Hunt v. US Tobacco Co

Opinions of the United
2008 Decisions States Court of Appeals
for the Third Circuit
8-5-2008
Hunt v. US Tobacco Co
Precedential or Non-Precedential: Precedential
Docket No. 07-2134
Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2008
Recommended Citation
"Hunt v. US Tobacco Co" (2008). 2008 Decisions. Paper 601.
http://digitalcommons.law.villanova.edu/thirdcircuit_2008/601
This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova
University School of Law Digital Repository. It has been accepted for inclusion in 2008 Decisions by an authorized administrator of Villanova
University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.
PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 07-2134
GREGORY HUNT, individually and on behalf of himself
and all others similarly situated
v.
UNITED STATES TOBACCO COMPANY;
U.S. SMOKELESS TOBACCO COMPANY, f/k/a UNITED
STATES TOBACCO COMPANY; UNITED STATES
TOBACCO SALES AND
MARKETING COMPANY, INC.;
UNITED STATES TOBACCO MANUFACTURING
COMPANY, INC.; UST INC.;
U.S. TOBACCO BRANDS INC.; UNITED STATES
SMOKELESS TOBACCO
MANUFACTURING LIMITED PARTNERSHIP
Appellants
Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil Action No. 06-cv-01099)
District Judge: Honorable Ronald L. Buckwalter
Argued April 17, 2008
Before: SCIRICA, Chief Judge, AMBRO
and FISHER, Circuit Judges
(filed: August 5, 2008 )
Margaret M. Zwisler, Esquire (Argued)
Charles H. Samel, Esquire
Latham & Watkins
555 11th Street, N.W.
Washington, D.C. 20004
Counsel for Appellants
Alan M. Sandals, Esquire
Sandals & Associates
One South Broad Street, Suite 1850
Philadelphia, PA 19107
Kenneth G. Gilman, Esquire
Douglas M. Brooks, Esquire (Argued)
David Pastor, Esquire
Daniel D’Angelo, Esquire
Gilman & Pastor
225 Franklin Street, 16th Floor
Boston, MA 02110
Counsel for Appellee
OPINION OF THE COURT
2
AMBRO, Circuit Judge
We consider whether a private plaintiff alleging
“deceptive” (rather than “fraudulent”) conduct under the
amended catch-all provision of the Pennsylvania Uniform Trade
Practices and Consumer Protection Law must prove that he
justifiably relied on the defendant’s alleged deceptive conduct
or statements. Concluding that under the private-plaintiff
standing provision of that Law he must so prove, and finding an
allegation of justifiable reliance lacking in the Complaint, we
vacate the District Court’s judgment denying the defendant’s
motion to dismiss and remand the case for determination
whether to permit leave to amend.
I. Background
Plaintiff-appellee Gregory Hunt and proposed class
members in this putative class action suit allege that U.S.
Smokeless Tobacco Company (“Smokeless”) engaged in
anticompetitive behavior that artificially inflated the price of the
company’s moist smokeless tobacco products, causing
purchasers to pay at least $0.07 per can more than they would
have paid in an efficient market. The alleged misconduct
included theft and concealment of competitors’ distribution
racks and point-of-sale advertisements at various stores, as well
as dissemination of disparaging and false statements about
competitors’ products. Hunt further alleges that Smokeless
concealed its anticompetitive behavior, thereby leading “all
consumers acting reasonably under the circumstances to believe
that they were purchasing moist smokeless tobacco products at
3
prices born[e] by a free and fair market.” 1
In a suit by one of Smokeless’s competitors, a jury found
Smokeless liable for the underlying antitrust violations.
Conwood Co., L.P. v. United States Tobacco Co., No. 5:98-CV-
108-R, 2000 WL 33176054 (W.D. Ky. Aug. 10, 2000), aff’d,
290 F.3d 768 (6th Cir. 2002). Hunt does not press, however, an
antitrust claim. Instead, he frames Smokeless’s misconduct as
consumer deception in violation of Pennsylvania’s Uniform
Trade Practices and Consumer Protection Law (“Consumer
Protection Law”), 73 Pa. Cons. Stat. §§ 201-1 to 201-9.2.
Specifically, he brought his suit in the Pennsylvania Court of
Common Pleas under the so-called “catch-all provision” of the
Consumer Protection Law, § 201-2(4)(xxi), which, following a
1996 amendment adding the words “or deceptive,” proscribes
“[e]ngaging in any other fraudulent or deceptive conduct which
creates a likelihood of confusion or of misunderstanding.” 2
1
In other words, Hunt claims that consumers “relied on
a presumption that they were paying prices set by an efficient
market, when in fact they were paying prices artificially inflated
by [Smokeless’s] anti-competitive and deceptive conduct.”
