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UDAP Litigation Against Financial Institutions: 
Emerging Theories and the Foreclosure 
Documentation Crisis
Defense Strategies for Individual, Class Action and State AG and FTC Enforcement Actions

TUESDAY, NOVEMBER 30, 2010

1pm Eastern    |   12pm Central | 11am Mountain        |   10am Pacific


                                                                                 Today’s f l f
                                                                                 T d ’ faculty features:

                                             Christopher J. Willis, Partner, Rogers & Hardin, Atlanta
                                                Frank A. Hirsch, Partner, Alston & Bird, Raleigh, N.C.




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                             WHAT IS AN ATTORNEY GENERAL’S
                                   BURDEN OF PROOF?

    EVIDENTIARY REQUIREMENTS IN UDAP ACTIONS BROUGHT BY STATE ATTORNEYS
                                  GENERAL

                                       Christopher J. Willis
                                       Stefanie H. Jackman*
                                           March 8, 2010
I.       INTRODUCTION

        In the past few years, and in the midst of the mortgage lending meltdown, the consumer
lending industry has witnessed increasing activity by state Attorneys General under state unfair
and deceptive acts and practices statutes, commonly referred to as “UDAP statutes.” In light of
the U.S. Supreme Court’s recent decision in Cuomo v. Clearing House Association, L.L.C.1 and
the pending Consumer Financial Protection Agency (CFPA)2 legislation, further avenues for
state governmental action against lending institutions are opening, particularly with respect to
federally-chartered banks. In Cuomo, the Supreme Court removed the preemptive protections
that previously insulated national banks from state action. Further, if passed, the CFPA Act may
extensively erode other aspects of federal preemption relating to both national banks and federal
savings associations. The combination of Cuomo, the CFPA, and the current economic climate
strongly suggests that state Attorneys General will continue to increase their efforts under UDAP
statutes in actions brought against participants in the consumer lending industry, especially given
the versatility of these statutes, as will be seen below.

        State UDAP statutes generally provide Attorneys General with a broad variety of
powerful remedies, including preliminary and permanent injunctive relief, restitution, civil
penalties, attorney’s fees, and even the power to have a receiver appointed under certain
circumstances. UDAP statutes also are being used with increasing frequency by private litigants
pursuing class action relief for alleged unfair and deceptive business practices.

        The basic pleading burdens that must be met in order to bring a claim under a UDAP
statute vary widely by jurisdiction. Further, UDAP statutes often provide for different pleading
and proof requirements in an action brought by an Attorney General than one brought by a
private plaintiff. This article attempts to compare and contrast the requirements for an Attorney
General bringing a claim under a state UDAP statute with those under a private class action,


*
  Mr. Willis is a litigation partner with Rogers & Hardin LLP in Atlanta, Georgia and represents
lenders in consumer litigation. Ms. Jackman is a litigation associate with Rogers & Hardin LLP.
1
    See Cuomo v. Clearing House Ass’n, L.L.C., 129 S. Ct. 2710 (2009).
2
    Consumer Financial Protection Agency, H.R. 3126, 11th Cong. (2009).
highlighting the relaxed requirements applicable to Attorney General actions in many
jurisdictions.

         In Section II, we begin with a general overview of recent enforcement activities by
Attorneys General relating to consumer lending under state UDAP statutes. The breadth of these
actions underscores the utility of UDAP statutes as enforcement tools. In Section III, we briefly
describe the evidentiary requirements of a traditional private UDAP class action and also provide
examples of jurisdictions that have departed from those requirements. In Section IV, we review
and analyze the proof requirements for Attorneys General under various state UDAP statutes. In
particular, we will examine the requirements for obtaining the particular types of relief that
generally are available to Attorneys General under state UDAP statutes - injunctive relief,
restitution, civil penalties, and attorney’s fees.

        We categorize the various jurisdictions and UDAP provisions as either “traditional,”
“hybrid,” or “lenient” according to how closely the proof requirements in a UDAP action
brought by an Attorney General track those that must be satisfied by private litigants in a class
action under a UDAP statute. A traditional jurisdiction is one that retains a higher degree of
similarity with respect to the requirements of a traditional class action, i.e., requiring
individualized proof of damages, reliance, and/or causation in order to obtain relief. On the other
end of the spectrum are the lenient jurisdictions, which may require little, if any, proof of
individualized damages, reliance, and/or causation in order to allow an Attorney General to
recover remedies under the applicable UDAP statute. As the name suggests, the hybrid
jurisdictions fall somewhere between the other two and exhibit characteristics of both traditional
and lenient UDAP statutes. Finally, in Section V, we provide some closing thoughts and
observations relating to how the requirements of UDAP actions brought by Attorneys General
differ across jurisdictions and from private class actions.

II.    CURRENT ENFORCEMENT TRENDS BY STATE ATTORNEYS GENERAL

       A.      Multi-Jurisdictional, Concerted Enforcement Actions

        Large, organized, cross-jurisdictional enforcement activities by consortia of state
Attorneys General have become very common with respect to actions against participants in the
consumer lending industry under state UDAP statutes. These efforts are the product of, and have
resulted in, the development of strong working relationships among Attorneys General and
consumer groups. Some recent examples of such actions include the Ameriquest and
Countrywide settlements in 2006 and 2008, respectfully. In 2006, 49 states, as well as the
District of Columbia, reached a landmark $325 million settlement with Ameriquest,3 the largest


3
 Specifically, Ameriquest agreed to pay $295 million in restitution to consumers and $30
million to the states to cover costs, fees, and consumer education programs. Press Release, State
of Idaho, Office of Attorney General Lawrence Wasden, Attorney General and Idaho
                                                   2
subprime mortgage lender in the United States.4 The settlement resolved allegations that from
1999 to 2005, Ameriquest and its affiliates, Town and Country Credit Corporation and AMC
Mortgage Services, failed to adequately disclose mortgage loan terms, refinanced borrowers into
inappropriate loans, inflated appraisals, and charged excessive fees.5 In addition to the financial
recovery, Ameriquest also agreed to modify certain of its lending practices and to appoint an
independent monitor to oversee compliance with the terms of the settlement agreement for the
next five years, at Ameriquest’s cost.6

       As of 2006, Ameriquest was the second largest state or federal consumer protection
settlement in history, after a $484 million settlement agreement reached in 2002 between
Household Finance Corporation and most of the 50 states.7 However, in 2008, both of those


Department of Finance Joint Settlement with Ameriquest Mortgage (Jan. 23, 2006),
http://www2.state.id.us/ag/newsrel/2006/nr_jan232006.htm (last visited Oct. 28, 2009).
4
 “Texas to get $21 million in Ameriquest settlement,” Dallas Morning News, Jul. 12, 2007,
available at
http://www.dallasnews.com/sharedcontent/dws/news/texassouthwest/stories/071307dnbusameriq
uest.1016b79.html (last visited Oct. 28, 2009). Only Virginia did not participate in the
settlement because Ameriquest did not do any business in that state. Press Release, Alabama
Attorney General, A.G. King Announces Ameriquest Settlement; Alabama Consumers May
Received Refunds of About $4 Million (Jan. 23, 2006),
http://www.ago.state.al.us/news_template.cfm?Newsfile=http://www.ago.alabama.gov/news/012
32006.htm (last visited Oct. 28, 2009).
5
    Id.
6
  Press Release, Alabama Attorney General, A.G. King Announces Ameriquest Settlement;
Alabama Consumers May Receive Refunds of About $4 Million (Jan.23, 2006),
http://www.ago.state.al.us/news_template.cfm?Newsfile=http://www.ago.alabama.gov/news/012
32006.htm (last visited Oct. 28, 2009); Press Release, State of Idaho, Office of Attorney General
Lawrence Wasden, Attorney General and Idaho Department of Finance Joint Settlement with
Ameriquest Mortgage (Jan. 23, 2006),
http://www2.state.id.us/ag/newsrel/2006/nr_jan232006.htm (last visited Oct. 28, 2009); “Texas
to get $21 million in Ameriquest settlement,” Dallas Morning News, Jul. 12, 2007, available at
http://www.dallasnews.com/sharedcontent/dws/news/texassouthwest/stories/071307dnbusameriq
uest.1016b79.html (last visited Oct. 28, 2009).
7
 Press Release, Alabama Attorney General, A.G. King Announces Ameriquest Settlement;
Alabama Consumers May Receive Refunds of About $4 Million (Jan.23, 2006),
http://www.ago.state.al.us/news_template.cfm?Newsfile=http://www.ago.alabama.gov/news/012
32006.htm (last visited Oct. 28, 2009).
                                                 3
prior settlements were eclipsed by a $8.4 billion settlement that resolved a lawsuit in which it
was alleged that Countrywide Financial committed unfair and deceptive acts by marketing and
originating unnecessarily risky and costly mortgage loan packages.8 The action was led by the
Attorneys General in Illinois and California and the settlement agreement included 40 states.9
The terms of the settlement agreement established the first mandatory loan modification program
in the country.10 Countrywide also agreed to suspend foreclosures on certain loans, to establish a
$150 million foreclosure relief fund for borrowers who met certain criteria, to establish a $70
million relocation assistance program for borrowers who did not qualify for loan modification, to
waive loan modification fees and late fees, to waive prepayment penalties on certain loans, and
to pay the costs of the investigation by the Attorneys General.11

       Another recent action was brought by the Attorneys General in 34 states against Dell
Financial Services to address concerns relating to Dell’s financing promotions, rebate offers,
technical support, and warranty service.12 The Attorneys General brought suit against Dell


8
  Press Release, California Department of Justice, Office of the Attorney General, Brown Sues
Countrywide for Mortgage Deception (Jun. 25, 2006),
http://ag.ca.gov/newsalerts/release.php?id=1582& (last visited Oct. 28, 2009); Frank A. Hirsch,
Jr., Credit crisis drives coordinated state enforcement activities, Consumer Fin. L. Rep. (LRP
Pubs.), Vol. 12, Issue 6, Aug. 20, 2008; BofA in $8.6 bln settlement over Countrywide loans,
Oct. 6, 2008, available at http://www.reuters.com/article/idUSBNG28749420081006 (last visited
Oct. 28, 2009); Press Release, Illinois Attorney General, Illinois Attorney General Madigan
Leads $8.7 Billion Groundbreaking Settlement of Lawsuit Against Mortgage Giant Countrywide
(Oct. 6, 2008), http://www.ag.state.il.us/pressroom/2008_10/20081006.html (last visited Oct. 28,
2009); Bank of American Doles Out Countrywide Settlement, Consumer Affairs, Jul. 23, 2009,
available at http://www.consumeraffairs.com/news04/2009/07/countrywide_settlement.html (last
visited Oct. 28, 2009).
9
    Id.
10
     Id.
11
  Press Release, Illinois Attorney General, Illinois Attorney General Madigan Leads $8.7 Billion
Groundbreaking Settlement of Lawsuit Against Mortgage Giant Countrywide (Oct. 6, 2008),
available at http://www.ag.state.il.us/pressroom/2008_10/20081006.html (last visited Oct. 28,
2009); Frank A. Hirsch, Jr., Credit crisis drives coordinated state enforcement activities,
Consumer Fin. L. Rep. (LRP Pubs.), Vol. 12, Issue 6, Aug. 20, 2008.
12
  Agam Shah, “Dell to pay $3.85 million in settlement with US states,” Macworld, Jan. 12,
2009, available at http://www.macworld.com/article/138157/2009/01/dell_settlement.html (last
visited Oct. 28, 2009); Press Release, Maine Office of the Attorney General, Dell Settlement
with State Attorneys General will Refund Consumers $3.35 Million (Jan. 12, 2009),
                                                4
alleging that Dell used deceptive practices to sell its products after receiving an array of
consumer complaints claiming that customers never received promised rebates or after applying,
never received the lowest available interest rate.13 To settle the claims, Dell agreed to pay $1.5
million in restitution to customers and another $1.85 million to the states to cover legal
expenses.14 Dell also agreed to a host of disclosure requirements relating to the availability of
certain interest rates and the terms of the credit extended to its customers.15

           B.   Enforcement Activities in the Mortgage Lending Context

        Attorneys General also utilize UDAP statutes to address irregular mortgage lending
practices, including alleged racial discrimination by mortgage lenders. Most recently, on June 9,
2009, the Massachusetts Attorney General negotiated a $10 million settlement with Fremont
Investment and Loan to settle allegations asserted in a complaint filed by the Attorney General in
October 2007 accusing Fremont of various predatory lending practices.16 Under the terms of the
settlement agreement, Fremont agreed to pay $8 million in consumer relief, $1 million in civil
penalties, and $1 million in costs and attorney’s fees.17 Fremont further agreed not to foreclose
upon any “presumptively unfair loans” without affording certain protections to those
borrowers.18 To define a “presumptively unfair loan,” the settlement agreement incorporated the
terms of a prior preliminary injunction, which held that “presumptively unfair loans” were those
with short term, introductory interest rates followed by increased payments, and included high

http://www.maine.gov/tools/whatsnew/index.php?topic=AGOffice_Press&id=66312&v=article
(last visited Oct. 28, 2009).
13
   Press Release, Maine Office of the Attorney General, Dell Settlement with State Attorneys
General will Refund Consumers $3.35 Million (Jan. 12, 2009),
http://www.maine.gov/tools/whatsnew/index.php?topic=AGOffice_Press&id=66312&v=article
(last visited Oct. 28, 2009).
14
     Id.
15
  Agam Shah, “Dell to pay $3.85 million in settlement with US states,” Macworld, Jan. 12,
2009, available at http://www.macworld.com/article/138157/2009/01/dell_settlement.html (last
visited Oct. 28, 2009).
16
   Press Release, Attorney General of Massachusetts, Attorney General Martha Coakley Reaches
$10 Million Settlement with Subprime Lender Fremont Investment and Loan (Jan. 9, 2009),
http://www.mass.gov/?pageID=cagopressrelease&L=1&L0=Home&sid=Cago&b=pressrelease&
f=2009_06_09_fremont_agreement&csid=Cago (last visited Oct. 28, 2009).
17
     Id.
18
     Id.
                                                5
loan-to-value and debt-to-income ratios.19 In the court’s opinion, these characteristics made
these loans more likely to go into default and be foreclosed upon.20 Fremont also agreed to give
30 or 45 days’ notice before foreclosure (depending on whether the loan was “presumptively
unfair” or not), and was prohibited from proceeding with a foreclosure without judicial approval
if the Attorney General objected.21 The lawsuit and settlement affected 2,200 Fremont-
originated loans to Massachusetts borrowers.22 The settlement followed after the Massachusetts
Supreme Judicial Court approved the Superior Court’s preliminary injunction barring Fremont
from foreclosing on any “presumptively unfair” loans without court approval in December
2008.23

