Federal Opinion Lays Out Categories of Unfair-Trade-Practice Claims

In an earlier post, we laid out five categories of claims under N.C. Gen.
Stat. § 75-1.1.

That five-category structure has now appeared in a judicial opinion for the first time, thanks to a recent opinion from Judge Louise Flanagan of the U.S. District Court for the Eastern District of North Carolina.

In Sparks v. Oxy-Health, LLC, the court named five categories of section 75-1.1 violations (punctuation omitted):

  • “general unfair conduct that offends public policy or is immoral, unethical, oppressive, unscrupulous, or substantially injurious to consumers,”
  • “deceptive misrepresentations that have the capacity or tendency to deceive the average person,”
  • “per se violations of § 75-1.1 established upon proof of a statutory or regulatory violation or the commission of certain torts,”
  • “a breach of contract accompanied by aggravating circumstances,” and
  • “anti-competitive conduct.”

I hope that other courts, too, will use this five-category analysis. On this blog, we have written before about the errors that can occur when lawyers and courts overlook the distinctions among types of 75-1.1 claims.

Some categories of section 75-1.1 claims—most notably, deception claims—involve requirements that might not apply to other categories. In addition, some of the categories have requirements in common. All in all, parties and courts benefit when decisions pay attention to these categories.

Sparks illustrates the special requirements that govern deception claims.

The plaintiffs’ son died when a critical part dislodged from a hyperbaric chamber in which he was sleeping. The plaintiffs sued Oxy-Health, the distributor of the chamber. They asserted several product-liability claims, plus a claim under section 75-1.1.

The 75-1.1 claim rested on alleged false statements by Oxy-Health. The plaintiffs alleged that Oxy-Health falsely stated that the hyperbaric chamber was FDA-approved, industry-certified, and suitable for home use.

This claim ran headlong into the reliance requirement announced in Bumpers. When Mrs. Sparks was deposed, Oxy-Health’s lawyers asked her what information she relied on when she bought the hyperbaric chamber. Her answer did not mention any of the above statements.

In response to Oxy-Health’s motion for summary judgment, Mrs. Sparks offered an affidavit in which she averred that she did rely on the statements in question. The court, however, struck this affidavit because it contradicted Mrs. Sparks’s earlier deposition testimony.

All in all, Sparks highlights the reliance requirement for deception claims under section 75-1.1—a requirement that would have applied in some categories of 75-1.1 claims, but not in others.

Note: Ellis & Winters represented a subpoena recipient in the Sparks case.

Author: Matt Sawchak

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