Demand with a Plan: The Need for Retailers to be Aware of the Variations in Civil Demand Statutes Across the Country

By: Jan E. Simonsen, Esq. and Alexander M. Gormley, Esq

Shoplifting is a uniform problem for retailers throughout the United States. However, the statutes that govern the rights of retailers to recover civil liability from shoplifters are anything but uniform from state to state. While there are similarities among some states, often along regional lines, each state has its own set of rules for how merchants can—or must—go about seeking restitution for shoplifting and all of its attendant costs. The important point for retailers and their loss prevention departments is that instead of having a single approach towards pursuing civil remedies for shoplifting, retailers must tailor their civil demand policies to the unique requirements and restrictions of each of the states in which their stores are located. This may ultimately require more work and planning up front, but will avoid unnecessary and costly litigation down the road.

The first category of Civil Demand Statutes explicitly require merchants to send a demand notice for restitution to the shoplifter as a prerequisite to filing a civil suit for damages. There are ten (10) states in this category and they can be divided into two sub-categories. The first sub-category is those states that enumerate the specific language and/or form that the civil demand notice must have: These states are Georgia, Maryland, Mississippi, and Ohio. Retailers should pay careful attention to the requirements of the statutes, as they can be numerous and very precise. For example, in Maryland, the demand letter must: 1) identify the act of shoplifting alleged to have been committed; 2) specify the amount of damages sought; 3) specify the amount of the civil penalty sought and the method of calculating that amount; 4) request payment of the damages and civil penalty by cash, money order, certified check, or cashier’s check; 5) contain a conspicuous notice advising the responsible person that payment of the damages and civil penalty does not preclude the possibility of criminal prosecution, but that the payment would not be admissible in any criminal proceeding as an admission or evidence of guilt; and 6) specify the date by which the payment should be made in order to avoid civil action. See, Md. Code Ann., (Cts. & Jud. Proc.) § 3-1303 (West).

The second sub-category of states is those that do not have specific requirements for the civil demand notice. These states are Alaska, Arkansas, Florida, Kansas, New Jersey and Pennsylvania. For example, Florida’s civil demand statute, Fla. Stat. Ann. § 772.11 (West), requires only that “Before filing an action for damages under this section, the person claiming injury must make a written demand for $200 or the treble damage amount of the person liable for damages under this section.”

The second category of Civil Demand Statutes explicitly allow merchants to send a civil demand notice, but do not require it as a prerequisite to filing a civil action for shoplifting. There are seventeen (17) states in this category. As with the first category, the states in this second category can be divided into two sub-categories based on whether they set specific requirements for the civil demand notice. The first sub-category is comprised of Delaware, the District of Columbia, Michigan, Minnesota, North Carolina, Rhode Island, South Dakota, Tennessee, Utah, Vermont and Washington. Michigan’s statute, Mich. Comp. Laws Ann. § 600.2953 (West), is representative of what the statutes in the sub-group tend to say, as it states that the merchant “may make a written demand for payment of the amount for which the person who committed [shoplifting] is liable”, and then provides several paragraphs of text that the letter must contain, verbatim. The second sub-category of states—those that do not set specific requirements for the civil demand notice—are Hawaii, Nebraska, New York, Oregon, Virginia and West Virginia. Virginia’s civil demand statute, Va. Code Ann. § 8.01-44.4 (West), offers a representative example. It states, “Prior to the commencement of any action [for shoplifting], a merchant may demand, in writing, that an individual…make appropriate payment to the merchant in consideration for the merchant’s agreement not to commence any legal action under this section”, but does not go so far as to set forth what the written demand must say.

The third category of Civil Demand Statutes create an explicit right to file a civil action for shoplifting, but are silent as to the issue of whether a demand can or must be made as a prerequisite to a civil suit. There are fifteen (15) states in this category: Arizona, California, Colorado, Connecticut, Idaho, Illinois, Indiana, Massachusetts, Missouri, Montana, Nevada, New Hampshire, New Mexico, Wisconsin, and Wyoming. It is important to note that, although many of these statutes appear to create a broad right to pursue restitution through civil remedies, they may have certain limitations. For example, in California, the statute that creates civil liability for shoplifting is a part of the penal code. See, Cal. Penal Code § 490.5 (West). According to Newman v. Checkrite California, Inc., 912 F. Supp. 1354, 1378 (E.D. Cal. 1995), because Cal. Penal Code § 490.5 is considered a “statutory penalty”, claims brought pursuant to it are not assignable. Therefore, while retailers in California could likely pursue a civil claim for shoplifting by way of a pre-suit demand, they could not assign such a claim to a debt collection agency without first obtaining an actual judgment.

The fourth category of Civil Demand Statutes create an explicit right to file a civil action for shoplifting, but do not allow for civil recovery by way of a pre-suit demand. There are only two (2) states in this category: Oklahoma and Texas. In Texas, under Tex. Civ. Prac. & Rem. Code Ann. § 134.005 (Vernon), “a person who has sustained damages resulting from [shoplifting] may recover…the amount of actual damages found by the trier of fact and…a sum not to exceed $1,000.” The implication from the language of this statute is that a retailer must present its claim to the trier of fact in a civil action, for a finding of a liability and damages, rather than make a demand to settle the claim based on its own calculation of its damages. That appears to have been the upshot of the interpretation of the statute in Alcatel USA, Inc. v. Cisco Sys., Inc., 239 F. Supp. 2d 660 (E.D. Tex. 2002), which stated: “an award of statutory damages is contingent upon an award of actual damages.” Oklahoma’s statute, Okla. Stat. Ann. tit. 21, § 1731.1 (West), is similar to Texas in that it requires “judgment” to be “rendered” before a merchant can obtain damages.

The fifth and final category of Civil Demand Statutes do not appear to create an explicit right to file a civil action for shoplifting, and therefore are also silent on the issue of pre-suit demand. There are seven (7) states in this category: Alabama, Iowa, Kentucky, Louisiana, Maine, North Dakota, and South Carolina. These states preclude retailers from filing civil actions for shoplifting, given that the cause of action would sound in the common law tort of conversion, but clearly does not allow for any statutory damages or penalties. Ultimately, the question of whether a retailer in these states could make a pre-suit demand to settle such a claim for conversion should be first reviewed with counsel based on research of local trial-court level practice and rulings.

Given the vast number of states in which many retailers operate, and the many idiosyncrasies of these various statutes, it is important for retailers to fully understand what their responsibilities are before pursuing civil demand in a shoplifting situation.