       Following Fremont, in another action brought by the Massachusetts Attorney
General, Option One and H&R Block were sued for allegedly engaging in “unfair and
deceptive conduct on a broad scale by selling extremely risky loan products that the

19
     Id.
20
     Id.
21
     Id.
22
     Id.
23
   Id. Other states also have been aggressively pursuing lenders by alleging that they pushed
consumers into inappropriate, unaffordable mortgage loans. E.g., Colorado – the Attorney
General settled with certain mortgage brokers in a UDAP suit relating to mortgage advertising
under which the lenders agreed to advertise only traditional, fixed rate mortgage loans and also
filed a civil action against Home Mortgage Solutions, Inc. and three associated individuals under
Colorado’s UDAP statute relating to their alleged practice of using direct mail to market option
ARM loans without disclosing associated risks (Press Release, Colo. Office of the Attorney
General, Suthers Focuses on Deceptive Advertising, Option ARMs, Foreclosure Consultants
(Nov. 18, 2008), http://www.ago.state.co.us/press_detail.cfmpressID=928.html (last visited Oct.
29, 2009)); Maine – the Attorney General sued a mortgage company for assisting borrowers who
did not qualify for a mortgage to form a commercial LLC to use to secure a mortgage (Press
Release, Maine Office of the Attorney General, Attorney General Sues Mortgage Lender (Oct. 5,
2007),
http://www.maine.gov/tools/whatsnew/index.php?topic=AGOffice_Press&id=44158&v=article
(last visited Oct. 29, 2009)); Connecticut – the Attorney General brought suit against lenders
who provided illegal mortgage subsidies and incentive programs in order to qualify borrowers
for loans that they otherwise could not afford (Press Release, Connecticut Attorney General’s
Office, Attorney General, Banking Department, DCP Sue Torrington Builder, Realtor, Mortgage
Firm For Lending Scam (Feb. 21, 2005),
http://www.ct.gov/ag/cwp/view.asp?A=1949&Q=290444 (last visited Oct. 29, 2009)).
                                               6
companies knew or should have known were destined to fail to Massachusetts
consumers.”24 The Attorney General’s complaint further alleged that Option One and H&R
Block discriminated against African-American and Latino borrowers in Massachusetts by
charging them higher points and fees to close their loans when compared to similarly-
situated white borrowers.25 American Home Mortgage Servicing also was named as a
defendant in the suit.26 In November 2008, the Attorney General obtained a preliminary
injunction that prohibited the companies from initiating or pursuing foreclosures upon
“presumptively unfair” mortgages.27 The terms of the Option One/H&R Block preliminary
injunction were comparable to those of the Fremont injunction.

        Similar suits also have been brought by the Attorneys General for Illinois and New
York. In Illinois, on July 31, 2009, Attorney General Lisa Madigan filed suit against Wells
Fargo for allegedly discriminating against Latino and African American homeowners by
selling them high-cost subprime mortgage loans while white borrowers with similar income
levels allegedly received lower cost loans.28 The complaint seeks to rescind all contracts
entered into between Wells Fargo and Illinois consumers by the methods alleged to be
unlawful, restitution to those consumers, a permanent injunction prohibiting Wells Fargo
from conducting similar activities in the future, and an order for fees and costs.29 Wells
Fargo responded that the Attorney General completely mischaracterized its lending practices
and is defending against the allegations.30


24
   Paul Jackson, Massachusetts AG Sues Option One, H&R Block, Housingwire.com (Jun. 4,
2008), http://www.housingwire.com/2008/06/04/massachusetts-ag-sues-option-one-hr-block/
(last visited Nov. 8, 2009).
25
     Id.
26
     Id.
27
     Id.
28
   Amy Merrick, Illinois Sues Wells Fargo Over Mortgage Discrimination, Wall Street Journal,
Jul. 31, 2009, available at http://online.wsj.com/article/SB124906504187697487.html (last
visited Nov. 8, 2009); Press Release, Illinois Office of the Attorney General, Madigan Sues
Wells Fargo for Discriminatory and Deceptive Mortgage Lending Practices (Jul. 31, 2009),
http://www.ag.state.il.us/pressroom/2009_07/20090731.html (last visited Oct. 28, 2009).
29
   Press Release, Illinois Office of the Attorney General, Madigan Sues Wells Fargo for
Discriminatory and Deceptive Mortgage Lending Practices (Jul. 31, 2009),
http://www.ag.state.il.us/pressroom/2009_07/20090731.html (last visited Oct. 28, 2009).
30
     Id.
                                               7
       In New York, on January 5, 2009, Attorney General Cuomo reached an agreement with
HCI Mortgage and Consumer One Mortgage under which those companies agreed to pay
$665,000 in restitution to 455 Latino and African American consumers who were illegally
charged higher fees than similarly-situated white consumers.31 In addition to the restitution
award, the companies also agreed to adopt a standard fee schedule that would be disclosed to all
borrowers and followed unless exceptional circumstances existed to justify a deviation.32
Further, the companies agreed to monitor and analyze the imposition of fees to ensure the fair
treatment of minority borrowers and to provide detailed compliance reports to the Attorney
General.33

        A recent, notable shift in jurisprudence in the area of consumer lending resulted directly
from Attorney General enforcement activities with respect to allegedly discriminatory lending
practices. On June 29, 2009, the United States Supreme Court rendered its decision in Cuomo v.
Clearing House Ass’n, L.L.C. In Cuomo, Eliot Spitzer, then Attorney General for the State of
New York, began investigating evidence of possible racial discrimination in the residential real
estate lending practices of several national banks and their operating subsidiaries. Spitzer’s
investigation was prompted by data that the federal Home Mortgage Disclosure Act requires
lenders to make public.34 On the basis of these alleged racial disparities, Spitzer sent “letters of
inquiry” to mortgage lenders implicated by the data, including several national banks and their
operating subsidiaries.35 The letters requested that lenders voluntarily produce certain non-
public information regarding their mortgage policies and practices, as well as data concerning
loans related to real property in New York.36 In response, the Office of the Comptroller of the
Currency (OCC) and the Clearing House Association, a consortium of national banks, including
several that received letters of inquiry from the attorney general, sued to enjoin the Attorney



31
   Press Release, New York Office of the Attorney General, Attorney General Cuomo
Announces Groundbreaking Agreement with Major Mortgage Brokers Who Discrimination
Against Minority Customers (Jan. 5, 2009),
http://www.oag.state.ny.us/media_center/2009/jan/jan5a_09.html (last visited Oct. 28, 2009).
32
     Id.
33
     Id.
34
  Court takes up New York AG’s bank lending probe, On the Docket: U.S. Supreme Court
News (Jan. 16, 2009), available at http://onthedocket.org/cases/visitorial-powers/cuomo-v-
clearing-house (last visited Nov. 12, 2009).
35
     Id.
36
     Id.
                                                 8
General’s request, arguing that it was preempted by an OCC regulation implementing the
National Bank Act, 12 U.S.C. § 484(a).37

        In an unexpected 5-4 alignment, the U.S. Supreme Court held that the OCC’s regulation
extending National Bank Act preemption to state enforcement actions was an unreasonable
interpretation of the statutory ban on state exercise of visitorial powers and was invalid.38 The
Court noted that its jurisprudence always understood “visitation” as the right to oversee
corporate affairs and that states always have enforced their laws of general application against
national banks.39 Accordingly, the Court held that “[o]n a pragmatic level, the difference
between visitation and law enforcement is clear. If a State chooses to pursue enforcement of its
laws in court, then it is not exercising its power of visitation and will be treated like a litigant.”40
Ultimately, the Court vacated the lower court’s injunction “insofar as it prohibits the Attorney
General from bringing judicial enforcement actions.”41 It is widely anticipated that the Court’s
decision in Cuomo will expose national banks to increased enforcement activities by Attorneys
General due to its removal of the preemptive protections previously afforded to these institutions
under federal law.

        In addition to targeting lenders alleged to be engaging in predatory or discriminatory
lending schemes, a number of Attorneys General also are using UDAP statutes to pursue alleged
fraudulent mortgage rescue and foreclosure relief scams. Usually, these scams involve a
company promising to modify a mortgage or to save a borrower from foreclosure in exchange
for substantial advance fees. The Attorneys General allege that these programs generally do not
result in any loan modification and usually constitute nothing more than an expensive paperwork
service that does not benefit the borrower. Attorneys General in a variety of states, including
Massachusetts, Minnesota, North Carolina, Indiana, Ohio, Kansas, New York, and Iowa, have
instituted litigation against various companies offering allegedly fraudulent foreclosure relief
services.42 Several of these Attorneys General have obtained relief preventing specific

37
     Id.
38
  Justices OK New York AG’s bank lending probe, On the Docket: U.S. Supreme Court News
(Jun. 29, 2009), available at http://onthedocket.org/cases/visitorial-powers/cuomo-v-clearing-
house (last visited Nov. 12, 2009).
39
     Cuomo v. Clearing House Ass’n, L.L.C., 129 S. Ct. 2710, 2718 (2009).
40
     Id.
41
     Id. at 2722.
42
  See generally Press Release, North Carolina Attorney General’s Office, AG Cooper Goes
After Charlotte Foreclosure Rescue Scams (Oct. 30, 2008), http://www.ncdoj.gov/News-and-
Alerts/News-Releases-and-Advisories/Press-Releases/AG-Cooper-goes-after-Charlotte-
                                               9
companies from charging up-front fees to borrowers, mandating certain disclosures, prohibiting
certain rescue activities within their states, including direct mail solicitations, and requiring
express, up-front disclosures regarding the nature and extent of the services to be provided to the
borrower.43

           C.   Other Consumer Credit-Related Enforcement Activities

       In addition to pursing lenders and other participants in the mortgage lending industry,
Attorneys General are using UDAP statutes to pursue parties in other areas of consumer lending.
For example, a recent and notable development that had its genesis in a consumer credit suit
brought under a UDAP statute by an Attorney General is the July 20, 2009 settlement between


foreclosure-rescue-.aspx (last visited Oct. 29, 2009); Press Release, North Carolina Attorney
General’s Office, AG Cooper Targets California Schemes That Prey on NC Homeowners (Jul.
15, 2009), http://www.ncdoj.gov/News-and-Alerts/News-Releases-and-Advisories/Press-
Releases/AG-Cooper-targets-California-schemes-that-prey-on-.aspx (last visited Oct. 29, 2009);
Press Release, Minnesota Office of the Attorney General, Minnesota Attorney General Lori
Swanson Sues Two More Out-Of-State Mortgage Foreclosure Consultants (Aug. 18, 2008),
http://www.ag.state.mn.us/Consumer/PressRelease/080821ForeclosureConsultants.asp (last
visited Oct. 29, 2009); Press Release, Indiana Attorney General, Attorney General Greg Zoeller
urges Hoosiers to Avoid Illegal Foreclosure Consultants (Aug. 14, 2009),
http://www.in.gov/attorneygeneral/press/Release.NFCS.8.14.09.html (last visited Oct. 29, 2009);
Press Release, Iowa Attorney General, A.G. Shuts down Foreclosure Rescue Company (Jul. 15,
2009),
http://www.state.ia.us/government/ag/latest_news/releases/july_2009/foreclosure_rescue_closed.
html (last visited Oct. 29, 2009); Press Release, Kansas Attorney General, Operation Homestead:
AG Six goes after mortgage fraud and scams targeting Kansans (Jul. 17, 2009),
http://www.ksag.org/page/operation-homestead-ag-six-goes-after-mortgage-fraud-and-scams-
targeting-kansans (last visited Oct. 29, 2009); Press Release, Ohio Attorney General, Foreclosure
Rescue Companies Sued for Deceptive Practices (Jan. 23, 2009),
http://www.ohioattorneygeneral.gov/Briefing-Room/News-Releases/January-2009/Foreclosure-
Rescue-Companies-Sued-for-Deceptive-Pr (last visited Oct. 29, 2009); Press Release, New York
Office of the Attorney General, Cuomo Announces Lawsuit Against Amerimod Loan
Modification Company to Protect Distressed Homeowners Facing Foreclosure (Aug. 13, 2008),
http://www.oag.state.ny.us/media_center/2009/aug/aug13b_09.html (last visited Oct. 29, 2009);
Press Release, Massachusetts Attorney General, Attorney General Martha Coakley Enters into
Settlement with Company Accused of Deceptively Advertising Foreclosure Relief Services and
Soliciting Illegal Advance Fees (Apr. 23, 2009),
http://www.mass.gov/?pageID=cagopressrelease&L=1&L0=Home&sid=Cago&b=pressrelease&
f=2009_04_23_loan_mod_pi&csid=Cago (last visited Oct. 29, 2009).
43
     Id.
                                                10
Minnesota Attorney General Lori Swanson and the National Arbitration Forum (“NAF”)
announcing that the NAF, once the largest arbitrator of credit card consumer collection disputes,
would no longer handle any consumer credit arbitrations.44 The settlement resolved a lawsuit
brought by the Attorney General alleging that the NAF violated Minnesota’s UDAP statute by
holding itself out to the public as an independent arbitration administrator, while at the same time
working against the interests of consumers.45 The complaint further alleged that the NAF also
failed to disclose its affiliation with a New York hedge fund group that owned a major debt
collection company that generated considerable business for the NAF.46 Under the terms of the
settlement, the NAF agreed to cease all consumer arbitration business nationwide as of July 24,
2009.47

