Arties's Auto Body, Inc. et al. v. The Hartford Fire Insurance Company

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Superior Court of Connecticut.

Arties's Auto Body, Inc. et al. v. The Hartford Fire Insurance Company

X08CV030196141S

Decided: October 14, 2010

Memorandum of Decision on Defendant's Motions Pursuant to Practice Book Sections 16-35 and 16-37 (No. 444.00)

Following a $14,765,556.27 jury verdict rendered and accepted in favor of the plaintiff class of Connecticut auto body repair shops, defendant The Hartford Fire Insurance Company (“the Hartford”) has moved in a single motion to set aside the verdict pursuant to Practice Book § 16-35 1 and for judgment notwithstanding the verdict pursuant to Practice Book § 16-37.2  The defendant had moved for a directed verdict at the end of the plaintiffs' case and the court reserved judgment thereon pursuant to Practice Book § 16-37.   The defendant is now asking that judgment be entered in its favor notwithstanding the verdict for the reasons claimed in its motion for directed verdict.

Procedural and Factual Background

This is a class action brought by the four named plaintiffs on behalf of a class of more than 1,000 Connecticut auto body shops against The Hartford.   The approved designated plaintiff class is all “Connecticut Licensed Auto Body Repair Shops, or licensed individuals, that have performed physical auto body repairs paid for directly or indirectly, partially or in full, by [The] Hartford as the result of auto mobile insurance policies issued by [The] Hartford.”  Artie's Auto Body, Inc. et al. v. The Hartford Fire Insurance Company, 287 Conn. 208, 212 (2008) [this case].   Plaintiffs, who seek money damages, injunctive relief, and other relief, allege that The Hartford engaged in a pattern of unfair and deceptive acts and practices in violation of the Connecticut Unfair Trade Practices Act, Conn. Gen.Stat. § 42-110a et seq.   (“CUTPA”) and were unjustly enriched as a result of those practices.   In summary, the plaintiffs have claimed that The Hartford has wrongfully steered its insureds and other insurance claimants to auto body repair shops favored by The Hartford (Direct Repair Providers or “DRPs”) and part of The Hartford's Customer Repair Service Program (CRSP).  It was also alleged that the Hartford through the use of positive and negative employee incentives has prevailed upon its own independent appraisers to establish an artificially low standard of hourly labor rates for auto body repair work in Connecticut to the damage and detriment of the plaintiffs.   The first claim has been referred by the parties as the “steering claim” or the “shop selection claim”;  the second as the “labor rate claim.”   Class action status has been granted by this court and affirmed on appeal.  Artie's supra.   This court thereafter ordered the creation of a subclass for purposes of the steering claim as it relates to both CUTPA counts and the unjust enrichment count consisting of all members of the class who were at any time during the class period (January 1, 2000 to the start of trial) a DRP shop of the Hartford but are not presently a DRP shop of the Hartford.   The class representative of the subclass is T & J Auto Body Shop of East Hartford.

CUTPA provides, in Conn. Gen.Stat. § 42-110b(a):  “[n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.”   Section 42-110g(a) further provides that “[a]ny person who suffers any ascertainable loss of money or property, real or personal, as a result of the use or employment of a method, act, or practice prohibited by Section 42-110b, may bring an action ․ to recover actual damages.   The jury was charged, over the defendant's objection, on the well established “cigarette rule” for establishing civil liability under the CUTPA statute:

CUTPA-UNFAIR TRADE PRACTICE-”CIGARETTE RULE ”

The plaintiffs claim that the defendant's practices involved in this case constituted and continue to constitute unfair trade practice that violates CUTPA.   Certain guidelines have been established as to what constitutes an unfair trade practice under CUTPA.   The plaintiffs must establish that one or more of the defendant's alleged practices meet at least one of the three following criteria:

1) it offends public policy as it has been established by statutes, the common law or other established concept of unfairness;  or

2) it is immoral, unethical, oppressive or unscrupulous;  or

3) it causes substantial injury to consumers, competitors or other business persons.

All three criteria do not need to be satisfied to support a finding of unfairness.   A practice may be unfair because of the degree to which it meets one of the criteria or to a lesser extent it meets all three.

