Justia Consumer Law Opinion Summaries

James Hulce, on behalf of himself and others similarly situated, filed a putative class action suit against Zipongo Inc., doing business as Foodsmart. Hulce alleged that Foodsmart violated the Telephone Consumer Protection Act (TCPA) by making unsolicited calls and sending text messages to him, despite his number being on the national do-not-call registry. Foodsmart's communications were about free nutritional services offered through Hulce's state and Medicaid-funded healthcare plan, Chorus Community Healthcare Plans (CCHP).The United States District Court for the Eastern District of Wisconsin granted Foodsmart's motion for summary judgment. The court found that the calls and messages did not constitute "telephone solicitations" under the TCPA because they were not made for the purpose of encouraging the purchase of services. Instead, the communications were about services that were free to Hulce, with Foodsmart billing CCHP directly.The United States Court of Appeals for the Seventh Circuit reviewed the case de novo. The court affirmed the district court's decision, holding that the calls and messages did not fall within the definition of "telephone solicitation" under the TCPA. The court concluded that "telephone solicitation" requires the initiation of a call or message with the purpose of persuading or urging someone to pay for a service. Since Foodsmart's communications were about free services and did not encourage Hulce to make a purchase, they did not meet this definition. The court emphasized that the purpose of the call must be to persuade someone who makes the purchasing decision to buy the services, which was not the case here. View "Hulce v Zipongo Inc." on Justia Law

Eido Hussam Al-Nahhas, an Illinois resident, took out four loans from Rosebud Lending LZO, operating as ZocaLoans, with interest rates up to nearly 700%, far exceeding Illinois law limits. Al-Nahhas alleged that ZocaLoans was a front for two private equity firms, 777 Partners, LLC, and Tactical Marketing Partners, LLC, to evade state usury laws by claiming tribal sovereign immunity through the Rosebud Sioux Tribe. He sued ZocaLoans and the firms for violating Illinois usury statutes and the federal Racketeer Influence and Corrupt Organizations Act.The defendants participated in litigation for fourteen months, including filing an answer, engaging in discovery, and attending status conferences. They later sought to compel arbitration based on an arbitration provision in the loan agreements. The United States District Court for the Northern District of Illinois denied the motion, finding that the defendants had waived their right to compel arbitration by participating in litigation.The United States Court of Appeals for the Seventh Circuit reviewed the case. The court affirmed the district court's decision, holding that the defendants waived their right to arbitrate through their litigation conduct. The court also found that the case was not moot despite the settlement between Al-Nahhas and ZocaLoans, as punitive damages were still at issue. The court granted the parties' motions to file documents under seal. View "Hussam Al-Nahhas v 777 Partners LLC" on Justia Law

Michael Wood incurred credit card debt with Pentagon Federal Credit Union (PenFed) and defaulted. PenFed reported the debt to credit reporting agencies, but Wood disputed the debt in writing. PenFed investigated and concluded the debt was valid. Later, Security Credit Services, LLC (SCS) purchased Wood's debt from PenFed and reported it as delinquent to a credit reporting agency without noting Wood's dispute. Wood alleged that SCS violated the Fair Debt Collection Practices Act (FDCPA) by failing to communicate that he disputed the debt.The United States District Court for the Northern District of Illinois granted summary judgment in favor of SCS. The court found that Wood had standing to sue but concluded that PenFed reasonably interpreted Wood's lack of response to its letter as an indication that he no longer disputed the debt. Therefore, the court determined that SCS did not know and should not have known that Wood still disputed the debt.The United States Court of Appeals for the Seventh Circuit reviewed the case. The court held that Wood had standing because the harm he alleged was analogous to defamation, a recognized common law injury. The court also found that there was a genuine issue of material fact regarding whether SCS should have known about Wood's dispute. Specifically, the court noted conflicting evidence about SCS's understanding of what constitutes a disputed account and whether SCS shared PenFed's interpretation that Wood's silence meant he no longer disputed the debt. The court concluded that SCS's failure to communicate Wood's dispute could be considered negligent under the FDCPA. Consequently, the Seventh Circuit reversed the district court's summary judgment and remanded the case for further proceedings. View "Wood v. Security Credit Services, LLC" on Justia Law