2
Hunt also brought suit under § 201-2(4)(viii), which
prohibits “[d]isparaging the goods, services or business of
another by false or misleading representation of fact.” He does
not ask us to affirm the District Court under this subsection. In
any event, our conclusion under § 201-2(4)(viii) would be the
same as the one we reach under § 201-2(4)(xxi): Hunt must
allege, but has not alleged, that he relied on Smokeless’s
deceptive conduct.
4
After removing the case to the United States District
Court for the Eastern District of Pennsylvania under the Class
Action Fairness Act, 28 U.S.C. § 1453 (permitting the removal
of certain class actions to federal court on diversity grounds),
Smokeless moved to dismiss the Complaint under Federal Rule
of Civil Procedure 12(b)(6) on the ground that Hunt failed to
allege that he had justifiably relied on Smokeless’s deceptive
conduct and suffered harm as a result of that reliance. The
District Court denied the motion, holding that “Plaintiff does not
need to establish reliance under the catch-all provision of the
[Consumer Protection Law].” Hunt v. United States Tobacco
Co., No. 06-cv-1099, 2006 WL 2619806, at *2 (E.D. Pa. Sept.
11, 2006). It reasoned that because the Consumer Protection
Law should be construed liberally, and because the legislature
added the words “or deceptive” to the catch-all provision in
1996, the provision should be read to relieve plaintiffs of
proving all the elements of common-law fraud. Id.
The District Court granted Smokeless’s motion to certify
the Court’s order for interlocutory appeal, presenting the issue
whether a plaintiff is required to prove reliance in order to state
a deception claim under the amended catch-all provision of the
Consumer Protection Law. We then granted permission to
appeal pursuant to 28 U.S.C. § 1292(b).
II. Standard of Review and Governing Law
We exercise de novo review. See Dixon Ticonderoga Co.
v. Estate of O’Connor, 248 F.3d 151, 161 (3d Cir. 2001).
Moreover, “[w]e accept all factual allegations in the complaint[]
and all reasonable inferences to be drawn therefrom in the light
5
most favorable to the plaintiffs.” Anthony v. Council, 316 F.3d
412, 416 (3d Cir. 2003) (internal quotation marks omitted).
Sitting in diversity, we must apply Pennsylvania’s law, as
it governs the cause of action here. See Yurecka v. Zappala, 472
F.3d 59, 62 (3d Cir. 2006). “In those few instances in which the
highest state court has recently spoken to the precise question at
issue in a particular setting, the duty of the federal court to
determine and apply state law is easily met. After all, [t]he
State’s highest court is the best authority on its own law.”
McKenna v. Ortho Pharm. Corp., 622 F.2d 657, 661 (3d Cir.
1980) (internal quotation marks omitted; alteration in the
original). By contrast, “[i]n the absence of any clear precedent
of the state’s highest court, we must predict how that court
would resolve the issue.” Yurecka, 472 F.3d at 62 (citing
Polselli v. Nationwide Mut. Fire Ins. Co., 126 F.3d 524, 528 n.3
(3d Cir. 1997)). “In making such a prediction, we should
consider relevant state precedents, analogous decisions,
considered dicta, scholarly works, and any other reliable data
tending convincingly to show how the highest court in the state
would resolve the issue at hand.” Id. (internal quotation marks
omitted).
III. The Consumer Protection Law’s Basic Framework
The Consumer Protection Law prohibits “unfair methods
of competition” and “unfair or deceptive acts or practices” in the
conduct of trade or commerce. 73 Pa. Cons. Stat. § 201-3; see
also Toy v. Metro. Life Ins. Co., 928 A.2d 186, 190 n.4 (Pa.
2007). Section 201-2(4) “lists specific unfair methods of
competition and unfair or deceptive acts or practices, and
6
includes a catchall provision.” Id. “The statute creates a private
right of action in persons upon whom unfair methods of
competition and unfair or deceptive acts or practices are
employed and who[,] as a result, sustain an ascertainable loss.”
