Pennsylvania Supreme Court Holds the UTPCPA’s “Ascertainable Loss” Requirement Cannot Be Manufactured by Voluntarily Hiring Counsel and Incurring Litigation Costs

In Grimes v. Enterprise Leasing Co. of Phila., LLC, the Pennsylvania Supreme Court held that the retention of counsel to institute suit alone does not constitute “ascertainable loss” under the state’s consumer protection statute.

The plaintiff in Grimes had rented a car from an Enterprise branch in Philadelphia and apparently declined to purchase Collision Damage Waiver or Loss Damage Waiver coverage. Consequently, the plaintiff was responsible for the cost of repairs for any vehicle damage incurred during the rental period and administrative, loss-of-use, and diminishment-in-value fees. The rental contract also contained a power-of-attorney clause that empowered Enterprise to request payment directly from plaintiff’s insurance carrier or credit card issuer. After the plaintiff returned the car to Enterprise, she was informed that she was responsible for a scratch on the car, and later received an invoice for the repair costs and other administrative fees noted in the contract.

Plaintiff sued Enterprise under Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), claiming the fees in the contract were unconscionable with no reasonable relationship to the costs of repairing the damage to the vehicle, and as such constituted deceptive acts and misrepresentations. The complaint alleged generally that Enterprise had demanded payment and that she had suffered damages, but she admitted in response to a counterclaim that she had not paid the disputed sum.

The trial court dismissed the case, finding the pleadings did not establish a pecuniary loss. However, the appellate court reversed, holding that given Enterprise’s threats to collect on the repair costs and fees, the plaintiff’s hiring of counsel to file suit was sufficient to plead an ascertainable loss. The issue presented to the Pennsylvania Supreme Court was whether “voluntarily hiring an attorney and allegedly incurring litigation costs to challenge alleged wrongful conduct” could satisfy the UTPCPL’s ascertainable loss requirement.

The Supreme Court reversed, finding that the retention of counsel alone does not constitute an “ascertainable loss” under the statute. The Court clarified that the statute’s authorization for attorneys fees is “in addition to other relief provided by this section,” explaining that the provisions for ascertainable losses and awards of costs and reasonable attorney fees are “distinct items for redress.” Consequently, the Supreme Court held that any other interpretation of the “ascertainable loss” requirement was incompatible with the plain language of the statute. To hold otherwise, the Court underscored, would lead to an unreasonable result, enabling any plaintiff who merely retained an attorney to automatically satisfy the “ascertainable loss” requirement. Further, the Grimes Court noted that other jurisdictions like Connecticut and Oregon have similarly held that including attorneys fees in the calculation of ascertainable loss would render the attorneys fees provision superfluous.

The Grimes Court’s articulation of ascertainable loss is also consistent with that of the New Jersey Supreme Court’s decision in Thiedemann v. Mercedes-Benz USA, LLC, where the Court explained that the NJCFA makes a clear distinction between the right of the attorney general to bring suit, and the more limited private right of action which requires an actual loss, not an illusory or hypothetical loss. Indeed, like Theidemann, the Grimes Court explained that the Pennsylvania consumer fraud statute’s “private right of action is not a general-purpose enforcement provision. Rather, the Act confers on the Attorney General and distinct attorneys the power to bring actions in the public interest to enforce the Act. Only those who can meet the requirements of the UTPCPL’s private cause of action may bring a personal action…”