Commonwealth v. Peoples Benefit Services Inc., 032806 PACCA, 557 MD 2005

Docket Nº:557 MD 2005
Party Name:Commonwealth v. Peoples Benefit Services Inc.
Case Date:March 28, 2006
Court:Court of Appeals of Pennsylvania

Commonwealth of Pennsylvania, Acting by Attorney General Thomas W. Corbett, Jr., Plaintiff


Peoples Benefit Services, Inc., Defendant

No. 557 M.D.2005

Court of Appeals of Pennsylvania

March 28, 2006

Argued: January 30, 2006




Before this court are preliminary objections filed by Peoples Benefit Services, Inc., (PBS) to a Complaint in Equity (Complaint) filed against PBS by the Commonwealth of Pennsylvania, Acting by Attorney General Thomas W. Corbett, Jr., (Commonwealth), pursuant to section 4 of Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (UTPCPL).1

PBS has sold discount prescription drug, medical and dental cards and/or memberships and related services to senior citizens since 1994, marketing its products and services through direct mail, telephone solicitations and television advertisements. More recently, the federal government established its own Medicare-endorsed prescription drug discount cards and prescription drug coverage program, which received widespread publicity. At this same time, PBS began marketing a new prescription drug discount card and began mailing new solicitations and otherwise advertising its goods and services.

In response to various consumer complaints, the Commonwealth began investigating PBS’s business practices and, as a result of the investigation, on November 2, 2005, the Commonwealth filed an eight-count Complaint against PBS for alleged violations of the UTPCPL, Telemarketer Registration Act (Telemarketing Act),2Fictitious Names Act3and related violations of federal law and regulations.4In its Complaint, the Commonwealth alleges generally that PBS has engaged in unfair methods of competition and unfair or deceptive acts or practices by marketing in ways that could confuse or mislead consumers into believing that PBS and/or its goods and services are government related, in violation of sections 2 and 3 of the UTPCPL.5

The Complaint seeks, inter alia: (1) a declaration that PBS’s conduct is in violation of the UTPCPL; (2) an order permanently enjoining PBS from engaging in such conduct;6(3) an order requiring PBS to make full restitution to the affected consumers7and to pay civil penalties to the Commonwealth;8(4) an order requiring PBS to forfeit its right to engage in any business in the Commonwealth until the restitution and civil penalties are paid; and (5) an order requiring PBS to provide notice to the Commonwealth prior to engaging in any business in the Commonwealth. (Complaint, ¶¶129, 134, 139, 149, 161, 169, 182, and 195.)

On November 22, 2005, PBS filed the instant preliminary objections to the Commonwealth’s Complaint, requesting that each Count of the Complaint be dismissed with prejudice. Specifically, PBS alleges that: (1) the Complaint fails to sufficiently identify the injured parties; (2) Counts I, IV and V of the Complaint lack the specificity required by Pa. R.C.P. No. 1019(a); (3) Counts I, II, III, VI, VII, and VIII of the Complaint fail to state claims for which relief can be granted; and (4) this court lacks subject matter jurisdiction over the causes of action in Counts VII and VIII of the Complaint. We will discuss each of PBS’s Preliminary Objections in turn.

A. Identity of Injured Parties

PBS first argues that the Commonwealth’s requests in each count of the Complaint for an order requiring PBS to make “full restitution to each and every person and/or entity which is entitled to restitution from [PBS] under the [UTPCPL],”9(Complaint, ¶¶129(E), 134(D), 139(E), 149(D), 161(D), 169(E), 182(D), 195(D)), lack the specificity required by Pa. R.C.P. No. 1019(a) and, therefore, must be dismissed.10

PBS asserts that, for restitution to be granted, Pa. R.C.P. No. 1019(a) requires that a plaintiff fully identify and describe the injured parties in the complaint and specify sums that represent the harm inflicted on each of these parties. See Commonwealth ex rel. Pappert v. TAP Pharmaceutical Products, Inc., 868 A.2d 624 (Pa. Cmwlth. 2005); Northview Motors, Inc., v. Commonwealth, 562 A.2d 977 (Pa. Cmwlth. 1989), appeal denied, 525 Pa. 605, 575 A.2d 570 (1990); Commonwealth by Kane v. Flick, 382 A.2d 762 (Pa. Cmwlth. 1978). Relying on these cases, PBS maintains that the Commonwealth fails to plead sufficient facts on which to base a payment of restitution because the Complaint does not identify a single person allegedly harmed and entitled to restitution due to PBS’s business practices, and the Complaint fails to specify any sums acquired by PBS in violation of the UTPCPL. We disagree.

