Justia Consumer Law Opinion Summaries

Two individuals, one of whom had taken out a substantial mortgage loan in 2007 secured by a deed of trust on her residential property in Washington, D.C., became involved in a foreclosure dispute after defaulting on the loan. Following the default, the original lender’s successor first attempted foreclosure in 2014 but withdrew due to a defective notice of default. The lender then sent a new notice in 2018, which the borrower disputed, claiming the amount owed was incorrect but not contesting the fact of default. In the interim, the borrower transferred a partial interest in the property to a second individual in 2022.The lender’s assignee initiated a judicial foreclosure in the Superior Court of the District of Columbia in 2019. Both the borrower and the new co-owner responded with counterclaims: the borrower alleged violations of the D.C. Consumer Protection Procedures Act and common-law fraud, while the co-owner claimed fraudulent misrepresentation. The lender moved to dismiss these counterclaims for failure to state a claim under Rule 12(b)(6). The Superior Court dismissed all counterclaims and later granted summary judgment for the lender, ordering foreclosure. Both individuals appealed after the trial court entered judgment against them.The District of Columbia Court of Appeals reviewed the case. It held that the counterclaims were properly dismissed because the borrower did not sufficiently allege a consumer-merchant relationship or reliance necessary for her claims, and the co-owner’s pleadings lacked the particularity and justifiable reliance required. The appellate court also found no genuine disputes of material fact that would preclude summary judgment on the foreclosure claim, as the lender had the superior interest and the statutory requirements raised by the appellants did not apply to judicial foreclosure. Accordingly, the Court of Appeals affirmed the Superior Court’s decisions in all respects. View "Edwards & Jones v. Wilmington Savings Fund Society, FSB" on Justia Law

A real estate investment trust issued shares governed by corporate charter documents that initially paid fixed dividends but were set to convert to floating rates tied to the London Inter-Bank Offered Rate (LIBOR). The charter provided three fallback options if LIBOR became unavailable. When LIBOR was discontinued, the company determined that the third fallback provision—a fixed rate based on the most recent dividend period—would apply. This decision was announced before the shares were set to convert to floating rates, leading to a decrease in the shares' market value.A shareholder filed a class action in the United States District Court for the Central District of California, alleging that the company’s failure to convert to SOFR-based floating rates, as selected by the Federal Reserve under the Adjustable Interest Rate (LIBOR) Act, violated California’s Unfair Competition Law (UCL). The shareholder claimed that a fixed rate could not serve as a valid “benchmark replacement” under the LIBOR Act. The company moved to dismiss, arguing that the fallback provision was a valid benchmark replacement, thus precluding a UCL claim. The district court denied the motion, finding ambiguity in the statute and relying on legislative history suggesting concern over fixed-rate conversions.On appeal, the United States Court of Appeals for the Ninth Circuit reversed the district court’s order. The Ninth Circuit held that, under the plain text of the LIBOR Act, a “benchmark replacement” may include a fixed dividend rate as provided in the fallback provision, and there is no requirement that it be a floating rate. The court found the fallback provision to be a valid benchmark replacement and concluded that the company’s actions were not “unlawful” or “unfair” under the UCL. The case was remanded for further proceedings on any remaining issues. View "VERTHELYI V. PENNYMAC MORTGAGE INVESTMENT TRUST" on Justia Law

