Deceptive Trade Practices — A Texas No-Damages Model for Toxic Tort Litigation

State and local governments have long participated in toxic tort litigation against manufacturers whose products are claimed to have driven up government healthcare costs. Now, the Texas attorney general has staked out a new way to pursue alleged wrongdoers without having to prove any actual damages: claim violations of the Texas Deceptive Trade Practices Act and seek civil penalties. Two recent examples likely foreshadow a much broader use of the DTPA in such litigation.

PFAS

Earlier this year, Texas filed suit against two longstanding PFAS manufacturers. Many states and local municipalities have filed PFAS litigation, mostly for contamination to drinking water supplies. What is new in this suit is that the state is not alleging any actual damages. Instead, it alleges that these chemical companies misled Texans regarding the safety of PFAS and that each act of deception is a violation of multiple parts of the DTPA. The state seeks up to $10,000 in civil penalties per violation.

Given how long PFAS were used, the state likely will seek penalties for decades of alleged violations. In toxic tort litigation such as this, $10,000 per violation can add up to many millions of dollars quickly. These potentially enormous penalty amounts would go straight to the state’s coffers (after the firms retained by the state take their cut, since the DTPA also permits the recovery of attorney’s fees). Because it is a case about civil penalties, presumably the state will not develop — and will not need to develop — evidence of any particular harm to any particular Texan.

The case is in very early stages as there are pending motions about jurisdiction.

Food Coloring

Although not a suit (yet), the Texas AG’s office announced that it is investigating a prominent food manufacturer for using food colors and preservatives in its products. According to the state, the products are touted as “healthy” when in fact they use artificial colors and preservatives. Additionally, the state faults the manufacturer for failing to remove artificial colors — despite the fact that it announced it would do so.

As the AG puts it, the state must “fight[] for our children’s future” by “putting an end to companies’ deceptive practices that are aimed at misleading parents and families about the health of food products.” While the state’s public announcements discuss health effects, a DTPA suit likely would seek only civil penalties unrelated to any particular harm. Thus, it is a powerful tool against companies who the state believes have misled the public.

Takeaway

State action against deceptive conduct is nothing new. Yet typically, it’s been used for specific statements and conduct. Expanding the use to traditional toxic tort litigation is an interesting new approach and one with potentially outsized financial risk. Given the potential financial benefits to states, this approach may spread among the states with similar statutory schemes. Defending against these claims will require adept use of the defenses available under the statutes and paring down runaway theories of the number of violations.