Defenses to Chapter 93A Claims: How Massachusetts Businesses Can Fight Back

Massachusetts Business Attorney · Business Law

A claim under Chapter 93A, the Massachusetts consumer protection law, gets a business owner’s attention fast. The statute allows double or triple damages and attorney’s fees. But a 93A claim is not automatic. The statute has real limits, and the courts have drawn clear lines around what it covers.

This article walks through the defenses that Massachusetts law actually recognizes, and the tools a business can use to limit its exposure even when some liability is possible. If you are trying to understand what conduct the statute prohibits in the first place, see our companion article on what makes a business practice unfair or deceptive under Chapter 93A.

First question: is it a § 9 claim or a § 11 claim?

Chapter 93A has two private enforcement sections, and some defenses work under one but not the other.

• Section 9 covers consumers and anyone else injured by an unfair or deceptive practice, other than a person entitled to sue under § 11.
• Section 11 covers a person who is itself engaged in trade or commerce and claims a loss caused by another business.

Section 9 requires a pre-suit demand letter and has a 30-day settlement-offer mechanism. Section 11 has no demand-letter requirement, but it has its own geographic limit and its own settlement tender. Keep that split in mind as you read the defenses below. For the business-to-business side in more detail, see Chapter 93A demand letters when a business sues a business.

The conduct was not “in trade or commerce”

Chapter 93A only reaches unfair or deceptive acts “in the conduct of any trade or commerce.” That phrase does real work, and it applies to both § 9 and § 11 claims. The Supreme Judicial Court (SJC) has held that several kinds of disputes fall outside it.

• Purely private transactions. In Lantner v. Carson (1978), the SJC held that the statute does not reach a transaction that is strictly private and not undertaken in the ordinary course of a trade or business. The case involved homeowners selling their own house.
• Disputes inside a single business. In Szalla v. Locke (1995), the SJC held that disputes between parties in the same venture are not covered by § 11. The statute is aimed at dealings between separate, independent businesses, not fights among people within one company.
• Employer and employee disputes. In Manning v. Zuckerman (1983), the SJC held that disputes arising out of the employment relationship are not covered, because an employer and employee are not engaged in trade or commerce with each other.
• Charitable or non-business activity. In Linkage Corp. v. Trustees of Boston University (1997), the SJC said a charitable institution acting in furtherance of its core mission will usually not be engaged in trade or commerce. But a nonprofit that enters the marketplace for business reasons can be. In that case, the university was held liable.

These lines are fact-specific. A side business, a sale that looks private but is really part of a pattern, or a nonprofit’s commercial venture may still fall within the statute.

It is a contract dispute, not an unfair practice

Many 93A claims are really breach-of-contract claims with a 93A count added for leverage. When that is the case, this can be a strong defense.

Massachusetts courts have said many times that a breach of contract, by itself, is not a 93A violation. The Appeals Court put it this way in Madan v. Royal Indemnity Co. (1989): a mere breach of contract, without more, does not violate c. 93A. The SJC said the same in Massachusetts Employers Insurance Exchange v. Propac-Mass, Inc. (1995), while noting that a breach can become a violation when it is used as leverage to destroy the rights of the other party.

Older cases asked whether conduct reached a “level of rascality” that would raise an eyebrow in the world of commerce. In Propac-Mass, the SJC called that phrase uninstructive. Instead, the court looks at the nature of the challenged conduct and at its purpose and effect. So the defense is not “we weren’t rascals.” It is that the conduct, viewed honestly, was an ordinary contract disagreement and not an effort to take unfair advantage.

The § 3 exemption for regulated conduct

Section 3 provides that nothing in Chapter 93A applies to transactions or actions “otherwise permitted under laws as administered by” a regulatory board or officer acting under state or federal statutory authority. The statute puts the burden of proving the exemption on the party claiming it.

Businesses in regulated industries sometimes assume this exemption covers them. It usually does not. In Fleming v. National Union Fire Insurance Co. (2005), the SJC described the exemption as an affirmative defense, called the burden “a difficult one to meet,” and said the defendant must show that the regulatory scheme affirmatively permits the practice being challenged. It is not enough to show that a regulator oversees the industry or that the conduct is also covered by another law.

If a statute, regulation or agency approval expressly allowed exactly what you did, raise § 3 and plead it. Being licensed or regulated is not, on its own, a defense.

No causation, no injury

A plaintiff must show that the unfair or deceptive act caused harm. Section 9 speaks of a person “injured” by the practice. Section 11 requires a “loss of money or property,” although a business without such a loss may still seek an injunction in some circumstances.

Two SJC consumer cases set the standard under § 9:

• In Hershenow v. Enterprise Rent-A-Car Co. of Boston (2006), the court held that proving a causal connection between the deceptive act and a loss is an essential predicate for recovery, even when the conduct is deceptive per se.
• In Tyler v. Michaels Stores, Inc. (2013), the court held that the plaintiff must show a “separate, identifiable harm arising from the violation itself.” A violation of a statute or regulation does not, on its own, prove injury.

Causation and injury are often where a 93A claim is weakest. If the customer got what they paid for, or would have made the same decision anyway, that is worth developing early.

