66 Mass. App. Ct. 726 | Mass. App. Ct. | 2006
The principal question presented by this appeal is whether the plaintiff’s G. L. c. 93A demand letter, purportedly sent on behalf of herself and a class of Massachusetts indirect purchasers who alleged injury as a result of the defendants’ illegal price-fixing, “reasonably describ[ed] . . . the injury suffered,” as required by G. L. c. 93A, § 9(3), inserted by St. 1969, c. 690. A Superior Court judge held the demand letter to be defective as matter of law for its failure to describe the alleged injury adequately and dismissed the complaint on the defendants’ motions under Mass.R.Civ.P. 12(b)(6), 365 Mass. 755 (1974). Because we conclude that the demand letter was minimally sufficient to meet the statutory requirement on the individual plaintiff’s own behalf prior to any class action being certified, we reverse.
Factual background. The defendants, manufacturers of a material called polyester staple,
The plaintiff, Dawn Richards, brought the instant complaint on April 8, 2004, pursuant to G. L. c. 93A, §§ 2 and 9. She alleged that she represented a class of “millions” of Massachusetts “indirect purchaser[s],” consumers who purchased products containing polyester staple while the defendants’ conspiracy was ongoing. She and the putative class members (the supposed class not yet having been certified) were indirect purchasers because they purchased the products at retail from third parties, not directly from the defendants. The plaintiff and the class were assertedly damaged (in an amount yet undetermined) because the products they purchased containing polyester staple were sold at artificially inflated prices as a result of the defendants’ price-fixing conspiracy and other anti-competitive conduct.
Prior to filing the complaint, the plaintiff’s counsel served on each of the defendants a letter entitled “Demand for Relief Pursuant to [G. L. c.] 93A, § 9.” Under a heading captioned “CLAIMANT,” the letter described the plaintiff and the class she proposed to represent and stated that the plaintiff personally “has purchased and paid illegally inflated prices on products containing polyester staple such as, but not limited to[,] shirts and other wearing apparel, linens and home furnishings.” Under
“Claimant, as well as the other members of the proposed Class, have suffered injury and damages as a result of the Respondent’s unfair or deceptive acts or practices in the form of higher out-of-pocket costs to purchase products containing polyester staple and other damages. Claimant is a member of the putative Class. The members of the Class have suffered similar damages. Due to the conduct of Respondent and the inherently self-concealing nature of the conspiracy, the dollar amount of damages suffered by the Class cannot be determined without discovery. However, Respondent possesses enough information as to the supra-competitive prices of polyester staple in order to make a reasonable class wide tender of settlement.” (Emphasis supplied.)
The letter demanded that the defendants pay all consequential damages caused by their illegal conduct, pay restitution and refunds to the plaintiff and members of the proposed class to the extent they had paid higher than competitive prices for products containing polyester staple, and reimburse the plaintiff and the proposed class members for their reasonable attorney’s fees and expenses. None of the defendants responded to the demand letter.
Defendants Arteva Specialties S.A.R.L., doing business as KoSa (KoSa); E.I. DuPont de Nemours & Company (DuPont); DAK Fibers, LLC (DAK); and Wellman, Inc. (Wellman), moved to dismiss the complaint under Mass.R.Civ.P. 12(b)(6) on the ground that the demand letter was inadequate under G. L. c. 93A, § 9. Defendant Nan Ya Plastics Corporation, America (Nan Ya), separately moved to dismiss on the basis of lack of personal jurisdiction. After a hearing, the motion judge ruled that the demand letter did not reasonably describe the injury suffered and allowed the motion to dismiss on that ground with regard to all the defendants. The judge did not address Nan Ya’s jurisdictional motion and argument. This appeal followed.