Id. (citing 73 Pa. Cons. Stat. § 201-9.2).3
IV. Hunt Must Allege Justifiable Reliance
We believe the Pennsylvania Supreme Court has
effectively answered the question presented in this case. That
3
The private-plaintiff standing provision reads in
pertinent part:
(a) Any person who purchases or leases goods or
services primarily for personal, family or
household purposes and thereby suffers any
ascertainable loss of money or property, real or
personal, as a result of the use or employment by
any person of a method, act or practice declared
unlawful by section 3 of this act, may bring a
private action to recover actual damages or one
hundred dollars ($100), whichever is greater. The
court may, in its discretion, award up to three
times the actual damages sustained, but not less
than one hundred dollars ($100), and may provide
such additional relief as it deems necessary or
proper. The court may award to the plaintiff, in
addition to other relief provided in this section,
costs and reasonable attorney fees.
73 Pa. Cons. Stat. § 201-9.2 (emphases added).
7
Court has categorically and repeatedly stated that, due to the
causation requirement in the Consumer Protection Law’s
standing provision, 73 Pa. Cons. Stat. § 201-9.2(a) (permitting
suit by private plaintiffs who suffer loss “as a result of” the
defendant’s deception), a private plaintiff pursuing a claim
under the statute must prove justifiable reliance. See, e.g.,
Schwartz v. Rockey, 932 A.2d 885, 897 n.16 (Pa. 2007) (stating
that “the justifiable reliance criterion derives from the causation
requirement which is express on the face of section 9.2[, the
statute’s private-plaintiff standing provision]”); Toy, 928 A.2d
at 202 (“[A] plaintiff alleging violations of the Consumer
Protection Law must prove justifiable reliance.”); Yocca v.
Pittsburgh Steelers Sports, Inc., 854 A.2d 425, 438 (Pa. 2004)
(“To bring a private cause of action under the [Consumer
Protection Law], a plaintiff must show that he justifiably relied
on the defendant’s wrongful conduct or representation and that
he suffered harm as a result of that reliance.”). It has not
recognized any exceptions, and has applied this rule in a variety
of situations. These include, in Yocca, a claim—like Hunt’s
claim here—under the post-1996 catch-all provision. See
Plaintiffs[’] Third Amended Class Action Complaint in Civil
Action at 18–19, Yocca, No. GD 01-016041 (Pa. Ct. C.P. 2001)
(accusing defendant of, inter alia, “[e]ngaging in any other
fraudulent or deceptive conduct which creates a likelihood of
confusion or of misunderstanding”). The Pennsylvania Superior
Court has applied the Supreme Court’s standing rule to the post-
1996 catch-all provision, see Debbs v. Chrysler Corp., 810 A.2d
137, 156–58 (Pa. Super. Ct. 2002); Sexton v. PNC Bank, 792
A.2d 602, 607–08 (Pa. Super. Ct. 2002), and our Court has
interpreted the rule to apply to all Consumer Protection Law
8
subsections, see Santana Prods., Inc. v. Bobrick Washroom
Equipment, Inc., 401 F.3d 123, 136 (3d Cir. 2005). Given this
significant authority on statutory standing, we think the
Pennsylvania Supreme Court would require justifiable reliance
where a private plaintiff alleges deceptive conduct under the
post-1996 catch-all provision.
A. Pennsylvania Courts’ Interpretation and
Application of the Consumer Protection Law’s
Private-Plaintiff Standing Provision
The Supreme Court of Pennsylvania has consistently
interpreted the Consumer Protection Law’s private-plaintiff
standing provision’s causation requirement to demand a
showing of justifiable reliance, not simply a causal connection
between the misrepresentation and the harm.4 In Weinberg v.
Sun Co., it held that plaintiffs bringing a private suit under
4
A mere causal connection can be established by, for
instance, proof that a misrepresentation inflated a product’s
price, thereby injuring every purchaser because he paid more
than he would have paid in the absence of the misrepresentation.
See Weinberg v. Sun Co., 777 A.2d 442, 445 (Pa. 2001). A
justifiable-reliance requirement, by contrast, requires the
plaintiff to go further—he must show that he justifiably bought
the product in the first place (or engaged in some other
detrimental activity) because of the misrepresentation. See id.
at 446.
9
Consumer Protection Law § 201-2(4)(v)5 and (ix)6 must allege
that they relied on the defendant’s deceptive conduct. 777 A.2d
442, 446 (Pa. 2001).7 The standing provision applicable to the
Attorney General, by contrast, contained no such requirement.
Id. at 445–46.8 Thus, unlike the Attorney General, who is
5
This subsection prohibits “[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.”
6
The subsection prohibits “[a]dvertising goods or
services with intent not to sell them as advertised.”
