there is no evidence
that in so doing, the General Assembly “was concerned with and … sought to eliminate
unfair trade practices in the public sphere.” Id. Finally, we considered that as a
consequence, the Commonwealth Court’s interpretation would make political
subdivision agencies liable for the punitive damages provided for in both the UTPCPL’s
public and private enforcement provisions.15 To do so would break from “longstanding
precedent that governmental agencies are ordinarily immune” from such damages, and
we were of the opinion that the General Assembly would not make such a break without
a clear indication of its intent to do so. Id. at 815. In a similar vein, we considered
section 9 of the UTPCPL, which allows the Attorney General to seek, inter alia, the
“dissolution, suspension or forfeiture of … the right to do business” of a “person” who
15 See 73 P.S. §§ 8, 9.2.
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violates an injunction, and concluded that it was unlikely that the General Assembly
intended to adopt a provision that would effectively allow the Attorney General to seek
the elimination of political subdivisions. Id.
Meyer II is plainly inapposite. The narrow issue in that case was whether the
College – a political subdivision agency – fell within the UTPCPL’s definition of “person”
so as to be liable for violations of the UTPCPL. In contrast, as we discuss at length
below, the critical language that we are called upon to interpret in section 4.1 is “person
in interest,” which is not defined in the UTPCPL. Further, it is clear that the outcome in
Meyer II was driven in large part by the College’s status as a defendant in the lawsuit.
Our decision therein incorporates principles underlying the doctrine of sovereign
immunity, the purpose of which is to prevent the depletion of state government assets
through lawsuits. See Snead v. Soc'y for Prevention of Cruelty to Animals of Pa., 985
A.2d 909, 913 (Pa. 2009). The doctrine has no application here, where the OAG is
bringing suit on behalf of the citizens of the Commonwealth.
Our decision in TAP Pharmaceuticals does not bear on the issue raised here. In
TAP Pharmaceuticals, the OAG sued multiple pharmaceutical companies in the
Commonwealth Court, claiming that by engaging in deceptive practices, the companies
inflated a key figure used in determining the rate of reimbursement by the Department
of Aging and the Department of Public Welfare. The Commonwealth Court found that
the companies violated the UTPCPL, granted injunctive relief and further awarded the
Commonwealth over $27,000,000 in restoration damages. TAP Pharmaceutical, 94
A.3d at 359-60. On appeal to this Court, the defendants challenged the amount of the
award, but not the Commonwealth’s right to a restoration award. See id. at 361
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(summarizing defendant’s arguments on appeal regarding the monetary award). The
question of whether the Commonwealth could receive the award was not before this
Court.
Conversely, in MTBE, the District Court for the Southern District of New York was
faced squarely with the question of whether the Commonwealth was eligible to receive
restoration under the UTPCPL. MTBE, 2015 WL 4092326, at *5. In its analysis, the
district court considered our decisions in Meyer II and TAP Pharmaceuticals, as
discussed above, and the fact that these decisions were issued on the same day, to
arrive at the conclusion that “person” cannot be ascribed different meanings within the
same statute, and that the definition of “person” in Meyer II must control so as to
preclude the Commonwealth from eligibility to receive restoration under section 4.1. Id.
at *6. In so holding, however, the federal district court ignored the fact that Meyer II and
TAP Pharmaceuticals involved different statutory provisions and narrowed its view to
focus only on the common use of “person” in both provisions. See id. Thus, MTBE is of
no value in the case presently before this Court.
To reiterate, section 4.1 states, in relevant part, that a court “may in its discretion
direct that the defendant or defendants restore to any person in interest any moneys
or property … which may have been acquired by means of any violation of this act.” 73
P.S. § 201-4.1 (emphasis added). This is the only provision of the UTPCPL that
employs the term “person in interest,” which is not defined in the UTPCPL. When
interpreting a statute, courts must presume that the legislature did not intend any
statutory language to exist as mere surplusage; consequently, courts must construe a
statute so as to give effect to every word. Reginelli v. Boggs, 181 A.3d 293, 305 (Pa.
[J-35-2018] - 37
2018); Commonwealth v. Ostrosky, 909 A.2d 1224, 1232 (Pa. 2006); 1 Pa.C.S. §
1921(a). The Commonwealth Court effectively read the phrase “in interest” out of the
statute entirely and gave no consideration to the phrase when rendering its statutory
construction. If the General Assembly intended to restrict eligibility for a remedy under
section 4.1 to those encompassed by “person” as defined in section 2(2), it could have
employed that term. Instead, it defined the class of eligible recipients as any “person in
interest.”
Proper construction of section 4.1 requires consideration of the phrase “person in
interest” as a whole. As stated hereinabove, the goal of all statutory interpretation is to
“ascertain and effectuate the intention of the General Assembly.” 1 Pa.C.S. § 1921(a).