Under the Telephone Consumer Protection Act (TCPA), an effective consent to automated calls is one that relates to the same subject matter covered by the challenged messages. Akira, a retailer, engaged Opt for text-message marketing services. Akira gathered 20,000 customers’ cell phone numbers for Opt’s messaging platform. Akira customers could join its “Text Club” by providing their cell phone numbers to Akira representatives inside stores, by texting to an opt-in number, or by completing an “Opt In Card,” stating that, “Information provided to Akira is used solely for providing you with exclusive information or special offers. Akira will never sell your information or use it for any other purpose.” In 2009-2011, Akira sent about 60 text messages advertising store promotions, events, contests, and sales to those customers, including Blow. In a purported class action, seeking $1.8 billion in damages, Blow alleged that Akira violated the TCPA, 47 U.S.C. 227, and the Illinois Consumer Fraud Act by using an automatic telephone dialing system to make calls without the recipient’s express consent. The Seventh Circuit affirmed summary judgment for Akira. Blow’s attempt to parse her consent to accept some promotional information from Akira while rejecting “mass marketing” texts construed “consent” too narrowly. The court declined to award sanctions for frivolous filings. View "Blow v. Bijora, Inc." on Justia Law

Medical service providers referred plaintiffs’ debts to defendants, who sent letters, demanding payment of the principal plus 5% interest. Plaintiffs claimed that this violated 15 U.S.C. 1692g(a)(1), the Fair Debt Collection Practices Act, which states that debt collectors must specify the amount of the debt, and that Wisconsin law provides for interest (absent a contractual provision) only if a debt has been reduced to judgment, and any pre-judgment request for interest is forbidden. The Seventh Circuit affirmed summary judgment for the defendants. Wis. Stat. 426.104(4)(b), the “safe harbor” for people who act in ways approved by the Administrator of Wisconsin’s Department of Financial Institutions applies because the defendants sent the Administrator a letter asking whether they were entitled to add 5% interest to debts for the provision of medical services. The Administrator’s silence for 60 days resulted in deemed approval. The defendants were entitled to demand payment of both principal and interest, so the letters did not violate 15 U.S.C. 1692e(2)(A), which prohibits false representations about the character, amount, or legal status of a debt. The federal Act otherwise allows debt collectors to add interest when permitted by law. Plaintiffs’ debts arose under state contract law and are subject to the safe harbor provision. View "Aker v. Collection Associates, LTD." on Justia Law

Mains executed a mortgage on his home with WAMU in 2006 and made timely payments for about two years. WAMU failed in 2008; the FDIC became its receiver. Chase purchased Mains’s mortgage. Mains fell behind on his payments. He requested loan modifications from Chase three times and discontinued making payments in March 2009. Chase sent Mains a default and acceleration notice in June. In April 2010, Citibank (Chase’s successor) filed for foreclosure in Clark County, Indiana. That court granted Citibank summary judgment in 2013. Mains unsuccessfully appealed, contending that Citibank had committed fraud because it was not the real party in interest but instructed its employees fraudulently to sign documents. In 2015, Mains filed a “rambling, 90‐page” federal court complaint, alleging that he had discovered new evidence that he could not have presented to the state court—undisclosed consent judgments, parties in interest, and evidence of robo‐signing. He claimed to have rescinded his mortgage. He alleged state law claims and violations of: the Real Estate Settlement Procedures Act, 12 U.S.C. 2601; the Truth in Lending Act, 15 U.S.C. 1631; the Fair Debt Collection Practices Act, 15 U.S.C. 1692; and the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961. The district court found that a decision for Mains would effectively nullify the state‐court judgment and dismissed for lack of subject matter jurisdiction under the Rooker‐Feldman doctrine. The Seventh Circuit agreed, but modified so that the dismissal was without prejudice. View "Mains v. Citibank, N.A." on Justia Law

