The Massachusetts Supreme Judicial Court Attempts To Clarify Whether A Consumer May Bring An Action Under The State’s Consumer Protection Act, Mass. G.L. c. 93A, When The Consumer Has Suffered No Actual Damage
In January, 2006, the Massachusetts Supreme Judicial Court (“SJC”) decided three closely-watched cases in which consumers who had not been injured in any way alleged that certain Massachusetts businesses were liable for statutory damages and attorneys’ fees under Mass. G.L. c. 93A. NELF was active as an amicus in all three cases arguing that the plaintiffs' claims should be dismissed because they had suffered no actual harm.
In the first two cases, Hershenow and Roberts, the plaintiffs attempted to bring class actions under c. 93A based on a car rental company’s alleged violation of the Massachusetts statute and regulations governing collision damage waivers (“CDW”), even though the alleged violations had not affected them in any way. (In Hershenow the plaintiffs purchased CDW coverage, but never invoked it because their vehicle was not damaged; in Roberts the plaintiff had not even purchased CDW coverage.) Similarly, in Albats the plaintiff brought a class action seeking recovery under c. 93A from her health club, alleging that her contract with the club violated the Massachusetts statute that governs health club agreements (and which provides that any violation of its provisions is a per se violation of c. 93A), despite the fact that she had actually suffered no harm from the allegedly illegal provisions. The plaintiffs in all three cases argued that actual harm was not required for recovery under c. 93A based on the SJC’s decision in Leardi v. Brown, 394 Mass. 151 (1985), in which the Court held that the inclusion of illegal provisions in a residential lease constituted an invasion of the tenants’ legally protected interest and could be the basis for statutory damages and fees. Each of the three cases was dismissed by the trial court. The plaintiffs appealed and the three cases were consolidated for hearing on direct appellate review by the SJC.
In its amicus briefs NELF argued that a plaintiff has no claim under c. 93A, absent proof that the alleged violation caused actual injury. NELF argued, inter alia, that the Legislature’s 1979 amendment of c. 93A, § 9, which replaced the “loss of money or property” requirement for consumer claims with a general “injury” requirement, did not eliminate the statute’s requirement that the violation must cause actual injury. NELF urged the SJC to clarify c. 93A jurisprudence by returning to the bedrock principle that a plaintiff has no claim if the defendant has not caused any harm. NELF warned that to hold otherwise would encourage abusive litigation that could expose Massachusetts businesses to the threat of potentially large awards of attorneys’ fees and large aggregated statutory damages especially in the class action context.
On January 17, 2006, the SJC issued decisions in Hershenow and Roberts, affirming the trial court’s grant of summary judgment for the defendant businesses in each case, on the ground that the plaintiffs could not maintain their actions because they had suffered no damages. In its decisions, the SJC relied on NELF’s analysis of the Legislature’s 1979 amendment of c. 93A and addressed many of NELF’s concerns. The Court stated that the Legislature did not intend to permit a consumer to recover statutory damages, attorney’s fees, and costs just because a consumer contract violates a requirement of law, when the consumer cannot demonstrate that the illegal contract has caused any loss.
Despite this holding, however, the SJC distinguished Hershenow and Roberts from its holding in Leardi on the grounds that in Leardi the illegal lease provisions did cause the tenants to suffer harm by deterring them from exercising their legal rights on pain of loss of tenancy. “[The mere existence of statutorily prohibited lease provision placed all tenants in a worse and untenable position than they would have been had the leases complied with the requirements of Massachusetts law.” In contrast, the Court concluded that, in Hersehnow and Roberts, “the statutorily noncompliant terms in Enterprise’s automobile rental contracts did not and could not deter the plaintiffs from asserting any legal rights.” In her concurrence in Hershenow, Justice Cowin argued that this is a distinction without a difference and that Leardi ought to be overruled to avoid continuing confusion in this area of law. Three days after its decisions in Hershenow and Roberts, on January 20, 2006, the SJC decided Albats without issuing a decision. It simply entered an order on the docket stating that “[t]he judgment of the Superior Court [dismissing the case] is affirmed by an equally divided court.”
