Justia Consumer Law Opinion Summaries

Benjamin Hoskins and his wife, Leanne Rodgers, participated in a telemarketing operation that defrauded consumers of more than $130 million by selling worthless “business coaching” services. The Federal Trade Commission (FTC) obtained a judgment against Hoskins for over $130 million and against Rodgers for approximately $1.5 million, reflecting the proceeds they received from the scam. Hoskins and Rodgers took steps to hinder collection by transferring assets through trusts and shell entities, including a residence in Las Vegas held via a trust in which they were both trustees and beneficiaries.The United States District Court for the District of Nevada initially blocked the FTC’s attempts to enforce the judgment, concluding that Nevada’s six-year statute of limitations for enforcement of judgments barred the FTC’s action against Rodgers. The court also quashed a writ of execution the FTC obtained under the Federal Debt Collection Procedure Act (FDCPA), reasoning that Nevada law required a separate action to prove the trust holding the property was Rodgers’s alter ego before the property could be levied.On appeal, the United States Court of Appeals for the Ninth Circuit reversed both of the district court’s rulings. The Ninth Circuit held that the FDCPA preempts inconsistent state statutes of limitations and has no time limit for collecting debts owed to the federal government by writ of execution. The court also determined that the judgment against Rodgers, which is payable to the FTC, qualifies as a “debt” under the FDCPA, regardless of whether the proceeds are ultimately distributed to victims. Additionally, the Ninth Circuit held that the FTC was not required to file a separate alter ego action under state law to levy property held in trust; under the FDCPA, the FTC may levy any property in which the judgment debtors have a substantial nonexempt interest. The case was remanded for further proceedings consistent with these holdings. View "FEDERAL TRADE COMMISSION V. HOSKINS" on Justia Law

Two competing companies in the athleticwear market, both producing bioceramic materials embedded in textiles, became involved in litigation over allegedly false advertising. One company, after settling the initial lawsuit by agreeing to pay $2.5 million and refrain from claiming FDA approval or health benefits for its product, filed for bankruptcy before completing the settlement payments. The plaintiff then brought a new action against the CEO of the defendant company, alleging both tortious interference with the settlement agreement and false advertising in violation of the Lanham Act, asserting that the defendant continued to falsely represent the product's health benefits and FDA approval.The United States District Court for the Central District of California presided over a jury trial. The jury found in favor of the plaintiff on the Lanham Act claim and awarded nominal damages. On post-trial motions, the district court granted judgment as a matter of law for the plaintiff on the tortious interference claim, awarded $2.5 million in damages, and further awarded the plaintiff disgorgement of the CEO’s salary (trebled) as "profits" under the Lanham Act, in addition to nearly $600,000 in attorneys’ fees.Upon appeal, the United States Court of Appeals for the Ninth Circuit reviewed the district court’s rulings. The Ninth Circuit held that, under California law, a corporate officer acting within the scope of agency and not at the expense of the corporation is immune from tortious interference claims, and reversed the district court’s denial of immunity and its tortious interference damages award. The court also reversed the district court’s disgorgement award, concluding that the CEO’s salary was not equivalent to profits under the Lanham Act. However, the Ninth Circuit affirmed the award of attorneys’ fees, finding no abuse of discretion in the district court’s determination that the case was “exceptional.” The case was remanded for further proceedings. View "MULTIPLE ENERGY TECHNOLOGIES, LLC V. CASDEN" on Justia Law

