2005 Ct. Sup. 16441, 40 CLR 485
No. X06-CV05-4004864 SConnecticut Superior Court Judicial District of Waterbury Complex Litigation Docket at Waterbury
December 16, 2005
MEMORANDUM OF DECISION
JON M. ALANDER, JUDGE.
The defendant South Central Connecticut Regional Water Authority (RWA) has moved for summary judgment on the third count of the plaintiff’s complaint on the grounds that, as a public corporation and political subdivision of the state, it is not subject to the provisions of the Connecticut Unfair Trade Practices Act (CUTPA), General Statutes § 42-110a et seq. For the foregoing reasons, I am not persuaded.
The plaintiff in the third count of its complaint alleges that RWA engaged in unfair methods of competition in the conduct of trade or commerce in violation of General Statutes § 42-110b by using its “state-sanctioned monopoly” as the exclusive provider of water and sewer services within its geographic region to market its PipeSafe program through which consumers could purchase in advance a plan for the repair or replacement of certain water pipes for a fixed monthly fee. The plaintiff, which is in the business of repairing sewer problems and water main leaks, alleges that it was harmed by the unfair advantage provided RWA by its monopoly status.
RWA was created by the General Assembly through Special Act 77-98 for the “primary purpose of providing and assuring the provision of an adequate water supply of pure water at reasonable cost within the South Central Connecticut Regional Water District.” Special Act 77-98, Sec. 1. RWA is a public corporation and political subdivision of the state. Special Act 78-24, Sec. 4, amending Special Act 77-98. RWA asserts that it is entitled to summary judgment because, as a political subdivision of the state, it is not a “person” under the Connecticut Unfair Trade Practices Act.
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The question of whether CUTPA applies to political subdivisions of the state has proven to be a perplexing issue for this state’s trial courts. Most of the courts which have addressed the issue have ruled that municipalities and municipal agencies are categorically not subject to CUTPA. See, e.g., Ippoliti v. Town of Ridgefield, judicial district of Danbury, Docket No. CV99-0337600S (Aug. 7, 2000) (Moraghan, J.); Nettleton Mechanical Contractors, Inc. v. Meriden, Superior Court, judicial district of Waterbury, Docket No. 146838 (February 3, 2000) (Doherty, J.) (26 Conn. L. Rptr. 493); Colon v. GEICO Casualty Co., Superior Court, judicial district of New Haven, Docket No. 419197 (July 28, 1999) (Moran, J.); Town of Guilford v. D.P.L. Refuse Service, judicial district of New Haven at Meriden, Docket No. CV95-0250575S (May 8, 1996) (Silbert, J.) (17 Conn. L. Rptr. 9); Barnes v. General Electric Co., Superior Court, judicial district of Hartford-New Britain at Hartford, Docket No. 529354 (July 25, 1995) (Hennessey, J.) (14 Conn. L. Rptr. 455); and Chernet v. Town of Wilton, judicial district of Stamford-Norwalk at Norwalk, Docket No. CV90 0108840 S (Sep. 28, 1990) (Cioffi, J.) (2 Conn. L. Rptr. 475) At least one court has rejected the view that municipalities and public agencies are categorically exempt from CUTPA in favor of a position that exemption from CUTPA is limited to those transactions and actions excluded pursuant to § 42-110c(a)(1). See Frillici v. Town of Westport, judicial district of Stamford-Norwalk at Stamford, Docket No. X05 CV 00-0176696 S (Oct. 12, 2001) (Tierney, J.). Other courts have been reluctant to adopt the categorical view and instead have relied on the exemption found in § 42-110c(a)(1) to find CUTPA inapplicable to the acts of the public entity. See Lanciani v. Metropolitan Dist. Comm.,
Superior Court, Complex Litigation Docket at Middletown, Docket No. X04-CV-04-04000696S (Jun. 1, 2005) (Quinn, J.) an Manchester v. United Stone America, complex litigation docket at Tolland, No. CV98-00707025 (Jun. 15, 2000) (Bishop, J.) I conclude that CUTPA when read in accordance with its express language and in furtherance of its remedial purpose applies as a general matter to public corporations and political subdivisions acting in a business context and whether particular transactions or actions of a public corporation or political subdivision are excluded from the ambit of CUTPA will depend on the applicability of § 42-110c(a)(1). Cf. Connelly v. Housing Authority, 213 Conn. 354 (1990) in which our Supreme Court held that the actions of a municipal housing authority related to the leasing or renting of subsidized apartments to low income tenants was exempt from CUTPA pursuant to the provisions of § 42-110c(a)(1). CT Page 16443
The courts of this state have been instructed by the legislature to follow the plain meaning rule when interpreting statutes. General Statutes § 1-2z. “The meaning of a statute shall, in the first instance, be ascertained from the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered.” CUTPA provides that “No person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of trade or commerce.” General Statutes § 42-110b(a). “Person” is defined in CUTPA as “a natural person, corporation, limited liability company, trust, partnership, incorporated or unincorporated association, and any other legal entity.” General Statutes §42-110a(3). As a public corporation with the ability to sue and be sued, see Special Act 77-98, Sec. 5 and Sec. 11, RWA fits within the express definition of person under CUTPA.
