Senate File 520 - Introduced
SENATE FILE
BY COMMITTEE ON JUDICIARY
(SUCCESSOR TO SSB 1081)
Passed Senate, Date Passed House, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act creating a private cause of action for certain consumer
2 fraud violations.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
4 TLSB 1105SV 82
5 rh/gg/14
PAG LIN
1 1 Section 1. NEW SECTION. 714F.1 TITLE.
1 2 This chapter shall be known and may be cited as the
1 3 "Private Remedy for Consumer Fraud Act".
1 4 Sec. 2. NEW SECTION. 714F.2 DEFINITIONS.
1 5 1. "Advertisement" means the same as defined in section
1 6 714.16.
1 7 2. "Consumer" means a natural person or the person's legal
1 8 representative.
1 9 3. "Consumer merchandise" means merchandise offered for
1 10 sale or lease, or sold or leased, primarily for personal,
1 11 family, or household purposes.
1 12 4. "Deception" means an act or practice that is likely to
1 13 mislead a substantial number of consumers as to a material
1 14 fact or facts.
1 15 5. "Merchandise" means the same as defined in section
1 16 714.16.
1 17 6. "Person" means the same as defined in section 714.16.
1 18 7. "Sale" means any sale or offer for sale of consumer
1 19 merchandise for cash or credit.
1 20 8. "Unfair practice" means the same as defined in section
1 21 714.16.
1 22 Sec. 3. NEW SECTION. 714F.3 PROHIBITED PRACTICES.
1 23 1. A person shall not engage in an unfair practice,
1 24 deception, fraud, false pretense, false promise, or
1 25 misrepresentation, or the concealment, suppression, or
1 26 omission of a material fact with the intent that others rely
1 27 upon the concealment, suppression, or omission, in connection
1 28 with the advertisement, retail sale, or lease of consumer
1 29 merchandise, or the solicitation of contributions for
1 30 charitable purposes.
1 31 2. A person shall not engage in any practice that is in
1 32 violation of any of the following:
1 33 a. Section 321.69.
1 34 b. Chapter 516D.
1 35 c. Section 516E.5, 516E.9, or 516E.10.
2 1 d. Chapter 555A.
2 2 e. Section 714.16, subsection 2.
2 3 f. Chapter 714A.
2 4 Sec. 4. NEW SECTION. 714F.4 EXCLUSIONS.
2 5 1. This chapter shall not apply to any of the following:
2 6 a. Advertising by a retailer for a product, other than a
2 7 drug or other product claiming to have a health=related
2 8 benefit or use, if the advertising is prepared by a supplier,
2 9 unless the retailer participated in the preparation of the
2 10 advertisement or knew or should have known that the
2 11 advertisement was deceptive, false, or misleading.
2 12 b. The newspaper, magazine, publication, or other print
2 13 media in which the advertisement appears, or the radio
2 14 station, television station, or other electronic media which
2 15 disseminates the advertisement if the newspaper, magazine,
2 16 publication, radio station, television station, or other print
2 17 or electronic media has no knowledge of the fraudulent intent,
2 18 design, or purpose of the advertiser at the time the
2 19 advertisement is accepted. This paragraph shall not apply to
2 20 any advertisement that complies with the statutes, rules, and
2 21 regulations of the federal trade commission.
2 22 c. Conduct that constitutes puffery or other similar
2 23 advertising, marketing, or sales techniques.
2 24 2. "Material fact" as used in this chapter does not
2 25 include repairs of damage to or adjustments on or replacements
2 26 of parts with new parts of otherwise new merchandise if the
2 27 repairs, adjustments, or replacements are made to achieve
2 28 compliance with factory specifications and are made before
2 29 sale of the merchandise at retail and the actual cost of any
2 30 labor and parts charged to or performed by a retailer for any
2 31 such repairs, adjustments, and parts does not exceed five
2 32 hundred dollars or ten percent of the actual cost to a
2 33 retailer including freight of the merchandise, whichever is
2 34 less, providing that the seller posts in a conspicuous place
2 35 notice that repairs, adjustments, or replacements will be
3 1 disclosed upon request. The exclusion provided in this
3 2 subsection does not apply to the concealment, suppression, or
3 3 omission of a material fact if the purchaser requests
3 4 disclosure of any repair, adjustment, or replacement.