Two couples, who were friends and interested in purchasing vacation property to accommodate their families, entered into identical purchase agreements in 2015 with the owner of a luxury resort in Montana. The agreements granted each couple a fractional interest in a three-bedroom villa, with the understanding that they would be transferred to a four-bedroom villa once one was constructed. Until that time, they were to be exempt from maintenance fees and allowed use of a four-bedroom cabin. Both couples paid the purchase price and received warranty deeds for the three-bedroom villas but never received the promised upgrade, as no four-bedroom villas were ever constructed. In 2023, the resort owner demanded maintenance fees and cancelled their reservations when the couples refused to pay, citing the unfulfilled contractual obligation. After the resort was sold to a new owner, the couples received no further communication or access.The couples sued for breach of contract and under the Montana Consumer Protection Act (MCPA), seeking damages and attorney fees. The Montana Nineteenth Judicial District Court granted summary judgment in their favor on the breach of contract claim, finding the agreements valid and breached by the owner for failing to provide the upgrade and improperly charging fees. The court denied summary judgment on the MCPA claim, which went to a jury along with the issue of contract damages. The jury awarded $250,000 in contract damages to each couple but found for the defendant on the MCPA claim. The court subsequently awarded all attorney fees and costs to the couples, finding these were inseparable from the contract claim.On appeal, the Supreme Court of the State of Montana affirmed. It held that substantial credible evidence supported the jury’s damages award, including damages for loss of use after the property changed hands, and that the verdict was consistent with the instructions and supported by the evidence. The court also upheld the award of full attorney fees, finding the claims and related work inseparable, and remanded for a determination of fees and costs incurred on appeal. View "McNain Holdings v. Wilderness Preserve" on Justia Law

The plaintiff received two pre-recorded telemarketing calls from a vacation property company, which he alleged were made without his consent in violation of the Telephone Consumer Protection Act. The company had used third-party vendors to conduct a large-scale telemarketing campaign, targeting individuals whose phone numbers had been obtained from opt-in websites. The plaintiff, on behalf of himself and a proposed class, filed suit against the company in April 2019, asserting that these calls violated federal law.In the United States District Court for the Northern District of Illinois, the defendant engaged in extensive litigation over the course of four years. It filed answers with affirmative defenses, participated in class-related discovery, and litigated several motions, including opposing class certification and filing for summary judgment. Notably, the defendant did not assert arbitration as a defense until after the class was certified and significant litigation had occurred. When it finally raised arbitration—claiming that many class members had agreed to arbitrate through opt-in websites—the district court refused to allow the late amendment to add this defense, finding that it was too late and that the right to arbitrate had been waived. The district court later denied the defendant’s motion to compel arbitration, granted summary judgment to the plaintiff and the class, and ordered further settlement negotiations.Upon appeal, the United States Court of Appeals for the Seventh Circuit clarified the appropriate standard of review for orders denying motions to compel arbitration, holding that legal rulings with precedential effect are reviewed de novo, while the ultimate waiver determination is reviewed for clear error. The court further held that a defendant’s conduct prior to class certification is relevant in assessing waiver of the right to arbitrate. Finding no clear error in the district court’s conclusion that the defendant waived its arbitration rights by failing to timely assert them, the Seventh Circuit affirmed the judgment. View "Moore v Club Exploria, LLC" on Justia Law

This case involves three individuals who were cast members on a reality television show. The plaintiff was engaged in a secret sexual affair with another cast member, who was the longtime boyfriend of the defendant. The defendant discovered the affair after finding sexually explicit videos of the plaintiff on her boyfriend’s cell phone, which had been recorded without the plaintiff’s knowledge or consent. The defendant then made recordings of these videos and sent them to the plaintiff, along with a confrontational text message. The situation became widely publicized, leading to significant media attention and public scrutiny of the plaintiff.The plaintiff subsequently filed a lawsuit in the Superior Court of Los Angeles County against both the boyfriend and the defendant, alleging claims for “revenge porn” under Civil Code section 1708.85, invasion of privacy, and intentional infliction of emotional distress. The complaint alleged that the defendant accessed the boyfriend’s phone without authorization, made copies of the explicit videos, and disseminated them to others, resulting in harm to the plaintiff. The defendant responded by filing a special motion to strike under California’s anti-SLAPP statute (Code of Civil Procedure section 425.16), arguing that her actions were protected as speech on a matter of public interest. The trial court denied the motion, finding that the claims arose from private conduct, not protected activity.On appeal, the California Court of Appeal, Second Appellate District, Division Eight, reviewed the order denying the special motion to strike de novo. The court held that the defendant failed to meet her burden of showing that the plaintiff’s claims arose from constitutionally protected activity under section 425.16. Specifically, the court concluded that the alleged acquisition and dissemination of the private videos did not constitute conduct in connection with a public issue or an issue of public interest. The order denying the special motion to strike was affirmed. View "Leviss v. Madix" on Justia Law