Following seventeen days of trial and jury deliberations over all or part of six days, the jury rendered its verdict of November 17, 2009, finding that the plaintiffs had proven by a preponderance of the evidence that “[t]he defendant's conduct or practices regarding hourly labor rates to be paid to the plaintiffs for auto body repair services was an unfair trade practice, [a]s offending public policy.”  (Jury Interrogatories (Court Ex. 10) Interrogatory 1.) The jury further identified the public policy found to have been offended as “Sec 38a-790-8 of the Conduct of Motor Physical Damage Appraisers.” 3  Id. The jury found that the foregoing unfair trade practice caused the plaintiffs to sustain an ascertainable loss of money or property (Id. Interrogatory 3), and money damages (Interrogatory 4) which they awarded in the amount of $14,765,556.27, none of which were found to have been wrongfully withheld by the defendant (Interrogatory 5).   The jury found that the labor rate practices were not unfair trade practices under the second prong (immoral, unethical, unscrupulous or oppressive conduct) or the third prong (substantial injury to plaintiffs not outweighed by countervailing benefits) of the cigarette rule;  and that defendant's conduct or practices or communications regarding utilization of its direct repair shops or its CRSP program were not an unfair trade practice under CUTPA.

The Hartford now asks by its motions that the verdict be set aside or that the court enter judgment in its favor notwithstanding the verdict for three reasons:  (I) that the substantial injury test, not the cigarette rule, is the appropriate test to make a determination of unfairness under CUTPA, (II) that even under the cigarette rule plaintiffs did not meet their burden of proving a CUTPA violation with respect to labor rates, and (III) that plaintiffs did not prove that the offense to the Appraiser's Code of Ethics caused an ascertainable loss to the class.

Discussion

The first claim raises an issue of law.4  The defendant claims that the court's “cigarette rule” charge on what is an unfair trade practice under CUPTA, quoted above, was error because the “substantial injury test” adopted by the Federal Trade Commission (FTC) in lieu of the “cigarette rule” is now the appropriate standard of CUTPA unfairness.   Implicit in this claim is the concept that our CUTPA statute is modeled after the Federal Trade Commission Act. In recognition of that linkage, our legislature, in enacting CUTPA in 1975, specifically legislated that:

It is the intent of the legislature that in construing subsection (a) of this section, the commissioner [of Consumer Protection] and the courts of this state shall be guided by interpretations given by the Federal Trade Commission and the federal courts to Section 5(a)(1) of the Federal Trade Commission Act (15 USC 45(a)(1)), as from time to time amended.  Conn. Gen.Stat. § 42-110b(b).

The cigarette rule itself has federal origins.   It was first articulated by the FTC in 1964 in connection with its rule governing the advertising and labeling of cigarettes.   David L. Belt, Unresolved Issues Under the Unfair Trade Practices Act, Connecticut Bar Journal, Vol. 82, No. 4, p. 389 (December 2008).   It was quoted by the U.S. Supreme Court in FTC v. Sperry & Hutchinson Co., 405 U.S. 233, 244 n.5 (1972).   The rule was adopted by the Connecticut Supreme Court as the standard for determining unfairness under CUTPA in Ivey, Barnum & O'Meara v. Indian Harbor Properties, Inc., 190 Conn. 528, 540 n.13 (1983).   In the ensuing twenty-seven years it has been cited as the governing CUTPA standard of unfairness in dozens of Connecticut appellate decisions and hundreds of Superior Court decisions.

Defendant's argument is that the cigarette rule should no longer be used because it has been abandoned by the FTC and Congress and replaced it with the “substantial injury test” which focuses on only the third prong of the cigarette rule and protection of the consumer:

(1) the practice must cause a substantial injury to consumers, competitors or other businessmen;

(2) the injury must not be outweighed by countervailing benefits to consumers or competition that the practice produces;  and

(3) it must be an injury that consumers themselves could not reasonably have avoided.   Commission Statement of Policy on the Scope of the Consumer Unfairness Jurisdiction (December 17, 1980), reprinted in In re Int'l Harvester Co., 104 F.T.C. 949, 1070 (1984).

In 1994 the “substantial injury test” was added by Congress to the statutory language of the FTC Act:

The Commission shall have no authority under this section or Section 18 [15 USC § 57a] to declare unlawful an act or practice on the grounds that such act or practice is unfair unless the act or practice causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition.   In determining whether an act or practice is unfair, the Commission may consider established public policies as evidence to be considered with all other evidence.   Such public policy considerations may not serve as a primary basis for such determination.  15 U.S.C. § 45n.

