Justia Consumer Law Opinion Summaries

A trade association representing the dietary supplement industry challenged a New York law that prohibits the sale of dietary supplements marketed for weight loss or muscle building to individuals under eighteen. The law was enacted in response to concerns about health risks to minors from such supplements. The statute defines covered products based on how they are labeled or marketed, and authorizes the Attorney General to seek injunctions against violators. The association argued that the law violates the First Amendment, is unconstitutionally vague, and is preempted by federal law.The United States District Court for the Southern District of New York denied the association’s motion for a preliminary injunction, finding that the association was unlikely to succeed on the merits of its claims, had not shown irreparable harm, and that the balance of equities and public interest weighed against granting relief. The District Court later dismissed the vagueness and preemption claims but allowed the First Amendment claim to proceed.On appeal, the United States Court of Appeals for the Second Circuit affirmed the District Court’s denial of a preliminary injunction. The Second Circuit held that the law satisfies intermediate scrutiny under the Central Hudson test for commercial speech, finding that New York has a substantial interest in protecting minors’ health, that the law directly advances that interest, and that it is not more extensive than necessary. The court also concluded that the age verification requirement does not unconstitutionally compel speech, that the statute is not unconstitutionally vague or overbroad, and that it is not preempted by federal law. The court further found that the association failed to demonstrate irreparable harm or that the public interest favored an injunction. The order denying the preliminary injunction was affirmed. View "Council for Responsible Nutrition v. James" on Justia Law

The City of New York brought suit in New York state court against several major oil companies and the American Petroleum Institute, alleging violations of New York’s consumer protection laws through deceptive advertising about the environmental impact of fossil fuels. The defendants removed the case to the United States District Court for the Southern District of New York, asserting multiple grounds for federal jurisdiction. The City moved to remand the case to state court, but the district court stayed proceedings pending the outcome of a similar case, Connecticut v. Exxon Mobil Corp., in the United States Court of Appeals for the Second Circuit.After the Second Circuit affirmed the remand in the Connecticut case, the district court in New York lifted the stay and allowed the parties to re-brief the remand motion in light of the new precedent. The City renewed its motion to remand and requested attorneys’ fees and costs under 28 U.S.C. § 1447(c). The oil companies continued to oppose remand, pressing several arguments that had already been rejected by numerous federal courts, including the Second Circuit in the Connecticut case. The district court granted the motion to remand and awarded the City attorneys’ fees and costs, but only for work related to five of the six grounds for removal, and only for work performed after the Connecticut decision.On appeal, the United States Court of Appeals for the Second Circuit reviewed only the award of attorneys’ fees and costs. The court held that the district court did not abuse its discretion in awarding fees and costs for the objectively unreasonable grounds for removal pressed after the legal landscape had shifted. The Second Circuit affirmed the district court’s order, concluding that the award was justified under the “unusual circumstances” exception recognized in Martin v. Franklin Capital Corp. View "The City of New York v. Exxon Mobil Corp." on Justia Law

Zesty Paws LLC and Health and Happiness (H&H) US International Inc. are competitors of Nutramax Laboratories, Inc. and Nutramax Laboratories Veterinary Sciences, Inc. in the pet supplements market. In July 2023, Zesty Paws began advertising itself as the "#1 brand of pet supplements" in the United States. Nutramax objected, asserting that its combined pet supplement sales exceeded those of Zesty Paws, making Zesty Paws’s advertising claims false. Zesty Paws responded by filing a lawsuit seeking a declaratory judgment that its advertising was not false or misleading, arguing that its claims were reasonably interpreted as comparing its aggregate sales to those of Nutramax’s individual product brands, such as Cosequin and Dasuquin, rather than to Nutramax as a whole.The United States District Court for the Southern District of New York granted Nutramax’s motion for a preliminary injunction, enjoining Zesty Paws from making the "#1 brand" claims. The district court found that Nutramax was likely to succeed on its false advertising claim under the Lanham Act, concluding that Nutramax is a brand and that its total sales exceeded those of Zesty Paws, rendering Zesty Paws’s advertising likely literally false. The court also found the claims material, likely to cause injury, and presumed irreparable harm under the Lanham Act.On appeal, the United States Court of Appeals for the Second Circuit reviewed the district court’s legal conclusions de novo and its decision to issue the injunction for abuse of discretion. The Second Circuit held that the district court erred by not properly applying the literal falsity standard, which requires that the challenged advertising be unambiguously false to a reasonable consumer. Because the district court did not adequately consider whether Zesty Paws’s interpretation was reasonable, the Second Circuit vacated the preliminary injunction and remanded for further proceedings. View "Zesty Paws LLC v. Nutramax Lab'ys, Inc." on Justia Law

