Justia Consumer Law Opinion Summaries

Union Pacific Railroad operated intermodal facilities in Illinois where truck drivers were required to scan their fingerprints for identification between 2013 and 2021. Twelve truck drivers filed suit, alleging that this practice violated Illinois’s Biometric Information Privacy Act (BIPA). Union Pacific argued that it was exempt from BIPA due to its contracts with the State of Illinois and its subdivisions, including operating commuter trains for Metra and performing design work on overpasses and grade crossings. The plaintiffs countered that these contracts were unrelated to the intermodal freight operations where their biometric data was collected.The United States District Court for the Northern District of Illinois reviewed Union Pacific’s motion for summary judgment. The court found in favor of the plaintiffs, holding that the statutory exemption in BIPA only applied when a contractor was working in the course of fulfilling a state or local government contract, not merely because the contractor had any contract at the time. The district court denied summary judgment, and later certified its decision for interlocutory appeal under 28 U.S.C. §1292(b), prompting the Seventh Circuit to accept the appeal.The United States Court of Appeals for the Seventh Circuit considered whether the BIPA exemption for contractors of state agencies or local units applied broadly or only when the contractor is working in fulfillment of relevant contracts. The court looked to recent Illinois appellate decisions, which uniformly interpreted the exemption to mean “in the course of” working for the government. Concluding that the Illinois Supreme Court would likely adopt this interpretation, the Seventh Circuit affirmed the district court’s decision, holding that Union Pacific was not exempt from BIPA for its intermodal freight operations simply because it had unrelated contracts with government entities. View "Payton v Union Pacific Railroad Company" on Justia Law

Copper City Gaming, Inc. alleged that in July 2022, Eric Allen entered into a lease agreement with the corporation, resulting in four payments totaling $14,400. Copper City claimed these payments were fraudulent, part of a conspiracy between Eric and Russ Allen, and asserted causes of action for fraud, violation of the Montana Consumer Protection Act, breach of contract, unjust enrichment, and civil conspiracy. The complaint specifically alleged the lease used the wrong address and corporate name, Eric lacked authority to sublease or failed to provide usable space, and Copper City never stored property there.Previously, a related action (DV-22-206) involved disputes between shareholder groups over management and use of corporate funds. That action began in Copper City’s name but, by court order, Russ and Camy Allen were substituted as plaintiffs, and Copper City was no longer a named party. The parties reached a mediated settlement, which included a Mutual General Release and Settlement Agreement, and a Special Master’s Order waiving certain business dispute claims, including storage-unit fees. The Special Master dismissed the action with prejudice as fully settled.The Supreme Court of the State of Montana reviewed the District Court’s order granting Eric Allen’s motion to dismiss under M. R. Civ. P. 12(b)(6) on collateral estoppel grounds. The Supreme Court held that the complaint and materials properly considered at the pleading stage did not conclusively establish that the prior adjudication decided the identical issues now raised, that Copper City was adequately represented in the prior action, or that Copper City had a full and fair opportunity to litigate those issues. The Court also found the District Court erred by considering matters outside the pleadings without converting the motion to summary judgment under Rule 12(d). The Supreme Court reversed the dismissal and remanded for further proceedings. View "Copper City Gaming v. Allen" on Justia Law

A company that operates a website hosting digitized yearbooks, allowing users to search for names and view yearbook pages, was sued by a California resident whose name and photo appeared in a yearbook on the site. The plaintiff alleged that the company violated California’s right-of-publicity statute by using individuals’ names without consent to advertise paid subscriptions. The plaintiff advanced a theory that simply making individuals’ names searchable on the site, even if no one actually searched for them, constituted a commercial use requiring consent under the statute.Previously, the United States District Court for the Northern District of California denied the company’s motion to dismiss, finding the plaintiff plausibly alleged a direct commercial use. The court then conditionally certified both damages and injunctive classes consisting of California residents whose names were searchable on the site, had never registered as users, and had not donated yearbooks. The company challenged class certification, arguing that individual issues predominated and that the lead plaintiff would not adequately represent the classes.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court held that, for class certification purposes, whether being “searchable” is sufficient for liability under the statute is a merits question not to be resolved at the certification stage. The court further found that injury could be shown by common evidence of economic harm, and that the district court did not abuse its discretion in managing potential individualized issues regarding class membership. The appellate court also rejected the company’s adequacy challenges, noting that the lead plaintiff could represent both classes. The Ninth Circuit affirmed the district court’s order certifying the classes. View "NOLEN V. PEOPLECONNECT, INC." on Justia Law

