Automatic Consumer Protection Act Liability For Breaches of Warranty – Is the Landscape Changing?

 It has long been an axiom of Massachusetts product liability law that a manufacturer or seller of a product that is found by a judge or jury to be defective is automatically exposed to liability under Massachusetts’ consumer protection statute, General Laws c. 93A. Such liability means an award of attorneys’ fees, and double or treble damages in aggravated cases. As a result, virtually every product liability lawsuit includes a Chapter 93A claim, in addition to the usual negligence and breach of warranty claims. Obviously, this exposure increases the difficulty of defending what may be routine and even nuisance-type claims. However, several recent court decisions discussed later in this article are cause for hope.

The problem begins with the wording of Chapter 93A itself, and in particular its having conferred considerable rule-making and other authority on the Massachusetts Attorney General. Originally enacted in 1967, Chapter 93A outlaws “unfair or deceptive acts or practices in the conduct of any trade commerce.” G.L. c. 93A § 2 (a). The statute also provides for an award of attorney’s fees, and multiple damages if the violation is “willful and knowing.” G.L. c. 93A § 9 (3), (4). Importantly, the statute also authorizes the Attorney General to make rules and regulations interpreting what constitutes such an “unfair or deceptive act or practice.” G.L. c. 93A § 2 (c).

After the enactment of Chapter 93A, the then-Attorney General enacted a regulation declaring that:

    • It shall be an unfair and deceptive act or practice
    • to fail to perform or fulfill any promises or obligations arising
    • under a warranty.

940 CMR § 3.08(2). With the stroke of a pen, the Attorney General transformed even the most benign of product defects into violations of Chapter 93A, and Massachusetts courts, both state and federal, adopted this view of the effect of the regulation. See Maillet v. ATF-Davidson Co., Inc., 407 Mass. 185, 190 (1990); Glyptal v. Englehard Corp., 801 F. Supp. 887, 889 (D. Mass. 1992). The impact of this has been to increase the expenses and complexity of defending product liability claims by giving plaintiffs another arrow in an already imposing quiver.

Recent court decisions, however, have questioned whether the Attorney General has the authority to declare what constitutes a per se unfair or deceptive act. See Klairmont v. Gainsboro Restaurant, 465 Mass. 165, 173-174 (2013). Klairmont involved the tragic death of a young bar patron who was killed in a fall down a flight of stairs. The Supreme Judicial Court held that it was not enough to show that the landlord had violated an Attorney General regulation, in this case one which declares that a failure to comply with a building code is a violation of 93A. See id. (citing to 940 CMR § 3.16(3)). Rather, the Court interpreted the regulation as “being bound by the scope of c. 93A,” and held that the plaintiff was required to show that the violation was by its nature “unfair or deceptive.” Id. at 174.

One month later, in a case involving the alleged defective design of cigarettes, the Supreme Judicial Court declined to reach the issue of whether a breach of warranty, by itself, should lead automatically to imposition of liability under 93A, holding out at least the possibility that the Court ultimately will hold that a plaintiff in a breach of warranty action is required to make a separate showing of unfair or deceptive conduct in order to recover under 93A. See Evans v. Lorillard Tobacco Co., 465 Mass. 411, n.25 (2013).

More recently, courts have begun to take an even more decisive position on this issue. In 2014, the First Circuit applied the reasoning of Klairmont in concluding that a regulatory violation is not a violation of Chapter 93A without a showing of unfair or deceptive conduct occurring in trade or commerce. See McDermott v. Marcus, Errico, Emmer & Brooks, P.C., 775 F. 3d 109, 120 (1st Cir. 2014) (“[T]he Attorney General is not permitted to regulate away these two requirements with respect to Chapter 93A claims”).

In 2017, the First Circuit applied this same reasoning to the regulation pertaining to warranty claims. See Sharp v. Hylas Yachts, 872 F.3d 31, 49-52 (1st Cir. 2017). In Sharp, the purchaser of a yacht brought claims against the manufacturer for breach of contract, breach of express and implied warranties, and under Chapter 93A. A jury found in favor of the plaintiff on the breach of contract and warranty claims, and awarded damages, but the judge found against the plaintiff on the Chapter 93A claim. The plaintiff appealed, arguing that pursuant to 940 CMR § 3.08(2), a breach of warranty resulted in per se liability under Chapter 93A . The First Circuit affirmed, holding that the Massachusetts Attorney General does not have the power to render certain statutory violations per se Chapter 93A violations. Id. at 50. The First Circuit further held that the judge permissibly had concluded that the facts as found by the jury did not rise to the level of unfair or deceptive conduct. Id. at 51-52.

In sum, there is now substantial authority for the proposition that there is no longer per se liability under Chapter 93A for a breach of warranty. Defense counsel should be familiar with this authority and prepared to argue it should plaintiff’s counsel attempt to use per se liability as a bargaining tactic.

ERIN K. HIGGINS

 

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PETER JOHN VEYSEY

 

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2018-03-09T21:44:24+00:00 December 27th, 2017|Categories: Erin K. Higgins, Peter John Veysey|0 Comments

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