7
The Supreme Court did not cite to the specific
subsections at issue, but a review of the Pennsylvania Superior
Court’s decision in the case reveals that these were the
subsections involved. See Weinberg v. Sun Co., 740 A.2d 1152,
1165–66, 1169–70 (Pa. Super. Ct. 1999), rev’d in part, 777 A.2d
442 (Pa. 2001).
8
The provision authorizing suits by the Attorney General
or a District Attorney states:
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 [73 Pa.
Cons. Stat. § 201-3] 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
10
responsible for protecting public interests, a private plaintiff
could not “pursue an advertiser because an advertisement might
deceive members of the audience and might influence a
purchasing decision when the plaintiff himself was neither
deceived nor influenced.” Id. at 446. The Court further noted
that the Consumer Protection Law’s “‘underlying foundation is
fraud prevention,’” id. (quoting Commonwealth v. Monumental
Properties, Inc., 329 A.2d 812, 816 (1974)), and that “[n]othing
in the [statute’s] legislative history suggests that the legislature
ever intended statutory language directed against consumer
fraud to do away with the traditional common law elements of
reliance and causation.” Id. Applying these broad principles,
the Court held that private purchasers of Sunoco Ultra®
gasoline who sued Sunoco under the theory that its
advertisements about Ultra® were misleading must allege that
they “purchased Ultra® because [they] heard and believed
Sunoco’s false advertising.” Id. at 444–46.
The Pennsylvania Supreme Court reaffirmed Weinberg
in its subsequent decision in Yocca, 854 A.2d 425. In that case,
season ticket holders to games of the Pittsburgh Steelers sued
the team under the Consumer Protection Law for allegedly
making false statements in its brochure soliciting season ticket
purchases. Id. at 427, 432. They pressed claims under
Consumer Protection Law § 201-2(4)(vii), (ix), (x), and (xi), as
temporary or permanent injunction the use of such
method, act or practice.
73 Pa. Cons. Stat. § 201-4 (emphases added).
11
well as the post-1996 catch-all provision. See Plaintiffs[’] Third
Amended Class Action Complaint in Civil Action at 18–19,
Yocca, No. GD 01-016041 (accusing the Steelers of, inter alia,
“[e]ngaging in any other fraudulent or deceptive conduct which
creates a likelihood of confusion or of misunderstanding”).
Drawing no distinctions among these substantive subsections of
the Consumer Protection Law, see 854 A.2d at 438–39, the
Supreme Court held that the purchasers of season tickets failed
to state a claim under the statute because they could not show
justifiable reliance, id. Reaffirming its holding in Weinberg, the
Court stated that “[t]o bring a private cause of action under the
[Consumer Protection Law], a plaintiff must show that he
justifiably relied on the defendant’s wrongful conduct or
representation and that he suffered harm as a result of that
reliance.” Id. at 438 (citing Weinberg, 777 A.2d at 446). The
purchasers could not make such a showing because even if they
relied on the misleading brochure in purchasing the season
tickets, that reliance would not have been justifiable: they signed
a purchase agreement after reading the brochure, and that
agreement explicitly stated that its terms superseded all of the
parties’ previous representations and agreements. Id. at 439.
Thus the ticket holders had “explicitly disclaimed reliance” on
anything said in the brochure. Id.
In Toy, 928 A.2d 186, the Pennsylvania Supreme Court
reiterated the Consumer Protection Law’s private-plaintiff
standing requirement of justifiable reliance. There, a life-
insurance policyholder sued the insurance company under 73 Pa.
12
Cons. Stat. § 201-2(4)(ii),9 (v),10 (vii)11 and (xvii) (the catch-all
provision) 12 of the Consumer Protection Law for allegedly
misrepresenting its life insurance policy as a retirement plan. Id.
at 189–90. Once again interpreting the private-action standing
provision in 73 Pa. Cons. Stat. § 201-9.2, the Court stated that
under Weinberg “a plaintiff alleging violations of the Consumer
Protection Law must prove justifiable reliance.” Id. at 202
(citing Yocca, 854 A.2d 425); see also id. at 208 (“In summary,
this Court concludes that . . . [our] decision in Weinberg stands
for the proposition that . . . a plaintiff alleging violations of the
Consumer Protection Law must prove the common law fraud
9
This subsection prohibits “[c]ausing likelihood of
confusion or of misunderstanding as to the source, sponsorship,
approval or certification of goods or services.”
10
It prohibits, among other things, “[r]epresenting that
goods or services have sponsorship, approval, characteristics,
ingredients, uses, benefits or quantities that they do not have.”
