Court Opinion

ID: 9676144
Source: CourtListenerOpinion
Date Created: 2023-08-24 05:16:00.453317+00
Date Added: 2024-06-11T18:16:44.636111
License: Public Domain

CORNYN, Justice,
concurring.
The Court today establishes a broad rule that bars DTPA claims by indirect purchasers when their claims are based upon unconscionable acts that could also constitute anti-competitive acts prohibited under the Texas Free Enterprise and Antitrust Act (the Antitrust Act). Athough I agree that the plaintiffs in this case cannot prevail on their DTPA claims, I think it is unnecessary to reach the question of whether the Antitrust Act has such preemptive force1 because the plaintiffs’ DTPA claims are without merit. Accordingly, I concur in the Court’s judgment, but I cannot join in its opinion.
I. Preservation of Error
Rule 166a mandates that a motion for summary judgment “shall state the specific grounds therefor” and that “[ijssues not expressly presented to the trial court by written motion, answer or other response shall not be considered on appeal as grounds for reversal.” Tex.R.Civ.P. 166a(e). In applying this rule, the Court adopts the view that the defendants’ motion for summary judgment raised only issues dependent upon the construction of the Antitrust Act, and that the motion did not challenge the existence of a plausible DTPA claim if the Antitrust Act was found not to override the DTPA in this ease. 907 S.W.2d at 505 (“[W]e therefore do not consider whether the manufacturers established by their summary judgment proof that the alleged conduct was not unconscionable as a matter of law under the DTPA”). My reading of the motion for summary judgment leads me to the conclusion that the defendants preserved error on their challenge to the merits of the DTPA claim, without regard to the potential impact of a proper construction of the Antitrust Act.
The defendants’ motion for summary judgment included the following statement:
*508The claims asserted by plaintiff-interve-nors, although couched in the language of the Texas Deceptive Trade Practices Act (“DTPA”), are cognizable only under the [Antitrust Act]; plaintiff-intervenors, as indirect purchasers of infant formula, have no standing under the [Antitrust Act] to bring such claims.
Tr. at 711 (emphasis added). In my view, when one argues that a claim is not cognizable under a particular statute, this is sufficient to challenge whether a claim has been stated under that statute. See McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 340 (Tex.1993) (“Grounds may be stated concisely, without detail and argument.” (quoting Roberts v. Southwest Tex. Methodist Hosp., 811 S.W.2d 141, 146 (Tex.App.—San Antonio 1991, writ denied))).
In this case, the plaintiff-intervenors brought only a DTPA claim, so the defendants’ motion for summary judgment must dispose of that DTPA claim. Therefore, the only reasonable interpretation of the motion is that it challenges the validity of the DTPA claim. Thus, the first ground listed in the motion, as quoted above, must be read as arguing that: (1) the facts as alleged do not state a DTPA claim; (2) the facts as alleged do state an antitrust claim; and (3) the court cannot treat the pleadings as an antitrust claim because the plaintiff-intervenors do not have standing under antitrust law.
This interpretation is further borne out by the joint brief filed by the defendants in support of its plea to the jurisdiction and certain special exceptions, which was incorporated by reference in the motion for summary judgment: “Plaintiff-intervenors ... have failed to state a claim under the [DTPA],... The DTPA is not designed to address and does not address such antitrust violations.” Tr. at 793. The brief also explains: “No provision in the DTPA, fairly construed, covers the antitrust violations alleged here.” Tr. at 798-99. The brief then analyzes both prongs of the DTPA’s definition of unconscionability and concludes that neither prong could be interpreted as encompassing' the alleged misconduct.
