Justia Consumer Law Opinion Summaries

A plaintiff filed a putative class action against a dietary supplement company, alleging that the supplement Hydro BCAA was mislabeled. The plaintiff claimed that preliminary testing showed the supplement contained more carbohydrates and calories than listed on its FDA-prescribed label. The plaintiff tested the supplement using FDA methods but did not follow the FDA’s twelve-sample sampling process.The United States District Court for the Southern District of California dismissed the complaint, holding that the Food, Drug, and Cosmetic Act preempted the claims because the plaintiff did not plead that he tested the supplement according to the FDA’s sampling process. The district court noted a divide among district courts on whether plaintiffs must plead compliance with the FDA’s testing methods and sampling processes to avoid preemption.The United States Court of Appeals for the Ninth Circuit reviewed the case. The court held that the plaintiff’s complaint allowed a reasonable inference that the supplement was misbranded under the Act, even without allegations of compliance with the FDA’s sampling process. The court found that the plaintiff’s preliminary testing of one sample, which showed significant discrepancies in carbohydrate and calorie content, was sufficient to survive a motion to dismiss. The court emphasized that plaintiffs are not required to perform the FDA’s sampling process at the pleading stage to avoid preemption.The Ninth Circuit reversed the district court’s dismissal, allowing the plaintiff’s state-law claims to proceed. The court concluded that the plaintiff’s allegations were sufficient to avoid preemption and stated a plausible claim that the supplement was mislabeled under the Act. View "SCHEIBE V. PROSUPPS USA, LLC" on Justia Law

Tody's Service, Inc. (Tody's), a towing company, billed Liberty Mutual Insurance Company (Liberty) a six-figure storage fee after towing and storing a vehicle involved in a fatal crash at the direction of the police. The vehicle, insured by Liberty, was held as evidence for nearly three years. After obtaining the vehicle's title, Liberty refused to pay the accrued storage charges, leading Tody's to sue Liberty to recover those fees.In the Superior Court, a judge granted summary judgment in favor of Liberty on all of Tody's claims, which included unjust enrichment, promissory estoppel, and failure to pay storage fees under G. L. c. 159B, § 6B. The judge found no evidence of unjust enrichment, ruled that § 6B does not provide a private right of action, and concluded that Tody's failed to demonstrate any actionable promise or reasonable reliance to support promissory estoppel.The Supreme Judicial Court reviewed the case and held that Liberty was not unjustly enriched as a matter of law, as there was no measurable benefit conferred on Liberty by Tody's storage of the vehicle. The court also found no evidence of reliance sufficient to support promissory estoppel, as Tody's stored the vehicle in response to a police directive, not in reliance on any promise by Liberty. Additionally, the court held that § 6B does not create a private right of action against a vehicle owner. Consequently, the Supreme Judicial Court affirmed the judgment in Liberty's favor. View "Tody's Service, Inc. v. Liberty Mutual Insurance Company" on Justia Law

The case involves a dispute between several plaintiffs, who are foreign nationals participating in an au pair program, and Cultural Care, Inc., a Massachusetts company that places au pairs with host families in the U.S. The plaintiffs allege that Cultural Care violated their rights under the Fair Labor Standards Act (FLSA) and various state wage and hour laws by failing to pay them legal wages. They also claim violations of state deceptive trade practices laws.The United States District Court for the District of Massachusetts denied Cultural Care's motion to dismiss the complaint, including its defense of derivative sovereign immunity under Yearsley v. W.A. Ross Construction Company. Cultural Care appealed, but the United States Court of Appeals for the First Circuit affirmed the District Court's decision, concluding that Cultural Care had not established entitlement to protection under Yearsley. After the case returned to the District Court, Cultural Care filed a motion to compel arbitration based on agreements in contracts signed by the au pairs with International Care Ltd. (ICL), a Swiss company. The District Court denied this motion, ruling that Cultural Care had waived its right to compel arbitration and that it could not enforce the arbitration agreement as a nonsignatory.The United States Court of Appeals for the First Circuit reviewed the case and affirmed the District Court's denial of the motion to compel arbitration. The court held that Cultural Care, as a nonsignatory to the ICL Contract, could not enforce the arbitration agreement under either third-party beneficiary theory or equitable estoppel. The court emphasized that the arbitration agreement did not demonstrate with "special clarity" that the signatories intended to confer arbitration rights on Cultural Care. Additionally, the plaintiffs' statutory claims did not depend on the ICL Contract, making equitable estoppel inapplicable. View "Posada v. Cultural Care, Inc." on Justia Law