RWA argues that the statutory definition of “person” under CUTPA should be construed as not including within its ambit political subdivisions of the state because the statute fails to explicitly include such entities. But see Cheryl Terry Enterprises, Ltd. v. Hartford, 270 Conn. 619, 627, (2004) in which the Connecticut Supreme Court interpreted the Connecticut Antitrust Act, General Statutes § 35-24 et seq., to apply to municipalities based on the broad definition of “person” contained in the act notwithstanding the statute’s failure to expressly define “person” to include municipalities. In support of its position, RWA points to numerous statutes that specifically include political subdivisions within their definition of “person.” See, e.g., General Statutes § 22a-457b(6) (Environmental Protection, Water Pollution Control) (“`Person’ means an individual, corporation, limited liability company, partnership, association, state, municipality, commission or political subdivision of a state, or any interstate body”); §23-65f(9) (Parks, Forests and Public Shade Trees, Forest Practices) (“`Person’ means any individual, firm, partnership, association, corporation, limited liability company, company, organization or legal entity of any kind, including any political subdivision of the state and including any state agency”; and § 33-40(11) (Corporations, Business Corporations) (“`Person’ means a natural person, company, partnership, foreign or domestic corporation, limited liability company, trust, unincorporated CT Page 16444 organization, government or any other entity or political subdivision, agency or instrumentality of a government.”) RWA argues that the legislature knows how to include political subdivisions within the sweep of a statute then it intends to do so.
The converse however is also true. The legislature knows how to expressly exclude political subdivisions from the applicability of a statute when it intends to do so. For example, the Home Improvement Act explicitly exempts municipalities and municipal agencies from the scope of its provisions. See § 20-428 (“This chapter shall not apply to any of the following persons or organizations: (1) The government of the state, municipalities of the state or any department or agency of the state or such municipalities.”) Given that its purpose is to protect consumers from the unfair trade practices of home contractors, see Jacques All Trades Corporation v. Brown, 42 Conn. App. 124, 127 (1996), aff’d, 240 Conn. 654 (1997), the Home Improvement Act is more analogous to CUTPA than the statutes cited by the defendant. Moreover, CUTPA contains a subsection which exempts from CUTPA’s reach certain matters. See § 42-110C. A categorical exemption for public corporations or political subdivisions is not included among its provisions.
The legislature has also expressly stated that “it is the intention of the legislature that [CUTPA] be remedial and be so construed. General Statutes § 42-110b(d). Accordingly, our Supreme Court has decreed that CUTPA “must be liberally construed in favor of those whom the legislature intended to benefit.”Fink v. Golenbock, 238 Conn. 183, 213 (1996). Among those CUTPA is designed to protect are business competitors who arc injured by unfair methods of competition. Eder Brothers v. Wine Merchants of CT., 275 Conn. 363, 379-80 (2005). The remedial purposes of CUTPA are furthered by including within its reach the business practices of a public corporation.
