Justia Consumer Law Opinion Summaries

A consumer purchased a licorice product manufactured by a Minnesota company, relying on packaging that stated the product was “Naturally Flavored,” “Natural Strawberry & Raspberry Flavored Licorice,” and “Free of . . . Artificial Colors & Flavors.” The consumer later learned, through laboratory testing, that the product contained DL malic acid, which is an artificial flavor created from petrochemical sources. The consumer alleged that this ingredient rendered the product’s labeling false or misleading, and filed a putative class action in California, asserting claims for violation of the California Consumers Legal Remedies Act, unjust enrichment, and breach of express warranty.The United States District Court for the Southern District of California dismissed the complaint with prejudice. The court found that the complaint failed to plead with sufficient particularity that the malic acid was artificial, thus not meeting the heightened pleading standard of Federal Rule of Civil Procedure 9(b). The district court also held that the plaintiff did not plausibly allege that a reasonable consumer would be misled by the product’s labeling, reasoning that the labels did not explicitly state the product was “all natural” or “100% natural,” and that the ingredients list disclosed both natural and artificial ingredients.On appeal, the United States Court of Appeals for the Ninth Circuit reversed the district court’s dismissal. The appellate court held that the complaint satisfied Rule 9(b) because it identified the specifics of the alleged fraud and provided details about the laboratory testing. The court also held that the plaintiff plausibly alleged that a reasonable consumer could be misled by the product’s claim to be free of artificial flavors when it allegedly contained an artificial flavor. The case was remanded for further proceedings. View "TRAMMELL V. KLN ENTERPRISES, INC." on Justia Law

An educational technology company was contracted by a county office of education to provide software and technology services to school districts, which involved collecting and storing various types of student data, including medical information. In 2022, the company experienced a data breach that resulted in unauthorized access to student medical records, including those of a minor plaintiff. The minor, through a guardian, filed a class action lawsuit alleging violations of both the Confidentiality of Medical Information Act (CMIA) and the Customer Records Act (CRA), claiming the company was negligent in protecting confidential medical information and failed to provide timely disclosure of the breach.The Superior Court of Ventura County granted the company’s demurrer and dismissed the case, concluding that the plaintiff failed to state a claim under either statute, as the company was not a covered entity under the CMIA or CRA and the plaintiff was not a “customer” under the CRA. The California Court of Appeal, Second Appellate District, Division Six, reversed, finding that the company fell within the scope of both statutes and that the plaintiff had alleged sufficient facts to support both claims. The appellate court also determined that the trial court erred by denying leave to amend the complaint.The Supreme Court of California reversed the appellate decision. The Court held that the plaintiff did not sufficiently allege the company was a “provider of health care” under the CMIA, nor that he was the company’s “customer” under the CRA, so no claim was stated under either statute. However, the Court clarified that under the CMIA, a breach of confidentiality occurs when medical information is exposed to a significant risk of unauthorized access or use, and actual viewing by an unauthorized party is not required. The judgment was reversed and remanded for further proceedings. View "J.M. v. Illuminate Education, Inc." on Justia Law

A group of Illinois residents called John Hancock to discuss their retirement accounts. John Hancock routed these calls through Amazon Connect, a service provided by Amazon Web Services. During these calls, Pindrop Security, using its cloud-based biometric technology, authenticated the callers by analyzing their voiceprints. The plaintiffs alleged that Amazon and Pindrop collected their biometric information without the required consent, in violation of the Illinois Biometric Information Privacy Act (BIPA).The plaintiffs first brought their claims against Amazon in Illinois state court, but after Amazon removed the case to the United States District Court for the Southern District of Illinois, that court dismissed the case for lack of personal jurisdiction. The plaintiffs then filed a similar complaint in the United States District Court for the District of Delaware, adding Pindrop as a defendant. The District of Delaware initially dismissed the case on extraterritoriality grounds, but after amended complaints, dismissed all claims against Pindrop based on BIPA’s financial-institution exemption and most claims against Amazon, except the claim under Section 15(b) for collecting biometric data without written consent. The court later granted Amazon judgment on the pleadings as to a Section 15(d) claim and ultimately granted summary judgment in favor of Amazon, closing the case. The court also denied the plaintiffs’ motions related to discovery extensions and voluntary dismissal of certain plaintiffs.On appeal, the United States Court of Appeals for the Third Circuit affirmed the District Court in all respects. The Third Circuit held that Pindrop was exempt from BIPA under the financial-institution exemption, that the District Court did not abuse its discretion in denying discovery extensions or the voluntary dismissal motion, and that the extraterritoriality doctrine barred the plaintiffs’ BIPA claims against Amazon because the relevant conduct did not occur primarily and substantially in Illinois. The court also affirmed the judgment on the pleadings for the Section 15(d) claim. View "McGoveran v. Amazon Web Services Inc" on Justia Law

