Justia Consumer Law Opinion Summaries

Several individuals brought a class action lawsuit against a group of insurance companies after a data breach compromised the driver’s license numbers of nearly three million people. The breach occurred when hackers exploited the companies’ online insurance quoting platform, which auto-populated sensitive information using data from both customers and third-party sources. The plaintiffs, whose information was compromised, alleged various harms, including time spent monitoring their financial records, increased risk of identity theft, emotional distress, and, for two plaintiffs, discovery of their driver’s license numbers on the dark web.The United States District Court for the Eastern District of Virginia dismissed the consolidated class action complaint, finding that none of the named plaintiffs had standing to pursue their claims. The district court concluded that the alleged injuries were either too speculative or not sufficiently concrete to satisfy Article III’s standing requirements, and granted the defendants’ motion to dismiss under Rule 12(b)(1).On appeal, the United States Court of Appeals for the Fourth Circuit reviewed whether the plaintiffs had standing to bring suit. The Fourth Circuit held that two plaintiffs, who alleged that their driver’s license numbers were actually posted on the dark web, suffered a concrete and particularized injury analogous to the common-law tort of public disclosure of private information. This injury was sufficient to confer standing to seek damages. However, the court found that the other plaintiffs, who did not allege their information was made public, lacked standing because their alleged injuries—such as increased risk of future harm, time spent on mitigation, and emotional distress—were either not imminent or not independently sufficient for standing. The Fourth Circuit therefore affirmed the district court’s dismissal as to those plaintiffs, reversed as to the two plaintiffs with information posted on the dark web, and remanded for further proceedings. View "Holmes v. Elephant Insurance Co." on Justia Law

The case involved two related companies and three individuals who operated a business targeting immigrants detained by U.S. Immigration and Customs Enforcement (ICE) and eligible for release on immigration bonds. The companies marketed their services as an affordable way to secure release, but in reality, they charged high fees for services that were often misrepresented or not provided. The agreements were complex, mostly in English, and required significant upfront and recurring payments. Most consumers did not understand the terms and relied on the companies’ oral representations, which were deceptive. The business was not licensed as a bail bond agent or surety, and the defendants’ practices violated federal and state consumer protection laws.After the plaintiffs—the Consumer Financial Protection Bureau, Massachusetts, New York, and Virginia—filed suit in the United States District Court for the Western District of Virginia, the defendants repeatedly failed to comply with discovery obligations and court orders. They did not produce required documents, ignored deadlines, and failed to appear at hearings. The district court, after multiple warnings and opportunities to comply, imposed default judgment as a sanction for this misconduct. The court also excluded the defendants’ late-disclosed witnesses and exhibits from the remedies hearing, finding the nondisclosures unjustified and prejudicial.The United States Court of Appeals for the Fourth Circuit reviewed the case and affirmed the district court’s decisions. The Fourth Circuit held that the default judgment was an appropriate sanction for the defendants’ repeated and willful noncompliance. The exclusion of evidence and witnesses was also upheld, as was the issuance of a permanent injunction and the calculation of monetary relief, including restitution and civil penalties totaling approximately $366.5 million. The court found no abuse of discretion or legal error in the district court’s rulings and affirmed the final judgment in all respects. View "Consumer Financial Protection Bureau v. Nexus Services, Inc." on Justia Law

Darrell J. Austin, Jr. filed a lawsuit against Experian Information Solutions, Inc., alleging violations of the Fair Credit Reporting Act (FCRA). Austin claimed that Experian reported inaccurate and derogatory information about his credit history, even after he had disputed the inaccuracies. He had enrolled in CreditWorks, a free online credit-monitoring service offered by an Experian affiliate, to understand why his credit applications were being denied despite the discharge of much of his debt through bankruptcy.The United States District Court for the Eastern District of Virginia denied Experian’s motion to compel arbitration and excluded the declaration of David Williams, an Experian affiliate employee, which was submitted to support the motion. The court found that Williams lacked personal knowledge and relied on hearsay documents. Additionally, the court concluded that the CreditWorks enrollment page was deceptive and did not provide sufficient notice to Austin that he was agreeing to arbitration.The United States Court of Appeals for the Fourth Circuit reviewed the case and reversed the district court’s decision. The appellate court found that the district court erred in excluding the Williams declaration, as Williams had adequately demonstrated personal knowledge of the enrollment process and the terms of use. The court also determined that the CreditWorks enrollment page provided clear and conspicuous notice of the terms of use, including the arbitration agreement, and that Austin had manifested assent to those terms by creating an account.The Fourth Circuit held that Experian had met its burden to establish the existence of a binding arbitration agreement and remanded the case for further proceedings consistent with its opinion. View "Austin v. Experian Information Solutions, Inc." on Justia Law

