The Tennessee Consumer Protection Act (TCPA) prohibits certain unfair and deceptive acts in commercial transactions that result in ascertainable loss to consumers. TCPA claims can be brought by individual consumers or by the Tennessee Attorney General. The Act was passed in 1977 to modernize consumer protection laws, safeguard consumers and legitimate businesses from bad faith actors, cultivate fair consumer practices, and establish a clear enforcement mechanism that could both protect consumers and legitimate businesses and bolster ethical standards for commercial transactions in Tennessee. The TCPA expands the scope and protections of common law fraud, giving consumers an opportunity for recovery without having to establish scienter.

The Act was significantly narrowed by 2011 legislation that circumscribed, but did not eliminate, the scope of the private right of action. Recent legislation modernized the law by adding reporting and compliance requirements for businesses and people that solicit business by telephone or text message.

Important Sections

• 47-18-103: Definitions

• 47-18-104: List of Unfair & Deceptive Acts

• 47-18-109: Individual Right of Action & Damages

• 47-18-110: Limitations of Actions

• 47-18-115: Construction

• 47-18-125: Additional Penalties Concerning Specially Targeted Consumers

• 47-18-138: Covered Service Agreements

Renters are protected under TCPA based on the definition of consumer as: “any natural person who seeks or acquires by purchase, rent, lease, assignment, award by chance, or other disposition, any goods, services, or property, tangible or intangible, real, personal or mixed, and any other article, commodity, or thing of value wherever situated or any person who purchases or to whom is offered for sale a franchise or distributorship agreement or any similar type of business opportunity” (emphasis added). Tenn. Code Ann. § 47-18-103(6).

We’ve raised TCPA claims in a number of cases, including when landlords withhold security deposits, in a rent-to-own contract gone wrong, where a property management company’s mishandling of HOA permits led to a tenant’s forced move, and where a foreign entity landlord’s revoked registration with the Secretary of State’s Office meant the landlord had no authority to file suits in any state court

Tucker v. Sierra Builders et al. sets out a two part test:

1. The defendant engages in one or more of the unfair or deceptive practices prohibited by the law, and;

2. That conduct caused an ascertainable loss of money or property, which can be real, personal, or mixed, or any other article, commodity, or thing of value

   180 S.W.3d 109, 115 (Tenn. Ct. App. 2005).

Unfair & Deceptive Acts

Section 104 lists 71—excluding subparts—acts or practices deemed unlawful. Though Section 103 contains 24 separate definitions, the Act falls short of providing an exact definition for “unfair’ or “deceptive.” 

Luckily, in Tucker, the state Court of Appeals offered a lengthy discussion of the terms under the direction of Section 115, specifically pulling from federal case law exploring the Federal Trade Commission Act.  

 The court described deceptiveness under the TCPA as more encompassing than the traditional common-law fraud definition: “A deceptive act or practice is one that causes or tends to cause a consumer to believe what is false or that misleads or tends to mislead a consumer as to matter of fact.” Id. at 116. 

Following the thread, an act or practice could be considered unfair—an even less narrow concept—if it “causes or is likely to cause substantial injury to consumers which is not reasonable avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition.” Id. at 116-17.  

 Substantial injury, the court held, meant “more than trivial or speculative…usually involve[ing] monetary injury or unwarranted health and safety risks.” Id. at 117. The injury should also be evaluated proportionally such that a smaller the number of impacted consumers requires a greater qualifying harm while a larger number of consumers needs a smaller harm.  

The court centered the question of reasonable avoidance in consumers’ ability to freely make informed decisions, where practices like “withholding important information from consumers, overt coercion, or exercising undue influence over a highly susceptible class of consumers” were categorically unfair. Id.

In a more succinct holding, the Tennessee Supreme Court sourced from a fellow state high court and found, “[A] ‘deceptive act or practice’ is a material representation, practice or omission likely to mislead a reasonable consumer.” Ganzevoort v. Russell, 949 S.W.2d 293, 299 (Tenn. 1997) (quoting Bisson v. Ward, 160 Vt. 343, 351 (Vt. 1993)). 

