RULING ON MOTIONS TO DISMISS AND STRIKE

SCHUMAN, JUDGE.

The State of Connecticut has filed an action under the Connecticut Unfair Trade Practices Act, General Statutes § 42-110a et seq. (CUTPA or "the act"), alleging that five former state officials and several private contractors engaged in unfair competition in the award of state contracts. The state officials are: Peter N. Ellef, former co-chief of staff for Governor John G. Rowland; Lawrence E. Alibozek, former deputy chief of staff for the Governor; Kristine D. Ragaglia, former commissioner of the department of children and families (DCF); Theodore R. Anson, former commissioner of the department of public works (DPW); and Patrick J. Delahunty, Jr., former chief deputy to commissioner of the department of public works (collectively, the "state defendants" or "state officials"). The private defendants are William A. Tomasso, Peter N. Ellef II, and several related companies. Most of the defendants have filed either a motion to dismiss or a motion to strike. The principal issue is the interpretation of an exception to CUTPA liability for "[t]ransactions or actions otherwise permitted under law as administered by any regulatory board or officer acting under statutory authority of the state or of the United States . . ." General Statutes § 42-110c(a)(1).

I A

The Tomasso defendants have filed a motion to dismiss raising several threshold CUTPA claims. They argue: 1) the case is non-justiciable on the grounds that a) the state has no standing to sue in its own right, b) the complaint alleges no economic harm, and c) there is no practical relief that the court can provide, and 2) the CUTPA exception quoted above applies to this case. All moving defendants join in the arguments of the Tomasso defendants, presumably because these arguments would, if valid, defeat the state's case in its entirety.

In order for the court to have subject matter jurisdiction, the case must be justiciable. See Wallingford v. Department of Public Health, 262 Conn. 758, 766, 817 A.2d 644 (2003). Justiciability requires: "(1) that there be an actual controversy between or among the parties to the dispute . . . 2) that the interests of the parties be adverse . . . 3) that the matter in controversy be capable of being adjudicated by judicial power . . . and 4) that the determination of the controversy will result in practical relief to the complainant . . ." (Internal quotation marks omitted.) Id., 766-67. In the first part of their claim of nonjusticiability, the Tomasso defendants argue that the state has standing only to bring a CUTPA action for harm to private parties and cannot do so to redress harm to the state itself, such as that alleged to have incurred during the contracting process. This phrasing of the argument, however, somewhat incorrectly characterizes the alleged activity. In its principal paragraphs, the complaint alleges that the Tomasso defendants bribed the state officials in connection with business with DPW and that the state officials acted in concert to secure an unfair advantage to the Tomasso defendants in the award of contracts for the development of the Connecticut Juvenile Training School for boys, a Juvenile Training school for girls, and numerous other public works projects. (Complaint, ¶¶ 21, 71.) The harm in this sort of alleged activity is obviously not limited to the state itself. Rather, insofar as there is corruption in the state contracting process, the harm extends to other businesses seeking to compete for state business lawfully. Ultimately, the harm is to citizens who are entitled to have state contracts awarded on the merits, thereby using their tax dollars in the most efficient way.

Further, although the state's use of CUTPA in this situation is apparently novel, CUTPA itself contains no requirement that actions initiated by the state redress only private harm. The act provides that "[w]henever the commissioner [of consumer protection] has reason to believe that any person has been engaged or is engaged in an alleged violation of any provision of this chapter said comissioner . . . may request the Attorney General to apply in the name of the State of Connecticut to the Superior Court" for various forms of equitable relief. General Statutes § 42-110m(a). The broad wording of this provision does not suggest any limitation on the class of victims in these cases. Further, it is well settled that the courts should interpret CUTPA generously in keeping with its remedial purpose. See Kim v. Magnotta, 249 Conn. 94, 108, 733 A.2d 809 (1999); General Statutes § 42-110b(d) ("It is the intention of the legislature that this chapter be remedial and be so construed."). The only limitation stated in this provision is that the attorney general act upon request of the commissioner of consumer protection after the latter has found reason to believe that violations of the act have occurred. The state has alleged that this process took place. (Complaint, ¶ 2.) Given the presumption of regularity that attends the acts of public officers, see Brookfield v. Candlewood Shores Estates, Inc., 201 Conn. 1, 6, 513 A.2d 1218 (1986), the court will not second guess their determination that, in general, this case is an appropriate one for the use of CUTPA.