The plaintiff, an Arizona resident, registered her personal cell phone on the national “do not call” registry in 2004. She alleged that a real estate company, Fast Easy Offer, LLC, and related entities, contacted her through at least six phone calls and two text messages in the fall of 2024. The messages asked if she had given up on selling her property. According to the plaintiff, Fast Easy Offer’s business model involves purchasing homes below market value and remarketing them, and if a home is not purchased, the lead is given to a real estate brokerage, Keller Williams Realty Phoenix, with revenues shared. The plaintiff claimed that the purpose of these communications was to solicit the purchase of real estate brokerage services.The plaintiff filed a putative class action in the United States District Court for the District of Arizona, alleging violations of the Telephone Consumer Protection Act (TCPA). The defendants moved to dismiss, arguing that the communications did not qualify as “telephone solicitations” under the Act and that Keller Williams Realty, Inc. was not vicariously liable. The district court granted the motion, dismissing the complaint with prejudice. The court held that the calls and texts were not telephone solicitations because they did not expressly encourage the purchase of services.The United States Court of Appeals for the Ninth Circuit reviewed the case de novo. It held that under the TCPA’s definition, and consistent with Chesbro v. Best Buy Stores, L.P., 705 F.3d 913 (9th Cir. 2012), the plaintiff had adequately pleaded that the messages qualified as telephone solicitations. The court concluded that the purpose of initiation of the calls or messages is determinative, and the plaintiff’s allegations about defendants’ intent sufficed. The Ninth Circuit reversed the district court’s dismissal and remanded for further proceedings. View "COFFEY V. FAST EASY OFFER, LLC" on Justia Law

A consumer purchased a licorice product manufactured by a Minnesota company, relying on packaging that stated the product was “Naturally Flavored,” “Natural Strawberry & Raspberry Flavored Licorice,” and “Free of . . . Artificial Colors & Flavors.” The consumer later learned, through laboratory testing, that the product contained DL malic acid, which is an artificial flavor created from petrochemical sources. The consumer alleged that this ingredient rendered the product’s labeling false or misleading, and filed a putative class action in California, asserting claims for violation of the California Consumers Legal Remedies Act, unjust enrichment, and breach of express warranty.The United States District Court for the Southern District of California dismissed the complaint with prejudice. The court found that the complaint failed to plead with sufficient particularity that the malic acid was artificial, thus not meeting the heightened pleading standard of Federal Rule of Civil Procedure 9(b). The district court also held that the plaintiff did not plausibly allege that a reasonable consumer would be misled by the product’s labeling, reasoning that the labels did not explicitly state the product was “all natural” or “100% natural,” and that the ingredients list disclosed both natural and artificial ingredients.On appeal, the United States Court of Appeals for the Ninth Circuit reversed the district court’s dismissal. The appellate court held that the complaint satisfied Rule 9(b) because it identified the specifics of the alleged fraud and provided details about the laboratory testing. The court also held that the plaintiff plausibly alleged that a reasonable consumer could be misled by the product’s claim to be free of artificial flavors when it allegedly contained an artificial flavor. The case was remanded for further proceedings. View "TRAMMELL V. KLN ENTERPRISES, INC." on Justia Law

A manufacturer of biodegradable coolers developed and released its product several years before a competing company launched a similar cooler. The first manufacturer’s early product was initially not available in retail stores but was later marketed directly to consumers. The competing company’s cooler, introduced later, was sold in major retail chains. The dispute arose when the second company advertised its cooler as the “world’s first eco sensitive cooler, made from 100% biodegradable materials.” The first manufacturer objected, asserting that these statements were false because it had marketed a biodegradable cooler before its competitor.The first manufacturer sued in the United States District Court for the Northern District of California, alleging false advertising under the Lanham Act and unfair competition under California law. The claim was that the competitor’s statements about being “first” deprived it of recognition, market cachet, and associated goodwill, causing harm to its reputation and marketing opportunities. The district court held that the Lanham Act does not provide a cause of action for claims based on inventorship or being “first to market” and granted summary judgment to the defendant. The court found the state law claim derivative and dismissed it as well.On appeal, the United States Court of Appeals for the Ninth Circuit affirmed the district court’s decision. The Ninth Circuit held that, under the Lanham Act, actionable false advertising must concern observable characteristics of the tangible product, not the origin of ideas or claims of market primacy. It concluded that statements about which company was first to market refer to the origin of a concept, not the qualities or characteristics of the product itself, and thus are not cognizable under the Lanham Act. The court also found that the plaintiff had waived any argument that consumers were confused about whether its product was biodegradable. The judgment for the defendant was affirmed. View "VERICOOL WORLD, LLC V. IGLOO PRODUCTS CORP." on Justia Law