The Hartford's position is that, in light of these developments, this court is bound by the statutory language of CUTPA Section 42-110b(b) (“courts of this state shall be guided by interpretations given by the Federal Trade Commission and the federal courts ․”) to follow the federal precedent and charge unfairness only under the substantial injury test.   The same argument was made and rejected by this court in denying the defendant's motion for summary judgment last year.  Artie's Auto Body, Inc. et als v. The Hartford Fire Insurance Company, Docket No. X08CV03-0196141S, Superior Court, Complex Litigation Docket at Stamford (September 22, 2009, Jennings, J.), 2009 Conn.Sup. 16108.   That ruling has become the law of the case, and will be followed as such.   But even without the prior ruling this court would not hold that it was error to charge on the cigarette rule, which continues to be the governing Connecticut standard of unfairness.   CUTPA does not mandate that Connecticut courts must always follow FTC and federal court interpretations.   It says that they “shall be guided” by the same.   The Connecticut Supreme Court has expressed awareness of the FTC abandonment of the cigarette rule since at least 2005 where the court said in Votto v. American Car Rental, Inc., 273 Conn. 478 484, n.3 (2005):

We note that we recently have recognized that a question exists as to whether the cigarette rule remains the guiding rule utilized by the Federal Trade Commission.   See American Car Rental, Inc. v. Commissioner of Consumer Protection, 273 Conn. 296, 305 n.6, 869 A.2d 1198 (2005).   In the present case however, neither party has raised or briefed this issue or asked us to reconsider our law in this area, and, accordingly, we will wait to consider this question until it has been presented to us for determination.  (Emphasis added.)

More recently in Naples v. Keystone Building & Development Corp., 295 Conn. 214, Justice Zarella in his concurring opinion reminded his colleagues of § 42-110b(b) and the court's “lack of attention to major policy statements and decisions issued by the Federal Trade Commission.  “Id. 239.   He agreed that Naples was not “an appropriate case to take on a review of our precedent, and, therefore any such review must be left to a future case.”   Id. He concurred in an opinion of the court that had cited the cigarette rule as the “well settled” test of unfairness under CUTPA.  Id. 227.   Even more recently, on May 18, 2010 the Supreme Court released its opinion in Harris v. Bradley Memorial Hospital and Health Center, 296 Conn. 315, once again citing and applying the “well settled” cigarette rule.  Id. 350.   It is clearly the established law of Connecticut, which was properly charged in this case.   It is also noteworthy that the Connecticut General Assembly in the thirty years since the 1980 FTC policy statement was announced has not legislatively adopted the substantial injury rule, as did the U.S. Congress in 1994, although it has amended CUTPA during that interval in several other respects.5  See Jones v. Mansfield Training School, 220 Conn 721, 729 (1972) (“What is notable ․ is that the legislature has repeatedly had the opportunity to designate § 5-142(a) benefits as an exclusive remedy.   It has not chosen to do so”).   And finally it is most significant that the U.S. District Court for the District of Connecticut applies the cigarette rule when construing CUTPA in diversity of citizenship cases.   When presented with these very same arguments in a companion case brought by the plaintiffs herein against another insurance company, the District Court acknowledged a “serious question ․ concerning whether the cigarette rule remains the guiding rule under federal law” but nonetheless, citing a survey of cases within the District, held that, “the current state of the law, then, is that the cigarette rule governs this issue.   Until such time as the [Connecticut] Supreme Court abandons the rule, it remains the guiding principle for this Court to follow as state and federal courts in Connecticut still follow and apply it.”  A & R Body Specialty v. Progressive Casualty Insurance Company, Docket No. 3:07-CV-0929 (WWE) (USDC, D.Conn) (May 28, 2008, Eginton, J.), 2008 WL. 2229888, *2 (D.Conn.) (Denying motion to certify question to the Connecticut Supreme Court as to the continued applicability of the cigarette rule).