The Connecticut Supreme Court when confronted with the issue of whether banks should be categorically exempted from CUTPA similarly focused on the statute’s broad definition of person, its lack of an express exemption for banks and its remedial purpose in concluding that CUTPA applied to banks. Normand Josef Enterprises, Inc. v. Connecticut National Bank, 230 Conn. 486, 509-10, (1994). The Supreme Court stated that, in light of the apparent applicability of CUTPA on its face, banks could only escape CUTPA’s regulatory ambit by establishing “some extrinsic CT Page 16445 ground of exemption.” Id., 510. The Supreme Court also noted that “a party claiming an exemption from CUTPA has the burden of proof.” Id., 509. The court looked at four factors to determine whether CUTPA should be construed as exempting banks notwithstanding its express language and remedial purpose. Those factors were: “(1) the applicability of Federal Trade Commission rules to the suspect conduct and the absence of any Federal Trade Commission regulatory activity over industry practices; (2) the existence and scope of an alternate comprehensive regulatory scheme or system; (3) the absence of any activity by the commissioner of consumer protection within this area; and (4) the case law of other jurisdictions.” Id., 512. A review of each of these factors does not compel the conclusion that the express language and remedial purpose of CUTPA should give way to an implied exemption for public corporations or political subdivisions.
The first and third factors, that is whether the Federal Trade Commission or the commissioner of consumer protection have made efforts to regulate the practices of political subdivisions of states, such as municipalities, support RWA’s position that an implied exemption should be recognized for political subdivisions of the state. No examples have been provided to me nor unearthed by me which indicate that either administrative body has sought to regulate the activities of such municipalities or other political subdivisions.
The second factor calls for a determination whether public corporations or political subdivisions are so comprehensively regulated by a different regime that CUTPA should not apply Normand Josef Enterprises, Inc. v. Connecticut National Bank, supra, 230 Conn. 516. The mere existence of generic state or federal regulation does not exclude CUTPA coverage. Id., 518. The focus of the inquiry is whether another “statute or regulation exists that encompasses the same type and scope of unfair trade practices that are proscribed by CUTPA.” Id.,
517-18. See also Russell v. Dean Witter Reynolds, Inc., 200 Conn. 172, 181-82 (1986) in which the Supreme Court implied a CUTPA exemption for the purchase and sale of securities because, in part, the Connecticut Uniform Securities Act, General Statutes § 36-470, et seq., provided a private cause of action for injuries caused by deceptive purchases and sales of securities. RWA has offered no instance in which it, as a political subdivision of the state, is subject to any other statute or regulation regarding unfair methods of competition or unfair CT Page 16446 trade practices.
The fourth and final factor involves an inquiry into the case law of other jurisdictions. That inquiry provides mixed guidance. My research disclosed that the appellate courts of two states have held municipalities or quasi-governmental agencies exempt from unfair trade practices statutes. See Washington Natural Gas Company v. Public Utility District No. 1, 77 Wash.2d 94 (1969) (The court held that a municipal corporation was exempt from the state’s Consumer Protection Act) and Kerrville HRH Inc. v. Kerrville, 803 S.W.2d 377, 384 (Tex.App. 1990) (The state’s Deceptive Trade Practices Act does not apply to municipalities.) The Supreme Court of Rhode Island however has allowed a suit under the State’s Unfair Trade Practices Act to proceed against a city water department. See Perron v. Treasurer of Woonsocket, 121 R.I. 781 (R.I. 1979). The Supreme Judicial Court of Massachusetts, which we are encouraged to look to because the governing statutes in Massachusetts are virtually identical to our own, Normand Josef Enterprises, Inc. v. Connecticut National Bank, supra, 230 Conn. 521, has expressly declined to decide whether a municipality is subject to the mandates of that state’s unfair trade practices act, opting instead to conclude in the cases before it that the municipality was not engaged in “trade or commerce” because the municipality was acting outside a business context. See, e.g., Park Drive Towing, Inc. v. City of Revere, 442 Mass. 80 (2004).
Given that two of the factors in the exemption analysis argue in favor of exemption for political subdivisions, one factor cuts against such an exemption and one factor is decidedly mixed, RWA has not presented a convincing case that it should be impliedly exempt from the strictures of CUTPA. The instance in which the Connecticut Supreme Court felt compelled to recognize an implied exemption occurred when all four factors supported implying an exemption. See Russell v. Dean Witter Reynolds, Inc., supra, 200 Conn. 180-84. The situation here demands adherence to the admonition that “Courts should not create exemptions that the legislature has not enacted.” Normand Josef Enterprises, Inc. v. Connecticut National Bank, supra, 230 Conn. 512.
In light of the above, the defendant RWA’s motion for summary judgment on the third count of the plaintiff’s complaint is denied.
(2004) (The court held that the unfair trade practices statute was not applicable to a municipality when it was not acting in a business context.)
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