**As mentioned, the Tennessee Civil Justice Act of 2011 limited the TCPA with regard to the private right of action found in Section 109. Hailed as a tort reform, the amendment impacted our and consumers’ use of the TCPA in two ways:

1.     The law specified that actions brought under Section 109 must be premised on one of the named unfair and deceptive acts listed in Section 104(b) and

2.     The catch-all provision of Section 104(b)(27)—“engaging in any other act or practice which is deceptive to the consumer or to any other person”—is now squarely and solely within the purview of the attorney general’s enforcement

Our job, then, is to work with the extensive list of prohibited acts and practices.

Omissions of material information

Sellers of a home, who had also built the structure, withheld negative information regarding the property’s septic system from the purchasers in violation of the TCPA. Fayne, 301 S.W.3d at 178. 

The court remanded a case where a used car dealer’s failure to disclose that a pickup truck was a reconstructed vehicle, and worth 30 to 50 percent less than fair market value likely violated the TCPA. Morris, 824 S.W.2d at 539, 541. 

Similarly, the appellate court found a dealership violated the TCPA in telling the soon-to-be purchaser that a particular truck had never been involved in a wreck when its frame had been extensively damaged and welded back together. Smith v. Scott Lewis Chevrolet, Inc., 843 S.W.2d 9, 10-11 (Tenn. Ct. App. 1992).

Compare the finding in Ganzevoort that the defendant, a realtor, had not acted unfairly or deceptively in not finding water leak in a home before the sale where the extent of the damage would only have been seen from under the structure and the repairs the realtor ordered to clear FHA loan approval had not uncovered the leak. 949 S.W.2d at 299. 

Services had Characteristics or are of a Particular Standard (104(b)(5), (7))

A record company acting unfairly and deceptively where several misrepresentations induced a singer to sign what she thought was a traditional recording contract but was only a contract to record and manufacture copies of a custom record she would then promote. 

Those misrepresentations included that the contract guaranteed the company’s financial commitment to promotion of the record when it did not, that the nature of the company’s business was selling records when its business was largely producing custom records, and that the company had plans to build a music venue to support its artists when the plans had been scrapped. Brungard v. Caprice Records, Inc., 608 S.W.2d 585, 591 (Tenn. Ct. App. 1980).  

False Advertising

Though the plaintiff was unsuccessful in the individual case, the Sixth Circuit has established the correlation between the TCPA and the federal Lanham Act, which applies to false advertising, holding that parties must demonstrate the defendant made a false or misleading factual representation.  

Further, the court explained, “if a statement is ‘literally false,’ we presume that it actually deceived consumers. If a statement is merely ‘misleading,’ then Louisiana-Pacific must prove that it deceived a “significant portion” of reasonable consumers.” Louisiana-Pacific Corp. v. James Hardie Building Products, Inc., 928 F.3d 514, 517 (6th Cir. 2019) (quoting Wysong Corp. v. APN, Inc., 889 F.3d 267, 270–71 (6th Cir. 2018)) 

**Remember a disclaimer or warranty, like “sold as is,” does not bar a TCPA claim: “…disclaimers permitted by T.C.A. § 47-2-316 do not prevent application of the Consumer Protection Act. The Consumer Protection Act creates a separate and distinct cause of action for unfair and deceptive acts or practices.” Morris,824 S.W.2d at 540. 

 Ascertainable Loss

The Act requires a plaintiff to have suffered “ascertainable loss,” specifically an injury the consumer can link directly to the defendant’s conduct. 

“In order to recover under the Tennessee Consumer Protection Act, the alleged unfair or deceptive act or practice must in fact cause the damages of which the plaintiff complains.” White v. Early, 211 S.W.3d 723, 743 (Tenn. Ct. App. 2006). 

In Fayne, the sellers’ omissions lead the purchasers to buy a home with a malfunctioning septic system. In Morris, a consumer bought and fully paid for a vehicle worthy 30 to 50 percent less than what he paid. In Brungard, the singer invested nearly $3,000 of her own money to produce the record. 