Emphasizing the plural word “courts” as used in CUTPA Section 42-110b(b) defendant argues that this superior court should not wait for appellate guidance, but should set aside the verdict in this case as against the law, being based exclusively on the now FTC-abandoned public policy prong of the cigarette rule.   This court declines to do so.   In Votto, American Car Rental, and Naples the Supreme Court expressed awareness of the FTC policy changes, but nonetheless adhered to the cigarette rule.   In the Votto footnote, supra, the court specifically advised that it would take up the issue in a proper case when “presented to us.”  (Emphasis added.)   It may be that this case will prove to be the appropriate case to frame the issue for review, but that review must occur at the Supreme Court.  “In any event, it is manifest to our hierarchal judicial system that this court has the final say on matters of Connecticut law and that the Appellate Court and Superior Court are bound by our precedent.”  (Multiple citations omitted).  William A. Stuart et als v. Kenneth J. Stuart, Jr., 297 Conn. 26, 45-46 (2010).  “We may not overturn prior case law established by our Supreme Court ․” Sullivan v. Brown, 116 Conn.App. 660, 662 (2009).

II

Since the Hartford's second and third claims raise issues of sufficiency of the evidence to sustain the verdict, it is useful to review the appropriate standard of decision.   The trial court should sustain a jury's findings “where there was some evidence upon which the jury could reasonably have based its verdict.”  Purzycki v. Town of Fairfield, 244 Conn. 101, 106-07 (1998) (reversing the trial court's decision to set aside and reinstating the jury's verdict).   And in deciding whether or not a verdict is reasonably supported by the evidence the court “․ must consider the evidence, including reasonable inferences which may be drawn therefrom, in the light most favorable to the parties who were successful at trial.”  Id. at 107.   It is irrelevant whether the jury could have reached a different verdict because a “verdict must stand if it is one that the jury reasonably could have returned and the trial court has accepted.”  Ravenswood Construction, LLC v. F.L. Merritt, Inc. 105 Conn.App. 7, 21-22 (2007).   See also Gladu v. Sousa, 252 Conn. 190 (2000) (holding that even a dubious verdict or the use of poor judgment by the jury is an insufficient basis for setting aside a verdict).   It is the jury's specific function “to sort out from the evidence that [is] in considerable conflict, those facts that would form the basis for its verdict and ․ to reconcile evidentiary inconsistencies.”  Pagnato v. Ippoliti, 245 Conn. 640, 654 (1998).

The defendant's second claim assumes the cigarette rule is the applicable standard but challenges the sufficiency of the evidence to prove a CUTPA violation with respect to labor rates.

The Hartford argues, first, that the provision of the Code of Ethics found to have been offended, Section 38a-790-8 (quoted in full at footnote 3) only requires that appraisers' estimates accurately reflect the market cost to repair the automobiles, and cites testimony, including that of its expert witness, that its appraisers wrote their estimates based on the prevailing market rate.   The position on the scope of the regulation is too narrow.   It requires more than just a market rate appraisal.   The code in a broader context requires that the appraiser “approach the appraisal of damaged property without prejudice against or favoritism toward, any party involved in order to make fair and impartial appraisals”;  “disregard any efforts on the part of others to influence his judgment in the interest of the parties involved”;  and “prepare an independent appraisal of damages.”   The jury was instructed that the law permits a finding of a CUTPA violation by violation of public policy if you determine that “․ the defendant's acts or conduct is at least within the ‘penumbra’ of some common law, regulatory, statutory, or other established concept of unfairness.”   See Ramirez v. Health Net of the Northeast, Inc., 285 Conn. 1, 19 (2008).   There was evidence from which the jury could reasonably have found that the independence of The Hartford's appraisers was compromised by the acts and conduct of the Hartford to the extent of a violation of the word or at least the spirit or “penumbra” of § 38a-790-8, including:

Testimony of Hartford's appraiser Michael O'Mara that “there were certain pressures being applied [by our employer] that limited our ability to produce what we felt was a fair and unbiased appraisal.”  (Tr. 10/15/09, 118.)

O'Mara testimony concerning the Hartford's “Automotive Service Representative Best Practices” (Pl.Ex. 308):  “Well, the standards were instructing us what we would and could not do, not suggesting.   I think, again, the fact that they called it suggesting wanted it to appear that we had more judgment than we actually did.”(Tr. 10/15/09, 138).

O'Mara:  “Well, I saw it as an attempt just to keep the costs low however they could, whatever was-that was the primary reason for reinspection services and dollar deviations was to try to keep the cost of repairs as low as possible.”  Id.

