Justia Consumer Law Opinion Summaries

Deque Systems Inc., a company specializing in web accessibility software, developed and registered multiple versions of its DevTools and Rules Help Pages products. To access these, users agreed not to copy, reverse-engineer, or otherwise misuse the software or its documentation. In 2021, BrowserStack, a competing firm, sought to develop its own accessibility testing tools. More than 100 BrowserStack employees created accounts with Deque—agreeing to Deque’s terms—and later, BrowserStack released an Accessibility Toolkit, which Deque alleged was developed by unlawfully copying and reverse-engineering DevTools and the Rules Help Pages.Deque filed suit in the United States District Court for the Eastern District of Virginia, claiming copyright infringement, false advertising, breach of contract, and unjust enrichment, and sought injunctive relief, damages, and other remedies. During discovery, Deque repeatedly failed to properly disclose its damages calculations and supporting evidence by the deadlines set in the court’s scheduling order. Despite several opportunities to supplement its disclosures and a late attempt to introduce expert testimony, Deque did not timely provide the required information. BrowserStack moved to exclude Deque’s damages evidence and for summary judgment. The district court granted these motions, finding that Deque’s noncompliance with disclosure rules was neither substantially justified nor harmless, and that Deque presented no evidence supporting injunctive or other relief.On appeal, the United States Court of Appeals for the Fourth Circuit reviewed and affirmed the district court’s judgment. The Fourth Circuit held that the district court did not abuse its discretion in excluding all evidence of Deque’s damages under Federal Rule of Civil Procedure 37(c)(1) due to repeated and unjustified failures to comply with disclosure requirements. The court also held that summary judgment for BrowserStack was warranted because Deque could not establish entitlement to injunctive, declaratory, or monetary relief. View "Deque Systems Inc. v. Browserstack, Inc." on Justia Law

In this case, the plaintiff, acting individually and on behalf of a proposed class, alleged that the defendant, a health insurance marketing company, violated the Telephone Consumer Protection Act (TCPA) by sending her a prerecorded telemarketing call without her prior express consent. The defendant argued that the plaintiff had given such consent when she used a third-party “lead generation” website operated by a non-party, where she filled out a form seeking insurance quotes. The online process included an agreement (the “Terms of Use”) with an arbitration clause covering disputes related to the website’s use and consent to be contacted by marketing partners, although the defendant was not named in the agreement.After the plaintiff filed suit in the United States District Court for the Eastern District of North Carolina, the defendant moved to compel arbitration, arguing that it could enforce the arbitration clause as a third-party beneficiary under Delaware law. The district court denied the motion, holding that, although the defendant benefited from the agreement, it was not a third-party beneficiary because the benefit was not central to the contract’s purpose. The court also determined that, under Fourth Circuit precedent, the court—not an arbitrator—must decide whether a non-signatory like the defendant can enforce the arbitration agreement.On appeal, the United States Court of Appeals for the Fourth Circuit reviewed the district court’s denial of arbitration de novo. The Fourth Circuit agreed that the district court, not an arbitrator, was the proper forum to decide the defendant’s standing to enforce the arbitration clause. However, the court disagreed with the district court’s interpretation of Delaware law, concluding that the benefit to the defendant was material to the agreement’s purpose, making the defendant a third-party beneficiary. The Fourth Circuit reversed the district court’s order and remanded with instructions to compel arbitration and stay the federal court proceedings. View "Sessoms v. USHealth Advisors, LLC" on Justia Law

Donte Jackson received a $30,000 loan from WebBank, which was later sold to Velocity Investments, LLC. After Jackson defaulted on the loan, Velocity, represented by the law firm Protas, Spivok & Collins LLC (PSC), sued Jackson in Maryland state court to collect the debt. Velocity eventually dismissed the state court suit with prejudice. Subsequently, Jackson brought a class action lawsuit against both Velocity and PSC, alleging that their practice of suing on time-barred debts was unlawful.In the United States District Court for the District of Maryland, both Velocity and PSC moved to compel arbitration based on an arbitration clause in Jackson’s original promissory note. The district court found that Velocity, as a subsequent holder of the note, was a party to the arbitration agreement but had waived its right to arbitrate by filing suit in state court. The court ruled that PSC was not a party to the agreement, as it did not fit the contractual definition of an entity “servicing” the note, which the court interpreted in accordance with Maryland law. Only PSC appealed the denial of its motion to compel arbitration.The United States Court of Appeals for the Fourth Circuit reviewed the district court’s ruling de novo. The Fourth Circuit held that PSC, as the law firm representing Velocity, was not a party to the arbitration agreement because it did not “service” the note in the relevant contractual sense, which involves collecting and maintaining a payment schedule for the loan. The court concluded that the arbitration agreement covered only creditors and loan servicers, not lawyers. The Fourth Circuit affirmed the district court’s denial of PSC’s motion to compel arbitration. View "Jackson v. Protas, Spivok & Collins LLC" on Justia Law