In 2016, a condominium seller was charged $470 by a property management company for preparing and delivering statutorily required disclosure documents related to the sale of his unit. The seller alleged that these fees were excessive and unreasonable, asserting that the management company’s services were of minimal value because the documents were maintained electronically and sellers had already paid for their preparation through association fees. After the seller’s death, the successor trustee continued the action, representing a proposed class of similarly situated condominium sellers.The Circuit Court of Cook County reviewed the seller's second amended complaint, which included claims for violation of the Condominium Property Act, violation of the Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act), and unjust enrichment. The court dismissed all but the Consumer Fraud Act claim. Following developments in a related case, Channon v. Westward Management, Inc., the appellate court stayed the appeal. After Channon was decided, holding that section 22.1 of the Condominium Property Act does not provide an implied private right of action for sellers against property managers, the circuit court reconsidered and dismissed the Consumer Fraud Act claim. The appellate court affirmed, reasoning that the statutory amendment clarified the permissible fee and capped it at $475, making the $470 charge not actionable.The Supreme Court of the State of Illinois reviewed the appeal and affirmed the judgments of both the circuit and appellate courts. The court held that the complaint failed to state a legally sufficient claim under the Consumer Fraud Act because the alleged high fee, absent additional evidence of unfair business practices, did not violate public policy or constitute oppression or substantial injury under the Act. The court further noted that the relevant statutory scheme was intended to protect buyers, not sellers, and the legislature had implicitly rejected the plaintiff’s arguments regarding the value and payment for the disclosure services. View "Greenswag v. Lieberman Management Services, Inc." on Justia Law

Several individuals filed a putative class action against two related corporate defendants, alleging that the defendants’ website terms and conditions violated a California statute known as section 1670.8, or the “Yelp Law.” The plaintiffs argued that certain provisions in the website’s terms—specifically, language related to trademark use and website access—prohibited or penalized negative statements about the defendants, their employees, or their goods and services. The plaintiffs claimed these provisions constituted unlawful non-disparagement clauses in consumer contracts.The Superior Court of Los Angeles County reviewed the case and sustained the defendants’ demurrer to the consolidated class action complaint, first with leave to amend and then, after an amended complaint was filed, without leave to amend. The court found that the challenged terms were limited to intellectual property protections and did not restrict consumer speech. It also determined that the statute did not create a private right of action for merely including a violative provision unless there was a threat to enforce that provision or penalize speech. The court concluded that neither the trademark nor the termination provisions in the defendants’ terms constituted actionable violations of section 1670.8 and entered judgment dismissing the case.Upon appeal, the Court of Appeal of the State of California, Second Appellate District, Division Five, affirmed the trial court’s judgment. The appellate court held that the website’s trademark language did not waive consumers’ rights to make critical statements about the defendants, and the website access termination clause was not a restriction on consumer speech. The court concluded that plaintiffs had not stated a cause of action under section 1670.8 and confirmed that the inclusion of these provisions, without a threat or attempt to enforce against protected speech, does not violate the statute. View "Scott v. Ulta Beauty, Inc." on Justia Law

