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A Sea Change in Unfair Trade Practice Litigation on the Horizon?

03/31/2020 | Connecticut Law Tribune
There are early indications that the holding in Soto may have an impact far beyond the situation directly addressed in that case.

Businesses pursuing and defending unfair trade practices claims have been in a long-standing tug-of-war over the scope and reach of Connecticut’s Unfair Trade Practices Act (CUTPA). That scope and reach may be shifting as we speak based on developments in a case against the gun manufacturers.

In its decision in Soto v. Bushmaster International, LLC, 331 Conn. 53 (2019), the Connecticut Supreme Court may have signaled a profound evolution under CUTPA, going far beyond the specifics of that case. One Connecticut Superior Court decision recognized that in Soto, “the scope of CUTPA has been addressed in a profound way . . . .”Russo v. Thornton, 68 Conn. L. Rptr. 173, 2019 WL 2005873 (Conn. Super. Ct. April 1, 2019).

Soto was brought by the administrators of the estates of elementary school students and faculty killed at the Sandy Hook Elementary School in 2012 against the manufacturers, distributors and sellers of the assault rifle used in the shootings. The Connecticut Supreme Court held that Conn. Gen. Stat. § 42-110g(a), which creates a private right of action for “any person who suffers any ascertainable loss of money or property” as a result of a violation of CUTPA, applies to any person, whether or not that person had any consumer, competitor or business relationship with the violator.

The Soto decision is significant because, unlike most common law causes of action, CUTPA allows a plaintiff to recover punitive damages and attorneys’ fees from the defendant. There are early indications that the holding in Soto may have an impact far beyond the situation directly addressed in that case.

Applying the Soto approach to similar language in other sections of CUTPA may lead to the survival of many CUTPA claims that would routinely have been stricken under existing lower court law. For example, in McCann Real Equities Series XXII, LLC v. David McDermott Chevrolet, Inc., 93 Conn. App. 486, 890 A.2d 140 (2006), which involved the sale by an automobile dealership of real property that had been its business premises, the Connecticut Appellate Court held that a CUTPA violation could not be based on conduct that is “incidental to an entity’s primary trade or commerce.” In that case, the court reasoned that the sale of real estate was not within the primary business of an automobile dealership and did not come within the reach of CUTPA. Since McCann, many CUTPA claims have been stricken because the alleged conduct was not within the defendant’s primary trade or commerce.

However, Section 42-110b(a) of CUTPA provides that “[n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.” The act does not expressly limit its scope to a violator’s “primary” trade or commerce. Under the Soto approach, the sections of CUTPA addressed in McCann could now lead to the survival of many previously nonviable CUTPA claims, with the consequential opportunity of the plaintiff to recover punitive damages and attorneys’ fees.

Soto may also expand the types of damages that can be recovered under CUTPA. The Supreme Court held that a CUTPA plaintiff may recover damages for personal injuries as “actual damages,” recovery of which are expressly authorized by Conn. Gen. Stat. § 42-110g(a). Thus, post-Soto, § 42-110g(a) may permit the recovery of damages for such injuries as injury to reputation, loss of good will and emotional distress injuries.

While the tug of war continues, Soto portends a broader application of CUTPA, which businesses will have to anticipate and navigate in their unfair trade practices litigation.

David A. Slossberg leads the business litigation practice at Hurwitz, Sagarin, Slossberg & Knuff. He is an editor of the definitive treatise on unfair trade practices in Connecticut. He can be reached at 203-877-8000.