Several individuals alleged that Google collected and misused the private browsing data of Chrome users who utilized Incognito mode, despite Google’s representations about the privacy of this feature. In June 2020, five plaintiffs brought a putative class action on behalf of these users, seeking both injunctive relief and damages. After extensive discovery, the United States District Court for the Northern District of California certified a class for injunctive relief but denied certification for a damages class, finding the plaintiffs had not shown that common issues predominated over individual ones.Following the denial of damages class certification, the named plaintiffs sought review in the United States Court of Appeals for the Ninth Circuit under Rule 23(f), but the petition was denied. The case proceeded, and as trial approached, the parties settled: Google agreed to change its policies, the named plaintiffs would arbitrate their individual damages claims, and they waived their rights to appeal the denial of damages class certification. The settlement explicitly stated that absent class members were not releasing damages claims or appellate rights. Several months after the settlement, a group of 185 Chrome users, referred to as the Salcido plaintiffs, moved to intervene to preserve absent class members’ appellate rights regarding damages.The United States Court of Appeals for the Ninth Circuit reviewed the district court’s denial of the intervention motion. The Ninth Circuit held that the district court did not abuse its discretion in finding the intervention motion untimely. Applying the circuit’s traditional three-part test for intervention—considering the stage of the proceedings, prejudice to other parties, and the reason for and length of delay—the court found that intervention at this late stage would prejudice the existing parties, that the delay was unjustified, and that the timing weighed against intervention. The denial of the motion to intervene was therefore affirmed. View "BROWN V. SALCIDO" on Justia Law

A consumer purchased a set of bed sheets from a major retailer, choosing a more expensive option because the packaging stated the sheets were made of “100% cotton” and had an “800 Thread Count.” After using the sheets, he believed the quality did not match the advertised thread count. He later had the sheets tested by an expert, who determined the actual thread count was much lower. The consumer alleged that it is physically impossible for 100% cotton fabric to reach the advertised thread counts and claimed that the retailer’s labeling was false and misleading.The consumer initially brought a class action in California state court, alleging violations of California’s Unfair Competition Law and Consumer Legal Remedies Act. The retailer removed the suit to the United States District Court for the Southern District of California. The retailer moved to dismiss the complaint, arguing that the consumer failed to adequately plead his claims and that the impossibility of the claimed thread count meant no reasonable consumer would be misled. The district court agreed and dismissed the case with prejudice, relying on the Ninth Circuit’s decision in Moore v. Trader Joe’s Co., interpreting it to mean that literally impossible claims cannot deceive reasonable consumers as a matter of law.The United States Court of Appeals for the Ninth Circuit reviewed the dismissal de novo. The court held that the district court erred in its interpretation of Moore. The appellate court clarified that claims of literal falsity are actionable under California consumer protection laws and that even physically impossible claims may deceive reasonable consumers. The court reversed the district court’s dismissal and remanded the case for further proceedings, holding that the consumer’s allegations were sufficient to survive a motion to dismiss. View "PANELLI V. TARGET CORPORATION" on Justia Law

