Texas Civil Justice League

NEWS

03/07/2007
Williams Files Consumer Protection Bill

Sen. Tommy Williams (R-The Woodlands) filed SB 1397 that contains two clarifications to the statutory provisions governing private remedies for violations of the state's Deceptive Trade Practices Act, which was substantially reformed in 1995. The measure is designed to prevent use of DTPA in class action litigation.

Texas’s Deceptive Trade Practices Act is in need of reform to ensure that the state’s businesses are not exposed to meritless lawsuits from individuals who have suffered no real harm. SB 1397 contains two clarifications to the statutory provisions governing private remedies for violations of the state’s Deceptive Trade Practices Act. The proposal provides that in order for a person to recover damages under these provisions, she must prove that the deceptive method, act, or practice caused her to enter into the transaction that caused her loss. This is required of individual claimants and of all members of a class. Texas courts have recognized that causation is an element of a Deceptive Trade Practices claim, but exactly what that means is unclear. This bill eliminates this uncertainty by requiring each claimant to prove that the deceptive act or practice caused the claimant to enter into the transaction, usually a purchase of some sort, that caused the claimant’s damages.

SB 1397 would also provide that plaintiffs’ damages are measured by their “out-of-pocket” loss, which is defined as the difference between the amount paid by the consumer for the good or service and the actual market value of the good or service that the consumer received. Currently, the statute does not specify a measure of damages in unfair practices cases. This means that courts may award whatever damages they think are appropriate, without any legislative guidance. Having a more certain, predictable definition of damages would decrease the possibility of “runaway” damage awards and allow both plaintiffs and defendants to assess how much a case is worth at the outset of the action.