In Bradley v. All American Classics of Tennessee, Inc., a buyer spent $36,000 on a poorly functioning car that he wouldn’t have purchased save for the dealer’s misrepresentations of the phone and its use of online sales to inhibit the buyer from inspecting the car. 2009 WL 1034797 at *6-7 (Tenn. Ct. App. 2009).  

For security deposit cases, we argue that the landlord’s withholding of the deposit after our clients move out is an ascertainable loss to the tune of the deposit’s dollar amount. 

We’ve also argued loss where clients spent close to $50,000 to renovate a home they believed, because of the defendant’s deceptive act, they had purchased but were actually just renting and where clients moved from their home to a more expensive apartment, took time off work, and hired movers, because of a detainer warrant the landlord did not have the authority to bring.  

Compare with a case in which the plaintiff’s loss of the use of their boat slip was not due to misrepresentations before the sale about the slip’s title, but to dangerous conditions at the marina that ultimately led to its closure. White, 211 S.W.3d at 725, 743.  

Additionally, a TCPA claim can’t rest solely on the basis of emotional distress, absent any other economic or pecuniary loss. See Akers v. Prime Succession of Tennessee, Inc., 387 S.W.3d 495, 508-10 (Tenn. 2012) (finding a family could not hold a crematory operator liable for the mishandling of their relative’s remains because, though of “significant emotional and sentimental value,” the remains did not have economic value). 

See all also Timothy J. Pagliara v. Johnston Barton Proctor and Rose, LLP, 708 F.3d 813, 820 (6th Cir. 2013) (holding a securities broker failed to state a TCPA claim where his injuries were only emotional distress and damage to his business reputation). 

Scienter

The Act and courts do not require plaintiffs to demonstrate that a defendant acted with intent, merely that the act at issue was unfair or deceptive and that it caused ascertainable loss.  

The Tennessee Supreme Court explained why a claim need not show intent by, again, linking the TCPA to the FTC Act: “The United States Supreme Court has held that ‘innocence of motive’ did not relieve sellers of liability because ‘there is a kind of fraud, as courts of equity have long perceived, in clinging to a benefit which is the product of misrepresentation, however innocently made.’” Fayne, 301 S.W.3d at 177-78.  

However, if plaintiffs can prove the defendant acted willfully or knowingly, treble damages come into play on top of actual damages.  

Knowingly

The Act defines knowingly as “actual awareness of the falsity or deception,” thought the awareness “may be inferred where objective manifestations indicate that a reasonable person would have known or would have had reason to know of the falsity or deception.” Tenn. Code Ann. § 47-18-103(15). 

In Steed Realty v. Oveisi, a real estate developer violated the TCPA by making verbal promises of property enhancements like utility hookups and road maintenance on undeveloped lots that were not in the written contracts and which he never intended to keep. The court found he acted knowingly, because the developer knew that the property appeared more valuable based on the pledged services and that since the obligations were not included in the contract, he would not keep his promises. 823 S.W.2d 195, 201 (Tenn. Ct. App. 1991) 

In Brungard, the record company and its employees willfully misrepresented that its contractual relationship with the singer involved promoting and financing her record when the company never invested money in the project, did not regularly maintain a standard record contract with artists, and was not the kind or size of company it pretended to be. 608 S.W.2d at 588-89. 

In Myers v. Hexagon Co., L.L.C., a car dealership’s employees violated the TCPA by routinely giving lessee’s an appraisal on a trade-in vehicle, then failing to apply that positive equity to the lease agreement, and using the notation “N.A.” in place of “$0” on the agreement to hide the fact that lessee was not receiving the trade-in equity. In characterizing the employee’s conduct as knowing, the court paid particular attention to their answer when the lessee asked about the “N.A.” notation: the employees said the trade-in value didn’t always appear on the contract and would be added in later. 54 F.Supp.2d 742, 753 (E.D. Tenn. 1998). 