Several individuals sued two outdoor retailers, alleging that the retailers used third-party “Session Replay Code” on their websites to record users’ activities, including keystrokes, clicks, and text entries, without user consent. This code operated invisibly to typical users and transmitted the recorded data to outside providers, which could aggregate and store the information, including potentially sensitive details. Among the plaintiffs, two made purchases on the websites and entered personal information such as names, addresses, and complete credit or debit card numbers; the other six only browsed and did not provide identifying data.The lawsuits were consolidated and transferred to the U.S. District Court for the Eastern District of Pennsylvania. That court dismissed the complaint, ruling that none of the plaintiffs sufficiently alleged an “injury in fact” necessary for Article III standing. The District Court reasoned that only the sharing of highly sensitive information, like medical or financial data, would establish standing, and it dismissed with prejudice the claims of the six plaintiffs who did not make purchases (and thus did not provide sensitive data). As for the two plaintiffs who did make purchases, the court dismissed their claims without prejudice, allowing them to amend if they could allege sharing of highly sensitive information.On appeal, the United States Court of Appeals for the Third Circuit held that the two purchasing plaintiffs (Cornell and Montecalvo) alleged an injury analogous to the common-law tort of intrusion upon seclusion, since their complete credit or debit card numbers were surreptitiously recorded and transmitted. Thus, the Third Circuit reversed the dismissal as to those two plaintiffs and remanded for further proceedings. However, the court affirmed (as modified to be without prejudice) the dismissal of the claims brought by the other six plaintiffs, holding that their allegations did not establish a concrete injury sufficient for standing. View "In Re: BPS Direct, LLC" on Justia Law

A group of retailers who sell tobacco and nicotine products in Washington County, Oregon, challenged a county ordinance that banned the sale of flavored tobacco and flavored synthetic nicotine products to anyone in the county, regardless of age. The retailers argued that the county ordinance was preempted by a statewide law—Senate Bill 587 (2021), codified at ORS 431A.190 to 431A.220—which created a statewide tobacco retail licensing scheme and regulated the retail sale of tobacco products in Oregon.After the ordinance was enacted, the retailers filed suit in the Washington County Circuit Court, seeking declaratory and injunctive relief to prevent enforcement of the ban. The circuit court agreed with the retailers and concluded that the state law preempted the county’s ordinance, issuing a permanent injunction against its enforcement. Washington County appealed to the Oregon Court of Appeals, arguing that the ordinance was a valid exercise of its home rule authority and was not preempted by state law. The Court of Appeals reversed the circuit court, holding that the statewide licensing law did not preempt the county’s flavored tobacco ban.The Supreme Court of the State of Oregon granted review. The court held that the state law did not expressly or implicitly preempt the county’s ordinance. It found that the statutory language did not unambiguously demonstrate legislative intent to bar local regulation of this kind, and that the county’s ordinance could operate concurrently with the state licensing law. The court concluded that the ordinance was a permissible “standard for regulating the retail sale of tobacco products and inhalant delivery systems for purposes related to public health and safety” under the state statute. The Supreme Court of Oregon affirmed the decision of the Court of Appeals, reversed the circuit court’s judgment, and remanded for further proceedings. View "Schwartz v. Washington County" on Justia Law

