Justia Consumer Law Opinion SummariesArticles Posted in US Court of Appeals for the Seventh Circuit
Persinger v. Southwest Credit Systems, L.P.
In 2017, a bankruptcy court discharged Persinger’s debts, under 11 U.S.C. 727. A few months later, Southwest Credit began collection efforts on a pre‐petition debt of Persinger’s, including by acquiring a type of credit information called her “propensity‐to‐pay score.” Alleging that this information had been secured without a permissible purpose, Persinger sued Southwest under the Fair Credit Reporting Act (FCRA), 15 U.S.C. 1681.The district court granted Southwest summary judgment, holding that Southwest’s compliance procedures were reasonable and met FCRA’s requirements. The Seventh Circuit affirmed, first holding that Persinger has standing to sue. Southwest invaded her privacy when it reviewed her credit information but no reasonable juror could conclude that the inquiry into Persinger’s propensity‐to‐pay score resulted in actual damages. If a plaintiff cannot prove actual damages, she may still recover statutory or punitive damages by proving that the defendant willfully violated FCRA. Viewed as a whole, Southwest’s procedures for handling bankruptcy notifications and for ordering bankruptcy scrubs from LexisNexis were reasonable compliance efforts, not willful violations of the FCRA. At the time Southwest ordered the credit score, it was unaware that the debt at issue had been discharged. View "Persinger v. Southwest Credit Systems, L.P." on Justia Law
Robbins v. Med-1 Solutions, LLC
Robbins defaulted on a debt to a hospital for services provided to her children. After MED-1, hired to collect the debt, filed a small-claims action, Robbins paid the $1,499 debt but refused to pay $375 attorney’s fees as required by the agreement she signed with the hospital. MED-1 then incurred more attorney’s fees (fees-on-fees) attempting to recover the initial attorney’s fees. The Indiana small-claims court ordered Robbins to pay both the initial attorney’s fees and the fees-on-fees. Robbins’s appeal initiated a de novo proceeding, so MED-1 filed a new complaint.Robbins filed a federal suit against MED-1 under the Fair Debt Collection Practices Act, 15 U.S.C. 1692–1692p. A magistrate stayed the case pending the outcome of the state case, which was eventually dismissed for failure to prosecute. In federal court, Robbins raised res judicata, arguing that the state court’s dismissal precluded MED-1 from claiming that the contract required her to pay attorney’s fees and fees-on-fees. Alternatively, she advanced an argument that she was not required to pay fees-on-fees and that MED-1 violated the Act by trying to collect sums she did not owe. The Seventh Circuit affirmed judgment for MED-1. The Indiana court’s dismissal does not have preclusive effect. Because Robbins’s contract with the hospital required her to pay all collection costs, including attorney’s fees, MED-1 did not violate the FDCPA by attempting to collect fees-on-fees. View "Robbins v. Med-1 Solutions, LLC" on Justia Law
Wadsworth v. Kross, Lieberman & Stone, Inc
PRA hired Wadsworth and, in its offer letter, described a signing bonus: $3,750 payable after 30 days of employment, followed by another $3,750 after 180 days of employment. If Wadsworth voluntarily ended her employment or PRA fired her for cause within 18 months, she was obligated to repay the full bonus. Wadsworth collected both signing payments, but after she completed one year of employment, PRA fired her. Kross, a debt-collection agency, attempted to recover the bonus payments. Kross mailed Wadsworth a collection letter and a Kross employee called Wadsworth by telephone four times. Wadsworth sued Kross claiming that its letter and phone calls violated the Fair Debt Collection Practices Act, 15 U.S.C. 1692, by failing to provide complete written notice of her statutory rights within five days of the initial communication and because the caller never identified herself as a debt collector.The district court entered summary judgment for Wadsworth. The Seventh Circuit reversed and remanded with instructions to dismiss for lack of subject-matter jurisdiction. The alleged violations did not cause Wadsworth any concrete harm and allege nothing more than “bare procedural violation[s],” which Article III precludes courts from adjudicating. View "Wadsworth v. Kross, Lieberman & Stone, Inc" on Justia Law
Bilek v. Federal Insurance Co.
