Justia Consumer Law Opinion SummariesArticles Posted in US Court of Appeals for the Sixth Circuit
Hurst v. Caliber Home Loans, Inc.
Hurst sought a loan modification in 2018. Caliber notified Hurst that her application was complete as of April 5, 2018, that it would evaluate her eligibility within 30 days, that it would not commence foreclosure during that period, and that it might need additional documents for second-stage review. On May 1, Caliber requested additional documents within 30 days. Although Hurst responded, she did not meet all of Caliber’s requirements. On May 31, Caliber informed Hurst that it could not review her application. Hurst sent some outstanding documents on June 7, but her application remained incomplete. Caliber filed a foreclosure action on June 18. Hurst spent $13,922 in litigating the foreclosure but continued working with Caliber. Caliber again denied the application as incomplete on August 31 but eventually approved her loan modification and dismissed the foreclosure action.Hurst filed suit under the Real Estate Settlement Procedures Act (RESPA), alleging that Caliber violated Regulation X’s prohibition on “dual tracking,” which prevents a servicer from initiating foreclosure while a facially complete loan-modification application is pending, 12 C.F.R. 1024.41(f)(2); failed to exercise reasonable diligence in obtaining documents and information necessary to complete her application, section 1024.41(b)(1); and failed to provide adequate notice of the information needed to complete its review (1024.41(b)(2)). The district court granted Caliber summary judgment. The Sixth Circuit reversed with respect to the “reasonable diligence” claim. Hurst identified communications where Caliber employees provided conflicting information and had trouble identifying deficiencies. View "Hurst v. Caliber Home Loans, Inc." on Justia Law
Snyder v. Finley & Co., L.P.A.
Ohio’s Necessaries Statute permits creditors to collect certain debts from one spouse incurred by the other.. Seeking to recover outstanding legal defense bills owed by Snyder’s husband, who had been convicted of embezzlement, Finley filed a debt-collection lawsuit against Finley and her husband, asserting joint liability. Snyder contends that the lawsuit was “objectively baseless” and violated the Fair Debt Collection Practices Act, 15 U.S.C. 1692e.The Sixth Circuit reversed the entry of summary judgment in favor of Finley. The Ohio Supreme Court has clearly held that the Necessaries Statute does not impose joint liability on a married person for the debts of a spouse. A creditor must first seek satisfaction of its claim from the assets of the spouse who incurred the debt and must show that the debtor-spouse is “unable to pay” for a non-debtor spouse to be liable under the Necessaries Statute. Finley’s claims against the husband remain pending in the Ohio state trial court. View "Snyder v. Finley & Co., L.P.A." on Justia Law
Lindenbaum v. Realgy, LLC
In 1991, Congress prohibited almost all robocalls to cell phones and landlines, 47 U.S.C. 227(b)(1)(B). A 2015 amendment attempted to allow robocalls if they were made “solely to collect a debt owed to or guaranteed by the United States.” The Supreme Court, in AAPC, held the amendment was unconstitutional content discrimination but that the exception was severable from the rest of the restriction, leaving the general prohibition intact. In 2019-2020, Lindenbaum received two robocalls from Realgy advertising its electricity services. She sued, alleging violations of the robocall restriction. After the Supreme Court decided AAPC, the district court dismissed the case for lack of subject matter jurisdiction reasoning that severability is a remedy that operates only prospectively, so the robocall restriction was unconstitutional and therefore “void” for the period the exception was on the books. Because it was “void,” the district court believed, it could not provide a basis for federal-question jurisdiction.The Sixth Circuit reversed. Because severance is not a remedy, it would have to be a legislative act in order to operate prospectively only. The Court recognized only that the Constitution had “automatically displace[d]” the government-debt-collector exception from the start, then interpreted what the statute has always meant in its absence. View "Lindenbaum v. Realgy, LLC" on Justia Law
Ward v. National Patient Account Services Solutions, Inc.
