Justia Consumer Law Opinion SummariesArticles Posted in U.S. Supreme Court
Midland Funding, LLC v. Johnson
Filing a bankruptcy proof of claim that is obviously time-barred is not a false, deceptive, misleading, unfair, or unconscionable practice under the Fair Debt Collection Practices Act (FDCPA).Midland filed a proof of claim in Johnson’s Chapter 13 bankruptcy case, asserting a credit-card debt and noting that the last time any charge appeared on Johnson’s account was more than 10 years ago. The Alabama limitations period is six years. The Bankruptcy Court disallowed the claim. Johnson filed suit under the FDCPA, 15 U.S.C. 1692. The Supreme Court reversed the Eleventh Circuit. The Bankruptcy Code defines “claim” as a “right to payment,” 11 U.S.C. 101(5)(A); state law usually determines whether a person has such a right. Alabama law provides that a creditor has the right to payment of a debt even after the limitations period has expired. The word “enforceable” does not appear in the Code’s definition. The law treats unenforceability of a claim due to the expiration of the limitations period as an affirmative defense. There is nothing misleading or deceptive in filing a proof of claim that follows the Code’s similar system. Concerns that a consumer might unwittingly repay a time-barred debt have diminished force in a Chapter 13 bankruptcy, where: the consumer initiates the proceeding; a knowledgeable trustee is available; procedural rules guide evaluation of claims; and the claims resolution process is “less unnerving” than facing a collection lawsuit. View "Midland Funding, LLC v. Johnson" on Justia Law
Expressions Hair Design v. Schneiderman
Businesses challenged New York General Business Law section 518, which provides that “[n]o seller in any sales transaction may impose a surcharge on a holder who elects to use a credit card in lieu of payment by cash, check, or similar means,” as violating the First Amendment by regulating how they communicate their prices, and as unconstitutionally vague. The Second Circuit vacated a judgment in favor of the businesses, reasoning that in the context of singlesticker pricing—where merchants post one price and would like to charge more to customers who pay by credit card—the law required that the sticker price be the same as the price charged to credit card users. In that context, the law regulated a relationship between two prices: conduct, not speech. The Supreme Court vacated, limiting its review to single-sticker pricing. Section 518 regulates speech. It is not a typical price regulation, which simply regulates the amount a store can collect. The law tells merchants nothing about the amount they may collect from a cash or credit card payer, but regulates how sellers may communicate their prices. Section 518 is not vague as applied to the businesses; it bans the single-sticker pricing they wish to employ, and “a plaintiff whose speech is clearly proscribed cannot raise a successful vagueness claim.” View "Expressions Hair Design v. Schneiderman" on Justia Law
Sheriff v. Gillie
The Fair Debt Collection Practices Act prohibits “abusive debt collection practices,” 15 U.S.C. 1692(a)–(d), barring “false, deceptive, or misleading representation[s].” The definition of “debt collectors,” excludes “any officer . . . of . . . any State to the extent that collecting . . . any debt is in the performance of his official duties.” Under Ohio law, overdue debts owed to state-owned agencies and instrumentalities are certified to the State’s Attorney General, who may appoint, as independent contractors, private attorneys, as “special counsel” to act on the Attorney General’s behalf. Special counsel must use the Attorney General’s letterhead in communicating with debtors. Attorneys appointed as special counsel, sent debt collection letters on the Attorney General’s letterhead to debtors, with signature blocks containing the name and address of the signatory as well as the designation “special” or “outside” counsel to the Attorney General. Each letter identified the sender as a debt collector seeking payment for debts to a state institution. Debtors filed a putative class action, alleging violation of FDCPA. The district court granted defendants summary judgment. The Sixth Circuit vacated, concluding that special counsel, as independent contractors, are not entitled to the FDCPA’s state-officer exemption. The Supreme Court reversed. Even if special counsel are not “state officers” under the Act, their use of the Attorney General’s letterhead does not violate Section 1692e. The letterhead identifies the principal—Ohio’s Attorney General—and the signature block names the agent—a private lawyer. A debtor’s impression that a letter from special counsel is a letter from the Attorney General’s Office is “scarcely inaccurate.” View "Sheriff v. Gillie" on Justia Law
