Justia Consumer Law Opinion Summaries

Haamid Khan created an account with Coinbase, Inc., an online platform for buying, selling, and storing digital currencies. Khan alleged that Coinbase charged customers a hidden “Spread Fee” during transactions, which was not clearly disclosed to users. He claimed that the fee was only revealed if a customer clicked a tooltip icon and that the platform’s design misled less sophisticated users by imposing the fee only on those using the default trading option. Khan sought an injunction under California’s unfair competition and false advertising laws to prohibit Coinbase from continuing these practices.Coinbase responded by filing a petition in the City & County of San Francisco Superior Court to compel arbitration, citing a user agreement that included an arbitration clause and a waiver of class and public injunctive relief. The trial court denied Coinbase’s petition, finding that Khan’s claims sought public injunctive relief, which could not be waived or compelled to arbitration under California law, specifically referencing McGill v. Citibank, N.A. The court determined that the relief sought would benefit the public at large, not just Khan or a defined group of users.The California Court of Appeal, First Appellate District, Division Three, reviewed the case de novo. The appellate court affirmed the trial court’s order, holding that Khan’s complaint seeks public injunctive relief under the standards set forth in McGill. The court found that the arbitration agreement’s waiver of public injunctive relief was invalid and unenforceable. It concluded that Khan’s requested injunction would primarily benefit the general public by prohibiting ongoing deceptive practices, and thus, his claims could proceed in court rather than arbitration. The order denying Coinbase’s petition to compel arbitration was affirmed. View "Kahn v. Coinbase, Inc." on Justia Law

In this case, the plaintiff was subject to a default judgment in 2006 for an unpaid credit card debt after a process server claimed to have effected substitute service at a Hayward, California address. The plaintiff asserted he was never served, did not reside at the address where service was attempted, and only learned of the judgment in December 2022. The debt was later assigned to a new creditor, who sought to renew and enforce the judgment, which had grown substantially with interest. After the plaintiff’s motion to vacate the judgment for lack of service was denied, he filed a new action seeking equitable relief to set aside the judgment and alleging violations of the Rosenthal Fair Debt Collection Practices Act.The Superior Court of Alameda County granted the defendants’ anti-SLAPP motions, striking the complaint and dismissing it with prejudice. The court found the plaintiff’s uncorroborated declaration insufficient to rebut the presumption of valid service and concluded he had not shown a likelihood of prevailing on his equitable or statutory claims. The court also determined that, because the plaintiff admitted to owing the debt, he could not establish a meritorious defense to the underlying action.The California Court of Appeal, First Appellate District, Division Four, reversed the trial court’s judgment. The appellate court held that the trial court erred by weighing the credibility of the plaintiff’s declaration at the anti-SLAPP stage, rather than accepting it as true for purposes of determining minimal merit. The appellate court further held that, where a challenge to a default judgment is based on lack of service, due process does not require the plaintiff to show a meritorious defense to set aside the judgment. The court also found that the plaintiff’s statutory claim under the Rosenthal Act was not contingent on prevailing on his equitable claims. The judgment was reversed and costs were awarded to the plaintiff. View "Ahmed v. Collect Access, LLC" on Justia Law

A consumer defaulted on credit payments, and the debt was assigned to a third-party debt collector. The collector sent a collection letter to the consumer that included mandatory language about debtor rights, but the notice used a smaller type size than required by California law. The consumer, on behalf of himself and a proposed class, filed suit alleging that the collection notices violated the type-size requirements of the Consumer Collection Notice law and, by extension, the Rosenthal Fair Debt Collection Practices Act. The suit sought statutory damages, attorney fees, costs, and injunctive relief.The Superior Court of Lake County granted summary judgment in favor of the debt collector. The court reasoned that the consumer and the class lacked standing to pursue statutory damages because they had not alleged or demonstrated any actual injury, harm, or loss resulting from the violation. The court concluded that civil liability under the relevant statutes could not be imposed without proof of actual or reasonably foreseeable harm.The California Court of Appeal, First Appellate District, Division Three, reviewed the case. The appellate court held that, under the Collection Notice law and the Rosenthal Act, a consumer has standing to seek statutory damages based solely on a statutory violation, regardless of whether the consumer suffered actual injury. The court explained that the statutory scheme authorizes recovery of statutory damages as a penalty to deter violations, not merely to compensate for actual harm. The court distinguished the relevant statutes from others that require proof of injury and rejected the argument that federal standing requirements or the use of the term “damages” limited standing to those who suffered actual harm. The judgment of the trial court was reversed. View "Kashanian v. National Enterprise Systems" on Justia Law

