Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—Pa. Sup. Ct.: Pennsylvania Unfair Trade Practices Law did not apply to political subdivision agencies, (Jun 18, 2014)

By Linda O’Brien, J.D., LL.M.

In an action by former students against a community college for engaging in unfair trade practices, the definition of “person” subject to liability under the Pennsylvania Unfair Trade Practices and Consumer Protection Act includes private entities but not political subdivision agencies, the Pennsylvania Supreme Court has held. The trial court order denying the college’s motion for summary judgment was reversed and remanded (Meyer v. Community College of Beaver County, June 16, 2014, Todd, D.).

Community College of Beaver County (CCBC) is an educational institution that offers two-year degrees and various certification courses. David Meyer and other former CCBC students enrolled in and completed substantial work in CCBC’s police training program. The former students filed suit against CCBC, alleging a violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Act (UTPCPL), among other claims. The plaintiffs asserted that, in 2002, state officials decertified the program due to CCBC’s malfeasance, rendering their educational and financial investments largely worthless. The appellate court affirmed the trial court’s denial of CCBC’s motion for summary judgment, and CCBC appealed.

The state high court determined that the state legislature did not intend for the definition of “person” under the UTPCPL to include political subdivision agencies. The UTPCPL declares unlawful numerous egregious practices, as well as other fraudulent or deceptive conduct that creates the likelihood of confusion or misunderstanding. Under the UTPCPL, public and private enforcement actions may be brought against “persons” employing those practices. A “person” is defined as “natural persons, corporations, trusts, partnerships, incorporated or unincorporated associations, and any other legal entities.” Since the parties argued two reasonable constructions of the definition of “person”, the court noted that the statute was ambiguous as to whether it included political subdivision agencies.

Where a statute is ambiguous, the circumstances under which it was enacted may be considered in determining legislative intent, according to the court. At the time of the UTPCPL’s adoption, common law provided a doctrine of sovereign immunity, which arguably extended to political subdivision agencies, and it was unlikely that the legislature would depart from that doctrine with general language such as “any other legal entities.” Furthermore, the UTPCPL was enacted to protect consumers, and there was no evidence that the legislature sought to eliminate unfair trade practices in the public sphere.

Finally, the consequences of adopting an interpretation of “person” to include political subdivision agencies strongly suggested that the legislature did not intend their inclusion, the court noted. The UTPCPL provides for the imposition of civil penalties in public enforcement actions and for damages as a remedy in private actions. Although the legislature has the authority to impose punitive sanctions and damages on its political subdivisions, it is unlikely that it would do so given longstanding precedent that government agencies are ordinary immune from common law damages, the court concluded.

In a concurring opinion, Chief Justice Castille stated, as additional support for the majority opinion’s construction of the definition, that a defendant must be engaged in “the conduct of any trade or commerce” in addition to being a “person” to be liable under the UTPCPL. The CCBC is not a merchant or engaged in trade or commerce for purposes of the UTPCPL. The CCBC is engaged in providing education and the fact that it accepts tuition funds in exchange for providing that education did not establish that its mission was profit-making trade or commerce.

The case is No. J-22A-2013.

Attorneys: John P. Liekar, Jr. (Yukevich Marchetti Liekar & Zangrilli, PC) for David J. Meyer, and Timothy L. Barr. Anthony G. Sanchez (Andrews & Price) for Community College of Beaver County.

Companies: Community College of Beaver County

Cases: StateUnfairTradePractices PennsylvaniaNews