Connecticut Employment Law Blog Insight on Labor & Employment Developments for Connecticut Businesses

State Official: AIG Bonuses Do Not Violate State Unfair Trade Practices Law (CUTPA)

Posted in Wage & Hour

Remember the big uproar over the AIG bonuses a few weeks back? (Seems like a few years ago now, right?)

Well, the beginning of the end of Connecticut’s interest in the matter occurred today with a whimper, not a bang, when the state’s consumer protection commissioner released a memorandum concluding that Connecticut has no legal authority over the bonuses under the Connecticut Unfair Trade Practices Act (CUTPA).

Commissioner Jerry Farrell, Jr. issued a press release that determined that while there is outrage in the public, no consumer protection laws are implicated.

“We conducted an exhaustive investigation and analysis of CUTPA case law, a thorough review of the Unfair Trade Practices Act itself, and careful scrutiny of the company’s documents to determine if Connecticut had any legal authority in this matter as an unfair trade practice, and we found that we do not have subject matter jurisdiction over the issue,” Farrell said.

“The Connecticut Unfair Trade Practices Act was made law by our state legislature to remedy problems that individual consumers had with businesses that they could not otherwise get relief for, under the law,” Farrell said.

Commissioner Farrell pointed to classic examples of corporate behavior that CUTPA was intended to remedy –those cases where a business systematically cheats its customers, such as by charging a fee for a service that was never provided, but does not otherwise violate any specific law.

“In every analysis under CUTPA, you look to see ‘who is the consumer?’ and ‘how is the consumer being aggrieved?’” Farrell said.

“CUTPA is a unique and expansive law, but it too has its limits,” he said. “While the Memorandum that I’m issuing speaks for itself, it concludes that CUTPA is meant to help consumers with problems they have with businesses – strictly as consumers and not in any other capacity. While we might like to look at ‘the taxpayers’ who are ultimately funding the AIG bonuses, and be tempted to say that they too are consumers — the group of people that CUTPA was meant to protect — that would be stretching the law beyond its original intent and logical reading,” Farrell said.

“I could not find anything in the CUTPA statute that would have allowed me to say that ‘taxpayer’ is the same as ‘consumer,” Farrell said. “If indeed the CUTPA statute somehow had the power to right injustices to the taxpayer, the amount of use it would get might be limitless.”

The Hartford Courant has an additional report with some feedback.  The result isn’t that surprising; indeed, during the time that it took the DCP to review the law, the furor over the bonuses has subsided.  While the legislature technically still has an investigation open, Connecticut’s interest and role in the AIG bonuses is coming, for all intents and purposes, to a quiet end.  

 

  • http://www.pointoflaw.com/archives/2009/04/connecticut-law.php PointOfLaw Forum

    Connecticut law and those AIG bonuses

    Whoops! According to a state official, they seem to have been perfectly legal after all….