Adir International, LLC operates a chain of retail stores, Curacao, which primarily serves low-income, Spanish-speaking immigrants in California, Nevada, and Arizona. Curacao offers store credit to customers, with over 90 percent of sales made on store credit. Since at least 2012, Curacao has offered optional “account protection” services (AGP Basic and AGP Plus) to credit customers, with AGP Plus including a credit property insurance component. Curacao was licensed as a credit insurance agent, but its sales associates, who were not licensed or endorsed, received bonuses for selling these insurance products. The AGP program allowed customers to defer payments under certain circumstances, but the fees for AGP often exceeded finance charges, and the program was highly profitable for Curacao.The People of the State of California filed a civil enforcement action in the Superior Court of Los Angeles County, alleging that Adir and its owner, Ron Azarkman, violated the Unfair Competition Law (UCL) through predicate violations of the Insurance Code and the Unruh Retail Installment Sales Act (Unruh Act). After a bench trial, the Superior Court found that Adir and Azarkman violated the Insurance Code by selling insurance through unlicensed employees, failing to use approved training materials, and providing required disclosures only after enrollment. The court held Azarkman personally liable due to his control and knowledge of the practices. However, the court ruled that the sale of account protection services did not violate the Unruh Act.On appeal, the California Court of Appeal, Second Appellate District, Division Eight, affirmed the trial court’s findings regarding the Insurance Code violations and Azarkman’s personal liability, rejecting arguments about primary jurisdiction, statutory interpretation, and statute of limitations. The appellate court reversed the trial court’s ruling on the Unruh Act, holding that the Act limits all permissible fees to those specifically authorized, and remanded for further proceedings on that claim. In all other respects, the judgment was affirmed. View "P. v. Adir Internat., LLC" on Justia Law

During the COVID-19 pandemic, two individuals who held automobile insurance policies with a major insurer in California alleged that the insurer’s rates became excessive due to a significant reduction in driving and traffic accidents. They claimed that the insurer was required by statute to refund a portion of the premiums collected during this period, even though the rates had previously been approved by the state’s insurance commissioner. The insurer did provide partial refunds in response to directives from the insurance commissioner, but the plaintiffs argued these refunds were insufficient and sought further restitution on behalf of a class of similarly situated policyholders.The Superior Court of Alameda County initially allowed the plaintiffs to amend their complaint after sustaining a demurrer. In their amended complaint, the plaintiffs continued to assert claims under California’s Unfair Competition Law and for unjust enrichment, maintaining that the insurer’s failure to provide full refunds violated Insurance Code section 1861.05(a). The trial court, however, sustained the insurer’s subsequent demurrer without leave to amend, holding that the statutory scheme did not require insurers to retroactively refund premiums collected under previously approved rates, even if those rates later became excessive due to changed circumstances.The California Court of Appeal, First Appellate District, Division One, reviewed the case on appeal. The court held that Insurance Code section 1861.05(a) does not impose an independent obligation on insurers to retroactively refund premiums collected under rates approved by the insurance commissioner, even if those rates later become excessive. The court reasoned that the statutory scheme provides for prospective rate adjustments through the commissioner’s review process, not retroactive modifications. The court also found that the insurer’s conduct was affirmatively permitted under the statutory “prior approval” system, and thus not actionable under the Unfair Competition Law. The judgment in favor of the insurer was affirmed. View "Davis v. CSAA Insurance Exchange" on Justia Law

