Justia Consumer Law Opinion Summaries

Joneca Company, LLC, and InSinkErator, LLC, are direct competitors in the garbage disposal market. InSinkErator alleged that Joneca marketed its disposals using horsepower designations that misrepresented the actual output power of the motors, thereby misleading consumers. InSinkErator claimed that industry and consumer standards understood horsepower to refer to the motor’s mechanical output, not merely the electrical input, and that Joneca’s advertising was causing it to lose sales and goodwill. InSinkErator tested Joneca’s products and found the output horsepower to be substantially less than advertised, prompting it to seek injunctive relief.The United States District Court for the Central District of California reviewed these allegations in the context of a motion for a preliminary injunction. After considering expert declarations and industry standards, the district court found that Joneca’s horsepower claims were literally false by necessary implication, as consumers would interpret horsepower designations as referring to output. The court also found that these claims were material to consumer purchasing decisions and that InSinkErator was likely to suffer irreparable harm absent an injunction. As a result, the court ordered Joneca to place disclaimers on its packaging and sales materials and required InSinkErator to post a $500,000 bond. Joneca appealed, challenging the district court’s findings on falsity, materiality, irreparable harm, balancing of hardships, and public interest.The United States Court of Appeals for the Ninth Circuit affirmed the district court’s preliminary injunction. The court held that the district court did not err in finding that InSinkErator was likely to succeed on the merits of its Lanham Act false advertising claim, that Joneca’s horsepower claims were materially misleading, and that InSinkErator faced irreparable harm. The Ninth Circuit found no abuse of discretion in the district court’s balancing of equities, bond requirement, or determination that the injunction served the public interest. View "INSINKERATOR, LLC V. JONECA COMPANY, LLC" on Justia Law

The plaintiff held a variable-rate credit card issued by a bank, with an agreement specifying that the interest rate for each billing cycle would be determined by adding a constant margin to the U.S. Prime Rate as published in The Wall Street Journal on the last day of each month. When the Federal Reserve increased the Federal Funds Rate multiple times from March 2022 to July 2023, the Prime Rate—and consequently, the plaintiff’s credit card interest rate—increased significantly. The new, higher rate was applied to the cardholder’s outstanding balances for the entire billing cycle, including balances incurred before the Prime Rate increased. The plaintiff, dissatisfied with paying higher interest on previous balances, filed a class action alleging that the bank’s method of calculating and applying the interest rate violated the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) and California’s Unfair Competition Law.The United States District Court for the Northern District of California dismissed the case under Rule 12(b)(6), concluding that the bank’s method fell within a statutory exception in the CARD Act. The court found that the credit card agreement’s use of the Prime Rate, which is publicly available and not controlled by the bank, satisfied the CARD Act’s exception for variable rates tied to an external index.On appeal, the United States Court of Appeals for the Ninth Circuit reviewed the dismissal de novo. The appellate court held that the agreement complied with 15 U.S.C. § 1666i-1(b)(2), as the only variable affecting the rate was the Prime Rate, which was not under the bank’s control. The court found no violation of the CARD Act and affirmed the district court’s dismissal, holding that the bank’s method of setting variable rates according to the Prime Rate was lawful under the statute’s exception. View "MILLIKEN V. BANK OF AMERICA, N.A." on Justia Law