Individual consumers can, under Section 109(a)(1), bring a civil suit for actual damages. The Act grants jurisdiction to a court in the county where the unlawful act occurred, is still occurring, or will occur imminently or to a court in the county in which the offending party resides, maintains a principal place of business, or does or has conducted business. Failing all else, the Act permits a suit in county where the defendant can be located.  

Consumers can also access declaratory and injunctive relief under Section 109(b), as long as the Attorney General has not already filed a case against the same defendant under Sections 107 or 108. 

Finally, the language of Section 109(a)(3) permits any necessary and proper relief beyond actual and treble damages. Courts have relied on that instruction to grant rescission of the contract and recovery of actual damages, such as a purchase price. See Smith v. Scott Lewis Chevrolet, Inc., 843 S.W.2d 9, 13 (Tenn. Ct. App. 1992) and True v. J.B. Deeds & Son, 151Tenn. 630 (Tenn. 1925).  

Election of Remedies

When bringing both TCPA and URLTA claims, we’ve been mindful to avoid inadvertently arguing for double recovery. Tenants can recover punitive damages under URLTA and treble damages under the TCPA, but if the claims arise from the same conduct, the court declines to award both.  

In Frost, the tenant originally pled for both punitive and treble damage and at trial, elected treble damages. The trial court, however, awarded the tenant punitive damages. The appellate court, relying on Tennessee’s approval of the doctrine of election of remedies, held: 

“…this Court has adopted ‘[t]he most prevalent approach [which] allows the plaintiff to submit the fact finder all theories of recovery’ and ‘[i]f the jury (and judge, in some instances) determines that the plaintiff is entitled to both forms of enhanced damages, the plaintiff may request that the amount of damages under each remedy be determined before making an election of which remedy he or she would like the judgement to reflect.’” Frost at *4 (quoting Concrete Spaces, Inc. v. Sender, 2 S.W.3d 901, 908 (Tenn. 1999). 

The appellate court found persuasive the tenant’s argument that the trial court erred in awarding punitive damages where she had pursued the TCPA’s available remedy. The court reserved the award and remanded the case for proper consideration of treble damages. Id.

No Punitive Damages

Consumers’ recovery is cabined to actual and treble damages. The Act’s plain language and case law bar awards of punitive damages.  

See Tenn. Code Ann. § 47-18-109(a)(3) and Paty v. Herb Adcox Chevrolet Co., 756 S.W.2d 697, 699 (Tenn. Ct. App. 1988).  

But Yes to Treble Damages

An award of treble damages falls within the trial court’s discretion based on the facts at hand. Wilson v. Esch, 166 S.W.3d 729, 731 (Tenn. Ct. App. 2004). While the statute prohibits punitive awards, the access to treble damages can essentially serve the same function.

The Act provides a four, non-exclusive factors by which a court can weigh the appropriateness of those damages. 

1.              The competence of the consumer  

2.              The nature of the deception or coercion practiced upon the consumer  

3.              The damage to the consumer 

4.              The good faith of the person acting in violation of the Act 

Tenn. Code Ann. § 47-18-109(a)(4) 

The Myers court did apply treble damages based on the defendants’ conduct. The court found that the lessee’s inexperience in leasing a car translated to a complete lack of knowledge on the specific negotiating trick to retaining the trade-in equity. Further, the court noted the defendants knew about the lessee’s inexperience and that the lessee believed the trade-in value as the defendant had stated it in the appraisal would be applied to the lease agreement. The court ruled that because the defendants acted on that knowledge and responded to the lessee’s direct question about the “N.A.” notation with a deliberate misrepresentation, their deception was fraudulent and without any good faith. Myers, 54 F.Supp.2d at 756. 

