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7 Things Companies Must Consider When Facing a Chapter 93A Complaint

The Massachusetts Consumer Protection Act, G.L.c.93A, sections 2 and 9 prohibits businesses from engaging in unfair and deceptive trade practices against consumers. Litigation under G.L.c.93A can be an expensive proposition for a company because it can potentially expose a company to double or triple damages, reasonable attorney's fees, costs, expenses, and interest.

The process starts with a customer/claimant sending a consumer protection demand letter to a business. The company then has 30 days to file a response and to make a reasonable offer of settlement, if possible. To this end, the claimant is required to follow the requirements of the statute and to make sure that any demand letter conforms to the terms and provisions of section 9. The demand letter must clearly indicate the name of the claimant, must reasonably describe the unfair and deceptive trade practice committed by the company and the resultant injury, and the letter must specifically state that the letter is a consumer protection demand letter sent pursuant to G.L.c.93A. If anyone of these elements is missing from the initial demand letter then any later consumer protection civil claim based upon that demand letter will be subject to dismissal.

Over the past couple of years, there have been some court decisions in both the state and federal courts in Massachusetts which define the limits of G.L.c.93A liability as follows:

1. Several courts have held that pre-litigation attorney's fees associated with the preparation of a consumer protection demand letter are not recoverable under the Consumer Protection Act. In the event, your company is faced with a consumer protection demand letter you are not required to pay the claimant's attorney's fees as part of any pre-suit settlement even if the claimant's attorney spent numerous hours on the project. 

2. Your company must conduct a proper investigation of the factual allegations set forth in the letter. As the owner of your business, please make sure that all of the allegations set forth in the demand are taken as meritorious. This means that you may need to interview employees or witnesses and review documents. This can be done with the assistance of your legal counsel. To this end, a company should have procedures in place for the investigation of claims or accidents. It not, then call for the assistance of outside legal counsel to help you navigate the necessary information channels. 

3. When a company has the ability to conduct a thorough investigation it will find itself in a better position to assess it should make a settlement offer and what the offer should be. The whole point of making a reasonable settlement offer in the first place is to mitigate any finding of double or triple damages against the company after trial. A few dollars can often go a long way when considering the potential liability of any case.

4. Claimant's attorneys see c.93A as a windfall for both themselves and their clients. As a result, your company needs to conduct its investigation, hire competent counsel, and make an appropriate response to the claim submitted in order to maximize your defense at the very beginning of the case.

5. As for out of state companies, the Supreme Judicial Court in the case of Moronta v. Nationstar Mortgage determined that a consumer is NOT required to send a consumer demand letter in order to sustain a claim under G.L.c.93A if the business either does not have a place of business in Massachusetts or does not have any assets in Massachusetts.  Foreign companies, then, will be at a disadvantage because they will not have that window of opportunity before the matter goes into litigation to be able to work out a settlement with a claimant.

On the other hand, and as a practical matter, whether the company is out of state or not, most claimant's lawyers are going to try to settle a matter and are going to resort to sending a consumer protection demand letter in the first instance whether the company is located in Massachusetts or out of state. For those cases where no demand in the first instance on an out of state corporation, those corporations will have to file some kind of settlement offer with the claimant as a way of mitigating any future liability under the statute. 

6. The Supreme Judicial Court in Anderson v. National Union Fire Insurance also decided that post-judgment interest was not subject to be multiplied under G.L.c.93A and that post-judgment interest is separate and distinct from the underlying amount of damages.

7. The First Circuit Court of Appeals in Sanders v. Phoenix determined that the filing of a consumer protection letter is not the functional equivalent of filing a lawsuit. The Court determined that the mere filing of a G.L. c.93A demand letter did not trigger the insurer's duty to defend and investigate and that such duties to defend and investigate only arose when there was an actual lawsuit filed by the claimant.

 As you can see, G.L.c.93A has many complexities that only a sophisticated law firm can use to best represent your legal interests when facing a challenge by a consumer. At the Katz Law Group, we do our best to keep up with the changes in all areas of the law, including G.L.c.93A, in order to better serve our business clients throughout the region. Please feel free to call us at 508-480-8202.

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