Haslam would ban class-action suits

By Richard Locker, Commercial Appeal
March 1, 2011

NASHVILLE — Gov. Bill Haslam is proposing new restrictions to the Tennessee Consumer Protection Act, including a ban on class-action lawsuits against violations of the 34-year-old law.

The governor also wants to exempt securities from the act’s coverage on the grounds that equities are regulated by federal and state laws tailored to them.

The changes are part of a broader Haslam initiative that, if approved by the legislature, would place new limits on civil liability lawsuits in Tennessee. The broader bill imposes lower limits on noneconomic damage awards in personal-injury cases and bans punitive damages in some of them.

Senate Bill 1522 is sponsored by Majority Leader Mark Norris, R-Collierville, but has not been set for a hearing.

The bill’s revisions would also:

Ban class-action lawsuits under the Tennessee Consumer Protection Act, which would codify a 2008 Tennessee Supreme Court ruling in a Memphis case that the act allow only lawsuits by individuals.

Ban punitive damage awards when a separate TCPA provision is used providing for awards three times actual damages in cases where the courts find that unfair or deceptive acts were “willful or knowing.”

According to its preamble, the Tennessee Consumer Protection Act of 1977 was adopted “to protect consumers and legitimate business enterprises from those who engage in unfair or deceptive acts or practices in the conduct of any trade or commerce.”

State Rep. Mike Kernell, D-Memphis, sponsored the bill at the start of his second term. Now in his 19th, Kernell said Monday that he’s disappointed with efforts to weaken the law.

“I have not heard of any complaints about it,” he said. “It’s not really been discussed so I don’t understand why it’s all of a sudden a problem. … It protects consumers and businesses from fly-by-night and fraudulent businesses.”

The governor’s legal counsel, Herbert Slatery, said the changes “fit within everything else: providing some clarity for business, including specified limits” on damage awards.

“So many other states have done this and we want to be competitive,” he said.

Slatery said the new administration believes TCPA has been misused, a stance backed by the Tennessee Chamber of Commerce & Industry, which brought it to the governor’s attention.

“That’s been a big issue for businesses and it’s been exploited over time,” said the chamber’s Bradley Jackson. “We’ve heard quite a bit of our businesses say it’s unfair and it’s not something a lot of other states have.”

But Mary Mancini of Tennessee Citizen Action, a citizen- and consumer-rights group, said the bill would “dismantle key provisions of the act, leaving, for example, victims of ponzi schemes without the legal means to recover their losses. …

“We’re not clear how this legislation would create quality jobs, boost the economy, or generate revenue for the state — all things we believe the legislature should be focused on right now.”

 

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