CPI Security Systems, Inc. filed a lawsuit against Vivint Smart Home, Inc., alleging that Vivint engaged in deceptive practices to lure away CPI’s customers. Vivint sales representatives falsely claimed that Vivint had acquired CPI, that CPI was going out of business, or that Vivint needed to upgrade CPI’s equipment. These tactics led many CPI customers to switch to Vivint, causing significant losses for CPI. A jury found Vivint liable for violating the Lanham Act, the North Carolina Unfair and Deceptive Trade Practices Act (UDTPA), and for committing the common-law torts of unfair competition and tortious interference with contracts. The jury awarded CPI $49.7 million in compensatory damages and $140 million in punitive damages.The United States District Court for the Western District of North Carolina upheld the jury’s verdict. Vivint appealed, raising several issues, including the requirement of CPI’s reliance on false statements for the UDTPA claim, the sufficiency of evidence supporting the damages award, the application of North Carolina’s cap on punitive damages, and the admission of prejudicial evidence.The United States Court of Appeals for the Fourth Circuit reviewed the case and found no reversible error. The court held that CPI was not required to prove its own reliance on Vivint’s false statements to establish a UDTPA claim, as the claim was based on unfair competition rather than fraud. The court also found that the evidence presented by CPI was sufficient to support the jury’s damages award. Additionally, the court ruled that the district court correctly applied North Carolina’s cap on punitive damages by considering the total compensatory damages awarded. The court further held that the district court did not abuse its discretion in denying Vivint’s motion to bifurcate the trial or in its evidentiary rulings. The reassignment of the trial judge post-trial did not warrant a new trial. Consequently, the Fourth Circuit affirmed the district court’s judgment. View "CPI Security Systems, Inc. v. Vivint Smart Home, Inc." on Justia Law

The case involves a class action lawsuit against Matt Martorello for violating civil provisions of the Racketeering Influenced and Corrupt Organizations Act (RICO). The plaintiffs, a group of Virginia citizens, alleged that Martorello orchestrated a "Rent-A-Tribe" scheme with the Lac Vieux Desert Band of Chippewa Indians to issue high-interest loans that circumvented state usury laws by claiming tribal immunity. The loans were made through tribal entities, Red Rock Tribal Lending, LLC, Big Picture Loans, LLC, and Ascension Technologies. The plaintiffs sought damages under federal civil RICO law.The U.S. District Court for the Eastern District of Virginia dismissed the tribal entities from the case due to sovereign immunity but allowed the claims against Martorello to proceed. The court found that Martorello had made material misrepresentations about the lending operations and granted class certification. Martorello's subsequent interlocutory appeals were denied, and the district court eventually granted summary judgment in favor of the plaintiffs, awarding them over $43 million in damages.The United States Court of Appeals for the Fourth Circuit reviewed the case. Martorello challenged three district court rulings: the denial of his motion to dismiss for failure to join necessary and indispensable parties, the application of Virginia law instead of tribal law, and the rejection of his "mistake of law" defense. The Fourth Circuit affirmed the district court's judgment. It held that the tribal entities were not indispensable parties due to their settlement agreement, Virginia law applied to the off-reservation lending activities, and a mistake-of-law defense was irrelevant to the civil RICO claims, which did not require proof of specific mens rea beyond the predicate acts. The court concluded that the district court did not abuse its discretion in any of its rulings. View "Williams v. Martorello" 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

In 2018, Marriott announced a data breach affecting the guest reservation database of Starwood Hotels & Resorts Worldwide, which Marriott had acquired in 2016. The breach exposed personal information of approximately 133.7 million guests, including some payment card information. Plaintiffs filed class action lawsuits against Marriott and Accenture, a third-party IT service provider for Starwood and Marriott during the breach. The cases were consolidated for pretrial proceedings in the District of Maryland.The district court initially certified multiple state-specific damages classes against Marriott and issue classes against both Marriott and Accenture. However, the court did not address the effect of a class-action waiver in the Starwood Preferred Guest Program (SPG) contract, which Marriott argued precluded class certification. The Fourth Circuit vacated the class certification, instructing the district court to consider the class-action waiver's impact.On remand, the district court again certified the classes, holding that Marriott had waived its right to enforce the class-action waiver by participating in multidistrict litigation (MDL) and by agreeing to pretrial proceedings in Maryland, contrary to the SPG contract's venue and choice-of-law provisions. The court also suggested that the class-action waiver might be unenforceable under Rule 23 of the Federal Rules of Civil Procedure.The United States Court of Appeals for the Fourth Circuit reviewed the case and reversed the district court's decision. The Fourth Circuit held that Marriott did not waive its right to enforce the class-action waiver and that the waiver was valid and enforceable. The court found that the waiver applied to the plaintiffs' claims, including consumer protection and negligence claims, as they were related to the SPG Program. Consequently, the court reversed the certification of all classes against Marriott and the issue classes against Accenture, as the latter were justified only in combination with the Marriott damages classes. View "Maldini v. Marriott International, Incorporated" on Justia Law