3 5 Sec. 5. NEW SECTION. 714F.5 PRIVATE CAUSE OF ACTION.
3 6 1. A consumer who suffers damage or injury as the result
3 7 of a prohibited practice in violation of this chapter may
3 8 bring an action at law to recover actual damages. An award of
3 9 damages for such a prohibited practice shall not be made
3 10 without proof that the person or persons seeking damages
3 11 suffered an actual out=of=pocket loss. The court may order
3 12 such equitable relief as it deems necessary to protect the
3 13 public from further violations, including temporary and
3 14 permanent injunctive relief.
3 15 2. If the court finds that a person has violated this
3 16 chapter, the court shall award to the consumer the costs of
3 17 the action and to the consumer's attorney reasonable fees.
3 18 Reasonable attorney fees shall be determined by the value of
3 19 the time reasonably expended by the attorney including but not
3 20 limited to consideration of the following factors:
3 21 a. The time and labor required.
3 22 b. The novelty and difficulty of the issues in the case.
3 23 c. The skills required to perform the legal services
3 24 properly.
3 25 d. The preclusion of other employment by the attorney due
3 26 to the attorney's acceptance of the case.
3 27 e. The customary fee.
3 28 f. Whether the fee is fixed or contingent.
3 29 g. The time limitations imposed by the client or the
3 30 circumstances of the case.
3 31 h. The amount of money involved in the case and the
3 32 results obtained.
3 33 i. The experience, reputation, and ability of the
3 34 attorney.
3 35 j. The undesirability of the case.
4 1 k. The nature and length of the professional relationship
4 2 between the attorney and the client.
4 3 l. Damage awards in similar cases.
4 4 3. In order to recover damages, a claim under this section
4 5 shall be proved by a preponderance of the evidence.
4 6 4. If the finder of fact finds that a prohibited practice
4 7 in violation of this chapter constitutes willful and wanton
4 8 disregard for the rights or safety of another, in addition to
4 9 an award of actual damages, statutory damages up to three
4 10 times the amount of actual damages may be awarded to a
4 11 prevailing consumer.
4 12 5. This section shall not affect a consumer's right to
4 13 seek relief under any other theory of law.
4 14 Sec. 6. NEW SECTION. 714F.6 ATTORNEY GENERAL
4 15 NOTIFICATION.
4 16 1. A party filing a petition, counterclaim,
4 17 cross=petition, or pleading in intervention alleging a
4 18 violation under this chapter, within seven days following the
4 19 date of filing such pleading, shall provide a copy to the
4 20 attorney general and, within seven days following entry of any
4 21 final judgment in the action, shall provide a copy of the
4 22 judgment to the attorney general.
4 23 2. A party appealing to district court a small claims
4 24 order or judgment involving an issue raised under this
4 25 chapter, within seven days of giving oral or written notice of
4 26 the appeal, shall notify the attorney general in writing and
4 27 provide a copy of the pleading raising the issue and a copy of
4 28 the small claims court order or judgment.
4 29 3. Except for appeals of small claims court orders or
4 30 judgments described in subsection 2, a party appealing an
4 31 order or judgment involving an issue raised under this
4 32 chapter, within seven days following the date such notice of
4 33 appeal is filed with the court, shall notify the attorney
4 34 general in writing and provide a copy of the pleading raising
4 35 the issue and a copy of the court order or judgment being
5 1 appealed.
5 2 4. Upon timely application to the court in which an action
5 3 involving an issue raised under this chapter is pending, the
5 4 attorney general may intervene as a party at any time or may
5 5 be heard at any time. The attorney general's failure to
5 6 intervene shall not preclude the attorney general from
5 7 bringing a separate enforcement action.
