Justia Consumer Law Opinion Summaries

PhantomALERT, a developer of a traffic app that crowdsources real-time data, modified its app in early 2020 to help users spot and avoid Covid-19 outbreaks. Apple rejected PhantomALERT’s updated app from its App Store, citing new guidelines limiting Covid-19-related apps to those from recognized health entities and requiring apps in highly regulated fields to be submitted by legal entities, not individual developers. PhantomALERT was invited to revise and resubmit its app for compliance. The Google Play Store also rejected the app for similar reasons. Apple later updated its guidelines, allowing certain Covid-related apps endorsed by government entities, but PhantomALERT alleged it was not notified of this change.PhantomALERT sued Apple in the United States District Court for the District of Columbia, claiming violations of the Sherman Antitrust Act, California antitrust law, and California unfair competition law. Apple moved to dismiss, and PhantomALERT missed the deadline for an opposition brief, instead filing an amended complaint. The district court dismissed the original complaint without prejudice as conceded and denied leave to late-file the amended complaint, finding it futile. The court determined PhantomALERT’s antitrust allegations failed to define a relevant product or geographic market and that prerequisites for injunctive relief under California law were not met.The United States Court of Appeals for the District of Columbia Circuit reviewed the district court’s order de novo, finding the dismissal was final and appealable. The Circuit affirmed, holding that PhantomALERT failed to plausibly allege relevant product markets for its Sherman Act claims, including the alleged App Store single-brand aftermarket and submarket for Covid-19-related tracing apps. The court concluded the amended complaint did not state a claim under federal or California antitrust laws, nor under California’s unfair competition law. The dismissal was affirmed without prejudice. View "PhantomALERT Inc. v. Apple Inc." on Justia Law

A private company operating an automated license plate recognition (ALPR) system collected and stored images of license plates and related data, including date, time, and location, from vehicles in public areas in California. The company maintained a written usage and privacy policy, posted on its website, which set out authorized uses of the ALPR information and procedures for access and security. A California resident whose license plate information was collected by this system filed a class action lawsuit, alleging that the company violated the ALPR statute by failing to meaningfully implement or publicly disclose a compliant usage and privacy policy, by failing to enact adequate security measures, and by improperly allowing customers to use the data for unauthorized purposes. The plaintiff claimed harm based on an asserted invasion of privacy due to the collection and storage of his information, but did not allege any unauthorized access, disclosure, or tangible injury.The Superior Court of San Diego County granted summary judgment to the company, finding that the plaintiff lacked standing because he had not suffered actual harm as required by the ALPR statute. The court also denied another class member’s ex parte application to intervene as a substitute plaintiff, partly because the application was untimely and partly because he too failed to demonstrate actual harm resulting from a statutory violation.On appeal, the California Court of Appeal, Fourth Appellate District, Division One, affirmed both rulings. The appellate court held that standing to sue under the ALPR statute requires a showing of actual harm arising from a violation of the statute, not merely a statutory violation or a subjective sense of privacy invasion. The court concluded the plaintiff had not suffered actual harm, and therefore lacked standing. The appellate court also found no reversible error in the denial of the motion to intervene, as the movant failed to address all grounds for the trial court’s decision. View "Mata v. Digital Recognition Network, Inc." on Justia Law