Portfolio alleges that in 1993, Pantoja incurred a debt for annual fees, an activation fee, and late fees for a Capital One credit card that he applied for but never actually used. In 2013, long after the statute of limitations had run, Portfolio, having purchased bought Capital One’s rights to this old debt, sent Pantoja a dunning letter trying to collect. The letter claimed that Patoja owed $1903 and offered several “settlement options.” The Fair Debt Collection Practices Act, 15 U.S.C. 1692e, prohibits collectors of consumer debts from using “any false, deceptive, or misleading representation or means in connection with the collection of any debt.” The district court granted summary judgment in favor of Pantoja on his claim under section 1692e. The Seventh Circuit affirmed, agreeing that the dunning letter was deceptive or misleading because it did not tell the consumer that Portfolio could not sue on the time‐barred debt and it did not tell the consumer that if he made, or even just agreed to make, a partial payment on the debt, he could restart the clock on the long‐expired statute of limitations, bringing a long‐dead debt back to life. View "Pantoja v. Portfolio Recovery Associates, LLC" on Justia Law

The law firm’s contract with XO Communications provided that the contract would be automatically renewed “for a similar term and at the same rates.” A customer who did not want to renew was required to notify XO at least 30 days before the expiration date in the contract. The contract provided that if the customer terminated the contract after the deadline it would have to pay a termination fee. XO’s monthly invoices contain a prominent reminder of the automatic renewal. After its third renewal, the firm wanted out of the contract because it was moving to a location not serviced by XO. The firm, not wanting to pay the $9,000 termination fee, filed a purported class action, alleging that XO’s monthly reminders should have included the date of the automatic renewal, or that XO should have otherwise notified the plaintiff of the renewal date. The Seventh Circuit affirmed dismissal, noting that: "It’s not as if the plaintiff were some hapless consumer bamboozled by a huge company…. Had this substantial enterprise kept track of the date of its contract with XO (more precisely the date of its latest renewal of the contract), it would not have incurred the modest termination fee." View "Cafferty, Clobes, Meriwether & Sprengel, LLP v. XO Communications Services, LLC" on Justia Law

The district court certified eight classes, consisting of persons in Illinois and Missouri who take eye drops manufactured by six pharmaceutical companies for treatment of glaucoma. Plaintiffs claimed that the defendants’ eye drops are unnecessarily large and wasteful, in violation of the Illinois Consumer Fraud Act, 815 ILCS 505/1, and the Missouri Merchandising Practices Act, Mo. Rev. Stat. 407.010, so that the price of the eye drops is excessive and that the large eye drops have a higher risk of side effects. There was no claim that members of the class have experienced side effects or have been harmed because they ran out of them early. The Seventh Circuit vacated with instructions to dismiss. The court noted possible legitimate reasons for large drops, the absence of any misrepresentation or collusion, and that defendants’ large eye drops have been approved by the FDA for safety and efficacy. “You cannot sue a company and argue only ‘it could do better by us,’” nor can one bring a suit in federal court without pleading that one has been injured. The plaintiffs allege only “disappointment.” View "Eike v. Allergan, Inc." on Justia Law

Until 1997, Illinois residents could only purchase power from a public utility, with rates regulated by the ICC. The Electric Service Customer Choice and Rate Relief Law allows residents to buy electricity from their local public utility, another utility, or an Alternative Retail Electric Supplier (ARES). The ICC was not given rate-making authority over ARESs, but was given oversight responsibilities. The Law did not explicitly provide a mechanism for recovering damages from an ARES related to rates. Zahn purchased electricity from NAPG, after receiving an offer of a “New Customer Rate” of $.0499 per kilowatt hour in her first month, followed by a “market-based variable rate.” Zahn never received NAPG’s “New Customer Rate.” NAPG charged her $.0599 per kilowatt hour for the first two months, followed by a rate higher than Zahn’s local public utility charged. Zahn filed a class-action complaint, claiming violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, breach of contract, and unjust enrichment. The court dismissed for lack of subject-matter jurisdiction, or for failure to state a claim. After the Illinois Supreme Court answered a certified question, stating that the ICC does not have exclusive jurisdiction to hear Zahn’s claims, the Seventh Circuit reversed. The district court had jurisdiction and Zahn alleged facts that, if true, could constitute a breach of contract or a deceptive business practice. View "Zahn v. North American Power & Gas, LLC" on Justia Law