Consumer Law: Texas Deceptive Trade Practices Act (Dtpa)

Front 1

TX Deceptive Trade Practices Act purpose

Back 1

- Liberally construed to protect consumers against false, misleading and deceptive business practices, unconscionable actions, and breaches of warranty

- Provide efficient and economic procedures to secure such protection

Front 2

Generally can't waive DTPA. Only certain circumstances.

Back 2

1) Written waiver is in writing, signed by consumers

2) Consumer isn’t in a significantly disparate bargaining position; AND

3) Consumer represented by legal counsel in seeking or acquiring the goods or services

Front 3

Define consumer.

Back 3

Only entity that may maintain private CoA under DTPA

Front 4

Define business consumer.

Back 4

Included as a consumer unless assets of $25 million or more

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Define goods.

Back 5

Tangible property and real property

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Define services.

Back 6

Excludes merely lending money

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Define unconscionability.

Back 7

Not common law or UCC; taking advantage to a grossly unfair degree

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Define knowingly.

Back 8

Required to recover mental anguish damages up to 3 x economic damages

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Define intentionally.

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Required to recover up to 3x mental anguish damages

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Define economic damages.

Back 10

DTPA general damages standard

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Define actual damages.

Back 11

Standard for all other statutes

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Define tie-in statute.

Back 12

Another state statute that makes a violation of that statue actionable through the DTPA

Insurance Code is not a tie-in-statute

Front 13

Consumer is the proper party plaintiff for the DTPA

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1) An entity 2) who seeks or acquires by 3) purchase or lease, 4) any goods or services

Does not include a business consumer with assets of $25 million or more, or owned or controlled by a corporation or entity with assets of $25 million or more

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“Seek or acquire”

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DTPA does not require transfer of consideration; an entity is a consumer if it seeks to purchase goods. Any purchase or good faith intent to purchase is an acquisition.

1) Purchaser acquires, as does any intended beneficiaries (but not incidental beneficiaries).

2) Don’t assume fact is intended or incidental.

Front 15

“Purchase or lease”

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DTPA says that entity must seek or acquire goods this way

1. Truly free services are not subject to DTPA

2. Purchase broadly defined to include any consideration

3. Consumer doesn’t have to be the one who pays

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"Goods or services"

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1. “Goods” are “tangible chattels or real property purchased or leased for use.”
- Includes real estate, inventory
- Excludes money
- Goods purchased for resale are purchased for use

2. “Services” means “work, labor, or service purchased or leased for use, including services furnished in connection with the sale or repair of goods”
- Includes insurance
- Excludes merely lending money (but if from consumer’s perspective, the loan was an essential part of transaction, it was subject to the act)

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Business customer exception to DTPA

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Business consumer is w/in scope of DTPA. Excluded: those with assets of $25 million or more, or one owned or controlled by a entity w/assets of $25 million or more

Business consumer: “an individual, partnership, or corporation who seeks or acquire by purchase or lease, any goods or services for commercial or business use”

Non-business consumers covered, regardless of assets

*Anytime you see business consumer, mention: A defendant has burden to prove business consumer exception as an affirmative defense.

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Statutory exemptions under DTPA

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- List of exempt conduct
- N/A to newspaper that published advertisements w/o knowledge of false, misleading or deceptive nature of the publication
- N/A to act or practice authorized by specific FTC rules or regulations

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Statutory exemption for professional services

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Section 17.49(c) provides DTPA n/a to claim for damages based on rendering of professional service.

"Essence of service" test:
- advice/judgment/opinion is exempt
- exemption is service specific, not profession specific. Generally, lawyers/doctors/accountants/architects/engineers are exempt

...but exemption n/a to express misrepresentation of material fact; failure to disclose; unconscionable act; breach of express warranty

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Personal Injury Claims

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If Subsections 17.50 (b) or (h) apply; no exemption.