These generous criteria have reduced a plaintiff’s obstacle in surmounting a rule 12(b)(6) motion to a “minimal hurdle,” Bell v. Mazza, 394 Mass. 176, 184 (1985), and they are applicable to c. 93A consumer class actions. Ciardi v. F. Hoffmann-La Roche, Ltd., 436 Mass. 53, 55 (2002). In this connection, we also observe that in enacting G. L. c. 93A the Legislature intended to create new substantive rights and procedural devices substantially broadening the vindication of consumers’ rights, id. at 58, and that “technicalities are not to be read into the statute in such a way as to impede the accomplishment of substantial justice,” Baldassari v. Public Fin. Trust, 369 Mass. 33, 41 (1975); this includes the reading of the demand letter requirement. See id. at 41-42. Indeed, as the Ciardi case made clear, in a G. L. c. 93A, § 9, case involving (as here) an indirect purchaser plaintiff’s class action complaint alleging injury from being “forced to pay ‘supra-competitive prices’ ” “as a result of [the defendants’] price-fixing conspiracy,” the “plaintiff has a relatively light burden to carry to maintain her complaint. . . under rule 12(b)(6).” Ciardi v. F. Hoffmann-La Roche, Ltd., 436 Mass. at 65.
“At least thirty days prior to the filing of any such action, a written demand for relief, identifying the claimant and reasonably describing the unfair or deceptive act or practice relied upon and the injury suffered, shall be mailed or delivered to any prospective respondent” (emphasis supplied).
Complicating the matter in the instant case is that, in the demand letter, the plaintiff purported to represent not only herself but also a class of similarly situated “indirect purchasers” and demanded a tender of settlement with the entire class. No reported decision has addressed the level of “reasonable” description required of a demand letter by a plaintiff seeking to elicit a settlement on behalf of an as yet uncertified class. As always in such situations, we look at the pertinent words of the statute itself for guidance, see Martha’s Vineyard Land Bank Commn. v. Assessors of W. Tisbury, 62 Mass. App. Ct. 25, 27-28 (2004), and cases cited:
“At least thirty days prior to the filing of any such action, a written demand for relief, identifying the claimant. . . , shall be mailed or delivered to any prospective respondent. Any person receiving such a demand for relief who, within thirty days of the mailing or delivery of the demand for relief, makes a written tender of settlement which is rejected by the claimant may, in any subsequent action, file the written tender and an affidavit concerning its rejection and thereby limit any recovery to the relief tendered if the court finds that the relief tendered was reasonable in relation to the injury actually suffered by the petitioner. In all other cases, if the court finds for the petitioner, recovery shall be in the amount of actual damages or twenty-five dollars, whichever is greater; or up to three but not less*732 than two times such amount if the court finds that the use or employment of the act or practice was a willful or knowing violation of said section two or that the refusal to grant relief upon demand was made in bad faith with knowledge or reason to know that the act or practice complained of .violated said section two.” (Emphases supplied.)
G. L. c. 93A, § 9(3).
The singular forms of “claimant” and “petitioner”
The use of singular forms in § 9(3) does not appear to have been accidental. The Legislature, having enacted § 9(2) at the same time as § 9(3), see St. 1969, c. 690, could easily have stated in § 9(3) that a demand letter by a plaintiff purporting to represent a class, as authorized by § 9(2), should identify “the claimant and any similarly situated persons on behalf of whom the claimant brings the action”; that a tender should be made to and might be rejected by the “the claimant on behalf of such similarly situated persons”; or that the reasonableness of the
Such an omission additionally appears intentional because the important functions served by the demand letter requirement — to “encourage negotiation and settlement . . . [and] operate as a control on the amount of damages” that can ultimately be recovered, Slaney v. Westwood Auto, Inc., 366 Mass. 688, 704 (1975) — could not practicably be realized (contrary to the plaintiff’s expectation here) at a time when both the size of the eventual plaintiff class (if ever certified) and the total extent of their eventually claimed damages were unknown and could not possibly be estimated by a prospective defendant receiving the letter without knowledge of the actual scope and extent of the injuries to be alleged. (The plaintiff’s contention, that merely by being identified as conspiratorial price-fixers in an unverified complaint prospective defendants may be presumed to possess the information necessary to make such a damage evaluation, finds no support in law, logic, or litigation realities.) Accordingly, in judging the sufficiency of such a precertification demand letter, we look solely to the description of the individual claimant’s own injury, and the central issue in this case becomes whether the demand letter sufficiently described the injury suffered by the plaintiff herself.