In 2019, Navient Solutions, LLC, a student loan servicer, filed a civil action alleging that a group of lawyers, marketers, and debt-relief businesses conspired to defraud Navient out of millions of dollars in unpaid student debt. Navient claimed that the defendants lured student borrowers into filing sham lawsuits against Navient under the Telephone Consumer Protection Act (TCPA), which regulates abusive telemarketing practices. The case proceeded to trial, and a jury found in favor of Navient. However, the district court later granted the defendants' renewed motions for judgment as a matter of law, ruling that the TCPA suits were not sham litigation and setting aside the jury's verdicts.The United States District Court for the Eastern District of Virginia initially rejected the defendants' argument that their litigation activities were protected under the Noerr–Pennington doctrine, which safeguards the First Amendment right to petition the government. After the jury returned verdicts against each defendant, the district court vacated the verdicts, concluding that the TCPA litigation was not sham litigation and that Navient's damages were directly related to the TCPA litigation.The United States Court of Appeals for the Fourth Circuit reviewed the case and affirmed the district court's decision. The Fourth Circuit held that the TCPA actions were not sham litigation and were protected under the Noerr–Pennington doctrine. The court found that the defendants' actions were based on a legitimate question of statutory interpretation regarding the definition of an automatic telephone dialing system (ATDS) under the TCPA. The court also noted that Navient had conceded the merits of the TCPA cases and had only sought damages related to the litigation costs. As a result, the court concluded that the defendants' petitioning activity was protected by the First Amendment, and the district court's judgment as a matter of law was appropriate. View "Navient Solutions, LLC v. Lohman" on Justia Law

John Koontz received two letters from SN Servicing Corporation (SNSC) regarding his residential mortgage loan. Koontz had previously filed for Chapter 7 bankruptcy, and his debts were discharged. The letters from SNSC stated that they were attempting to collect a debt and mentioned late fees assessed to Koontz's loan account. Koontz filed a lawsuit claiming that SNSC's actions violated the Fair Debt Collection Practices Act (FDCPA) and a similar West Virginia law.The United States District Court for the Northern District of West Virginia dismissed Koontz's complaint. The court concluded that Koontz was no longer a "consumer" with a "debt" under the FDCPA due to his Chapter 7 bankruptcy discharge. The court also found that the letters did not constitute attempts to collect a consumer debt and that Koontz failed to adequately plead a "false, deceptive, or misleading representation" under the FDCPA. Consequently, the court dismissed both the federal and state claims.The United States Court of Appeals for the Fourth Circuit reviewed the case and reversed the district court's decision in part. The appellate court held that Koontz remained a "consumer" with a "debt" under the FDCPA despite his Chapter 7 discharge, as the mortgage lien remained an enforceable obligation. The court also determined that the letters from SNSC constituted attempts to collect a debt. However, the court agreed with the district court that Koontz failed to state a claim under 15 U.S.C. § 1692e but found that he adequately stated a claim under 15 U.S.C. § 1692f. The appellate court reversed the dismissal of the state-law claim for the same reasons. The case was remanded for further proceedings. View "Koontz v. SN Servicing Corporation" on Justia Law

Shelby Roberts rented an apartment from Ansley at Roberts Lake Apartments. After a dispute over the lease termination, Ansley retained her $500 security deposit and sent her an invoice for $791.14 for additional damages. Roberts believed these charges were fabricated and refused to pay. Ansley referred the debt to Carter-Young, a collection agency, which reported the debt to credit reporting agencies. Roberts disputed the debt, but Carter-Young only confirmed the debt with Ansley without further investigation. Roberts sued Carter-Young for failing to conduct a reasonable investigation under the Fair Credit Reporting Act (FCRA).The United States District Court for the Middle District of North Carolina dismissed Roberts' claim, stating that her dispute involved legal, not factual, matters, and thus did not require Carter-Young to investigate under the FCRA. The court held that the FCRA did not mandate investigations into legal disputes.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court held that to state a claim under the FCRA, a plaintiff must allege facts showing that the information in their credit report is inaccurate or incomplete and that this inaccuracy is objectively and readily verifiable by the furnisher. The court found that both legal and factual disputes could form the basis of a claim if they meet this standard. The Fourth Circuit vacated the district court's dismissal and remanded the case for further proceedings to determine if Roberts' allegations met the new standard of being objectively and readily verifiable. View "Roberts v. Carter-Young, Inc." on Justia Law