Ward’s daughter used his personal information, including his social security number and driver’s license, to apply for a residential lease in Texas in his name. Without Ward’s knowledge or permission, she lived in the property, failed to pay rent, and was eventually evicted. The landlord then transferred the outstanding debt to National Credit Systems, Inc. (NCS), which reported the delinquent debt under Ward’s name to various credit reporting agencies. Upon discovering the debt on his credit report, Ward disputed its validity, claiming he was a victim of identity theft. Despite Ward submitting documentation, NCS concluded the debt information was accurate and continued reporting it.The United States District Court for the District of Colorado permitted Ward’s claim against NCS under the Fair Credit Reporting Act (FCRA) to proceed to trial. The jury found NCS liable for negligently failing to conduct a reasonable investigation of Ward’s dispute and awarded Ward $500,000 for emotional distress. NCS filed a post-trial motion under Rule 50(b), arguing that Ward had not proven the information was inaccurate under the FCRA, but the district court denied the motion.Upon review, the United States Court of Appeals for the Tenth Circuit held that inaccuracy is a prima facie element of a claim alleging an unreasonable investigation under the FCRA. To establish this, a consumer must demonstrate that the disputed information was objectively and readily verifiable as containing a mistake or error by the furnisher. The Court concluded that Ward’s claim did not meet this standard, as the alleged inaccuracy depended on subjective assertions about identity theft, which were not objectively verifiable. The Tenth Circuit reversed and vacated the district court’s judgment, remanding with instructions to enter judgment for NCS. View "Ward v. National Credit Systems" on Justia Law

A professional track and field athlete received a bottle of Gatorade Recovery Gummies at an award ceremony hosted by Gatorade, which were labeled as “NSF Certified for Sport,” indicating independent testing for banned substances. After consuming the gummies, the athlete submitted a routine drug test that later returned positive for cardarine, a banned performance-enhancing drug, resulting in immediate suspension from elite competition. Subsequent investigation revealed that the gummies lot the athlete received had never been NSF certified, and Gatorade was aware of the mislabeling before distributing the product. The athlete suffered significant consequences, including loss of eligibility to compete, loss of a scholarship, and forfeiture of endorsement opportunities.The athlete initiated legal action in the United States District Court for the Southern District of New York, alleging strict products liability, negligence, negligent misrepresentation, violation of Texas’s Deceptive and Unfair Trade Practices Act, tortious interference with contract, and intentional infliction of emotional distress. The district court dismissed all claims. It found no “cognizable injury outside of purely economic damages” for the strict liability, negligence, and misrepresentation claims, applying New York’s economic loss doctrine. Additional claims were dismissed based on statutory definitions and insufficient allegations of extreme conduct or distress.On appeal, the United States Court of Appeals for the Second Circuit reviewed the dismissal de novo. It affirmed the district court’s dismissal of the tortious interference, consumer protection, and emotional distress claims. However, the court recognized uncertainty in New York law regarding tort recovery for nonconsensual bodily changes detectable only by laboratory testing and the boundaries of the economic loss doctrine. Accordingly, the Second Circuit deferred decision and certified two questions to the New York Court of Appeals concerning the scope of the economic loss doctrine and whether the athlete’s injury is cognizable in tort under New York law. View "Asinga v. Gatorade Co." on Justia Law

Meta Platforms, Inc. operates social media platforms Facebook and Instagram. The District of Columbia sued Meta in the Superior Court of the District of Columbia, alleging violations of the Consumer Protection Procedures Act (CPPA). The District claimed Meta engaged in unfair and deceptive practices by developing features that encouraged children to spend excessive time on its platforms and by misrepresenting the safety of its platforms for children. During discovery, Meta produced millions of documents, some of which it later sought to “claw back,” asserting attorney-client privilege over four internal communications among researchers related to youth well-being research.The Superior Court of the District of Columbia reviewed these four documents in camera at the District’s request. The District argued the crime-fraud exception applied, contending the documents showed attorneys advised Meta researchers to remove or alter research evidencing harms to children, to avoid liability during ongoing litigation. The Superior Court found probable cause to believe the communications furthered consumer fraud, thus invoking the crime-fraud exception and ordering Meta to produce the documents. Meta’s motion for reconsideration, which included new declarations disputing the court’s characterization of the documents, was denied. The court declined to consider the new evidence because it was not timely presented.Meta petitioned the District of Columbia Court of Appeals for a writ of mandamus to vacate the discovery orders. The District of Columbia Court of Appeals denied the petition. The court held that Meta had not shown a “clear and indisputable right” to mandamus relief because the record did not clearly and indisputably foreclose the trial court’s finding of probable cause that the crime-fraud exception applied. The denial of mandamus does not preclude Meta from later challenging the trial court’s findings on direct appeal. View "In re Meta Platforms, Inc." on Justia Law

