Why You Need To Know About The Connecticut Unfair Trade Practices Act
Suppose that you signed a contract to obtain a gym membership in Connecticut; and suppose that a large part of what convinced you to sign that contract was the gym's salesperson's representation to you that your gym membership included access to the gym's racquetball courts.
However, let's suppose that, a month later, you discovered that the gym did not even have a racquetball court. In reality, the gym was planning to add one later in the year, but the construction project was not even scheduled to be begin for ten months, and, at present, there simply was no racquetball court for you to "access."
You felt deceived, of course, and you decide to request cancellation of your contract--due to the salesperson's misrepresentation as to the racquetball court.
When you issued your cancellation request, however, the gym refuses to grant cancellation. So, you're stuck with a 24-month contract for a gym membership to a gym that does not even have the main feature you were after when you elected to sign a contract with this gym.
What are your legal options for resolving your contract dispute with the gym?
Common law fraud vs. CUTPA
Let's first compare two causes of action available to you under Connecticut law: common law fraud and violation of Conn. Gen. Stat. § 42-110. (The later is more commonly referred to as either "Connecticut Unfair Trade Practices Act" or "CUTPA.")
When you find yourself harmed by an unfair or deceptive trade practice in Connecticut, The Connecticut Unfair Trade Practices Act has some clear some advantages over common law fraud.
One overarching advantage of CUTPA over common law fraud is that, whereas many acts that are actionable under common law fraud may also be actionable under CUTPA, the scope of CUTPA goes beyond that of common law fraud, such that many acts that are actionable under CUTPA may not also be actionable under common law fraud. ("The unfair trade practices condemned by § 42-110b are not confined to those that were illegal at common law or prohibited by statute[.]" See Murphy v. McNamara.) So, CUTPA gives plaintiffs a broader range of possibilities for finding redress.
Another advantage is that, unlike a claim for common law fraud--illustrating this by reference to our hypothetical scenario--a CUTPA claim need not prove the intent of the gym's salesperson (see Willow Springs Condominium Assn., Inc. v. Seventh BRT Development Corp.) when he falsely represented the inclusion of the racquetball court.
[A] violation of CUTPA may be established by showing either an actual deceptive practice . . . or a practice amounting to a violation of public policy. . . . Furthermore, a party need not prove an intent to deceive to prevail under CUTPA.
In contrast, an essential element of common law fraud is that "the party making the representation knew it to be false . . . [and] made [the representation] to induce action by the other party[.]" (See Carr v. Fleet Bank). It's notoriously difficult to prove intent. So, the importance of the pass that CUTPA gives plaintiff on the element of intent is hard to overstate.
Under CUTPA, it's enough to prove that an act was deceptive, or that is was against public policy, even if only in effect.
CUTPA vs. the Federal Trade Commission Act
The Connecticut Unfair Trade Practices Act prohibits the use of “unfair or deceptive acts or practices in the conduct of any trade or commerce.” See https://www.cga.ct.gov/current/pub/chap_735a.htm#sec_42-110b. But perhaps the most common question this sentence raises is: what counts as an "unfair or deceptive act" under CUTPA?
Because the Connecticut legislature intended for CUTPA to give consumers a broader scope for recovery than the common law provided, in instructing courts on how to determine whether an act counts as an "unfair or deceptive act" under CUTPA, the legislature "encouraged" Connecticut courts (see Hinchliffe v. American Motors Corporation) to look at both prior and new interpretations of the Federal Trade Commission Act ("FTCA") so that CUTPA did not inadvertently end up mirroring the common law's less-than-ideal, limited scope:
In deciding what constitutes an unfair or deceptive act or practice, courts of this state are encouraged to look to interpretations of the Federal Trade Commission Act; 15 U.S.C. § 45 (a)(1); rendered by both the federal trade commission and the federal courts. For the plaintiff victimized by such conduct, CUTPA provides an action more flexible and a remedy more complete than did the common law.
So, the FTCA's role for CUTPA is that of guidance. However, and importantly, Connecticut courts are not limited to only considering FTCA interpretations.
Remedy for CUTPA violation
Whereas a common law fraud claim against the gym may only entitle you to seek rescission of the contract recovery of your actual damages, a CUTPA claim may entitle you to also seek recovery of attorneys' fees and punitive damages. See Conn. Gen. Stat. § 42-110g(d). So, establishing the gym's CUTPA liability to you gives you access to a far more comprehensive remedy.
For example, in our hypothetical gym dispute scenario, the actual damages might include the:
- Loss of monies paid to the gym for periods in which the gym's racquetball courts were neither provided nor accessible (which was at all times in our scenario).
- Loss of monies paid to the gym for periods after which you requested cancellation.
But if only two or three months have passed since you signed the contract, the total of your actual damages might not add up to much money. So, the additional remedies to which CUTBA entitles you might be the difference between the stake of the case being "worth it" to you to resolve, or not, in the event the amount of money at stake were not large enough to justify the effort.
One, perhaps non-obvious, consequence of this more comprehensive remedy under CUTPA, is that you may find yourself with far more leverage in the dispute, even in advance of actually winning the case, simply because the potential price tag of losing that the gym would face would feature a much higher amount--paying your actual damages, plus your costs, plus your attorneys' fees, and maybe even punitive damages. It all adds up quickly, and it's a much scarier possibility for your opponent than if you were only pursuing a common law fraud remedy.
This was, in fact, precisely the legislature's intent in enacting CUTPA: the legislature wanted to (a) give injured consumers sufficient incentive to assert CUTPA claims and to (b) thereby more frequently deter and punish unfair and deceptive trade practices.
"Bait and switch" sales tactics are classic CUTPA violations.
In Ferrigno v. Pep Boys, the court explained that when a seller misleads a buyer as to what the seller is exchanging for the buyer's purchase, a "classic CUTPA violation" occurs. That is exactly what happened in our hypothetical gym scenario. The salesperson detected your interest in racquetball, and then misled you to believe that the gym had racquetball courts and that your gym membership would give you access to those courts. Convinced by this pitch, you signed the contract, and the gym thereby profited.
Although there is not, technically, a simply, exclusive test for determining whether an act is deceptive under CUTPA, Janusauskas v. Fichman reminded us of at least one of the tests courts use:
Under CUTPA "[a]n act or practice is deceptive if three conditions are met. First, there must be a representation, omission, or other practice likely to mislead consumers. Second, the consumers must interpret the message reasonably under the circumstances. Third, the misleading representation, omission, or practice must be material — that is, likely to affect consumer decisions or conduct."
In a phrase I personally find somewhat comical, the court has repeatedly referred to these kinds of "bait and switch" scenarios as "the entrepreneurial aspects of the business[,]" as distinct from accidental harms, poor workmanship, and other wrongs that don't necessarily entail intentionally deceiving buyers.
So...I guess that means you would do well to steer clear of entrepreneurs and their ilk.