| 1 | 1 | | 84R10171 TSR-F |
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| 2 | 2 | | By: Davis of Harris H.B. No. 2898 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to certain procedures, civil penalties, and remedies under |
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| 8 | 8 | | the Deceptive Trade Practices-Consumer Protection Act. |
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| 9 | 9 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 10 | 10 | | SECTION 1. Sections 17.45(9) and (13), Business & Commerce |
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| 11 | 11 | | Code, are amended to read as follows: |
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| 12 | 12 | | (9) "Knowingly" means actual awareness, at the time of |
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| 13 | 13 | | the act or practice complained of, of the falsity, deception, or |
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| 14 | 14 | | misleading nature [unfairness] of the act or practice giving rise |
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| 15 | 15 | | to the consumer's claim or, in an action brought under Subdivision |
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| 16 | 16 | | (2) of Subsection (a) of Section 17.50, actual awareness of the act, |
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| 17 | 17 | | practice, condition, defect, or failure constituting the breach of |
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| 18 | 18 | | warranty, but actual awareness may be inferred where objective |
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| 19 | 19 | | manifestations indicate that a person acted with actual awareness. |
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| 20 | 20 | | (13) "Intentionally" means actual awareness, at the |
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| 21 | 21 | | time of the act or practice complained of, of the falsity, |
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| 22 | 22 | | deception, or misleading nature [unfairness] of the act or practice |
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| 23 | 23 | | giving rise to the consumer's claim [,] or the condition, defect, or |
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| 24 | 24 | | failure constituting a breach of warranty giving rise to the |
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| 25 | 25 | | consumer's claim, coupled with the specific intent that the |
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| 26 | 26 | | consumer act in detrimental reliance on the act, practice, |
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| 27 | 27 | | condition, defect, or failure [falsity or deception or in |
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| 28 | 28 | | detrimental ignorance of the unfairness]. Intention may be |
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| 29 | 29 | | inferred from objective manifestations that indicate that the |
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| 30 | 30 | | person acted intentionally or from facts showing that a defendant |
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| 31 | 31 | | acted with flagrant disregard of prudent and fair business |
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| 32 | 32 | | practices to the extent that the defendant should be treated as |
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| 33 | 33 | | having acted intentionally. |
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| 34 | 34 | | SECTION 2. Sections 17.47(a), (b), (c), and (d), Business & |
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| 35 | 35 | | Commerce Code, are amended to read as follows: |
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| 36 | 36 | | (a) Whenever the consumer protection division has reason to |
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| 37 | 37 | | believe that any person is engaging in, has engaged in, or is about |
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| 38 | 38 | | to engage in any act or practice declared to be unlawful by this |
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| 39 | 39 | | subchapter, and that proceedings would be in the public interest, |
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| 40 | 40 | | the division may bring an action in the name of the state against |
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| 41 | 41 | | the person to restrain by temporary restraining order, temporary |
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| 42 | 42 | | injunction, or permanent injunction the use of such [method,] |
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| 43 | 43 | | act[,] or practice. |
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| 44 | 44 | | Nothing herein shall require the consumer protection |
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| 45 | 45 | | division to notify such person that court action is or may be under |
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| 46 | 46 | | consideration, provided[. Provided], however, the consumer |
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| 47 | 47 | | protection division shall, at least seven days prior to instituting |
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| 48 | 48 | | such court action, contact such person to inform him [in general] of |
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| 49 | 49 | | the alleged unlawful conduct. [Cessation of unlawful conduct after |
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| 50 | 50 | | such prior contact shall not render such court action moot under any |
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| 51 | 51 | | circumstances, and such injunctive relief shall lie even if such |
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| 52 | 52 | | person has ceased such unlawful conduct after such prior contact.] |
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| 53 | 53 | | Such prior contact shall not be required if, in the opinion of the |
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| 54 | 54 | | consumer protection division, there is good cause to believe that |
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| 55 | 55 | | such person would evade service of process if prior contact were |
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| 56 | 56 | | made or that such person would destroy relevant records if prior |
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| 57 | 57 | | contact were made, or that such an emergency exists that immediate |
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| 58 | 58 | | and irreparable injury, loss, or damage would occur as a result of |
