Justia Consumer Law Opinion Summaries

Leyse received a prerecorded telemarketing call from a radio station. He sued, alleging violation of the Telephone Consumer Protection Act of 1991, 105 Stat. 2394, which prohibits certain prerecorded telemarketing calls. The district court dismissed, finding that the Federal Communications Commission had issued regulations exempting the type of call at issue from the TCPA’s prohibitions; that the FCC was authorized by Congress to do so; that the court should defer to the resulting regulation; and that the regulation passed muster under Chevron. The Sixth Circuit affirmed, holding that “Chevron deference” applies to the regulation and that the regulation is valid under Chevron. The court rejected an argument that it lacked jurisdiction under the Hobbs Act. View "Leyse v. Clear Channel Broad. Inc." on Justia Law

A Stonefire loan officer, contacted the Lees and convinced them that they could refinance and lower their mortgage payment, get rid of private mortgage insurance, and consolidate credit card debt. They signed papers that they did not read, agreeing to pay Stonefire a brokerage fee of $7000.00 and a processing fee of $995, and that the exact amount of “additional compensation,” would be disclosed at closing. The additional compensation was the “Yield Spread Premium,” to lower up-front closing costs. The lender paid a Premium of 3.5 percent, which increased the interest rate on the loan. The Lees received a variable rate a five percent higher than the fixed rate on their prior loan. At closing, they signed a HUD-1 settlement statement that described a “[p]remium pd to broker by lender to Stonefire” of $5670 paid outside closing. The district court granted summary judgment to the lender on conspiracy and civil fraud claims and to Stonefire on the claim of civil conspiracy. The Lees and Stonefire settled. With respect to the lender, the Sixth Circuit affirmed as to fraud, but reversed on the civil conspiracy claim; Ohio case law prohibits lenders from knowingly conspiring with brokers to conceal mortgage costs, from borrowers. View "Lee v. Countrywide Home Loans, Inc." on Justia Law

Plaintiffs, Lewis, Ross and Jennings, were limited guarantors of loans owed by River City, which filed for bankruptcy. Defendant acquired the original lender’s position and reported to credit reporting agencies that the plaintiffs were obligated in the full amount of the underlying loans rather than in limited amounts. In a suit under the Fair Credit Reporting Act 15 U.S.C.1681–1681x, defendant counterclaimed on the guaranty agreements. The district court found defendant liable to each plaintiff for FCRA violations and the plaintiffs in breach of their guaranty agreements. The court awarded Lewis $30,000 in actual damages and $120,000 in punitive damages and each remaining plaintiff $25,000 in actual damages and $100,000 in punitive damages. The court jointly awarded plaintiffs $20,024.55 in costs and $218,674.00 in attorney’s fees. On the breach of guaranty claims, the court found Lewises liable for $256,797.29, Jennings liable for $255,367.29, and Ross liable for $306,726.14. Defendant objected to Lewis’s garnishment, arguing that defendant was the net judgment creditor because the proper method of calculation required the court to: add the amounts defendant owed plaintiffs (including attorney’s fees and costs); add the amount paintiffs collectively owed defendant; then set off the former sum from the latter. The district court rejected the argument. The Sixth Circuit affirmed. View "Lewis v. United Joint Venture" on Justia Law

Washington Mutual foreclosed on property before receiving assignment and transfer of the promissory note and the delinquent home mortgage and before recording it. The homeowner brought a lawsuit for an allegedly false claim of ownership under the Fair Debt Collection Practices Act, 15 U.S.C. 1692, against the law firm acting for the purported mortgagee. She claimed violation of the Act, the Ohio Consumer Sales Practices Act, and intentionally inflicted emotional distress. The district court dismissed, finding that she did not state a claim under the Act and declining to exercise supplemental jurisdiction. The Sixth Circuit reversed. The filing of foreclosure action by the law firm, claiming ownership of the mortgage by its client, constituted a "false, deceptive or misleading representation" under the Act because the bank had not obtained transfer of the ownership documents. The homeowner adequately alleged that the misidentification caused confusion and delay in trying to contact the proper party concerning payment and resolution of the problem. View "Wallace v. WA Mut. Bank, F.A." on Justia Law

Plaintiffs, manufacturers and sellers of tobacco products, alleged that provisions of the 2009 Family Smoking Prevention and Tobacco Control Act violated their First Amendment rights. The district court granted partial summary judgment upholding the law and partial summary judgment to plaintiffs. The Seventh Circuit affirmed and ruled in favor of the government on most issues, declining to apply strict scrutiny and finding that warnings required by the Act reasonably related to the government's interest in preventing deception of consumers. The court upheld bans on event sponsorship, branding non- tobacco merchandise, and free sampling (loyalty and continuity programs); a requirement that tobacco manufacturers reserve significant packaging space for textual health warnings; the restriction of tobacco advertising to black and white text; and the constitutionality of the Act's color graphic and non-graphic warning label requirement. Reversing the district court, the court upheld the Act's restriction on claims that tobacco products are "safe or less harmful by virtue of” FDA regulation, inspection or compliance" 21 U.S.C. 331(tt)(4).View "Disc. Tobacco City & Lottery, Inc. v. United States" on Justia Law

