The Pennsylvania Supreme Court Reverses the Lower Courts’ Decision to Limit Compensation under the Pennsylvania’s Unfair Trade Practices and Consumer Protection Law
In Dwyer v. Ameriprise Financial, Inc., No. 2 WAP 2023 (April 25, 2024), the Supreme Court of Pennsylvania holds the availability of treble damages is wholly independent of any entitlement to punitive damages and must be considered by the trial court without regard to a punitive damages award on related common-law claims.
Ameriprise induced Earl and Christine Dwyer (the “Dwyers”) to purchase a life insurance policy for Mr. Dwyer. The maturity date of the policy was in 2051 when Mr. Dwyer would be ninety-five years old. An Ameriprise representative misrepresented to the Dwyers that their quarterly premium payments would remain the same for the life of the policy. (If Dwyer’s premium payment had remained the same, the policy would have lapsed for insufficient funds in 2020, when Mr. Dwyer was sixty-four years old.)
Years later, the Dwyers sued Ameriprise, raising common-law claims of negligent and fraudulent misrepresentation, as well as a statutory claim arising from a violation of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (“CPL”), 73 P.S. §§ 201-1 – 201-10, premised upon Ameriprise’s misrepresentations. The Dwyers sought compensatory damages of $45,570, which represented the return of their premium payments of $14,580 plus six percent interest. Section 9.2(a) of the CPL authorizes private actions and the award of treble damages.
The parties agreed that liability for the common-law claims and the question of punitive damages would be decided by a jury, with the amount of compensatory damages reserved for determination by the trial court. If the jury returned a verdict for the Dwyers, the trial court would adjudicate the CPL claim.
The jury returned a verdict for the Dwyers on their claims of negligent and fraudulent misrepresentation, finding that Ameriprise made intentional, fraudulent misrepresentations in the process of selling the policy and that the Dwyers justifiably relied upon these misrepresentations to their financial detriment. The jury also found that Ameriprise’s conduct was outrageous and that this conduct warranted punitive damages in the amount of $75,000.
The trial court found in the Dwyers’ favor on the CPL claim, awarding $45,570 in compensatory damages plus interest; the trial court declined to treble the damages or to provide any other additional relief, reasoning that that treble damages under the CPL would be duplicative of the punitive damages awarded by the jury on the common-law claims. Thus, the Dwyers’ final award included $45,570 in compensatory damages (for either the common-law claims or the CPL claim), $75,000 in punitive damages on the common-law claims, and $123,176 in attorneys’ fees and costs under the CPL.
The Dwyers appealed the trial court’s decision to the Superior Court, which affirmed, concluding that the trial court’s decision was a permissible exercise of its discretion. The Pennsylvania Supreme Court granted review to determine (1) whether the Superior Court erred by affirming the denial of treble damages under the CPL and (2) whether the Superior Court erred by applying an abuse of discretion standard of review instead of a de novo standard of review.
The Supreme Court explained that Section 9.2 of the CPL serves three purposes. First, Section 9.2 authorizes the award of treble damages in a private cause of action in order to incentivize the private enforcement of the law, shifting to private citizens the ability to ferret out fraudulent, unfair, and deceptive trade practices that the legislature has deemed illegal. Second, Section 9.2 seeks to compensate private plaintiffs for their “ascertainable loss” by allowing them to recover up to three times their actual damages. Third, the availability of enhanced damages under the CPL serves to deter wrongful conduct.
The Supreme Court concluded that the mechanism to reach these three objectives—to incentivize private actions for unfair and deceptive trade practices, to compensate plaintiffs, and to deter wrongful conduct—is “the carrot of treble damages,” as well as attorneys’ fees, which serves the overarching legislative goal of eradicating unfair and deceptive trade practices. The Court distinguished treble damages under the CPL from punitive damages, which are common law remedies that are penal in nature and are intended to punish a tortfeasor and to deter the tortfeasor and others from similar conduct. The Supreme Court held that although there may be some overlap in the function of punitive damages and statutory damages under the CPL, the CPL is remedial and not penal in nature. As such, the Supreme Court determined that the trial court’s decision not to award treble damages due to the award of punitive damages and attorneys’ fees was not an exercise of discretion. It was a refusal to exercise discretion. Moreover, the Supreme Court concluded that the Superior Court erred in finding that the Dwyers already had been “adequately compensated” without treble damages as there is no statutory language in the CPL that supports an award of damages based upon the amorphous concept of adequate compensation.
The Pennsylvania Supreme Court’s decision in Dwyer v. Ameriprise Financial, Inc., No. 2 WAP 2023 (April 25, 2024) can be accessed here.
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