consumer protection - liability of corporate officer
Commonwealth v. Manson - Commonwealth Court - July 10, 2006
The CEO/lead investor of a company was individually liable for consumer protection law (CPL) violations where the evidence with the he had participated, taken part, and cooperated in conduct which was fraudulent or deceptive and likely to create confusion or misunderstanding, under sec. 2(4)(xxi) of the CPL, 73 P.S. sec. 201-2(4)(xxi).
"Pennsylvania law recognizes the participation theory as a basis for liability" in such a situation. "Liability under this theory attaches only where the corporate officer is an actor who participates in the wrongful actions; thus, corporate officers may be held liable for misfeasance...[but not] for mere nonfeasance."
Concerning deceptive conduct, the court said that the question was not whether the wrongful conduct was intended to deceive the consumer but rather whether person "engaged in conduct that might be 'deceptive to the ordinary consumer'" -- a lesser wrong that fraudulent conduct.
The company in question was Unclaimed Freight Company, LLC. The wrongful conduct was in taking orders for merchandise and receiving payments from consumers, when the company and its CEO "knew or should have known that the merchandise would not be delivered to those consumers...Unclaimed Freight provide neither furniture nor refunds...."