House File 2534
HOUSE FILE
BY COMMITTEE ON JUDICIARY
(SUCCESSOR TO HSB 531)
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to consumer fraud violations, including the
2 creation of a private remedy for consumer fraud violations.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
4 TLSB 5155HV 80
5 rh/sh/8
PAG LIN
1 1 Section 1. Section 714.16, subsection 2, paragraph a,
1 2 unnumbered paragraph 4, Code 2003, is amended to read as
1 3 follows:
1 4 "Material fact" as used in this subsection does not include
1 5 repairs of damage to or adjustments on or replacements of
1 6 parts with new parts of otherwise new merchandise if the
1 7 repairs, adjustments, or replacements are made to achieve
1 8 compliance with factory specifications and are made before
1 9 sale of the merchandise at retail and the actual cost of any
1 10 labor and parts charged to or performed by a retailer for any
1 11 such repairs, adjustments, and parts does not exceed three
1 12 hundred dollars or ten percent of the actual cost to a
1 13 retailer including freight of the merchandise, whichever is
1 14 less, providing or if the retailer is a motor vehicle dealer
1 15 licensed to sell new motor vehicles under chapter 322 and the
1 16 actual cost of labor and parts does not exceed four percent of
1 17 the retail price of the motor vehicle suggested by the
1 18 manufacturer, provided that the seller posts in a conspicuous
1 19 place notice that repairs, adjustments, or replacements will
1 20 be disclosed upon request, and also provided that the retailer
1 21 discloses in writing to a buyer or lessee at or before the
1 22 time of sale or lease any damage exceeding three thousand
1 23 dollars, ten percent of the actual cost to a retailer
1 24 including freight, or four percent of the manufacturer's
1 25 suggested price of a motor vehicle, whichever is applicable.
1 26 The exemption provided in this paragraph does not apply to the
1 27 concealment, suppression or omission of a material fact if the
1 28 purchaser or lessee requests disclosure of any repair,
1 29 adjustment or replacement.
1 30 Sec. 2. NEW SECTION. 714F.1 TITLE.
1 31 This chapter shall be known and may be cited as the
1 32 "Private Remedy for Consumer Fraud Act".
1 33 Sec. 3. NEW SECTION. 714F.2 DEFINITIONS.
1 34 1. "Advertisement" means the same as defined in section
1 35 714.16.
2 1 2. "Agricultural merchandise" means merchandise sold to be
2 2 used in the production of agricultural, horticultural,
2 3 viticultural, or dairy products; of livestock, wildlife,
2 4 poultry, bees, or fish, or products thereof; or of any and all
2 5 products raised or produced on farms.
2 6 3. "Consumer" means any of the following:
2 7 a. A natural person or the person's legal representative.
2 8 b. A partnership, corporation, company, trust, business
2 9 entity or association, political association as defined in
2 10 section 13C.1, religious organization as defined in section
2 11 13C.1, public or nonpublic school, college, university, or a
2 12 fraternal benefit society as defined in section 512B.3.
2 13 4. "Consumer merchandise" means merchandise offered for
2 14 sale, lease, or rental, or sold, leased, or rented, primarily
2 15 for personal, family, or household purposes, agricultural
2 16 merchandise, and office supplies and services.
2 17 5. "Deception" means an act or practice which would be
2 18 likely to mislead a consumer acting reasonably under the
2 19 totality of the circumstances giving due consideration to all
2 20 relevant factors.
2 21 6. "Material fact" means the same as defined in section
2 22 714.16.
2 23 7. "Merchandise" means the same as defined in section
2 24 714.16.
2 25 8. "Office supplies and services" means any goods, or
2 26 services incident to the use of such goods, including but not
2 27 limited to supplies and equipment and promotional advertising,
2 28 to be used in the operation of any office. "Office supplies
2 29 and services" does not include goods or services purchased for
2 30 the purpose of resale.
2 31 9. "Person" means the same as defined in section 714.16.