An elderly plaintiff with significant disabilities inherited her home and, facing a tax sale due to unpaid property taxes, responded to a flyer offering help. She met with the defendant, who had her sign documents that transferred ownership of her home to him, allegedly under the pretense of providing a loan. The documents did not provide for any payment to the plaintiff, only that the defendant would pay the back taxes. The plaintiff later attempted to cancel the transaction, believing it had been voided when the defendant returned her documents and she received no loan. Several years later, the defendant served her with an eviction notice, prompting her to file suit alleging fraud, undue influence, financial elder abuse, and other claims, seeking cancellation of the transfer and damages.The case was heard in the Superior Court of Los Angeles County. The defendant, representing himself, filed an answer and a cross-complaint, asserting that he had purchased the property and that the plaintiff had lived rent-free for years. The litigation was marked by extensive discovery disputes, with the plaintiff filing nine motions to compel and for sanctions due to the defendant’s repeated failures to provide timely and adequate discovery responses, appear for depositions, and pay court-ordered sanctions. The court issued incremental sanctions, including monetary and issue sanctions, before ultimately imposing terminating sanctions by striking the defendant’s answer and cross-complaint, leading to a default judgment in favor of the plaintiff.The California Court of Appeal, Second Appellate District, Division Eight, reviewed the case. It held that the trial court did not abuse its discretion in imposing terminating sanctions after the defendant’s persistent and willful noncompliance with discovery orders. The court also found that the plaintiff’s complaint provided sufficient notice of damages, and that the award of damages and attorney fees was supported by substantial evidence. The judgment of the trial court was affirmed in all respects. View "Atlas v. Davidyan" on Justia Law

Leslie Cruz made two purchases from the website operated by subsidiaries of Tapestry, Inc. in early 2024. She later filed a lawsuit in the Superior Court of Los Angeles County, alleging that the companies engaged in unfair competition and false advertising by promoting misleading sales discounts. Cruz claimed that the advertised sale reductions were deceptive because the merchandise was rarely, if ever, sold at the full price listed, and sought restitution and disgorgement of unjust enrichment resulting from these practices.The defendants moved to compel arbitration, relying on an arbitration clause in their website’s Terms of Use. The checkout pages on the website included a line of gray, small-font text below the order submission button stating that by clicking, the user agreed to the Terms of Use and Privacy Policy, with hyperlinks to those documents. The trial court, after reviewing screenshots of the checkout pages, found that the notice of the arbitration agreement was not sufficiently conspicuous. The court emphasized that the notice was less prominent than other visual elements on the page and that the transaction did not create an expectation of an ongoing contractual relationship governed by extensive terms. The court concluded that Cruz had not assented to the arbitration agreement and denied the motion to compel arbitration.The California Court of Appeal, Second Appellate District, Division One, reviewed the trial court’s decision de novo. It held that the defendants failed to provide reasonably sufficient notice to Cruz that clicking the order button would bind her to the Terms of Use, including the arbitration provision. The court found that the design of the checkout pages did not adequately call attention to the notice text, and affirmed the trial court’s order denying the motion to compel arbitration. View "Cruz v. Tapestry" on Justia Law

Russell Johnson, a resident of a continuing care retirement community operated by Stoneridge Creek, filed a class action lawsuit alleging that Stoneridge Creek unlawfully increased residents’ monthly care fees to cover its anticipated legal defense costs in ongoing litigation. Johnson claimed these increases violated several statutes, including the Health and Safety Code, the Unfair Competition Law, the Consumer Legal Remedies Act (CLRA), and the Elder Abuse Act, and breached the Residence and Care Agreement (RCA) between residents and Stoneridge Creek. The RCA allowed Stoneridge Creek to adjust monthly fees based on projected costs, prior year per capita costs, and economic indicators. In recent years, Stoneridge Creek’s budgets for legal fees rose sharply, with $500,000 allocated for 2023 and 2024, compared to much lower amounts in prior years.The Alameda County Superior Court previously denied Stoneridge Creek’s motion to compel arbitration, finding the RCA’s arbitration provision unconscionable. Johnson then moved for a preliminary injunction to prevent Stoneridge Creek from including its litigation defense costs in monthly fee increases. The trial court granted the injunction, finding a likelihood of success on Johnson’s claims under the CLRA and UCL, and determined that the fee increases were retaliatory and unlawfully shifted defense costs to residents. The court also ordered Johnson to post a $1,000 bond.The California Court of Appeal, First Appellate District, Division Four, reviewed the case and reversed the trial court’s order. The appellate court held that the fee increases did not violate the CLRA’s fee-recovery provision or other litigation fee-shifting statutes, as these statutes govern judicial awards of fees, not how a defendant funds its own legal expenses. The court further concluded that Health and Safety Code section 1788(a)(22)(B) permits Stoneridge Creek to include reasonable projections of litigation expenses in monthly fees. However, the court remanded the case for the trial court to reconsider whether the fee increases were retaliatory or excessive, and to reassess the balance of harms and the appropriate bond amount. View "Johnson v. Stoneridge Creek Pleasanton CCRC" on Justia Law

