Justia Consumer Law Opinion Summaries

Brown is the sole owner and operator of a credit-monitoring service. Brown’s websites used a “negative option feature” to attract customers, offering a “free credit report and score” while obscuring in much smaller text that applying for this “free” information automatically enrolled customers in a $29.94 monthly “membership” subscription for Brown’s credit-monitoring service. Customers learned this information only when he sent them a letter after they were automatically enrolled. Brown’s most successful contractor capitalized on the confusion by posting Craigslist advertisements for fake rental properties and telling applicants to get a “free” credit score from Brown’s websites. The FRC sued Brown under the Federal Trade Commission Act, 15 U.S.C. 53(b). The district judge found that Brown was a principal for his contractor’s fraudulent scheme and that the websites failed to meet certain disclosure requirements in the Restore Online Shopper Confidence Act (ROSCA), 15 U.S.C. 8403. The judge entered a permanent injunction and ordered Brown to pay more than $5 million in restitution to the Commission. The Seventh Circuit affirmed as to liability and the issuance of a permanent injunction but, overruling precedent, vacated the restitution award. Section 13(b) authorizes only restraining orders and injunctions. The FTCA has two detailed remedial provisions that expressly authorize restitution if the Commission follows certain procedures. Adherence yp stare decisis should not allow the Commission to circumvent these elaborate enforcement provisions. View "Federal Trade Commission v. Credit Bureau Center, LLC" on Justia Law

Plaintiffs own cats with health problems. Their veterinarians prescribed Hill’s cat food. They purchased this higher-priced cat food from PetSmart stores using their veterinarian’s prescriptions before learning that the Prescription Diet cat food is not materially different from non-prescription cat food and no prescription is necessary. Plaintiffs filed a class-action lawsuit under the Illinois Consumer Fraud and Deceptive Business Practices Act. The district judge dismissed the claim as lacking the specificity required for a fraud claim and barred by a statutory safe harbor for conduct specifically authorized by a regulatory body (the FDA). The Seventh Circuit reversed. The safe-harbor provision does not apply. Under the Food, Drug, and Cosmetic Act, 21 U.S.C. 301, pet food intended to treat or prevent disease and marketed as such is considered a drug and requires FDA approval. Without FDA approval, the manufacturer may not sell it in interstate commerce and the product is deemed adulterated and misbranded. FDA guidance recognizes that most pet-food products in this category do not have the required approval and states that it is less likely to initiate an enforcement action if consumers purchase the food through or under the direction of a veterinarian (among other factors). The guidance does not specifically authorize the conduct alleged here, so the safe harbor does not apply. Plaintiffs pleaded the fraud claim with the particularity required by FRCP 9(b). View "Vanzant v. Hill's Pet Nutrition, Inc." on Justia Law

Wolfington brought a claim under the Truth in Lending Act, 15 U.S.C. 1601, stemming from reconstructive knee surgery he received from Reconstructive Orthopaedic Associates (the Rothman Institute). Wolfington alleged that Rothman failed to provide disclosures required by the Act when it permitted him to pay his deductible in monthly installments following surgery. The district court entered judgment, rejecting Wolfington’s claim because it determined he had failed to allege that credit had been extended to him in a “written agreement,” as required by the Act’s implementing regulation, Regulation Z. The court also sua sponte imposed sanctions on Wolfington’s counsel. The Third Circuit affirmed in part, agreeing that Wolfington failed to adequately allege the existence of a written agreement, but concluded that counsel’s investigation and conduct were not unreasonable. In imposing sanctions, the district court placed emphasis on the statement by Rothman’s counsel, not Wolfington’s. The statement by Wolfington’s counsel did not amount to an “unequivocal” admission that there was no written agreement. View "Wolfington v. Reconstructive Orthopaedic Associates II, PC" on Justia Law