Two consumers filed a lawsuit against a company that produces and sells eggs, challenging the company’s marketing claims that its hens are “free range” and “pasture raised on over 8 acres.” The plaintiffs alleged that these statements were deceptive because, in their view, the terms “pasture raised” and “free range” have objective meanings set by specific animal welfare certification organizations, and that consumers would expect the eggs to meet those standards. The plaintiffs sought to certify classes of California and New York consumers who purchased the eggs, arguing that the company’s advertising led consumers to pay a premium under false pretenses.The United States District Court for the Northern District of California considered the plaintiffs’ motion for class certification. During this process, the court excluded the plaintiffs’ expert’s opinion on the meaning of “pasture raised,” finding the expert’s methodology unreliable under Daubert v. Merrell Dow Pharmaceuticals, Inc. Without this expert opinion, the district court concluded that the plaintiffs could not show that deception was a common issue capable of classwide resolution, as required for predominance under Federal Rule of Civil Procedure 23(b)(3). Nonetheless, the court certified the classes, reasoning that common questions remained regarding the materiality of the statements and the calculation of damages.On appeal, the United States Court of Appeals for the Ninth Circuit reversed the district court’s order granting class certification. The Ninth Circuit held that, in the absence of admissible expert evidence regarding what consumers understand “pasture raised” to mean, the plaintiffs failed to show that common issues of deception predominated. The court further held that common questions of materiality and damages could not, by themselves, justify class certification when the element of deception was not established on a classwide basis. View "RUSOFF V. THE HAPPY GROUP, INC." on Justia Law

A fatal car accident involving an eighteen-year-old driving a 2013 Toyota Scion led to a lawsuit by the driver’s estate against Toyota and Subaru, who had jointly developed the vehicle. The plaintiff alleged negligence, product liability, and violations of North Carolina’s Unfair and Deceptive Trade Practices Act, claiming that design defects caused the occupant compartment to collapse and a fire to spread, ultimately resulting in the driver’s death. During discovery, the plaintiff requested extensive documents and depositions, including English translations of Japanese-language materials. Toyota and Subaru objected to several document requests and deposition topics, and disputes arose regarding the timing and sufficiency of their responses.The Superior Court of Robeson County granted the plaintiff’s motions to compel, ordered the production of additional documents (including English translations), and mandated that Toyota and Subaru’s corporate representatives testify to all noticed deposition topics without further objection. When the defendants failed to comply as ordered, the trial court imposed sanctions, deeming certain facts established against them—including elements of duty and breach in the plaintiff’s product liability claim—and struck their regulatory compliance defense. Toyota and Subaru appealed, challenging the discovery and sanctions orders.The North Carolina Court of Appeals vacated the sanctions order and reversed the requirement to translate documents but otherwise affirmed the discovery order, holding that most of the trial court’s actions were not an abuse of discretion. The Supreme Court of North Carolina reviewed only the remaining issues in the discovery order. It held that the trial court erred by enforcing a fourteen-day deadline for objections to document requests in deposition notices (rather than the seven days required by the rules), and by waiving defendants’ objections to deposition topics for not seeking a protective order. Accordingly, the Supreme Court reversed the relevant portions of the Court of Appeals’ decision, instructed it to vacate the discovery order, and remanded for further proceedings. View "Sessoms v. Toyota Motor Sales, U.S.A., Inc" on Justia Law

