Why the World Hates Lawyers
Why does the world hate lawyers? Because of stuff like this. You can't make this up: the on-line menu prices for a Chinese restaurant weren't up-to-date, and a customer was overcharged $4. I get being pissed about that. But what would most people do? Just lump it, stop patronizing the restaurant, ask the restaurant for a refund, or complain to the credit card issuer. But in this case, the customer has a JD (and to make it more delicious, happens be a Harvard Business School professor). The professor decides to go all legal on the restaurant, demanding $12, as treble damages under Massachusetts' unfair and deceptive acts and practices (UDAP) statute, MGL 93a (even citing the statute!).
I get why people would be hating on the professor for that alone. But here's what really peeves me. He gets MGL 93a wrong!!! (I happen to teach this statute.) The professor is demanding something that he almost assuredly cannot get under law.
As an initial matter, it's important to know that there is no scienter (intent) requirement for MGL 93a. A negligent misrepresentation is as much of a violation as an intentional one. The interesting issue is the remedy. Let's look at the relevant part of the statute:
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. 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 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.
First, MGL 93a(9)(3) does not mandate treble damages. It provides for a recovery of the greater of actual damages or $25. The statute allows double to treble damages if the UDAP was a willful or knowing violation" or if the defendant refused, in bad faith to settle. That's quite different from automatic treble damages.
But wait, you say, that just means the HBS professor should have been demanding $25, not $12. Not quite. There's a second problem. MGL 93a(9)(3) requires that before bringing suit the plaintiff send a demand letter to the business asking for rectification of the unfair or deceptive act or practice. That gives the business a chance to settle things for something like actual damages. The whole purpose of the demand provision is to encourage settlement and to act as a control on damages. (Refusal to parlay is one of the hooks that can result in treble damages.)
If the defendant's offer of settlement is rejected by the plaintiff, the defendant can introduce its offer (and its reasonableness) at trial. Here, the restaurant offered the professor a full refund of the overcharge in response to his email (which is fairly understood as a demand letter). Thus, in a lawsuit, if the defendant made a reasonable settlement offer, the court must limit damages not to the $25 minimum, but to the restraurant's reasonable offer. See Kohl v. Silver Lake Motors, Inc., 369 Mass. 795 (Mass. 1976). I don't see how the professor gets to treble damages here.
Indeed, just reading the statute carefully ought to have given the professor some pause. While he makes a big deal in one of the emails about being ethically bound to deal only with an attorney if the restaurant is represented by counsel, it strikes me as a possible ethical problem to be making demands (particularly on an unrepresented party) for which one lacks a legal basis. I don't think negligent belief about the law helps the professor here.
Let me state for the record that my Chinese restaurant of choice is perpetually engaged in a FACTA card truncation violation. They've been failing to truncate card numbers for years on every take-out order. I'd like them to stop, but I want to be sure I have somewhere to go on Christmas, so I haven't said a word.