In 2013, Rachel Dixon was driving a car owned by her boyfriend, Rene Oriental-Guillermo (“Policyholder”), when she was involved in an accident with a vehicle in which Priscila Jimenez was a passenger, and which was owned by Iris Velazquez, and operated by Alli Licona-Avila. At the time of the accident, Dixon resided with Policyholder, who had purchased a personal automobile insurance policy (“Policy”) for his vehicle through Safe Auto Insurance Company (“Safe Auto”). The Policy contained an unlisted resident driver exclusion (“URDE”), which excluded from coverage any individuals who lived with, but were not related to, the policyholder, and whom the policyholder did not specifically list as an additional driver on the insurance policy. Jimenez and her husband Luis (collectively, “Appellants”) filed a personal injury lawsuit against Dixon, Policyholder, and Licona-Avila. On May 13, 2015, Safe Auto filed a complaint against Dixon, Policyholder, and Appellants, seeking a declaratory judgment regarding the enforceability of the URDE with respect to Dixon. The trial court granted summary judgment in favor of Safe Auto, finding the URDE unambiguous, valid, and enforceable, and concluding that Safe Auto had no duty under the Policy to defend or indemnify Dixon in the underlying personal injury lawsuit. Appellants timely appealed to the Superior Court, arguing: (1) the trial court erred in holding the URDE was valid and enforceable; (2) that the URDE violated the provisions of the Pennsylvania Motor Vehicle Financial Responsibility Law (“MVFRL”); and (3) that the URDE violated public policy. The Superior Court affirmed the order of the trial court in a divided, published opinion. The Pennsylvania Supreme Court concurred the URDE at issue in this case was enforceable, and affirmed the Superior Court. View "Safe Auto v. Oriental-Guillermo" on Justia Law

Plaintiffs Automated Transactions, LLC (ATL) and David Barcelou, appealed a superior court order dismissing their defamation and New Hampshire Consumer Protection Act (CPA) claims against the defendants, American Bankers Association (ABA), Credit Union National Association (CUNA), Robert Stier, and Pierce Atwood, LLP. Plaintiffs argued the trial court erred because it could not determine, at the motion to dismiss stage, that the statements upon which plaintiffs premised the defendants’ liability were nonactionable. The New Hampshire Supreme Court found no reversible error and affirmed the superior court judgment. View "Automated Transactions, LLC v. American Bankers Assn." on Justia Law

Appellants Icon Legacy Custom Modular Homes, LLC and Icon Legacy Transport, LLC challenged a series of trial court orders in favor of appellees Dagney Trevor, Merusi Builders, Inc., Osborne Construction, LLC, and Paul Osborne. This appeal arose from the sale and construction of a new modular home that suffered from significant deficiencies. Trevor purchased the modular home; Icon Legacy Custom Modular Homes, LLC (Icon Legacy) and Icon Legacy Transport, LLC (Icon Transport) manufactured and transported the home; Osborne Construction, LLC (Osborne Construction) and Paul Osborne (Osborne) were collectively the contractor involved in the assembly the home; Merusi Builders, Inc. (Merusi) was a subcontractor involved in the assembly of the home. Though not parties to this appeal, Vermont Modular Homes, Inc., David Curtis, and Blane Bovier were Icon’s Vermont-based “approved builders” and three of the defendants in the suit below. In 2015, Trevor purchased an Icon Legacy Custom Modular Home as a replacement to one she lost to fire. The home sustained significant water damage during a rainstorm when water entered the home before the roof installation was complete. Other structural defects emerged after Trevor moved into the home. Although Icon and Vermont Modular Homes repaired some of the damage, major defects relating to both the water damage and alleged improper construction remained in the home. Ultimately judgement was entered against Icon. Icon appealed, arguing multiple errors leading to the outcome against it. The Vermont Supreme Court reversed as to the trial court's thirty-percent upward adjustment of the lodestar damages calculation, and remanded for the trial court to strike that amount from Trevor's attorney fee award. The Court affirmed the trial court in all other respects. View "Trevor v. Icon Legacy Custom Modular Homes, LLC, et al." on Justia Law