11
This proscribes “[r]epresenting that goods or services
are of a particular standard, quality or grade, or that goods are of
a particular style or model, if they are of another.”
12
Even though the case was decided after Yocca, the
policyholder in Toy sued under the catch-all provision as it stood
prior to 1996 (the year in which the words “or deceptive” were
added to the provision). Toy, 929 A.2d at 188 n.1, 190 n.4.
Thus, the catch-all provision at issue in Toy merely prohibited
“any other fraudulent conduct which creates a likelihood of
confusion or misunderstanding.” Id. at 190 n.4 (emphasis
added).
13
element of justifiable reliance . . . .” (citation omitted; emphasis
added)).
The Supreme Court mentioned its justifiable-reliance
requirement most recently in Schwartz v. Rockey, 932 A.2d 885,
897 & n.16 (Pa. 2007). In the course of deciding whether to
import common-law punitive damage principles into the
Consumer Protection Law’s treble damages provision, it noted
that the “justifiable reliance criterion [of the Consumer
Protection Law] derives from the causation requirement which
is express on the face of section 9.2.” Id. at 897 n.16.
The Pennsylvania Superior Court has followed suit. In
Debbs, 810 A.2d at 156–58 (citing Weinberg, 777 A.2d at 446),
the Court held that reliance (which, under Pennsylvania
Supreme Court precedent, must be justifiable) was required
under, inter alia, the post-1996 catch-all subsection (xxi) of
§ 201-2(4). Sexton v. PNC Bank, 792 A.2d at 607–08 (citing
Weinberg, 777 A.2d at 446), held similarly.
B. Our Court’s Interpretation of Pennsylvania
Case Law
Given the Pennsylvania Supreme Court’s unequivocal
holdings, and the Pennsylvania Superior Court’s interpretation
of those holdings, it is perhaps unsurprising that our Court has
already interpreted the justifiable-reliance standing requirement
to apply to all substantive subsections of the Consumer
Protection Law, fraud-based or not. In Santana Prods., Inc., we
interpreted Weinberg to mean that “a plaintiff bringing an action
under the [Consumer Protection Law] must prove the common
14
law fraud elements of reliance and causation with respect to all
subsections of the [Consumer Protection Law].” 401 F.3d at
136 (emphasis added) (making this observation in the course of
determining whether the Consumer Protection Law’s statute of
limitations should be borrowed for purposes of plaintiff’s
Lanham Act claim). Similarly, in Tran v. Metro. Life Ins. Co.,
408 F.3d 130, 139–41 (3d Cir. 2005), we stated that the plaintiff
was wise to retreat at oral argument from his contention that,
because he alleged only unfair business practices and deceptive
conduct, not fraud, he need not allege justifiable reliance.
Citing Weinberg, Yocca, and various Superior Court decisions,
we “reject[ed the plaintiff’s] argument that he [was] freed from
proving justifiable reliance in connection with his [Consumer
Protection Law] claims.” Id. at 141.
C. Hunt Must Allege Justifiable Reliance Under
the “Deception” Prong of the Post-1996 Catch-
all Provision
Given the Pennsylvania courts’ repeated holdings that
“[t]o bring a private cause of action under the [Consumer
Protection Law], a plaintiff must show that he justifiably relied
on the defendant’s wrongful conduct or representation and that
he suffered harm as a result of that reliance,” Yocca, 854 A.2d
at 438 (where, as here, the plaintiffs pressed a claim under the
post-1996 catch-all provision, see id.; Plaintiffs[’] Third
Amended Class Action Complaint in Civil Action at 18–19,
Yocca, No. GD 01-016041), we conclude that private plaintiffs
alleging deceptive conduct under the statute’s post-1996 catch-
all provision must allege justifiable reliance.
15
Hunt’s arguments to the contrary do not persuade us.
First, he contends that the Pennsylvania Supreme Court meant
to create a justifiable reliance requirement only for claims of
fraud, not claims of deceptive or unfair practices. Hunt’s Br.
15–18. He points to the Court’s statement in Weinberg that
“[n]othing in the [statute’s] legislative history suggests that the
legislature ever intended statutory language directed against
consumer fraud to do away with the traditional common law
elements of reliance and causation.” 777 A.2d at 446 (emphasis
added). This language hardly means that only plaintiffs bringing
claims under the provisions of § 201-2(4) that pertain to fraud
need allege justifiable reliance. Indeed, in Weinberg the Court
required the plaintiffs to allege justifiable reliance under
Consumer Protection Law § 201-2(4)(v), which the Court
described as an allegation of “deceptive marketing of goods.”
