Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—Mass. Sup. Jud. Ct.: Massachusetts High Court clarifies scope of ‘unfair deceptive act or practice’ prohibition, (Sep 8, 2016)

By Michael Menzhuber, J.D., LL.M.

The Massachusetts Supreme Judicial Court answered "yes" to the certified question, "Does 940 [Code Mass. Regs.] § 5.05 apply to transactions in which the customer is a business entity?" The court found that: (1) "customers" are defined in the Attorney General’s "Motor Vehicle Regulations" as "any person"; and (2) "person" is defined in the motor vehicle regulations to include "corporations" and "other legal entities" (Limoliner, Inc. v. Dattco, Inc., September 7, 2016, Lenk, B.).

Limoliner, Inc. verbally requested Dattco, Inc., a motor vehicle repair corporation, to make certain repairs to one of its luxury motor coaches. Dattco subsequently generated a list of repairs that did not include the inverter repair requested by Limoliner. After Dattco completed all the repairs, except the inverter repair, it presented Limoliner with an invoice. Limoliner refused to pay the invoice and Dattco did not return the vehicle.

Limoliner alleged, among other things, that Dattco engaged in an "unfair and deceptive act or practice," in violation of G.L.c. 93A, § 2(a), by failing to record its verbal repair request in writing, as required by 940 Code Mass. Regs. § 5.05(2). The case eventually was decided by the First Circuit Court of Appeals, which affirmed the judgment of the magistrate, except with respect to the Limoliner’s regulatory claim. On that issue, the appellate court certified the following question: "Does 940 [Code Mass. Regs.] § 5.05 apply to transactions in which the customer is a business entity?"

After noting that G.L.c. 93A, § 2(a) applies to transactions between persons involved in trade or commerce with other persons also engaged in trade or commerce, the Supreme Judicial Court considered the language of the regulation. It found that: (1) the regulations apply to "customers"; (2) "customer" is defined as "any person" in the Attorney General’s "Motor Vehicle Regulations"; and (3) 940 Code Mass. Regs. § 5.01 includes "corporations" and "other legal entities" in its definition of "person."

The court also noted that another provision in the Attorney General’s "Motor Vehicle Regulations" contained a clause specifically limiting its applicability to motor vehicles purchased primarily for personal, family or household purpose. It then determined that if the intent was to limit 940 Code Mass. Regs. § 5.05 to consumer transactions, this "limiting" language could have been included and, the failure to do so was, therefore, purposeful.

Finally, the court distinguished its decision in Knapp Shoes, Inc. v. Sylvania Shoe Mfg, Corp., 418 Mass 737 (1994), which held that a provision from a different section of the Attorney General’s regulations did not apply to interbusiness transactions because, at that time, G.L.c. 93A had not been amended to: (1) protect persons engaged in a trade or commerce from "unfair or deceptive acts of practices"; and (2) apply to "customers" instead of "consumers." The court also found it significant that the provision at issue in the present case appeared in the Attorney General’s "Motor Vehicle Regulations" while the one at issue in Knapp only appeared in the "Customer Protection: General Regulations."

The case is No. SJC-12033.

Attorneys: Robert E. Curtis, Jr. (Curtis & Sindeband LLP) for Limoliner, Inc. Christopher S. Williams for Dattco, Inc.

Companies: Limoliner, Inc.; Dattco, Inc.

Cases: StateUnfairTradePractices MassachusettsNews