Michael Reilly approached William G. Harris III, a developmentally disabled individual, to purchase his home for $30,000, significantly below its appraised value. Harris, unable to understand the value of money, signed the contract. Reilly attempted to finalize the sale but was informed by the Sheltered Workshop, where Harris was a client, of Harris's disability and was denied further contact with him. Harris passed away in December 2021, and Reilly sued Harris's Estate for specific performance of the contract. The Estate counterclaimed, alleging negligence, violations of the Montana Consumer Protection Act (CPA), and sought punitive damages.The Second Judicial District Court, Butte-Silver Bow County, dismissed Reilly's complaint without imposing sanctions and denied the Estate's request for treble damages and attorney fees. The jury awarded the Estate $28,900 in compensatory damages and $45,000 in punitive damages. Reilly moved to dismiss his complaint just before the trial, which the District Court granted, but the Estate objected, seeking sanctions for the late dismissal. The District Court did not rule on the objection. The jury found Reilly exploited Harris and violated the CPA, awarding damages accordingly. The District Court later denied the Estate's request for treble damages and attorney fees, citing the substantial jury award as sufficient.The Supreme Court of the State of Montana reviewed the case. It held that the District Court abused its discretion by dismissing Reilly's complaint without imposing sanctions, given the late timing and the Estate's incurred costs. However, it affirmed the District Court's denial of treble damages and attorney fees under the CPA, agreeing that the jury's award was substantial. The Supreme Court affirmed the compensatory and punitive damages awarded to the Estate and remanded the case to the District Court to award the Estate its full costs and attorney fees incurred before Reilly's motion to dismiss. View "Harris Estate v. Reilly" on Justia Law

Former students of the University of Montana filed a class action lawsuit against the university, alleging mishandling of student loan reimbursement payments. They claimed that the university's contract with Higher One Holdings, Inc. subjected them to excessive bank fees and unlawfully disclosed their personal information without consent. The university had contracted with Higher One from 2010 to 2015 to process student loan reimbursements, which involved issuing debit cards and charging various fees.The District Court of the Fourth Judicial District in Missoula County certified three classes of plaintiffs but was later partially reversed by the Montana Supreme Court, which upheld the certification of two classes and reversed the third. The case proceeded to a jury trial, where the jury found in favor of the university, concluding that it did not breach its fiduciary duty, violate privacy rights, or unjustly enrich itself.The Supreme Court of the State of Montana reviewed the case on appeal. The students raised several issues, including the admissibility of evidence regarding their banking practices, the testimony of the university's expert witness, the university's closing arguments, the admission of a fee comparison chart, and the refusal of a burden-shifting jury instruction. The court found that the District Court did not abuse its discretion in its evidentiary rulings, including allowing the university to present evidence about students' banking practices and admitting the fee comparison chart. The court also held that the expert witness's testimony was permissible and that the university's closing arguments did not prejudice the students' right to a fair trial.Ultimately, the Supreme Court of Montana affirmed the District Court's judgment in favor of the University of Montana, upholding the jury's verdict. View "Knudsen v. U. of M." on Justia Law

Zaappaaz, an online retailer founded by Azim Makanojiya, sold personal protective equipment (PPE) during the COVID-19 pandemic. They advertised guaranteed same-day shipping and in-stock availability, but failed to deliver on these promises, leading to numerous customer complaints. Customers often did not receive their orders on time, even when paying extra for expedited shipping, and were told refunds were unavailable.The Federal Trade Commission (FTC) sued Zaappaaz for deceptive trade practices under the FTC Act and related regulations. The FTC sought $37,549,472.14 in damages, representing revenue from late or undelivered PPE orders. The magistrate judge recommended partial summary judgment on liability but found factual disputes regarding damages and injunctive relief. The district court adopted this recommendation and later granted the FTC's motion to establish certain facts, including Zaappaaz's net revenue from undelivered and unrefunded PPE orders.The United States District Court for the Southern District of Texas held a bench trial and awarded the FTC $37,549,472.14 in damages. This included $12,241,035.69 for undelivered and unrefunded orders and $25,308,436.45 for late shipments. The court implemented a redress plan for the latter amount, allowing consumers to seek refunds from the FTC, with unclaimed funds returned to Zaappaaz after 120 days.The United States Court of Appeals for the Fifth Circuit reviewed the case. It affirmed the $12,241,035.69 portion of the judgment, agreeing that the FTC had established this amount based on undisputed facts. However, it vacated the $25,308,436.45 portion, finding that the district court's award of full refunds for late shipments did not comply with the statutory requirement that the remedy be necessary to redress the injury and not punitive. The case was remanded for further proceedings consistent with this opinion. View "FTC v. ZAAPPAAZ" on Justia Law

Steve Kovachevich, a homebuyer, was required to purchase private mortgage insurance (PMI) when he took out a mortgage with a down payment of less than 20%. After a year, he requested his mortgage servicer, LoanCare, to cancel his PMI. LoanCare initially denied the request, stating he had not paid down enough of his mortgage to qualify for cancellation under the Homeowners Protection Act (HPA). However, LoanCare agreed to voluntarily cancel the PMI upon meeting certain conditions, which Kovachevich fulfilled. Subsequently, he sought a refund of the prepaid PMI premiums from the mortgage insurer, National Mortgage Insurance Corporation (NMIC), but was denied.The United States District Court for the Eastern District of Virginia dismissed Kovachevich’s claim under the HPA, ruling that he was not entitled to a refund of unearned premiums under § 4902(f) because his PMI was canceled voluntarily and not under the statutory benchmarks of the HPA. The court also dismissed his state-law claims of unjust enrichment and conversion, stating it lacked subject-matter jurisdiction after dismissing the federal claim.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court affirmed the district court’s dismissal of Kovachevich’s HPA claim, agreeing that § 4902(f) only mandates refunds for PMI canceled under the statutory benchmarks, not for voluntary cancellations. However, the appellate court vacated the dismissal of the state-law claims and remanded them to the district court to consider whether to exercise supplemental jurisdiction over those claims. View "Kovachevich v. National Mortgage Insurance Corporation" on Justia Law