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| 59 | 59 | | such delay in obtaining a temporary restraining order. |
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| 60 | 60 | | (b) An action brought under Subsection (a) of this section |
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| 61 | 61 | | which alleges a claim to relief under this section may be commenced |
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| 62 | 62 | | in the district court of the county in which the person against whom |
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| 63 | 63 | | it is brought resides or[,] has his principal place of business[, |
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| 64 | 64 | | has done business,] or in the district court of the county where the |
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| 65 | 65 | | transaction occurred, or, on the consent of the parties, in a |
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| 66 | 66 | | district court of Travis County. An action brought under |
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| 67 | 67 | | Subsection (a) is subject to the procedural and evidentiary rules |
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| 68 | 68 | | applicable to any other civil action filed in a district court. The |
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| 69 | 69 | | court may issue temporary restraining orders, temporary or |
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| 70 | 70 | | permanent injunctions to restrain and prevent violations of this |
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| 71 | 71 | | subchapter and such injunctive relief shall be issued without bond. |
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| 72 | 72 | | (c) In addition to the request for a temporary restraining |
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| 73 | 73 | | order[,] or permanent injunction in a proceeding brought under |
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| 74 | 74 | | Subsection (a) of this section, the consumer protection division |
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| 75 | 75 | | may request[, and the trier of fact may award,] a civil penalty to |
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| 76 | 76 | | be paid to the state. If the consumer protection division requests |
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| 77 | 77 | | a civil penalty, the trier of fact shall determine the number of |
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| 78 | 78 | | violations that the person committed, whether the person acted |
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| 79 | 79 | | knowingly or intentionally, and the amount of economic harm caused |
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| 80 | 80 | | by the act or practice that is the subject of the proceeding. The |
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| 81 | 81 | | trier of fact may then award a civil penalty to be paid to the state |
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| 82 | 82 | | in an amount of: |
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| 83 | 83 | | (1) not more than $20,000 per violation, not to exceed |
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| 84 | 84 | | a total of the lesser of $50,000 or the amount of economic harm |
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| 85 | 85 | | caused by the act or practice that is the subject of the proceeding, |
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| 86 | 86 | | unless the person acted intentionally, in which case the trier of |
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| 87 | 87 | | fact may award a civil penalty in an amount of not more than the |
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| 88 | 88 | | greater of $250,000 or the amount of economic harm caused by the act |
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| 89 | 89 | | or practice that is the subject of the proceeding; and |
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| 90 | 90 | | (2) if the act or practice that is the subject of the |
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| 91 | 91 | | proceeding was calculated to acquire or deprive money or other |
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| 92 | 92 | | property from a consumer who was 65 years of age or older when the |
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| 93 | 93 | | act or practice occurred, an additional amount of not more than |
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| 94 | 94 | | $50,000 [$250,000]. |
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| 95 | 95 | | (d) The court may make such additional orders or judgments |
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| 96 | 96 | | as are necessary to compensate identified [identifiable] persons |
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| 97 | 97 | | for actual damages or to restore money or property, real or |
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| 98 | 98 | | personal, that was [which may have been] acquired by means of any |
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| 99 | 99 | | unlawful act or practice. An award under this subsection [Damages] |
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| 100 | 100 | | may not include any damages incurred, or money or property |
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| 101 | 101 | | acquired, more than [beyond a point] two years prior to the |
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| 102 | 102 | | institution of the action by the consumer protection division. |
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| 103 | 103 | | Orders of the court may also include the appointment of a receiver |
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| 104 | 104 | | or a sequestration of assets if a person who has been ordered by a |
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| 105 | 105 | | court to make restitution, including by returning money or |
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| 106 | 106 | | property, under this section has failed to comply with the court's |
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| 107 | 107 | | order [do so] within three months after the order [to make |
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| 108 | 108 | | restitution] has become final and nonappealable. |
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| 109 | 109 | | SECTION 3. Section 17.60, Business & Commerce Code, is |
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| 110 | 110 | | amended to read as follows: |
