Refining Per Se Unfair Trade Practices

North Carolina’s “unfair or deceptive acts or practices” statute, section 75-1.1 of the North Carolina General Statutes, is a central feature of North Carolina litigation. The statute allows lucrative remedies, but it defines prohibited conduct with only vague standards. Courts have difficulty applying these standards in any detail, so they often use analytical shortcuts in decisions under the statute. One key shortcut under section 75-1.1 is the “per se violation.” A per se violation arises when actions that violate a source of law outside section 75-1.1—a different statute, a regulation, or a nonstatutory doctrine—automatically violate section 75-1.1 as well. A per se violation has a transformative effect: in one stroke, it turns a claim for single damages into a claim for treble damages and possible attorney fees. Courts in section 75-1.1 cases have struggled to decide when to carry out, and when to refuse, this transformation. They have accepted and rejected per se theories with no explanation or with question-begging explanations. They have also sidestepped the problems with a per se theory by applying a number of variations on per se theories. This variety of approaches leaves courts and lawyers to guess at what analysis to apply in future cases. The courts can end this confusion by sharpening the per se theory and replacing parts of it. In many instances, the General Assembly has announced, directly or indirectly, that a violation of a given statute is also a violation of section 75-1.1. Courts should continue to apply these per se violations. In all other cases, however, courts should ask whether the conduct that makes up a separate violation satisfies the tests for unfairness under section 75-1.1. The tests for unfairness already address violations of separate statutes and other expressions of public policy. This streamlined approach will strengthen the analysis of per se and non-per-se violations alike