Similarly, in Brooks, et al. v. Tennessee Farmers Mutual Ins., Co., the appellate court affirmed the trial court’s treble damage award where an insurance company offered a one-time payout of a policy holder’s claim using its assessor’s estimate despite knowing that the assessor’s report was incomplete. The court described both the company’s ‘take it or leave it’ statement about the payout and its offer of coverage based only on an imperfect evaluation as coercive. The court also held that telling the policy holder the potential payout check didn’t contain a disclaimer when it did have such language amounted to a false statement. Treble damages, the appellate court held, were not in error. 2014 WL 6735129 at *8 (Tenn. Ct. App. 2014). 

Compare, however, Keith v. Howerton, et al., 2002 WL 31840683 at *3 (Tenn. Ct. App. 2002) (holding a trial court may within its discretion award an amount less than three times actual damages where appropriate). 

Attorneys’ Fees

The Act explicitly provides for reasonable fees and costs pursuant to Section 109(e)(1).   

That amount need not be proportional to the award of compensatory damages, and based on the purpose of attorneys’ fees, is not seen as punitive. See Killingsworth v. Ted Russell Ford, Inc., 104 S.W.3d 530, 535 (Tenn. Ct. App. 2002) (“The potential award of attorney’s fees under the Tennessee Consumer Protection Act is intended to make prosecution of such claims economically viable to plaintiff[s].”) and Miller v. United Automax, 166 S.W.3d 692, 688 (Tenn. 2005) (holding fees under the TCPA are not duplicative of punitive damages). 

A trial court has discretion when awarding fees and in a TCPA case, should adhere to the factors established by the Tennessee Supreme Court as guided by Supreme Court Rule 8, RPC 1.5. See Brooks v. Tennessee Farmers Mut. Ins. Co., 2014 WL 6735129 at *9 (Tenn. Ct. App. 2014) (citing Connors v. Connors, 594 S.W.2d 672 (Tenn. 1980)). 

Those familiar factors include: 

·       The time spent on the case 

·       The time limitations imposed by the circumstances 

·       The novelty and difficulty of the questions involved and the skill requisite to perform the legal service properly 

·       The local customary fee for similar legal services 

·       The amount in controversy and the case’s resolution 

·       The attorney’s experience, reputation, and ability 

  Connors, 594 S.W.2d at 676 

Time

Pursuant to Section 110, the Act imposes a 1-year statute of limitations from the time a consumer discovers the unlawful act or practice.  

Federal and state courts apply Tennessee’s long-held discovery rule whereby the clock starts when the consumer discovers, or with reasonable diligence should have discovered, the unfair or deceptive act. See Terry v. Community Bank of Northern Virginia, 255 F.Supp.2d 817, 823 (W.D. TN 2003) (quoting Stanbury v. Barcardi, 953 S.W.2d 671, 675 (Tenn. 1997)). 

Further, the term ‘discovery’ can be read to mean actual knowledge that the conduct at issue is unlawful and the consumer has a claim against the offending party. The Cout of Appeals, in Leonard v. Leo’s Exterminating Services, Inc., provides a clear summary of the state’s case law regarding the discovery rule, including: 

“The plaintiff is deemed to have discovered the right of action when the plaintiff becomes aware of facts sufficient to put a reasonable person on notice that he or she has suffered an injury as a result of the defendant’s wrongful conduct.” 2010 WL 2134145 at *13 (Tenn. Ct. App. 2010) (quoting Roe v. Jefferson, 875 S.W.2d 653, 657 (Tenn. 1994)). 

**The Act also includes a little wiggle room, allowing that no actions can be brought more than five years from the unfair or deceptive transaction. Stay tuned for more information about how to use that provision.  

Class Actions

Class actions are not permitted.

See Walker et al. v. Sunrise Pontiac-GMC Truck, Inc., 249 S.W.3d 301, 310-11 (Tenn. 2008) for a more in-depth discussion.  

Inapplicable to attorneys

TCPA claims can’t be leveled against attorneys for conduct undertaken in connection with services to a client. 

See Wright v. Linebarger Googen Blair & Sampson, LLP, 782 F.Supp.2d 593, 608 (W.D. TN 2011) (distinguishing the practice of law from acts within the scope of trade and commerce, the latter of which falls within the TCPA while the former does not).