• Consumer Protection Does Not Right Private Wrongs
  • December 2, 2015 | Author: Joan S. Allgaier
  • Law Firm: Hall & Evans, LLC - Denver Office
  • More and more, we see consumer protection claims accompanying negligence claims against nursing homes, doctors, home service aides - really, any “service” profession.
     
    Why is this problematic? The Colorado Consumer Protection Act (“CCPA”; see C.R.S. § 6-1-105) was intended to protect the public and punish deceptive trade practices committed by businesses in dealing with the public. Rather than remedy private wrongs, these types of claims also allow recovery of a penalty in addition to attorney fees. C.R.S. § 6-1-113. Further, because CCPA claims rely on allegations of fraud, deception, advertising practices, and public impact, they expand the scope of discovery beyond issues of negligence and standard of care. Thus, the best practice is to dispose of the CCPA claim at the outset of a case with a Rule 12 motion to dismiss to avoid overbroad and potentially abusive discovery.
     
    Even though the allegations in the complaint are viewed in the light most favorable to plaintiff under Rule 12, often CCPA claims can be dismissed because they simply were not intended to resolve the types of private wrongs at issue in negligence cases.
     
    To prove a private claim for relief under the CCPA, plaintiffs must show that: (1) the defendant engaged in an unfair or deceptive trade practice; (2) the challenged practice occurred in the course of the defendant’s business, vocation, or occupation; (3) the challenged practice significantly impacts the public as actual or potential consumers of the defendant’s goods, services, or property; (4) the plaintiff suffered injury in fact to a legally protected interest; and (5) the challenged practice caused the plaintiff’s injury. Brodeur v. American Home Assurance Co., 169 P.3d 139, 155 (Colo. 2007).
     
    If even one element cannot be met, the claim falls as a matter of law. HealthOne of Denver, Inc. v. UnitedHealth Group, Inc., 805 F.Supp.2d 1115, 1120 (D.Colo. 2011). When the wrong complained of is a negligent act as opposed to a deceptive trade practice, it is difficult for the claim to prevail on each and every element of a CCPA claim because the CCPA was never intended to remedy the private, wrongful act.
     
    To establish a deceptive trade practice, the plaintiff must show that the defendant “knowingly makes a false representation” and the false representation must either induce a party to act, refrain from acting, or have the capacity or tendency to attract consumers. Rule 9(b) requires that allegations of fraud be stated with particularity. Arguably, a plaintiff must meet the heightened pleading requirements of Rule 9(b) to prove a deceptive or unfair trade practice. Int’l Acad. of Bus. and Fin. Mgmt., Ltd. v. Mentz, 2013 WL 212640, *6 (D.Colo. Jan. 18, 2013); Two Moms and a Toy, LLC v. Int’l Playthings, LLC, 2012 WL 4510686, *5 (D.Colo. Sept. 30, 2012); HealthOne of Denver, Inc., 805 F.Supp.2d at 1120-21 (D.Colo. 2011); Gen. Steel Domestic Sales, LLC v. Chumley, 2011 WL 2415167, *4 (D.Colo., June 10, 2011).
     
    Further, a promise cannot constitute a misrepresentation unless the promisor did not intend to honor it at the time it was made. Rhino Linings USA, Inc. v. Rocky Mountain Rhino Lining, Inc., 62 P.3d 142, 148 (Colo. 2003). Mere statements of opinion such as puffing or praise of goods by a seller is no warranty, and the CCPA does not, as a matter of law, make actionable a statement that would otherwise be mere puffery. Park Rise Homeowners Ass’n, Inc. v. Resource Constr. Co., 155 P.3d 427, 435 (Colo.App. 2006), cert. denied (2007).
     
    Plaintiffs often cannot satisfy the public impact requirement. Relevant considerations for determining whether a challenged practice significantly impacts the public in the context of a CCPA claim include “(1) the number of consumers directly affected by the challenged practice; (2) the relative sophistication and bargaining power of the consumers affected by the challenged practice; and (3) evidence that the challenged practice has previously impacted other consumers or has significant potential to do so in the future.” Brodeur v. American Home Assurance. Co., 169 P.3d 139, 155 (Colo. 2007). If a wrong is private in nature and does not affect the public, the claim is not actionable under the CCPA. Id.
     
    The plaintiff must also have standing to assert a CCPA claim. The plaintiff must be the actual consumer, a successor in interest to an actual consumer or acting in the course of his or her business when injured by a deceptive trade practice. C.R.S. § 6-1-113(1). Further, if the plaintiff suffered no injury, in fact, or suffered an injury in fact, but not from violation of a legal right, the claim should be dismissed for lack of standing. Anson v. Trujillo, 56 P.3d 114, 117 (Colo.App. 2002).
     
    Finally, to the extent that the plaintiff fails to show the deceptive trade practice caused the injury complained of, the CCPA claim must be dismissed.
     
    Since the defendant need only prevail on one element to prevail on a dispositive motion at the outset of litigation, all CCPA claims asserted in negligence claims should be met with a Rule 12 motion to dismiss.