Justia Consumer Law Opinion Summaries

Google was accused of violating the privacy rights of users in the United States by continuing to track and store their location data even after users had disabled the “Location History” feature on their devices. The lawsuit, brought as a class action on behalf of approximately 247.7 million individuals, consolidated multiple complaints. The parties ultimately negotiated a settlement that included both injunctive relief—requiring Google to alter its practices—and a $62 million fund. This settlement fund was to cover attorneys’ fees, litigation costs, service awards for class representatives, and administrative expenses. The remaining funds were to be distributed to selected nonprofit organizations with a focus on internet privacy, rather than directly to class members.The United States District Court for the Northern District of California, after conducting a fairness hearing under Federal Rule of Civil Procedure 23(e)(2), overruled objections from certain class members. These objectors argued that it was improper to distribute the settlement fund exclusively through the cy pres doctrine without first attempting a direct distribution to class members. The district court found that a direct distribution was infeasible because the pro rata share for each class member would be minimal (less than 25 cents) and administrative costs would further reduce any recovery. It approved the cy pres distribution, finding the selected nonprofit recipients had a substantial nexus to the class’s privacy interests.On appeal, the United States Court of Appeals for the Ninth Circuit affirmed the district court’s order. The appellate court held that the district court properly considered the relevant factors under amended Rule 23(e), did not improperly presume the fairness of the settlement, and acted within its discretion in approving a cy pres-only monetary distribution where direct payments were deemed infeasible and not verifiable. The court also found the selection of cy pres recipients appropriate and declined to address new constitutional arguments not presented below. The holding is that cy pres-only distributions are permissible in class settlements when direct distribution is infeasible and the selected recipients have a substantial nexus to the interests of the class. View "PATACSIL V. GOOGLE LLC" on Justia Law

A real estate investment trust issued shares governed by corporate charter documents that initially paid fixed dividends but were set to convert to floating rates tied to the London Inter-Bank Offered Rate (LIBOR). The charter provided three fallback options if LIBOR became unavailable. When LIBOR was discontinued, the company determined that the third fallback provision—a fixed rate based on the most recent dividend period—would apply. This decision was announced before the shares were set to convert to floating rates, leading to a decrease in the shares' market value.A shareholder filed a class action in the United States District Court for the Central District of California, alleging that the company’s failure to convert to SOFR-based floating rates, as selected by the Federal Reserve under the Adjustable Interest Rate (LIBOR) Act, violated California’s Unfair Competition Law (UCL). The shareholder claimed that a fixed rate could not serve as a valid “benchmark replacement” under the LIBOR Act. The company moved to dismiss, arguing that the fallback provision was a valid benchmark replacement, thus precluding a UCL claim. The district court denied the motion, finding ambiguity in the statute and relying on legislative history suggesting concern over fixed-rate conversions.On appeal, the United States Court of Appeals for the Ninth Circuit reversed the district court’s order. The Ninth Circuit held that, under the plain text of the LIBOR Act, a “benchmark replacement” may include a fixed dividend rate as provided in the fallback provision, and there is no requirement that it be a floating rate. The court found the fallback provision to be a valid benchmark replacement and concluded that the company’s actions were not “unlawful” or “unfair” under the UCL. The case was remanded for further proceedings on any remaining issues. View "VERTHELYI V. PENNYMAC MORTGAGE INVESTMENT TRUST" on Justia Law

Two consumers filed a lawsuit against a company that produces and sells eggs, challenging the company’s marketing claims that its hens are “free range” and “pasture raised on over 8 acres.” The plaintiffs alleged that these statements were deceptive because, in their view, the terms “pasture raised” and “free range” have objective meanings set by specific animal welfare certification organizations, and that consumers would expect the eggs to meet those standards. The plaintiffs sought to certify classes of California and New York consumers who purchased the eggs, arguing that the company’s advertising led consumers to pay a premium under false pretenses.The United States District Court for the Northern District of California considered the plaintiffs’ motion for class certification. During this process, the court excluded the plaintiffs’ expert’s opinion on the meaning of “pasture raised,” finding the expert’s methodology unreliable under Daubert v. Merrell Dow Pharmaceuticals, Inc. Without this expert opinion, the district court concluded that the plaintiffs could not show that deception was a common issue capable of classwide resolution, as required for predominance under Federal Rule of Civil Procedure 23(b)(3). Nonetheless, the court certified the classes, reasoning that common questions remained regarding the materiality of the statements and the calculation of damages.On appeal, the United States Court of Appeals for the Ninth Circuit reversed the district court’s order granting class certification. The Ninth Circuit held that, in the absence of admissible expert evidence regarding what consumers understand “pasture raised” to mean, the plaintiffs failed to show that common issues of deception predominated. The court further held that common questions of materiality and damages could not, by themselves, justify class certification when the element of deception was not established on a classwide basis. View "RUSOFF V. THE HAPPY GROUP, INC." on Justia Law

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