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| 111 | 111 | | Sec. 17.60. REPORTS AND EXAMINATIONS. (a) Whenever the |
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| 112 | 112 | | consumer protection division has reason to believe that a person is |
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| 113 | 113 | | engaging in, has engaged in, or is about to engage in any act or |
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| 114 | 114 | | practice declared to be unlawful by this subchapter, or when it |
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| 115 | 115 | | reasonably believes it to be in the public interest to conduct an |
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| 116 | 116 | | investigation to ascertain whether any person is engaging in, has |
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| 117 | 117 | | engaged in, or is about to engage in any such act or practice, an |
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| 118 | 118 | | authorized member of the division may: |
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| 119 | 119 | | (1) serve a directive that states the alleged |
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| 120 | 120 | | violation and: |
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| 121 | 121 | | (A) requires [require] the person to file with |
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| 122 | 122 | | the division, on the prescribed forms, a statement or report in |
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| 123 | 123 | | writing, under oath or otherwise, as to all the facts and |
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| 124 | 124 | | circumstances concerning the alleged violation [and such other data |
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| 125 | 125 | | and information as the consumer protection division deems |
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| 126 | 126 | | necessary]; |
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| 127 | 127 | | (B) requires the person to submit to an |
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| 128 | 128 | | examination [(2) examine] under oath about the [any person in |
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| 129 | 129 | | connection with this] alleged violation; or |
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| 130 | 130 | | (C) requires the person to produce for inspection |
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| 131 | 131 | | [(3) examine any] merchandise or samples [sample] of merchandise |
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| 132 | 132 | | relating to the alleged violation [deemed necessary and proper]; |
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| 133 | 133 | | and |
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| 134 | 134 | | (2) [(4)] pursuant to an order of the appropriate |
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| 135 | 135 | | court, impound any sample of merchandise that is produced in |
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| 136 | 136 | | accordance with this subchapter and retain it in the possession of |
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| 137 | 137 | | the division until the completion of all proceedings in connection |
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| 138 | 138 | | with which the merchandise is produced. |
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| 139 | 139 | | (b) Unless authorized by a court order, the consumer |
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| 140 | 140 | | protection division may not require a person to comply with a |
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| 141 | 141 | | directive for action under Subsection (a)(1) before the 31st day |
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| 142 | 142 | | after the date the person is served the directive. |
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| 143 | 143 | | (c) Before the 31st day after the date a person is served a |
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| 144 | 144 | | directive for action under Subsection (a)(1), the person may file a |
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| 145 | 145 | | petition, stating good cause, to extend the period in which the |
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| 146 | 146 | | person must comply with the directive or to modify or set aside the |
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| 147 | 147 | | directive. The petition may be filed in the district court in the |
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| 148 | 148 | | county where the person resides, if the person is an individual, or |
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| 149 | 149 | | where the person's principal place of business in this state is |
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| 150 | 150 | | located, if the person is not an individual, or a district court of |
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| 151 | 151 | | Travis County. The period in which a person may file the petition |
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| 152 | 152 | | may be extended by a court order or by a written agreement between |
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| 153 | 153 | | the person and the consumer protection division. |
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| 154 | 154 | | (d) An action brought under Subsection (c) to modify or set |
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| 155 | 155 | | aside a directive is subject to the procedural and evidentiary |
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| 156 | 156 | | rules applicable to any other civil action filed in a district |
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| 157 | 157 | | court. |
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| 158 | 158 | | (e) A person who files a petition as provided by Subsection |
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| 159 | 159 | | (c) shall comply with the directive as ordered by the court. |
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| 160 | 160 | | SECTION 4. Section 17.61, Business & Commerce Code, is |
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| 161 | 161 | | amended by amending Subsections (b), (c), and (g) and adding |
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| 162 | 162 | | Subsection (g-1) to read as follows: |
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| 163 | 163 | | (b) Each demand shall: |
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| 164 | 164 | | (1) state the statute and section under which the |
