Gregg, G. v. Ameriprise Financial, Aplts. ( 2021 )

[J-31-2020] [MO: Wecht, J.]
IN THE SUPREME COURT OF PENNSYLVANIA
WESTERN DISTRICT
GARY L. GREGG AND MARY E. GREGG, : No. 29 WAP 2019
:
Appellees : Appeal from the Order of the
: Superior Court entered September
: 12, 2018 at No. 1504 WDA 2017,
v. : affirming the Judgment of the Court
: of Common Pleas of Allegheny
: County entered September 27, 2017
AMERIPRISE FINANCIAL, INC., : at No. GD 01-006611.
AMERIPRISE FINANCIAL SERVICES, :
INC., RIVERSOURCE LIFE INSURANCE : ARGUED: May 21, 2020
COMPANY AND ROBERT A. KOVALCHIK, :
:
Appellants :
DISSENTING OPINION
JUSTICE TODD DECIDED: FEBRUARY 17. 2021
In Commonwealth v. Golden Gate National Senior Care, 194 A.3d 1010 (Pa.
2018), our Court held that Section 201-2(4)(xxi) of Pennsylvania’s Unfair Trade Practices
and Consumer Protection Law1 (“CPL”) prohibits all “deceptive conduct” in a consumer
transaction, i.e., all conduct which has “the capacity or tendency to deceive.” I agree with
the majority that this holding should be reaffirmed. Additionally, I agree that Section xxi
can be invoked in either a public enforcement action brought by the Attorney General, or
in a private action such as the one brought by Appellees in the case at bar. However, on
the core question before us, I disagree that the General Assembly, when it amended
Section xxi in 1996 to add the prohibition against “deceptive conduct” in the conduct of
1 73 P.S. § 201-2(4)(xxi) (hereinafter, “Section xxi”).
consumer transactions for goods and services, intended to impose strict liability.
Therefore, I must respectfully dissent.
As the majority recognizes, the question of whether Section xxi imposes strict
liability is one of statutory interpretation, and thus our objective is to ascertain and
effectuate the intent of the General Assembly. Golden Gate, 194 A.3d at 1023; see also 1
Pa.C.S. § 1921(a). As we have so oft observed, “[t]he best indication
of legislative intent is the plain language of the statute.” Crown Castle NG East v.
Pennsylvania Public Utility Commission, 234 A.3d 665, 674 (Pa. 2020). When the words
of a statute are free and clear of all ambiguity, they are the best indicator of legislative
intent; hence, in such circumstances, “we cannot disregard the letter of the statute under
the pretext of pursuing its spirit.” Fletcher v. Pennsylvania Property & Casualty Insurance
Guarantee Association, 985 A.2d 678, 684 (Pa. 2009) (citing 1 Pa.C.S. § 1921(b)). In my
view, in concluding that Section xxi imposes strict liability, the majority contravenes these
principles.
As discussed by the majority, when Section xxi was originally enacted in 1968, it
prohibited only “fraudulent conduct” creating a likelihood of confusion or
misunderstanding. 73 P.S. § 201-2(4)(xv) (effective 1968-1996). The current version of
Section xxi at issue in this appeal was enacted by the legislature in 1996, when that body
added the words “or deceptive” in the phrase “[e]ngaging in any other fraudulent or
deceptive conduct which creates a likelihood of confusion or of misunderstanding.” Id. §
201-2(4)(xxi) (emphasis added).
[J-31-2020] [MO: Wecht, J.]- 2
In Golden Gate, we addressed an enforcement action brought by the Attorney
General to obtain an injunction under Section 201-4 of the CPL2 to prohibit a nursing
home from making what the Attorney General alleged were misleading statements in
advertising materials regarding the nature and quality of care provided by the home to
prospective residents. We interpreted the CPL as not requiring proof of intentional
conduct on the part of the nursing home – a vendor of nursing care services – in order for
it to be liable under Section xxi for creating a likelihood of confusion or misunderstanding
on the part of the consumers of those services, the prospective residents. Noting our
Court’s long-standing recognition of the broad remedial purpose of the CPL in
Commonwealth by Creamer v. Monumental Properties, Inc., 329 A.2d 812, 817 (Pa.
1974), to halt “unfairness and deception in all consumer transactions,” we stated in
Golden Gate that, under Section xxi, “[a]n act or a practice is deceptive or unfair if it has
the capacity or tendency to deceive, and neither 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.” Golden Gate, 194 A.3d at 1023
(quotation marks and citation omitted).