There is no dispute as to the demand letter’s sufficient identification of the claimant and the class she proposed to represent. There is also no dispute that the letter “reasonably described] the unfair or deceptive act or practice relied upon,” G. L. c. 93A, § 9(3), by explicitly alleging that the defendants had conspired to “fix, raise, maintain and stabilize prices for the sale of polyester staple” and to “divide and allocate customers in connection with the sale of polyester staple” and by setting forth details of the conspiracy alleged to have occurred in the defendants’ meetings and conversations. Price-fixing of any sort is unquestionably a violation of G. L. c. 93A. Ciardi v. F. Hoffmann-La Roche, Ltd., 436 Mass. at 59-60.
“1) the type of consumer product bought by the plaintiff containing Polyester Staple; 2) the approximate number of products containing Polyester staple bought by the plaintiff; 3) an estimate of the alleged economic injury suffered by the plaintiff; or 4) any correlation between anything any defendant is alleged to have done and the unidentified consumer product the plaintiff is alleged to have purchased.”
We disagree with the judge’s strictures.
Requiring a dollar estimate of the alleged “economic injury” suffered by the plaintiff was also not supportable. The letter, in our view, describes the injury in sufficient detail to permit the defendants reasonably (even if only roughly) to ascertain their exposure, at least to her as an individual and occasional purchaser of personal and household items containing polyester staple. We have held on more than one occasion that a demand letter need not contain a dollar amount of damages, so long as it describes the injuries in “sufficient detail to permit [the defendant] reasonably to ascertain its exposure.” Simas v. House of Cabinets, Inc., 53 Mass. App. Ct. 131, 140 (2001). See Brandt
Contrary to the finding that the demand letter did not allege that the plaintiff “was injured in any manner, let alone reasonably describe the injury suffered,” the letter expressly alleged that the plaintiff was injured “in the form of [having to pay] higher out-of-pocket costs to purchase products containing polyester staple and other damages” as a result of the defendants’ price-fixing conspiracy.
Under the judge’s and the defendants’ theory, that a heightened level of detail regarding injury and damages is required in a demand letter, a consumer seeking to challenge a price-fixing conspiracy as the representative of an allegedly injured class under G. L. c. 93A, § 9(2), would rarely, if ever, be able to satisfy the condition precedent to filing suit, given the evidentiary reality that true conspirators may be presumed to have taken steps to conceal their illegal conduct and its harmful effects. Cf. Commonwealth v. Anselmo, 33 Mass. App. Ct. 602, 604 (1992), quoting from Commonwealth v. Nelson, 370 Mass. 192, 200 (1976) (“circumstantial evidence ... is the usual mode of proving [conspiracy], since it is not often that direct evidence can be had”); Commonwealth v. Melanson, 53
We also disagree with the finding that the plaintiff failed to identify any causal relationship between the defendants’ alleged conduct and the products the plaintiff claimed to have purchased.
As noted earlier, the plaintiff cast the demand letter as one on behalf of the entire putative class as well as herself. If and when a class is certified, it is unclear — and we express no opinion on the issue — whether one or more new demand letters would be required or even appropriate,
Finally, as noted earlier, the judge did not act on Nan Ya’s separate motion to dismiss for lack of personal jurisdiction.
Consequently, we deem the trial court to be the more appropriate forum to marshal the pertinent facts and apply the fact-dependent jurisdictional standards under the long-arm statute, G. L. c. 223A, § 3, at least in the first instance. For such an inquiry, the trial court is also better positioned to decide the issue in question as a matter of sound judicial administration; at the same time we keep in mind (while expressing no view as to how the jurisdictional issue might be resolved) that this allocation of decision-making does not preclude appellate correction when necessary.
