Justia Consumer Law Opinion Summaries

The Family Smoking Prevention and Tobacco Control Act requires manufacturers of new tobacco products to obtain authorization from the United States Food & Drug Administration (FDA) prior to marketing their products. In reviewing a manufacturer’s Premarket Tobacco Product Application, FDA must determine that the marketing of the product is “appropriate for the protection of the public health.” Section  910(c)(4), 123 Stat. at 1810. The agency denied Avail Vapor LLC’s application for its flavored electronic cigarettes, chiefly on the grounds that its products posed a serious risk to youth without enough offsetting benefits to adults.   The Fourth Circuit upheld the FDA’s decision denying Avail’s application. The court explained that under the Tobacco Control Act (TCA) the FDA has the daunting task of ensuring that another generation of Americans does not become addicted to nicotine and tobacco products. The TCA gives FDA the flexibility to determine whether marketing of a new tobacco product is appropriate for the protection of public health, taking into account evolving science and an everchanging market. FDA made the determination that Avail’s flavored ENDS products, seeking in all respects to mimic those sweet treats to which youth are particularly attracted, pose a substantial risk of youth addiction without enough offsetting benefits to adult smokers. FDA could not allow young adults to perceive e-cigarettes as another Baby Ruth or Milky Way, only to find themselves in the grip of a surreptitious nicotine addiction. Substantial evidence supports the assertion that “[t]here is an epidemic of youth use of e-cigarette products, and flavored products like petitioners’ are at the center of that problem.” View "Avail Vapor, LLC v. FDA" on Justia Law

Defendants are The Source of Public Data, L.P.; ShadowSoft, Inc.; HarlingtonStraker Studio, Inc.; and D.B. (collectively “Public Data”). Plaintiffs’ allegation that all Defendants are alter egos jointly responsible for any Fair Credit Reporting Act (“FCRA”) liability arising from the business activities conducted on PublicData.com. Public Data sought Section 230(c)(1) protection against four claims brought against it for violating the FCRA. The district court agreed that the claims were precluded by Section 230(c)(1). Plaintiffs appealed, arguing that Section 230(c)(1) does not apply.   The Fourth Circuit reversed the district court’s ruling. THe court explained that Section 230(c)(1) provides protection to interactive computer services. But it does not insulate a company from liability for all conduct that happens to be transmitted through the internet. Instead, protection under Section 230(c)(1) extends only to bar certain claims, in specific circumstances, against particular types of parties. Here, the district court erred by finding that Section 230(c)(1) barred all counts asserted against Public Data. To the contrary, on the facts as alleged, it does not apply to any of them. Counts One and Three are not barred because they do not seek to hold Public Data liable as a publisher under the provision. Counts Two and Four are not barred because Public Data is itself an information content provider for the information relevant to those counts. View "Tyrone Henderson, Sr. v. The Source for Public Data, L.P." on Justia Law

Appellants sought to develop thousands of acres of land in Belize, which they marketed as a luxury resort called “Sanctuary Belize.” In their sales pitch to U.S. consumers, many promises were made but not kept. In 2018, the FTC shut this down, calling Sanctuary Belize Enterprise (SBE) a “scam,” and alleging violations of the Federal Trade Commission Act and the Telemarketing Sales Rule for making misrepresentations to consumers. The FTC also brought contempt charges against Appellant stemming from past judgments against him. After an extensive bench trial, the district court found ample evidence of violative and contumacious conduct, ultimately ruling in the FTC’s favor.   Appellants appealed and the Fourth Circuit affirmed in large part, the one exception being vacating the equitable monetary judgments in accordance with the Supreme Court’s decision in AMG Capital Management, LLC v. Federal Trade Commission. The court explained that the various permanent injunctions—including the prohibition of SBE individuals and entities from engaging in further misrepresentations—are appropriately tailored to prevent similar scams in the future. Further, the court held that the district court in Maryland was within its discretion to keep the case because the FTC’s allegations in the Sanctuary Belize case rested on the same facts as the telemarketing contempt charges stemming from AmeriDebt, which was litigated in Maryland and which no party had asked to transfer. View "Federal Trade Commission v. Andris Pukke" on Justia Law