O'Mara:  “Well, yes, because influencing us, again, we were being influenced by an outside party, in my view.   And the insurance department regulations specifically prohibit that.”  Id.

“Q. All right.   In terms of the practices that were in place at the Hartford, did you feel that you could prepare an unbiased appraisal in February of 2002?   A. [O'Mara] No.” (Tr. 10/15/09, 143.)

“Q. Did the deviations [from the Best Practices] affect your performance evaluations and your review and all of those things?   A. [O'Mara] Yes.” (Tr. 10/15/09, 153.)

Mr. O'Mara also testified about the concept of the so-called “prevailing rate” that the defendant relies upon:

I don't really believe it is a prevailing rate.   The argument that the insurance companies have always made over the years is that they are paying what the prevailing rate is.   But the prevailing rate that they have established because they have shops on the program that are willing to accept that rate is not really establishing a prevailing rate.  (Tr. 10/15/09, 130.)

Granted, Mr. O'Mara was only one of many witnesses and there was contrary evidence, but he was a retired employee of the Hartford and the jury was entitled to credit and believe his testimony which is sufficient under our law to support the finding of a violation or offense to at least the “penumbra” of the regulation.

The jury responded to the interrogatory on the second criterion of the cigarette rule by saying that the plaintiffs had not proved by a preponderance of the evidence that the defendant's conduct or practices regarding hourly labor rates to be paid to the plaintiffs for auto body repair services was an unfair trade practice “[a]s immoral, unethical, unscrupulous, or oppressive conduct.”   From this response the defendant makes the argument that the finding of no “unethical” conduct when coupled with the finding that the defendant offended the public policy of the regulation § 38a-790-8 which is titled “Code of Ethics” can only mean that the jury could not have found a violation of the regulation but must have found only conduct which offended the penumbra or shadow of the regulation, which would not offend the public policy prong of the cigarette rule to a sufficient “degree” or “extent” to sustain a single prong violation of CUTPA.   The underlying premise is the established rule-included in the charge to the jury-that “all three criteria [of the cigarette rule] do not need to be satisfied to support a finding of unfairness.   A practice may be unfair because of the extent to which it meets one of the criteria or because to a lesser extent it meets all three.”  McLaughlin Ford, Inc. v. Ford Motor Company, 192 Conn. 558, 569 n.15 (1984).   The so-called inconsistency is not that obvious or significant, and does not lead inescapably to the conclusion of weakness of the finding of conduct offending public policy.   The regulation itself makes no reference to ethics or unethical conduct.   The word ethics only appears in the bolded title:  “Code of Ethics.”   With respect to the general statutes our Supreme Court has stated that boldface catchlines in the titles of statutes are intended to be informal brief descriptions of the contents of the statutory sections and that “[t]hese descriptions should not be read or considered as statements of legislative intent since their sole purpose is to provide users with a brief description of the contents of the sections.”  Clark v. Commissioner of Correction, 281 Conn. 380, 389 n. 14 (2007), quoting Preface to General Statutes, p. viii.   The same rule would apply to the regulations of state agencies, which are legislation by delegation.   That title to Section 38a-790-8 should not be used as a bootstrap to attenuate the finding made by the jury that the defendant's conduct was offensive to the public policy of the regulation.   In any event, the assessment of the “degree” or “extent” of offense to public policy for purposes of the single criterion rule is solely the function of the jury.  “It is within the trier's province to weigh the CUTPA factors as it sees fit.   The law prescribes no precise formula by which the court should balance the criteria.”  Collandro v. Allstate Insurance Company, 63 Conn.App. 602, 614 (2001).   The Appellate Court has also rejected an argument that, if a CUTPA claimant relies on only one criterion it must establish the degree to which the defendant's conduct is unfair.  Johnson Electric Company, Inc. v. Salce Contracting Associates, 72 Conn.App. 342, 357, cert. denied, 262 Conn. 922 (2002).   See, also the discussion of this topic in David L. Belt's article, supra, at p. 391, where he lists several cases upholding a finding of a CUTPA violation based on establishing a single criterion.