Id. at 444 (emphasis added); see supra note 7. And to the extent
the Weinberg Court arguably suggested a limitation of the sort
Hunt would have us recognize, that suggestion, as noted above,
was dispelled by Yocca.
Similarly, we find Hunt’s arguments relating to the 1996
amendment to the catch-all provision unpersuasive. He argues,
and the District Court concluded, that after the 1996
amendment’s addition of the words “or deceptive” to the catch-
all provision, a plaintiff alleging deception under that provision
need not prove all the elements of common-law fraud.13 Hunt,
13
“[T]o establish common law fraud, a plaintiff must
prove: (1) misrepresentation of a material fact; (2) scienter; (3)
intention by the declarant to induce action; (4) justifiable
16
2006 WL 2619806, at *2; Hunt’s Br. 10–14. Some authority
supports that proposition. See, e.g., Commonwealth v.
Percudani, 825 A.2d 743, 746–47 (Pa. Commw. Ct. 2003). But
even accepting that proposition for the sake of argument, it does
not necessarily follow that justifiable reliance is one of the
common-law-fraud elements from which a private Consumer
Protection Law plaintiff alleging mere deception is excused.
Such a reading is especially appropriate because the
justifiable-reliance requirement on which we base our decision
emanates not from the catch-all provision that the legislature
amended in 1996, but rather from the private-plaintiff standing
provision. See Schwartz, 932 A.2d at 897 & n.16; Weinberg,
777 A.2d at 445–46. A private-plaintiff standing provision, by
its nature, applies to all private plaintiffs, whatever substantive
subsection of § 201-2(4) they invoke, for its purpose is to
separate private plaintiffs (who may only sue for harm they
actually suffered as a result of the defendant’s deception) from
the Attorney General (who may sue to protect the public from
conduct that is likely to mislead). See Schwartz, 932 A.2d at
897 n.16; Weinberg, 777 A.2d at 444–46.14 It is thus
reliance by the party defrauded upon the misrepresentation; and
(5) damage to the party defrauded as a proximate result.”
Colaizzi v. Beck, 895 A.2d 36, 39 (Pa. Super. Ct. 2006).
14
By contrast, the Pennsylvania Commonwealth Court’s
decision in Percudani involved a suit by the Pennsylvania
Attorney General, not private plaintiffs, so the Consumer
Protection Law’s private-plaintiff standing provision was not at
issue there. See 825 A.2d at 744.
17
unsurprising that in Yocca, where the plaintiffs sued under the
amended version of the catch-all provision, see Plaintiffs[’]
Third Amended Class Action Complaint in Civil Action at
18–19, Yocca, No. GD 01-016041, the Pennsylvania Supreme
Court continued to hold that justifiable reliance is a requirement
for private plaintiffs, see 854 A.2d at 438–39 (citing Weinberg,
777 A.2d at 446 (grounding reliance requirement in private-
plaintiff standing provision)).15
Toy is not to the contrary. There, the Pennsylvania
Supreme Court dismissed as “irrelevant” the plaintiff’s
argument that the 1996 amendment to the Consumer Protection
Law’s catch-all provision confirmed that justifiable reliance was
not required. 928 A.2d at 203 n.20. That argument was
irrelevant because the plaintiff was actually suing under the pre-
1996 version of the statute. Id. Hunt overreads Toy to the
extent he argues that because the Court found the argument
“irrelevant” as to a claim under the pre-1996 statute, it must
have found that argument “relevant” as to the post-1996 version
of the statute. We read footnote 20 in Toy as merely suggesting
that even assuming the plaintiff’s argument had merit under the
post-1996 catch-all provision, this would not help the plaintiff
because she was suing under the pre-1996 provision. Assuming
15
We thus think mistaken those trial-court opinions that
rely on the 1996 amendment to conclude that reliance is no
longer required of private plaintiffs suing under the Consumer
Protection Law’s catch-all provision. See, e.g., Alberton v.
Commonwealth Land Title Ins. Co., 247 F.R.D. 469, 480–81
(E.D. Pa. 2008); Foultz v. Erie Ins. Exch., No. 3053, 2002 WL
452115, at *11–12 (Pa. C.P. Mar. 13, 2002).
18
a premise for the sake of argument, of course, is not the same as
validating that premise. This reading of footnote 20 is
especially appropriate because, as discussed above, Toy
reiterated the standing rule of Weinberg that “a plaintiff alleging
violations of the Consumer Protection Law must prove the
common law fraud element of justifiable reliance.” Id. at 208.