           D.     Debt Collection-Related Actions Under UDAP Statutes

        Attorneys General also use UDAP statutes to prosecute companies that engage in
allegedly unlawful debt collection practices, which only further demonstrates the versatility of
UDAP statutes as avenues for relief. For example, in New York, Attorney General Cuomo
recently undertook a large-scale enforcement against alleged unlawful debt collection practices
occurring within the state. Specifically, on June 23, 2009, Cuomo announced that his office had
shut down a New York collection operation that consisted of at least nine debt collection
companies operating in the Buffalo area.48 In addition to shutting down that operation, Cuomo
also reported larger enforcement efforts across the state, including subpoenaing 20 companies
operating as debt collectors in order to investigate their operations, shutting down two other
collection agencies for allegedly threatening and intimidating consumers, and settling with three
other companies who agreed to reform their collection practices.49

           Other examples of recent UDAP enforcement actions against debt collectors are observed


44
 Matthew R. Salzwedel, Devona Wells, “National Arbitration Forum Settlement With
Minnesota Attorney General,” State AG Tracker, Vol. 1, No. 4 (2009).
45
     Id.
46
     Id.
47
     Id.
48
   Press Release, New York Office of the Attorney General, Attorney General Cuomo Shuts
Down New York Debt Collection Operation That Used Illegal Scare Tactics to Threaten
Consumers Across the Country (Jun. 23, 2009),
http://www.oag.state.ny.us/media_center/2009/june/june23a_09.html (last visited Oct. 28, 2009).
49
     Id.
                                                 11
in Florida and Illinois. First, in 2008, the Florida Attorney General’s Office announced a $1.3
million award in a 2005 case alleging deceptive and misleading collection activities by the
defendant and his collection company.50 The court ordered the defendant to pay $388,000 in
consumer restitution and $700,000 in fines for violating the Florida UDAP statute.51 Similarly,
in 2007, the Illinois Attorney General’s Office instituted a suit against Arrow Financial Services,
LLC, a debt collection agency, also for allegedly using unfair tactics and deceptive practices to
secure collection from consumers.52

        In sum, UDAP statutes provide Attorneys General with many opportunities to prosecute
and recover upon a wide range of consumer protection-related issues. The attractiveness of
UDAP statutes as a legal vehicle, coupled with widespread public sentiment favoring actions
against lenders and other participants in the consumer lending industry, seems destined to lead to
increasing Attorney General activity in this area. Thus, in the following sections, we analyze
what Attorneys General must plead and prove in an action under their state UDAP statutes, as
compared to the familiar example of a private class action under those statutes.

III.       PROOF REQUIREMENTS IN PRIVATE UDAP CLASS ACTIONS

           A.   Traditional Prerequisites For A Private Class Action

        A plaintiff who is able to establish liability under a UDAP statute often has access to
remedies that are far more comprehensive than the damages that can be recovered in a common
law fraud action. The ability to recover attorney’s fees, injunctive relief, and punitive damages
under many UDAP statutes serves to encourage consumers to act as private attorneys general.
Nonetheless, in many instances, the actual damages suffered by each consumer as a result of an
alleged UDAP violation are minimal, which causes many private litigants to pursue UDAP
claims through a class action. However, obtaining class certification for UDAP claims can prove
very difficult in many circumstances. Frequently, when the parties contest whether the court can
certify the class, issues arise relating to whether individualized proof of reliance, causation, and
injury will be necessary in order to establish liability and recover damages. The requirement of
individual proof on such issues often makes class certification impossible.


50
   Press Release, Florida Office of the Attorney General, Attorney General Obtains $1.3 Million
Judgment Against Jacksonville Debt Collector (Apr. 7, 2008),
http://myfloridalegal.com/__852562220065EE67.nsf/0/4B3531A605D477D285257424005858A
6?Open&Highlight=0,unfair,deceptive (last visited Oct. 28, 2009).
51
     Id.
52
   Press Release, Illinois Office of the Attorney General, Madigan Files Lawsuit Against
Nationwide Debt Collector (Jan. 25, 2007),
http://www.ag.state.il.us/pressroom/2007_01/20070125b.html (last visited Oct. 28, 2009).
                                                12
        Generally, in order to obtain class certification, the representative plaintiff(s) for the class
of aggrieved consumers will need to establish, to the satisfaction of the court, that:

        1.      the class is so numerous that joinder of all members is impracticable;

        2.      there are common issues of law or fact common to the class that predominate over
                any questions affecting only the individual members;

        3.      the claims or defenses of the representative plaintiff(s) is/are typical of those of
                the other members of the proposed class; and

        4.      the representative(s) will fairly and adequately protect the interests of the
                proposed class.

        The most common issues that arise with respect to these prerequisites when attempting to
certify a class based upon a UDAP claim relate to whether reliance, causation, and/or damages
must be proven to establish the claim. If so, a second question arises relating to whether these
elements can be proven on a class-wide basis or will require individualized inquiries into the
particular circumstance of each allegedly unlawful act. As a general rule, where there are
significant individualized questions going to causation and injury such that individual proof of
reliance and damages will be required, courts usually will find that a class action is inappropriate
and deny certification.53 Further, each member of the proposed class often will be required to
demonstrate that he or she suffered some actual loss in order to bring a private UDAP claim, let
alone be part of a class action for such a claim.54 Because many UDAP statutes are worded in a
way that requires proof of causation and actual damages by each putative class member, claims
under those statutes cannot be effectively litigated on a classwide basis.



53
  See, e.g., Ahmad v. Yale-New Haven Hosp., Inc., 933 A.2d 1208, 1214 (Conn. App. Ct. 2007)
(denying class certification on a UDAP claim because each plaintiff would need to present
individualized evidence that they were eligible for free care funds and would have applied and
received such funds to prevail on their consumer protection claims); Kia Motors Am. Corp. v.
Butler, 985 So. 2d 1133 (Fla. Dist. Ct. App. 2008) (refusing to certify a class action because
individualized causation and damages issues predominated over any common questions of fact or
law among the class).
54
  See McKinnon v. Honeywell Int’l, Inc., 97 7A.2d 420, 427 (Me. 2009) (refusing to certify a
class action because under Maine’s UDAP statute, each plaintiff had to prove that he suffered a
substantial injury); Morrissey v. Nextel Partners, Inc., 880 N.Y.S.2d 874 (N.Y. Sup. Ct. 2009)
(each plaintiff must prove that he suffered an actual injury as a result of the alleged deceptive act
or practice and since each proposed class member was subjected to varying deceptive practices,
individual issues of causation and damages precluded certification).
                                                  13
           B.         Jurisdictions That Have Relaxed Standing And Proof Requirements For
                      Class Actions Brought Under Their UDAP Statutes

        Some states are modifying the standing and proof requirements for asserting a class
action by relaxing the manner in which litigants can establish reliance, causation, and damages
under the applicable UDAP statute, or by relieving them of the burden of proof altogether. For
example, the California Supreme Court recently held in In re Tobacco II Cases that the
heightened standing requirements for a class action established by Proposition 64 were
applicable only to the class representatives, and not the absent class members.55 In this case, the
plaintiffs alleged that the tobacco industry defendants violated the UCL56 by conducting a
campaign of deceptive advertising and misleading statement regarding the addictive nature of
nicotine and the relationship between smoking and disease.57 The defendants argued that issues
of causation and injury would require individualized proof from each class member.58 The
defendants moved to decertify the class based upon the passage of Proposition 64 and its
heightened standing requirements for UCL claims calling for each person alleging a violation of
the UCL to prove that he suffered an injury in fact and actual damages.59 As a result, the
defendants claimed that numerous individualized issues predominated and the class could not be
maintained.60 The trial court agreed and decertified the class.61

        On appeal, the California Supreme Court held that only the representative plaintiff for the
class was required to meet the applicable standing requirements relating to causation, reliance,
and damages.62 Accordingly, the court held that the language of the UCL lent no support to the
trial court’s conclusion that all unnamed class members also must demonstrate standing by
proving, on an individualized basis, causation, reliance, and actual damages in order to be part of
the class asserting claims under the UCL.63 The court also relaxed the reliance and causation

55
     See generally 207 P.3d 20 (Cal. 2009).
56
   The UCL is California’s Unfair Competition Law and can be found at Cal. BPC Code § 17200
et seq.
57
     Id. at 25.
58
     Id. at 27-28.
59
     Id.
60
     Id. at 28.
61
     Id.
62
     Id. at 31-32.
63
     Id. at 32, 35.
                                                  14
requirements for the representative plaintiff. Specifically, the court held that while the
representative plaintiff must show that the misrepresentation was an immediate cause of the
injury-producing conduct, the representative plaintiff did not need to demonstrate that it was the
only cause and did not need to demonstrate individualized reliance upon a specific
misrepresentation in order to establish reliance.64

        Even more recently, the Court of Appeals for the District of Columbia went one step
further and determined that the representative plaintiff in a UDAP class action does not need to
allege that he suffered any injury as a result of an unfair business practice. In Grayson v. AT&T
Corp.,65 the plaintiff brought suit alleging violations of various consumer protection statutes,
including the D.C. Consumer Protection Procedures Act (“CPPA”), on behalf of himself and the
general public.66 The trial court granted the defendant’s motion to dismiss the plaintiff’s CPPA
claim because the plaintiff failed to produce any evidence to show that he suffered any damage,
and therefore, the plaintiff lacked standing to represent the class.67 On appeal, the plaintiff
argued that recent amendments to the CPPA allowed suit to be brought on behalf of the general
public “regardless of whether [the representative plaintiff] has experienced an injury in fact as a
result of the [defendants’] trade practices.”68 The appellate court agreed and held that the
amendments to the CPPA removed the requirement that the class representative demonstrate an
injury-in-fact, and therefore, the representative plaintiff could bring suit on behalf of the general
public seeking relief under the CPPA despite the fact that he did not suffer any actual damages.69

        Other states also have relaxed the reliance requirements for the members of the class. For
example, in Dix v. American Bankers Life Assurance Co. of Fla.,70 a class of plaintiffs brought
suit under the Michigan Consumer Protection Act (“MCPA”)71 alleging that the defendant made
material misrepresentations and omissions in order to induce the plaintiffs to purchase various



64
     Id. at 39-40.
65
     2009 D.C. App. LEXIS 460 (D.C. Cir. Sept. 17, 2009).
66
     Id. at *2-*3. The CPPA can be found at D.C. Code §§ 28-3901 through 28-3913.
67
     Id. at *15-*16.
68
     Id. at *49.
69
     Id. at *50-*52.
70
     415 N.W.2d 206 (Mich. 1987).
71
     The MCPA is found at Mich. Comp. Laws §§ 445.901 through 445.922.
                                                 15
annuity policies.72 The lower court denied the plaintiffs’ motion for class certification after
finding that a class action would not promote “the convenient administration of justice.” 73 In
reaching its holding, the lower court relied upon a prior case that involved a common law fraud
claim.74 However, the Michigan Supreme Court rejected the notion that MCPA claims had to
meet the same standards as a claim based upon common-law fraud, in which there often were too
many disparate issues of law and fact to permit a class action.75 Instead, the Michigan Supreme
Court held that “members of a class proceeding under the [MCPA] need not individually prove
reliance on the [defendants’] alleged misrepresentations. It is sufficient if the class can establish
that a reasonable person would have relied on the representations.”76 The court further held that
evidence of the defendants’ intent to deceive under the MCPA could be shown on a
representative basis and did not require proof of an intent to deceive with respect to each
individual class member.77

        The relaxation of UDAP statutes in these states allows private plaintiffs to seek damages
on behalf of putative class members without undertaking the burden of showing that the class
members actually suffered any harm from the defendant’s alleged conduct. In a very real sense,
these jurisdictions have changed the burden of proof on a private UDAP plaintiff depending on
whether that person is a named party or an absent class member. To date, this has occurred in
only a handful of states and whether jurisdictions will continue to modify class action standing
and proof requirements in an effort to make private UDAP actions easier to bring remains to be
seen. However, given the economic climate, current public sentiment, and other issues relating
to the consumer lending industry, it seems likely that plaintiffs will push to expand these
decisions into other states.

IV.        UDAP ACTIONS BROUGHT BY ATTORNEYS GENERAL

        As discussed in Section II, Attorneys General increasingly are turning to UDAP statutes
to pursue claims against consumer lenders and others involved in the consumer credit industry.
In these actions, Attorneys General often pursue claims on behalf of a group of aggrieved
consumers and may or may not involve any or all of those consumers in the prosecution of the


72
     Dix, 415 N.W.2d at 207.
73
     Id. at 208-09.
74
     Id.
75
     Id. at 209.
76
     Id.
77
     Id.
                                                 16
case. In almost every state, Attorneys General can seek to recover a variety of types of relief
under the applicable UDAP statute, including injunctive relief, restitution, attorney’s fees, and
civil penalties. However, as will be discussed below, while UDAP statutes almost universally
provide for Attorneys General to seek restitution, injunctions, civil penalties, and reasonable
attorney’s fees and costs, the evidentiary showing that is required to obtain such relief varies
widely across jurisdictions. Nonetheless, some general trends do emerge.