Joanne Sudakow entered into a contract with CleanChoice Energy, Inc. to purchase electricity. The initial agreement, which she accepted in October 2021, did not include an arbitration clause and specified that New York would be the exclusive venue for any lawsuits. About three weeks after the contract was executed, CleanChoice sent Sudakow a “Welcome Package” containing new terms, including an arbitration provision, but Sudakow did not sign or otherwise expressly assent to these new terms. She continued to pay for her electricity service until she terminated it in August 2022.Sudakow later filed a putative class action in the United States District Court for the Southern District of New York, alleging breach of contract and deceptive business practices by CleanChoice. CleanChoice moved to compel arbitration based on the arbitration provision in the subsequently mailed terms. The district court denied the motion, finding that Sudakow did not have sufficient notice of the arbitration provision and had not assented to it.On appeal, the United States Court of Appeals for the Second Circuit reviewed the district court’s denial of the motion to compel arbitration de novo. The Second Circuit held that Sudakow was not bound by the arbitration provision because CleanChoice failed to provide clear and conspicuous notice of the new terms, and a reasonable person would not have understood that making payments constituted assent to those terms. The court also found that the language of the subsequent terms indicated that a signature was required for assent, which Sudakow never provided. Accordingly, the Second Circuit affirmed the district court’s judgment denying CleanChoice’s motion to compel arbitration. View "Sudakow v. CleanChoice Energy, Inc." on Justia Law

Plaintiffs filed a class action lawsuit against Kimberly-Clark Corporation, alleging that the company falsely advertised its bathroom wipes as flushable, leading consumers to pay a premium and causing plumbing damage. The parties reached a settlement where Kimberly-Clark agreed to pay up to $20 million in compensation to the class and up to $4 million in attorney’s fees. However, class members claimed less than $1 million. The district court approved the settlement under Rule 23(e) of the Federal Rules of Civil Procedure.The United States District Court for the Eastern District of New York approved the settlement, finding it fair, reasonable, and adequate. Objector Theodore H. Frank appealed, arguing that the settlement disproportionately benefited class counsel, who received most of the monetary recovery. Frank contended that the district court failed to properly assess the allocation of recovery between the class and class counsel.The United States Court of Appeals for the Second Circuit reviewed the case and agreed with Frank that the district court applied the wrong legal standard in its Rule 23(e) analysis. The appellate court clarified that Rule 23(e) requires courts to compare the proportion of total recovery allocated to the class with the proportion allocated to class counsel. The court vacated the district court’s order and judgment approving the settlement and remanded the case for further proceedings consistent with this opinion. The appellate court did not reach a conclusion on whether the settlement was fair but emphasized the need for a proper proportionality analysis. View "Kurtz v. Kimberly-Clark Corp." on Justia Law

Plaintiff Khalilah Suluki alleged that her mother, Khadijah Suluki, committed identity theft by opening several credit card accounts in her name without permission, including an account with Credit One Bank, N.A. Upon discovering the alleged fraud, Suluki disputed the account with Credit One and the three major national credit reporting agencies (CRAs). Credit One investigated the dispute multiple times and concluded that the account was legitimate and belonged to Suluki. Suluki filed suit, claiming that Credit One violated the Fair Credit Reporting Act (FCRA) by failing to conduct a reasonable investigation into her dispute.The United States District Court for the Southern District of New York granted summary judgment in favor of Credit One. The court concluded that, regardless of the reasonableness of Credit One's investigation, no reasonable investigation required by the statute would have yielded a different result. The court also found that Suluki did not present any triable issues of fact regarding whether Credit One willfully or negligently violated the FCRA to be liable for damages.The United States Court of Appeals for the Second Circuit reviewed the case and affirmed the district court's judgment. The appellate court agreed that there was a genuine issue of material fact regarding the accuracy of the information reported and the reasonableness of Credit One's investigations. However, it concluded that no reasonable investigation would have led Credit One to determine that the account was fraudulent or that the information was unverifiable. The court also determined that Suluki could not recover damages because she did not present evidence from which a reasonable jury could find that Credit One willfully or negligently violated the FCRA. Thus, the appellate court affirmed the district court's decision. View "Suluki v. Credit One Bank, NA" on Justia Law