Epic Games, a developer and operator of the Epic Games Store, sued Apple over its App Store practices, alleging violations of federal and California competition law. The dispute centered on Apple’s rules requiring developers to use Apple’s in-app payment system, which imposed a 30% commission, and its prohibition of developers directing users to other purchasing options outside the App Store. After a bench trial, the district court found Apple’s anti-steering provisions violated California’s Unfair Competition Law by preventing informed consumer choice but upheld Apple’s in-app payment system requirement for digital goods. The court issued an injunction barring Apple from restricting developers from including in their apps buttons, links, or other calls to action that direct users to alternative purchasing mechanisms.Following the injunction, Apple implemented a compliance plan involving a 27% commission on linked-out purchases and a series of restrictions on how developers could present external payment options, including limitations on button design, link placement, and user flow. Epic contested Apple’s compliance, arguing these measures still effectively prohibited alternative purchases. After holding multiple evidentiary hearings, the United States District Court for the Northern District of California found Apple in civil contempt for failing to comply with the injunction, citing Apple’s bad faith and pretextual justifications. The district court imposed broad sanctions, including prohibiting any commission on linked-out purchases, restricting Apple’s ability to limit external links, and referring Apple for criminal investigation.On appeal, the United States Court of Appeals for the Ninth Circuit affirmed the district court’s contempt findings and most of the resulting sanctions but found portions of the sanctions—particularly the blanket ban on commissions—overbroad and more punitive than coercive. The Ninth Circuit reversed and remanded those parts for further tailoring, clarified the scope of permissible developer link prominence, and declined to vacate the injunction or reassign the case. The court otherwise affirmed the district court’s orders. View "EPIC GAMES, INC. V. APPLE INC." on Justia Law

Several individuals operated two multi-level marketing businesses, Success by Health and VOZ Travel. Success by Health sold coffee, tea, and nutraceuticals, promising affiliates “financial freedom” through a compensation structure that incentivized recruitment over product sales. VOZ Travel, launched in 2019 to offset losses, purported to sell travel services, but never produced the promised products. Both businesses generated substantial revenues, largely through affiliate recruitment. One of the individuals, James Noland, was already subject to a 2002 permanent injunction prohibiting him and those acting with him from running unlawful multi-level marketing schemes.The Federal Trade Commission (FTC) filed suit in the United States District Court for the District of Arizona, alleging violations of the Federal Trade Commission Act and related consumer protection rules. The district court granted an ex parte temporary restraining order, followed by a preliminary injunction that froze assets and installed a receiver. Summary judgment was entered for the FTC on some claims, and after an 11-day bench trial, the district court found the defendants liable for operating a pyramid scheme, making material misrepresentations, and violating two consumer protection rules. The court imposed monetary damages, a permanent injunction barring participation in multi-level marketing, and, for some defendants, a civil compensatory sanction for contempt of the 2002 injunction. The defendants appealed only the scope and nature of the relief.The United States Court of Appeals for the Ninth Circuit reviewed the case and affirmed in all respects. The court held that challenges to the preliminary injunction were moot. It found no abuse of discretion in the district court’s calculation and imposition of a civil compensatory sanction based on net revenues, nor in the award of monetary relief under Section 19 of the FTC Act without the need for prior administrative proceedings. The court also upheld the permanent injunction prohibiting future participation in multi-level marketing, finding it appropriately tailored to the defendants’ conduct. View "FEDERAL TRADE COMMISSION V. NOLAND" on Justia Law

A group of grocery retailers and public interest organizations challenged federal regulations that established a national uniform disclosure standard for foods containing genetically modified ingredients. Congress had directed the Secretary of Agriculture to create this standard, which was delegated to the Agricultural Marketing Service (AMS). The AMS’s regulations, effective January 1, 2022, required certain foods to disclose if they were “bioengineered” or contained “bioengineered” ingredients, but generally excluded highly refined foods where genetically modified material was undetectable. Plaintiffs argued that this exclusion, the mandated use of the term “bioengineered” instead of more familiar terms like “GMO,” and the allowance of QR code and text-message disclosure options were unlawful or arbitrary under the Administrative Procedure Act (APA).The United States District Court for the Northern District of California granted summary judgment to the plaintiffs only on their challenge to the QR code and text-message disclosure options, remanding those provisions to the AMS without vacating them. The court denied summary judgment on all other claims, which the Ninth Circuit construed as a final judgment granting summary judgment to the AMS and intervenor-defendants on the remaining claims. Plaintiffs appealed.The United States Court of Appeals for the Ninth Circuit held that the plaintiffs had standing and that the AMS committed legal error by generally excluding highly refined foods from the definition of “bioengineered foods.” The court reversed the district court’s grant of summary judgment to the defendants on this issue, remanded with instructions to grant summary judgment to the plaintiffs, and directed the district court to determine whether any regulatory provisions should be vacated. The Ninth Circuit affirmed the district court’s rejection of the claim that the use of “bioengineered” was arbitrary and capricious, finding the agency’s choice reasonable. The court also held that the district court abused its discretion by not vacating the two disclosure-format regulations and directed prospective vacatur after further input from the parties. The judgment was otherwise affirmed. View "NATURAL GROCERS V. ROLLINS" on Justia Law