2 32 10. "Sale" means any sale or offer for sale of consumer
2 33 merchandise for cash or credit.
2 34 11. "Unfair practice" means the same as defined in section
2 35 714.16.
3 1 Sec. 4. NEW SECTION. 714F.3 PROHIBITED PRACTICES.
3 2 1. A person shall not engage in a practice that the person
3 3 knows or reasonably should know is an unfair practice,
3 4 deception, fraud, false pretense, false promise, or
3 5 misrepresentation, or that constitutes the concealment,
3 6 suppression, or omission of a material fact with the intent
3 7 that others rely upon the concealment, suppression, or
3 8 omission, in connection with the advertisement, sale, lease,
3 9 or rental of consumer merchandise or the solicitation of
3 10 contributions for charitable purposes.
3 11 2. A person shall not engage in any practice that is in
3 12 violation of any of the following:
3 13 a. Chapter 126.
3 14 b. Section 321.69.
3 15 c. Chapter 516D.
3 16 d. Chapter 555A.
3 17 e. Section 714.16, subsection 2, paragraphs "b" through
3 18 "n".
3 19 f. Chapter 714A.
3 20 Sec. 5. NEW SECTION. 714F.4 PRIVATE CAUSE OF ACTION.
3 21 1. A consumer who suffers damage or injury as the result
3 22 of a practice declared to violate this chapter may bring an
3 23 action at law to recover actual damages. The court may order
3 24 such equitable relief as it deems necessary to protect the
3 25 public from further violations, including temporary and
3 26 permanent injunctive relief.
3 27 2. The court shall award to a prevailing consumer costs
3 28 and reasonable attorney fees. Reasonable attorney fees shall
3 29 be determined by the value of the time reasonably expended by
3 30 the attorney including, but not limited to, the following:
3 31 a. The time and labor required.
3 32 b. The novelty and difficulty of the legal issues.
3 33 c. The skill level necessary to perform the legal service.
3 34 d. The preclusion of employment by the attorney due to the
3 35 acceptance of the case.
4 1 e. The customary fee.
4 2 f. Whether the fee is fixed or contingent.
4 3 g. The time limitations imposed by the client or the
4 4 circumstances of the case.
4 5 h. The amount of money involved in the case and the
4 6 results obtained.
4 7 i. The experience, reputation, and ability of the
4 8 attorneys involved in the case.
4 9 j. The feasibility of the case.
4 10 k. The nature and length of the professional relationship
4 11 with the client.
4 12 l. Award amounts in similar cases.
4 13 3. Any claim under this section shall be required to be
4 14 proved by a preponderance of the evidence.
4 15 4. Reimbursement awarded to the attorney general pursuant
4 16 to section 714.16 on behalf of a plaintiff who has filed an
4 17 action pursuant to this section concerning the same set of
4 18 facts shall be deducted from any damages awarded to the
4 19 plaintiff in an action filed under this section.
4 20 5. Court interpretations of this chapter shall have no
4 21 effect on court interpretations of actions by the state
4 22 pursuant to section 714.16.
4 23 6. This section shall not affect a consumer's right to
4 24 seek relief under any other theory of law.
4 25 Sec. 6. NEW SECTION. 714F.5 CLASS ACTIONS BARRED.
4 26 A class action lawsuit alleging violations of this chapter
4 27 shall not be available. This section shall not affect a
4 28 consumer's right to bring or participate in a class action
4 29 lawsuit under any other theory, and shall not affect a right
4 30 to joinder of claims or parties.
4 31 Sec. 7. NEW SECTION. 714F.6 ATTORNEY GENERAL
4 32 NOTIFICATION.
4 33 1. Except for appeals in small claims court described in
4 34 subsection 2, a party filing a claim, counterclaim, or other
4 35 petition alleging a violation under this chapter shall provide
5 1 a copy of the petition to the attorney general and, within
5 2 seven days following entry of any final judgment in the
5 3 action, shall provide a copy of the judgment to the attorney
5 4 general.