5 8 5. All copies of pleadings, orders, judgments, and notices
5 9 required by this section to be sent to the attorney general
5 10 shall be sent by certified mail unless the attorney general
5 11 has previously been provided such copies of pleadings, orders,
5 12 judgments, or notices in the same action by certified mail, in
5 13 which case subsequent mailings may be made by regular mail.
5 14 Failure to provide the required mailings to the attorney
5 15 general shall not be grounds for dismissal of an action under
5 16 this chapter, but shall be grounds for a subsequent action by
5 17 the attorney general to vacate or modify the judgment.
5 18 Sec. 7. NEW SECTION. 714F.7 CLASS ACTIONS.
5 19 In addition to the criteria considered by a court in
5 20 determining whether a class action alleging a violation of
5 21 this chapter should be permitted for the fair and efficient
5 22 adjudication of the controversy pursuant to the rules of civil
5 23 procedure, the court shall determine whether permitting the
5 24 class action is consistent with the interests of justice and
5 25 whether all criteria considered have been established by a
5 26 preponderance of the evidence.
5 27 EXPLANATION
5 28 This bill creates a private remedy for certain consumer
5 29 fraud Act violations.
5 30 The bill creates a private cause of action for consumer
5 31 fraud violations. The bill provides that a consumer who
5 32 suffers damage or injury as a result of a prohibited practice
5 33 declared to violate the bill may bring an action at law to
5 34 recover actual damages, and may seek court protection from
5 35 further violations, including temporary and permanent
6 1 injunctive relief. In addition, a prevailing consumer in such
6 2 an action may be awarded costs and reasonable attorney fees to
6 3 be determined by the value of time reasonably expended by the
6 4 attorney including but not limited to certain factors as
6 5 specified in the bill. In addition, if the finder of fact
6 6 finds that a prohibited practice in violation of the bill
6 7 constitutes willful and wanton disregard for the rights or
6 8 safety of another, in addition to an award of actual damages,
6 9 statutory damages up to three times the amount of actual
6 10 damages may be awarded to a prevailing consumer.
6 11 The bill defines a prohibited practice to include an unfair
6 12 practice, deception, fraud, false pretense, false promise, or
6 13 misrepresentation, or the concealment, suppression, or
6 14 omission of a material fact with the intent that others rely
6 15 on the concealment, suppression, or omission, in connection
6 16 with the advertisement, sale, or lease of consumer
6 17 merchandise, or the solicitation of contributions for
6 18 charitable purposes.
6 19 The bill does not apply to certain advertising by a
6 20 retailer for a product unless the retailer participated in the
6 21 preparation of the advertisement or knew or should have known
6 22 that the advertisement was deceptive or misleading, print
6 23 media in which the advertisement appears or electronic media
6 24 which disseminates the advertisement if the print or
6 25 electronic media has no knowledge of the fraudulent intent,
6 26 design, or purpose of the advertiser at the time the
6 27 advertisement is accepted, and conduct that constitutes
6 28 puffery or other similar advertising, marketing, or sales
6 29 techniques.
6 30 The bill authorizes the attorney general to oversee private
6 31 consumer fraud actions, including small claims court actions,
6 32 by requiring a party filing a petition, counterclaim,
6 33 cross=petition, or pleading in intervention alleging a
6 34 violation under the bill to provide a copy of the relevant
6 35 documents, including judgments and notices of appeal, to the
7 1 attorney general. In addition, the attorney general may
7 2 intervene as a party in a private consumer fraud action at any
7 3 time, or may be heard in such an action at any time.
7 4 The bill provides that failure to provide all mailings of
7 5 petitions, orders, judgments, and notices of appeal to the
7 6 attorney general shall not be grounds for dismissal, but shall
7 7 be grounds for a subsequent action by the attorney general to
7 8 vacate or modify the judgment.
7 9 The bill provides that in addition to the criteria
7 10 considered by a court in determining whether a class action
7 11 alleging a violation of the bill should be allowed, the court
7 12 shall determine whether permitting the class action is
7 13 consistent with the interests of justice and whether all
7 14 criteria considered have been established by a preponderance
7 15 of the evidence.
7 16 LSB 1105SV 82
7 17 rh:rj/gg/14