Ajay Thakore, a resident of La Jolla, California, and owner of Gopher Media LLC, a digital marketing agency, became involved in a dispute with Andrew Melone and American Pizza Manufacturing (APM), a local “take-n-bake” restaurant. The conflict began after the City of San Diego converted parking spaces outside APM to 15-minute zones. Thakore, who frequented nearby businesses and allegedly had a financial stake in a competitor, was accused of parking for extended periods and initiating contentious exchanges. Thakore and Gopher Media sued Melone and APM in the United States District Court for the Southern District of California, alleging harassment, discrimination, and unfair competition. Melone and APM counterclaimed, alleging defamation, trade libel, and unfair business practices, including claims that Thakore and Gopher Media orchestrated negative online reviews and made false statements on social media.In response to the countercomplaint, Thakore and Gopher Media filed a motion to strike under California’s anti-SLAPP statute (Cal. Civ. Proc. Code § 425.16), arguing that the alleged conduct constituted protected speech on a public issue. The United States District Court for the Southern District of California denied the anti-SLAPP motion. Thakore and Gopher Media then sought an interlocutory appeal to the United States Court of Appeals for the Ninth Circuit, challenging the denial.The United States Court of Appeals for the Ninth Circuit, sitting en banc, reviewed whether it had jurisdiction to hear an interlocutory appeal from the denial of an anti-SLAPP motion under the collateral order doctrine. The court held that such denials do not resolve issues completely separate from the merits and are not effectively unreviewable after final judgment. Accordingly, the Ninth Circuit overruled its prior decision in Batzel v. Smith, dismissed the appeal for lack of jurisdiction, and remanded the case. View "GOPHER MEDIA LLC V. MELONE" on Justia Law

A group of borrowers in California brought a class action against Flagstar Bank, alleging that the bank failed to pay interest on their mortgage escrow accounts as required by California Civil Code § 2954.8(a). Flagstar did not pay interest on these accounts, arguing that the National Bank Act (NBA) preempted the California law, and therefore, it was not obligated to comply. The plaintiffs sought restitution for the unpaid interest.The United States District Court for the Northern District of California, relying on the Ninth Circuit’s prior decision in Lusnak v. Bank of America, N.A., granted summary judgment for the plaintiffs. The court ordered Flagstar to pay restitution and prejudgment interest to the class. Flagstar appealed to the United States Court of Appeals for the Ninth Circuit, which affirmed the district court’s decision, holding that Lusnak foreclosed Flagstar’s preemption argument. However, the Ninth Circuit remanded the case to the district court to correct the class definition date and the judgment amount due to errors in the statute of limitations tolling and calculation of damages.On remand from the United States Supreme Court, following its decision in Cantero v. Bank of America, N.A., the Ninth Circuit reviewed whether it could overrule Lusnak in light of Cantero. The court held that Cantero did not render Lusnak “clearly irreconcilable” with Supreme Court precedent, and therefore, the panel lacked authority to overrule Lusnak. The Ninth Circuit affirmed the district court’s holding that the NBA does not preempt California’s interest-on-escrow law, but vacated and remanded the judgment and class certification order for modification of the class definition date and judgment amount. View "KIVETT V. FLAGSTAR BANK, FSB" on Justia Law

