The UPUAA allows for both criminal and civil liability. Under the civil liability prong of the UPUAA.
The UPUAA allows for both criminal and civil liability. Under the civil liability prong of the UPUAA:
(1) A person injured in his person, business or property by a person engaged in conduct forbidden by an provision of Section 76-10-1603 may sue in an appropriate district court and recover twice the damages he sustains, regardless of whether:
(a) the injury is separate and distinct from the injury suffered as a result of the acts or conduct constituting the pattern of unlawful conduct alleged as part of the cause of action; or
(b) the conduct has been adjudged criminal by any court of the state or the United States.
Furthermore, a principal, in addition to being responsible for actual damages caused by his or her agent(s), may also be liable for double damages:
[I]f the pattern of unlawful activity alleged and proven as part of the cause of action was authorized, solicited, requested, commanded, undertaken, performed, or recklessly tolerated by the board of directors or a high managerial agent acting within the scope of his employment.
However, even if a civil plaintiff is able to recover double damages under either section of the UPUAA, how does a court properly calculate the plaintiff’s actual damages award?
In Alta Indus. v. Hurst, the Utah Supreme Court sought to shed some light on the damages calculation question as it related to civil liability under the UPUAA. There, Steelco had sued defendants alleging claims for fraud, conversion, conspiracy, receiving stolen property, and a pattern of unlawful activity. Following a bench trial, the trial court ruled that defendants had converted property, had entered into a civil conspiracy, and committed fraud in its dealings with Alta Industries. However, the court also dismissed Steelco’s claims for relief and double damages under the UPUAA. Defendants appealed the judgment, and Steelco cross-appealed the court’s ruling dismissing its pattern of unlawful activity claim.
On appeal, the Utah Supreme Court had two issues to consider as it related to Steelco’s pattern of unlawful activity claim: 1) whether the trial court erred in dismissing the claim; and 2) if so, what the proper calculation of damages was sustained by Steelco. As to the first question, the court found that the trial court had erred in its interpretation of the UPUAA. According to the trial court, for the act to apply, “there must be three similar episodes that involve separate and different entities, and not within the same entity.” However, the supreme court disagreed, holding:
While subsection 76-10-1602(3) requires the commission of at least three episodes of unlawful activity, the Act does not require three separate entities. The term “entity” does not even appear in the statute. Furthermore, while the Act requires the existence of an enterprise, section 76-10-1603 expressly provides that the existence of one enterprise is sufficient to invoke liability under the Act. Indeed, our case law establishes that the Act requires proof of only a single enterprise.
Having determined that the UPUAA did not require proof of separate enterprises, the court went on to find that defendants had engaged in a pattern of unlawful activity in this case. As a result, Steelco was entitled to double damages under the UPUAA. However, an issue remained concerning the calculation of the damages sustained by Steelco.
The court started its damages calculations analysis by pointing out that the civil prong of the UPUAA “does not provide a method for calculating actual damages. Furthermore all of the predicated acts, or unlawful activities, under the Act are crimes, not civil causes of action. Accordingly, we must look outside the Act to determine a method of calculating damages.” To that end, the court looked to causes of action similar to the crimes charged in this case. According to the court:
In the instant case, because the elements of civil conspiracy are subsumed in the crime of bribery proven in this case, the damage calculation applicable to a civil conspiracy can be used to arrive at the actual damages Steelco sustained due to the kickback arrangements. Similarly, because the elements of conversion are subsumed in the crime of receiving stolen property proven in this case, the damage calculation applicable to conversion can be used to arrive at the actual damages Steelco sustained because of the theft of the steel. The trial court awarded Steelco damages on the bases of fraud, in connection with the kickback scheme, and conversion, in connection with the steel theft. Those damages may also be used to arrive at the damages Steelco sustained as a result of the pattern of unlawful activity.
However, defendants claimed that the trial court erred in its damages calculation as it related to Steelco’s conversion claim.
The trial court awarded Steelco the amount of money received by defendants from the sale of the steel plus interest. Defendants disagreed with the award, claiming that the “appropriate market for a retailer of steel is the wholesale market, not the retail market, and therefore, Steelco was only entitled to recover its replacement costs.” To answer the question raised by defendants, the court noted that the Restatement (Second) of Torts gave Steelco three options for determining its damages, which included the amount of money defendants received from the sale of the steel. The trial court’s award was based upon the amount of money defendants received from the sale of the steel. As a result, the trial court’s damages calculation was not in error, and therefore “the measure of damages is twice the amount Wasatch received for the sale of the steel plus interest.”
The Utah Supreme Court’s ruling in Alta Industries rejects any argument that in order to recover a civil judgment under the UPUAA a plaintiff must prove the existence of different enterprise. However, it also provides guidance for determining the proper damages calculations for the various offenses a defendant may commit under the UPUAA. While the UPUAA does not provide for a way to properly calculate a plaintiff’s actual damages, other areas of the law can be examined for guidance on the issue.