1) Section 17.50(b) allows damages/mental anguish from personal injury
2) 1750(h) allows all personal injury damages if claim is based on a “tie-in” statute

Front 21

DTPA is inapplicable to claim arising out of a written contract if relates to a “transaction/project/set of transactions related to the same project” involving consideration by the consumer of >$100,000.

** Need signed contract; consumer must be represented by an attorney; exemption does not apply to a residence.

Back 21

DTPA n/a to CoA out of transactions relating to same project, involving a total consideration by consumer of >$500,000.

**No need for written contract or attorney; look at total cost to project; does not apply to a residence.

Front 22

DTPA defendants

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As long as the goods or services form the basis of the consumer’s complaint, he may sue any entity that violates DTPA

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"in connection with"

Act must occur in connection with consumer’s transaction

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Remote Parties test: Did the misrepresentation reach consumer? If yes- in connection with; if no, not.

- can't sue upstream manufacturers or suppliers who were not party
- consumer retailers purchases; manufacturer brochure; wants claim against manufacturer misrepresentation--> reached consumer

Front 24

DTPA claims (separate but cumulative)

[constitute producing cause of economic damages or mental anguish damages]

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Section 17.50(a) of DTPA :

1) Laundry list (enumerated prohibited acts and practices) relied on by by a consumer to the consumer’s detriment;

2) Breach of an express or implied warranty;

3) Any unconscionable action or course of action by any person; or

4) Use or employment by any person of an act or practice in violation of Chapter 541 (Insurance Code)

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"Laundry list" claims

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- Require consumer reliance
- 27 acts/practices deemed prima facie false, deceptive, misleading; conduct may violate more than 1 section of the Act
- Most common: General misrepresentative, misrepresentation of legal rights, failure to disclose
- For general misrepresentation, only necessary that actor makes in accurate or false representation of fact (oral or written) regarding goods or services

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Failure to disclose

[4-point intent test]

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1) D. knew info regarding goods or services

2) Information was not disclosed

3) Intent to induce the consumer to enter into the transaction; and

4) Consumer would not have entered into transaction on same terms had the information been disclosed

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Is opinion or "puffing" actionable under DTPA?

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Statements that constitute mere opinion, or puffing, are not actionable under DTPA.

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PER or SOF

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n/a to DTPA

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DTPA allows multiple claims

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But can only have single recovery for same damages

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Unconscionability is determined at transaction time w/objective standard [no culpable mental state]

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An act or practice, which to a consumer’s detriment, takes advantage of consumer's lack of knowledge, ability, experience, or capacity to a grossly unfair degree*

*Grossly unfair: glaringly noticeable, flagrant, complete, unmitigated

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Breach of warranty

[any BOW actionable under DTPA]

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- Independent basis for a CoA
- a vehicle to bring an otherwise existing claim
- DTPA doesn't create warranties; incorporates warranty laws [so look to state law to see if warranty exists and whether there's been a breach]
- warranties can be disclaimed

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Warranty claim analysis

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1) Analyze warranty claim as if no DTPA

2) If breach, use DTPA for damages

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Implied warranty of suitability

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- Applies to commercial leaseholds; warrants commercial property is fit for its intended purpose.

- May be waived.

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"Implied Warranty of Good and Workmanlike Performance in Service Contracts"

(primary consumer warranty)

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1) In repair/modification K of tangible good or real estate, there’s implied warranty that work done competently

2) May not waive

3) No implied warranty for professional service

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"Implied Warranty of Good and Workmanlike Performance and Habitability in Sale of Home"

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All changed on 9/30; habitability may not be waived.

Front 36

Violations of Chapter 541 (insurance) automatically violate DTPA

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*Insurance is a service; this isn’t a tie-in statute

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DTPA action must start w/in 2 years after date on which act/practice occurred (or within 2 years after consumer discovered or in exercise of reasonable diligence should have discovered the occurrence)

Back 37

Courts generally look to date of injury

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Pre-suit notice of a DTPA action must be given 60 days before filing (unless filed as counterclaims)

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Action must contain nature of complaint, damage amounts, attorney fees

May give notice for a class (in class action)

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D responsibilities in proposing a settlement offer

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1) D has 60 days from receipt of 90 days after answer, to propose a settlement offer

2) Offer must include an amount of money or consideration reduced to cash value as settlement of damages (settlement in kind) and an amount for consumer’s reasonable attorneys’ fees.