A manufacturer of biodegradable coolers developed and released its product several years before a competing company launched a similar cooler. The first manufacturer’s early product was initially not available in retail stores but was later marketed directly to consumers. The competing company’s cooler, introduced later, was sold in major retail chains. The dispute arose when the second company advertised its cooler as the “world’s first eco sensitive cooler, made from 100% biodegradable materials.” The first manufacturer objected, asserting that these statements were false because it had marketed a biodegradable cooler before its competitor.The first manufacturer sued in the United States District Court for the Northern District of California, alleging false advertising under the Lanham Act and unfair competition under California law. The claim was that the competitor’s statements about being “first” deprived it of recognition, market cachet, and associated goodwill, causing harm to its reputation and marketing opportunities. The district court held that the Lanham Act does not provide a cause of action for claims based on inventorship or being “first to market” and granted summary judgment to the defendant. The court found the state law claim derivative and dismissed it as well.On appeal, the United States Court of Appeals for the Ninth Circuit affirmed the district court’s decision. The Ninth Circuit held that, under the Lanham Act, actionable false advertising must concern observable characteristics of the tangible product, not the origin of ideas or claims of market primacy. It concluded that statements about which company was first to market refer to the origin of a concept, not the qualities or characteristics of the product itself, and thus are not cognizable under the Lanham Act. The court also found that the plaintiff had waived any argument that consumers were confused about whether its product was biodegradable. The judgment for the defendant was affirmed. View "VERICOOL WORLD, LLC V. IGLOO PRODUCTS CORP." on Justia Law

After the death of Laurel Kalinski in 2019, her estate consisted primarily of a house and a vehicle, with her daughter, Crystal, named as the personal representative. Crystal and her brother Nicholas, the sole heirs, initially agreed Crystal could keep the house by refinancing and paying Nicholas half the equity, using life insurance proceeds to pay estate debts and legal fees. They retained Murphy Law Office to represent the estate in the probate process. Disagreements emerged between the siblings regarding the value of the property and the amount Nicholas was to receive, leading Nicholas to hire separate counsel. Eventually, Crystal refinanced the house and transferred it to herself, prompting litigation between the siblings and later a settlement.The Estate, through Crystal, sued Murphy Law Office and its attorney, alleging negligence (legal malpractice), breach of contract, violation of the Idaho Consumer Protection Act (ICPA), and unjust enrichment. The District Court of the Fourth Judicial District granted summary judgment for Murphy on all claims, striking the Estate’s expert affidavit as untimely and lacking foundation, and finding no genuine dispute of material fact. The court ruled that the unjust enrichment and ICPA claims were not independent of the malpractice claim and that there was insufficient evidence of unfair or deceptive acts under the ICPA. The Estate appealed only the unjust enrichment and ICPA rulings.The Supreme Court of the State of Idaho affirmed the district court’s judgment. It held that, under Idaho law, the Estate’s unjust enrichment claim could not proceed as an independent cause of action because it was based on the same allegations as the malpractice claim and did not establish any separate element. The Court also found the Estate failed to present evidence of any unfair, deceptive, or unconscionable conduct by the attorney sufficient to support a claim under the ICPA. Costs on appeal were awarded to Murphy, but attorney fees were denied. View "Estate of Kalinski v. Murphy Law Office PLLC" on Justia Law

