The Distinct Injury Requirement is Alive and Well in Massachusetts Consumer Cases

The patchwork of Massachusetts Supreme Judicial Court decisions construing our consumer protection statute (Chapter 93A) has created a great deal of confusion, particularly over the last decade as the Court has grappeled with the meaning of its 1985 decision in Leardi v. Brown.  In that case, the Court had held that consumers could recover statutory damages where they have suffered “an invasion of a legally protected interest, but no harm for which actual damages can be awarded.”  Plaintiffs' attorneys (and particularly plaintiffs' class action attorneys) have seized upon that language to suggest that once they establish such an invasion, they have no burden to prove that a defendant's alleged conduct caused injury, a position that, if true, would greatly improve their chances of obtaining class certification in many consumer cases.  

Their arguments gained ground in the 2004 decision in Aspinall v. Philip Morris Cos., a “light tobacco” case in which the Court held that proof of deceptive advertising could be sufficient to establish a per se injury to consumers of the advertised product.  Two years later the Court, in Hershenow v. Enterprise Rent-A Car, seemed to distance itself from Aspinall, holding that Chapter 93A still required plaintiffs to establish “a causal connection between the deceptive act and an adverse consequence or loss.”  (A concurring opinion in Hershenow suggested that the Court effectively had overruled Leardi and should expressly acknowledge having done so.)  Two years later the Court issued yet another decision, Iannacchino v. Ford Motor Co., in which it appeared to limit the reach of Hershenow.  The Court has continued to explore the meaning of Chapter 93A's injury requirement in the more recent decisions of Casavant v. Norwegian Cruise Line Ltd., and Rhodes v. AIG Dom. Claims, Inc., in each case reaffirming the principle that a plaintiff in a Chapter 93A case must prove a loss causally connected to the alleged unfair or deceptive act.

Last week, the SJC shed new light on the injury analysis in its decision in  Download Tyler v Michaels Stores Inc The plaintiff in Tyler alleged that Michaels Stores collected her zip code during credit card transactions, that Michaels then used her zip code together with her name to find her address and telephone number through commercially available databases, and that she subsequently received unsolicited and unwanted marketing material from Michaels.  Plaintiff claimed that the retailer's conduct violated G.L. c. 93, Section 105, which prohibits the collection of personal identification information not required by the credit card issuer in connection with a credit card transaction, and which expressly makes violations of its privacy provisions also violations of chapter 93A.

The federal district judge presiding over the case granted Michaels' motion to dismiss, but then certified questions to the Massachusetts Supreme Judicial Court.  In response to the certified questions, the SJC held that a zip code may constitute “personal identification information” within the meaning of Section 105(a), that a plaintiff may bring an action for a privacy right violation without proof of identity fraud, and that the statute applies to information recorded electronically and not just through paper transaction forms.

In addition to resolving these questions concerning the privacy law, the Court seized on the opportunity to clarify the status of Leardi and the meaning of injury under Chapter 93A:

The invasion of a consumer's legal right (a right, for example, established by statute or regulation), without more, may be a violation of G.L. c. 93A, § 2, and even a per se violation of Section 2, but the fact that there is such a violation does not necessarily mean the consumer has suffered an injury or a loss entitling her to at least nominal damages and attorney's fees; instead, the violation of the legal right that has created the unfair or deceptive act or practice must cause the consumer some kind of separate, identifiable harm arising from the violation itself. . . . To the extent that the quoted passage from Leardi can be read to signify that “invasion” of a consumer plaintiff's established legal right in a manner that qualifies as an unfair or deceptive act under G.L. c. 93A, § 2, entitles the plaintiff to at least nominal damages (and attorney's fees), we do not follow the Leardi decision.  Rather, as the Rhodes, Casavant, Iannacchino, and Hershenow decisions indicate, a plaintiff bringing an action for damages under c. 93A, § 9, must allege and ultimately prove that she has, as a result, suffered a distinct injury or harm that arises from the claimed unfair or deceptive act itself.

With this passage, the Court has once and for all dispelled the notion that, because of Leardi, plaintiffs pursuing claims under Chapter 93A do not need to prove a distinct injury causally connected to the alleged unfair or deceptive act or practice.  The Court, however, went on to hold that, “[w]hen a merchant acquires personal identification information in violation of §105(a) and uses the information for its own business purposes, whether by sending the customer unwanted marketing materials or by selling the information for a profit, the merchant has caused the consumer an injury that is distinct from the statutory violation itself and cognizable under G.L. c. 93A, § 9.”  What constitutes a legally cognizable injury in any given situation likely will continue to be a point of controversy resolved on a case-by-case basis.