“Without More:” Demystifying the South Carolina Unfair Trade Practices Act

The South Carolina Unfair Trade Practices Act (“SCUTPA”), S.C. Code Ann. § 39-5-10 et seq., exists for a simple purpose: to make unlawful “unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce.” A plaintiff bringing a claim under SCUTPA must show: “(1) the defendant engaged in an unfair or deceptive act in the conduct of trade or commerce; (2) the unfair or deceptive act affected the public interest; and (3) the plaintiff suffered monetary or property loss as a result of the defendant’s unfair or deceptive act(s).” Estate of Carr ex rel. Bolton v. Circle S Enterprises, Inc., 379 S.C. 31, 42, 664 S.E.2d 83, 89 (Ct. App. 2008). The second element, the public interest requirement, may be met by proof of facts demonstrating the potential for repetition of the defendant’s conduct. Id. at 43 – 44, 664 S.E.2d at 89.

Ardis and Intentional Breaches of Contract

Despite the apparent simplicity of these elements, attorneys and courts alike have muddied the waters over the years with imprecise analysis. In Ardis v. Cox, 314 S.C. 512, 431 S.E.2d 267 (Ct. App. 1993), for example, the Court of Appeals’ created a misunderstanding that continues to confuse attorneys and courts alike. In holding that an “isolated sale between private individuals” where “no other similar sales were made or contemplated” failed to demonstrate the potential for repetition, the court concluded

The SCUTPA is unavailable to redress private wrongs if the public interest is unaffected. LaMotte v. The Punch Line of Columbia, Inc., 296 S.C. 66, 370 S.E.2d 711 (1988); Noack Enterprises, Inc. v. Country Corner Interiors, 290 S.C. 475, 351 S.E.2d 347 (Ct.App.1986). An unfair or deceptive act or practice that affects only the parties to a trade or a commercial transaction is beyond the Act’s embrace. Noack. Unfair or deceptive acts or practices have the potential for repetition. Id. A deliberate or intentional breach of a valid contract, without more, does not constitute a violation of the SCUTPA. The Key Co., Inc. v. Fameco Distributors, Inc., 292 S.C. 524, 357 S.E.2d 476 (Ct.App.1987). Otherwise, every intentional breach of a contract within a commercial setting would constitute an unfair trade practice and thereby subject the breaching party to treble damages. Id.

Id. at 519, 431 S.E.2d at 271.

A plain reading of the paragraph, the penultimate paragraph of the opinion, suggests that the court’s analysis is concerned with the second element of SCUTPA, the public interest requirement. The confusion, however, begins with the third and fourth sentences: “Unfair or deceptive acts or practices have the potential for repetition. A deliberate or intentional breach of a valid contract, without more, does not constitute a violation of the SCUTPA.” Id. [internal citations omitted]. The placement of the phrase “without more” in this paragraph suggests that to satisfy the public interest requirement, a party arguing that a deliberate or intentional breach of contract gives rise to a SCUTPA claim must show some additional element. Alternatively, some attorneys have argued, and courts have ruled, that Ardis establishes that a SCUTPA claim may not be premised on an intentional breach of contract at all. [1]

From Ardis to United Roasters

What, however, does “without more” actually mean? The court in Ardis did not say, but cited Key Co., Inc. v. Fameco Distributors, 292 S.C. 524, 526-27, 357 S.E.2d 476, 478 (Ct. App. 1987) for the proposition. The Key Co. court, too, failed to elaborate, instead attributing the language of “without more” to Atlantic Purchasers, Inc. v. Aircraft Sales, Inc., 705 F.2d 712 (4th Cir.1983). Atlantic Purchasers, of course, did not explain the meaning of the “without more” proposition, but cited United Roasters, Inc. v. Colgate-Palmolive Co., 649 F.2d 985 (4th Cir.1981) as its origin.   

The phrase “without more” is never used in United Roasters. In reading the portion of the case cited by Atlantic Purchasers, however, the meaning of those words is readily apparent.

In United Roasters, the court recognized that while an intentional breach of contract is a permissible basis for a UTPA claim, an intentional breach alone is not sufficient to state a claim. Instead, the court observed that the intentional breach of contract must be, in some way, unfair or deceptive to serve as the basis for a UTPA claim. In concluding its discussion of the facts, the Court noted,

Under the jury’s resolution of the facts, Colgate’s violation of its contractual obligation was an intentional breach, but there was neither unfairness nor deception in formulation of the contract, and the jury found no deception in the circumstances of its breach. The contract here was carefully negotiated and drawn by sophisticated parties. There is no hint of any unfairness to either party before Colgate’s cessation of performance. It then broke the contract, but we cannot conclude that unfairness inhered in the circumstances of the breach within the meaning of the statute simply because the breach was intentional and not promptly disclosed.

United Roasters, 649 F.2d at 992.

A Redundancy, Not a New Rule

The words “without more,” then, are simply a reference to the first element of SCUTPA: the act giving rise to a SCUTPA claim must be unfair or deceptive. “Without more” has nothing to do with the second element, the public interest requirement. By dropping an innocuous restatement of the first element into the middle of a paragraph on the public interest requirement, the court in Ardis needlessly complicated a simple analysis.

Unfortunately, the meaning of “without more” is far from the only dispute about the scope and application of the SCUTPA. The SCUTPA has grown into a claim that can easily confuse even experienced litigators, but it can be demystified by careful examination of our case law. If you need attorneys experienced in litigating SCUTPA claims, or are interested in discussing the steps you can take to avoid those claims arising, contact us.  

[1] This argument is, suffice to say, baseless. See e.g. Beneficial Financial I, Inc. v. Windham, 431 S.C. 256, 268, 847 S.E.2d 793, 800 (Ct. App. 2020).

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