Contrary to the additional suggestion of the defendants, there is no requirement that the state allege economic harm. It is true that in this case the state does not allege the type of direct injury to the taxpayers that might result if the contracts were awarded at higher cost than appropriate or if the projects were not constructed properly. But the same CUTPA section discussed above specifically states that "[p]roof of public interest or public injury shall not be required in any action pursuant to . . . this section." General Statutes § 42-110m(a).

Finally, with regard to remedies, it is sufficient to note at this point that the state has pleaded and suggested the need for remedies such as restitution and disgorgement of any bribes that state officials received, injunctive relief against future violations of the act, and the imposition of civil penalties for willful violations of the act. These possible remedies, all of which are authorized by the act, assure that CUTPA may afford practical relief to the state in this case, thus rendering the case justiciable. See General Statutes §§ 42-110m(a); 42-110o(b).

B

The Tomasso defendants next argue that this case comes within the exception to CUTPA found in § 42-110c(a) that provides: "Nothing in this chapter shall apply to: (1) transactions or actions otherwise permitted under law as administered by any regulatory board or officer acting under statutory authority of the state or of the United States . . ." General Statutes § 42-110c(a)(1). This issue does not implicate the subject matter jurisdiction of the court because, as ruled, the case is justiciable, the state has standing and, in general, the court has power to hear CUTPA cases. See Lostritto v. Community Action Agency of New Haven, Inc., 269 Conn. 10, 31, 848 A.2d 418 (2004). Rather, the issue goes to "the legal sufficiency of the allegations of [the] complaint . . . to state a claim upon which relief can be granted . . ." Practice Book § 10-39(a)(1). Therefore, the Tomasso defendants should have raised this issue by motion to strike rather than motion to dismiss. See id. §§ 10-31(a)(1); 10-39(a)(1). Because, however, the Tomasso defendants agree that the court can consider this portion of their motion to dismiss as a motion to strike, the court can adjudicate the matter on the merits.

The Tomasso defendants quite properly frame the issue as one of defining the "transactions or actions" in question. The defendants contend that the court must define the relevant "transactions or actions" broadly to refer to the type or category of activity involved. Thus, in this case, they would identify the category of conduct at issue as contracting for public works projects. Because this activity is "permitted under law," generally and, in fact, Public Acts 1999, No. 99-26 specifically authorized the awarding of contracts for the construction of the Connecticut Juvenile Training School, the Tomasso defendants conclude that the case falls within the exception. The defendants maintain that a more narrow or specific definition of "transactions or actions" that would focus on the wrongful activity alleged in the complaint would eliminate the usefulness of the exception because a CUTPA complaint will invariably allege wrongful activity that would never be "permitted by law."

Our Supreme Court has had several occasions to apply the § 42-110c exception. It is true that in Connelly v. Housing Authority, 213 Conn. 354, 567 A.2d 1212 (1990), and Danbury v. Dana Investment Corp., 249 Conn. 1, 730 A.2d 1128 (1999), the court ruled that the exception applied after identifying the "transactions or actions" in question as the more general lawful activity involved rather than the specific wrongful conduct alleged in the complaint. See Connelly, supra, 213 Conn. 361 ("the 'transactions or actions otherwise permitted under law' are the continued leasing or renting of subsidized apartments to low income tenants."); Dana Investment Corp., supra, 249 Conn. 20 ("The process by which the city assesses real estate is authorized and regulated expressly by a pervasive statutory scheme.") But in these cases, the court was apparently not called upon, and did not have occasion, to decide the precise question here of how to define the "transactions or actions." See Connelly, supra, 213 Conn. Dana Investment Corp., supra, 249 Conn. 19-20. Further, in both cases, the court employed the alternative rationale that the type of transactions involved were not among the type to which the Federal Trade Commission Act has been applied. See Connelly, supra, 22 Conn. 361-64 (citing Russell v. Dean Witter Reynolds, 200 Conn. 172, 510 A.2d 972 (1926)); Dana Investment Corp., supra, 249 Conn. 20. Thus, these two cases do not serve as precedent for the proposition that the court must construe the "transactions or actions" at issue in the broad, abstract way recommended by the defendants.