Mary Reyes sued Equifax Information Services, L.L.C., alleging violations of the Fair Credit Reporting Act (FCRA) for continuing to report a delinquent Citibank credit card account after she disputed the charges as fraudulent. Reyes received text messages about suspicious charges on her Citibank account, which she reported to Citibank. Citibank canceled her card and issued a new one, transferring the disputed charges to the new account. Reyes disputed the charges with Citibank and filed police reports, but Citibank maintained the charges were valid. Reyes stopped making payments, and Citibank reported the unpaid balance to credit reporting agencies, including Equifax.The United States District Court for the Eastern District of Texas granted summary judgment in favor of Equifax, dismissing Reyes's claims. The court found that Reyes failed to present evidence showing that the information reported by Equifax was inaccurate, that Equifax failed to follow reasonable procedures or conduct a reasonable reinvestigation, and that Equifax caused her any damages. The court also concluded that Reyes's FCRA suit was an impermissible collateral attack on the validity of her debt with Citibank.The United States Court of Appeals for the Fifth Circuit reviewed the case and affirmed the district court's decision. The Fifth Circuit held that inaccuracy is a threshold requirement for a claim under 15 U.S.C. § 1681i, and Reyes failed to show that the information reported by Equifax was inaccurate. The court also agreed that the FCRA does not provide a vehicle for challenging the legal validity of a debt by suing a credit reporting agency for accurately reporting that debt. The court concluded that consumer reporting agencies are not required to investigate the legal validity of disputed debts under the FCRA. View "Reyes v. Equifax" on Justia Law

The case involves Elaine Neidig, who had three mammograms at Valley Health System's Winchester Medical Center between 2016 and 2019. In 2019, the FDA found that some mammograms performed at the facility had serious image quality deficiencies. Neidig received a notification from Valley Health about these issues and subsequently filed a class action lawsuit alleging that Valley Health misrepresented the quality of its mammography services. She claimed that the mammograms were worthless and sought economic damages, including statutory damages for consumer protection violations, compensatory damages, and contract damages. Neidig did not claim any physical or emotional injury.The United States District Court for the Northern District of West Virginia dismissed Neidig's complaint, ruling that her claims fell under the West Virginia Medical Professional Liability Act (MPLA) and were barred by the MPLA’s statute of limitations. The court found that the MPLA applied because the claims were related to health care services, despite Neidig's argument that her claims were purely economic and not based on physical or emotional injury.The United States Court of Appeals for the Fourth Circuit certified a question to the Supreme Court of Appeals of West Virginia, asking whether the MPLA applies to claims where the plaintiff disclaims any form of physical or emotional injury. The Supreme Court of Appeals of West Virginia reformulated the question to ask whether the MPLA applies when the plaintiff claims only economic damages and disclaims all liability based on physical injury, emotional injury, or death.The Supreme Court of Appeals of West Virginia held that the MPLA does not apply to a suit against a health care provider or health care facility when the plaintiff claims only economic damages and disclaims all liability based on physical injury, emotional injury, or death. The court emphasized that the MPLA requires a predicate claim arising from the death or injury of a person, and since Neidig's claims were solely for economic damages, the MPLA did not apply. View "Neidig v. Valley Health System" on Justia Law

Brian Lyngaas, a dentist, sued United Concordia Companies, Inc. (UCCI) for sending unsolicited faxed advertisements in violation of the Telephone Consumer Protection Act (TCPA). Lyngaas, through his dental practice, was part of UCCI’s Fee for Service Dental Network, which included a “Value Add Program” (VAP) offering discounts from third-party vendors. UCCI sent three faxes promoting these discounts, which Lyngaas claimed were unsolicited advertisements.The United States District Court for the Eastern District of Michigan granted summary judgment in favor of UCCI, ruling that the faxes were not advertisements under the TCPA because UCCI’s profit motive was too remote. Lyngaas appealed this decision.The United States Court of Appeals for the Sixth Circuit reviewed the case de novo and reversed the district court’s decision. The appellate court held that UCCI’s faxes were advertisements under the TCPA because they facially promoted third-party products as part of exclusive marketing agreements, and UCCI had a sufficiently direct profit motive. The court emphasized that TCPA liability falls on the sender of the fax, not necessarily the seller of the advertised product. The court also noted that Lyngaas could not proceed with claims regarding a fax he did not receive. The case was remanded for further proceedings consistent with this opinion. View "Brian J. Lyngaas, D.D.S., P.L.L.C. v. United Concordia Co." on Justia Law