Justia Consumer Law Opinion SummariesArticles Posted in US Court of Appeals for the Seventh Circuit
Ewing v. 1645 W. Farragut LLC
Randall Ewing and Yasmany Gomez entered into a contract with 1645 W. Farragut LLC (Farragut) to purchase a house. The house was in need of substantial renovations, but Ewing and Gomez proceeded with the contract based on Farragut's assurance that the house would be renovated and ready by closing time. Unbeknownst to Ewing and Gomez, the house was under a stop work order, which hindered their ability to secure a mortgage. When they requested their earnest money back, Farragut refused. They subsequently sued Farragut for breach of contract, common law fraud, and fraud under the Illinois Consumer Fraud Act. The United States District Court for the Northern District of Illinois found Farragut liable for fraud and breach of contract and awarded Ewing and Gomez $905,000 in damages. Farragut appealed the decision and Ewing and Gomez cross-appealed, seeking to add Farragut's principal, Erik Carrier, to the case. The United States Court of Appeals for the Seventh Circuit affirmed the District Court's decisions, finding that the record supported the damages awarded and that the District Court did not abuse its discretion in denying the motion for a new trial and the motions to amend. View "Ewing v. 1645 W. Farragut LLC" on Justia Law
Nabozny v. Optio Solutions LLC
Nabozny received a letter at her Wisconsin home, offering to settle an unpaid credit-card debt. The letter summarized basic information about her debt: the creditor, the outstanding balance, the account number, and her name and address. The letter was from Optio under its operating name of Qualia, but it was printed and mailed by RevSpring, a third-party printing and mail vendor. Nabozny did not give Optio consent to share the information about her debt with RevSpring.Nabozny filed a purported class action, alleging that Optio’s communication with RevSpring violated the Fair Debt Collection Practices Act, 15 U.S.C. 1692, which provides that “a debt collector may not communicate, in connection with the collection of any debt, with any person other than the consumer” without the consumer’s consent. The Seventh Circuit affirmed the dismissal of Nabozny’s suit for lack of subject-matter jurisdiction. Nabozny lacks standing to sue because she “suffered no concrete injury.” The court noted recent decisions in other circuits that sharing a debtor’s data with a third-party mail vendor to populate and send a form collection letter “causes no harm that our legal tradition recognizes as sufficient to support a suit in federal court under Article III of the Constitution.” View "Nabozny v. Optio Solutions LLC" on Justia Law
Federal Trade Commission v. Credit Bureau Center, LLC
Brown’s credit-monitoring business used a “negative option feature” on its websites, offering visitors a free credit report but automatically enrolling them in a $29.94 monthly subscription when they applied for that report. Information about the monthly membership was buried . Brown’s contractors created website traffic by posting Craigslist advertisements for fake rental properties and directing applicants to the websites for a “free” credit score. The FTC sued under Federal Trade Commission Act (FTCA) section 13(b), which authorizes restraining orders and permanent injunctions to enjoin conduct that violates its prohibition of unfair or deceptive trade practices. On its face, section 13(b) authorizes only injunctive relief but the Commission long interpreted it to permit restitution awards—an interpretation adopted by the Seventh Circuit and others.The district court entered a permanent injunction and ordered Brown to pay more than $5 million in restitution. The Seventh Circuit overruled its precedent and held that section 13(b) does not authorize restitution awards.The Supreme Court granted certiorari and held that section 13(b) does not authorize equitable monetary relief. On remand, the Commission argued that the Court’s decision had significantly changed the law and successfully requested the reimposition of the restitution award under the Restore Online Shoppers’ Confidence Act and FTCA section 19. The Seventh Circuit modified the new judgment. Its direction that any funds remaining after providing consumer redress shall be “deposited to the U.S. Treasury as disgorgement” exceeds the remedial scope of section 19, which is limited to redressing consumer injuries. View "Federal Trade Commission v. Credit Bureau Center, LLC" on Justia Law
Latrina Cothron v. White Castle System, Inc.