These same arguments were reiterated in the briefs before the court of appeals. In the defendants’ initial brief before that court, they argued, “Section 17.45 of the DTPA has never been construed to cover anti-competitive actions of the sort alleged by interve-nors. Nor is there anything in the legislative history that would indicate that this section was intended to apply to price-fixing or other similar violations of the antitrust laws.” Brief of Appellees, at 10. Similarly, in their motion for rehearing in the court of appeals, the defendants argued, “[T]here is no ease, no bit of DTPA legislative history, and no hint by any commentator that the DTPA ever was intended or assumed to encompass price fixing or monopolization.” Appellee’s Motion for Rehearing, at 7-8.
Given these clear and unambiguous arguments on the merits of the DTPA claims in this case, I cannot join with the Court’s discussion of the relationship between the Antitrust Act and the DTPA, when that issue is unnecessary to resolve the case before us.
II. The Merits of the DTPA Claim
Under the DTPA, an unconscionable action or course of action is one which:
(A) takes advantage of the lack of knowledge, ability, experience, or capacity of a person to a grossly unfair degree; or
(B) results in a gross disparity between the value received and consideration paid, in a transaction involving transfer of consideration.
Tex.Bus. & Com.Code § 17.45(5).
“To obtain summary judgment, a movant must either negate at least one element of the plaintiffs theory of recovery or plead and conclusively establish each element of an affirmative defense.” Centeq Realty, Inc. v. Siegler, 899 S.W.2d 195, 197 (Tex.1995) (citations omitted). In determining whether the plaintiff-intervenors have stated a viable claim under either definition, we must take the allegations of fact alleged in their petition as true. Nixon v. Mr. Property Mgmt. Co., 690 S.W.2d 546, 549 (Tex.1985). However, mere conclusory statements do not constitute effective summary judgment proof and need not be given the same presumptive force in this analysis. See Life Ins. Co. v. Gar-Dal, Inc., 570 S.W.2d 378, 382 (Tex.1978).
*509Under the first prong of unconseionability, the plaintiff-intervenors essentially argue that only the defendants and the physicians who they recruited as surrogate salespeople had the knowledge, ability, and experience to fairly evaluate the nutritional value of infant formula. This is true, they claim, even though the defendants’ products are sold through “grocery stores, supermarkets, drug stores, discount merchandisers and other retail outlets.” They allege that by banding together to refrain from direct-to-consumer advertising and using the doctors to create an illusion of uniqueness or nutritional superiority, the defendants took advantage of consumers’ lack of knowledge to a grossly unfair degree.
This argument fails on two counts. First, the plaintiff-intervenors assume in making these largely conelusory allegations that consumers lack the knowledge, ability, or experience to fairly evaluate the desirability of infant formula marketed by the defendants. But, certainly, consumers cannot be presumed to lack a sufficient level of knowledge to assess many factors relevant to choosing a nutritional program for their infants: the emotional and developmental advantages of breast feeding, the occasional inconveniences of breast feeding, the cost of alternatives such as breast feeding or cow’s milk, and the convenience and extended shelf life of powdered infant formula. Furthermore, judicial notice may be taken of the availability of advice on every facet of child-rearing (including this one) from a burgeoning market of magazines, books, consultants, relatives, friends, public service brochures, and health care agencies. Given this general level of readily available information, the plaintiff-intervenors basic assumption that the public lacks basic information with which to evaluate the defendants’ marketing techniques is simply a bald, unsupported conclusion. Whatever advantage their cumulative knowledge gave them in this market, the defendant’s conduct simply cannot reasonably be construed as meeting the requisite standard of “a showing that the resulting unfairness was glaringly noticeable, flagrant, complete and unmitigated.” Chastain v. Koonce, 700 S.W.2d 579, 584 (Tex.1985).