2 Section 201-4 provides:
Whenever the Attorney General or a District Attorney has
reason to believe that any person is using or is about to use
any method, act or practice declared by section 3 of this act
to be unlawful, and that proceedings would be in the public
interest, he may bring an action in the name of the
Commonwealth against such person to restrain by temporary
or permanent injunction the use of such method, act or
practice.
73 P.S. § 201-4 (footnote omitted).
[J-31-2020] [MO: Wecht, J.]- 3
Consequently, the majority appropriately rejects Appellants’ argument that the
phrase “deceptive conduct” in Section xxi should be construed in a manner consistent
with Section xxi’s pre-amendment form, so as to require a showing of intentional
fraudulent conduct by the vendor.3 Such a construction would render inoperative the
1996 amendment which added the terms “or deceptive” to the type of conduct which is
prohibited by Section xxi. Had the General Assembly wished to prohibit only intentional
conduct constituting “fraud,” this added language would not have been necessary,
inasmuch as the version in effect prior to the 1996 amendment already contained such a
prohibition.
Critically, however, unlike the majority, I do not view our Golden Gate decision as
dispositive of the strict liability inquiry presented by this appeal, as we did not address in
Golden Gate what state of mind, if any, must be shown under Section xxi to impose
liability on a vendor such as Ameriprise for deceptive conduct, as that question was not
before us in that case. In examining the text of Section xxi, and in tension with the
majority’s conclusion that Section xxi imposes strict liability, it is noteworthy that Section
xxi differs markedly from other regulatory statutes which protect the public by imposing
strict liability with language that expressly and unmistakably declares that such conduct
is absolutely or strictly prohibited. See, e.g., 35 P.S. § 6018.606(i) (“with respect to the
offenses specified . . . the legislative purpose is to impose absolute liability for such
3 Fraudulent conduct as reflected in the tort of intentional misrepresentation is comprised
of the following elements: (1) a representation; (2) which is material to the transaction at
hand; (3) made falsely, with knowledge of its falsity or recklessness as to whether it is
true or false; (4) with the intent of misleading another into relying on it; (5) justifiable
reliance on the misrepresentation; and (6) the resulting injury was proximately caused by
the reliance. Gibbs v. Ernst, 647 A.2d 882, 889 (Pa. 1994).
[J-31-2020] [MO: Wecht, J.]- 4
offenses”); 52 P.S. § 1396.4b(f)(2) (“It shall be presumed, as a matter of law, that a
surface mine operator or owner is responsible without proof of fault, negligence or
causation . . . ”); 30 Pa.C.S. § 2504 (“No person, regardless of intent, shall: (1) Put or
place in any waters . . . any electricity, explosives or any poisonous substances . . . (2)
Allow any substance, deleterious, destructive or poisonous to fish, to be turned into or
allowed to run . . . into any waters . . . .”); 4 Pa.C.S. § 1518.1 (“A person required under
this section [of the Gaming Act] to file a report of a suspicious transaction who fails to [do
so] shall be strictly liable for his actions . . . .”). Notably absent from Section xxi is any
similar language indicating a legislative intent to impose strict liability on a vendor of goods
and services for violating its prohibition against engaging in deceptive conduct.
Indeed, in my view, it would be incongruous for the General Assembly to prohibit
a vendor from engaging in fraudulent conduct in Section xxi, which indisputably requires
an intentional state of mind on the part of the vendor to deceive, see, e.g., Rohm and
Haas Company v. Continental Casualty Company, 781 A.2d 1172, 1179 (Pa. 2001) (fraud
requires a “deliberate intent to deceive”), while simultaneously strictly prohibiting a vendor
from engaging in deceptive acts without regard to mens rea, as doing so would reduce
the fraud prohibition to mere surplusage. This would contravene the well established
principle of statutory interpretation that in drafting a statute “the legislature is presumed
to have intended to avoid mere surplusage, [and] every word, sentence, and provision of
a statute must be given effect.” Independent Oil & Gas Association of Pennsylvania v.
