Massachusetts has an important statute which protects consumers and businesses from unfair and deceptive acts or practices. It is codified in Massachusetts General Laws Chapter 93A, known simply in the Massachusetts legal world as 93A. Section 2 of Chapter 93A states as follows:
“Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.”
Pursuant to the definitions section of 93A, any person involved in trade or commerce, including corporations, can bring a claim and also be sued for violations of the statute. Trade and commerce are also broadly defined to cover just about every type of business transaction and marketplace activity.
Section 1 of 93A defines “Person” and “Trade” and “Commerce” as follows:
(a) ”Person” shall include, where applicable, natural persons, corporations, trusts, partnerships, incorporated or unincorporated associations, and any other legal entity.
(b) ”Trade” and ”commerce” shall include the advertising, the offering for sale, rent or lease, the sale, rent, lease or distribution of any services and any property, tangible or intangible, real, personal or mixed, any security as defined in subparagraph (k) of section four hundred and one of chapter one hundred and ten A and any contract of sale of a commodity for future delivery, and any other article, commodity, or thing of value wherever situate, and shall include any trade or commerce directly or indirectly affecting the people of this commonwealth.
There are two separate and distinct areas of relief under 93A. One covers claimants who are consumers, and the other protects individuals and entities engaged in business or commerce.
A consumer who is the victim of unfair or deceptive business practices brings a claim under Section 9 of 93A. For instance, if a person buying an automobile feels deceived or cheated, Section 9 is the mechanism used to obtain relief.
A person or business engaged in trade or commerce brings a claim under Section 11 of 93A. This is what is referred to as a “business to business” claim under 93A. For example, let’s say an investment advisor leaves a brokerage firm voluntarily to pursue another employment opportunity, and then his former firm contacts his clients and, in an effort to keep their business, tells them the advisor had been fired and that he had put them in unsuitable investments and wasn’t a capable investment advisor. That person would proceed with a business to business claim under Section 11 against his former firm.
Both sections 9 and 11 allow for recovery of compensatory, or actual, damages. In addition, treble (a fancy word for triple) damages can be awarded if bad faith, malice or a willful violation of 93A is shown. For example, if $10,000 is awarded in compensatory or actual damages, $30,000 will be awarded if unfair and deceptive practices or bad faith are established. Also, attorneys’ fees are awarded if the claimant can prove his case.
Sections 9 and 11, however, have different requirements for bringing a claim.
There is a notice prerequisite that must be met under Section 9. Before filing a lawsuit under Section 9, the damaged party must first send to the offending party a written demand for relief. This written demand must identify the claimant and describe, in as much detail as possible, the unfair or deceptive acts or practices and the damages which the claimant has suffered. The letter must be sent to each proposed defendant at least thirty days prior to filing any lawsuit. The defendant has thirty days under 93A to respond to the written demand for relief and can make a settlement offer.
If the potential defendant does not respond, or if a response is made but the claims are rejected, or the settlement offer is deemed inadequate, the claimant may then proceed with a claim in court. Keep in mind that if a settlement offer is rejected, and a judge subsequently decides that the offer was reasonable under the circumstances, that court can limit the damages to the settlement offer and not award treble damages or attorneys’ fees. This could be the case even if it is established that there was bad faith or improper motive. The demand letter is extremely important and is a jurisdictional requirement in order for a court to hear the case. In other words, the failure to send the demand letter at least thirty days before filing a claim will result in the dismissal of the claim by the court – the court will lack jurisdiction to hear it.
Section 11, the “business to business” unfair and deceptive acts section, does not require a written demand letter prior to the filing of a claim, but does allow the defendant to make a written offer of settlement in the answer, instead of in response to a demand letter. If the court eventually finds the offer to be reasonable, damages could likewise be limited.
Section 11 has its own jurisdictional requirement. In order to maintain a claim under Section 11, the unfair and deceptive acts must have occurred primarily in Massachusetts. If they occurred elsewhere, Section 11 is unavailable.
Chapter 93A, the Massachusetts Consumer Protection Statute, is a valuable and popular method to combat unfair and deceptive business practices and obtain compensation, which can sometimes result in multiple damages and an award of attorneys’ fees. It can be used by consumers under Section 9 and by businesses and business people under Section 11.