Second, the plaintiff-intervenors assume that the defendants’ advantage is somehow different from that held by any manufacturer. Such comparison between manufacturers is relevant because, as we stated in Chastain, the standard against which a seller’s conduct is judged is an objective one. Chastain, 700 S.W.2d at 583. In applying this standard, the court must determine whether the seller’s attempts to tout the superiority of its products rose above mere “puffing.” See Dowling v. NADW Marketing, Inc., 631 S.W.2d 726, 728-29 (Tex.1982); see also Shaw Equip. Co. v. Hoople Jordan Constr. Co., 428 S.W.2d 835, 838-39 (Tex.Civ.App.—Dallas 1968, no writ). Without such an objective standard, the trial court is left in the untenable position of assessing the relative value of competing products. As one amicus in this ease argued:
A courtroom ... is the wrong place to determine whether Pepsi tastes better than Coke, Old Spice smells better than Brut, Colgate whitens teeth better than Crest, Gillette shaves closer than Schick, Bayer works faster than Anacin, MCI is better than AT & T, Nike is better for slam dunking than Converse, Hewlett Packard calculators do more things than Texas Instrument calculators, and so on. Many of these “superiority” claims involve matters of opinion, taste, and preference rather than matters subject to factual verification. Robust competition — not lawsuits under the DTPA — must resolve these questions.
Amici Curiae Brief of Texas Ass’n of Bus. & Nat’l Fed. of Indep. Bus., at 11.
Instead, an unconseionability claim must establish that the seller, armed with superior knowledge, ability, or experience to discern the impropriety of a particular transaction, nonetheless employed high-pressure tactics, preyed upon a consumer’s vulnerability, or used misleading inducements to convince the consumer to purchase inappropriate goods. See, e.g., Bennett v. Bailey, 597 S.W.2d 532, 535 (Tex.Civ.App.—Eastland 1980, writ ref'd n.r.e.) (holding a dance studio liable for an unconscionable act in its inducement of a vulnerable widow to pay $30,000 for dance lessons). Importantly, these unconscionable *510acts must be directed at the consumers who lack the knowledge and ability to make an informed decision.
Because the plaintiff-intervenors allegations, taken as true, do not establish either a significant absence of knowledge and ability on behalf of consumers in our free-market, information-saturated society or an objectively determinable abusive course of action in the defendants’ dealings with consumers, the claims under the first prong of unconsciona-bility must fail.
To establish a viable claim under the second prong of uneonscionability, the plaintiff-intervenors must establish that there was a gross disparity between the value received and the consideration paid. This gross disparity test has typically been applied when the product received is something other than what the buyer sought or when the product is virtually worthless, at least in comparison to the good sought. See, e.g., Teague v. Bandy, 793 S.W.2d 50, 56 (Tex.App.—Austin 1990, writ denied) (finding a gross disparity in value when a cow purchased as an embryo donor proved to be infertile). The disparity in value must be “complete and unmitigated.” Chastain, 700 S.W.2d at 583.
In this case, the plaintiff-intervenors allege that there was a gross disparity in value because the manufacturing costs of the defendants’ infant formula were far below the wholesale price. Between 1978 and 1990, the total manufacturing cost of a 13-ounce can of formula ranged from 20 to 32 cents. During the same period, the wholesale price ranged from 54 cents to $1.73. The plaintiff-interve-nors argue that this differential between sales price and wholesale cost constitutes a gross disparity in value.
I disagree with this argument for two reasons. First, the plaintiff-intervenors have compared the wholesale price to manufacturing costs rather than the value received. While manufacturing costs certainly affect the value of a specific good, the two measures are distinct. Manufacturing costs include only the costs of raw materials and processing costs. This measure does not include the manufacturers’ research costs, sales expenses, administrative costs, or profit. When these other factors are added to manufacturing costs, the resulting total, when allocated to the individual units produced, is one measure of the market value. But value is also dependent upon other considerations, such as the supply and demand in the market.