Board of Assessment Appeals of Fayette County, 814 A.2d 180, 183 (Pa. 2002); see also
1 Pa.C.S. § 1922(2) (“the General Assembly intends the entire statute to be effective and
certain”). The majority’s construction of Section xxi – imposing strict liability for deceptive
[J-31-2020] [MO: Wecht, J.]- 5
conduct – obviates the need for a consumer to ever allege fraudulent conduct in order to
prevail under this section. By this interpretation, the legislature’s addition of the language
“deceptive conduct” effectively swallows Section xxi’s companion prohibition against
fraudulent conduct which immediately precedes it, rendering that companion provision
meaningless. Thus, the majority’s construction fails to give effect to the full language of
the statute, and such a reading should be avoided. Allegheny County Sportsmen's
League v. Rendell, 860 A.2d 10, 19 (Pa. 2004).
The Superior Court below seems to have derived its conclusion that Section xxi is
a strict liability statute from its reading of the Commonwealth Court’s decision in
Commonwealth v. TAP Pharmaceuticals, 36 A.3d 1197 (Pa. Cmwlth. 2011), a view the
majority shares. See Majority Opinion at 16. In TAP, the Commonwealth Court rejected
the argument that a jury’s verdict, which found the defendant did not commit fraudulent
or negligent misrepresentation, was dispositive of the Section xxi claim. Rather, it held
that “[t]he test for deceptive conduct under [Section xxi] is essentially whether the conduct
has the tendency or capacity to deceive, which is a lesser, more relaxed standard than
that for fraud or negligent misrepresentation.” TAP, 36 A.3d at 1253. Like the Superior
Court below, the majority deems TAP to establish that a consumer is not required to prove
even negligent conduct by a vendor that has the tendency or capacity to deceive; rather,
the vendor is strictly liable for such conduct. See Majority Opinion at 16 (“This test is, as
the Commonwealth Court has recognized, a lesser, more relaxed standard than that for
fraudulent or negligent misrepresentation. As the Commonwealth Court concluded, all
that the statute requires the plaintiff to prove is that “the acts or practices are capable of
[J-31-2020] [MO: Wecht, J.]- 6
being interpreted in a misleading way.” (citation omitted)). In my view, this reasoning is
misguided.
The Commonwealth Court in TAP, in arriving at the holding relied on by the
majority, recognized that the 1996 amendment to Section xxi nullified its previous
interpretation of that section as requiring a consumer to demonstrate that the vendor
committed the common law tort of fraud. See TAP, 36 A.3d at 1253-1254 (discussing,
inter alia, Commonwealth v. Percudani, 825 A.2d 743 (Pa. Cmwlth. 2003) (rejecting
Superior Court’s continuing requirement of proof of common law fraud under Section xxi,
given that it would render the addition of the phrase “deceptive conduct” superfluous and
contrary to our Court’s view that Section xxi should be liberally construed)). In developing
its “lesser, more relaxed standard,” the Commonwealth Court specifically characterized
its post-amendment interpretation as “hav[ing] the effect of eliminating the common law
state of mind element (either negligence or intent to deceive), and of softening or
eliminating the common law reliance and causation elements implicated in actual
deception.” Id. at 1254 (emphasis added). However, the court did not define the state of
mind required under its “lesser” standard.
As discussed above, the common law tort of fraudulent – i.e., intentional –
misrepresentation requires a material representation which is made falsely, with
knowledge by the maker of its falsity or recklessness as to its truth, and with the intent of
misleading another into relying on it. Gibbs, 647 A.2d at 889. The tort of negligent
misrepresentation requires proof of: (1) a misrepresentation of a material fact; (2) made
under circumstances in which the misrepresenter ought to have known its falsity; (3) with
an intent to induce another to act on it; and (4) which results in injury to a party acting in
[J-31-2020] [MO: Wecht, J.]- 7
justifiable reliance on the misrepresentation. Bortz v. Noon, 729 A.2d 555, 561 (Pa.
1999). In both cases, the focus is on the actor’s knowledge of the truth or falsity of the
statement (or expressive act) conveyed to its recipient.
Thus, TAP recognized that, for a plaintiff to establish that a vendor engaged in
“deceptive conduct” in violation of Section xxi, the plaintiff need not prove that the vendor
knew, or should have known, of the falsity of his or her statement. See Bortz, 729 A.2d
at 561 (in order for a plaintiff to succeed on that claim, he must establish that an individual
made a statement misrepresenting a material fact). However, rather than eliminating any
state of mind requirement for liability to attach, in my view, TAP recognized that the
addition of “or deceptive” conduct merely broadens the focus of Section xxi’s state of mind
requirements.