In conducting statutory interpretation, the court must "look to the words of the statute itself, to the legislative history and circumstances surrounding its enactment, to the legislative policy it was designed to implement, and to its relationship to existing legislation and common law principles governing the same subject matter . . ." (Internal quotation marks omitted.) Bender v. Bender, 258 Conn. 733, 741, 785 A.2d 197 (2001). Further, because "'the governing statutes in Massachusetts are virtually identical to our own,'" our courts have "repeatedly looked to the reasoning and decisions of the Supreme Judicial Court of Massachusetts with regard to the scope of CUTPA." Normand Josef Enterprises, Inc. v. Connecticut National Bank, 230 Conn. 486, 521, 646 A.2d 1289 (1994).

As an initial matter, the defendants' construction of the statute does not completely square with the statutory language. The defendants point out that the public contracting process in this state is subject to extensive governmental control, and they identify several state departments that have some involvement in the process. But the exception does not refer to state departments. Rather, the exception applies to actions permitted under law as administered by "any regulatory board or officer" acting under statutory authority. General Statutes § 42-110c(a)(1). The language of the exception suggests approval of specific actions by a specific decision-maker rather than supervision of the general activity by a state department.

The legislative history, while sparse, is at least not inconsistent with this approach. The exception came into law with the initial enactment of CUTPA in 1973. See Mead v. Burns, 199 Conn. 651, 661-62, 509 A.2d 11 (1986); Heslin v. Connecticut Law Clinic of Trantolo Trantolo, 190 Conn. 510, 517 n. 6, 461 A.2d 938 (1983). In 1976, the legislature amended the exception to its current wording by substituting the phrase "under law as administered" for "or administered." See Mead v. Burns, supra, 199 Conn. 362; Public Acts 1976, No. 76-303, § 1. The stated purpose of the amendment was to prevent businesses from avoiding liability for "pernicious . . . actions" by claiming that another agency administers its activities.

Of great assistance is the fact that Massachusetts case law directly addresses the issue under consideration. Interpreting an exception identical to § 42-110c(a)(1) in the Massachusetts unfair trade practices act, the Appeals Court of Massachusetts has held:

The burden [of proving the exception] is a difficult one to meet. To sustain it, a defendant must show more than the mere existence of a related or even overlapping regulatory scheme that covers the transaction. Rather, a defendant must show that such scheme affirmatively permits the practice which is alleged to be unfair or deceptive.

Bierig v. Everett Square Plaza Associates, 34 Mass.App. 354, 367 n. 14, 611 N.E.2d 720, review denied, 415 Mass. 1105, 616 N.E.2d 809 (1993) (quoting Greaney, Chapter 93A Rights and Remedies, § 6-4 (1992)). Thus, the Massachusetts court has interpreted the "transactions or actions" in question to be "the practice which is alleged to be unfair or deceptive," id., rather than the broader category or type of activity involved.

Contrary to the defendants' suggestion, there are in fact a variety of cases in which the exception, interpreted to apply to the specific unfair trade activity alleged, serves an important purpose. This purpose is "to ensure that a business is not subjected to [unfair trade practice] liability if it relies on activity permitted by law." Rini v. United Van Lines, Inc., 903 F.Sup. 224, 231 (D.Mass. 1995), rev'd on other grounds, 104 F.3d 502, (1st Cir.), cert. denied, 522 U.S. 809 (1997). Thus, the Appeals Court in Massachusetts has held that the exception applied when a state regulatory scheme permitted the owners of a residential development to implement the rent increases that were the subject of a suit by tenants. See Bierig v. Everett Square Plaza Associates, supra, 34 Mass.App. 367-68. Similarly, the South Carolina courts, applying a similar exception to the state's unfair trade practice statutes, have found that the exception applies in cases in which a limitation on liability for the failure to deliver household goods was specifically permitted under regulations and tariffs administered by the Interstate Commerce Commission, see Carr v. United Van Lines, Inc., 289 S.C. 194, 198-99, 345 S.E.2d 734 (Ct.App. 1986), and in which an insurance company's exclusion of coverage of certain medical procedures was specifically approved by the state insurance commission. See Trident Neuro-Imaging Laboratory v. Blue Cross and Blue Shield of South Carolina, Inc., 568 F.Sup. 1474, 1483 (D.S.C. 1983).