The Ninth Circuit affirmed the district court's grant of summary judgment for Chase in an action brought by plaintiff, alleging claims under the Truth in Lending Act (TILA). In a prior appeal, the panel held that plaintiff gave proper, timely notice of rescission and vacated the district court's judgment, remanding for further proceedings. On remand. the district court granted summary judgment on a different ground, holding that plaintiff had no right of rescission. The panel held that the district court properly considered defendants' new argument on remand and properly granted summary judgment, because plaintiff obtained the mortgage in order to reacquire a residential property in which his prior ownership interest had been extinguished. Therefore, the right of rescission did not apply. View "Barnes v. Chase Home Finance, LLC" on Justia Law

DiNaples fell behind on her Chase credit card payments. Chase assigned her account to MRS, a debt collection agency, which sent DiNaples a collection letter as a pressure sealed envelope that had a QR code printed on its face. The QR code can be scanned by a reader downloadable as a smartphone application to reveal the internal reference number associated with DiNaples’s account at MRS. DiNaples filed a class action lawsuit under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692–1692, which prohibits debt collectors from “[u]sing any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by use of the mails.” The Third Circuit affirmed summary judgment that MRS violated the FDCPA. A debt collector violates section 1692f(8) by placing on an envelope the consumer’s account number with the debt collector. There is no meaningful difference between displaying the account number itself and displaying a QR code — scannable “by any teenager with a smartphone app” — with the number embedded. The court rejected MRS’s contention that DiNaples had not “suffered a concrete injury,” explaining that DiNaples was injured by “the disclosure of confidential information,” and rejected MRS’s assertion of the FDCPA’s “bona fide error defense.” View "Dinaples v. MRS BPO LLC" on Justia Law

Attorney Kohn, on behalf of Unifund, filed suit against Burton in Brown County, Wisconsin for failure to make payments on a Citibank credit agreement. In his answer, Burton stated, “I have never had any association with Unifund ... and do not know who you are or what you are talking about, so I strongly dispute this debt.” He asserted counterclaims, alleging that his personal information had been compromised; that Unifund had failed to provide him notice of his right to cure the default before filing suit; and that there was a “Lack of Privity” because he “ha[d] never entered into any contractual or debtor/creditor arrangements” with Unifund. While that action was pending, Burton sued in federal district court, citing the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692–1692p, and the Wisconsin Consumer Act (WCA). The state court dismissed Kohn’s action against Burton on the basis of Burton’s denial that he was the individual who had incurred the underlying debt. The Seventh Circuit affirmed a judgment in favor of Kohn and Unifund, finding that the FDCPA or WCA claims could not proceed because Burton failed to present sufficient evidence that the debt incurred on the Citibank account was for personal, family, or household purposes and therefore a “consumer debt.” View "Burton v. Kohn Law Firm, S.C." on Justia Law

The First Circuit reversed the judgment of the district court dismissing this putative class action alleging a violation of Massachusetts' consumer protection laws for failure to meet the heightened pleading standard of Fed. R. Civ. P. 9(b), holding that Plaintiff's complaint stated a plausible claim for relief. Plaintiff brought this action against Defendant New England Coffee Company, operating as a subsidiary of Reily Foods Company, alleging that she purchased Defendant's "Hazelnut Creme" coffee because she thought that the coffee contained hazelnut. When she discovered that the coffee contained no hazelnut, Plaintiff brought a putative class action arguing that the coffee's labeling violated Mass. Gen. Laws ch. 98A, 2(a). The district court concluded that the complaint failed to pass muster under the relevant pleading standard. The First Circuit reversed, holding (1) the complaint's allegations made it plausible that a fact-finder could reasonably regard the label as having the capacity to mislead; and (2) Plaintiff's claim under chapter 93A was not impliedly preempted by federal law. View "Dumont v. Reily Foods Co." on Justia Law