D. Defenses

• Library: Elements of Civil Causes of Action (SCBar) (2021 Ed.)

D. Defenses

The Act provides "no action may be brought under this article more than three years after discovery of the unlawful conduct which is the subject of the suit."⁵⁶

The Act is inapplicable to "[a]ctions or transactions permitted under laws administered by any regulatory body or officer acting under statutory authority of this State or the United States or actions or transactions permitted by any other South Carolina state law."⁵⁷ In 1980, the South Carolina Supreme Court adopted a "general activity test" for interpreting the application of the statutory exemption.⁵⁸ The test provides:

'When a party claiming exemption from the Act shows the general activity in question is regulated by a 'regulatory body or officer' within the meaning of [the Act], the opposing party ... then has the burden of showing that the specific acts at issue are not covered by the exemption ...'.⁵⁹

Pursuant to this test the Court of Appeals held banking activities⁶⁰ and sales of mobile homes⁶¹ to be exempt from the Act because both were subject to state regulatory boards. Subsequently, a trial court found that an automobile dealership was exempt from the Act because § 39-5-40(a) excludes any activity regulated by state or federal agencies or other state statutes.⁶² This decision led the South Carolina Supreme Court to clarify its position on the statutory exclusion. The court concluded the general activity test did not fulfill the intent of the legislature in prohibiting unfair trade practices. It decided the exemption was intended to exclude actions or transactions that are allowed or authorized by regulatory agencies or other statutes.⁶³ Subsequently, the court noted it had retained the exemption recognized in McLeod for a security transaction and held that transactions under the Procurement Code are also exempt from SCUTPA.⁶⁴ In Andrade v. Johnson⁶⁵ the Court of Appeals said that a South Carolina Electric & Gas (SCE&G) "quality dealer program was not specifically authorized or regulated by a South Carolina Public Service Commission rate increase order and that the order did not described how the program should be designed or implemented." The court, therefore, reversed summary judgment granted in favor of SCE&G because the trial court wrongly concluded the program was exempt from SCUTPA. In RFT Mgmt. Co., L.L.C. v. Tinsley & Adams L.L.P.,⁶⁶ the state Supreme Court said it was error for the lower court to find SCUTPA is not available against the legal profession. A federal court refused to conclude that a clear basis existed for finding that the pharmaceutical industry was exempt.⁶⁷

The South Carolina Legislature has enacted specific gambling loss statutes as the exclusive remedy for gamblers seeking recovery of losses sustained by illegal gambling and, therefore, a person engaged in illegal gambling cannot recover under SCUTPA.⁶⁸

The South Carolina Tort Claims Act⁶⁹ waives the immunity of the State, its agencies, political subdivisions, and governmental entities from liability in tort. The Act contains many limitations on liability and damages that may preclude or restrict a plaintiff's cause of action. The Act apparently applies to a SCUTPA claim. In Health Promotion Specialists, LLC v. S.C. Bd. of Dentistry,⁷⁰ the state Supreme Court held that the defendant agency was a governmental entity that could invoke the protections of the Act and that promulgation of a regulation by the board was a legislative or quasi-legislative act that was protected from liability.

An agreement to arbitrate may bar a SCUTPA claim in some, but not all, cases.⁷¹ Federal preemption is also a possible defense.⁷²

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Notes:

^[56] S.C. Code § 39-5-150. See...