In contrast, the defendants' proposal to focus only on the general category of activity involved would not further any important purpose and, in fact, would significantly impair enforcement of CUTPA. As a Tennessee court has stated in rejecting a similar proposal:

The purpose of the exemption is to insure that a business is not subjected to a lawsuit under the Act when it does something required by law, or does something that would otherwise be a violation of the Act, but which is allowed under other statutes or regulations. It is intended to avoid conflict between laws, not to exclude from the Act's coverage every activity that is authorized or regulated by another statute or agency. Virtually every activity is regulated to some degree. The defendant's interpretation of the exemption would deprive consumers of a meaningful remedy in many situations.

Skinner v. Steele, 730 S.W.2d 335, 337 (Tenn.Ct.App. 1987). In this case, the defendants maintain that, because contracting with the state for public works is generally permitted by law, the defendants can avoid CUTPA liability for alleged bribery and steering of state contracts. The defendants' interpretation, in other words, would mean that CUTPA liability could not attach to the most serious of unfair trade practices. This interpretation is hardly consistent with the broad, remedial purpose of CUTPA.

Finally, the defendants rely on an exception to CUTPA and "courts should not interpret legislation to enlarge existing statutory exemptions." Normand Josef Enterprises, Inc. v. Connecticut National Bank, supra, 230 Conn. 510. See also General Statutes § 42-110c(b) ("The burden of proving exemption, as provided in this section, from the provisions of this chapter shall be upon the person claiming the exemption."). Contrary to this principle, the defendants' interpretation would enlarge the exception into a loophole through which an unscrupulous or even illegal business could fall on the unremarkable basis that its general type of activity is subject to government regulation.

For all these reasons, the court concludes that the "transactions or actions" in question under § 42-110c(a)(1) are the specific actions alleged in the complaint. In this case, there can be no dispute that the bribery and steering of state contracts alleged in the complaint is not "permitted by law." Therefore, the exception is not available to the defendants and the complaint states a cause of action upon which relief can be granted. Construing this portion of the Tomasso defendants' motion to dismiss as a motion to strike, the motion is denied.

II

The state agrees that it has sued the state defendants in their individual, rather than official, capacities. That being the case, the state defendants cannot invoke sovereign immunity. See Miller v. Egan, 265 Conn. 301, 307, 828 A.2d 549 (2003). Instead, state defendants Anson, Delahunty, and Ragaglia seek dismissal based on the statutory immunity of state employees found in General Statutes § 4-165. See Martin v. Brady, 261 Conn. 372, 374, 802 A.2d 814 (2002). The state counters that the actions of the state defendants were "wanton, reckless or malicious" and therefore immunity does not apply.

In resolving this portion of the motion to dismiss, the court "must take the facts to be those alleged in the complaint, including those facts necessarily implied from the allegations, construing them in a manner most favorable to the pleader." (Internal quotation marks omitted.) Lagassey v. State, 268 Conn. 723, 736, 846 A.2d 831 (2004). The state alleges that the defendants are liable under CUTPA because they acted "in concert with and by giving substantial assistance or encouragement to" the private defendants (Complaint, ¶ 21) in "[engaging] in unfair methods of competition . . . in the conduct of any trade or commerce." General Statutes § 42-110b(a). The state defendants' initial challenge to this theory is to the concept of accessory liability under CUTPA. The court rejects this challenge on the basis of the well-reasoned decision of Judge Levin in Feen v. Benefit Plan Administrators, Inc., Superior Court, judicial district of New Haven, Docket No. 406726 (September 7, 2000) (Levin, J.) ( 28 Conn. L. Rptr. 137). In sum, Judge Levin concluded that the remedial nature of CUTPA, the history of accessorial civil liability in Connecticut that predated the enactment of CUTPA, and the acceptance of accessorial liability under the Federal Trade Commission Act and in Massachusetts decisions all warrant its approval here. The court agrees.

