In a case that drew national attention, Pennsylvania’s highest court backed a married couple seeking a bigger award after winning a lawsuit against an insurer they accused of engaging in fraud and negligence when it sold them a life insurance policy.
In 2020, an Allegheny County jury found the insurer, Ameriprise Financial, liable for $120,570 in common-law punitive and compensatory damages.
The county court also awarded the couple — Earl and Christine Dwyer — another $169,173 in damages based on their claims that Ameriprise had violated Pennsylvania’s Unfair Trade Practices and Consumer Protection Law.
Ameriprise, however, argued the Dwyers had to choose between the two awards.
Lower courts were sympathetic and ultimately declined to award damages under the consumer protection law.
But in a 22-page ruling last week, the Pennsylvania Supreme Court rejected the lower courts’ reasoning and sent the case back to Allegheny County
Why: Based on the reasons for having two forms of damages available to consumers who pursue fraud cases against businesses.
Both kinds of damages are designed to punish businesses that have defrauded or otherwise harmed consumers, and to dissuade others from doing so.
But awards under the consumer protection law, called statutory awards, serve three additional purposes that are not served by punitive damages.
The statutory award — which can be assessed in an amount of up to three times the punitive award — incentives private citizens to enforce consumer protection laws.
“These plaintiffs act in their own self-interest and, simultaneously, in the public interest, supplementing the government’s own enforcement of the law,” Justice David Wecht wrote for the court majority.
Second, the statutory award compensates plaintiffs for the time and expense of enforcing the consumer protection law, over and above whatever other harm they suffered.
“Even with competent attorneys, litigation is not effortless, and may arise only after the consumer has dealt with the hassle of ascertaining the wrongdoing of another,” Wecht wrote.
Third, the statutory award serves as a deterrent to bad actors.
And by allowing damages to be trebled, the law offers a carrot to consumers whose claims might otherwise be too small to justify the rocky road of litigation.
Why does it matter: The high court had not previously weighed in on the issue, according to Ken R. Behrend, a Pittsburgh attorney who represented the Dwyers.
“In that vacuum, it unfortunately created some awkward law, which the Supreme Court has now clarified,” Behrend said in an interview with biznewsPA.
He expected the lower court to award up to treble damages, noting that the actual award is up to the court’s discretion.
He noted that the Dwyers originally filed suit in 2001.
In a statement, an Ameriprise spokesperson said the company expected the opposite result.
“While we’re disappointed with the Pennsylvania Supreme Court’s decision, we’re confident the trial judge will once again deny the request for treble damages,” the spokesperson said.
Who’s watching: The case drew attention from both statewide and national groups, which filed friend-of-the-court briefs on both sides.
Backing Ameriprise were the Pennsylvania Coalition for Civil Justice Reform, Pennsylvania Chamber of Business and Industry and Pennsylvania Manufacturers’ Association, as well as the National Association of Manufacturers and the U.S. Chamber of Commerce.
The national chamber, in its brief, argued that an automatic award of treble damages created “a serious risk of over-punishment and over-deterrence,” resulting in higher prices, less innovation and lower-quality products.
Behrend argued that honest businesses have nothing to fear from the recent ruling.
Briefs supporting the Dwyers were filed by the National Consumer Law Center, National Association of Consumer Advocates, Pennsylvania Legal Aid Network, Legal Aid of Southeastern Pennsylvania, Community Justice Project, Neighborhood Legal Services Association and Philadelphia Legal Assistance.
What’s next: The case goes back to Allegheny County court.
The Supreme Court majority said the lower court could not consider punitive damages when awarding statutory damages.
But in a dissenting opinion, Justice P. Kevin Brobson said the lower court should be able to account for the punitive damages already granted, given that there are some overlaps in the two types of damages.
“They are both aimed, at least in part, at punishing a defendant and deterring future misconduct,” Brobson wrote.