Specifically, by its plain terms, Section xxi no longer requires a plaintiff to establish
the tort of fraudulent misrepresentation to recover thereunder. Rather, as I read it, with
the 1996 addition of “or deceptive” conduct, Section xxi now broadly prohibits all
“deceptive conduct which creates a likelihood of confusion or of misunderstanding.” 73
P.S. § 201-2(4)(xxi). The use of this language reveals that it is not the state of mind of
the vendor regarding the truth or falsity of a particular statement that is determinative;
rather, the focus has been expanded to include the vendor’s state of mind with respect to
the misleading or confusing effect his statements or actions are likely to have on a
consumer. See Webster’s Unabridged Dictionary 516 (2d ed. 1998) (defining deceptive
as “apt or tending to deceive”); American Heritage Dictionary 371 (2d ed. 1982) (defining
deceptive as “tending to deceive, misleading”). In my view, then, a violation of Section
xxi may be established merely by showing that the vendor is aware, or should be aware,
[J-31-2020] [MO: Wecht, J.]- 8
that his statements are “capable of being interpreted in a misleading way” by a consumer,
regardless of the vendor’s belief regarding the truth or falsity of the statements. See
Golden Gate, 194 A.3d at 1023 (emphasis added). This is, in essence, a negligence
standard. See generally Restatement (Second) of Torts § 303 (1965) (“An act is negligent
if the actor intends it to affect, or realizes or should realize that it is likely to affect, the
conduct of another . . . in such a manner as to create an unreasonable risk of harm to the
other.”). Under my construction, for example, a vendor could be liable under Section xxi
even if his statements are technically true, if he knows or should know that those
statements will create a likelihood of confusion or of misunderstanding on the part of a
consumer.
Critically, unlike the majority’s construction, my interpretation gives meaning to all
of the words in Section xxi and allows a plaintiff to prevail whenever the vendor either
intentionally engages in fraud with respect to a consumer transaction, or whenever the
vendor negligently engages in conduct that creates a likelihood of the type of harm that
the CPL was intended to prevent – that is, confusion or misunderstanding on the part of
a consumer. Stated another way, in my view, a vendor may be liable under Section xxi
for deceptive conduct only when he knows, or reasonably should know, that his conduct,
be it his actions or statements, is likely to cause misunderstanding or confusion in a
consumer regarding the goods or services the vendor is selling. This standard, in my
view, effectuates the paramount goal of the CPL — to eliminate unfairness and deception
in consumer transactions — by proscribing, in addition to the intentional deception of
consumers, conduct which vendors should recognize is likely to deceive reasonable
consumers. However, in contrast to the strict liability standard embraced by the majority,
[J-31-2020] [MO: Wecht, J.]- 9
this negligence standard also protects honest businesspeople from incurring unforeseen
penalties for statements or acts that no consumer would have been confused or misled
by.4
For all these reasons, I disagree that Section xxi imposes strict liability, and thus I
respectfully dissent.
Chief Justice Saylor and Justice Baer join this dissenting opinion.
4 The majority cites decisions from other jurisdictions construing similar consumer
protection statutes prohibiting “deceptive conduct” which have held that these statutes do
not require proof of intent to establish deceptive conduct. Majority Opinion at 16.
However, those decisions do not address whether the implicated statutes require proof
of the lesser mens rea of negligence. Indeed, other state courts interpreting their own
consumer protection laws which, like Section xxi, proscribe deceptive conduct, have
found that their statute’s prohibitions against deceptive conduct are violated whenever a
party to a consumer transaction negligently engages in conduct or actions which deceive
reasonable consumers. See, e.g., Drakopoulos v. U.S. Bank, 991 N.E.2d 1086, 1094
n.15 (Mass. 2013) (“negligence, where it results in an unfair or deceptive act, may give
rise to [Massachusetts Consumer Protection Act] liability”); Grove v. Huffman, 634 N.E.2d
1184 (Ill. Ct. App. 1994) (negligent misrepresentation by seller of property as to its
condition established violation of Illinois Consumer Protection Act); Poole v. Union
Planters Bank, 337 S.W.3d 771 (Tenn. Ct. App. 2010) (Tennessee Consumer Protection
Act extends to negligent conduct).
[J-31-2020] [MO: Wecht, J.]- 10