Ward received twice medical treatment at Stonecrest. Stonecrest hired NPAS, Inc. to collect Ward’s outstanding balances. NPAS first sent Ward a billing statement on October 3 related to his July hospital visit. The statement provided NPAS's full name and address at the top of the first page; the reverse side explained who it was. NPAS called Ward on October 24 and left a voice message: We are calling from NPAS on behalf of Stonecrest … Please return our call. On November 17, NPAS, sent a second billing statement. On December 27, NPAS left a second, identical, voice message. NPAS then returned his account to Stonecrest. Ward’s second account regarding his October hospital visit followed a similar process. On December 28, after retaining counsel, Ward sent a cease-and-desist letter to “NPAS Solutions, LLC,” an entity unrelated to NPAS, Inc. Ward stated at his deposition that NPAS, Inc.’s voice messages caused him to become confused as to which entity had called him.Ward filed suit under the Federal Debt Collection Practices Act, 15 U.S.C. 1692e(11) alleging NPAS failed, in its voice messages, to identify itself as a debt collector and failed to identify the “true name” of its business. The Sixth Circuit held that the case should be dismissed because Ward lacks Article III standing. Ward does not automatically have standing simply because Congress authorizes a plaintiff to sue for failing to comply with the Act. The procedural injuries Ward asserts do not bear a close relationship to traditional harms. View "Ward v. National Patient Account Services Solutions, Inc." on Justia Law
Garland v. Orlans, PC
The Orlans law firm, sent a letter on law-firm letterhead, stating that Wells Fargo had referred the Garland loan to Orlans for foreclosure but that “[w]hile the foreclosure process ha[d] begun,” “foreclosure prevention alternatives” might still be available if Garland contacted Wells Fargo. The letter explained how to contact Wells Fargo “to attempt to be reviewed for possible alternatives,” the signature was typed and said, “Orlans PC.”Garland says that the letter confused him because he was unsure if it was from an attorney and “raised [his] anxiety” by suggesting “that an attorney may have conducted an independent investigation and substantive legal review ... such that his prospects for avoiding foreclosure were diminished.” Garland alleges that Orlans sent a form of this letter to thousands of homeowners, without a meaningful review of the homeowners’ foreclosure files, so the communications deceptively implied they were from an attorney. The Fair Debt Collection Practices Act (FDCPA) prohibits misleading debt-collection communications that falsely imply they are from an attorney.The Sixth Circuit affirmed the dismissal of the purported class action for lack of jurisdiction. Garland lacks standing. That a statute purports to create a cause of action does not alone create standing. A plaintiff asserting a procedural claim must have suffered a concrete injury; bare allegations of confusion and anxiety do not qualify. Whether from an attorney or not, the letter said nothing implying Garland’s chance of avoiding foreclosure was “diminished.” View "Garland v. Orlans, PC" on Justia Law
Thomas v. TOMS King (Ohio), LLC
After receiving a credit card receipt printed with the first six and last four digits of her credit card, Thomas sued TOMS for violating the “truncation requirement” of the Fair and Accurate Credit Transactions Act of 2003 (FACTA), 15 U.S.C. 1681c(g), which prohibits anyone who accepts credit or debit cards for payment from printing more than the last five digits of a customer’s card number on the receipt, and offers actual and statutory damages.The district court dismissed, finding that the alleged violation did not result in harm sufficiently concrete for Article III standing purposes. The Sixth Circuit affirmed. FACTA reflects Congress’s concern with preventing identity theft, and its belief that truncating card numbers is the most effective means of doing so but a violation of the truncation requirement does not automatically cause an injury in fact. Thomas’s allegations do not establish an increased risk of identity theft; they do not show how, even if her receipt fell into the wrong hands, criminals would have a gateway to her personal and financial data, and she did not allege that the receipt was lost, stolen, or seen by a third party. View "Thomas v. TOMS King (Ohio), LLC" on Justia Law
Online Merchants Guild v. Cameron
During the COVID-19 pandemic, Kentucky’s Attorney General opened civil price-gouging investigations into Kentucky-based merchants, including at least one member of the Guild that was selling goods to Kentuckians through Amazon’s online marketplace. The Guild challenged the constitutionality of Kentucky’s price-gouging laws as applied to sellers on Amazon, invoking the extraterritoriality doctrine of the dormant commerce clause. Accepting that the Attorney General sought only to enforce the Commonwealth’s price-gouging laws against Kentucky-based sellers in connection with sales to Kentucky consumers through Amazon’s platform, the district court nevertheless granted the Guild a preliminary injunction, concluding that enforcing the laws in connection with Amazon sales would have impermissible extraterritorial effects.The Sixth Circuit vacated, first holding that the Guild is likely to establish direct organizational standing and standing on behalf of its members. This enforcement of Kentucky’s price-gouging laws is unlikely to run afoul of the dormant commerce clause’s extraterritoriality doctrine, which invalidates state laws as per se unconstitutional in the narrow instances where a state expressly or inevitably exceeds its authority and seeks to control wholly out-of-state commerce. The effect on out-of-state commerce of Kentucky’s price-gouging laws depends entirely upon Amazon’s independent decision-making with regard to the structure of its online marketplace, so the application of those laws to Kentucky-based third-party sellers on Amazon in connection with sales to Kentucky consumers is unlikely to offend the extraterritoriality doctrine. View "Online Merchants Guild v. Cameron" on Justia Law