A married couple enrolled their children at a private school that, until the 2020–2021 academic year, offered a traditional curriculum. Following the events of summer 2020, the school shifted its curriculum to emphasize issues of race and gender identity. The parents became concerned after learning their sixth-grade child was exposed to controversial teachings and age-inappropriate materials. They joined a group of parents to express their concerns to the school’s leadership. After the parents met with school officials, the school abruptly expelled their children and accused the parents of making racist remarks, which the parents deny.The parents filed suit in Superior Court, Mecklenburg County, alleging breach of contract, fraud, unfair and deceptive trade practices, defamation, and other claims. The trial court, Judge Lisa C. Bell presiding, dismissed all claims except for breach of the implied covenant of good faith and fair dealing. The parents voluntarily dismissed that remaining claim to appeal. The North Carolina Court of Appeals affirmed the trial court’s dismissal of all other claims.The Supreme Court of North Carolina reviewed the case to determine whether the parents’ complaint satisfied the state’s “notice pleading” standard for surviving a motion to dismiss under Rule 12(b)(6). The court held that the parents adequately alleged claims for breach of contract, fraud, unfair and deceptive trade practices based on their fraud allegations, and defamation. The court found that their breach of contract claim was viable because they alleged the school expelled their children under a false pretext, in violation of the contract. The fraud and defamation claims also survived due to sufficient factual allegations. The Court reversed the Court of Appeals in part and remanded for further proceedings on these claims, but affirmed or declined to review the dismissal of other claims. View "Turpin v. Charlotte Latin Schools, Inc" on Justia Law

A group of plaintiffs, including a data privacy company serving public officials and several individually named police and correctional officers, alleged that a broad range of defendants, such as data brokers and marketing companies, continued to disclose the home addresses and phone numbers of individuals protected under Daniel’s Law after receiving formal requests to cease disclosure. The data privacy company, acting as an assignee for thousands of covered persons, facilitated these take-down requests. Plaintiffs claimed that, despite notice, defendants failed to comply within the statutory period, exposing individuals to risks such as stalking and threats.After the plaintiffs filed numerous civil actions in New Jersey state court, defendants removed the cases to federal court, where the United States District Court for the District of New Jersey, with a judge from the Eastern District of Pennsylvania presiding, consolidated and considered the cases. Defendants moved to dismiss, arguing Daniel’s Law was facially unconstitutional, particularly objecting to the apparent lack of a mental state requirement for liability. The district court denied the motions, reasoning that the statute could be interpreted to require at least negligence, not strict liability, for actual damages, to avoid constitutional concerns.On appeal, the United States Court of Appeals for the Third Circuit certified to the Supreme Court of New Jersey the question of whether Daniel’s Law requires a mental state for liability. The Supreme Court of New Jersey held that Daniel’s Law, as currently written, does not require any mental state—such as negligence, knowledge, or recklessness—to impose liability for actual damages under its civil cause of action. The Court based its decision on the statute’s text, legislative history, and the legislature’s omission of a mental state requirement where such language was used elsewhere in the statute. View "Atlas Data Privacy Corp. v. We Inform, LLC" on Justia Law

A software company operated an online payment portal used by residents, including the plaintiff, to pay rent for Maryland apartments. Each time the plaintiff paid rent through the portal, she was charged a convenience fee. To complete a transaction, users were required to check a box agreeing to the portal’s hyperlinked terms and conditions, which included an arbitration provision, a clause allowing unilateral changes to the agreement, and a notice provision stating that notices would be posted on the portal. The plaintiff, on behalf of herself and similarly situated individuals, filed a class action, alleging that the company unlawfully acted as an unlicensed collection agency by collecting these fees.After the action was removed to the U.S. District Court for the District of Maryland, the company moved to compel arbitration based on the terms and conditions. The plaintiff opposed, arguing that the arbitration agreement was unenforceable under Maryland law because the company’s ability to unilaterally change the terms without advance notice rendered its promise to arbitrate illusory. The district court agreed, finding that the contract was a browsewrap agreement and that the modification and notice clauses allowed the company to change terms at will without meaningful notice or an opportunity for users to opt out before changes became binding.On appeal, the United States Court of Appeals for the Fourth Circuit reviewed the district court’s denial of the motion to compel arbitration de novo. The Fourth Circuit held that, under Maryland law, the arbitration agreement was unenforceable for lack of consideration because the company’s promise to arbitrate was illusory. The court reasoned that the change-in-terms clause gave the company unfettered discretion to modify the agreement at any time, without advance notice, thus failing to bind the company meaningfully. The court affirmed the district court’s judgment. View "Trimble v. Entrata, Inc." on Justia Law