The best indicator of the General Assembly’s intent is the plain language of the statute.
Gilmour Mfg. Co., 822 A.2d at 679. The phrase at issue here encapsulates those
whose interests were affected by the enjoined conduct, i.e., those who lost money or
property because of the enjoinable conduct that was found to violate the UTPCPL. This
expansive definition, which is broader than the statutorily-defined term “person,” furthers
the long-recognized directive that the UTPCPL be construed liberally to achieve its
objective of preventing fraud or unfair or deceptive business practices and leveling the
playing field between businesses and consumers. See Monumental Properties, Inc.,
329 A.2d at 817; see also Weinberg, 777 A.2d at 446.
This interpretation also avoids the anomalous result of granting the
Commonwealth the authority to seek an injunction to stop fraudulent, unfair or deceptive
business practices (as provided for in section 4), but prohibiting it from seeking
restoration where it lost money or property because of the improper conduct (as
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provided by section 4.1). Accordingly, we hold that the Commonwealth is a “person in
interest” as used in section 4.1 of the UTPCPL, and may seek the remedies provided
thereunder.
Unjust Enrichment and Piercing the Corporate Veil
In connection with its unjust enrichment claim, the OAG alleges that the parent
companies received the allegedly improper payments, and it seeks to pierce the
corporate veil so as to recover these sums. See OAG’s Brief at 59; Amended
Complaint, 9/8/2015, ¶¶ 279-81. Unjust enrichment is an equitable remedy, defined as
“the retention of a benefit conferred by another, without offering compensation, in
circumstances where compensation is reasonably expected, and for which the
beneficiary must make restitution.” Roethlein v. Portnoff Law Assocs., Ltd., 81 A.3d
816, 825 n.8 (Pa. 2013). Piercing the corporate veil is similarly a matter of equity,
allowing a court to disregard the corporate form and assess one corporation’s liability
against another. Mosaica Educ., Inc. v. Pa. Prevailing Wage Appeals Bd., 925 A.2d
176, 184 (Pa. Commw. 2007). The corporate veil will be pierced and the corporate form
disregarded “whenever justice or public policy demand[,]” Ashley v. Ashley, 393 A.2d
637, 641 (Pa. 1978), such as when the corporate form has been used to “defeat public
convenience, justify wrong, protect fraud, or defend crime.” Mosaica Educ., Inc., 925
A.2d at 184. A request to pierce the corporate veil is not an independent cause of
action, but rather is a means of imposing liability established in an underlying cause of
action, such as tort or breach of contract, against another. ITP, Inc. v. OCI Co., 865
F. Supp. 2d 672, 684 (E.D. Pa. 2012) (providing that under Pennsylvania law, piercing
[J-35-2018] - 39
the corporate veil is not an independent cause of action); see also Clientron Corp. v.
Devon IT, Inc., 894 F.3d 568, 576 (3d Cir. 2018).
The thrust of the OAG’s argument in favor of its unjust enrichment claim is that
the allegedly ill-gotten proceeds have been siphoned out of the Facilities and passed on
to the parent entities. Yet the UTPCPL claims are all based on alleged misconduct by
the Facilities, either individually or chain-wide. Thus, the OAG’s efforts to impose
liability on Parent Companies are necessary only in the event that it obtains a judgment
against the Facilities that the Facilities cannot satisfy. As this eventuality has not yet
come to pass, the OAG’s unjust enrichment claim is premature. We therefore affirm the
dismissal of the OAG’s unjust enrichment claim, but do so without prejudice to raise it at
a later date in an action to enforce any judgment obtained if the circumstances so
require.
Conclusion
In conclusion, we hold that the Commonwealth Court erred in determining that
the statements upon which the OAG’s UTPCPL claims are based are puffery; that
statements and documents other than advertisements cannot serve as the foundation
for a UTPCPL claim; that the OAG’s claims under subsection (4)(xxi) were insufficiently
specific; and that the OAG is not entitled to seek restoration under the UTPCPL. As
such, we reverse the Commonwealth Court’s dismissal of the claims raised under the
UTPCPL. Because the unjust enrichment claim (and attendant attempt to pierce the
corporate veil) is premature, we affirm the dismissal of that claim without prejudice for
the OAG to raise it, if necessary, at some point in the future. We remand this matter to
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the Commonwealth Court so that it may proceed in accordance with our decision
herein.16
Order reversed in part and affirmed in part. Case remanded for further
proceedings.
Chief Justice Saylor and Justices Baer, Todd, Dougherty, Wecht and Mundy join
the opinion.
16 Having determined that the OAG’s claims may proceed, we need not address its final
issue, in which it challenges the Commonwealth Court’s failure to grant it leave to file a
second amended complaint. See OAG’s Brief at 62.
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