Judgment reversed.
Polyester staple is a synthetic, petroleum-based fiber incorporated in many household goods, including carpets, rugs, curtains, draperies, sheets, pillows, pillowcases, wall coverings, tablecloths, bedspreads, comforters, sofas, chairs, mattresses, suits, shirts, pants, coats, jackets, parkas, sweaters, and sleeping bags. The defendants themselves manufacture no consumer products.
Polyester staple, a fungible commodity, is purchased primarily on the basis of price. In order to operate economically, the manufacturers of polyester staple must utilize a capital-intensive, large-scale production process, a process used by essentially all manufacturers of polyester staple. The significant start-up costs and large-scale production requirements mean that there are high barriers to entry to manufacturing polyester staple. During the class period at issue here, the defendants’ aggregate polyester staple market share in the United States was, allegedly, about eighty-five to ninety percent.
The conspiracy occurred between on April, 1999, and July, 2001. During this two-year period, the defendants implemented four successive, uniform polyester-staple price increases: in August, 1999, ten to fifteen percent; in
On October 31, 2002, defendant Arteva Specialties S.A.R.L., or KoSa (see note 2, supra), pleaded guilty to the criminal charge of participating in a conspiracy to suppress and eliminate competition by fixing prices and allocating customers for polyester staple and agreed to pay a $28.5 million criminal fine. KoSa also paid a criminal fine after pleading guilty to price-fixing in violation of the Canadian Competition Act. In a statement of admissions executed by KoSa pursuant to the Canadian criminal code, KoSa implicated employees at DAK Fibers, LLC; Wellman, Inc.; and Nan Ya Plastics Corporation, America (Nan Ya), as participating in the conspiracy. Additionally, as a result of an investigation by the United States Department of Justice, defendant E.I. DuPont de Nemours & Company (DuPont) admitted to participating in the conspiracy and was granted amnesty from criminal charges under the Federal corporate leniency program. The former sales manager of Nan Ya was indicted for engaging in a conspiracy to fix prices and restrain competition in the sale of polyester staple but was acquitted.
The term “petitioner” is an inadvertently retained relic of the legislation that inserted § 9 into G. L. c. 93 A at a time, prior to the 1974 institution of the Massachusetts Rules of Civil Procedure and the merger of law and equity, when a proceeding under the new provision of the statute was commenced by a “bill in equity” brought “in the superior court in equity” (see St. 1969, c. 690, inserting G. L. c. 93A, § 9[1]; G. L. c. 93A, § 9[1], was amended by St. 1978, c. 478, § 45, and rewritten in 1979, see now G. L. c. 93A, § 9[1], as appearing in St. 1979, c. 406, § 1), the person bringing such an action was called “the petitioner,” and the “persons similarly situated” proposed to be represented by that petitioner consisted of “unnamed petitioners” who would, upon certification, become “the class of petitioners” (also relics remaining in the statute as codified, see G. L. c. 93A, § 9[2]).
In light of the entire evidence and the statutory language, we conclude that, with respect to the demand letter, the judge made clearly erroneous findings and applied incorrect legal standards with respect to the latter, as explained infra. See Kendall v. Selvaggio, 413 Mass. 619, 620-621 (1992).
