Unfairness, Identity Theft, and Treble Damages After FCW Law Offices

Earlier this month, the Connecticut Appellate Court clarified the law regarding the interaction of enhanced damages available under different statutes.  In Frank Charles White v. FCW Law Offices, the court held that, although trial courts must treble damages for a prevailing plaintiff under the statutory action for identity theft, they may not award both statutorily enhanced damages and damages under the Connecticut Unfair Trade Practices Act (“CUTPA”) based on the same underlying conduct.  Thus, an award of damages for identity theft is now exclusive of a damage award under a separate count for a CUTPA violation based on the same conduct, despite the unfairness and deception involved in identity theft, as a matter of law.

Identity theft is the knowing use of another’s personally identifying information to attempt to or actually obtain money or other benefits without the other person’s consent.  Conn. Gen. Stat. § 53a-129a(a).  The statute provides that, where a plaintiff succeeds, “the court shall award the greater of one thousand dollars or treble damages, together with costs and a reasonable attorney’s fee.”   Conn. Gen. Stat. § 52-571h.

Identity theft seems to inherently involve deception, and is fundamentally unfair, and as a statutorily proscribed activity is in fact against public policy.  Thus, the same conduct that constitutes identity theft may also violate CUTPA.  CUTPA provides a separate cause of action for certain unfair or deceptive acts and is a powerful statute in its own right allowing for actual damages, as well as punitive damages, costs, and attorneys’ fees.  Many lawsuits in Connecticut allege theories of CUTPA liability based upon the conduct underlying separate counts in attempts to reach the enhanced damages provisions in addition to whatever damages may be available outside CUTPA.

That is what occurred in FCW Law Offices.  The case involved a scam perpetrated after and with the benefit of identity theft.  Certain unknown individuals and an entity or unincorporated association posed as a licensed Connecticut attorney, Attorney White.  The scammers used Attorney White’s identity to convince third parties to sell time-shares and make payments.  Attorney White learned of the scam after a victim contacted his mother, and he was later contacted by other victims who believed he owed them money based on the time-share and payment transactions.  He reported the scammers’ website, the theft of his identity, and the scam to state and local authorities, but eventually sued alleging both a statutory identity theft cause of action and a CUTPA cause of action.  Attorney White presented evidence at a damages hearing, after which the trial court awarded him damages under both statutes.  Specifically, the trial court entered judgment in favor of Attorney White on his identity theft and CUTPA counts, and awarded $150,000 of compensatory damages for identity theft, in addition to attorneys’ fees and costs, and $300,000 of punitive damages under CUTPA.  

Attorney White appealed seeking to increase the award on the basis that the trial court failed to award treble compensatory damages as required by the identity theft statute.  The Appellate Court agreed with him that the identity theft statute’s language is mandatory, and thus, the trial court improperly failed to treble the compensatory damages award. 

But the Appellate Court did not stop there.  On its own, the court then looked to the common law principle precluding double recovery and  precedent preventing recoveries in addition to a recovery under statutory provisions for treble damages.  Ultimately, the court held that since the CUTPA violation was “based upon the same transaction, occurrence or event which the plaintiff based his action for damages resulting from identity theft” on which Attorney White prevailed, he may not also recover punitive damages under the CUTPA theory.  The court’s explanation on this front provides two pleading lessons to Connecticut lawyers regarding the exclusivity of identity theft damages.

First, practitioners should keep in mind that FCW Law Offices did not create an exclusivity provision not otherwise found in these statutes, but instead described only a remedial rule.  Under Connecticut law, recovery may not be had under multiple theories for the same conduct—and this rule applies to statutes providing for treble damages.  But because this exclusive effect is a matter of “the proper remedy,” and neither CUTPA nor the identity theft cause of action contain an exclusivity provision, plaintiffs may (and should) continue to plead identity theft and CUTPA as alternative liability theories.  The pleading stages and the damages award phase are different animals, and the FCW Law Offices opinion itself acknowledges that plaintiffs may “allege alternative theories of liability” but may “not . . . recover twice for . . . the same” occurrence.  

Second, practitioners should scrutinize the facts of the case with an eye towards teasing the CUTPA claim out—and away from the identity theft claim.  It appears that under FCW Law Offices, a prevailing plaintiff may still recover enhanced damages under both identity theft and CUTPA theories so long as the claims are capable of being distinguished based on the underlying conduct, or the injury.  Put another way, FCW Law Offices does not close the courthouse doors to a CUTPA claim that is related to identity theft.  The holding is based on common law rules that would not apply if the CUTPA claim had sought to recover for acts, occurrences, or transactions, that were related to but did not fall within the statutory definition of identity theft.  For example, if the scammers had engaged in conduct other than using Attorney White’s identifying information (and which could not itself support liability for identity theft) but that conduct was nonetheless was unfair or deceptive and otherwise satisfied all the CUTPA requirements, the double-recovery rule would be inapplicable—and a recovery under CUTPA should be available. 

Notably, the case did not examine the purpose or policy goals of the punitive damages available under CUTPA, how those policies may differ from statutory damages for identity theft, or the extent of any difference.  Statutorily vested discretion to award of punitive damages, such as occurs in CUTPA, does not seem to implicate the concerns underlying the common law double-recovery rule.  Yet, moving forward, the courts will treble compensatory damages for identity theft, but will not award damages under CUTPA – compensatory or punitive – for the same conduct to a successful identity theft plaintiff.  Treble damages, plus costs and fees, is a significant incentive, but attorneys should continue to both plead CUTPA claims notwithstanding the prohibition on double recovery and analyze potential related but distinct CUTPA claims.  Following FCW Law Offices, there is no doubt that courts will enforce the treble damages provision of Connecticut’s civil cause of action for identity theft to the exclusion of CUTPA a claim remedy.  But the exclusivity is a remedial matter not a pleading matter, and CUTPA claims based on conduct outside, but related to, conduct constituting identity theft, should be unaffected.