A neurosurgeon who co-owned a medical practice and several unrelated businesses purchased disability insurance policies through insurance brokers employed by a financial group. The brokers allegedly advised him he would receive maximum benefits if disabled, without disclosing that his other business interests could reduce his benefits. After being diagnosed with a vision condition that prevented him from performing neurosurgery, the plaintiff claimed maximum benefits but received only partial payments because of his unrelated business interests. He filed a complaint asserting, among other claims, that the brokers violated the New Jersey Consumer Fraud Act (CFA) by failing to obtain sufficient disability insurance.The Superior Court, Law Division, granted the brokers’ motion to dismiss the CFA count, relying on Plemmons v. Blue Chip Insurance Services, Inc., which held insurance brokers are exempt from the CFA as “semi-professionals.” The trial court noted but did not resolve the tension between Plemmons and Shaw v. Shand, which narrowly construed the CFA's “learned professional” exception. The Appellate Division affirmed the dismissal. The Supreme Court of New Jersey granted leave to appeal the CFA count.The Supreme Court of New Jersey held that insurance brokers, producers, and agents are not exempt from liability under the CFA, neither as “semi-professionals” nor under the “learned professional” exception. The Court found no support for a “semi-professional” exemption in the CFA’s text and determined that licensing or regulation alone does not justify exemption. The Court reversed the Appellate Division’s judgment, vacated the CFA count’s dismissal, and remanded for further proceedings, also inviting legislative clarification on professional exemptions under the CFA. View "Lowe v. Audet" on Justia Law

The plaintiffs in this case are individuals who received marketing text messages and phone calls from a medical services company, promoting its home sleep tests. Despite their efforts to stop the communications—such as replying “STOP” to text messages and registering on the National Do-Not-Call Registry—they continued to receive unwanted texts and calls. They filed a consolidated class action complaint seeking monetary, injunctive, and declaratory relief for alleged violations of both the federal Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227, and the Florida Telephone Solicitation Act.The United States District Court for the Central District of Illinois reviewed the complaint after the defendant moved to dismiss the TCPA claims. The defendant argued that the relevant TCPA provision, § 227(c)(5), only provides a private right of action for unwanted telephone calls, not text messages. The plaintiffs did not argue that their suit could proceed based on calls alone. The district court agreed with the defendant, found that the plaintiffs failed to state a claim under the TCPA because their complaint focused on text messages, and declined to exercise supplemental jurisdiction over the state-law claim, ultimately dismissing the entire suit.The United States Court of Appeals for the Seventh Circuit reviewed the dismissal de novo. The main issue was whether § 227(c)(5)’s reference to “telephone calls” includes text messages. The court held that, based on the statute’s text, context, and the ordinary public meaning at the time of enactment, “telephone call” does not encompass text messages. The court also concluded that neither FCC interpretations nor prior decisions involving other TCPA provisions required a different outcome. The Seventh Circuit affirmed the district court’s dismissal. View "Steidinger v Blackstone Medical Services" on Justia Law