The defendants next maintain that the allegations are insufficient to show that their actions were "wanton, reckless or malicious." The principal allegation against the state defendants is that they acted in concert with the Tomasso defendants "in an effort to secure an unfair advantage for the [Tomasso] defendants . . . in the process of competing to be the developer for and to secure the contract for" the Connecticut Juvenile Training School, a juvenile training school for girls, and "numerous other public works, property management and/or economic development projects for the State of Connecticut and/or various quasi-public agencies." (Complaint, ¶ 21.)

There are numerous supplemental allegations against each state defendant. The state alleges that defendant Ragaglia accompanied defendants Ellef, Alibozek, and Tomasso on a trip in November 1998 to a Marion, Ohio facility that DCF had identified as a model for the boys' training school. During the trip, Ragaglia allegedly discussed the state's real estate needs. She later participated on a panel that selected the Tomasso defendants for the project. (Complaint, ¶¶ 32-33, 44-49.)

The court finds sufficient allegations to show that Ragaglia's actions were "wanton, reckless or malicious." The allegation that Ragaglia discussed the state's real estate needs with an outside party, apparently before formal involvement or approval of the Commissioner of DPW, reveals a violation of state law, which in itself would suffice to negate statutory immunity. See Martin v. Brady, supra, 261 Conn. 379 ("in some instances, the mere fact that an official has acted in excess of his or her authority may suffice to prove that the conduct was wanton, reckless or malicious.") (internal quotation marks omitted.) In addition, Ragaglia allegedly participated in the panel that selected Tomasso for the project while she knew, from her trip, that Tomasso had inside knowledge of the state's real estate needs. These allegations, when combined with the general allegation that Ragaglia acted "in an effort to secure an unfair advantage for the [Tomasso] defendants," reveal a level of reckless behavior that bars reliance on statutory immunity.

The allegations against defendant Anson include the claim that, during the same general time period that he approved several aspects of the boys' school project, Anson received free architectural drawings for an addition to his personal residence from an architectural firm that worked on the project. (Complaint, ¶¶ 35, 51, 72(1).) Although there is no direct connection alleged to the Tomasso defendants in this matter, these allegations, construed favorably to the state, stand as an independent basis to find that Anson received a benefit in exchange for awarding state business. Because such action would violate state law, Anson cannot invoke statutory immunity. See Martin v. Brady, supra, 261 Conn. 379. In addition, the complaint alleges that Anson made initial efforts to assist defendant Ellef in terminating the employment of a DPW employee who had raised concerns about the Tomasso defendants. Allegedly, Anson later approved the selection of the Tomasso defendants for the girls' school project while at the same time having knowledge that they had the benefit of using the same consultants in their statement of qualifications as DPW has used in framing its request for proposals. (Complaint, ¶¶ 43, 56-57, 61-62, 67.) These allegations state a case that defendant Anson intentionally attempted to provide and conceal an unfair advantage for the Tomasso defendants in the state contracting process, thus disqualifying him from statutory immunity.

The state alleges that defendant Delahunty chaired an evaluation committee for the boys' school project that reviewed eight submissions, including that of the Tomasso defendants. The Tomasso's statement of qualifications disclosed a consultant as part of their team who Delahunty allegedly knew had also acted as a consultant for DPW in framing the request for qualifications. (Complaint, ¶¶ 35-39.) The state then alleges that Delahunty later signed a notice requesting that three entities, including the Tomasso defendants, submit proposals. Ultimately, however, DPW terminated that phase of the contracting process for the boys' school and the state does not allege that Delahunty had any further involvement in it. (Complaint, ¶¶ 41-42.) With regard to the girls' school project, Delahunty again was allegedly part of an evaluation committee that reviewed five submissions, including that of the Tomasso defendants. Again, Delahunty allegedly was aware that the Tomassos had used two consultants who had also assisted DPW in framing the request for proposals. (Complaint, ¶¶ 56-57, 60-61.) The complaint, however, does not allege that Delahunty had any further involvement in the matter.