Defendant cites cases where violations of statutes have been held not to constitute a CUTPA violation.   In Normand Joseph Enterprises v. Connecticut National Bank, 230 Conn. 486, 524-25 (1994), the court held that a bank's “technical violation” of a midnight deadline which governs its handling of executions on customer bank accounts under Conn. Gen.Stat. § 52-367a was “no more than a technical violation” of the statute which “did not offend public policy, implicate the concept of unfairness or cause the type of substantial injury that CUTPA was designed to address.”   But there is no basis for this court to conclude that the Hartford's violation of the regulation in question, or its penumbra, was in any way merely “technical.”   There was nothing so mechanical as a midnight deadline involved here.   And furthermore, since Normand Joseph Enterprises was decided in 1984 CUTPA § 42-110g was amended by Public act 97-9 to provide that “[p]roof of public interest or public injury shall not be required in any action brought under this section.” 6  Likewise there is no basis for this court to conclude that the Hartford's transgression of the regulation was “an isolated instance of misinterpretation by the defendant of its obligations due to the unique circumstances of this particular case as distinguished from unfair or deceptive acts or practices in defendant's trade or business.” as in Jacobs v. Healey Ford Subaru, 231 Conn. 707, 728-29 (1995), where the attorney trial referee had found that the defendant's statutory noncompliance was not, in fact, unfair, deceptive or oppressive.   Here the jury has specifically found an unfair trade practice based on the Hartford's acts or practices as offending the public policy of § 38a-790-8 of the regulations.   And defendant's reliance on A-G Foods, Inc. v. Pepperidge Farm, Inc., 216 Conn. 200 (1990), is misplaced.   In that case the court set aside a CUTPA verdict of unfair trade practice based on a finding of negligence by a producer in failing to monitor the books of a distributor who was stealing money from a customer by failing to deliver bakery goods which had been paid for in advance.   The court found inadequate evidence of any violation of the second or third criterion of the cigarette rule, making specific reference to plaintiff's failure to show “․ an unjustified consumer injury, a necessary predicate for recovery under CUTPA.”  Id. 217.   In discussing the third criterion the court did explore the 1980 policy statements of the FDC and quoted the statement that “․ unjustified consumer injury is the primary focus of the FTC Act and the most important of the three ․ criteria.”  (Citation omitted.)  Id. at 216.   The court did not, however, adopt the federal substantial injury test or abandon the first criterion of the cigarette rule here at issue.   The court stated, apparently in dictum because the public policy criterion does not seem to have been a basis of the verdict, that “[c]ontrary to the claim of the plaintiff, the first prong, standing alone is insufficient to support a CUTPA violation at least where the underlying claim is grounded solely in negligence.”  Id. 217.   For that proposition the court cited Atlantic Ridgeflield Co. v. Canaan Oil Co., 202 Conn. 234, 242 (1987), where the court after reviewing those same 1980 FTC policy statements said that the part of the single criterion rule of McLaughlin Ford, supra, which says “or because to a lesser extent it meets all three,” “suggests that conjunctive linkage may be appropriate in certain cases.”  (Emphasis added.)   Id. Reading A-G Foods and Atlantic Ridgefield together, this court concludes that the foregoing statement in A-G Foods regarding the first prong of the cigarette rule should be limited to cases where the claim of an unfair trade practice is based on negligence of the defendant.   See Thames River Recycling, Inc. v. Gallo, 50 Conn.App. 767, 788 (1998), where the Appellate Court distinguished A-G Foods on the ground that the plaintiff's claims in that case were not grounded solely in negligence.   It may also be that the foregoing statement of “conjunctive linkage” in A-G Foods may be limited or even overruled legislatively by Public Act 97-9 which eliminated the requirement of proving public interest or injury in order to recover under CUTPA.

For all these reasons, the court upholds the sufficiency of the evidence to prove a CUTPA violation with respect to labor rates.

III

Defendant's third claim challenges the sufficiency of the evidence to prove that the offense to the public policy of the Appraiser's Code of Ethics caused an ascertainable loss to the plaintiff class.