Cothron works at an Illinois White Castle restaurant where she must scan her fingerprint to access the computer system. With each scan, her fingerprint is collected and transmitted to a third-party vendor for authentication. Cothron alleges that White Castle did not obtain her written consent before implementing the fingerprint-scanning system, violating the Illinois Biometric Information Privacy Act, 740 ILCS 14/1, arguing that every unauthorized fingerprint scan amounted to a separate violation of the statute, so a new claim accrued with each scan. On interlocutory appeal, the Seventh Circuit certified a question to the Illinois Supreme Court, which responded that claims accrue each time a private entity scans a person’s biometric identifier and each time a private entity transmits such a scan to a third party, respectively, not only upon the first scan and first transmission.The Seventh Circuit then lifted a stay and affirmed the denial of White Castle’s motion for judgment on the pleadings. The court rejected White Castle’s request to expand the interlocutory appeal to include new questions concerning the scope of a possible damages award and Due Process and Excessive Fines Clause claims. The order before the court concerned only the timeliness of Cothron’s suit. View "Latrina Cothron v. White Castle System, Inc." on Justia Law
Chaitoff v. Experian Information Solutions, Inc.
Chaitoff sued under the Fair Credit Reporting Act, 15 U.S.C. 1681, alleging that Experian made a mistake when it omitted a fact from his credit report, then failed to correct its error. Chaitoff had signed an agreement with his mortgage lender that allowed him to make lower payments and avoid foreclosure. Rather than report the agreement, Chaitoff’s credit report said that he was delinquent. The district court granted Experian summary judgment.The Seventh Circuit reversed in part, holding that the omission of material information is actionable under the FCRA; reporting the existence of the agreement did not involve the application of law to facts. Experian’s initial reporting efforts were reasonable but, concerning Experian’s investigations after Chaitoff alerted it to the discrepancy, a reasonable jury could find that there was a cost-effective step Experian could have taken that would have discovered the agreement’s existence. Experian failed to note Chaitoff’s dispute in later reports, as the FCRA requires. View "Chaitoff v. Experian Information Solutions, Inc." on Justia Law
Choice v. Kohn Law Firm, S.C.
Unifund purchased Choice's defaulted consumer debt and hired the Kohn Law Firm, which sued Choice in state court on behalf of Unifund, seeking judgment in the amount of the debt plus “statutory attorney fees.” An attached affidavit by Unifund’s agent indicated that the company was not seeking additional amounts after the charge-off date, including attorney’s fees. Choice believed that because the affidavit contradicted the complaint's request for judgment, one of the statements was false; he claimed that no applicable statute permitted the recovery of such attorney’s fees.Choice sued under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692, alleging injury from the receipt of false, misleading, and deceptive communications. Choice alleged “he hired an attorney to help him ascertain the amount of the alleged debt owed, whether attorney fees could be imposed, and in what amount” and paid an appearance fee to a lawyer in the state court action. Despite his allegation that, but for the statements, he would have paid or settled the debt, during discovery Choice denied owing any debt. He later said he lost sleep due to concern over the extent of his liability.The Seventh Circuit affirmed the dismissal of the complaint. Choice did not establish Article III standing; neither confusion, lost sleep, nor hiring a lawyer are concrete harms. Choice admitted in discovery that he did not suffer any actual damages. View "Choice v. Kohn Law Firm, S.C." on Justia Law
Smith v. First Hospital Laboratories, Inc.
FSSolutions faxed Dr. Thalman several times to ask him to join its network of preferred medical providers and administer various employment screening and testing services to its clients. Thalman declined the invitation and instead invoked the Telephone Consumer Protection Act, 7 U.S.C. 227(b)(1)(C), to sue FSSolutions for sending him unsolicited advertisements. The district court dismissed the complaint after finding that the faxes were not “unsolicited advertisements” within the meaning of the TCPA because they merely asked to purchase Thalman’s own services rather than inviting him to buy something from FSSolutions.The Seventh Circuit reversed. While a fax must directly or indirectly encourage recipients to buy goods, services, or property to qualify as an unsolicited advertisement, Thalman plausibly alleged that FSSolutions’s faxes did just that by promoting the company’s network of preferred medical providers, a network that would bring Thalman new business in exchange for a portion of the underlying client fees. “[M]indful that many plaintiffs’ attorneys view the TCPA opportunistically, the court cautioned against overreading its opinion, which applies to unsolicited faxes that an objective recipient would construe as urging the purchase of a good, service, or property by emphasizing its availability or desirability. View "Smith v. First Hospital Laboratories, Inc." on Justia Law
Ross v. Financial Asset Management Systems, Inc.
