Consumer Transactions Outline : John Bauman Spring 2017
Texas Deceptive Trade Practices Act
First created in 1973 to eliminate prior obstructions to consumers bringing suits (low dollar recovery, especially in light of litigation costs/high burden of proof for fraud). Atty fees being awarded can make these cases economically feasible to be tried.
In 1995 Tort Reform set in, and DTPA claims have decreased, since there is now a cap on damages.
Exemptions – 17.49
Certain things are exempted from coverage of the DTPA.
The impetus for the exemptions came when it appeared that there might be a DTPA case for things like legal malpractice. Attorneys didn’t want to be liable for treble damages and attorney’s fees.
(a) The media is exempted from DTPA cases where they do things like running an ad in the paper (unless they knew it was false).
(c) Legal malpractice cases are exempted from DTPA cases, except for 5 listed occurrences.
(e) Products liability cases
OVERVIEW OF THE DTPA
§17.50 (creates a private right of action for injured consumer) A consumer may maintain an action where any of the following constitute a producing cause of economic damages or damages for mental anguish (DTPA Causes of Action):
A false, misleading, or deceptive act or practice that is:
specifically enumerated in §17.46 (“the Laundry List”) AND
relied on by a consumer to the consumers detriment;
breach of an express or implied warranty;
An unconscionable action or course of action by any person;
a violation of the Insurance Code Ch. 541.
Elements of DTPA Cause of Action
Plaintiff is a consumer (consumer standing)
Defendant committed a proscribed act in §17.50 (1 of the 4 cons. COA’s)
Defendant’s acts were producing cause of the consumer’s damages.
“but, for” causation, no forseeability requirement
§17.44: Construction & Application
The DTPA is supposed to be liberally construed:
(a) This subchapter shall be liberally construed and applied to promote its underlying purposes, which are to protect consumers against false, misleading, and deceptive business practices, unconscionable actions, and breaches of warranty and to provide efficient and economical procedures to secure such protection.
CONSUMER STANDING REQUIREMENT — Element 1
Having status as a consumer gives a P standing to file suit under the DTPA. Without consumer standing, there can be no cause of action under the DTPA.
Whether a D commits a violation actionable under the DTPA is a different question than whether they have consumer standing.
§17.45(4): DTPA definition of “Consumer”:
An individual, partnership, corporation, this state, or an agency
Businesses too can use the DTPA, not just individuals.
Who seeks or acquires
By purchase or lease
Any goods or services
The term does not include a business consumer w/ assets of $25MM or more or that is owned or controlled by a corp. or entity with assets of $25MM or more.
Big business limitation to keep the DTPA for small business & individual use.
Test for Consumer Status:
An individual, person, or state that:
Seeks OR acquires
For purchase OR lease
Goods OR services AND
The goods or services purchased or lease must be the basis of the complaint.
The 2 part test:
P must have sought or acquired by purchase or lease some goods or services; AND
The goods or services purchased or leased must form the basis of the complaint.
If facts are undisputed, then it’s a question of law for the judge.
If the facts to determine consumer status are disputed, then it’s a fact question for the jury.
“Seek or Acquire”
Do not have to purchase in order to have consumer standing, but it does makes it difficult to prove damages.
No privity of contract required for the plaintiff to have consumer standing.
Important aspect: look at the Plaintiff’s “relationship to the transaction.”
A third party beneficiary may qualify as a consumer if he’s a primary intended beneficiary (must be bought FOR this person; not just an “incidental benefit”).
If derived for the person, then they may be a consumer; EX:
If X buys service for Y, Y has consumer standing.
Employee complains about dust and employer buys that employee a respirator.
Funeral services are bought for the living relatives of the dead, so the family of the deceased are 3rd party beneficiaries.
Baby in hospital is the primary intended beneficiary.
Employer provided insurance — employee is primary intended beneficiary & insurance is purchased for that employee .
Incidental benefit à person is not a consumer:
Employer buys a forklift to be used during employee’s employment and forklift is defective and employee is injured.
Employee is injured at work by robber because security system was defective.
“For purchase or lease”
A gratuitous acts/good is not a purchased good/service under the DTPA.
Cannot sue a court appointed lawyer under the DTPA.
“Free” servicing under warranty could still be by purchase because it was bargained for (paid for) when the customer bought the car.
“Free estimates” are arguable à
If damaged before the shop agrees to repair, then no standing. It’s an unconsummated transaction.
If damaged after they agreed to repair, then consumer standing because it’s a consummated transaction.
“Goods or Services” under §17.45:
(1): Goods: means tangible chattels or real property purchased or leased for use.
No intangibles (goodwill, securities, loss of consortium), no money.
(2): Services: means work, labor, or services purchased or leased for use, including services f
n glass in mug. Patron acquired a good for his direct benefit & has consumer standing.
A goes to bank to get a loan to buy a truck and gets a free toaster with the loan. The toaster blows up and destroys his house, and he sues bank under DTPA. Consumer argues the object was to get a loan and a toaster, so he has consumer standing; toaster is not free. It is paid for in the loan. D will argue toaster was free, so no consumer standing.
A goes to store to buy car polish, they don't have his brand, he leaves and is stopped by security guard who ask him if he stole his watch. No consumer standing b/c he was seeking car polish, and the object of the case is the security guard's services. Can't qualify as a 3rd party beneficiary because the company was thinking of itself, not him, when it hired the guard.
Dad goes to auto dealer w/ son intending to give son some cash and to co-sign on car. Dealer learns dad’s HIV positive and won't sell the son the truck. Son would have consumer status, but not dad. He's not buying the truck and isn't a 3rd party beneficiary. (Might be different if dad was going to use the truck.)
Lawyer goes into a bar to buy beer. Bar’s not open. Bartender gives him a free beer. Lawyer is injured by broken glass. It’s a gratuitous transaction, so no consumer standing. (Might be able to get standing if argue bar only gave him the free drink so he would stay and buy more.)
The TXSC has held that DTPA actions cannot be assigned.
Texas courts have tended to view DTPA claims as uniquely personal to the original consumer.
Recent cases indicate that DTPA cases to not survive the death of the consumer.
DTPA claims only belong to the original consumer and the original consumer cannot assign that claim. The TXSC held that it DTPA actions shouldn’t be assignable.
DTPA causes of actions apply to private sellers as well. You don’t have to be “in the business of selling.”
LAUNDARY LIST VIOLATIONS – (1 of the 4 consumer COA’s under the DTPA)
Elements for a Laundry List Violation: –§17.50
P has consumer standing
Defendant Violated of one of the LL Violations (27 claims listed)
Reliance by the P on the misrepresentation to P’s detriment
Defendant’s actions caused mental or economic damages