The Commonwealth of Kentucky initiated a lawsuit against several pharmacy benefit managers (PBMs) and related entities, asserting that these firms contributed to the opioid crisis in Kentucky by conspiring with drug manufacturers to increase opioid supply. Kentucky alleged the PBMs negotiated with drug companies to give opioids preferred placement on formularies in exchange for rebates and fees, thus violating state consumer protection laws and creating a public nuisance. The PBMs served both federal and commercial clients, including federal workers under the Federal Employees Health Benefits Act, TRICARE members, and Veterans Health Administration beneficiaries.Following removal of the case to the United States District Court for the Eastern District of Kentucky by the PBMs under the federal officer removal statute (28 U.S.C. § 1442), Kentucky sought to remand the case to state court, arguing its complaint disclaimed liability for conduct undertaken at the direction of federal officers. The district court granted Kentucky’s motion to remand.The United States Court of Appeals for the Sixth Circuit reviewed the district court’s decision de novo. Relying on its prior decision in Ohio ex rel. Yost v. Ascent Health Services, LLC, and similar decisions from other circuits, the Sixth Circuit determined the PBMs acted under federal officers when administering federal health benefits and that Kentucky’s claims related to conduct performed under federal supervision. The court found the PBMs had raised colorable federal defenses, including immunity and preemption under federal statutes governing federal health plans, TRICARE, ERISA, and Medicare Part D. The court concluded that Kentucky’s complaint targeted indivisible conduct relating to federal duties, so the PBMs met the requirements for removal under § 1442. The Sixth Circuit reversed the district court’s remand order and remanded the case for further proceedings. View "Commw. of Ky. v. Express Scripts, Inc." on Justia Law

A television production company maintained insurance coverage for its shows, including one chronicling the struggles of obese individuals to lose weight. In 2011, the insurer added an exclusion to the general liability portion of the policy, barring coverage for “any/all reality shows.” The company did not object to this exclusion. Years later, several participants or their families sued the production company for injuries allegedly arising from the show’s filming. The insurer refused to defend or indemnify the company, citing the “reality show” exclusion.The insurer brought a declaratory judgment action in the United States District Court for the Southern District of Texas, seeking confirmation that it had no duty to defend or indemnify. The production company counterclaimed for breach of contract, fraudulent inducement, and violations of Texas consumer protection statutes. The district court granted summary judgment to the insurer, finding that the exclusion unambiguously barred coverage for bodily injuries arising from reality shows like the one at issue. At a subsequent bench trial, the district court rejected the company’s fraud and statutory claims, finding no misrepresentation by the insurer and concluding the company could not have justifiably relied on any representation given its knowledge of the exclusion and the show’s nature.On appeal, the United States Court of Appeals for the Fifth Circuit affirmed. The Fifth Circuit held that the company forfeited its argument about the ambiguity of "reality show" by not raising it in the district court and, in fact, previously represented the show as a “reality show.” The appellate court also found no clear error in the district court’s factual findings rejecting the fraud and consumer protection claims, noting substantial evidence of the company’s understanding of the exclusion. The district court’s judgment was affirmed in full. View "Megalomedia v. Philadelphia Indemnity" on Justia Law

Insurance companies paid claims to policyholders whose Hyundai or Kia vehicles were stolen or damaged due to a vulnerability stemming from the lack of an engine immobilizer in certain models from 2011 to 2022. These companies, as subrogees, filed a nationwide class action alleging that the Korean manufacturers, Hyundai Motor Company and Kia Corporation, defectively designed these vehicles, making them prone to theft. The complaint also asserted claims for breach of warranties, violations of consumer protection statutes, fraud, unjust enrichment, and negligent failure to warn.Multiple lawsuits arising from this issue were consolidated into multidistrict litigation before the United States District Court for the Central District of California. The district court dismissed the claims against the Korean entities for lack of personal jurisdiction, concluding that the evidence did not establish intentional targeting of California by the manufacturers and that the claims did not arise from California-related conduct. The district court also denied leave to amend and jurisdictional discovery, entering final judgment under Rule 54(b) dismissing the Korean entities from the subrogation track.On appeal, the United States Court of Appeals for the Ninth Circuit reviewed the district court’s dismissal de novo. The Ninth Circuit held that the Korean manufacturers were subject to specific personal jurisdiction in California. The panel found that the manufacturers purposefully directed their activities toward California by sending thousands of shipments of vehicles through California ports and designing vehicles specifically for the U.S. market. The court further held that the claims arose out of these California contacts, as the injuries were caused by vehicles shipped to California. The panel reversed the district court’s dismissal and remanded the case for further proceedings, leaving the question of reasonableness of jurisdiction for the district court to resolve. View "IN RE: KIA HYUNDAI VEHICLE THEFT MARKETING, SALES PRACTICES, AND PRODUCTS LIABILITY LITIGATION" on Justia Law