5 5 2. In an appeal from small claims court to district court
5 6 involving an issue raised under this chapter, the party
5 7 raising the claim or counterclaim shall provide a copy of the
5 8 notice of appeal, the petition, and the small claims order to
5 9 the attorney general within seven days of the filing of the
5 10 notice of appeal from small claims court. Upon application to
5 11 the court wherein the matter is pending, the attorney general
5 12 may intervene as a party at any time, or may be heard at any
5 13 time. The attorney general's failure to intervene as a party
5 14 or otherwise participate in the action shall not preclude any
5 15 later action by the attorney general.
5 16 3. The party appealing an order or judgment shall provide
5 17 a copy of the notice of appeal to the attorney general within
5 18 seven days following the date such notice is filed with the
5 19 court. An appeal shall not be docketed until proof of mailing
5 20 of the notice of appeal to the attorney general has been filed
5 21 in the supreme court in accordance with subsection 4. Upon
5 22 application to the appellate court wherein the matter is
5 23 pending, the attorney general may intervene as a party at any
5 24 time or may be heard at any time.
5 25 4. All copies of petitions, pleadings, judgments, and
5 26 notices of appeal shall be sent by certified mail to the
5 27 attorney general and shall be accompanied by a written
5 28 statement identifying the copied document as pertaining to an
5 29 action under this section. Proof of mailing may be by
5 30 affidavit or return receipt. Failure to provide the required
5 31 copies to the attorney general shall not be grounds for
5 32 dismissal of an action under this section.
5 33 EXPLANATION
5 34 This bill relates to consumer fraud violations, including
5 35 the creation of a private remedy for consumer fraud Act
6 1 violations.
6 2 The bill amends the definition of "material fact", an
6 3 element of a consumer fraud violation currently enforced by
6 4 the attorney general, to exclude a retailer who is a motor
6 5 vehicle dealer licensed to sell new motor vehicles under Code
6 6 chapter 322 (motor vehicle manufacturers, distributors, and
6 7 dealers) and the actual cost of labor and parts does not
6 8 exceed 4 percent of the retail price of the motor vehicle
6 9 suggested by the manufacturer, and if the retailer discloses
6 10 in writing to a buyer or lessee at or before the time of sale
6 11 or lease any damage exceeding $3,000, 10 percent of the actual
6 12 cost to a retailer including freight costs, or 4 percent of
6 13 the manufacturer's suggested price of a motor vehicle,
6 14 whichever is applicable.
6 15 The bill creates a private cause of action for consumer
6 16 fraud violations. The bill provides that a consumer who
6 17 suffers damage or injury as a result of a prohibited practice
6 18 declared to violate the bill may bring an action at law to
6 19 recover actual damages, and may seek court protection from
6 20 further violations, including temporary and permanent
6 21 injunctive relief. In addition, a prevailing consumer in such
6 22 an action may be awarded costs and reasonable attorney fees.
6 23 The bill defines a prohibited practice to include a
6 24 practice a person knows or reasonably should know is an unfair
6 25 practice, deception, fraud, false pretense, false promise, or
6 26 misrepresentation, or that constitutes the concealment,
6 27 suppression, or omission of a material fact with the intent
6 28 that others rely on the concealment, suppression, or omission,
6 29 in connection with the advertisement, sale, lease, or rental
6 30 of consumer merchandise or the solicitation of contributions
6 31 for charitable purposes. The bill provides certain additional
6 32 definitions, and applies the same amended definition of
6 33 "material fact" previously stated.
6 34 The bill authorizes the attorney general to oversee private
6 35 consumer fraud actions, including small claims court actions,
7 1 by requiring a party filing a claim, counterclaim, or other
7 2 petition alleging a violation under the bill to provide a copy
7 3 of the relevant documents, including judgments and notices of
7 4 appeal, to the attorney general. In addition, the attorney
7 5 general may intervene as a party in a private consumer fraud
7 6 action at any time, or may be heard in such an action at any
7 7 time.
7 8 LSB 5155HV 80
7 9 rh/sh/8