The plaintiff, Detrina Solomon, a subscriber to a digital video streaming service operated by Flipps Media, Inc. (doing business as FITE), alleged that her rights under the Video Privacy Protection Act (VPPA) were violated when FITE disclosed her streaming history to Facebook (now Meta Platforms, Inc.). The disclosed information included the titles and URLs of the videos she watched and her Facebook ID (FID), which is linked to her Facebook profile.The United States District Court for the Eastern District of New York dismissed Solomon's complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure, concluding that she failed to plausibly allege that FITE disclosed her personally identifiable information as defined by the VPPA. The district court also denied her leave to amend the complaint, noting that she had multiple opportunities to propose amendments but did not do so.The United States Court of Appeals for the Second Circuit reviewed the case and affirmed the district court's decision. The appellate court adopted the "ordinary person" standard, which holds that personally identifiable information under the VPPA includes information that would allow an ordinary person to identify a consumer's video-watching habits. The court concluded that the information disclosed by FITE, consisting of video titles and FIDs, did not meet this standard because an ordinary person would not be able to use this information to identify Solomon's video-watching habits without additional effort or technological expertise.The court also found no abuse of discretion in the district court's denial of leave to amend, as Solomon's request was made only in a footnote and lacked any proposed amendments to address the deficiencies in her complaint. Thus, the judgment of the district court was affirmed. View "Solomon v. Flipps Media, Inc." on Justia Law

In spring 2020, Czigany Beck, a full-time student at Manhattan College, paid tuition and a comprehensive fee for the semester. Due to the COVID-19 pandemic, the college transitioned to remote learning in March 2020, and Beck received only 46% of her education in person. Beck filed a class action lawsuit against Manhattan College, claiming breach of implied contract and unjust enrichment for not refunding a portion of her tuition and fees.The United States District Court for the Southern District of New York dismissed Beck's claims. The court found that the college's statements were not specific enough to constitute a promise for in-person classes or access to on-campus facilities. The court also ruled that the comprehensive fee was nonrefundable based on the college's terms, and thus Beck's unjust enrichment claim for fees was barred. The court granted summary judgment to Manhattan College on Beck's remaining unjust enrichment claim for tuition, concluding that the college's switch to online instruction was reasonable given the pandemic.Beck appealed to the United States Court of Appeals for the Second Circuit, arguing that the district court's judgment should be reversed based on the decision in Rynasko v. New York University. Manhattan College countered with decisions from the New York Supreme Court's Appellate Division, which supported affirming the district court's judgment. The Second Circuit identified a split between federal and state courts on New York contract-law principles and certified the question to the New York Court of Appeals: whether New York law requires a specific promise to provide exclusively in-person learning to form an implied contract between a university and its students regarding tuition payments. The Second Circuit reserved decision on Beck's appeal pending the New York Court of Appeals' response. View "Beck v. Manhattan College" on Justia Law

Eight Black homeowners in New York City sued a lending institution and affiliated entities, alleging that the lender violated federal, state, and city antidiscrimination laws. They claimed the lender made mortgage refinancing loans with high default interest rates to Black and Latino individuals in poor neighborhoods who had no income, no assets, and low credit scores but high equity in their homes, and then foreclosed on the loans when the individuals defaulted. The United States District Court for the Eastern District of New York entered a final judgment awarding four homeowners $722,044 in compensatory damages and four others nominal damages.The lender appealed, arguing that the district court erred in three ways: by finding the homeowners' claims timely under the doctrine of equitable tolling and the discovery rule of accrual, in its instructions to the jury on disparate impact and disparate treatment theories of discrimination, and in holding that a release-of-claims provision in a loan modification agreement signed by two homeowners was unenforceable as a matter of law.The United States Court of Appeals for the Second Circuit reviewed the case. The court concluded that the district court did not abuse its discretion in holding that the homeowners' claims were timely under the doctrine of equitable tolling. The court also found no error in the district court's instructions to the jury on disparate impact and disparate treatment theories of discrimination. Finally, the court agreed that the release-of-claims provision in the loan modification agreement was unenforceable as a matter of law. Accordingly, the Second Circuit affirmed the judgment of the district court. View "Saint-Jean v. Emigrant Mortg. Co., Inc." on Justia Law

The Second Circuit reversed and remanded the district court's dismissal of plaintiff's lemon law suit based on lack of subject matter jurisdiction. Plaintiff filed suit under the Magnuson‐Moss Warranty—Federal Trade Commission Act (MMWA), 15 U.S.C. 2301 et seq., and New York State law, contending that the "certified pre-owned" BMW she purchased from defendant was incurably defective. The Second Circuit held that the value of plaintiff's MMWA claims, as pled, exceeded the $50,000 minimum amount in controversy requirement. In this case, although plaintiff could neither add punitive damages under the MMWA nor rely on the value of her state law claims to meet the jurisdictional threshold, plaintiff's rescission claim supplied a sufficient basis for subject matter jurisdiction. View "Pyskaty v. Wide World of Cars, LLC" on Justia Law