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Reasonable settlement: substantially same/more than amount of damages found by trier of fact

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If consumer rejects offer, may be filed with court with affidavit certifying its rejection and it limits damages and precludes additional damages; limits a consumer’s attorneys’ fees

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Remedy for failure to give notice

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Abatement

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3 possible defenses to a DTPA claim

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- Negation of producing cause
- Mediation/arbitration
- Pre-suit notice

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Mediation/arbitration under DTPA

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1) Allowable when compelled by either party

2) Claims are subject to arbitration

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Producing cause --> lowest TX causation standard!

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NOT proximate cause. It is a substantial factor which brings about injury and without which the injury would not have occurred.

May be negated by signing "as-is agreement" and preclude recovery

Front 45

Consumer damages

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1) Economic: covers pecuniary loss

2) Mental anguish: If trier of fact finds D’s conduct committed knowingly, may recover MAD
*Knowingly: known or should have known (they will tell you this)
*Standard of Proof: very high!
--> “substantial disruption… in daily routine” or “high degree of mental pain and distress” “more than mere worry, anxiety, vexation, embarrassment or anger”

3) Additional Damages: recoverable if culpable mental state
Knowingly: not more than 3x economic damages (treble)
Intentionally: not more than 3x mental anguish and economic damages

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What damages if jury finds that defendant acted knowingly?

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May award additional damages (up to 2x economic) and may award mental anguish damages.

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What damages if jury finds that defendant acted intentionally?

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May award economic damages, MAD, and additional damages up to 2x economic and MAD

* If you find a way to get more than 3 x damages, redo your math!

Front 48

DTPA mandates attorneys' fees

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Fully compensate consumer; encourage attorneys to represent consumers.

Front 49

Consumers' attorneys fees vs. D's attorneys fees.

Back 49

Consumers' are mandatory; discretionary amount depending on work.

D's are generally mandatory on finding of:
1) Groundless (suit had no basis in fact or law)
2) Bad faith (malice/ill will/spite)
3) Harassment (sole purpose)

Front 50

Before 1995, DTPA permitted prevailing consumer to recover "actual damages"; then replaced with "economic."

BUT, actual damages may still be recovered in tie-in statute cases

Back 50

- broader than economic damages; includes all damages recoverable at common law (economic and tort).

- If D acted knowingly, can recover up to 3x [treble] all actual damages (including MAD, pain/suffering)

Front 51

Tie-in statute

Back 51

DTPA permits a claim to be brought by a consumer based on other statutes.

Tie-in statute benefit: damages measured by "actual damages" standard, not economic loss

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3 claims of a tie-in statute

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1) TI statute by itself
2) DTPA by itself
3) DTPA tie-in claim

Front 53

34 tie-in statutes. Most common--

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a. Business Opportunity Act: seller promises to sell buyer goods to start business
b. Contest and Giveaway Act: inducement to attend sales presentation
c. Debt Collection Act ** (tested before!)
d. Health Spa Act: 3 days to rescind
e. Home Solicitation Act: door-to-door sales; right to rescind
f. Credit Service Organizations: credit repair organizations
g. Removal of Unauthorized Vehicles from Parking Facility (Towing Statute): requires very specific signage
h. Rental-Purchase Agreements: rent-to-own agreements
i. Representation as Attorney: prohibit notary from holding self as attorney
j. Manufactured Housing Standards Act: DTPA for mobile homes
k. Motor Vehicle Commission Code: Lemon laws for new cars
l. Timeshare Act: 6 days to rescind
m. Unfair Claims Settlement Practices Act
n. Regulation of Telephone Solicitation: regulates unsolicited calls and faxes