We also find unpersuasive Hunt’s argument that some
subsections of § 201-2(4) are incompatible with a justifiable-
reliance requirement. See Hunt’s Br. 15 n.3 (citing § 201-
2(4)(xii) (proscribing certain buyer referral agreements), (xiii)
(proscribing pyramid and chain-letter schemes), (xiv)
(proscribing failure to honor written warranty), (xvi)
(proscribing repairs or improvements that are inferior to what
was promised in writing), (xviii) (proscribing confession-of-
judgment clauses in consumer contracts)). He does not explain
why a justifiable-reliance requirement would be incompatible
with these subsections. To the extent he means that some of
these subsections do not appear to proscribe deception or fraud
(thus making it odd to ask whether the plaintiff would have
purchased the product had he known the “truth”), this argument
is inapplicable to this case, as here the wrong that Hunt
attributes to Smokeless is deception. Hunt’s complaint is that
Sm okeless’s “decep tion, including its affirm ative
misrepresentations and omissions concerning the price of moist
smokeless tobacco products, likely misled all consumers acting
reasonably under the circumstances to believe that they were
purchasing moist smokeless tobacco products at prices born[e]
by a free and fair market.” App. 83 (Complaint); see also
Hunt’s Br. 6 (“The issue here is whether a claim for ‘deceptive
19
conduct’ under the catch-all provision requires proof of
justifiable reliance.”).16
In sum, the Supreme Court of Pennsylvania has
announced and applied a broad rule that private plaintiffs must
allege justifiable reliance under the Consumer Protection Law.
We thus think it imprudent to create an exception here for
plaintiffs suing under the “deception” prong of the Consumer
Protection Law’s catch-all provision, and we decline to do so.
V. Hunt Has Not Adequately Pled Justifiable Reliance
Hunt has not adequately alleged that he justifiably relied
on Smokeless’s deception, for he has not alleged that
Smokeless’s deception induced him to purchase Smokeless’s
products or engage in any other detrimental activity. See
Weinberg, 777 A.2d at 446 (stating that the plaintiff in that case
“must allege reliance, that he purchased Ultra® because he
heard and believed Sunoco’s false advertising” (emphasis
added)). Although Hunt alleges he and his putative class
members “relied on a presumption that they were paying prices
set by an efficient market,” App. 49 (Complaint), he leaves us
guessing as to how his knowledge that the market was
16
Hunt also cites Commonwealth v. Monumental Props.
Inc., 329 A.2d 812, 817 (Pa. 1974), for its admonition that the
Consumer Protection Law “is to be construed liberally to effect
its object of preventing unfair or deceptive practices.” But
Weinberg relied on Monumental Properties as support for its
justifiable-reliance requirement. See Weinberg, 777 A.2d at
446.
20
inefficient would have changed his conduct. “[A] court need
not credit a complaint’s ‘bald assertions’ or ‘legal conclusions’
when deciding a motion to dismiss.” Morse v. Lower Merion
Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997).
We reject Hunt’s suggestion that he enjoys a presumption
of reliance, as this suggestion is inconsistent with Pennsylvania
case law. See Toy, 928 A.2d at 202 (stating that “a plaintiff
alleging violations of the Consumer Protection Law must prove
justifiable reliance” (emphasis added)); Yocca, 854 A.2d at 438
(“To bring a private cause of action under the [Consumer
Protection Law], a plaintiff must show that he justifiably relied
on the defendant’s wrongful conduct or representation and that
he suffered harm as a result of that reliance.”). Hunt cannot
enjoy a presumption of what he must prove affirmatively—that
is, under the Consumer Protection Law, Hunt must prove
justifiable reliance affirmatively.
A presumption of reliance is also inconsistent with
Pennsylvania Superior Court precedent. In Debbs, for instance,
the Pennsylvania Superior Court interpreted Weinberg and other
precedents to require an individualized showing by each private
plaintiff suing under the Consumer Protection Law’s post-1996
catch-all provision that he actually relied on the defendant’s
alleged material omission (i.e., that the omission actually
affected his decision whether to purchase the product). 810
A.2d at 155–58 (suit against Chrysler by automobile owners
who alleged that Chrysler withheld information that air bag
deployment caused serious burns). Rejecting a broad
21
presumption of reliance,17 the Court decided that common
questions of law and fact did not predominate over individual
issues. Thus, it held that the plaintiffs’ Consumer Protection
Law claims were not appropriate for class certification. Id. at
158–59. Similarly, in Aronson v. GreenMountain.com, the
Superior Court refused to presume reliance by customers of
GreenMountain who sued the company under the Consumer
Protection Law for false advertising. 809 A.2d 399, 405 (Pa.