An 81-year-old man purchased a Maserati from a car dealership and its principal, claiming they orally promised him a $6,500 credit for his trade-in vehicle but only credited $2,000 in the written contract. He alleged that he would not have completed the transaction had he known the true trade-in value. Based on these events, he sued the sellers for financial elder abuse, violation of the Consumers Legal Remedies Act (CLRA), and several related claims. During discovery, the sellers served requests for admission, which the plaintiff denied or withdrew. The case proceeded to trial, where a jury found in favor of the sellers on all claims, concluding there was no misrepresentation.After prevailing at trial, the sellers sought approximately $490,000 in attorney fees, specifically cost-of-proof fees under Code of Civil Procedure section 2033.420 and CLRA fees under Civil Code section 1780, subdivision (e). The Superior Court of Orange County denied the fee motion in its entirety, holding that the unilateral fee provision in Welfare and Institutions Code section 15657.5, subdivision (a) barred prevailing defendants from recovering attorney fees on financial elder abuse claims and any intertwined claims. The court found all claims were based on the same transaction and thus inextricably linked, relying on precedent that prohibits fee awards to prevailing defendants in such circumstances.The California Court of Appeal, Fourth Appellate District, Division Three, reviewed the case. It held that the trial court erred in categorically denying cost-of-proof fees, finding that such fees serve a distinct purpose—encouraging efficient litigation—and do not conflict with the unilateral fee provision, which is designed to protect plaintiffs from adverse fee awards for losing on elder abuse claims. However, the appellate court affirmed the denial of CLRA fees, as the sellers failed to provide a separate, adequate argument for their entitlement. The order was affirmed in part, reversed in part, and remanded for further proceedings on cost-of-proof fees. View "Gamo v. Merrell" on Justia Law

Paul Kim, a California resident, purchased an Airstream motorhome from a dealer in California. The warranty agreement for the motorhome included an Ohio choice of law provision and an Ohio forum selection clause. Kim sued Airstream in California, alleging violations of the Song-Beverly Consumers Warranty Act. Airstream moved to stay the lawsuit in favor of the Ohio forum, citing the forum selection clause. Kim opposed, arguing that enforcing the forum selection clause would diminish his unwaivable rights under the Song-Beverly Act.The Superior Court of Los Angeles County severed the choice of law provision as illegal under the Song-Beverly Act’s waiver prohibition but granted Airstream’s motion to stay, concluding that enforcing the forum selection clause would not diminish Kim’s unwaivable California rights. The court relied on Airstream’s stipulation to apply the Song-Beverly Act in the Ohio forum.The California Court of Appeal, Second Appellate District, reviewed the case. The court affirmed the lower court’s decision to sever the choice of law provision but reversed the decision to stay the case. The appellate court held that Airstream’s stipulation was insufficient to meet its burden of proving that enforcing the forum selection clause would not diminish Kim’s unwaivable rights. The court instructed the trial court to allow Airstream the opportunity to demonstrate that Ohio conflict of law principles would require the application of the Song-Beverly Act to Kim’s claims, thereby protecting his unwaivable rights. The case was remanded for further proceedings consistent with this opinion. View "Kim v. Airstream" on Justia Law