The defendant, a former U.S. Coast Guard employee, was convicted by a jury of murdering two co-workers in Alaska. At the time of the government’s collection action, he held approximately $450,000 in a Thrift Savings Plan (TSP) account, a federal retirement savings plan. His wife had a statutory right to a joint and survivor annuity from the account, and federal law generally requires spousal consent for lump-sum withdrawals. Following his conviction, the government sought to collect the entire balance of his TSP account as restitution for the victims’ families.The United States District Court for the District of Alaska initially ordered restitution from the defendant’s retirement and disability income, including his TSP funds, but limited lump-sum withdrawals from the TSP without spousal consent, instead permitting monthly payments. On appeal, the United States Court of Appeals for the Ninth Circuit vacated the restitution order, holding that the district court could not use the All Writs Act to bypass statutory garnishment limits and remanded for a determination of whether the defendant’s benefit streams constituted “earnings” subject to a 25% garnishment cap under the Consumer Credit Protection Act.On remand, the district court issued amended restitution orders authorizing the government to collect the entire TSP account balance as a lump sum. The defendant appealed, arguing that statutory spousal protections limited the government to periodic garnishments. The United States Court of Appeals for the Ninth Circuit held that the government may only cash out a defendant’s TSP account to satisfy a restitution order under the Mandatory Victims Restitution Act if the plan’s terms would allow the defendant to do so at the time of the order. Because spousal consent was required and not obtained, the court vacated the restitution orders and remanded for further proceedings. View "United States v. Wells" on Justia Law

Plaintiffs, representing themselves and a putative class, purchased Kleenex Germ Removal Wet Wipes manufactured by Kimberly-Clark Corporation. They alleged that the product’s labeling misled consumers into believing the wipes contained germicides and would kill germs, rather than merely wiping them away with soap. Plaintiffs claimed that this misrepresentation violated several California consumer protection statutes. The wipes were sold nationwide, and the plaintiffs included both California and non-California residents.The United States District Court for the Northern District of California first dismissed the non-California plaintiffs’ claims for lack of personal jurisdiction and dismissed the remaining claims under Rule 12(b)(6), finding that the labels would not plausibly deceive a reasonable consumer. The court dismissed the Second Amended Complaint (SAC) without leave to amend, and plaintiffs appealed.On appeal, the United States Court of Appeals for the Ninth Circuit reviewed whether subject-matter jurisdiction existed under diversity jurisdiction statutes, 28 U.S.C. §§ 1332(a) and 1332(d)(2). The court found that the SAC failed to allege Kimberly-Clark’s citizenship and did not state the amount in controversy. The panel held that diversity of citizenship cannot be established by judicial notice alone and that the complaint must affirmatively allege the amount in controversy. Plaintiffs were permitted to submit a proposed Third Amended Complaint (TAC), which successfully alleged diversity of citizenship but failed to plausibly allege the required amount in controversy for either statutory basis. The court concluded that neither it nor the district court had subject-matter jurisdiction and vacated the district court’s judgment, remanding with instructions to dismiss the case without prejudice. The panel denied further leave to amend, finding that additional amendment would be futile. View "ROSENWALD V. KIMBERLY-CLARK CORPORATION" on Justia Law

After purchasing a collectible from an online retailer, the plaintiff was charged multiple times through his PayPal account for additional items he alleges he did not knowingly subscribe to. He filed a putative class action in California state court against the retailer, asserting claims under California’s False Advertising Law and Unfair Competition Law. Importantly, he sought only equitable restitution and did not pursue damages, even though he conceded that damages were available under California’s Consumer Legal Remedies Act.The defendant removed the case to the United States District Court for the Southern District of California under the Class Action Fairness Act, which was not disputed as a proper basis for federal jurisdiction. The plaintiff then moved to remand, arguing that the federal court lacked “equitable jurisdiction” because he had an adequate remedy at law available, even though he chose not to pursue it. The district court agreed, holding that it could remand for lack of equitable jurisdiction and that the defendant could not waive the defense that an adequate legal remedy was available.On appeal, the United States Court of Appeals for the Ninth Circuit held that district courts do have the authority to remand a removed case to state court for lack of equitable jurisdiction. However, the Ninth Circuit further held that a defendant may waive the adequate-remedy-at-law defense in order to keep the case in federal court. The court vacated the district court’s remand order and sent the case back to allow the defendant the opportunity to perfect its waiver. If the defendant waives the defense, the case may proceed in federal court. View "RUIZ V. THE BRADFORD EXCHANGE, LTD." on Justia Law