A startup company that produces grain-free pet food filed a class action lawsuit against a major competitor, a traditional pet food company, alleging violations of the Lanham Act for false advertising. The plaintiff claimed that the larger company, whose products contain grain, conspired with veterinarians and two non-profit organizations to falsely associate grain-free pet food with an increased risk of canine heart disease. The complaint described a coordinated marketing campaign, including statements on the defendant’s website, educational materials for veterinarians, and dissemination of information through blogs, media appearances, and social media. The plaintiff asserted these actions were intended to disparage grain-free products and damage its business.The United States District Court for the District of Kansas dismissed the plaintiff’s claims under Federal Rule of Civil Procedure 12(b)(6). The district court found that the plaintiff failed to plausibly allege two required elements for a Lanham Act claim: first, that the challenged statements constituted commercial speech; and second, that the statements were literally false. The court concluded that academic articles and the other challenged statements were not commercial speech, and that the plaintiff had not sufficiently alleged literal falsity. The court also dismissed the related Kansas civil conspiracy claim, as it depended on the Lanham Act violation.On appeal, the United States Court of Appeals for the Tenth Circuit reviewed the dismissal de novo. The appellate court held that the district court erred in part. It found that the plaintiff plausibly alleged that some of the traditional pet food company’s website statements and veterinary educational materials were commercial speech and could be literally false under the establishment claim doctrine. However, it affirmed dismissal regarding statements made by veterinarians and non-profits, finding these were not commercial speech. The court affirmed in part, reversed in part, and remanded for further proceedings. View "KetoNatural Pet Foods v. Hill's Pet Nutrition" on Justia Law

A lightning strike in October 2019 caused a destructive fire at a large mansion in southern Illinois owned by Wesley Gibson. Gibson had acquired the property nearly 30 years earlier as a family vacation home and, over time, extensively renovated it and filled it with valuable furniture, antiques, and artwork. Eventually, he transformed the mansion and surrounding properties into a commercial lodging and events venue, hosting weddings, corporate retreats, and other gatherings. Gibson’s family continued to use the mansion for about 70 nights per year, but the property’s primary use became commercial, as evidenced by tax filings and significant rental income.Following the fire, Gibson filed a claim with Chubb National Insurance Company under his homeowner’s policy, which provided $8.75 million for the dwelling and $3.5 million for its contents. Chubb paid the dwelling coverage in full but limited payment for the contents to $25,000, citing a business property exclusion in the policy that capped coverage for property used in business at that amount. Gibson sued Chubb in the United States District Court for the Northern District of Illinois for breach of contract and violations of Illinois insurance and consumer-fraud statutes. On cross-motions for summary judgment, the district judge found that the majority of the contents were used for business purposes and subject to the $25,000 limit, granting partial summary judgment to Chubb. The judge allowed Gibson’s claim to proceed only for certain items kept in areas not accessible to guests. After settling remaining issues, final judgment was entered.The United States Court of Appeals for the Seventh Circuit affirmed. The court held that under the terms of the policy and Illinois law, Chubb properly classified most of the mansion’s contents as business property and was only obligated to pay the $25,000 sublimit. The court also affirmed summary judgment for Chubb on the statutory claims. View "Gibson v Chubb National Insurance Company" on Justia Law

Clearview AI, Inc. developed technology that collects and analyzes photographs from public websites to create facial recognition profiles, which can reveal personal details about individuals. After a media exposé in January 2020, multiple putative class-action lawsuits were filed against Clearview and related defendants, alleging misuse of biometric data. The cases were consolidated in the U.S. District Court for the Northern District of Illinois, and plaintiffs asserted claims on behalf of a nationwide class and state-specific subclasses (Illinois, California, New York, and Virginia), each based on differing statutory and common law rights.The litigation was extensive, involving motions to dismiss and discovery, before settlement negotiations began. The initial settlement talks failed due to Clearview’s limited financial resources. A second round resulted in a proposed settlement that offered class members a share in Clearview’s future equity, with a larger stake for members of certain state subclasses compared to the nationwide class. No original class representatives endorsed the settlement, prompting lead counsel to appoint new representatives, all from the favored subclasses. The district court, after considering objections, including from members of the nationwide class, approved the settlement as fair, reasonable, and adequate.The United States Court of Appeals for the Seventh Circuit reviewed the objections of nationwide class members. The court found no inherent flaw in the lack of injunctive relief or in the structure of monetary relief (an equity stake in the defendant). However, it held that the settlement was procedurally deficient because no representative of only the nationwide class participated in or approved the allocation of benefits, raising concerns about fair and adequate representation. The Seventh Circuit vacated the district court’s approval of the settlement and remanded for further proceedings. View "Weissman v Clearview AI, Inc." on Justia Law