In a February 8, 2010 blog post, which can be found here, we reported on a then-recent jury verdict in which a Connecticut jury awarded nearly $15 million to a class of automotive body shop plaintiffs based on the jury’s finding that the insurance company defendant violated the Connecticut Unfair Trade Practices Act. Artie’s Auto Body et al. v. Hartford Fire Ins. Co., FST-CV03-0196141-S, 2009 WL 3737931 (Conn. Super., Sept. 22, 2009). At issue was whether the so-called “cigarette rule,” used to determine whether an act or practice is “unfair” within the meaning of CUTPA, has been superseded by a newer, narrower federal standard.

Pursuant to CUTPA, which provides that “[n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce,” it was also “the intent of the legislature that in construing subsection (a) of this section, the commissioner and the courts of this state shall be guided by interpretations given by the Federal Trade Commission and the federal courts to Section 5(a)(1) of the Federal Trade Commission Act (15 USC 45(a)(1)), as from time to time amended.” Accordingly, Connecticut courts previously adopted the federal “Cigarette Rule,” which rule originally provided that a plaintiff prove that (1) the act or practice offends public policy as it has been established by statutes, the common law or other established concept of unfairness; (2) the act or practice is immoral, unethical, oppressive or unscrupulous; or (3) the act or practice causes substantial injury to consumers, competitors or other business persons. In 1984, the FTC narrowed the rule to concentrate on the third (“substantial injury”) prong.

On October 14, 2010, the superior court presiding over the Artie’s Auto Body trial ruled on the defendant’s motions to set aside the verdict and for judgment notwithstanding the verdict, which motions raised, inter alia, the continued viability of the three-prong cigarette rule. The court denied the defendant’s motions and, in doing so, declined to reject the longstanding cigarette rule in favor of the newer federal “substantial injury test.” A copy of the opinion can be found here.

After reiterating that the defendant’s argument had been made and rejected on summary judgment last year, the court again held that, “even without the prior ruling this court would not hold that it was error to charge on the cigarette rule, which continues to be the governing Connecticut standard of unfairness.”

The court first noted that CUTPA does not mandate that Connecticut courts must always follow FTC and federal court interpretations; rather, it says that they “shall be guided” by same.

Additionally, the court noted that other courts, while recognizing the existence of a “serious question” regarding the continued viability of the cigarette rule, have declined the opportunity to resolve this precise issue until an appropriate case is presented to the Supreme Court. The court acknowledged and rejected the defendant’s argument that the superior court should not wait for appellate guidance, but should set aside the verdict in this case as against the law, based exclusively on the now FTC-abandoned public policy prong of the cigarette rule. The court relied on, inter alia, prior Supreme Court discussion of the issue, in which the Supreme Court advised that it would take up the issue in a proper case when “presented to us”. (Emphasis in original.) The superior court continued, “[i]t may be that this case will prove to be the appropriate case to frame the issue for review, but that review must occur at the Supreme Court.”