Contractors & The Law


Alaska’s Unfair Trade Practices and Consumer Protection Act applies to you

While contractors need to be aware of a number of different causes of action for which they could be exposed to legal liability, one claim typically not thought of as applying to contractors is Alaska’s Unfair Trade Practices and Consumer Protection Act (“UTPA”).I In Alaska, the UTPA can become a very powerful weapon for a plaintiff suing under the act, as it may lead to treble damages and require the losing party to pay full reasonable attorneys’ fees to the prevailing party.

The reference to “consumer” in the act is a bit of a misnomer because contractors may be subject to, and liable under, the UTPA in many situations. Contractors or owners engaging in questionable business tactics could in fact expose themselves to liability under the act. Prudent contractors and owners would be well advised to consider the consequences of engaging in “hardball” tactics and other sharp practices that could expose them to liability under the act.

The Alaska Unfair Trade Practices and Consumer Protection Act – a primer

The UTPA establishes that “[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of trade or commerce are declared to be unlawful.”II The crux of the act is that persons engaged in trade or commerce must avoid false, confusing, misleading, fraudulent or deceptive acts.III There is no question that the construction industry is clearly a part of trade and commerce. While the act identifies 57 specifically unlawful actions, the UTPA is intended to be broad and encompasses acts or omissions beyond those specifically enumerated.IV

Among the unlawful acts proscribed by the UTPA, a few stand out. For example, misrepresenting the standard, quality, type, origin or condition of goods or services is a violation of the act.V This means if a contractor is going to make representations about the products he or she is using, those representations better be accurate. For example, if a contractor were to claim that some product used in the construction of an improvement was locally sourced in Alaska, obtaining that product from another location would be a violation of the act, no matter what the quality. Another broad category of wrongdoing under the UTPA is making false or misleading statements or engaging in conduct likely to create confusion or misunderstanding among customers.VI This means that statements made by contractors or owners must be accurate and sufficiently explained as to ensure that the recipient is not mislead or confused.

A key aspect of this is that even innocent misrepresentations are unlawful under the UTPA. The misrepresenting party’s good faith is not a defense to a UTPA violation because the acts enumerated in the UTPA are unfair or deceptive by definition.VII

Finally, disparaging the goods or services of another through false or misleading representations of fact is a violation of the act.VIII While this is not a blanket prohibition on making statements about competitors, be aware that speaking ill of competitors could expose a contractor or owner to liability under the UTPA if those statements turn out to be false — or even if they are innocent misrepresentations.

While there are a number of exceptions to the UTPA, for example, a transaction involving the sale of real estate, typical construction transactions and interactions are likely within the act’s control. Construction is a part of trade and commerce, and so the UTPA will apply in most cases.

Treble damages and attorneys’ fees

One key reason contractors need to be aware of UTPA claims is the potential for treble damages. The UTPA allows a private or class action plaintiff that suffered an ascertainable loss of money or property as a result of a violation of the UTPA to recover treble damages — meaning three times the actual damages incurred — a potentially ruinous award. Further, in an action brought by a private party under the UTPA, the prevailing side, if successful, is entitled to full reasonable attorneys’ fees.IX

UTPA claims may not be common in the construction industry, but it is one of the rare statutory schemes that allows plaintiffs to treble the actual damages that they can prove.

Conclusion

Construction projects involve substantial capital that may be at risk if everything does not go as planned. When that happens the parties involved may resort to provocative measures and sharp practices to exert their will or to thwart the ambitions of the other side. If you’re inclined to take measures like that, or if you’re inclined to respond in kind — you would be well advised to think twice. UTPA claims may not be common to the industry, but contractors and owners may find that their ignorance of the act, and its prohibited practices, comes with a very steep price tag.

This column provides information about the law designed to help users safely cope with their own legal needs. But legal information is not the same as legal advice — the application of law to an individual’s specific circumstances. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation.

Michael C. Geraghty, partner in Oles Morrison Rinker & Baker’s Anchorage office, joined the firm after serving for nearly three years as attorney general for the state of Alaska (2012-2014). A lifelong Alaskan, Mike’s practice focuses on areas and industries reflecting Alaska’s growth and history, including construction and natural resources. Throughout his 36-year career he has been involved in numerous complex cases, including class actions and anti-trust. He has appeared before the Alaska Supreme Court in matters ranging from sovereign immunity, insurance bad faith and administrative law, to attorney-client privilege, OSHA regulations, contract claims, shareholder disputes, products liability and premises-landowner liability.

Ryan M. Gilchrist is an associate in Oles Morrison Rinker & Baker’s Seattle office. He joined Oles Morrison after graduating from the University of Washington School of Law in December 2015. During law school, Ryan was a managing editor for the Washington International Law Journal. Ryan also served as a judicial extern for the Hon. Kenneth L. Schubert of the King County Superior Court and was a summer associate at Oles Morrison in 2015.