In January, 2006, the Massachusetts Supreme Judicial Court (“SJC”) decided three closely-watched cases in which consumers who had not been injured in any way alleged that certain Massachusetts businesses were liable for statutory damages and attorneys’ fees under Mass. G.L. c. 93A. NELF was active as an amicus in all three cases arguing that the plaintiffs' claims should be dismissed because they had suffered no actual harm.
In the first two cases, Hershenow and Roberts, the plaintiffs attempted to bring class actions under c. 93A based on a car rental company’s alleged violation of the Massachusetts statute and regulations governing collision damage waivers (“CDW”), even though the alleged violations had not affected them in any way. (In Hershenow the plaintiffs purchased CDW coverage, but never invoked it because their vehicle was not damaged; in Roberts the plaintiff had not even purchased CDW coverage.) Similarly, in Albats the plaintiff brought a class action seeking recovery under c. 93A from her health club, alleging that her contract with the club violated the Massachusetts statute that governs health club agreements (and which provides that any violation of its provisions is a per se violation of c. 93A), despite the fact that she had actually suffered no harm from the allegedly illegal provisions. The plaintiffs in all three cases argued that actual harm was not required for recovery under c. 93A based on the SJC’s decision in Leardi v. Brown, 394 Mass. 151 (1985), in which the Court held that the inclusion of illegal provisions in a residential lease constituted an invasion of the tenants’ legally protected interest and could be the basis for statutory damages and fees. Each of the three cases was dismissed by the trial court. The plaintiffs appealed and the three cases were consolidated for hearing on direct appellate review by the SJC.
In its amicus briefs NELF argued that a plaintiff has no claim under c. 93A, absent proof that the alleged violation caused actual injury. NELF argued, inter alia, that the Legislature’s 1979 amendment of c. 93A, § 9, which replaced the “loss of money or property” requirement for consumer claims with a general “injury” requirement, did not eliminate the statute’s requirement that the violation must cause actual injury. NELF urged the SJC to clarify c. 93A jurisprudence by returning to the bedrock principle that a plaintiff has no claim if the defendant has not caused any harm. NELF warned that to hold otherwise would encourage abusive litigation that could expose Massachusetts businesses to the threat of potentially large awards of attorneys’ fees and large aggregated statutory damages especially in the class action context.
On January 17, 2006, the SJC issued decisions in Hershenow and Roberts, affirming the trial court’s grant of summary judgment for the defendant businesses in each case, on the ground that the plaintiffs could not maintain their actions because they had suffered no damages. In its decisions, the SJC relied on NELF’s analysis of the Legislature’s 1979 amendment of c. 93A and addressed many of NELF’s concerns. The Court stated that the Legislature did not intend to permit a consumer to recover statutory damages, attorney’s fees, and costs just because a consumer contract violates a requirement of law, when the consumer cannot demonstrate that the illegal contract has caused any loss.
Despite this holding, however, the SJC distinguished Hershenow and Roberts from its holding in Leardi on the grounds that in Leardi the illegal lease provisions did cause the tenants to suffer harm by deterring them from exercising their legal rights on pain of loss of tenancy. “[The mere existence of statutorily prohibited lease provision placed all tenants in a worse and untenable position than they would have been had the leases complied with the requirements of Massachusetts law.” In contrast, the Court concluded that, in Hersehnow and Roberts, “the statutorily noncompliant terms in Enterprise’s automobile rental contracts did not and could not deter the plaintiffs from asserting any legal rights.” In her concurrence in Hershenow, Justice Cowin argued that this is a distinction without a difference and that Leardi ought to be overruled to avoid continuing confusion in this area of law. Three days after its decisions in Hershenow and Roberts, on January 20, 2006, the SJC decided Albats without issuing a decision. It simply entered an order on the docket stating that “[t]he judgment of the Superior Court [dismissing the case] is affirmed by an equally divided court.”
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