The plaintiff obtained a mortgage in 2007 and later fell behind on payments, leading to a repayment agreement. In 2013, servicing of the loan transferred to new entities, and in 2016 the plaintiff filed for Chapter 13 bankruptcy, triggering an automatic stay against debt collection efforts. During bankruptcy, the mortgage servicers sent monthly account statements, payoff statements (at the plaintiff’s request), and 1098 tax forms. Each document contained clear disclaimers indicating they were not attempts to collect a debt from someone in bankruptcy. The plaintiff alleged that these communications amounted to prohibited debt collection and included inaccurate calculations, asserting violations of both federal and state consumer protection laws.The United States District Court for the District of Maryland first granted summary judgment to the servicers on federal claims, determining the documents were purely informational and not debt collection efforts. The court also declined to exercise supplemental jurisdiction over the plaintiff’s state law claims after dismissing all federal claims, and dismissed those claims without prejudice. The plaintiff appealed, contesting the district court’s findings regarding the nature of the communications and the dismissal of his state law claims.The United States Court of Appeals for the Fourth Circuit reviewed the district court’s summary judgment decisions de novo. The appellate court affirmed the lower court’s rulings, holding that none of the communications constituted attempts to collect a debt under the Fair Debt Collection Practices Act, nor did they violate the bankruptcy stay. The court found the disclaimers in the documents clear and unequivocal, and noted that payoff statements were sent only at the plaintiff’s request. Because federal claims were properly dismissed, the appellate court upheld the district court’s decision to dismiss the state law claims for lack of jurisdiction. View "Palazzo v. Bayview Loan Servicing, LLC" on Justia Law

A married couple who lived in West Virginia refinanced their home loan in 2004. Over the years, they regularly sent their mortgage servicer payments that included both the scheduled monthly amount and additional principal prepayments, combining the two in single checks and clearly indicating when a prepayment was included. The loan servicers, including LoanCare, LLC (which began servicing the loan in 2019), allegedly failed to apply the prepayments before the monthly payments, resulting in the couple being charged excess interest. Despite several requests for correction, LoanCare did not adjust its practices. The couple eventually paid off the loan and sought a refund for the excess interest.The couple filed a putative class action in the United States District Court for the Eastern District of Virginia, alleging that LoanCare violated two provisions of the West Virginia Consumer Credit and Protection Act (the Act): section 46A-2-127(d) and section 46A-2-128. They also asserted claims for unjust enrichment and conversion. The district court dismissed the unjust enrichment and conversion claims, but allowed the statutory claims to proceed. After discovery, LoanCare moved for summary judgment, arguing that the Act required proof of intentional misconduct, and that there was no evidence it acted intentionally.The United States District Court for the Eastern District of Virginia granted summary judgment for LoanCare, holding that the Act’s provisions at issue required proof of intentional violation, which the couple could not show. On appeal, the United States Court of Appeals for the Fourth Circuit concluded that the district court erred in requiring intent, holding that the statutory provisions impose strict liability and do not require proof of intent to violate. The appellate court vacated the judgment and remanded the case for further proceedings. View "Tederick v. Loancare, LLC" on Justia Law

Two individuals were seriously injured during a 2022 mass shooting at the Edmund Burke School in Washington, D.C. The shooter, a 23-year-old man from Virginia, used an AR-15 and various accessories and ammunition manufactured by multiple U.S. and foreign companies. The shooter built his arsenal by purchasing and assembling these products, which were then used in the attack. Both plaintiffs, a parent picking up her child and a school security guard, survived but suffered severe physical and emotional injuries.The plaintiffs filed suit in the United States District Court for the Eastern District of Virginia, asserting claims under Virginia’s False Advertising Statute and Consumer Protection Act, and alleging negligence and negligence per se for violations of the National Firearms Act and Virginia’s Uniform Machine Gun Act. The defendants moved to dismiss, arguing that the plaintiffs lacked Article III standing because their injuries were not “fairly traceable” to the defendants’ conduct. The district court agreed, dismissing the case for lack of subject-matter jurisdiction under Rule 12(b)(1). Despite this, the court also reached the merits and dismissed the claims under Rule 12(b)(6), finding them barred by the Protection of Lawful Commerce in Arms Act (PLCAA).On appeal, the United States Court of Appeals for the Fourth Circuit reversed the district court’s standing ruling, holding that the plaintiffs had alleged sufficient facts to demonstrate that their injuries were “fairly traceable” to the defendants’ alleged misconduct, thus satisfying Article III’s requirements. The Fourth Circuit vacated the district court’s alternative merits ruling under the PLCAA as advisory and beyond its jurisdiction, remanding the case for further proceedings consistent with its opinion. View "Lowy v. Daniel Defense, LLC" on Justia Law

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