         First, recognizing that the purpose of many Attorney General actions is deterrence, rather
than compensation, the vast majority of states have made it easier for Attorneys General to
obtain injunctions and restitution by relaxing the standing and proof requirements relating to
consumer reliance, causation, and damages that ordinarily would apply in a private class action.
In fact, in some instances, liability may be found and relief awarded without the Attorney
General even having to put on any proof of individual consumer reliance, causation, or injury.
Second, the showing that is required to obtain injunctive relief, a remedy frequently sought by
Attorneys General in UDAP actions, has been relaxed significantly in many jurisdictions.
Finally, attorney’s fees and civil penalties, which can result in significant awards and are widely
available as a potential remedy, often remain a matter of the discretion of the court or require a
heightened showing of willful conduct in order to be awarded.

        Each state has its own unique UDAP statute. While there are some similarities between
many UDAP statutes, there also are significant differences in the statutory language and judicial
interpretation of those statutes across jurisdictions, especially with regard to Attorney General
actions. This paper attempts to loosely categorize the various UDAP statutes into three broad
categories. However, it is important to recognize that even within a particular UDAP statute,
some provisions fall into a variety of categories. The categories used in this paper and a basic
definition of each are as follows. First, there are the “traditional” jurisdictions, which tend to
contain requirements for an Attorney General to prove liability and obtain relief that are the most
closely aligned with private class action requirements. Traditional jurisdictions and statutes
usually require proof of the defendant’s intent to deceive, as well as proof of individual
consumer reliance, causation, and damages. On the other end of the spectrum are the “lenient”
jurisdictions, which often impose liability and permit recovery by an Attorney General with little
or no proof of individual consumer reliance, injury, and damages. The third category consists of
the “hybrid” jurisdictions, which fall somewhere in the middle of the traditional and lenient
categories. Hybrid jurisdictions appear to retain certain aspects of traditional proof requirements
in some areas but incorporate more lenient standards in others. We grouped states into these
categorizations primarily to illustrate the diversity of positions among the states with regard to
what an Attorney General must prove in order to obtain relief under a UDAP statute.78

       A.      Traditional Jurisdictions

78
  Some jurisdictions fall into more than one category with respect to their treatment of different
remedies available to an Attorney General.
                                                17
                  1.    Establishing Liability

         In a minority of jurisdictions, there is a prerequisite that the State prove an intent to
deceive or prove some sort of public harm, in addition to individual proof of reliance, causation,
and damages requirements. For example, in Chatham Racquet Club v. Commonwealth of
Pennsylvania, the Commonwealth Court of Pennsylvania reversed a decision of the lower
chancery court that granted the Attorney General an injunction in an action brought under
Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (“CPL”)79 because there
was no finding that the defendant had an intent to defraud anyone or otherwise acted in bad
faith.80 Specifically, the court rejected the Commonwealth’s argument that it only had to show
that an act or practice had a tendency or capacity to deceive because the CPL meant to create a
more flexible standard of actionable misconduct that eliminated the requirements of proof of
intent, scienter, actual reliance, and damages.81 Instead, the court held that since the violation
was alleged under a specific subsection of the CPL that forbid “engaging in any other fraudulent
conduct which creates a likelihood of confusion or of misunderstanding,” the statutory language
required the Commonwealth to show that the challenged conduct was, in fact, fraudulent, despite
the general rule that the CPL should be construed liberally to effectuate its intent of protecting
the public from unfair and deceptive trade practices.82

        Similarly, in defining what constitutes a deceptive trade practice in violation of New
Mexico’s UDAP statute, the State must show that the defendant knew or reasonably should have
known that its statements or behavior were deceptive.83 This knowledge requirement was held to
apply to all deceptive practices listed in New Mexico’s statute by the New Mexico Supreme
Court in Stevenson v. Louis Dreyfus Corp.84 Wyoming’s UDAP statute85 also contains a similar

79
     Pennsylvania’s UDAP statute is found at 73 Pa. Stat. Ann. §§ 201-1 through 201-9.3.
80
     561 A.2d 354, 355 (Pa. Commw. Ct. 1989).
81
     Id. at 357-58.
82
  Id. at 359 (citing 73 P.S. § 201-2(4)(xvii) (subsequently amended to become 73 P.S. § 201-
2(4)(xxi)) (emphasis added).
83
     N.M. Stat. Ann. § 57-12-2(D).
84
  811 P.2d 1308, 1311 (N.M. 1991) (“‘Knowledge’ does not necessarily mean ‘actual
knowledge’ but means knowledge of such circumstances as would ordinarily lead upon
investigation, in the exercise of reasonable diligence which a prudent man ought to exercise, to a
knowledge of the actual facts. One who intentionally remains ignorant is chargeable in law with
knowledge.”)
85
     Wyoming’s UDAP statute is found at Wyo. Stat. Ann.§§ 40-12-101 through 40-12-114.
                                              18
requirement in that any violation of the statute must be committed “knowingly” by the
defendant.86

                2.      Injunctive Relief

        As a general rule, every state permits its Attorney General to seek injunctive relief under
the state’s UDAP statute. However, the proof required to obtain various types of injunctive
relief varies widely across jurisdictions. While some states look solely to the statutory authority
for the injunction and dispense with traditional proof requirements for such relief, courts in
traditional jurisdictions have not gone so far. Instead, these jurisdictions continue to require that
an injunction be granted only under an analysis that includes proof of irreparable harm and an
inadequate remedy at law. For example, in Delaware, broad injunctive relief is available under
Section 2523 of Delaware’s Consumer Fraud Act (“DCFA”).87 Specifically, Section 2523 reads,
“[i]n actions filed under this subchapter, the Court of Chancery after a hearing may grant relief
by issuing temporary restraining orders, preliminary or permanent injunctions, and such other
relief as may be necessary to prevent any person from engaging in activities declared by this
subchapter to be unlawful or which may be necessary to restore to any person in interest any
money or property, real or personal, which may have been acquired by means of any practice
declared to be unlawful by this subchapter.” However, Section 2523 goes on to state that
“[u]nless otherwise specified in this subchapter, the procedure for all such proceedings shall be
as provided in the Rules of Procedure of the Court of Chancery or as established by the usual
practice and procedure in [the] Court.”

        Wyoming’s UDAP statute also requires that injunctive relief, whether preliminary or
permanent, be issued only in accordance with “principles of equity.”88 Moreover, under New
York’s UDAP statute,89 while injunctive relief is available “[w]henever the attorney general shall
believe from evidence satisfactory to him that any person, firm, corporation or association or
agent or employee thereof has engaged in or is about to engage in any of the acts or practices
stated to be unlawful . . . ,” the State is only authorized to obtain corresponding preliminary relief


86
     Wyo. Stat. Ann. § 40-12-105:

          (a) A person engages in a deceptive trade practice unlawful under this act when,
         in the course of his business and in connection with a consumer transaction, he
         knowingly: (goes on to list 15 examples of unlawful conduct) (emphasis added).
87
  6 Del. Code Ann. § 2523. The entire DCFA is available at 6 Del. Code Ann. §§ 2511 through
2527, as well as §§ 2580 through 2584.
88
     Wyo. Stat. Ann. § 40-12-106.
89
     See N.Y. Gen. Bus. Law §§ 349, 350.
                                                 19
in accordance with Article 63 of New York’s Civil Practice Law and Rules.90 Article 63 states
that preliminary injunctive relief “may be granted pending a hearing for a preliminary injunction
[only] where it appears that immediate and irreparable injury, loss or damage will result unless
the defendant is restrained before the hearing can be had.”91

         Pennsylvania has a similar rule. In a case involving an alleged mortgage wrapping
scheme, prior to granting a preliminary injunction, the trial court evaluated and determined that
all six of the common law prerequisites under Pennsylvania law for a preliminary injunction had
been satisfied.92 In affirming the trial court’s conclusion, the appellate court did note that when
the State alleges a credible violation of the CPL, irreparable harm will be presumed but still
reviewed the remaining prerequisites before affirming the trial court’s decision to grant
preliminary injunctive relief.93

        Further, in addition to common law requirements for injunctive relief, some states require
that any suit under the applicable UDAP statute be shown to be in the public interest before any
injunctive relief will be allowed. In addition to showing all six common law prerequisites for
obtaining a preliminary injunction in Pennsylvania, the CPL also requires that the State make a
threshold showing that the CPL suit is in the public interest before being entitled to any sort of
injunctive relief.94 Similarly, both Wyoming’s and New Mexico’s UDAP statutes95 require the


90
     N.Y. Gen. Bus. Law. § 349(b).
91
     N.Y. C.P.L.R. Law § 6301.
92
   Commonwealth v. Snyder, 977 A.2d 28, 41-53 (2009). A party seeking to obtain a preliminary
injunction under Pennsylvania law must establish that: “(1) the injunction is necessary to prevent
immediate and irreparable harm that cannot be adequately compensated by damages; (2) greater
injury would result from refusing an injunction than from granting it, and, concomitantly, that
issuance of an injunction will not substantially harm other interested parties in the proceedings;
(3) a preliminary injunction will properly restore the parties to their status as it existed
immediately prior to the allegedly wrongful conduct; (4) the activity it seeks to restrain is
actionable, its right to relief is clear and the wrong is manifest, or in other words, that it is likely
to prevail on the merits; (5) the injunction it seeks is reasonably suited to abate the offending
activity; and (6) a preliminary injunction will not adversely affect the public interest.” Id. at 39,
n.14 (citing Summit Towne Ctr., Inc. v. Shoe Show of Rocky Mount, Inc., 828 A.2d 995 (Pa.
2003).
93
     Id. at 41.
94
  73 Pa. Stat. § 201-4 (“Whenever the Attorney General or a District Attorney has reason to
believe that any person is using or is about to use any method, act or practice declared by section
3 of this act to be unlawful, and that proceedings would be in the public interest, he may bring an
                                                 20
Attorney General to demonstrate that the proceedings under the statute would be in the public
interest in order to pursue any claims for relief, including injunctive relief.96 In Oregon, proof of
“an immediate harm to the public health, safety or welfare” relieves the State of certain advance
notice requirements to the defendant and permits the State to bring an immediate action to enjoin
the alleged unlawful trade practices.97 Further, if the State alleges that a “threat of immediate
harm to the public health, safety or welfare” exists, a temporary restraining order can be issued
without prior notice to the defendant, but that order will expire within 10 days unless good cause
is shown to extend it or the defendant agrees to such an extension.98

                  3.     Restitution

        Although private plaintiffs and Attorneys General often seek to avoid the burden of
proving actual harm by seeking damages in the form of “restitution,” in the more traditional
jurisdictions, actual, individualized proof of causation and damages generally will be required for
an award of restitution in a UDAP action.99 For example, in an action brought by the
Commonwealth under Pennsylvania’s CPL seeking recovery against the defendant and his
company for taking customer orders and funds for merchandise despite knowing that the
merchandise would not or could not be delivered, the Commonwealth sought restitution on
behalf of more than 300 customers.100 In order to prove the amount of restitution that was
appropriate for these customers, the Commonwealth sought either to submit a stipulation of
damages or present testimony from an agent who reviewed and summarized all of the consumer



action in the name of the Commonwealth against such person to restrain by temporary or
permanent injunction the use of such method, act or practice.”)
95
     New Mexico’s UDAP statute is found at N.M. Stat. §§ 57-12-1 through 57-12-22.
96
     N.M. Stat. § 57-12-8(A); Wyo. Stat. Ann. § 40-12-106.
97
     Or. Rev. Stat. § 646.632(1), (6).
98
     Or. Rev. Stat. § 646.632(7).
99
  See, e.g., Commonwealth v. TAP Pharm. Prods., Inc., 885 A.2d 1127, 1138 (Pa. Commw. Ct.
2005) (noting that individualized proof of causation and damages would be necessary since
“[c]ertainly, in order to obtain some of its requested relief, the Commonwealth will have to
establish not only liability but also damages. Accordingly, the Commonwealth will have to offer
some proof that the scheme-induced, inflated reimbursements did lead dispensers to select the
drugs at issue.”)
100
      Commonwealth v. Manson, 903 A.2d 69, 71-72 (Pa. Commw. Ct. 2006).
                                                 21
complaints.101 However, the court held that the agent’s testimony was hearsay and that the case
could not be proven with mere affidavits.102 Instead, the court ordered the Commonwealth to
present the testimony of 10 damages witnesses, after which the court would determine whether
to grant a continuance so that the Commonwealth could present additional witnesses to establish
additional damages.103 Ultimately, the court permitted the Commonwealth to present the
testimony of 60 damages witnesses, after which the court held that the defendant violated the
CPL and ordered the defendant to pay $20,178.88 in restitution and $20,000 as a civil penalty.104
The restitution award and the trial court’s method for hearing the damages testimony both were
upheld on appeal as proper.105 Moreover, the CPL implies that the ability of the Attorney
General to request restitution may depend not only upon the discretion of the court, but also upon
whether the Attorney General secured a permanent injunction to restrain and prevent further
violations of the CPL.106

         In addition to Pennsylvania, other states also require actual evidence of damages to
identifiable individuals in order to award any monetary recovery to the State. In fact,
Wyoming’s UDAP expressly requires proof of actual damages to identifiable individuals in order
to secure damages and restitution.107 Moreover, in Louisiana, whether a consumer is entitled to
restitution depends upon proof that: (1) the consumer was, in fact, aggrieved by the unfair or
deceptive practice; (2) the extent to which the consumer was aggrieved; and (3) whether the




101
      Id. at 72.
102
      Id.
103
      Id.
104
      Id. at 73.
105
      Id. at 76-77.
106
   73 Pa. Stat. § 201-4.1 (“Whenever any court issues a permanent injunction to restrain and
prevent violations of this act …, the court may in its discretion direct that the defendant or
defendants restore to any person in interest any moneys or property, real or personal, which may
have been acquired by means of any violation of this act, under terms and conditions to be
established by the court.”).
107
   See Wyo. Stat. Ann. § 40-12-106 (“The court may make such additional orders or judgments
as are necessary to compensate identifiable persons for actual damages or restoration of money
or property, real or personal, which may have been acquired by means or any act or practice
restrained.”).
                                               22
consumer desires to receive restitution.108 Further, in Alabama, while the Alabama Supreme
Court held in Nunley v. State, 628 So. 2d 619, 621 (Ala. 1993) that the Alabama Deceptive Trade
Practices Act (“DTPA”)109 permitted a trial court to award restitution in a suit brought by the
Attorney General, § 8-9-10 of the DTPA expressly states that in any action brought by the
Attorney General, the court shall not award minimum damages or treble damages, but instead,
recovery shall be limited to actual damages suffered by the consumers, plus reasonable
attorney’s fees and costs. Accord Iowa Code § 714.16(7) (“[a] claim for reimbursement may be
prove[n] by any competent evidence, including evidence that would be appropriate in a class
action”).

