McGonagle v. The Home Depot U.S.A., Inc.

(Massachusetts Appeals Court)

• Opposing Expansion of Consumer Protection Liability to Violations of Statues Unrelated to Consumer Protection

This case raises an important issue regarding construction of a regulation of the Massachusetts Attorney General, 940 C.M.R. § 3.16(3), (“AG regulation”) under the Massachusetts Consumer Protection Act, G. L. c. 93A (“Chapter 93A”).  Chapter 93A protects consumers in their commercial relationships with businesses.  The AG regulation provides that violations of other state statutes “meant for the protection of the public’s health, safety or welfare” and “intended to provide the consumers of this Commonwealth protection” constitute an unfair or deceptive practice giving rise to potential liability under Chapter 93A.  The plaintiff class ignores this second qualifying phrase and argues that the AG regulation applies to Home Depot’s alleged failure, in violation of the state sales tax code, to subtract the value of a manufacturer’s coupon from the purchase price of certain items in charging sales tax that it then paid over to the Commonwealth.  Taken to its logical conclusion, the argument of the plaintiff class would extend the scope of the AG regulation to any state statute intended to protect the public’s health, safety, or welfare.  If adopted, this construction of the AG regulation would make violation of virtually any Massachusetts statute an unfair act or practice under Chapter 93A, thereby exposing businesses to the risk of that statute’s onerous remedies (including an award of attorney’s fees and multiple damages).  NELF filed an amicus brief in the case arguing that the AG regulation is limited, both by its express terms and by the scope of its enabling legislation, to violation of state statutes enacted for the protection of consumers and that the state sales tax code does not protect consumers.  NELF explained that the sales tax code does not regulate the commercial relationship between consumers and retailers but instead addresses the tax obligations of both to the Commonwealth.  NELF further argued that applying the AG regulation to matters beyond the scope of Chapter 93A would upset the legislative balance between the interests of businesses and consumers.