Plaintiffs were injured in unspecified accidents and treated by South Carolina health care providers. Seeking to pursue personal injury lawsuits, Plaintiffs requested their medical records from the relevant providers. Those records—and accompanying invoices—were supplied by defendants Ciox Health, LLC and ScanSTAT Technologies LLC, “information management companies” that retrieve medical records from health care providers and transmit them to requesting patients or patient representatives. Claiming the invoiced fees were too high or otherwise illegal, Plaintiffs filed a putative class action against Ciox and ScanSTAT in federal district court.   The district court dismissed the complaint and the Fourth Circuit affirmed. The court explained that South Carolina law gives patients a right to obtain copies of their medical records, while capping the fees “a physician, or other owner” may bill for providing them. However, the statutory obligations at issue apply only to physicians and other owners of medical records, not medical records companies. View "Tammie Thompson v. Ciox Health, LLC" on Justia Law

While working for a company that makes skin grafts, Plaintiff caught wind of a kickback scheme operating in a Veterans Administration hospital. The scheme involved the sale of skin grafts to the VA by commission-based salespeople who were paid based on how much they sold. If true, that would likely violate the Anti-Kickback Statute, 42 U.S.C. Section 1320a-7b, which would then make each commission-induced sale a violation of the False Claims Act, 31 U.S.C. Section 3729 et seq. So Plaintiff brought a qui tam suit as a False Claims Act relator on behalf of the United States government and an analogous state-law claim under North Carolina law.   After the United States declined to intervene in the suit, Plaintiff prosecuted it. Because he used conclusory language in his original Complaint, the district court dismissed the Complaint with prejudice for failure to state a fraud claim with particularity under Federal Rule of Civil Procedure 9(b).   The Fourth Circuit agreed with the district court’s dismissal of the original Complaint for a lack of particularity. Given that it is largely made up of conclusory allegations, the original Complaint may even have failed Rule 8’s lower standard of plausibility. The court also found that the district court did not abuse its discretion in denying leave to amend for bad faith. Although the court affirmed the district court’s decision, because the district court did not take jurisdiction over the state-law claim, the court modified the decision to clarify that the state-law claim should be dismissed without prejudice. View "US ex rel. Haile Nicholson v. Medcom Carolinas, Inc." on Justia Law

Plaintiff entered into a reverse mortgage agreement with Reverse Mortgage Solutions, Inc. (“RMS”). In violation of the Truth in Lending Act (“TILA”), RMS failed to disclose certain information at closing. Section 1635(b) of TILA imposes certain obligations on a creditor, like RMS, after it receives a notice of rescission, but RMS did not comply with those obligations either. Plaintiff sued RMS for, among other things, rescission and failing to honor her rescission rights under TILA.   A jury returned a verdict for RMS, finding that RMS did not fail to honor Plaintiff’s attempt to rescind the loan. However, the district court issued judgment as a matter of law for Plaintiff holding that RMS violated Section 1635(b)’s requirements. It also held that Plaintiff was not required to tender or return, the loan proceeds to RMS.   The Fourth Circuit vacated the district court’s judgment as a matter of law and remanded. The court explained that the district court erred in granting judgment as a matter of law to Plaintiff on the Rescission Count. In response to RMS’s failure to voluntarily unwind the loan or otherwise respond to that notice as required by Section 1635(b), Plaintiff had a right to sue RMS to obtain rescission relief under TILA. But neither Section 1635(b) nor any other provision of TILA provides that the failure of a lender to voluntarily unwind a loan or respond to a notice of intent to rescind allows a borrower to avoid tendering the loan proceeds as part of rescission. View "Teresa Lavis v. Reverse Mortgage Solutions Inc" on Justia Law