Bilek received unauthorized robocalls concerning health insurance that allegedly violated the Telephone Consumer Protection Act and the Illinois Automatic Telephone Dialing Act (47 U.S.C. 227; 815 ILCS 305/30(a)(b)). Bilek sued on a vicarious liability theory, claiming that Federal contracted with Innovations to sell its insurance; Innovations hired lead generators to effectuate telemarketing; and the lead generators made the unauthorized robocalls that form the basis of Bilek’s claims. Bilek cited three agency theories: actual authority, apparent authority, and ratification.The Seventh Circuit reversed the dismissal of Bilek’s complaint. Expressing no view on whether Bilek will ultimately succeed in proving an agency relationship between the lead generators and either Federal or Innovations, the court concluded that Bilek alleged enough at the pleading stage for his complaint to move forward. Bilek alleges more than a barebones contractual relationship, and did enough to plead that the lead generators acted with Federal’s actual authority. Bilek alleged that Federal authorized the lead generators, through Innovations, to use its approved scripts, tradename, and proprietary information to solicit and advertise its insurance; Bilek received a robocall, and after pressing 1, he spoke to a lead generator who used this proprietary information to quote Federal’s insurance. View "Bilek v. Federal Insurance Co." on Justia Law
Zylstra v. DRV, LLC
The Zylstras purchased their RV from a non-party dealership for $91,559.15. A one-year warranty covered portions of the RV manufactured by DRV. “Written notice of defects subject to warranty coverage must be given to the selling dealer or DRV … within 30 days after the defect is discovered.” The owner is required to take the RV to the selling dealer or factory for repair. Each DRV vehicle is custom-built for the purchaser. The Zylstras took the vehicle in for punch-list items and for warranty repairs. During a subsequent long trip, Zylstra discovered that the black waste tank valve was leaking and that sewage had been leaking into the insulation throughout the RV's underbelly. He could not find a DRV authorized dealer but an independent mobile technician came and completed the repair. After the leak, the Zylstras stopped using the RV out of concern for their health. They contend that it is not, and never has been, fit for its ordinary purpose of recreational use.They filed a complaint alleging breach of express and implied warranty, violation of the Magnuson-Moss Warranty Act (MMWA), and violation of state consumer protection laws. The Seventh Circuit affirmed summary judgment in favor of DRV. Even in the light most favorable to the Zylstras, DRV never had a reasonable opportunity to repair the defects as required under the warranty. View "Zylstra v. DRV, LLC" on Justia Law
Tawanna Ware v. Best Buy Stores
In 2013, a Chicago Best Buy store's manager warned the Plaintiffs that plasma‐screen televisions frequently experienced longevity problems, and encouraged them to buy a five‐year extended warranty, the “Geek Squad Protection Plan.” They bought a Samsung 64‐inch plasma‐screen television for $3,119.99 and the Plan for another $519.99. The television broke down after four years. Best Buy could not repair it. The Plan provided that if the television could not be repaired, Best Buy could elect either to replace the television or to compensate the consumer with a gift card. Best Buy provided a gift card, the value of which was keyed to the current market price of a new television of similar quality to the one purchased in 2013.The Plaintiffs filed a purported class action under the Magnuson‐Moss Warranty Act, 15 U.S.C. 2301, which requires that if a warrantied consumer good cannot be repaired, the written warranty must give the consumer a choice of remedy: either a replacement or a refund of the purchase price, less reasonable depreciation. They argued that the Plan is a full “written warranty” and that Best Buy’s unilateral decision to provide the gift card failed to provide consumers with the choice. The Seventh Circuit affirmed the dismissal of the case. For purposes of diversity jurisdiction, the Wares have not met the amount‐in‐controversy requirement. View "Tawanna Ware v. Best Buy Stores" on Justia Law
Consumer Financial Protection Bureau v. Consumer First Legal Group, LLC
The Consumer Financial Protection Bureau, the federal government’s primary consumer protection agency for financial matters under the 2010 Dodd-Frank Act, 12 U.S.C. 5511(a)–(b), lacks “supervisory or enforcement authority with respect to an activity engaged in by an attorney as part of the practice of law under the laws of a State in which the attorney is licensed.”The Bureau sued two companies and four associated lawyers that provided mortgage-assistance relief services to customers across 39 states. The firms had four attorneys at their Chicago headquarters and associated with local attorneys in the states in which they conducted business. The bulk of the firms’ work was performed by 30-40 non-attorneys (client intake specialists), who enrolled customers, gathered and reviewed necessary documents, answered consumer questions, and submitted loan-modification applications. The "specialists" and attorneys worked off scripts. The firms charged each customer a retainer, followed by recurring monthly fees. On average, the firms collected $3,375 per client. Customers paid separately for additional work, such as representation in foreclosure or bankruptcy, An attorney at headquarters reviewed each loan modification file and forwarded it to an attorney in the customer’s home state. The local attorneys were paid $25-40 for each task. Most reviews took five-10 minutes. Local attorneys almost never communicated directly with customers. One firm obtained loan modifications for 1,369 out of 5,265 customers; the other obtained loan modifications for 190 out of 1,116. The companies ceased operations in 2013.The district court partially invalidated sections of the attorney exemption and granted summary judgment against the defendants for charging unlawful advance fees, failing to make required disclosures, implying in their welcome letter to customers that the customer should not communicate with lenders, implying that consumers current on mortgages should stop making payments, and misrepresenting the performance of nonprofit alternative services. The tasks completed by the firms’ attorneys did not amount to the “practice of law.” The court ordered restitution and enjoined certain defendants from providing “debt relief services.” The Seventh Circuit agreed that the firms and lawyers were not engaged in the practice of law; further proceedings are necessary concerning remedies. View "Consumer Financial Protection Bureau v. Consumer First Legal Group, LLC" on Justia Law
Kuberski v. REV Recreation Group, Inc.