Plaintiff rented a car, drove 64 miles in one day, refilled the fuel tank, and returned the car to the same location from which he rented the car. In addition to rental and other fees that he does not dispute, he was charged a $13.99 fuel service fee that he challenged by filing a putative class action, claiming breach of contract, fraud, and unjust enrichment. Defendant claimed that, because plaintiff drove fewer than 75 miles during the rental period, to avoid the charge he was required to return the car with a full fuel tank and to submit a receipt. The district court dismissed, finding that the contract was not ambiguous. The Sixth Circuit affirmed, citing the voluntary payment doctrine.View "Salling v. Budget Rent A Car Sys., Inc." on Justia Law

In 2006, plaintiffs contracted with defendant to purchase a condominium for $395,900. They made cash deposits of $11,877 and executed a note for $19,795. When notified of a closing date in 2009, plaintiffs' counsel sent defendant a letter rescinding the agreement and requesting return of the deposits. Defendant declined. Plaintiffs' complaint alleged violation of the Interstate Land Sales Full Disclosure Act, 15 U.S.C. 1701, for failing to provide a printed property report, and failure to include a provision notifying plaintiffs that if defendant failed to furnish a property report before execution of the purchase agreement, they had the right to revoke the purchase agreement within two years of its signing. They also asserted a claim under the Michigan Condominium Act, Mich. Comp. Laws 559.184. The district court held that the claim for rescission was untimely, stating that a purchaser must notify the seller of rescission within two years after the signing, but a has an additional third year to bring suit if the seller refused to honor the rescission. The Sixth Circuit affirmed that the claim for automatic rescission was untimely, but reversed dismissal of the state law claim and remanded. Equitable rescission may be available under 15 U.S.C. 1709. View "Veneklase v. Bridgewater Condos, L.C," on Justia Law

Plaintiffs paid off their home mortgage early and were charged a $30 "payoff statement fee" and a $14 "recording fee" in connection with the prepayment. They challenged the fees as violations of the mortgage contract, of state laws, and of the federal Real Estate Settlement Procedures Act, 12 U.S.C. 2601. The district court dismissed the suit as preempted by the federal Home Owners’ Loan Act, 12 U.S.C. 1461, and for failure to state a claim under RESPA. The Sixth Circuit held that the other claims were properly dismissed, but remanded a breach of contract claim. A Michigan Usury Act claim was preempted by HOLA; plaintiffs failed to state a claim under the deed recording statute, the state consumer protection law, or RESPA, which does not apply to charges imposed after the settlement. The court rejected a claim by the FDIC, appointed as receiver for the defendant-lender, that the court had been deprived of jurisdiction by the Financial Institution Reform, Recovery, and Enforcement Act, 12 U.S.C. 1281(d).View "Molosky v. Washington Mut., Inc." on Justia Law

Two members of a program advertised as providing healthcare discounts to consumers sued, seeking to represent a class of 30,850. They claimed violations of the Ohio Consumer Sales Practices Act as well as Ohio’s common law prohibition against unjust enrichment in that healthcare providers listed in the discount network that had never heard of the program, and that newspaper advertisements, designed to look like news stories were deceptive. The district court exercised jurisdiction under the Class Action Fairness Act of 2005, 28 U.S.C. 1332(d), which grants jurisdiction over class actions in which the amount in controversy exceeds $5 million and the parties are minimally diverse. The district court dismissed. The Sixth Circuit affirmed. The consumer-protection laws of many states, not just of Ohio, govern the claims and there are many factual variations among the claims, making a class action neither efficient nor workable nor above all consistent with the requirements of Rule 23 of the Federal Rules of Civil Procedure.

Plaintiffs Carol Metz and others filed a putative class action against fifty-five banks, including Fifth Third. The claims arose out of a Ponzi scheme involving bogus promissory notes. Five months later, attorney Daniel Morris filed a motion to intervene on behalf of his clients. Attached to the motion was a complaint similar to Metz's complaint except it was premised on promissory notes issued by different entities. The district court granted the motion to intervene. After the district court had dismissed Fifth Third with prejudice, Morris filed an intervenors' complaint against Fifth Third. The complaint was virtually identical to the complaint attached to the motion to intervene Morris filed earlier. The district court dismissed the claims with prejudice and granted Fifth Third's request for sanctions. The Sixth Circuit affirmed the imposition of sanctions, holding (1) the district court's imposition of sanctions under the bad faith standard was proper; (2) the record set forth sufficient evidence to support the district court's decision; (3) the district court properly sanctioned Morris under its inherent authority even though Fed. R. Civ. P. 11 also applied; (4) the district court did not deny Morris due process; and (5) the amount of fees awarded was not excessive.