These allegations establish that Delahunty was aware that the Tomasso defendants had inside knowledge of DPW's preferences for both projects. But the only action of Delahunty alleged is that he signed a notice requesting that the Tomassos and two other entities submit proposals for the boys' school project, which phase of the project DPW then terminated. It is true that the state alleges that all of the state defendants, including Delahunty, acted in concert "in an effort to secure an unfair advantage" for the Tomasso defendants in the contracting process. (Complaint, ¶ 21.) But given that the complaint then proceeds to identify numerous acts of the other defendants that reveal the specific manner in which they assisted in securing this unfair advantage, the absence of any such alleged actions by Delahunty is significant. There are simply no significant actions by Delahunty alleged from which the court can infer that he acted in a "wanton, reckless or malicious" manner. Accordingly, the court grants the motion to dismiss of defendant Delahunty on the ground of statutory immunity.

III

The Ellef II defendants have moved to strike on the principal ground that the allegations against them do not state a claim upon which relief can be granted. As in the case of a motion to dismiss, in resolving a motion to strike the court must construe the allegations in a light most favorable to the plaintiff. See Faulkner v. United Technologies Corp., 240 Conn. 576, 580, 693 A.2d 293 (1997). The only specific allegation of wrongdoing by the Ellef II defendants follows the claim that defendant Peter Ellef — the father of defendant Peter Ellef II — accepted bribes from the Tomasso defendants in connection with DPW business. (Complaint, ¶¶ 11, 71(1).) The complaint then alleges: "A significant portion of the benefits to Defendant Peter Ellef was provided through Defendant Peter N. Ellef II and Defendant LF Design, LLC." (Complaint, ¶ 71(1.) Although serving as a conduit for bribe money in the award of public contracts would unquestionably constitute an unfair trade practice, there are no facts alleged from which the court can infer that the Ellef II defendants did so knowingly. Thus, the issue arises as to what extent CUTPA liability can attach without proof of knowledge of the underlying unfair trade practices.

Our Supreme Court has held that "knowledge of falsity, either constructive or actual, need not be proven to establish a violation of CUTPA." Web Press Services Corp. v. New London Motors, Inc., 203 Conn. 342, 363, 525 A.2d 57 (1987). Although that holding arose in the different context of a misrepresentation case, there are other indications that knowledge is not a required element in proving CUTPA. CUTPA is a remedial statute that proscribes a broader range of conduct than does the common law. See id. The main body of the statute itself does not require proof of knowledge. Section 42-110b(a) of the General Statutes provides only that "[n]o person shall engage in unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." The only reference to a knowledge requirement comes in § 42-110o(b), which provides that the Attorney General may seek civil penalties in the event of a willful violation. The section then provides: "For purposes of this section, a willful violation occurs when the party committing the violation knows or should have known that his conduct was a violation of section 42-110b." See General Statutes § 42-110o(b); note 4 supra. The presence of a knowledge requirement for proof of willful violations and entitlement to civil penalties, and the absence of mention of a similar knowledge requirement elsewhere in the act, confirms that CUTPA liability does not depend on proof of a knowing violation.

Accordingly, the state has alleged a sufficient cause of action against the Ellef II defendants in count one, which alleges unfair trade practices in violation of § 42-110b(a). However, the absence of facts from which the court can infer knowledge means that the state has not sufficiently pleaded a cause of action against the Ellef II defendants in count two, which seeks civil penalties under § 42-110o(b). Therefore, the court grants the motion to strike count two as to the Ellef II defendants.

IV

The motion to dismiss of defendant Delahunty is granted. The motion to strike of the Ellef II defendants is granted as to count two only. The remaining motions are denied.

It is so ordered.

Carl J. Schuman Judge, Superior Court