Supreme Court tightens control on consumer protection act
Jessica M. Karmasek Dec. 17, 2010, 10:28am
CHARLESTON -- West Virginia consumers looking to sue for misrepresentation under the state's Consumer Credit and Protection Act now must show proof of reliance, according to an opinion released Friday by the state Supreme Court of Appeals.
Previously, state consumers only had to prove misrepresentation to seek damages.
Following the Court's ruling in White vs. Wyeth, plaintiffs now must show a causal connection between their individual claims of injury and any alleged unfair or deceptive conduct.
The ruling potentially has tremendous implications for consumers, especially those filing lawsuits involving prescription medications. But it also could affect the state Attorney General's office and the number of opportunities for lawsuits it files on behalf of the state.
The suit at issue, filed in April 2004 by a group of private citizens who purchased prescription hormone replacement therapy drugs, alleges that pharmaceutical company Wyeth used "unfair" and "deceptive" practices in promoting such prescription drug products to doctors and patients for treatment of menopausal disorders by using "misleading" statements in advertising, marketing and labeling of the products.
In October 2008, Wyeth filed alternative motions for dismissal or summary judgment, arguing that the plaintiffs could not establish that they had standing to sue because they failed to meet their burden of showing a causal connection between the claims of injury and any alleged unfair or deceptive conduct attributed to the company.
In 2009, the Putnam Circuit Court found that the state's consumer protection act does not require plaintiffs pursuing a private cause of action to allege reliance in their complaints. The court then denied Wyeth's motions to dismiss or for summary judgment for lack of standing.
However, the lower court observed that the interpretation of the phrase "as a result of" in West Virginia Code was "a matter of first impression" and was a determinative issue in a potentially large and costly suit.
Concerned with the seeming conflict between its interpretation of the statutory phrase in light of the constitutional standing requirement regarding causal connection, the lower court certified the issue as a legal question to the state's high court.
Wyeth also petitioned the Court for review of the certified question, which was accepted by order dated Nov. 12, 2009.
The certified question -- reformulated by the Court -- reads, "Does the 'as a result of' language in Section 46A-6-106(a) of the West Virginia Consumer Credit and Protection Act require proof of reliance on alleged affirmative misrepresentations in order to satisfy the element of causation in private causes of action brought pursuant to the Act?"
To that, the Court answered "yes."
Justice Thomas McHugh, who authored the Court's opinion, wrote that the Court did its own study of other states.
Its research revealed that the private cause of action provisions of 28 states contain the "as a result of" language. Eleven states and the District of Columbia, it said, have statutes containing the "whether or not any person has in fact been misled, deceived or damaged" language. Only five states have both statutory provisions, it found.
"Our review of the diverse cases and numerous authorities addressing the issue of reliance in the context of private consumer protection causes of action leads us to the conclusion that courts are struggling to arrive at a way to be faithful to the purposes of consumer protection statutes -- promoting fair and honest business practices and protecting consumers -- without inviting nuisance lawsuits which impede commerce," McHugh wrote for the Court.
"In determining the meaning of the phrase 'as a result of' in the WVCCPA, we find the decisions from other jurisdictions which are most reasonable, practical and fair to all relevant purposes and interests are those which have concluded that proof of a causal nexus between the deceptive conduct giving rise to the private cause of action and the ascertainable loss may require proof of reliance in some but not all instances."
The Court also found that the private cause of action afforded state consumers does not extend to prescription drug purchases.
"Prescription drug cases are not the type of private causes of action contemplated under the terms and purposes of the WVCCPA because the consumer can not and does not decide what product to purchase," the Court wrote.
As a result of the Court's decision, the Putnam Circuit Court was directed to enter a dismissal order in the case.
Chief Justice Robin Davis and Justice Margaret Workman recused themselves from the case. Senior Status Judge Fred Fox and Mercer Circuit Court Judge Omar Aboulhosn sat in for them.