Plaintiffs, who had donated funds to the Church of Jesus Christ of Latter-day Saints, alleged that the Church and its investment subsidiary, Ensign Peak Advisors, Inc., fraudulently induced donations by concealing the true use and accumulation of donated funds. They claimed that the Church misrepresented that tithing would be used for charitable and religious purposes, when instead large portions were invested and used for commercial ventures, such as the development of the City Creek Mall. A key event in the case was the publication of a whistleblower report in December 2019, which was widely reported in national and local media and described how the Church managed and concealed a large investment portfolio. The Church publicly responded, and three other lawsuits were filed by different donors based on similar allegations.After actions were filed in several federal district courts, the cases were consolidated in the United States District Court for the District of Utah. Plaintiffs brought claims for breach of fiduciary duty, fraud, fraudulent concealment, fraudulent misrepresentation, and unjust enrichment, seeking to represent a nationwide class of post-1997 donors. The district court dismissed the consolidated complaint with prejudice, ruling that the claims were untimely under Utah’s three-year statute of limitations for fraud. The court found that the widespread news coverage of the whistleblower report meant that plaintiffs, exercising reasonable diligence, should have discovered the alleged fraud more than three years before filing suit.On appeal, the United States Court of Appeals for the Tenth Circuit affirmed the district court’s dismissal. The Tenth Circuit held that the plaintiffs’ claims were time-barred because the whistleblower report and related media coverage provided sufficient public notice to trigger the statute of limitations, and that reasonable diligence would have led to earlier discovery. The court also found no error in the district court’s procedural rulings and denied the request for leave to amend. View "In re: Church of Jesus Christ of Latter-Day Saints" on Justia Law

A debt buyer initiated a lawsuit against a consumer to collect an alleged unpaid debt, attaching to its complaint a borrower agreement that did not clearly identify the consumer or the specific debt. The complaint described the agreement as evidence of the debt, but did not include more specific documentation such as a signed loan agreement or transaction history. The consumer responded by filing a cross-complaint, alleging that the debt buyer violated requirements under California’s Fair Debt Buying Practices Act by failing to have proper documentation before attempting collection and by not attaching required documents to the complaint. After the cross-complaint was filed, the debt buyer amended its complaint to include additional documents, such as the executed loan agreement and transaction history.The Superior Court of San Joaquin County granted summary judgment in favor of the debt buyer on the cross-complaint, finding that the debt buyer had satisfied the requirement to have access to documentation evidencing the consumer’s agreement to the debt, that there was no violation of the attachment requirement, that any failure to attach additional documentation was a bona fide error, and that the consumer lacked standing.The California Court of Appeal, Third Appellate District, reviewed the case. The appellate court affirmed the trial court’s ruling on the access requirement, agreeing that the debt buyer had access to sufficient documents before filing the original complaint. However, it reversed the trial court’s adjudication on the attachment requirement, finding that the document attached to the original complaint did not evidence the consumer’s agreement to the debt as required by law. The appellate court also held that filing an amended complaint with the proper documents did not cure the original violation, that there were triable issues of fact regarding the bona fide error defense, and that the consumer had statutory standing to bring the claims. The court reversed summary judgment in favor of the debt buyer, except as to the access requirement. View "Velocity Investments, LLC v. Nguyen" on Justia Law