Defendants, VSL Pharmaceuticals, Inc. and Alfasigma USA, Inc., appealed the district court’s order finding them in contempt of the court’s permanent injunction. The injunction prohibited Defendants from suggesting in promotional materials that their probiotic contained the same formulation as one marketed by Claudio De Simone and ExeGi Pharma, LLC.   On appeal, Defendants (1) their statements weren’t contemptuous, (2) their statements didn’t harm Plaintiffs (3) the district court improperly awarded attorneys’ fees, and (4) VSL and Alfasigma shouldn’t be jointly liable for the fee award. The Fourth Circuit affirmed the district court’s order.   The court explained a party moving for civil contempt must establish four elements by clear and convincing evidence, relevant here are the last two: that the alleged contemnor by its conduct violated the terms of the decree, and had knowledge (at least constructive knowledge) of such violations; and that the movant suffered harm as a result.   Defendants emphasized that consumers couldn’t access the Letter from Alfasigma’s home page. That’s true, as De Simone and ExeGi showed only that consumers could access the Letter by searching “vsl3 litigation” on Google. But the way in which consumers could access the Letter is irrelevant to Alfasigma’s constructive knowledge that it remained on the website.   Further, under the Lanham Act, “commercial advertising or promotion” is “commercial speech . . . for the purpose of influencing consumers to buy goods or services.” Here, Defendants’ press release’s final sentence emphasizes VSL#3’s commercial availability, so the district court reasonably viewed the message as an attempt to realize economic gain. View "Claudio De Simone v. VSL Pharmaceuticals, Inc." on Justia Law

Plaintiffs, a group of drivers, sued Defendants, a group of personal injury lawyers, after Defendants sought and obtained car accident reports from North Carolina law enforcement agencies and private data brokers and then sent Plaintiffs unsolicited attorney advertising material. Plaintiffs' claims were brought under the Driver’s Privacy Protection Act (“DPPA”).The district court held that, although Plaintiffs have standing to bring their claims, the claim failed on the merits.The Fourth Circuit affirmed. Plaintiffs have a legally recognizable privacy interest in the accident reports. However, Defendant's conduct in obtaining the records did not constitute a violation of DPPA. Defendants obtained Plaintiffs’ personal information from the accident reports; however, Plaintiffs failed to preserve the argument that those accident reports are“motor vehicle records under DPPA. View "William Garey v. James S. Farrin, P.C." on Justia Law

Plaintiff, a North Carolina attorney, believed he uncovered fraud perpetrated by forty-five adult care homes upon the United States and the State of North Carolina. According to Plaintiff, Defendants violated a North Carolina Medicaid billing regulation, and did so knowingly, as evidenced by the clarity of the regulation and by the fact Defendants did not ask the regulators for advice. The district court granted Defendants’ motion for summary judgment, holding that Plaintiff failed to proffer evidence showing “that the bills submitted by Defendants to North Carolina Medicaid for PCS reimbursement were materially false or made with the requisite scienter.”   The Fourth Circuit affirmed the district court’s decision. The court held that no reasonable juror could find Defendants acted with the requisite scienter on Plaintiff’s evidence. The court explained that The False Claims Act (“FCA”) imposes civil liability on “any person who . . . knowingly presents, or causes to be presented” to the Federal Government “a false or fraudulent claim for payment or approval.” The Act’s scienter requirement defines “knowingly” to mean that a person “has actual knowledge of the information,” “acts in deliberate ignorance of the truth or falsity of the information,” or “acts in reckless disregard of the truth or falsity of the information.” Here, Plaintiff failed to identify any evidence that Defendants knew, or even suspected, that their interpretation of the relevant policy and the guidance from NC Medicaid was incorrect. Nor did Plaintiff identify any evidence that Defendants attempted to avoid discovering how the regulation applied to adult care homes. View "US ex rel. Stephen Gugenheim v. Meridian Senior Living, LLC" on Justia Law

Following a data breach targeting servers owned by Defendant, Plaintiffs alleged that Defendant violated federal securities laws by omitting material information about data vulnerabilities in their public statements.The Fourth Circuit affirmed the district court’s dismissal of the complaint, finding that the investors did not adequately allege that any of Defendant’s statements were false or misleading when made.The court explained that to state a claim under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, a plaintiff must first allege a “material misrepresentation or omission by the defendant.” However, not all material omissions give rise to a cause of action. Here, Plaintiffs focus on statements about the importance of protecting customer data; privacy statements on Defendant's website; and cybersecurity-related risk disclosures. The court found that Plaintiffs failed to allege that any of the challenged statements were false or rendered Defendant's public statement misleading. Although Defendant could have disseminated more information to the public about its vulnerability to cyberattacks, federal securities law does not require it to do so. View "Construction Laborers Pension Trust Southern CA v. Marriott International, Inc." on Justia Law