A consumer purchased a Brita water filter product, alleging that the product’s labeling and packaging led him to believe it would remove or reduce hazardous contaminants in tap water to below laboratory-detectable levels. He contended that the packaging conveyed the impression that the product would eliminate a broad range of harmful substances, but did not clearly or conspicuously state that it would not do so. The consumer claimed that he would not have purchased the product or would have paid less if he had known its actual capabilities, and asserted that reasonable consumers would have similar expectations based on the labeling.After Brita removed the lawsuit to the United States District Court for the Central District of California, the district court dismissed the complaint in its entirety without leave to amend. The district court found that the plaintiff’s claims for affirmative misrepresentation and material omission failed, applying the reasonable consumer standard and concluding that no reasonable consumer would interpret Brita’s packaging as promising removal of all hazardous contaminants to below lab-detectable limits. The district court also found the plaintiff lacked standing for certain statutory claims and determined that amendment would be futile.The United States Court of Appeals for the Ninth Circuit reviewed the district court’s dismissal and affirmed the decision. The appellate court held that no reasonable consumer would expect Brita’s water filter products to remove or reduce all hazardous contaminants to below laboratory-detectable levels, especially in light of Brita’s disclosures about the products’ capabilities and limitations. The court further held that the omission claim failed as a matter of law under the reasonable consumer standard. Finally, the appellate court concluded that the district court did not abuse its discretion by denying leave to amend, as amendment would not cure the defect. Judgment was affirmed. View "BROWN V. THE BRITA PRODUCTS COMPANY" on Justia Law

An Iranian citizen, living in the United States, held a credit card account with a large financial institution. Due to United States sanctions against Iran, federal regulations prohibit U.S. banks from providing services to accounts of individuals ordinarily resident in Iran, unless those individuals are not located in Iran. The bank had a compliance policy requiring account holders from such sanctioned countries to regularly provide documents showing they were not residing in those countries. The plaintiff, subject to this policy, submitted various documents as proof of U.S. residency. After the bank mistakenly treated one of his residency documents as temporary rather than permanent, it closed his account when he failed to submit additional documentation.The plaintiff sued in state court, alleging violations of federal and state anti-discrimination and consumer protection statutes, including 42 U.S.C. § 1981, the Equal Credit Opportunity Act, the California Unruh Civil Rights Act, and the California Unfair Competition Law. The defendant bank removed the case to the United States District Court for the Southern District of California. The district court granted summary judgment for the bank on all claims except for an ECOA notice claim and a related UCL claim, both of which the plaintiff later voluntarily dismissed. The plaintiff then appealed.The United States Court of Appeals for the Ninth Circuit held that the International Emergency Economic Powers Act’s liability shield provision immunizes the bank from liability for good faith actions taken in connection with compliance with sanctions regulations, even if such actions are not strictly compelled by the regulations. The court found that the bank’s policy was consistent with federal guidance and that the plaintiff failed to show a genuine dispute of material fact regarding the bank’s good faith. The Ninth Circuit affirmed the district court’s judgment in favor of the bank. View "NIA V. BANK OF AMERICA, N.A." on Justia Law

A national trade association representing large online businesses challenged a recently enacted California statute designed to protect minors’ privacy and well-being online. The law imposes specific requirements on businesses whose online services are likely to be accessed by children under eighteen, including obligations regarding data use, age estimation, and restrictions on certain user interface designs known as “dark patterns.” Before the law took effect, the association brought suit in the United States District Court for the Northern District of California, arguing that several provisions were unconstitutional on First Amendment and vagueness grounds, and sought a preliminary injunction to prevent enforcement.The district court initially enjoined the entire statute, finding the association was likely to succeed on its facial First Amendment challenge. On the State’s appeal, the United States Court of Appeals for the Ninth Circuit vacated most of the injunction, affirming only as to a specific requirement regarding Data Protection Impact Assessments and related inseverable provisions, and remanded for the district court to analyze the association’s other facial challenges and the issue of severability under the Supreme Court’s clarified standards in Moody v. NetChoice, LLC. On remand, the district court again enjoined the entire statute and, in the alternative, seven specific provisions.On further appeal, the United States Court of Appeals for the Ninth Circuit held that the association did not meet its burden for a facial challenge to the law’s coverage definition or its age estimation requirement, vacating the injunction as to those. However, the court affirmed the preliminary injunction as to the law’s data use and dark patterns restrictions on vagueness grounds, finding the provisions failed to clearly delineate prohibited conduct. The court vacated the injunction as to the statute’s remainder and remanded for further proceedings on severability. View "NETCHOICE, LLC V. BONTA" on Justia Law