CUTPA requires as an element of a private cause of action under the statute to recover actual damages, a plaintiff who “․ suffers an ascertainable loss of money or property, real or personal, as a result of the use or employment of a method, act or practice prohibited by Section 42-110b [which prohibits engaging in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or business].”  Conn. Gen.Stat. § 42-110g(a).   The meaning of the “ascertainable loss” requirement was addressed in detail in Hinchcliffe v. American Motors Corporation, 184 Conn. 607, 612-15 (1981).   Ascertainable loss is not the same as the “actual damages” which a successful CUTPA plaintiff can recover under § 42-110g, and a plaintiff is not required to allege or prove any specific amount of loss or damage to meet the requirement of ascertainable loss.  Id. 613.   Damage is only a species of loss which necessarily encompasses a broader meaning than the term damage.   “Ascertainable” means capable of being discovered, observed, or established.   “Loss” has been held synonymous with deprivation, detriment, and injury.   Id. In the buyer-seller context, to satisfy the ascertainable loss requirement, a plaintiff “need prove only that he has purchased an item partially as a result of an unfair or deceptive practice or act and that the item is different from that for which he bargained.”  Id. 614-15.

The ascertainable loss requirement is a threshold barrier which limits the class of persons who may bring a CUTPA claim seeking either actual damages or equitable relief.   Were we to construe that barrier as a requirement that all plaintiffs show actual damages, any person who bought an item which was deceptively advertised but was actually of a value equal to or greater than the item as advertised would not be able to obtain a rescission under CUTPA.   Such a construction impairs the efficacy of the equitable remedies provided by CUTPA and prevents the statute from achieving the remedial effect which the legislature desired.  Id. 615-16.

The defendant in argument has merged the concepts of actual damages and ascertainable loss, but Hinchcliffe is clear that they are separate concepts and a plaintiff does not have to make a showing of any amount of actual damages to satisfy the ascertainable loss requirement.   Defendant argues that any loss sustained by plaintiffs can be attributed to the actions of other insurance companies, the agreement of each class member to accept the hourly rates quoted by the Hartford, or competition with direct repair shops or even with each other.   But plaintiffs are not required to prove that the unfair trade practice was the sole cause of an ascertainable loss;  they need only prove that it was a proximate cause, one substantial producing factor resulting in some measurable loss to the plaintiff auto body shops.   The court finds that there was some evidence which would allow a reasonable jury to conclude that the Hartford's influence over its appraisers was a substantial producing factor of at least some measurable loss in income to the plaintiffs.   The undisputed evidence was that their services were billed on a combination of hourly charges for the work of the auto body specialists in their employ, plus the cost of materials.   The hourly rate was the only item seriously in contention.   Hartford's former appraiser Michael O'Mara testified:

Q. If the Hartford did not impose limits upon you, would you have written a rate at what you believed to be fair and reasonable?  ․ A. Yes, I would have.

Q. Okay. What-at the time what did you believe to be fair and reasonable?   A. I would have approached it on an individual basis.

Q. Okay. You indicated you made reference to the mechanical rate.   Would that have been part of your thinking in determining what was fair and reasonable?   A. Yes, it would.

Q. Why? A. Because the mechanical rate was determined by the market and the mechanical repairs and all body repairs are very, very similar.

Q. And when you say the market, you are talking about free of the Hartford's influence?   A. Correct

Q. You made reference to the widening gap between auto body repairs and mechanical service rates.   Is that observation based on your thirty years in the business of actual work in both mechanical and auto body fields?   A. Yes, it is.  (10/15/09 Tr. 41-43.)

Defendant discredits the O'Mara testimony by pointing out inconsistencies and admissions adduced on cross examination, but those are credibility issues for the jury.   Taking this evidence and the undisputed evidence that mechanical rates were higher than auto body rates, and construing the evidence as I must most favorably to the plaintiffs, there was an adequate evidentiary basis for the jury to conclude reasonably that the defendant's influence over its appraisers was a proximate cause of at least some ascertainable loss in income to the plaintiffs.

Order

For the foregoing reasons the defendant's Motions Pursuant to Practice Book Sections 16-35 and 16-37 are denied.

Alfred J. Jennings, Jr., Judge Trial Referee

FOOTNOTES

FN1. Section 16-35 provides, in part:  “Motions in arrest of judgment, whether for extrinsic causes or causes apparent on the record, motions to set aside a verdict ․ motions for new trials ․ must be filed with the clerk within ten days after the verdict is accepted.”.  FN1. Section 16-35 provides, in part:  “Motions in arrest of judgment, whether for extrinsic causes or causes apparent on the record, motions to set aside a verdict ․ motions for new trials ․ must be filed with the clerk within ten days after the verdict is accepted.”