                  4.     Civil Penalties and Attorney’s Fees

        Most UDAP statutes permit the recovery of civil penalties and attorney’s fees under the
theory that such remedies further the deterrent nature of the statute. However, in traditional
jurisdictions, merely prevailing in a UDAP suit is not enough to allow the imposition of a civil
penalty. Instead, these jurisdictions impose an additional requirement – that the State prove that
the defendant’s unlawful conduct was willful. Examples of these jurisdictions are as follows:

           Pennsylvania – “In any action brought under [Pennsylvania’s UDAP statute], if the
             court finds that a person, firm or corporation is wilfully [sic] using or has wilfully
             [sic] used a method, act or practice declared unlawful by section 3 of this act, the
             Attorney General . . . may recover, on behalf of the Commonwealth of Pennsylvania,
             a civil penalty of not exceeding one thousand dollars ($1,000) per violation. . . Where
             the victim of the wilful [sic] use of a method, act or practice declared unlawful by
             section 3 of this act is sixty years of age or older, the civil penalty shall not exceed
             three thousand dollars ($3,000) per violation . . . .”110

           New Mexico – “[I]f the court finds that a person is willfully using or has willfully
             used a method, act or practice declared unlawful by the Unfair Practices Act, the
             attorney general, upon petition to the court, may recover, on behalf of the state of
             New Mexico, a civil penalty of not exceeding five thousand dollars ($5,000) per
             violation.”111


108
    State v. Gen. Motors Co., 354 So. 2d 770, 774 (La. Ct. App. 1979) (“We have little difficulty
in concluding that the consumer, . . . and the Attorney General, on the consumer’s behalf, are not
entitled to seek, in a class action, actual damages.”) (citing La. Rev. Stat. Ann. § 51:1409).
109
      Alabama’s Deceptive Trade Practices Act is found at Ala. Code §§ 8-19-1 through 8-19-15.
110
      73 Pa. Stat. § 201-8(b).
111
      N.M. Stat. § 57-12-11.
                                                  23
           Oregon – requires proof that the defendant acted “willfully” in order to impose a civil
             penalty.112

           Massachusetts – “If the court finds that a person has employed any method, act or
             practice which he knew or should have known to be in violation of [this Act], the
             court may require such person to pay to the commonwealth a civil penalty of not
             more than five thousand dollars for each such violation and also may require the
             [defendant] to pay the reasonable costs of investigation and litigation of such
             violation, including reasonable attorneys’ fees.”113

           Connecticut – “In any action brought under section 42-110m, if the court finds that a
             person is wilfully [sic] using or has wilfully [sic] used a method, act or practice
             prohibited by section 42-110b, the Attorney General, upon petition to the court, may
             recover, on behalf of the state, a civil penalty of not more than five thousand dollars
             for each violation. For purposes of this subsection, a wilful [sic] violation occurs
             when the party committing the violation knew or should have known that his conduct
             was a violation of section 42-110b.”114

           South Carolina – “If a court finds that any person is willfully using or has willfully
             used a method, act or practice declared unlawful by [the Act], the Attorney General,
             upon petition to the court, may recover on behalf of the State a civil penalty of not
             exceeding five thousand dollars per violation.”115

           Arizona – “If a court finds that any person has wilfully [sic] violated [the Act], the
             attorney general upon petition to the court may recover from the person on behalf of
             the state a civil penalty of not more than ten thousand dollars per violation. For
             purposes of this section, a wilful [sic] violation occurs when the party committing the
             violation knew or should have known that his conduct was of the nature prohibited by
             [the Act].”116

           Kentucky – “[I]f the court finds that a person is willfully using or has willfully used a
             method, act, or practice declared unlawful by [this Act], the Attorney General, upon


112
      Or. Rev. Stat. § 646.642.
113
      Mass. Gen. Law. Ch. 93A, § 4.
114
      Conn. Gen. Stat. § 42-110o(b).
115
      S.C. Code Ann. § 39-5-110(a).
116
      Ariz. Rev. Stat. Ann. § 44-1531(A), (B).
                                                  24
               petition to the court, may recover, on behalf of the Commonwealth, a civil penalty of
               not more than two thousand dollars ($2,000) per violation, or where the defendant’s
               conduct is directed at a person aged sixty (60) or older, a civil penalty of not more
               than ten thousand dollars ($10,000) per violation, if the trier of fact determines that
               the defendant knew or should have known that the person aged sixty (60) or older is
               substantially more vulnerable than other members of the public.”117

           Montana – “In an action brought under 30-14-111, if the court finds that a person is
             willfully using or has willfully used a method, act, or practice declared unlawful by
             30-14-103, the department, upon petition to the court, may recover on behalf of the
             state a civil fine of not more than $10,000 for each violation.”118

           Indiana – “If a court finds any person has knowingly violated section 3 or 10 of this
             chapter, . . . the attorney general, . . . , may recover from the person on behalf of the
             state a civil penalty of a fine not exceeding five thousand dollars ($5,000) per
             violation.”119

         The requirement that the State prove that the defendant willfully violated the UDAP
statute imposes an additional hurdle for the State in seeking to recover civil penalties, which can
prove to be very significant in some cases. In contrast to more lenient jurisdictions that
automatically provide an award of civil penalties and attorney’s fees to the State upon bringing a
successful UDAP action, here, the State cannot depend on a similar guarantee of a potentially
significant monetary recovery in its favor.

          B.      Hybrid Jurisdictions

                  1.      Establishing Liability

       In some jurisdictions, the Attorney General still may have to prove that the defendant
acted knowingly or with the intent that others rely upon his misrepresentation, but other elements
of a UDAP claim are relaxed. In particular, proof of consumer reliance or actual harm may not
be required. For example, the Kansas Consumer Protection Act (“KCPA”)120 provides a
substantial, non-exclusive list of activities that are defined as deceptive acts in violation of the


117
      Ky. Rev. Stat. § 367.990(2).
118
      Mont. Code Ann. 30-14-142(2).
119
      Ind. Code § 24-5-0.5-4 (g).
120
   The KCPA is found at Kan. Stat. Ann. §§ 50-623 through 50-640 and 50-675a through 50-
679a.
                                                    25
KCPA and expressly states that such acts are deceptive “whether or not any consumer has in fact
been misled.”121 The KCPA also provides that the Attorney General can recover various forms
of relief, including a declaratory judgment, injunctive relief, damages on behalf of consumers, a
mandatory civil penalty of not more than $10,000 for each violation, and the reasonable expenses
and investigation fees.122 However, while the KCPA relaxes consumer reliance and causation
elements, most listed violations of the KCPA do require the State to prove that the defendant
acted knowingly or with reason to know that its actions were deceptive.123

        Iowa’s UDAP statute124 goes slightly further than Kansas in modifying the elements that
an Attorney General must prove. Iowa’s UDAP statute states that, “[t]he act, use or employment
by a person of an unfair practice, deception, fraud, false pretense, false promise, or
misrepresentation, or the concealment, suppression, or omission of a material fact with intent that
others rely upon the concealment, suppression, or omission, in connection with the lease, sale, or
advertisement of any merchandise or the solicitation of contributions for charitable purposes,
whether or not a person has in fact been misled, deceived, or damaged, is an unlawful
practice.”125 However, Iowa’s UDAP statute draws a distinction between what must be proven
in an affirmative misrepresentation case versus an omission or concealment case by stating that
“[e]xcept in an action for the concealment, suppression, or omission of a material fact with intent
that others rely upon it, it is not necessary in an action for reimbursement or an injunction, to
allege or to prove reliance, damages, intent to deceive, or that the person who engaged in an
unlawful act had knowledge of the falsity of the claim or ignorance of the truth.”126 Moreover,
as in Kansas, Iowa’s UDAP statute permits the Attorney General to obtain a broad array of
remedies without showing any consumer reliance, including preliminary and permanent
injunctive relief, restitution, disgorgement, and civil penalties.127

      Delaware and Arizona both take an approach similar to that in Iowa. Under Delaware’s
Consumer Fraud Act (“DCPA”),128 a plaintiff does not need to show that the defendant intended

121
      Kan. Stat. Ann. § 50-626(b).
122
      Kan. Stat. Ann. §§ 50-632(a), 50-636.
123
      See, e.g., Kan. Stat. Ann. § 50-626(b).
124
      Iowa’s UDAP statute is found at Iowa Code §§ 714.16 through 714.16A.
125
      Iowa Code § 714.16(2)(a).
126
      Iowa Code § 714.16(7).
127
      Id.
128
      The DCPA is found at 6 Del. Code Ann. §§ 2511 through 2527, 2580 through 2584.
                                                26
to misrepresent or to make a deceptive or untrue statement.129 Instead, the only intent
requirement is that in a case involving a defendant omitting or concealing a material fact, it must
be shown that the defendant intended that others rely on the omission or concealment.130
However, in either case, proof of actual reliance is not required.131

       Similarly, in People v. Green Acres Trust, the Arizona Court of Appeals rejected a claim
that summary judgment should be granted against the State on its Consumer Fraud Act
(“ACFA”)132 claim because the State failed to establish any consumer reliance upon the
defendant’s deceptive and unfair practices.133 In the course of holding that the defendant’s
motion for summary judgment should be denied, the Court of Appeals expressly rejected the
argument that summary judgment was appropriate because detrimental reliance by consumers
was neither alleged nor established by the State.134 Instead, the court held that under the ACFA,
proof of reliance, actual deception, and/or damages was not required in a consumer fraud action
brought by the Attorney General.135 However, as the Arizona Court of Appeals recognized in a
subsequent case, proof of the defendant’s intent to deceive consumers is required under the
ACFA.136



129
  Stephenson v. Capano Dev., Inc., 462 A.2d 1069, 1074 (Del. 1983) (internal citations
omitted).
130
      Id.; 6 Del. Code Ann. § 2513(a).
131
      Stephenson, 462 A.2d at 1074.
132
      Arizona’s Consumer Fraud Act is found at Ariz. Rev. Stat. Ann. §§ 44-1521 through 44-1534.
133
      See generally 618 P.2d 1086 (Ariz. Ct. App. 1980).
134
      Id. at 1094.
135
   Id. (citing Ariz. Rev. Stat. Ann. § 44-1522(A)); accord Peery v. Hansen, 585 P.2d 574, 578
(Ariz. Ct. App. 1978) (the right to rely is not an element of a private action under the Consumer
Fraud Act).
136
   State ex rel. Babbitt v. Goodyear Tire & Rubber Co., 626 P.2d 1115, 1117 (Ariz. Ct. App.
1981) (applying Ariz. Rev. Stat. Ann. § 44-1522(A), which reads “[t]he act, use or employment
by any person of any deception, deceptive act or practice, fraud, false pretense, false promise,
misrepresentation, or concealment, suppression or omission of any material fact with intent that
others rely upon such concealment, suppression or omission, in connection with the sale or
advertisement of any merchandise whether or not any person has in fact been misled, deceived or
damaged thereby, is declared to be an unlawful practice.”).
                                                27
                 2.     Injunctive Relief

        In hybrid jurisdictions, injunctive relief is widely available and often sought. However,
while the court may not engage in a traditional, common law analysis of whether injunctive relief
is appropriate, certain circumstances may require enhanced levels of proof as a prerequisite to
such relief. For example, in Iowa, Section 714.16(7) of Iowa’s UDAP statute137 provides, “[i]f it
appears to the attorney general that a person has engaged in, is engaging in, or is about to engage
in a practice declared to be unlawful by this section, the attorney general may seek and obtain in
an action in a district court a temporary restraining order, preliminary injunction, or permanent
injunction prohibiting the person from continuing the practice or engaging in the practice or
doing an act in furtherance of the practice.” However, since Section 714.16(7) draws a
distinction between affirmative misrepresentations and concealment, suppression, or omission of
material facts, the level of proof required for injunctive relief will vary depending on the nature
of the defendant’s alleged conduct. Omission cases require an elevated showing of proof before
injunctive relief, or any other relief for that matter, can be obtained.138 However, Iowa courts
also recognize that injunctive relief can be awarded under its UDAP statute in the absence of
proof of an inadequate remedy at law or risk of irreparable harm because it is presumed that the
legislature, in authorizing injunctive relief in the UDAP statute, already balanced the relative
harms and remedies at law and decided to authorize injunctive relief upon finding that the UDAP
statute had been violated.139 Based on the fact that the UDAP statutes in Delaware, Kansas, and
Arizona contain a similar distinction between actions based upon affirmative misrepresentations
and those based upon omission, it is reasonable to assume that courts in those states may apply a
similar analysis when determining when injunctive relief is appropriate in an Attorney General
action.