Super. Ct. 2002). The Court reasoned that “‘[t]here is no
authority which would permit a private plaintiff to pursue an
advertiser because an advertisement might deceive members of
the audience and might influence a purchasing decision when
the plaintiff himself was neither deceived nor influenced.’” Id.
(quoting Weinberg, 777 A.2d at 446).
Hunt’s arguments to the contrary do not convince us. His
reliance on cases from non-Pennsylvania jurisdictions that do
presume reliance is misplaced, as those cases (state cases, and
federal cases imposing no constitutional or other federal
restraint on Pennsylvania’s Consumer Protection Law) do not
bind the Pennsylvania Supreme Court. In any event, unlike the
claims in many of those cases, see, e.g., Basic Inc. v. Levinson,
485 U.S. 224 (1988), Hunt’s claim does not lend itself to a
presumption of reliance. Securities-fraud cases, for instance,
presume reliance where a defendant makes material
17
The Court recognized a narrow exception, not
applicable to our case, that allows a presumption of reliance
where the defendant and plaintiffs are in a fiduciary relationship.
Id. at 157.
22
misrepresentations about a company to an efficient securities
market. See Basic, 485 U.S. at 245–47. There, “[b]ecause most
publicly available information is reflected in [the] market price,
an investor’s reliance on any public material misrepresentations,
therefore, may be presumed for purposes of a Rule 10b-5
action.” Id. at 247. Hunt, by contrast, does not allege that
Smokeless made a misrepresentation to an efficient market;
rather, he alleges that Smokeless concealed the inefficiency of
the market for Smokeless’s product.
Moreover, the presumption of reliance in securities cases
stems in part from the materiality of the misrepresented
information, and Hunt has not explained how the information
Smokeless concealed was material to a purchasing decision. See
id. We are hard-pressed to understand how a potential
purchaser’s knowledge that a market for a product is inefficient
would influence his decision whether to purchase that product.
By contrast, where a seller deceives a potential purchaser as to
the nature, quality or origin of a product, it is easy to understand
the purchaser’s later claim that the misrepresented information
was important to his purchasing decision. A purchaser of a car,
for instance, can plausibly claim that he might not have made
the purchase had he known that the car actually had 200,000
miles on it instead of 200 as he was initially told. But it is far
less clear to us that the purchaser would find it important that
the market for that car is inefficient. Hunt’s lack of even an
attempt at an explanation as to the materiality of Smokeless’s
misrepresentations makes us particularly hesitant to accept his
conclusory assertion that we should presume he relied on
23
Smokeless’s deception.18
VI. We Remand for Determination Whether Hunt May
Amend His Complaint
Although Hunt’s failure to allege justifiable reliance
renders his Complaint inadequate, we have held that “if a
complaint is subject to a Rule 12(b)(6) dismissal, a district court
must permit a curative amendment unless such an amendment
would be inequitable or futile.” Phillips v. County of Allegheny,
515 F.3d 224, 245 (3d Cir. 2008). On remand, the District Court
should permit Hunt to amend his Complaint if the Court finds
that he satisfies this standard.
18
Hunt also cites Pennsylvania Supreme Court cases
holding that reliance can be presumed. But Aronson
distinguished these cases as ones involving direct dealings
between parties to a contract, rather than class actions. 809
A.2d at 405 (citing New York Life Ins. Co. v. Brendwene et ux.,
172 A.2d 669 (Pa. 1934); In re Estate of Harris, 245 A.2d 647
(Pa. 1968)). It also distinguished the cases as ones involving a
material misrepresentation about which the plaintiff was aware.
Id. As we have discussed, Hunt has not adequately explained
why the alleged misrepresentations in this case are material to
a purchasing decision. In any event, these cases cannot
overcome the Pennsylvania Supreme Court’s recent and specific
pronouncements that a private Consumer Protection Law
plaintiff must prove justifiable reliance. See Toy, 928 A.2d at
202; Yocca, 854 A.2d at 438.
24
VII. Conclusion
Hunt must allege, but has not alleged, that he and other
putative class members justifiably relied on Smokeless’s
deceptive conduct. We thus vacate the District Court’s order
denying Smokeless’s motion to dismiss and remand the case for
a determination whether to grant leave to amend.
25