Here, the Commonwealth’s Complaint states that suit is brought in the public interest to enjoin PBS from continuing its unlawful business practices and on behalf of consumers harmed due to PBS’s methods, acts and practices. (Complaint, ¶¶6-9, 124.) Described as injured parties are consumers who received PBS solicitations, (Complaint, ¶¶24-30), who purchased goods and services from PBS, (Complaint, ¶121), and who received telemarketing calls from or on behalf of PBS while enrolled on Pennsylvania’s “Do Not Call” list, (Complaint, ¶¶110-18). The Complaint also refers to specific instances where consumers complained about PBS’s misleading solicitations, (Complaint, ¶¶25-30), and identifies each of PBS’s programs at issue in the case and for which restitution is sought.11We conclude that further specificity is not required at this stage of the proceedings because the facts that PBS demands to be pled, such as the precise identity of consumers who purchased its products and the amounts these consumers paid, are better known to PBS than to the Commonwealth. Paz v. Department of Corrections, 580 A.2d 452 (Pa. Cmwlth. 1990), appeal denied, 532 Pa. 652, 615 A.2d 341 (1992) (stating that a more specific pleading should not be required as to matters about which the objecting party has, or should have, as much or better knowledge than the pleader); see also Line Lexington Lumber & Millwork, Co., Inc., v. Pennsylvania Publishing Corp., 451 Pa. 154, 301 A.2d 684 (1973). Moreover, we disagree with PBS’s assertion that it requires the names of consumers entitled to restitution, or the amounts to which they are entitled, in order to defend against the causes of action set forth in the Complaint. In actions brought in the public interest, such information is not needed to determine whether PBS engaged in business practices that are unfair or deceptive under the UTPCPL, and PBS was on notice of the facts it had to refute in that regard. See Weinberg v. Sun Company, Inc., 565 Pa. 612, 777 A.2d 442 (2001); Paz; Line Lexington. While it remains to be determined whether the Commonwealth can produce evidence establishing PBS’s obligation to pay restitution, the details requested by PBS are evidentiary in nature and, thus, better obtained through discovery and presented at trial.12Paz; Totani v. Lansford-Coaldale Joint Water Authority, 2 Pa. D. & C. 3d 143 (1975). Therefore, we dismiss PBS’s preliminary objections based on a lack of specificity in the Commonwealth’s requests for restitution.13

B. Adequacy of Pleadings

PBS also argues that Counts I, IV and V of the Commonwealth’s Complaint must be dismissed for failure to plead with the specificity required by Pa. R.C.P. No. 1019(a). We disagree.

1. Count I

In Count I, the Commonwealth alleges, inter alia, that PBS violated section 201-2(4)(i) of the UTPCPL, which defines as an unfair or deceptive act or practice, the “[p]assing off goods and services as those of another.” PBS maintains that nowhere in Count I, or anywhere in the Complaint, does the Commonwealth specifically allege that PBS passed its goods and services off as those of another; rather, the Complaint alleges only that PBS represented that its products were “sponsored by, affiliated with or endorsed by” government agencies or programs, or legitimate, independent organizations other than PBS. (Complaint, ¶¶127-29.) Citing Department of Transportation v. Shipley Humble Oil Company, 370 A.2d 438 (Pa. Cmwlth. 1977), PBS further asserts that this lack of specificity renders PBS incapable of developing defenses to such claims.

However, the Commonwealth’s Complaint describes in great detail the manner in which PBS passed off (or represented) its goods and services as those of a government agency or program, (see e.g., Complaint, ¶¶31, 50, 59-61, 73, 101 and 128), supplies the times such conduct began, (Complaint, ¶¶21, 28, 49), and includes statements from some of the consumers who received the solicitations and were confused as to their source, (Complaint, ¶¶26-27, 29). PBS’s argument to the contrary is based purely on semantics. In addition, PBS has demonstrated that the Complaint contains sufficient specificity to enable PBS to prepare a defense by framing additional objections to the claims in Count I in the form of a demurrer. See Speck v. Finegold, 408 A.2d 496 (Pa. Super. 1979), rev’d in part on other grounds, 497 Pa. 77, 439 A.2d 110 (1981) (holding that it is inconsistent for a party to both demur to a pleading and, at the same time, move for a more specific pleading, reasoning that, if a party is able to demur, then the pleading must be specific enough for the party to understand the allegations contained therein); see also, Nationwide Insurance Company v. Montefour, 36 Pa. D. & C. 3d 225 (1985). In the present context, it is for PBS to seek evidential details rather than clarification. Speck.

2. Counts IV and V

PBS argues that Counts IV and V must be dismissed because the Commonwealth fails in those Counts to adequately distinguish between defendants and their alleged wrongdoings. Count IV of the Complaint alleges that PBS violated the Telemarketing...

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