Roger Tejon subscribed to a video streaming service operated by Zeus Networks, LLC, through its online platform using an Apple device. To register, Tejon chose between an annual or monthly plan by clicking one of two large, red buttons on a “Choose your plan” page. Below these buttons, in small, gray text was a hyperlinked “Terms of Service,” which included a mandatory arbitration clause, but there was no requirement that Tejon click on this link to complete his subscription. Tejon later alleged that Zeus shared his viewing history and personally identifiable information with a social media company without his consent and sued Zeus for violating the Video Privacy Protection Act.Zeus moved to compel arbitration, arguing that Tejon had consented to the arbitration clause by signing up for an account. The United States District Court for the Southern District of Florida denied this motion. The district court found that the terms of service hyperlink was not conspicuous enough to put a reasonably prudent user on inquiry notice of the arbitration provision.The United States Court of Appeals for the Eleventh Circuit reviewed the district court’s denial de novo. The Eleventh Circuit held that the design of Zeus’s subscription page did not provide sufficient inquiry notice of the arbitration agreement to bind Tejon. The court explained that the hyperlink to the terms was small, in gray font, and located beneath prominent action buttons, making it easy to overlook. The court further noted that the page did not explicitly state that clicking the subscription button would bind the user to arbitration. The Eleventh Circuit affirmed the district court’s order denying the motion to compel arbitration. View "Tejon v. Zeus Networks, LLC" on Justia Law

A group of consumers residing in California purchased products online from a national retailer’s website between 2020 and 2022. To complete their purchases, they were required to agree to the retailer’s Terms and Conditions, which included an arbitration clause mandating that any disputes be resolved through arbitration before the American Arbitration Association (AAA) and that certain pre-arbitration steps be followed. When the consumers later believed that the retailer had engaged in false and deceptive marketing, they followed the pre-arbitration process as outlined, served notices of dispute, attempted mediation, and, after those efforts failed, filed demands for arbitration with the AAA and paid all required fees.After the consumers initiated arbitration, the AAA notified the parties that the retailer had not filed its arbitration agreement with the AAA as required by AAA rules. The AAA requested compliance, but the retailer refused to register its agreement. As a result, the AAA, following its Consumer Arbitration Rules, terminated the arbitration proceedings and closed the consumers’ cases. The consumers then filed a petition in the United States District Court for the Eastern District of Wisconsin seeking to compel arbitration, arguing that the retailer’s refusal to register the agreement and pay related fees constituted a refusal to arbitrate under the Federal Arbitration Act.The district court denied the petition, relying on precedent which holds that, when arbitration proceeds and ends in accordance with the agreed rules—even if terminated by the arbitral forum for procedural reasons—a court may not intervene to compel further arbitration. The United States Court of Appeals for the Seventh Circuit affirmed, holding that because the parties’ agreement delegated procedural questions to the AAA and the AAA exercised its discretion under its rules in terminating the proceedings, there was no refusal to arbitrate that would justify judicial intervention under the Act. View "Bernal v Kohl's Corporation" on Justia Law

A patient received medical care at a hospital and was billed for those services. At the time, the patient’s income allegedly qualified her for financial assistance known as charity care under Washington law, which is designed to help low-income patients pay hospital bills. The hospital did not determine the patient’s eligibility for charity care before billing her and subsequently assigned the debt to a collection agency. The agency sued to collect the debt, obtained a judgment, and did not provide any information about the availability of charity care in its communications. The patient only learned about the program after judgment and was later granted a partial reduction by the hospital, but the collection agency refused to honor it, citing its policy against reductions after court judgment.The patient filed a class action against the collection agency in Skagit County Superior Court, alleging violations of the Washington Consumer Protection Act (CPA), the Collection Agency Act (CAA), and the federal Fair Debt Collection Practices Act (FDCPA). The case was removed to the United States District Court for the Western District of Washington. The district court dismissed some claims, including those under the CAA, and divided the remaining claims into “failure-to-screen” and “failure-to-notify” theories. The court dismissed the “failure-to-screen” theory, retained the “failure-to-notify” theory, and certified a question of state law to the Washington Supreme Court regarding whether the charity care notice requirements apply to collection agencies.The Supreme Court of the State of Washington held that the statutory requirement to give notice of charity care under RCW 70.170.060(8)(a) applies to collection agencies collecting hospital debt. The court explained that the policy and plain language of the statute require patients to be notified by all entities engaged in billing or collection, including collection agencies, and that the duty to provide notice passes to assignees of hospital debt. View "Preston v. SB&C, Ltd." on Justia Law