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May 20th, 2013

Massachusetts High Court Promotes Practically Boundless ‘Consumer Protection’ Law

A recent decision by Massachusetts’ Supreme Judicial Court shows how disturbingly far consumer protection laws have been stretched and contorted beyond their intended purpose by plaintiffs’ lawyers and some courts.

The latest contortion came last week when the Bay State’s highest court ruled in Klairmont v. Gainsboro Restaurant, a case that arose when a college student, during a night of drinking, strayed into a back area of Our House East, a local restaurant-bar.  There were no witnesses to what happened next, but he was later found at the bottom of a stairway leading to a basement storage room, where he died from a fall.  A jury considered the evidence and found that the small business was not responsible for his death under the state’s wrongful death law.  But the case did not end there.

The original trial judge disregarded the jury’s verdict.  He is allowed to reach his own conclusions under Massachusetts’ consumer protection law, known as Chapter 93A, which is known to be among the most pro-plaintiff of such laws in the country.  The judge transformed the jury’s verdict for the defense on the wrongful death claim into a consumer protection award of $2.25 million in damages, which the judge tripled to $6.7 million, and added $2.3 million in attorneys’ fees and costs.

How does an award go from zero to $9 million?  The judge found that because the stairway that the plaintiff fell down was constructed decades earlier without a permit and was not up to code, the bar had somehow willfully committed an unfair business practice.  Although the jury had found that the condition of the stairway did not cause the student’s death, the judge found otherwise.  Under Ch. 93A, the judge, not the jury, decides liability.

On appeal, the Supreme Judicial Court found that the state’s consumer protection law could be used this way when a plaintiff’s lawyer can dig up a statutory or regulatory violation that can be allegedly connected to the injury and conveniently, if not convincingly, defined as an unfair business practice.  (To its credit, the Supreme Judicial Court did find that it was improper for the trial court to award damages for loss of consortium and loss of future income, amounts authorized under the wrongful death statute, and sent the case back to the trial court for a recalculation of damages and reconsideration of attorney fees).

As ATRA explained in its amicus brief, states enacted consumer protection laws as “gap fillers” – to provide a means for people to recover when they are duped into buying a product or service by a deceptive advertisement or unfair practice.  Since the loss in the typical day-to-day consumer purchase is small, it was felt that the economic realities did not leave consumers with an effective means of recovery.  For that reason, Ch. 93A, similar to some other state consumer laws, provides for recovery of triple damages and legal expenses.

The Klairmont case is tragic, but it is not the type of injury that consumer protection laws are intended to address.  Massachusetts has a wrongful death law tailored to fairly deciding cases alleging negligent conduct that results in death and which allows high damage awards.  In this instance, the jury found that the business owners were not at fault.  But a sympathetic judge used the state’s broad consumer protection law to make them pay anyway.

The Supreme Judicial Court had an opportunity to place rational bounds on private lawsuits brought under Ch. 93A.  It failed to do so.  This is a classic, unfortunate case of “bad facts making bad law,” and it will automatically be considered among other nominees for Dishonorable Mentions in the next edition of ATRA’s annual Judicial Hellholes report, due for release this coming December.

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