NEW ORLEANS — A white paper by Emory University Law Professor Joanna M. Shepherd examines the costs and consequences of the Louisiana Unfair Trade Practices and Consumer Protection Law (LUTPA), but not everyone agrees with her assessment.
The 26-page report published by Shepherd and the American Tort Reform Foundation, examines the history and origins of LUTPA, and analyzes data on related litigation to reach the conclusion that LUTPA has become less effective over time.
“Indulgent amendments and overly permissive interpretations of LUTPA have allowed enterprising litigants and lawyers to bring claims unrelated to the original intent of the legislature," the report states.
According to a chart in the paper, the number of unfair trade practices and consumer protection law cases published in Louisiana has trended upward from an average of 1.1 cases per 100,000 people in 2005 to slightly more than 1.8 cases per capita in 2009. Nationally, the number of cases published has also grown, but at a fairly steady rate, whereas Louisiana saw a drastic jump from 1.4 in 2006 to 1.9 in 2008.
Tad Bartlett, an attorney at Jones Swanson Huddell and Garrison LLC, told the Louisiana Record that Shepherd’s numbers do not account for the fact that LUTPA-only lawsuits are rare.
“LUPTA claims are overwhelmingly included with other causes of action in a lawsuit, such that limiting or eliminating LUTPA will not automatically result in limiting the number of lawsuits,” he said.
Shepherd ascribes most of the blame for the increase in lawsuits to overcorrections and expansions to the law over time.
“While the intent of LUTPA was to protect consumers from unfair and deceptive practices, in recent years it has been applied in expansive ways that are inconsistent with this goal,” she wrote.
Businesses and consumers both suffer from overly permissive consumer protection laws because they impose significant costs on businesses and these are passed on to consumers, according to the paper. Such laws might also prevent businesses from releasing adequate information about their products to prevent claims of deceptive advertising, the paper stated.
Other effects of LUTPA alleged by the paper include overburdening of the civil justice system and increased cost to tax payers.
Bartlett said that these effects are not as dire as the paper indicates.
“LUTPA already presents a series of balances, in the statutory text and in its application by the courts, to keep it limited primarily to only very egregious practices that go outside the bounds of normal business practices, and is as much a tool to protect businesses as anything else," he said. "The occasional outlier has not upset this balance."
The paper presents several suggestions for legislative reform that Shepherd says will protect consumers while reducing opportunities for abuse. These include: limiting damages to actual out-of-pocket costs, adding a detrimental reliance requirement and restricting standing to consumers who can show actual harm.
“The text of the law is inherently limited to 'actual' damages and not speculative damages, excluding class- action claims, and only allowing treble damages where an attorney general investigation has been commenced into ongoing violations," Bartlett said.
Shepherd could not be reached for comment.