Spokeo, Inc. v. Robins
Spokeo operates a “people search engine,” which searches a wide spectrum of databases to gather and provide personal information about individuals to various users, including prospective employers. After Robins discovered that his Spokeo-generated profile contained inaccurate information, he filed a class-action complaint alleging that the company willfully failed to comply with the Fair Credit Reporting Act of 1970, 15 U.S.C. 1681e(b). The district court dismissed. The Ninth Circuit reversed, reasoning that Robins’ “personal interests in the handling of his credit information are individualized.” The Supreme Court vacated. A plaintiff invoking federal jurisdiction bears the burden of establishing the “irreducible constitutional minimum” of standing by demonstrating an injury in fact, fairly traceable to the defendant’s challenged conduct, likely to be redressed by a favorable judicial decision. A plaintiff must show that he suffered “an invasion of a legally protected interest” that is “concrete and particularized” and “actual or imminent, not conjectural or hypothetical.” The Ninth Circuit’ focused on particularization: the requirement that an injury “affect the plaintiff in a personal and individual way,” but an injury in fact must be both concrete and particularized. Concreteness requires an injury to actually exist; a plaintiff does not automatically satisfy the injury-in-fact requirement whenever a statute grants a right and purports to authorize a suit to vindicate it. The violation of a statutory procedural right granted can be sufficient in some circumstances to constitute injury in fact, so that a plaintiff need not allege additional harm beyond the one identified by Congress. The Court did not rule on the correctness of the Ninth Circuit’s ultimate conclusion, but stated that Robins cannot satisfy Article III by alleging a bare procedural violation. View "Spokeo, Inc. v. Robins" on Justia Law
Maracich v. Spears
Using FOIA requests directed to the South Carolina DMV, attorneys obtained names and addresses, then sent letters to more than 34,000 individuals, seeking clients for a lawsuit against car dealerships for violation of a state law. The letters were headed “ADVERTISING MATERIAL,” explained the lawsuit, and asked recipients to return an enclosed card to participate in the case. Recipients sued the attorneys, alleging violation of the Driver’s Privacy Protection Act of 1994 (DPPA), 18 U.S.C. 2721(b)(4), by obtaining, disclosing, and using personal information from motor vehicle records for bulk solicitation without express consent. The district court dismissed, based on a DPPA exception permitting disclosure of personal information "for use in connection with any civil, criminal, administrative, or arbitral proceeding," including "investigation in anticipation of litigation." The Fourth Circuit affirmed. The Supreme Court vacated and remanded. An attorney’s solicitation of clients is not a permissible purpose under the (b)(4) litigation exception. DPPA’s purpose of protecting privacy in motor vehicle records would be substantially undermined by application of the (b)(4) exception to the general ban on disclosure of personal information and ban on release of highly restricted personal information in cases there is any connection between protected information and a potential legal dispute. The Court noted examples of permissible litigation uses: service of process, investigation in anticipation of litigation, and execution or enforcement of judgments and orders. All involve an attorney’s conduct as an officer of the court, not a commercial actor, seeking a business transaction. A contrary reading of (b)(4) could affect interpretation of the (b)(6) exception, which allows an insurer and certain others to obtain DMV information for use in connection with underwriting, and the (b)(10) exception, which permits disclosure and use of personal information in connection with operation of private tollroads. View "Maracich v. Spears" on Justia Law
Marx v. General Revenue Corp.