                 3.     Restitution

         With respect to the proof that is required to recover restitution for consumers, some
hybrid jurisdictions draw a distinction between whether the restitution sought is general or
specific restitution. A court awards “general” restitution when the court orders a certain amount
of restitution that will be divided later. In contrast, a court awards “specific” restitution when its

137
      Iowa’s UDAP statute is found at Iowa Code §§ 714.16 through 714.16A.
138
   Iowa Code § 714.16(7) (“Except in an action for the concealment, suppression, or omission of
a material fact with intent that others rely upon it, it is not necessary in an action for
reimbursement or an injunction, to allege or to prove reliance, damages, intent to deceive, or that
the person who engaged in an unlawful act had knowledge of the falsity of the claim or
ignorance of the truth.”).
139
   State ex rel. Miller v. Grady, 2005 Iowa App. LEXIS 283, at *10-*13 (Iowa Ct. App. Apr. 13,
2005).
                                                  28
order apportions specific amounts to specific consumers. If the restitution award is general,
proof of consumer reliance may not be required. In contrast, for specific restitution, reliance
must be proven.

         An example of this distinction is seen in Consumer Protection Division v. Morgan.140
This case involved an appeal from an administrative proceeding before the Maryland Consumer
Protection Division in which the Attorney General alleged that a property investor, a mortgage
lender, and two appraisers violated the Maryland Consumer Protection Act (“MCPA”)141 by
using unfair and deceptive practices to take advantage of first-time home buyers in Baltimore.142
Ultimately, the Consumer Protection Division Chief held that the defendants violated the MCPA
and ordered the defendants to pay restitution, civil penalties, and the costs of the proceeding.143
On appeal to the circuit court, the defendants argued that it was improper for the Consumer
Protection Division to award restitution with respect to 32 purchasers who did not testify at the
administrative hearing.144 Specifically, of the 48 purchasers of property that allegedly were
harmed by the defendants, only 16 actually testified.145 However, the Division awarded
restitution to all 48 purchasers.146 The circuit court agreed with the defendants and struck the
restitution award for 32 non-testifying consumers.147

        On appeal to the Maryland Court of Appeals, the Consumer Protection Division argued
that testimony from the 32 additional purchasers was not necessary because the “proper
consideration [was] not whether a particular consumer testified, but rather whether there [was]
substantial evidence to support the order of restitution.”148 In response, while acknowledging
that Maryland law did not require proof of reliance for general restitution orders, the defendants
argued that the Consumer Protection Division issued a specific restitution order because the
order apportioned certain amounts to certain consumers instead of just allocating a general

140
      See generally 874 A.2d 919 (Md. 2005).
141
      The MCPA is found at Md. Code. Ann., Com. Law §§ 13-101 through 13-501.
142
      Morgan, 874 A.2d at 927, 932.
143
      Id. at 937-38.
144
      Id. at 938.
145
      Id. at 937.
146
      Id.
147
      Id.
148
      Id. at 940.
                                                29
amount to be divided at some later point.149 Accordingly, testimony showing reliance was
necessary for specific restitution orders.150 Ultimately, the Court of Appeals held that while
proof of reliance was not necessary to prove a violation of the MCPA, once a violation was
established, proof of actual consumer reliance may be necessary before specific restitution can be
made to individual consumers since “[w]hether consumer testimony is required to support a
specific restitution order depends upon the facts and circumstances of each case.”151 Under the
circumstances in Morgan, the Court of Appeals held that it was error to grant specific restitution
to the non-testifying purchasers since some of the purchasers were complicit in the defendants’
unlawful scheme or otherwise might not wish to receive restitution.152 To receive specific
restitution, those 32 purchasers would need to present individual testimony to show that they in
fact relied on the defendants’ representations to their detriment.153 Nonetheless, the Court of
Appeals did hold that a general restitution order could be made in the absence of any
individualized proof of reliance by consumers under the MCPA.154 In the event that a general
award was rendered by the Consumer Protection Division on remand, the court stated that a
procedure for inviting and assessing subsequent individual consumer claims against the general
restitution award would need to be implemented by the Consumer Protection Division.155

                    4.   Civil Penalties and Attorney’s Fees



149
      Id.
150
      Id.
151
      Id. at 941.
152
      Id.
153
      Id.
154
      Id. at 942.
155
   See id. at 943; accord 6 Del. Code § 2524(c) (implying that a general award without
individual proof of reliance may be made by stating that, “[a]ny person who has suffered
damages as a result of the use or employment of any such unlawful acts or practices and submits
proof to the satisfaction of the Court that that person has in fact been damaged, may participate
with general creditors in the distribution of the assets to the extent of out-of-pocket losses by a
receiver”); Thomas v. State, 226 S.W.3d 697, 707 (Tex. App. 2007) (upholding the trial court’s
general grant of restitution to the State for violations of Texas’ UDAP statute and stating that
Tex. Bus. & Com. Code Ann. § 17.47(d) does not require restitution to be provided to
“identifiable individuals” in an identifiable amount but noting that such information would be
required for an award of actual damages).
                                                 30
        The jurisdictions in the hybrid category differ from the more traditional states by not
requiring that the State prove that the defendant acted willfully as a prerequisite to recovering a
civil penalty or attorney’s fees. But an award of such relief is not automatic simply because the
Attorney General establishes a violation; instead, whether to award civil penalties and/or
attorney’s fees is reserved to the discretion of the trial court. Numerous examples of these types
of UDAP provisions are listed below by state:

                         a.      Discretionary Civil Penalty Provisions

           Louisiana – “In addition to the remedies provided herein, the attorney general may
             request and the court may impose a civil penalty against any person found by the
             court to have engaged in any method, act, or practice in Louisiana declared to be
             unlawful under this [Act].”156

           Wyoming – Provides that civil penalties are discretionary.157

           Iowa – “In addition to the remedies otherwise provided for in this subsection, the
             attorney general may request and the court may impose a civil penalty not to exceed
             forty thousand dollars per violation against a person found by the court to have
             engaged in a method, act, or practice declared unlawful under this section . . . .”158

           Alaska – “In an action brought under [Alaska’s UDAP statute], if the court finds that
             a person is using or has used an act or practice declared unlawful by [the statute], the
             attorney general, upon petition to the court, may recover, on behalf of the state, a civil
             penalty of not less than $1,000 and not more than $25,000 for each violation.”159

           Kansas – “In any action brought by the attorney general or the county or district
             attorney, the court may, without requiring bond of the attorney general or the county
             or district attorney: . . . award reasonable expenses and investigation fees, civil
             penalties and costs.”160




156
      La. Rev. Stat. Ann. § 51:1407(B).
157
      Wyo. Stat. Ann. § 40-12-113(a).
158
      Iowa Code § 714.16(7).
159
      Alaska Stat. § 45.50.551(b).
160
      Kan. Stat. Ann. § 50-632(c)(7).
                                                   31
              Texas - “[T]he consumer protection division may request, and the trier of fact may
               award, a civil penalty to be paid to the state in an amount of: (1) not more than
               $20,000 per violation; and (2) if the act or practice that is the subject of the
               proceeding was calculated to acquire or deprive money or other property from a
               consumer who was 65 years of age or older when the act or practice occurred, an
               additional amount of not more than $250,000.”161

           New Hampshire – The trial court may award penalties up to $10,000 for each
             violation of the applicable UDAP statute but payment of civil penalties cannot be
             required until after the appeal process has been exhausted.162

           Illinois – “In addition to the remedies provided herein, the Attorney General or
             State’s Attorney may request and the Court may impose a civil penalty in a sum not
             to exceed $50,000 against any person found by the Court to have engaged in any
             method, act or practice declared unlawful under this Act. In the event the court finds
             the method, act or practice to have been entered into with the intent to defraud, the
             court has the authority to impose a civil penalty in a sum not to exceed $50,000 per
             violation.”163

           Missouri – “The court may award to the state a civil penalty of not more than one
             thousand dollars per violation; except that, if the person who would be liable for such
             penalty shows, by a preponderance of the evidence, that a violation resulted from a
             bona fide error notwithstanding the maintenance of procedures reasonably adopted to
             avoid the error, no civil penalties shall be imposed.”164

           District of Columbia – “In addition, in an action under this section, the Attorney
             General may recover a civil penalty of not more than $1,000 for each violation . . .
             .”165

           North Dakota – “The court may assess for the benefit of the state a civil penalty of
             not more than five thousand dollars for each violation of [this] chapter . . . .”166



161
      Tex. Bus. & Com. Code Ann. § 17.47(c).
162
      N.H. Rev. Stat. Ann. § 358-A:4.
163
      815 Ill. Comp. Stat. 505/7(b).
164
      Mo. Rev. Stat. § 407.100(6).
165
      D.C. Code § 28-3909(b).
                                                   32
           Tennessee – “The court may also order payment to the state of a civil penalty of not
             more than one thousand dollars ($1,000) for each violation.”167

                         b.      UDAP Provisions Permitting Discretionary Attorney’s Fees

           New Hampshire – “If any person is found to have engaged in any act or practice
             declared unlawful by this chapter, the court may award to the state in any action
             brought under this chapter all legal costs and expenses.”168

           District of Columbia – “In addition, in an action under this section, the Attorney
             General may recover . . . the costs of the action, and reasonable attorney’s fees.”169

           Nebraska – “The prevailing party may, in the discretion of the court, recover the
             costs of such action including a reasonable attorney’s fee.”170

           Indiana – “In addition [to other remedies], the court may: . . . order the supplier to
             pay to the state the reasonable costs of the attorney general’s investigation and
             prosecution related to the action.”171

           Montana – Attorney’s fees are allowed to the prevailing party, but, “[w]hen faced
             with a successful defendant, a district court should only award attorney fees ‘upon a
             finding that the plaintiff's action was frivolous, unreasonable, or without foundation,
             even though not brought in subjective bad faith.’”172

           New York – “The court may award reasonable attorney’s fees to a prevailing
             plaintiff.”173


166
      N.D. Cent. Code § 51-15-11.
167
      Tenn. Code § 47-18-108(b)(3).
168
      N.H. Rev. Stat. Ann. § 358-A:6(IV).
169
      D.C. Code § 28-3909(b).
170
      Neb. Rev. Stat. 59-1608(1).
171
      Ind. Code § 24-5-0.5-4(c)(3).
172
      Tripp v. Jeld-Wen, Inc. 112 P.3d 1018, 1026 (Mont. 2005); Mont. Code. § 30-14-133(3).
173
      N.Y. Gen. Bus. Law § 349(h).
                                                   33
           Oregon –“The court may award reasonable attorney fees to the prevailing party in an
             action under this section.”174

        The reason these provisions are categorized in the hybrid category is because, with the
exception of Nebraska, which expressly states that the award that “may” be awarded is
discretionary, it is not clear from the text of these statutes whether the courts will interpret the
term “may” to be permissive or mandatory. However, the discretionary nature of the statutory
language does not mean that these remedies are not widely awarded.

        Another variety of hybrid UDAP statutes are those that provide for a mandatory civil
penalty in favor of the State when a defendant is shown to have engaged willfully in unlawful
practices. In contrast to the traditional jurisdictions, in which a finding of willfulness is required
for any imposition of a civil penalty or attorney’s fees, these jurisdictions make civil penalties
mandatory when willfulness is proven, but may be interpreted to allow penalties to be recovered
on a discretionary basis for non-willful violations. Below are several examples of these types of
UDAP provisions:

           Delaware – “If a court of competent jurisdiction finds that any person has willfully
             violated this subchapter, upon petition to the court by the Attorney General in the
             original complaint or made at any time following the court's finding of a willful
             violation, the person shall forfeit and pay to the State a civil penalty of not more than
             $10,000 for each violation. For purposes of this subchapter, a willful violation occurs
             when the person committing the violation knew or should have known that the
             conduct was of the nature prohibited by this subchapter.”175

           Alabama – If the State proves that the defendant knowingly engaged in an unlawful
             practice violation, a civil penalty award is mandatory under the UDAP statute.176

           Florida – “Except as provided in s. 501.2077, any person, firm, corporation,
             association, or entity, or any agent or employee of the foregoing, who is willfully
             using, or has willfully used, a method, act, or practice declared unlawful under s.
             501.204, or who is willfully violating any of the rules of the department adopted
             under this part, is liable for a civil penalty of not more than $10,000 for each such
             violation. Willful violations occur when the person knew or should have known that
             his or her conduct was unfair or deceptive or prohibited by rule. This civil penalty
             may be recovered in any action brought under this part by the enforcing authority; or

174
      Or. Rev. Stat. § 646.632(8).
175
      6 Del. Code Ann. § 2522(b).
176
      Ala. Code § 8-19-11(b).
                                                   34
               the enforcing authority may terminate any investigation or action upon agreement by
               the person, firm, corporation, association, or entity, or the agent or employee of the
               foregoing, to pay a stipulated civil penalty.”177

        Wyoming’s civil penalty provision is unique because while the decision to award a
penalty is discretionary, Wyo. Stat. Ann. § 40-12-113(c) provides that the court also has the
discretion to double the civil penalty if the defendant’s violations are shown to have been willful.

        In sum, there are a variety of penalty and attorney’s fees provisions in the hybrid
jurisdictions. While the majority of these provisions appear to be discretionary, some hybrid
jurisdictions mandate civil penalties when a defendant willfully violated a UDAP statute.

          C.      Lenient Jurisdictions

         As a general matter, in lenient jurisdictions, very little, if any, proof is required of an
Attorney General with respect to consumer reliance, causation, and damages. Injunctive relief is
widely available and only subject to specific statutory requirements. Further, civil penalties and
attorney’s fees are mandatory regardless of whether the defendant willfully violated the UDAP
statute.

                  1.      Establishing Liability

        In the most lenient jurisdictions, limited or no proof of consumer reliance, causation,
and/or injury must be shown for an Attorney General to establish liability under the applicable
UDAP statute. Instead, all that must be shown is that the defendant’s acts had the tendency to
deceive or were capable of deceiving.