Swiger v. Rosette
Swiger accepted a $1200 loan from online lender Plain Green, an entity owned by and organized under the laws of the Chippewa Cree Tribe of the Rocky Boy’s Reservation, Montana. She describes Rees as the “mastermind” behind a "rent-a-tribe" scheme, alleging that he and his company used Plain Green's tribal sovereign immunity as a front to shield them from state and federal law. When Swiger signed the loan contract, she affirmed that Plain Green enjoys “immun[ity] from suit in any court,” and that the loan “shall be governed by the laws of the tribe,” not the laws of any state. She agreed to binding arbitration under tribal law, subject to review only in tribal court. The provision covers “any issue concerning the validity, enforceability, or scope of this Agreement or this Agreement to Arbitrate.” Seven months after accepting the loan, Swiger alleged that she repaid $1170.54 but still owed $1922.37.Swiger sued, citing Michigan and federal law, including the Racketeer Influenced and Corrupt Organizations Act and consumer protection laws. The district court concluded that the enforceability of the arbitration agreement “has already been litigated, and decided against Rees, in a similar case commenced in Vermont.” The Sixth Circuit reversed and remanded with instructions to stay the case pending arbitration. Swiger’s arbitration agreement includes an unchallenged provision delegating the question of arbitrability to an arbitrator. The district court exceeded its authority when it found the agreement unenforceable View "Swiger v. Rosette" on Justia Law
Smith v. General Motors LLC
In 2005-2006, GM changed the dashboard used for GMT900 model cars from a multi-piece design to a single-piece design, which made the dashboard prone to cracking in two places. Plaintiffs, from 25 states, alleged that GMT900 vehicles produced in 2007-2014 contained a faulty, dangerous dashboard and that GM knew of the defective dashboards before GTM900 vehicles hit the market. The complaint contained no allegation that any of the plaintiffs have been hurt by the allegedly defective dashboards. The complaint, filed on behalf of a nationwide class, alleged fraudulent concealment, unjust enrichment, and violations of state consumer protection statutes and the Magnusson-Moss Warranty Act.The Sixth Circuit affirmed the dismissal of the case. At worst, Plaintiffs suffered only cosmetic damage and a potential reduced resale value from owning cars with cracked dashboards. Although the plaintiffs claimed that routine testing, customer complaints, and increased warranty claims alerted GM to the defective dashboards and accompanying danger, that is not enough to survive a motion to dismiss without specifics about how and when GM learned about the defect and its hazards, and concealed the allegedly dangerous defect from consumers. Even accepting that GM produced defective vehicles, under the common legal principles of the several states, the plaintiffs must show that GM had sufficient knowledge of the harmful defect to render its sales fraudulent. View "Smith v. General Motors LLC" on Justia Law
Donovan v. FirstCredit, Inc.
Donovan received from FirstCredit a letter demanding payment of a purported medical debt. The letter's envelope had two transparent glassine windows on its face, taking up most of the left half of the envelope. Because the letter, when folded, is smaller than the envelope, the text visible through the windows depends in part on where the letter is sitting within the envelope. No matter how the letter is situated, Donovan’s name and address are always visible as is an empty checkbox followed by the phrase “Payment in full is enclosed.” Sometimes, a second empty checkbox followed by “I need to discuss this further. My phone number is _____,” is visible. Donovan alleged that the visibility of the checkboxes and the accompanying language created the risk that anyone who saw her mail would recognize that she was receiving mail from a debt collector, seeing relief under the Fair Debt Collection Practices Act, 15 U.S.C. 1692. The district court granted FirstCredit judgment.The Sixth Circuit reversed. Donovan has standing. Her injury is “particularized” and “actual.” The letter that caused her injury was addressed and sent to Donovan specifically. The statute does not include a “benign language exception” and unambiguously prohibits the use of language or symbols on debt collectors’ envelopes, excepting language or symbols to ensure the successful delivery of the communication, the collector’s address, and the collector’s “business name,” if the name does not indicate the debt collection business. View "Donovan v. FirstCredit, Inc." on Justia Law