Kuberski began his retirement by purchasing a new 2013 Fleetwood Storm, manufactured by RV, for nearly $160,000, from REV’s authorized dealer, Camping World in North Carolina. During the first year, Kuberski reported over 40 (non-trivial) defects to Camping World, which, required by the warranty, serviced the RV seven times over two years. Those efforts were unsuccessful. Kuberski sent a letter to REV with a list of every defect, all unrepaired problems, and the servicing records, requesting that REV buy back the RV or exchange it for a properly working replacement model. REV did not accept either option but offered free repairs at its Decatur, Indiana facility. REV later offered to pay Kuberski’s expenses of transporting the RV to Indiana. Initially, Kuberski accepted the offer He never arrived at REV’s facility. He filed suit under the federal Magnuson-Moss Warranty Act, which creates a private right of action for any “consumer who is damaged by the failure of a supplier, warrantor, or service contractor to comply with any obligation under [the statute], or under a written warranty, implied warranty, or service contract,” 15 U.S.C. 2310(d)(1).The Seventh Circuit affirmed a verdict in favor of REV, rejecting Kuberski’s challenge to jury instructions concerning his “substantial compliance” with the warranty. Kuberski’s acknowledged failure to honor his appointment with REV was not a simple failure of literal compliance. It was enough also to defeat a finding of substantial compliance. View "Kuberski v. REV Recreation Group, Inc." on Justia Law
Cowans v. Equifax Information Services, Inc.
In these consolidated cases, the plaintiffs owe consumer debts they claim are not owned by the creditors listed on their credit reports. They approached the consumer reporting agencies and requested an investigation of their claims. The consumer reporting agencies contacted the purported creditors for verification that they owned the debts, which the creditors confirmed. Although informed of these confirmations, the plaintiffs did not believe that the consumer reporting agencies investigated the claims as thoroughly as 15 U.S.C. 1681i of the Fair Credit Reporting Act requires, so they sued.The Seventh Circuit affirmed the rejection of the claims. The plaintiffs’ allegations that the creditors did not own their debts are not factual inaccuracies that the consumer reporting agencies are statutorily required to guard against and reinvestigate, but primarily legal issues outside their competency. The plaintiffs are not without recourse. They could confront the creditors who are in the best position to respond to assertions that they do not own the plaintiffs’ debts or, under 15 U.S.C. 1681i(c), make notations of their disputes on their credit reports. The burden to determine whether their debts were validly assigned is not on the consumer reporting agencies. View "Cowans v. Equifax Information Services, Inc." on Justia Law
Weaver v. Champion Petfoods USA Inc.
Weaver purchased Champion dog food. Champion’s packaging describes the food as biologically appropriate, made with fresh regional ingredients, and never outsourced. Weaver alleged that: Champion’s food is not made solely from fresh ingredients but contains ingredients that were previously frozen; Champion uses previously manufactured food that failed to conform to specifications, as dry filler; Champion uses ingredients that are past the manufacturer’s freshness window; Champion does not source all its ingredients from areas close to its plants and sources some ingredients internationally; and there is a risk that its food contains BPA and pentobarbital.Weaver filed a purported class action, alleging violations of the Wisconsin Deceptive Trade Practices Act, fraud by omission, and negligence. The Seventh Circuit affirmed the rejection of his suit on summary judgment. Weaver had failed to produce sufficient evidence from which a reasonable jury could determine that any of the representations were false or misleading. Weaver only offered his own testimony to prove how a reasonable consumer would interpret “biologically appropriate” and offered no evidence that he purchased dog food containing pentobarbital. He failed to show that Champion had a duty to disclose the risk that its food may contain BPA or pentobarbital. Humans and animals are commonly exposed to BPA in their everyday environments, Champion does not add BPA to its food, and submitted unrebutted testimony that the levels allegedly present would not be harmful to dogs. View "Weaver v. Champion Petfoods USA Inc." on Justia Law