        For example, in probably the most lenient jurisdiction, California, Section 17200 of its
Unfair Competition Law (“UCL”)178 imposes strict liability for deceptive acts and does not
require any showing that the defendant actually intended to deceive or injure anyone in order to
state a claim.179 Instead, “[t]he test is whether the public is likely to be deceived [which] means

177
      Fla. Stat. § 501.2075.
178
      The UCL is found at Cal. Bus. & Prof. Code §§ 17200 through 17594.
179
   People ex rel. Lockyer v. Fremont Life Ins. Co., 128 Cal. Rptr. 2d 463, 476 (Cal. Ct. App.
2002) (citing Prata v. Superior Court, 111 Cal. Rptr. 2d 296, 303 (Cal. Ct. App. 2001) (“By their
breadth, [sections 17200 and 17500] encompass not only those advertisements which have
deceived or misled because they are untrue, but also those which may be accurate on some level,
but will nonetheless tend to mislead or deceive . . . . A perfectly true statement couched in such a
manner that it is likely to mislead or deceive the consumer, such as by failure to disclose other
relevant information, is actionable under these sections.”) (citations omitted).
                                                   35
that a section 17200 violation, unlike common law fraud, can be shown even if no one was
actually deceived, relied upon the fraudulent practice, or sustained any damage.”180 Further,
Section 17203 of the UCL exempts the Attorney General and other governmental attorneys from
any standing requirements for bringing a representative suit under the UCL, despite the fact that
ordinarily, representative actions under the UCL can only be brought if the representative can
show that he suffered an injury in fact and damages as a result of the defendant’s conduct.181

         Similarly, an Attorney General proceeding under the District of Columbia’s Consumer
Protection Procedures Act (“CPPA”)182 does not have to prove causation or damages to establish
liability under that statute. Specifically, Section 28-3904 of the CPPA provides, “[i]t shall be a
violation of this chapter, whether or not any consumer is in fact misled, deceived or damaged
thereby, for any person to: [lists a variety of deceptive and unfair practices].” Accordingly,
Section 28-3909(a) of the CPPA states that the Attorney General can secure injunctive and
restitutionary relief without any proof of damages.183 Further, no showing that the defendant
intended to deceive or injure consumers is necessary.184

       Several other states have determined that proof of consumer reliance, causation, and/or
damages is not required for liability to attach in an action brought by the Attorney General under
their UDAP statutes. These states are as follows:




180
    State Farm Fire & Cas. Co. v. Superior Court, 53 Cal. Rptr. 2d 229, 235 (Cal. Ct. App. 1996)
(internal citation omitted) (abrogated on other grounds).
181
   Cal. Bus. & Prof. Code § 17203; accord In re Tobacco II Cases, 207 P.3d 20 (Cal. 2009)
(expressly recognizing that Proposition 64’s standing requirements do not apply to actions
brought by the Attorney General under the UCL).
182
      The CPPA is found at D.C. Code §§ 28-3901 through 28-3913.
183
     Specifically, § 28-3909(a) reads, “[n]otwithstanding any provision of law to the contrary, if
the Attorney General has reason to believe that any person is using or intends to use any method,
act, or practice in violation of [the CPPA], and if it is in the public interest, the Attorney General,
. . . , may petition the Superior Court of the District of Columbia to issue a temporary or
permanent injunction against the use of the method, act, or practice. In any action under this
section, the Attorney General shall not be required to prove damages and the injunction shall be
issued without bond. The Attorney General may recover restitution for property lost or damages
suffered by consumers as a consequence of the unlawful act or practice.”
184
   Fort Lincoln Civic Ass’n v. Fort Lincoln New Town Corp., 944 A.2d 1055, 1073 (D.C. 2008)
(applying D.C. Code § 28-3904).
                                                  36
             Illinois – “Unfair methods of competition and unfair or deceptive acts or practices,
               including but not limited to the use or employment of any deception fraud, false
               pretense, false promise, misrepresentation or the concealment, suppression or
               omission of any material fact, with intent that others rely upon the concealment,
               suppression or omission of such material fact, . . . are hereby declared unlawful
               whether any person has in fact been misled, deceived or damaged thereby.”185

             South Carolina – In State v. Brown, 294 S.E.2d 781 (S.C. 1982), the State initiated
               an action pursuant to South Carolina’s Unfair Trade Practices Act (“UPTA”)186
               alleging that the defendant engaged in the deceptive manufacturing, promotion,
               distribution, and sale of transient voltage surge suppressors.187 The trial court granted
               summary judgment in favor of the defendants for a variety of reasons, including
               because the State failed to prove fraud or demonstrate irreparable harm or damage to
               any citizen.188 The appellate court reversed and remanded the case, in part because it
               determined that under UPTA, the State did not need to prove actual deception or
               fraud.189 Instead, “a finding of a tendency to deceive and mislead” was sufficient for
               liability to attach under the UPTA.190

             Alaska – The Supreme Court of Alaska held that under its UDAP statute,191 “[a]n act
               or practice is deceptive or unfair if it has the capacity or tendency to deceive. Actual
               injury as a result of the deception is not required . . . . All that is required is a showing
               that the acts and practices were capable of being interpreted in a misleading way.”192

             Maryland – Defines an unfair or deceptive trade practice to include any “[f]alse,
               falsely disparaging, or misleading oral or written statement, visual description, or


185
      815 Ill. Comp. Stat. 505/2.
186
      See S.C. Code Ann. §§ 39-5-10 through 39-5-160.
187
      Brown, 294 S.E.2d at 781.
188
      Id. at 782-83.
189
      Id. at 783.
190
      Id.
191
   Alaska’s UDAP statute, the Unfair Trade Practices and Consumer Protection Act, is found at
Alaska Stat. §§ 45.50.471 through 45.50.561.
192
      Odom v. Fairbanks Mem. Hosp., 999 P.2d 123, 132 (Alaska 2000).
                                                      37
             other representation of any kind which has the capacity, tendency, or effect of
             deceiving or misleading consumers.”193 “Any practice prohibited by [Maryland’s
             Consumer Protection Act] is a violation of this title, whether or not any consumer in
             fact has been misled, deceived, or damaged as a result of that practice.”194

          Ohio – “Unlike a fraud claim, where a plaintiff must allege harm above and beyond
            the misrepresentation and reliance thereon, a cause of action accrues under the
            Consumer Sales Practices Act195 as soon as the allegedly unfair or deceptive
            transaction occurs.”196

          Kentucky – Actual consumer reliance is not required to find a violation of
            Kentucky’s Consumer Protection Act197 because no such requirement appears in §
            367.170 of the Act, which defines “unlawful act” as “[u]nfair, false, misleading, or
            deceptive acts or practices in the conduct of any trade or commerce are hereby
            declared unlawful.198

       Accordingly, unlike a class action in which consumer reliance, causation, and damages
must be proven to certify a class and proceed with the suit, in lenient jurisdictions, an Attorney
General is required to provide very little individual proof, if any, for liability to attach.

                2.      Injunctive Relief

        The lenient jurisdictions with respect to injunctive relief are those that have UDAP
provisions that permit the imposition of injunctive relief in the absence of any proof of
traditional elements, such as a lack of an adequate remedy at law or the risk of irreparable harm,


193
      Md. Code. Ann. Com. Law. § 13-301(1).
194
  Md. Code Ann. Com. Law § 13-302. Maryland’s Consumer Protection Act can be found at
Md. Code Ann., Com. Law §§ 13-101 through 13-501.
195
   Ohio’s Consumer Sales Practice Act is found at Ohio Rev. Code Ann. §§ 1345.01 through
1345.13.
196
   Delahunt v. Cytodyne Techs., 241 F. Supp. 2d 827, 835 (S.D. Ohio 2003) (applying Ohio
law).
197
   Kentucky’s Consumer Protection Act is found at Ky. Rev. Stat. Ann. §§ 367.110 through
367.990.
198
    Telcom Directories, Inc. v. Commonwealth, 833 S.W.2d 848, 850 (Ky. Ct. App. 1991)
(interpreting Ky. Rev. Stat. Ann. § 367.170(1)).
                                                 38
and which do not require enhanced proof in cases involving failure to disclose facts. For
example, as set forth in State ex rel. Hatch v. Cross Country Bank, Inc.,199 a court may impose a
temporary injunction under Minnesota’s UDAP statute without any proof of either irreparable
harm or the lack of an adequate remedy at law. The Court held that, “when the legislature has
explicitly authorized the state to obtain injunctive relief to prevent violations of statutes that
protect consumers, the legislature has obviated a showing of irreparable harm and inadequate
legal remedy.”200

         Other jurisdictions have reached the same conclusion with respect to preliminary
injunctions authorized by specific statutes. For example, in State ex rel. Office of Attorney
General Bureau of Consumer Protection v. NOS Communications, Inc., the Supreme Court of
Nevada held that it was proper to issue a preliminary injunction under Nevada’s UDAP statute
without requiring the State to plead or prove irreparable injury or an inadequate remedy at law.201
Instead, the court held that irreparable injury and an inadequate remedy at law are presumed
when the State meets the requirements of the statute providing for injunctive relief in a statutory
enforcement action.202 Therefore, to obtain a preliminary injunction under Nevada’s UDAP
statute, “a state or government agency need only show, through competent evidence, a




199
      703 N.W.2d 562 (Minn. Ct. App. 2005).
200
     Id. Specifically, the MCFA provides that “[t]he attorney general or any county attorney may
institute a civil action in the name of the [S]tate in the district court for an injunction prohibiting
any violation of sections 325F.68 to 325F. 70. The court, upon proper proof that defendant has
engaged in a practice made enjoinable by section 325F.69, may enjoin the future commission of
such practice.” Minn. Stat. Ann. § 325F.70, subd. 1. Further, the Minnesota statute granting the
authority to the attorney general to enforce laws related to unfair, discriminatory, and unlawful
practices in business, commerce, or trade states that: “in addition to the penalties provided by
law. . .specifically and generally, whether or not injunctive relief is otherwise provided by law,
the courts of this state are vested with jurisdiction to prevent and restrain violations of those laws
. . . . On becoming satisfied that any of those laws has been or is being violated, or is about to be
violated, the attorney general shall be entitled . . . (a) to sue for and have injunctive relief . . .
against any such violation or threatened violation without abridging the penalties provided by
law . . . .” Minn. Stat. § 8.31, subd. 3 (2004).
201
   84 P.3d 1052, 1054 (Nev. 2004). Nevada’s UDAP statute is found at Nev. Rev. Stat. §§
598.0903 through 598.0999.
202
      Id.
                                                  39
reasonable likelihood that the statute was violated and that the statute specifically allows
injunctive relief.”203

         Kentucky and Florida have codified their relaxed requirements for injunctive relief.
Specifically, Kentucky’s Consumer Protection Act204 provides that “[u]pon application of the
Attorney General, a restraining order shall be granted whenever it reasonably appears that any
person will suffer immediate harm, loss or injury from a method, act or practice prohibited by
[this statute].”205 “In order to obtain a temporary or permanent injunction, it shall not be
necessary to allege or prove that an adequate remedy at law does not exist. Further, it shall not
be necessary to allege or prove that irreparable injury, loss or damage will result if the injunctive
relief is denied.”206 Specifically, Florida’s provision states that, “[i]n addition to the remedies
provided in this act, and notwithstanding the existence of any adequate remedy at law, the
department is hereby authorized to make application for injunction to a circuit court. Such
circuit court shall have jurisdiction, upon hearing and for cause shown, to grant a temporary or
permanent injunction, to be issued without bond, restraining any person from violating or
continuing to violate any of the provisions of this act or from failing or refusing to comply with
the requirements of this act or any rule duly promulgated under the provisions of this act.”207

                  3.     Restitution

        In the most lenient jurisdictions, broad, across-the-board restitution may be awarded
without any advance proof of actual consumer damages. For example, in People el rel. Lockyer
v. Fremont Life Insurance Co., after a bench trial, the court found that the defendant violated
California’s unfair competition law and imposed $2.5 million in civil penalties (assessed at a rate
of $210 per violation), granted the State injunctive relief, and required the defendant to offer
across-the-board restitution to consumers.208 On appeal, the defendant argued that the restitution


203
   Id. at 1055; accord Village of Riverdale v. Allied Waste Tran., Inc., 777 N.E.2d 684, 688 (Ill.
Ct. App. 2002) (when seeking injunctive relief that is expressly provided for by statute, “[t]he
State or agency need only show that the statute was violated and that the statute relied upon
specifically allows injunctive relief”; proof of an inadequate remedy or irreparable harm is not
required).
204
      Ky. Rev. Stat. Ann. §§ 367.110 through 367.990.
205
      Ky. Rev. Stat. Ann. § 367.190(2).
206
      Ky. Rev. Stat. Ann. § 367.190(3).
207
      235 Fla. Stat. 501.923.
208
      128 Cal. Rptr. 2d 463, 466 (Cal. Ct. App. 2002).
                                                 40
award should be reversed because not all of the consumers were harmed by the defendant’s
actions.209 Specifically, the defendant argued that across-the-board restitution could not be
ordered without proof that all consumers were deprived of money or property as a result of the
defendant’s unfair business practices.210 The appellate court rejected this argument. Instead, the
court held that the award of across-the-board restitution was appropriate and within the
discretion of the court, observing that the UCL “clearly authorizes a trial court to order
restitution in the absence of proof of lack of knowledge in order to deter future violations . . . and
to foreclose retention by the violator of its ill-gotten gains,” and the rule “that restitution under
the UCL may be ordered without individualized proof of harm is well settled.”211