Camarena defaulted on a debt, then married Ross. Ross and Camarena share a phone plan. FAMS, a debt collector, mailed Camarena a letter. Camarena never followed the letter’s instructions but learned FAMS’s employee email address format and sent emails disputing his debt to FAMS’s CEO and Vice President. The CEO had no recollection of seeing Camarena’s email and could not locate it, while the VP found it in his deleted folder but could not recall ever seeing it. Had Camarena properly submitted his dispute, FAMS could have followed its policy of stopping collection activity until the account was validated. FAMS called Ross concerning Camarena’s debt. Ross initially informed FAMS that it had called her personal cell phone, not an appropriate number for Camarena. The FAMS collector failed to follow procedures to prevent her from receiving future calls, despite his training. FAMS continued to call Ross.Ross sued FAMS, alleging that the calls violated the Fair Debt Collection Practices Act, 15 U.S.C. 1692 by continuing debt collection activities after Camarena disputed the debt without first providing verification of the debt; calling Ross after Camarena disputed the debt; calling Ross after she notified FAMS that Camarena does not use her phone; and disconnecting calls with Ross. The Seventh Circuit affirmed summary judgment in favor of FAMS based on the “bona fide error” defense. FAMS had policies and procedures that should have prevented the calls from going out to Ross. View "Ross v. Financial Asset Management Systems, Inc." on Justia Law
Dinerstein v. Google, LLC
Google and the University of Chicago Medical Center collaborated to develop software capable of anticipating patients’ future healthcare needs. The University delivered several years of anonymized patient medical records to Google, to “train” the software’s algorithms. An agreement restricted Google’s use of the records to specific research-related activities and prohibited Google from attempting to identify any patient whose records were disclosed. Dinerstein sued on behalf of himself and a class of other patients whose anonymized records were disclosed, claiming that the University had breached either an express or an implied contract traceable to a privacy notice he received and an authorization he signed upon each admission to the Medical Center. Alternatively, he asserted unjust enrichment. Citing the same notice and authorization, he alleged that the University had breached its promise of patient confidentiality, violating the Illinois Consumer Fraud and Deceptive Business Practices Act. Against Google, he claimed unjust enrichment and tortious interference with his contract with the University. He brought a privacy claim based on intrusion upon seclusion.The Seventh Circuit affirmed the dismissal of the case. To sue in federal court, a plaintiff must plausibly allege (and later prove) that he has suffered an injury in fact that is concrete and particularized, actual or imminent, and traceable to the defendant’s conduct. The injuries Dinerstein alleges lack plausibility, concreteness, or imminence (or some combination of the three). View "Dinerstein v. Google, LLC" on Justia Law
Frazier v. Dovenmuehle Mortgage, Inc.
Frazier obtained a home mortgage loan for which Dovenmuehle served as sub-servicer. Beginning in October 2015, Frazier failed to make her monthly payments. Frazier successfully negotiated and settled her debt through a short sale of her home, which closed in January 2016. Frazier was later denied a new mortgage loan because her Equifax credit report reflected late payments on her previous mortgage in months following the short sale. She disputed the information to several credit reporting agencies. To confirm the accuracy of its records, Equifax sent Dovenmuehle four Automated Consumer Dispute Verification forms in 2019-2020. Frazier contends the amended codes Dovenmuehle gave Equifax for Pay Rate and Account History were inaccurate, pointing to how Equifax interpreted and reported the amended data in her credit reports.Frazier sued under the Fair Credit Reporting Act, 15 U.S.C. 1681, claiming that Dovenmuehle failed to conduct a reasonable investigation of disputed data and provided false and misleading information to credit reporting agencies. She relied on evidence about persisting inaccuracies in Equifax’s credit reports produced using the amended data. The district court granted Dovenmuehle summary judgment. The Seventh Circuit affirmed. Given the full record, no reasonable jury could find that Dovenmuehle provided patently incorrect or materially misleading information. View "Frazier v. Dovenmuehle Mortgage, Inc." on Justia Law