Marx alleged that GRC violated the Fair Debt Collection Practices Act (FDCPA) by harassing and falsely threatening her in order to collect on a debt. The district court ruled against Marx and awarded GRC costs under FRCP 54(d)(1), which gives courts discretion to award costs to prevailing defendants unless "a federal statute ... provides otherwise." Marx unsuccessfully argued that the court’s discretion under Rule 54(d)(1) was displaced by the FDCPA provision, 15 U.S.C. 1692k(a)(3), which provides that “[o]n a finding by the court that an action under this section was brought in bad faith and for the purpose of harassment, the court may award to the defendant attorney’s fees reasonable in relation to the work expended and costs.” The Tenth Circuit and Supreme Court affirmed. Section 1692k(a)(3) is not contrary to, and does not displace district court discretion to award costs under, Rule 54(d)(1); its allowance of costs does not create a negative implication that costs are unavailable in any other circumstances. The context of the statute indicates that Congress was simply confirming a background presumption that courts may award to defendants attorney’s fees and costs when the plaintiff brings an action in bad faith. Because Marx did not bring this suit in bad faith, the specific provision is not applicable. View "Marx v. General Revenue Corp." on Justia Law
Mims v. Arrow Financial Services, LLC
Petitioner filed a damages action in Federal District Court, alleging that respondent, seeking to collect a debt, violated the Telephone Consumer Protection Act of 1991 (TCPA), 47 U.S.C. 227, by repeatedly using an automatic telephone dialing system or prerecorded or artificial voice to call petitioner's cellular phone without his consent. At issue was whether Congress' provision for private actions to enforce the TCPA rendered state courts the exclusive arbiters of such actions. The Court found no convincing reason to read into the TCPA's permissive grant of jurisdiction to state courts any barrier to the U.S. district courts' exercise of the general federal-question jurisdiction they have possessed since 1875. Therefore, the Court held that federal and state courts have concurrent jurisdiction over private suits arising under the TCPA. View "Mims v. Arrow Financial Services, LLC" on Justia Law
CompuCredit Corp. v. Greenwood
Although respondents' credit card agreement required their claims to be resolved by binding arbitration, they filed a lawsuit against petitioner and a division of petitioner bank, alleging, inter alia, violations of the Credit Repair Organizations Act (CROA), 15 U.S.C. 1679 et seq. At issue was whether the CROA precluded enforcement of an arbitration agreement in a lawsuit alleging violations of the Act. The Court held that because the CROA was silent on whether claims under the Act could proceed in an arbitrable forum, the Federal Arbitration Act (FAA), 9 U.S.C. 1 et seq., required the arbitration agreement to be enforced according to its terms. View "CompuCredit Corp. v. Greenwood" on Justia Law
J. McIntyre Machinery, Ltd. v. Nicastro
This case arose from a products-liability suit filed in New Jersey state court where Robert Nicastro seriously injured his hand while using a metal-shearing machine manufactured by defendant. The accident occurred in New Jersey, but the machine was manufactured in England, where defendant was incorporated and operated. At issue was whether the New Jersey courts had jurisdiction over defendant, notwithstanding the fact that the company at no time either marketed goods in the State or shipped them there. The Court held that due process protected defendant's right not to be coerced except by lawful judicial power. As a general rule, the exercise of judicial power was not lawful unless defendant "purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." The Court held that there could be exceptions, say, for instance, in cases involving an intentional tort, but the general rule was applicable in this products-liability case, and the so-called "stream-of-commerce" doctrine could not displace it. Therefore, the Court held that the facts did not demonstrate that defendant purposefully availed itself of the New Jersey market and New Jersey was without power to adjudge the rights and liabilities of defendant where its exercise of jurisdiction would violate due process. Accordingly, the judgment of the New Jersey Supreme Court was reversed.
Goodyear Dunlop Tires Operations, S. A., et al. v. Brown
Respondents, North Carolina residents whose sons died in a bus accident outside Paris, France, filed a suit for wrongful death damages in North Carolina state court alleging that the accident was caused by tire failure. At issue was whether foreign subsidiaries of a United States parent corporation were amenable to suit in state court on claims unrelated to any activity of the subsidiaries in the forum state. The Court held that, because the episode-in-suit, the bus accident, occurred in France, and the tire alleged to have caused the accident was manufactured and sold abroad, North Carolina courts lacked specific jurisdiction to adjudicate the controversy. The Court also held that a connection so limited between the forum and the foreign corporation was an inadequate basis for the exercise of general jurisdiction where such a connection did not establish the "continuous and systematic" affiliation necessary to empower North Carolina courts to entertain claims unrelated to the foreign corporation's contacts with the State. Therefore, the Court held that petitioners were not amendable to suit in North Carolina and the judgment of the North Carolina Court of Appeals was reversed.