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PA Businesses Battle Out of State Consumer Complaints

Written by: on March 26, 2018 | Category: Blog | Tags: ,

In a unanimous ruling, the Pennsylvania Supreme Court has decided that citizens of other states can sue Pennsylvania-headquartered businesses under the Pennsylvania Unfair Trade Practices and Consumer Protection Law, even for consumer complaints on out-of-state transactions.

The Unfair Trade Practices and Consumer Protection Law, known as the “UTPCPL,” was enacted in 1968 for the purpose of protecting consumers from unscrupulous businesses. The UTPCPL prohibits businesses from engaging in a wide range of unfair or deceptive acts or practices. Consumer complaints under the law can be investigated and prosecuted by the Pennsylvania Attorney General’s Consumer Protection Bureau, but importantly the law also allows for private lawsuits. Therefore, an individual consumer who has been harmed by a business’s unfair or deceptive activity (or a collective class of consumers harmed by a business in the same way, such as under a contract or billing practice applied to many customers) can file a lawsuit against that business under the UTPCPL.

The Supreme Court’s recent opinion in Danganan v. Guardian Protection Services, issued on February 21, 2018 and written by Chief Justice Thomas G. Saylor, clarifies who may sue under the UTPCPL and for what type of conduct. In the case, plaintiff Jobe Danganan sued Guardian Protection Services, a Pennsylvania-based company, under the UTPCPL after he continued to be billed by Guardian for the monitoring of a security system in a home in Washington, D.C., despite the fact that he said he had canceled his contract with Guardian and moved to another house across the country in California.

Danganan filed a lawsuit under the UTPCPL in the Court of Common Pleas of Philadelphia County. Guardian removed the case to federal court on the basis of diversity jurisdiction and the district court dismissed the case, agreeing with Guardian’s argument that the UTPCPL only provides a remedy to Pennsylvania residents. Danganan appealed to the Third Circuit Court of Appeals. The Third Circuit noted that UTPCPL claims are often raised in class action suits, which are frequently removed from Pennsylvania state courts to federal court, and so the Third Circuit certified the case to the Pennsylvania Supreme Court to provide a definitive answer to this question of state law.

In its ruling, the Supreme Court observed that the plain language of the UTPCPL contains “no geographic limitation or residency requirement” for its application and that the law is meant to be construed liberally to “effect its object of preventing unfair or deceptive practices.” Therefore, the Supreme Court held “that a non-Pennsylvania resident may bring suit under the UTPCPL against a Commonwealth headquartered business based on transactions that occurred out-of-state.” With regard to Guardian’s concern that such a rule would allow any person around the globe to file a UTPCPL action without any connection to Pennsylvania, the Court responded that such suits may be otherwise limited by jurisdictional principles or choice-of-law rules, but that the text of the UTPCPL itself contains no such restrictions. The Danganan opinion effectively overturns several prior federal court decisions reaching the opposite conclusion, and the case is now back before the Third Circuit for further proceedings.

Attorney Ryan L. Stauffer is a member of the firm’s Litigation Group, representing individuals and businesses in court cases.

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