Justia Consumer Law Opinion Summaries

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

After defaulting on his credit card debt, the plaintiff’s outstanding balance was sold by the issuing bank to a series of institutional debt buyers. None of these entities were licensed in New Jersey as consumer lenders or sales finance companies at the time they acquired the debt. The last entity in the chain, LVNV Funding LLC, obtained a default judgment against the plaintiff to collect the debt. Subsequently, the plaintiff initiated a separate class action against LVNV and the other assignees, seeking a declaration that the debt purchase was void under the New Jersey Consumer Finance Licensing Act (CFLA) because the buyers lacked the required licenses, and requesting an injunction against further collection efforts.The Superior Court, Law Division, dismissed the plaintiff’s complaint with prejudice, holding that the CFLA does not provide a private right of action for borrowers to void loan contracts based on alleged licensing violations. While the plaintiff’s appeal was pending, the Appellate Division decided Francavilla v. Absolute Resolutions VI, LLC, which held that the CFLA confers no such private right. Relying on that precedent, the Appellate Division affirmed the dismissal and denied the plaintiff’s cross-motion to vacate the underlying default judgment.The Supreme Court of New Jersey reviewed the case to determine whether a borrower may bring a private action under the CFLA to void a loan contract. The Court held that the CFLA does not contain an implied private right of action for borrowers to void loan contracts. The Court reasoned that the legislative history and statutory structure show no intent to permit such private suits, noting that prior statutes expressly granted a private remedy, which was omitted from the CFLA. The voiding provision in the CFLA operates within a penal framework, and absent clear legislative direction, the Court will not infer a private right of action. The judgment of the Appellate Division was affirmed. View "Diana v. LVNV Funding LLC" on Justia Law

A group of Kansas residential natural gas consumers, who purchase gas from local distributors, sued several interstate wholesalers. They alleged that during Winter Storm Uri, the wholesalers manipulated the market and sold natural gas to local distributors at exorbitant prices, leading to unprecedented increases in retail gas prices. The plaintiffs claimed these actions violated the Kansas Consumer Protection Act (KCPA) by forcing local distributors into the high-priced spot market and passing the excessive costs on to consumers. The plaintiffs contended that even though the alleged misconduct occurred in the wholesale market, it had a direct and significant impact on retail customers.The United States District Court for the District of Kansas consolidated five class actions and reviewed the claims. The district court granted the defendants’ joint motion to dismiss, finding that the Federal Energy Regulatory Commission (FERC) has exclusive jurisdiction over interstate wholesale natural gas rates under the Natural Gas Act (NGA), and that the plaintiffs’ state-law claims were preempted. The court concluded that the challenged conduct concerned wholesale transactions, which are subject to comprehensive federal regulation.The United States Court of Appeals for the Tenth Circuit reviewed the case. It affirmed the district court’s decision, holding that the NGA field-preempts the plaintiffs’ KCPA claims because the claims are aimed directly at, and challenge, transactions and practices in the interstate wholesale natural gas market, an area reserved for federal oversight. The Tenth Circuit distinguished this case from Supreme Court precedent where state-law claims were not preempted, emphasizing that these plaintiffs’ claims targeted wholesale sales rather than background marketplace conditions. The court concluded that the exclusive jurisdiction of FERC over wholesale sales foreclosed state-law consumer protection claims based on those transactions. View "Mehl v. BP Energy Company" on Justia Law

Austin Stuart Fraase applied for a full-time maintenance technician position with Fargo Parks District. During the hiring process, Fargo Parks ordered a background check from Advantage Credit Bureau, which incorrectly reported that Austin had a speeding conviction. In reality, the ticket belonged to his twin brother, Aaron Stuart Fraase. The criminal search section of the report listed the conviction, though the motor vehicle section showed a clean record. Fargo Parks’ human resources staff discussed the report with Austin and his supervisor, ultimately concluding that the ticket likely belonged to his brother. Austin was reassured that it would not affect his interview or hiring, and he accepted and began the job as scheduled. Advantage sent Austin notices of his right to dispute the report, but he chose instead to file suit under the Fair Credit Reporting Act.The United States District Court for the District of North Dakota granted summary judgment to Advantage. The court concluded that Advantage had used reasonable procedures by searching the official North Dakota Courts website with Austin’s identifying information and reporting the results, and that Austin suffered no damages as he was hired without delay or loss.On appeal, the United States Court of Appeals for the Eighth Circuit reviewed the case de novo and affirmed the district court’s judgment. The Eighth Circuit held that Advantage’s reliance on the official court website as a reputable source was reasonable under the Fair Credit Reporting Act. The court found no evidence of systemic problems with the website or that Advantage failed to follow its own procedures. Thus, Advantage was not liable for the inaccurate report. The court did not address whether Austin suffered actual damages, as it found no violation of the statute. The district court's grant of summary judgment was affirmed. View "Fraase v. Advantage Credit Bureau" on Justia Law