FN2. Section 16-37 provides, in part:  “After the acceptance of a verdict and within the time stated in Section 16-35 for filing a motion to set a verdict aside, a party who has moved for a directed verdict may move to have the verdict and any judgment rendered thereon set aside and have judgment rendered in accordance with his or her motion for a directed verdict.”.  FN2. Section 16-37 provides, in part:  “After the acceptance of a verdict and within the time stated in Section 16-35 for filing a motion to set a verdict aside, a party who has moved for a directed verdict may move to have the verdict and any judgment rendered thereon set aside and have judgment rendered in accordance with his or her motion for a directed verdict.”

FN3. Section 38a-790-8 is part of the administrative regulations of the Connecticut Department of Insurance and bears the title “Code of Ethics.”   It provides:  “Every appraiser shall:  (1) Conduct himself in such as manner as to inspire public confidence by fair and honorable dealings;  (2) approach the appraisal of damaged property without prejudice against, or favoritism toward, any party involved in order to make fair and impartial appraisals;  (3) disregard any efforts on the part of others to influence his judgment in the interest of the parties involved;  (4) prepare an independent appraisal of damages.   No appraiser shall:  (A) receive directly or indirectly any gratuity or other consideration in connection with his appraisal services from any person except his employer, or, if self-employed, his customer;  (B) traffic in automobile salvage if such salvage is obtained in any way as a result of appraisal services rendered by him.”.  FN3. Section 38a-790-8 is part of the administrative regulations of the Connecticut Department of Insurance and bears the title “Code of Ethics.”   It provides:  “Every appraiser shall:  (1) Conduct himself in such as manner as to inspire public confidence by fair and honorable dealings;  (2) approach the appraisal of damaged property without prejudice against, or favoritism toward, any party involved in order to make fair and impartial appraisals;  (3) disregard any efforts on the part of others to influence his judgment in the interest of the parties involved;  (4) prepare an independent appraisal of damages.   No appraiser shall:  (A) receive directly or indirectly any gratuity or other consideration in connection with his appraisal services from any person except his employer, or, if self-employed, his customer;  (B) traffic in automobile salvage if such salvage is obtained in any way as a result of appraisal services rendered by him.”

FN4. It is now clearly established that the trial court, on motion of a party or its own motion, “has the inherent power to set aside a verdict where it finds it has made, in its instructions, rulings on evidence, or otherwise in the course of the trial, a palpable error which was harmful to the proper disposition of the case and probably brought about a different result in the verdict ․” Stephenson's Civil Procedure, 3d Ed. § 197b, p. 410..  FN4. It is now clearly established that the trial court, on motion of a party or its own motion, “has the inherent power to set aside a verdict where it finds it has made, in its instructions, rulings on evidence, or otherwise in the course of the trial, a palpable error which was harmful to the proper disposition of the case and probably brought about a different result in the verdict ․” Stephenson's Civil Procedure, 3d Ed. § 197b, p. 410.

FN5. e.g. P.A. 95-123, P.A. 03-6, P.A. 04-169, P.A. 04-189, and P.A, 97-9 (June 18 Special Session).   The latter is significant because it eliminated the judicially imposed requirement of proof of public interest or injury.   See Ivey, Barnum & O'Meara, supra, at 540 (“The specific relief afforded by CUTPA requires, in a private dispute, the assertion of a public interest that is ‘specific and substantial’ ”)..  FN5. e.g. P.A. 95-123, P.A. 03-6, P.A. 04-169, P.A. 04-189, and P.A, 97-9 (June 18 Special Session).   The latter is significant because it eliminated the judicially imposed requirement of proof of public interest or injury.   See Ivey, Barnum & O'Meara, supra, at 540 (“The specific relief afforded by CUTPA requires, in a private dispute, the assertion of a public interest that is ‘specific and substantial’ ”).

FN6. Substantial injury to consumers, competitors or other business persons is still an element of the third criterion of the cigarette rule, but the jury in this case expressly found no violation of the third criterion..  FN6. Substantial injury to consumers, competitors or other business persons is still an element of the third criterion of the cigarette rule, but the jury in this case expressly found no violation of the third criterion.

Jennings, Alfred J., J.T.R.