The transaction was not “primarily and substantially” in Massachusetts (§ 11 only)

A business claim under § 11 cannot be brought unless the actions and transactions occurred “primarily and substantially within the commonwealth.” This is a real defense for businesses with out-of-state operations, but two features make it harder than it looks:

• The statute puts the burden of proof on the party claiming the conduct did not occur primarily and substantially in Massachusetts. That is usually the defendant.
• In Kuwaiti Danish Computer Co. v. Digital Equipment Corp. (2003), the SJC held that the question is whether the “center of gravity” of the circumstances giving rise to the claim is primarily and substantially in Massachusetts. The court said the analysis cannot be reduced to any precise formula or single factor.

This limit appears in § 11. It is not a defense to a consumer claim under § 9.

The claim is too late

Actions under Chapter 93A must be commenced within four years after the cause of action accrues (G.L. c. 260, § 5A). This applies to both § 9 and § 11 claims. When a claim “accrues” can itself be disputed, so check dates carefully before assuming a claim is either timely or barred. Related claims in the same lawsuit, such as contract or tort counts, have their own limitations periods.

No proper demand letter (§ 9 only)

Under § 9(3), at least 30 days before filing suit, a claimant must send a written demand for relief that identifies the claimant and reasonably describes the unfair or deceptive practice and the injury suffered. In Entrialgo v. Twin City Dodge, Inc. (1975), the SJC called the demand letter a prerequisite to suit that must be alleged and proved.

There are exceptions. The demand requirement does not apply to a 93A claim asserted as a counterclaim or cross-claim, or where the business does not maintain a place of business or keep assets in Massachusetts. And because § 11 has no demand requirement, this defense is not available against a business plaintiff.

If you received a demand letter, how you respond is critical. See your company received a Massachusetts 93A demand letter: now what?

Limiting exposure with a reasonable settlement tender

Not every defense defeats a claim. Some cap the damages. The statute gives businesses a way to do that through a reasonable written offer of settlement.

• Section 9 claims. A business that receives a demand letter can make a written tender of settlement within 30 days. If the claimant rejects it and the court later finds the relief tendered was reasonable in relation to the injury actually suffered, recovery is limited to the amount tendered. Attorney’s fees and costs incurred after the rejection of a reasonable written offer made within that 30-day window must be denied.
• Section 11 claims. A defendant may file a written offer of settlement for single damages with its answer. If the plaintiff rejects it and the court finds the relief tendered was reasonable in relation to the injury actually suffered, the court may not award more than single damages.

A tender is a judgment call. An offer the court finds unreasonable gives no protection, so the numbers are worth working through with counsel before the deadline.

“Willful or knowing” is a damages fight

Double or triple damages under both § 9 and § 11 depend on a finding that the violation was willful or knowing. Under § 9, multiple damages are also available if the business refused to grant relief in bad faith with knowledge or reason to know that its conduct violated the statute. So even where a violation is found, whether it was willful or knowing decides whether the business pays single damages or two to three times that amount. For more on multiplied damages, see “I can get 3x the damages in a 93A lawsuit.”

Defenses at a glance

• Not trade or commerce: § 9 and § 11.
• Mere breach of contract / good-faith contract dispute: § 9 and § 11.
• Section 3 regulatory exemption: § 9 and § 11 (defendant’s burden).
• No causation or injury: § 9 (injury) and § 11 (loss of money or property).
• Not primarily and substantially in Massachusetts: § 11 only (defendant’s burden).
• Four-year statute of limitations: § 9 and § 11.
• Missing or defective demand letter: § 9 only, with exceptions.
• Reasonable settlement tender (limits recovery): 30 days after demand under § 9; with the answer under § 11.

One caution about defenses you may have read about elsewhere: Sections 9 and 11 do not contain a general “bona fide error” defense. The federal Fair Debt Collection Practices Act has one (15 U.S.C. § 1692k(c)). Chapter 93A’s private-action sections do not.

Frequently asked questions

Does Chapter 93A apply to employee disputes?

Generally not. The SJC held in Manning v. Zuckerman (1983) that disputes arising out of the employment relationship between an employer and employee are not covered by Chapter 93A.

How long does someone have to bring a 93A claim?

Four years after the cause of action accrues, under G.L. c. 260, § 5A.

Does a business have to send a demand letter before suing another business under 93A?

No. The 30-day demand letter requirement is in § 9, which covers consumer and similar claims. Section 11, which covers business claims, has no demand-letter requirement.

Getting help with a Chapter 93A claim

Several of these defenses, and the § 9 tender, depend on acting early. Whether you are a business facing a 93A claim or considering one, see Chapter 93A: when you have a legal claim as a homeowner or business owner, our article on Chapter 93A and debt collection in Massachusetts, and our Massachusetts business law services, or contact our office at 978-273-8337.

About the Author

Richard Alan Gaudet, Esq. is a Massachusetts attorney at the Law Offices of Richard Alan Gaudet, LLC in Middleton, Massachusetts, who advises businesses and individuals on collections, Chapter 93A claims and commercial disputes. His practice focuses on professional license defense, business law and litigation, family law, and landlord representation, serving clients across Northern, Eastern, and Central Massachusetts. Reach him at 978-273-8337 or rgaudet@gaudetlawoffice.com. Office: 35 Village Rd., Ste 100, Middleton, MA 01949.

ABOUT THIS ARTICLE

This article was prepared by a Massachusetts attorney and is provided solely for general informational and educational purposes directed to members of the general public. It does not constitute legal advice and does not create an attorney-client relationship. The law applicable to any particular situation depends on the specific facts and circumstances of that matter. Readers are encouraged to seek the advice of a licensed Massachusetts attorney before taking any action.