Pa. Consumer Law Protects Nonresidents, State Justices Hear

Pa. Consumer Law Protects Nonresidents, State Justices Hear

Share us on: By Dan Packel

Law360, Harrisburg (November 28, 2017, 4:09 PM EST) — A Pennsylvania attorney pushed the state’s Supreme Court on Tuesday to find that the state’s consumer protection statute allows a nonresident to sue a Pennsylvania business over out-of-state transactions, arguing that an adverse ruling would leave his client without any way to fight being charged for a canceled home protection plan.

Attorney Michael Donovan told the justices at oral argument that the state’s General Assembly drafted the state’s Unfair Trade Practices and Consumer Protection Law in a way that allowed out-of-state residents to bring claims against Pennsylvania businesses.

He said that if the court found the law did not apply, while upholding a choice-of-law provision in the contract mandating that other parts of Pennsylvania law do apply, it would make it impossible for his client to bring a lawsuit in other states, amounting to a “tough noogies” clause.

“It’s a Catch-22,” Donovan told the justices. “The client is stuck in the middle and will have no remedies. That’s why we’re here.”

The Pennsylvania justices are dealing with the question after California resident Jobe Danganan persuaded the Third Circuit to ask them to weigh in on the Pennsylvania Unfair Trade Practices and Consumer Protection Law in his putative class action against Pennsylvania-based Guardian Protection Services. A federal trial court judge initially threw out the suit with prejudice, determining that the UTPCPL does not apply to nonresidents.

Danganan sued Guardian in 2015 over a contract for home protection services at his Washington, D.C., home. According to court documents, he entered into a five-year contract with a $44.95 monthly services fee with the company in April 2013 but moved to California, sold his house and canceled the contract in fall 2014.

He said that although he provided Guardian written and verbal notice of cancellation, the company continued billing him even though he no longer lived in or even owned the house.

Danganan said that he followed a forum selection clause in the contract that obligates that all disputes be subject to Pennsylvania law when he initially filed his suit in the Philadelphia County Court of Common Pleas. Guardian later removed the case to federal court, where it was then tossed.

While his attorney, Donovan, told the justices that the language of the UTPCPL was clear in allowing nonresidents to bring suit against Pennsylvania companies, Justice Max Baer raised concerns about the implications of such a conclusion, raising the prospect of a customer anywhere in the world bringing claims under the law against Pittsburgh’s Heinz over the company’s ketchup.

But Donovan responded that without any limitations in the statute, it was not the court’s job to reduce its scope.

Attorney Laura Vendzules of Blank Rome representing Guardian, also faced questions about the language of the statute, after she argued that it was not nearly as generous to out-of-state residents as Donovan contended.

“This limiting language that you’re inserting does not appear to be there,” said Justice Christine Donohue.

And after Chief Justice Thomas Saylor questioned Vendzules on why her client was so opposed to facing the lawsuit over the contract in Pennsylvania, she invoked the “elephant in the room,” pointing to Donovan’s reputation in class action litigation.

The attorney saw a $187 million jury award against Wal-Mart affirmed by the Pennsylvania Supreme Court in 2014, and Vendzules suggested that he was keyed in on the state after increasing hurdles to federal class actions.

Danganan is represented by Michael Donovan of Donovan Litigation Group LLC and Christian Schreiber of Chavez & Gertler LLP.

Guardian is represented by Laura E. Vendzules and Michael A. Iannucci of Blank Rome LLP.