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| 165 | 165 | | alleged violation is being investigated, and the [general] subject |
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| 166 | 166 | | matter of the investigation; |
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| 167 | 167 | | (2) describe the class or classes of documentary |
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| 168 | 168 | | material to be produced with reasonable specificity so as to fairly |
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| 169 | 169 | | indicate the material demanded; |
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| 170 | 170 | | (3) prescribe a return date not later than the 30th day |
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| 171 | 171 | | after the demand has been served within which the documentary |
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| 172 | 172 | | material is to be produced, unless an extended return date is |
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| 173 | 173 | | authorized by a court order; and |
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| 174 | 174 | | (4) identify the persons authorized by the consumer |
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| 175 | 175 | | protection division to whom the documentary material is to be made |
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| 176 | 176 | | available for inspection and copying. |
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| 177 | 177 | | (c) A civil investigative demand may not contain any [a] |
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| 178 | 178 | | requirement, including a requirement for the [or] disclosure of |
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| 179 | 179 | | documentary material, which would not be discoverable under the |
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| 180 | 180 | | Texas Rules of Civil Procedure in a civil action brought by the |
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| 181 | 181 | | consumer protection division under this subchapter. |
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| 182 | 182 | | (g) At any time before the return date specified in the |
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| 183 | 183 | | demand, or within 30 [20] days after the demand has been served, |
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| 184 | 184 | | whichever period is longer [shorter], a petition to extend the |
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| 185 | 185 | | return date for, or to modify or set aside any aspect of the demand, |
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| 186 | 186 | | stating good cause, may be filed in the district court in the county |
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| 187 | 187 | | where the party who is served with the demand resides [parties |
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| 188 | 188 | | reside], or, on consent of the parties, a district court of Travis |
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| 189 | 189 | | County. The period in which a person may file the petition may be |
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| 190 | 190 | | extended by a court order or by a written agreement between the |
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| 191 | 191 | | person and the consumer protection division. A person who files a |
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| 192 | 192 | | petition under this subsection shall comply with the demand as |
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| 193 | 193 | | ordered by the court. |
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| 194 | 194 | | (g-1) A petition to modify or set aside any aspect of the |
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| 195 | 195 | | demand is subject to the procedural and evidentiary rules |
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| 196 | 196 | | applicable to any other civil action filed in a district court. |
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| 197 | 197 | | SECTION 5. (a) The changes in law made by this Act to |
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| 198 | 198 | | Sections 17.45 and 17.47, Business & Commerce Code, apply only to a |
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| 199 | 199 | | violation of the Deceptive Trade Practices-Consumer Protection Act |
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| 200 | 200 | | that occurs on or after the effective date of this Act. A violation |
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| 201 | 201 | | of the Deceptive Trade Practices-Consumer Protection Act that |
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| 202 | 202 | | occurs before the effective date of this Act is governed by the law |
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| 203 | 203 | | in effect on the date the violation occurred, and the former law is |
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| 204 | 204 | | continued in effect for that purpose. For purposes of this |
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| 205 | 205 | | subsection, a violation occurs before the effective date of this |
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| 206 | 206 | | Act if any element of the violation occurs before that date. |
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| 207 | 207 | | (b) The changes in law made by this Act to Sections 17.60 and |
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| 208 | 208 | | 17.61, Business & Commerce Code, apply only to a directive served |
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| 209 | 209 | | under Section 17.60, Business & Commerce Code, and a civil |
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| 210 | 210 | | investigative demand served under Section 17.61, Business & |
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| 211 | 211 | | Commerce Code, on or after the effective date of this Act. A |
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| 212 | 212 | | directive or civil demand served before the effective date of this |
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| 213 | 213 | | Act is governed by the law in effect on the date the directive or |
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| 214 | 214 | | demand was served, and the former law is continued in effect for |
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| 215 | 215 | | that purpose. |
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| 216 | 216 | | SECTION 6. This Act takes effect September 1, 2015. |
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