         Idaho courts also hold that restitution should not be limited to only the consumers who
proved an injury at trial. In State el rel. Kidwell v. Master Distributors, Inc., after concluding
that certain defendants violated Idaho’s Consumer Protection Act (“ICPA”)212 and entering an
injunction against those defendants, the trial court refused to grant the State any restitutionary
relief.213 On appeal, the State argued that the court’s refusal to grant restitution to consumers
was an abuse of discretion because it reflected a belief by the trial court that the State had to
prove that consumers in fact relied upon the deceptive acts and that the defendants’ acts were a
proximate cause of the damages sustained by Idaho consumers.214 The appellate court agreed
that the trial court’s refusal to grant restitution was not consistent with ICPA.215 While
recognizing that restitution was not automatic under the ICPA, the trial court’s decision on
whether to award it should have been exercised with a view towards the purpose of the ICPA.216
“Only a substantial likelihood that defendants who have engaged in unfair or deceptive trade
practices will be subject to restitutionary orders will deter many with a mind to engage in [such]
practices.”217 After determining that the trial court should reconsider the State’s request for


209
      Id. at 467.
210
      Id. at 482.
211
      Id. (quoting Fletcher v. Sec. Pac. Nat. Bank, 153 Cal. Rptr. 28, 32 (Cal. 1979)).
212
      The ICPA is found at Idaho Code Ann. §§ 48-601 through 48-619.
213
      State el rel. Kidwell v. Master Distribs., Inc., 615 P.2d 116, 120 (Idaho 1980).
214
      Id. at 120, 123.
215
      Id. at 123.
216
      Id. at 124.
217
      Id. at 124-25.
                                                   41
restitution, the appellate court went on to evaluate the scope of any revised restitutionary
order.218 Specifically, the court evaluated whether the restitution order should include restitution
for the 300 to 400 consumers who had purchased items as a result of the defendants’ deceptive
practices or just the 15 witnesses who actually testified at trial.219 The court held that the
restitution order should not be limited only to the consumers who testified but instead, should be
applied to all consumers who were affected by the practices that violated the ICPA.220 In so
holding, the court stated that limiting restitution only to the consumers who testified at trial
would “unduly complicate future consumer protection trials.”221 However, the court further
stated that the trial court would need to establish a procedure by which consumer claims could be
efficiently and fairly processed if it awarded restitution upon remand.222

        Ohio courts also show a willingness to award restitutionary damages without a showing
of consumer injury.223 In State v. Calautti, the State brought suit alleging that the defendant had
violated the Ohio Consumer Sales Practices Act (“OCSPA”)224 and the Ohio Odometer Rollback
and Disclosure Act by engaging in odometer rollbacks and title laundering.225 The State
prevailed on its motion for summary judgment and the trial court imposed a $14,000 civil
penalty under the OCSPA.226 The trial court also ordered the defendant to pay restitution to each
of the 15 consumers identified as being harmed by the defendant’s acts.227 However, since the
State did not make any showing of individual damages, the trial court awarded restitution based
upon the minimum statutory damages that could be recovered by each consumer under the Ohio




218
      Id. at 125.
219
      Id.
220
      Id.
221
      Id.
222
      Id. at 126.
223
      See generally State v. Calautti, 1989 Ohio App. LEXIS 3440 (Ohio Ct. App. Sept. 1, 1989).
224
      The OCSPA is found at Ohio Rev. Code Ann. §§ 1345.01 through 1345.13.
225
      Calautti, 1989 Ohio App. LEXIS 3440, at *1.
226
      Id. at *3.
227
      Id.
                                                42
Odometer Rollback and Disclosure Act multiplied by the number of consumers, which equaled
$22,500.228

        On appeal, the defendant argued the trial court erred in ordering restitution in the absence
of any proof or affidavits from the 15 consumers regarding the extent of their damages.229 The
defendant also argued that the imposition of the statutory minimum damages was a violation of
the defendant’s due process rights since this was not a class action and the consumers were not
parties.230 The court held that the award was proper since the State was not required to file the
case as a class action and considering that the relevant odometer statute provided for either
“three times the amount of actual damages sustained or fifteen hundred dollars, whichever is
greater,” the lack of proof of damages was not a bar to the restitution award.231

         As in Ohio, other courts also reject claims by defendants that allowing Attorneys General
to bring suit and recover damages for a class of consumers without having to meet any standing
requirements or otherwise identify all of the “class members” violates their due process rights.
For example, in Texas, the Court of Appeals held the mere fact that the Attorney General sought
restitution on behalf of a class of consumers in an action under the Texas Deceptive Trade
Practices – Consumer Protection Act (“DTPA”)232 did not require the Attorney General to
demonstrate any standing to assert claims on behalf of a group of consumers and recover
damages. Specifically, in Molano v. State, the Texas Attorney General brought suit under the
DTPA on behalf of a class of consumers and sought injunctive relief, civil penalties, restitution
to consumers, and attorney’s fees and costs.233 However, the Attorney General did not present
any specific evidence as to each consumer’s alleged injury.234 In response, Molano filed a
motion to abate, claiming that the State failed to follow the prerequisites for a class action suit
and that the trial court should require the State to comply with those requirements before going
forward in order to protect Molano’s due process rights.235 The trial court denied Molano’s


228
      Id.
229
      Id. at *8.
230
      Id.
231
      Id. at *8-9.
232
      The DTPA is found at Tex. Bus. & Com. Code Ann. §§ 17.41 through 17.63.
233
      Molano v. State, 262 S.W.3d 554, 556-57 (Tex. App. 2008).
234
      Id.
235
      Id. at 557.
                                                43
motion and, following a bench trial, rendered judgment in favor of the State that included
permanent injunctive relief, $10,000 in restitution to consumers, $10,000 in civil penalties, and
$15,000 in fees and costs.236

        Molano appealed the denial of his motion to abate, arguing that since other litigants are
required to follow class action rules, so should the State since it sought restitution.237
Specifically, Molano asserted that the absence of any statutory authority in the DTPA
authorizing the Attorney General to bring a class action, combined with the fact that the suit
essentially was a de facto class action, the Attorney General should have to meet the same
requirements as any other purported class action in order to receive restitution.238 Molano
further asserted that to hold otherwise denied him of his due process rights and denied him an
opportunity to defend himself against potential claimants and to know what each claimant was
alleging.239

        The appellate court noted that under ordinary principles, the State would not be able to
bring a class action under the circumstances of the case because it was not a member of the
purported class and the DTPA did not authorize class actions by the Attorney General.240
However, the appellate court ultimately disagreed with the defendant and held instead that while
there was some authority for treating actions filed under the DTPA by the State as de facto class
actions, those cases were distinguishable and the court was not prepared to hold that the fact that
the Attorney General sought restitution under the DTPA converted the action into a class
action.241 In the court’s view, to hold otherwise would “impede [the DTPA’s] efficient and
economical procedure to secure the protection of consumers from deceptive business
practices.”242 Accordingly, the court relied on prior precedent that held the State was not
required to present evidence of identifiable persons or the amount of money to be paid to each




236
      Id.
237
      Id. at 558, 560.
238
      Id. at 560.
239
      Id. at 558.
240
      Id. at 559-60.
241
      Id. at 561.
242
      Id.
                                                44
consumer when seeking restitution under the DTPA and held that the State did not have to follow
class action procedures when filing suit under the DTPA.243

                  4.     Civil Penalties and Attorney’s Fees

        Some UDAP statutes include a provision for the mandatory award of civil penalties or
attorney’s fees in a successful suit brought by an Attorney General. While the majority of
jurisdictions do not mandate the recovery of civil penalties or attorney’s fees, a number of
jurisdictions do have such provisions, which are as follows:

                                 a.       Mandatory Civil Penalties

           Kansas – authorizes a civil penalty of up to $10,000 for each violation and does not
             require the aggrieved consumer to be a party to the action brought by the Attorney
             General.244

           Maryland – up to $1,000 for each violation, if only first violation of the statute by
             the defendant; up to $5,000 for each violation if repeated.245

           Minnesota – authorizes a civil penalty of up to $25,000.246

           California – authorizes up to $2,500 per violation.247

           Colorado – $2,000 per violation but capped at $500,000.248

                                 b.       Mandatory Attorney’s Fees

           Illinois – “In any action brought under the provisions of this Act, the Attorney
             General or the State’s Attorney is entitled to recover costs for the use of this State.”249

243
      Id. at 560-61.
244
      Kan. Stat. Ann. § 50-636(a).
245
      Md. Code Com. Law § 13-410(a), (b).
246
      Minn. Stat. § 8.31 subd. 3(b).
247
      Cal. Bus. & Prof. Code § 17206(a).
248
      Colo. Rev. Stat. § 6-1-112(1)(a).
249
      815 Ill. Comp. Stat. 505/10.
                                                   45
           Missouri – “In any action brought under the provisions of section 407.100, the
             attorney general is entitled to recover as costs, in addition to normal court costs, the
             cost of the investigation and prosecution of any action to enforce the provisions of
             this chapter.250

           Montana – “The court shall award reasonable attorney fees to the prevailing party for
             bringing a successful action . . . .”251

           North Dakota – “[T]he court shall award to the attorney general reasonable
             attorney’s fees, investigation fees, costs, and expenses of any investigation and action
             brought under this chapter . . . .”252

           Alaska – “[I]f the attorney general prevails, the state shall be awarded its actual
             attorney fees and costs, including costs of investigation, to the extent those fees and
             costs are reasonable.”253

           South Carolina – “Whenever any permanent injunction is issued by such court in
             connection with any action which has become final, reasonable costs shall be
             awarded to the State.”254

           Maryland – “In any action brought by the Attorney General under the provisions of
             this title, the Attorney General is entitled to recover the costs of the action....”255

           Alabama – Attorney’s fees are mandatory in a successful action by the Attorney
             General under the Alabama UDAP statute.256

        States with these mandatory provisions often justify them by asserting that the mandatory
nature serves to further the legislative intent and spirit of UDAP statutes to provide “prompt,
economical, and readily available remedies against consumer fraud” and serve as a deterrent to

250
      Mo. Rev. Stat. § 407.130.
251
      Mont. Code § 30-14-131(2).
252
      N.D. Cent. Code § 51-15-10.
253
      Alaska Stat. § 45.50.537(d).
254
      S.C. Code § 39-5-50(a).
255
      Md. Code Com. Law § 13-409.
256
      Ala. Code § 8-19-11(e).
                                                   46
future unlawful conduct.257 Depending on how stringently the applicable UDAP statute is with
respect to proof of reliance, injury, or damages, a substantial civil penalty may be awarded in the
absence of any such proof. For example, the Colorado Supreme Court held in May Department
Stores Co. v. State that because Colorado’s Consumer Protection Act’s (“CCPA”)258 civil penalty
requirement serves to punish and deter the wrongdoer and not to compensate injured parties, “the
CCPA does not require proof of an actual injury or loss before a civil penalty can be
awarded.”259

        Similarly, in California, which imposes strict liability for violations of its UDAP statute,
meaning that no proof of reliance, causation, or injury is required, § 17206 of the UCL provides
for a mandatory civil penalty not to exceed $2,500 for each violation of the UCL. Pursuant to
this section of the UCL, the California superior court in People ex rel. Lockyer v. Fremont Life
Insurance Company imposed a civil penalty in excess of $2.5 million against the defendant.260
On appeal, the court rejected the defendant’s argument that the penalty constituted an improper
double penalty, was excessive, and violated the defendant’s due process rights.261 In reaching its
holding, the appellate court first noted that while §17206 of the UCL permits discretion in
determining the amount of a penalty, an award of civil penalties is mandatory and cumulative to
any other remedies that are available.262 Additionally, the court distinguished BMW v. Gore and
refused to analyze the issue pursuant to the standards set in that case because BMW dealt with
punitive damage awards and not civil penalties.263 In upholding the penalty award, the court
approved of the method for determining the total number of violations subject to a penalty to be
calculated based upon the number of victims and the number of independent acts.264 Ultimately,
given the nature of the unfair practices, which were aimed primarily at the elderly, and the other



257
      May Dep’t Stores Co. v. State, 863 P.2d 967, 972 (Colo. 1993).
258
      The CCPA can be found at Colo. Rev. Stat. §§ 6-1-101 through 6-1-115.
259
   May Dep’t Stores, 863 P.2d at 973 (noting that if consumer injury or involvement was
required, the State would be forced to wait until consumers were victimized and contradict the
mandatory nature of the civil penalty provision and broad remedial purpose of the CCPA).
260
      128 Cal. Rptr. 2d at 466-67.
261
      Id. at 478, 480-82.
262
      Id. at 476, 480-82.
263
      Id. at 473-76.
264
      See id. at 479-80
                                                 47
grounds articulated by the trial court, the appellate court found that civil penalty was not
excessive or in violation of any of the defendant’s due process rights.265

V.        CONCLUSION

        Attorneys General and private plaintiffs continue to be active in pursuing UDAP actions
against individuals and companies engaged in a variety of consumer lending activities.
Currently, all signs point to this activity continuing, if not increasing, in the coming years. The
versatility of UDAP statutes to a variety of consumer lending industries makes them useful tools
to address allegedly improper lending practices. As a result of the inherent difficulties of
establishing a fraud-based claim on a classwide basis, in recent years, a trend has emerged in
some jurisdictions towards liberalizing the requirements for class litigation and recovery on
UDAP claims. However, not all jurisdictions are following this path and many retain traditional
proof elements for UDAP actions brought on a classwide basis.

         More jurisdictions appear to be willing to reduce the proof burdens that confront litigants
attempting to bring concerted action under a state UDAP statute when the claim is brought by the
state’s Attorney General. In fact, in some instances, Attorneys General will be able to establish
liability and recover substantial injunctive and monetary relief against defendants without having
to prove reliance, causation or damages as to any consumer in the state. Thus, any defendant
faced with an action by a state Attorney General must carefully evaluate its strategy in light of
the provisions of the applicable UDAP statute and the interpretation of those provisions by the
state’s courts. The failure to do so could result in a large restitution award or imposition of civil
penalties and attorney’s fees.




265
      Id. at 478, 480-82.
                                                 48

				
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