Every other reported gross disparity ease under the DTPA compares the sales price to the market value. See, e.g., Sun Power, Inc. v. Adams, 751 S.W.2d 689, 694-95 (Tex.App.—Ft. Worth 1988, no writ); Poe v. Hutchins, 737 S.W.2d 574, 585 (Tex.App.—Dallas 1987, writ ref'd n.r.e.); Bel-Go Assocs. v. Vitale, 723 S.W.2d 182, 189 (Tex.App. Houston [1st Dist.] 1986, no writ); Vick v. George, 671 S.W.2d 541, 550 (Tex.App.—San Antonio 1983), rev’d in part on other grounds, 686 S.W.2d 99 (Tex.1984). The plaintiff-intervenors cite no cases, and we can find none, where a disparity in value is determined by reference to manufacturing costs alone.
Second, a sales price ranging from two- and-a-half to five-and-a-half times the manufacturing cost is not a gross disparity in value. Were this degree of price differential sufficient to state a claim under the DTPA, every consumer who pays $1.00 for a cup of coffee or $1.50 for french fries would have a claim of uneonscionability. To hold otherwise would require courts to determine what constitutes a “fair” price. As our case law reveals, courts have refrained from making such determinations and have refused to find a gross disparity in value unless the goods received are virtually worthless. See, e.g., Dwight’s Discount Vacuum Cleaner City, Inc. v. Scott Fetzer Co., 860 F.2d 646, 650-51 (5th Cir.1988), cert. denied, 490 U.S. 1108, 109 S.Ct. 3161, 104 L.Ed.2d 1024 (1989) (“[T]he ‘gross disparity1 test obviously mirrors a fraud-type measure of recovery, in which a consumer receives a product inferior in quality to that which he intended to buy or, alternatively, when the consumer is defrauded out of his money entirely.”); Wyatt v. Petrila, 752 S.W.2d 683, 685 (Tex.App.—Corpus Christi 1988, writ denied) (“In DTPA actions based on uneonscionability, we look to gross disparity, not merely arguable unfairness.”).
*511Because the plaintiff-intervenors have not claimed that there was a gross disparity between the value received and the consideration paid, and because the disparity between the manufacturing costs and the consideration paid was not a gross disparity, the summary judgment on the claims based on the second prong of uneonscionability was proper.
IV. Conclusion
I agree with the Court that the summary judgment rendered by the trial court was proper. However, I base my decision on an evaluation of the merits of the DTPA claims, a point which I conclude was before the trial court and thus preserved. Because the facts alleged, even if taken as true, do not constitute unconscionable acts under either prong of the uneonscionability definition in the DTPA, I would reverse the judgment of the court of appeals and render judgment in favor of the defendants.

. The Court does not frame its analysis as one of preemption in the traditional sense, but instead concludes that in order to harmonize the provisions of the DTPA and the Antitrust Act, we must consistently apply the limitation on suits by indirect purchasers. While the indirect purchaser rule may be consistent with the policies and goals of antitrust law, I am not convinced that the policies and goals of the DTPA are sufficiently similar to warrant the incorporation of this rule in DTPA law.

. See, e.g., Birchfield v. Texarkana Memorial Hosp., 747 S.W.2d 361, 368 (Tex.1987) (refusing to limit statute to recovery for affirmative decep-tíve acts, practices, or representations and refusing to find DTPA exemption for health care liability for claims arising before enactment of express *515exemption); Melody Home Mfg. Co. v. Barnes, 741 S.W.2d 349, 352 (Tex.1987) (refusing to require actual payment to establish “consumer” standing); Mayo v. John Hancock Mutual Life Insurance Co., 711 S.W.2d 5, 6 (Tex.1986) (rejecting argument that insured's recovery of penalties under Article 3.62 precluded suit under Article 21.21); Vail v. Texas Farm Bureau Mut. Ins. Co., 754 S.W.2d 129, 132, 135 (Tex.1985) (holding that recovery under an insurance contract does not preclude statutory recovery, and that the legislature did not intend to exempt insurers from DTPA liability); Big H Auto Auction, Inc. v. Saenz Motors, 665 S.W.2d 756, 758 (Tex.1984) (refusing to exclude purchasers who bought goods for resale from the definition of “consumer”).