Although we acknowledge that the plaintiff could have been more specific about her alleged injury by estimating the quantities of her various purchases and their prices (information within her control), the cases do not demand more detail than is necessary to permit a reasonable response and tender. Given the relatively small dollar amount that such nonstaple and sporadically purchased items could cost an average person or household over the four-year statute of limitations period (G. L. c. 260, § 5A), “the amount of damages claimed was reasonably ascertainable,” Fredericks v. Rosenblatt, 40 Mass. App. Ct. at 717-718, and it should not, in our view, have been unduly difficult for each defendant to have responded to the demand letter with a “ballpark” estimate by way of a settlement offer, which, even if objectively overly generous, would favorably compare with the anticipated expense of litigating a motion to dismiss, let alone a full-scale defense of such problematic conduct, and serve the valuable purpose of limiting recovery. It was obviously ill-advised of the defendants to fail to respond at all to the demand letter, since it exposed them to the risk under § 9(3) of having their silence treated as a “refusal to grant relief” and determined to have been “made in bad faith,” when they clearly had reason to know that an antitrust price-fixing conspiracy of the sort complained of — a conspiracy that had already been adversely determined against one or more of the defendants in other jurisdictions — violated G. L. c. 93A, § 2, see Ciardi v. F Hoffinann-La Roche, Ltd., 436 Mass. at 59-60, which in turn exposed them to the risk of the imposition of multiple damages. Cf. Brandt v. Olympic Constr., Inc., 16 Mass. App. Ct. at 915-916; Parker v. D’Avolio, 40 Mass. App. Ct. 394, 395-396 (1996).
In arguing that the demand letter was deficient for failing to contain “a damage figure” as to the injury sustained, the defendants cite Thorpe v. Mutual of Omaha Ins. Co., 984 F.2d 541 (1st Cir. 1993), but Thorpe is distinguishable. The plaintiff’s claim there arose from the insurance company’s
In the course of making that finding, the judge commented that “the nature of the product in question, Polyester Staple, seems to mitigate against finding such a causal connection due to the many junctures in manufacturing and retailing at which a cost increase could have been absorbed through the stream of commerce.” By that observation, the judge appeared to suggest that the plaintiff could not establish, or would have great difficulty establishing, her proximately caused actual damages, “a required element of a successful G. L. c. 93A claim.” Aspinall v. Philip Morris Cos., 442 Mass. 381, 401 (2004). To the extent the judge cited and may have relied on Aspinall for the proposition that “in the absence of a causal relationship between the alleged unfair acts and the claimed loss, there can be no recovery,” he seems to have inappropriately conflated the issue whether the plaintiff will ultimately be able to prove causation so as to be entitled to recover any damages with the question whether the plaintiff has sufficiently, i.e., reasonably, described her injury suffered in her demand letter. As the court in Ciardi v. F. Hoffmann-La Roche, Ltd., 436 Mass. at 65, made clear, “doubt as to whether a particular claim can be proved is not a proper basis for dismissing a complaint under rule 12(b)(6).”
The defendants have brought to our attention in support of their position the Supreme Judicial Court’s recent decision in Hershenow v. Enterprise Rent-A-Car Co. of Boston, Inc., 445 Mass. 790 (2006), but Hershenow did not involve any issue as to the sufficiency of the demand letter, so their reliance on it is unavailing. On the issue of causation, id. at 798, the court reiterated Aspinall’s holding, to which we of course adhere, that “causation is a required element of a successful G. L. c. 93A claim.” Here we only reject the defendants’ and
Compare Baldassari v. Public Fin. Trust, 369 Mass. at 41-42. Cf. Tarpey v. Crescent Ridge Dairy, Inc., 47 Mass. App. Ct. at 391-392 (suggesting the theoretical possibility of additional post-suit demand letters); Halper v. Demeter, 34 Mass. App. Ct. at 303 & n. 7 (noting that, where the plaintiff was allowed to raise a c. 93A claim in an amended complaint, the defendant should have an opportunity to amend his answer and to “tender a damage-limiting offer of settlement”).
The judge’s dismissal of the plaintiffs claims against Nan Ya along with her claims against the other defendants on the basis of the supposed inadequacy of the demand letter was independently erroneous, because Nan Ya’s motion to dismiss did not mention, much less rest on, that ground and because the demand letter requirements of G. L. c. 93A, § 9(3), do not apply to respondents who (as Nan Ya in its motion papers explicitly asserted was true of it) do not have a place of business or assets within the Commonwealth.