Navigating the Tennessee Consumer Protection Act
Tennessee’s Consumer Protection Act has protected the state’s consumers from unfair and deceptive activities since it was enacted in 1977. But there are a number of caveats (and some recent developments) that would-be litigants should keep in mind before bringing a lawsuit under the Act.
Consumers may directly sue the bad actor if they have suffered damages due to unfair or deceptive trade practices. Tennessee Code Ann. § 47-18-109(a)(1) provides that “[a]ny person who suffers an ascertainable loss of money or property, real, personal, or mixed, or any other article, commodity, or thing of value wherever situated” due to certain unfair or deceptive acts prohibited by the Act can individually sue to recover their damages. However, remember that you must be able to show actual damages caused by the deception.
Consumers may recover up to three times their damages if the other actor willfully and knowingly violated the Act. The Act allows plaintiffs to potentially sue for three times (“treble”) their actual damages if the violation of the Act was “willful or knowing.”[1] But, again, plaintiffs must be able to show some degree of actual damages to proceed with their case—three times zero is still zero.
Successful consumers may be able to recover their attorney’s fees. Litigation is very expensive, and not every case can be taken on a contingent basis. The high cost of attorney’s fees frequently keeps plaintiffs without disposable income from having their day in court. Fortunately, the Act permits courts—in their discretion—to award successful plaintiffs their attorney’s fees and costs as part of their recovery.[2] But keep in mind that the decision to award fees is up to the court and far from guaranteed. Additionally, if the court finds that the plaintiff’s lawsuit is “frivolous, without legal or factual merit” or brought solely to harass the defendant, the Act permits the court to award attorney’s fees and costs to the defendant out of the plaintiff’s pocket.[3] These provisions mean that the Act can, in some ways, be a double-edged sword.
Consumers should act quickly to preserve their rights. All claims brought under the Act must be filed within one (1) year of the victim’s “discovery of the unlawful act or practice.”[4] Importantly, courts have interpreted this to mean that the clock starts ticking “not only when the plaintiff has actual knowledge of a claim, but also when the plaintiff has actual knowledge of facts sufficient to put a reasonable person on notice” of the claim.[5] In other words, the court may find that the deadline for bringing a claim under the Act cuts off a year after the plaintiff should have known about the defendant’s bad acts, even if the plaintiff did not have actual knowledge. Plaintiffs should also keep in mind that the statute also imposes a five (5) year statute of repose, which terminates the right to bring a claim under the Act regardless of when they discover the defendants’ allegedly unlawful acts.
Consumers should retain experienced counsel to determine what clauses (if any) give rise to their claims. Tennessee Code Ann. § 47-18-104 lists dozens of specific behaviors that qualify as “[u]nfair or deceptive acts or practices” under the Act. A few examples of per se unfair and deceptive acts or practices include:
· Falsely representing that an unlicensed person is a licensed contractor[6];
· Claiming that a service, replacement, or repair is needed when it is not[7];
· Unlawfully disconnecting or turning back a vehicle odometer to reduce the number of miles shown[8];
· Misrepresenting that goods or services are of a particular standard, quality, grade, style, or model that they are not[9];
· Falsely advertising a going out of business sale[10] or advertising that a business is “going out of business” more than ninety (90) days before such business ceases to operate[11];
· Advertising goods or services with the intention of not selling them as advertised[12] or with the intent not to satisfy public demand without including a limited quantity disclaimer[13];
· Passing off used or secondhand goods as new[14];
· Misrepresenting the ingredients, uses, benefits, or sponsorship of goods or services[15];
· Falsely passing off goods or services as those of another[16]; or
· Using deceptive designations of geographic origin.[17]
The above provides only a sample of the categories listed by the Act. But whether a plaintiff has a claim under the Act depends entirely on whether the facts of his or her case fall within one of the enumerated categories of acts and practices.
Although the Act does also include a generalized prohibition on “any other act or practice which is deceptive to the consumer or to any other person,” private entities cannot sue under this clause—only the office of the attorney general can enforce that specific language.[18]
Whether a party is subject to the Act may also depend on the particular “hat” that the party was wearing when it took the allegedly deceptive action. For instance, the Tennessee Supreme Court recently confirmed that claims may be sustained against health care providers for “deceptive practices in advertising, billing, or collections” because health care providers are subject to the Act whenever they are acting in their “business capacity rather than in [their] professional capacity.”[19]
Because private individuals must instead find a specific category of prohibited conduct under which to bring their claim, individuals must retain experienced counsel to ensure that they successfully plead which specific clauses may apply to their case.
If you believe that you have been deceived or taken advantage of by a business or contractor, please contact Meridian Law at (615) 229-7499, info@meridian.law, or www.meridian.law to schedule a free consultation and discuss your options. Although we are practicing “social distancing” at this time, we are available to meet in-person under certain circumstances or by phone, videoconferencing, and/or email to discuss your options.
Eric Lyons
Disclaimer: The information in this blog post (“post”) is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from Meridian Law, PLLC or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.
[1] Tenn. Code Ann. § 47-18-109(a)(3).
[2] § 47-18-109(e)(1).
[3] § 47-18-109(e)(2).
[4] See § 47-18-110.
[5] Town of Smyrna, Tenn. v. Mun. Gas Auth. of Georgia, 129 F. Supp. 3d 589, 597 (M.D. Tenn. 2015) (quoting Redwing v. Catholic Bishop for Diocese of Memphis, 363 S.W.3d 436, 459 (Tenn. 2012)) (quotation marks omitted).
[6] § 47-18-104(b)(35).
[7] § 47-18-104(b)(13).
[8] § 47-18-104(b)(16).
[9] § 47-18-104(b)(7).
[10] § 47-18-104(b)(17).
[11] § 47-18-104(b)(29).
[12] § 47-18-104(b)(9).
[13] § 47-18-104(b)(10).
[14] § 47-18-104(b)(6).
[15] § 47-18-104(b)(5).
[16] § 47-18-104(b)(1).
[17] § 47-18-104(b)(3).
[18] § 47-18-104(b)(27).
[19] Franks v. Sykes, 600 S.W.3d 908, 914–15 (Tenn. 2020).