Justia Consumer Law Opinion SummariesArticles Posted in US Court of Appeals for the Third Circuit
Wolfington v. Reconstructive Orthopaedic Associates II, PC
Wolfington brought a claim under the Truth in Lending Act, 15 U.S.C. 1601, stemming from reconstructive knee surgery he received from Reconstructive Orthopaedic Associates (the Rothman Institute). Wolfington alleged that Rothman failed to provide disclosures required by the Act when it permitted him to pay his deductible in monthly installments following surgery. The district court entered judgment, rejecting Wolfington’s claim because it determined he had failed to allege that credit had been extended to him in a “written agreement,” as required by the Act’s implementing regulation, Regulation Z. The court also sua sponte imposed sanctions on Wolfington’s counsel. The Third Circuit affirmed in part, agreeing that Wolfington failed to adequately allege the existence of a written agreement, but concluded that counsel’s investigation and conduct were not unreasonable. In imposing sanctions, the district court placed emphasis on the statement by Rothman’s counsel, not Wolfington’s. The statement by Wolfington’s counsel did not amount to an “unequivocal” admission that there was no written agreement. View "Wolfington v. Reconstructive Orthopaedic Associates II, PC" on Justia Law
Dinaples v. MRS BPO LLC
DiNaples fell behind on her Chase credit card payments. Chase assigned her account to MRS, a debt collection agency, which sent DiNaples a collection letter as a pressure sealed envelope that had a QR code printed on its face. The QR code can be scanned by a reader downloadable as a smartphone application to reveal the internal reference number associated with DiNaples’s account at MRS. DiNaples filed a class action lawsuit under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692–1692, which prohibits debt collectors from “[u]sing any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by use of the mails.” The Third Circuit affirmed summary judgment that MRS violated the FDCPA. A debt collector violates section 1692f(8) by placing on an envelope the consumer’s account number with the debt collector. There is no meaningful difference between displaying the account number itself and displaying a QR code — scannable “by any teenager with a smartphone app” — with the number embedded. The court rejected MRS’s contention that DiNaples had not “suffered a concrete injury,” explaining that DiNaples was injured by “the disclosure of confidential information,” and rejected MRS’s assertion of the FDCPA’s “bona fide error defense.” View "Dinaples v. MRS BPO LLC" on Justia Law
Coba v. Ford Motor Co.
Beginning in 2001, Ford received complaints from F-Series vehicle purchasers, relating to the fuel tanks. The problems were clustered in certain regions. Ford suspected that unique qualities in regional fuel supplies, particularly excessive concentrations of biodiesel, were causing delamination. In 2007, Ford released an improved tank coating. Ford’s warranty claims decreased, but some reports of delamination persisted. By 2010, Ford believed that the cause was not biodiesel but was acids found in fuel samples from service stations near a dealer that encountered numerous delamination complaints. Coba purchased two 2006 F-350 dump trucks for his landscaping business. By 2009, both trucks exhibited delamination. Ford's dealership replaced the tanks and filters in both trucks at no cost to Coba. Coba continued to have the same problems, even after the warranties expired. Coba filed a class-action, asserting breach of Ford’s New Vehicle Limited Warranty (NVLW), violation of the New Jersey Consumer Fraud Act (NJCFA), and breach of the duty of good faith and fair dealing. The Third Circuit affirmed summary judgment in favor of Ford. The denial of class certification did not divest the district court of jurisdiction, although jurisdiction was predicated on the Class Action Fairness Act, 28 U.S.C. 1332(d).The NVLW, which covered defects in “materials or workmanship” did not extend to design defects, such as alleged by Coba, which also negated his breach of the implied covenant of good faith and fair dealing claims. The evidence of Ford’s knowledge of the alleged defect did not create a triable NJCFA issue. View "Coba v. Ford Motor Co." on Justia Law
Kamal v. J. Crew Group, Inc.
Kamal visited various J. Crew store, making credit card purchases. Each time, Kamal “received an electronically printed receipt,” which he retained, that “display[ed] the first six digits of [his] 6 credit card number as well as the last four digits.” The first six digits identify the issuing bank and card type. The receipts also identified his card issuer, Discover, by name. Kamal does not allege anyone (other than the cashier) saw his receipts. His identity was not stolen nor was his credit card number misappropriated. The Third Circuit affirmed the dismissal of Kamal’s purported class action under the Fair and Accurate Credit Transactions Act of 2003 (FACTA), which prohibits anyone who accepts credit or debit cards as payment from printing more than the last five digits of a customer’s credit card number on the receipt, 15 U.S.C. 1681c(g), for lack of Article III standing. Absent a sufficient degree of risk, J. Crew’s alleged violation of FACTA is “a bare procedural violation.” View "Kamal v. J. Crew Group, Inc." on Justia Law
Barbato v. Greystone Alliance LLC
Crown buys defaulted consumer debt, then refers the accounts to third-party servicers for collection or hires a law firm to file a collection lawsuit. Crown does not contact consumers directly. Crown purchased Barbato’s credit card debt and referred the account to Turning Point for collection. Crown’s obligation to pay Turning Point was contingent upon Turning Point’s success; Crown established settlement guidelines. Turning Point sent Barbato a collection letter, identifying itself as a “Collection Agency” and Crown as its client and left voicemail messages. Crown did not directly communicate with Barbato, nor did it review or approve the letter. When Barbato filed for bankruptcy, Crown closed Barbato’s account. Barbato sued under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692(a), identifying Crown as a “debt collector.” The Supreme Court decided (Henson) that “[a]ll that matters is whether the target of the lawsuit regularly seeks to collect debts for its own account or does so for ‘another.” The district court concluded that Henson pertained only to the “regularly collects” definition of “debt collector” and did not affect its holding that Crown was a debt collector under the “principal purpose” definition. On interlocutory appeal, the Third Circuit affirmed. An entity that acquires debt for the “purpose of . . . collection” but outsources the actual collection activity qualifies as a “debt collector.” View "Barbato v. Greystone Alliance LLC" on Justia Law
Alpizar-Fallas v. Favero
Favero’s car struck Alpizar-Fallas's car, causing Alpizar-Fallas serious injuries. Both drivers were insured by Progressive. The next day, Barbosa, a Progressive claims adjuster, went to Alpizar-Fallas's home to inspect her car and have her sign “paperwork” that would “expedite the processing of the property damage claim.” Alpizar-Fallas alleges that he stated that her signature was “necessary” for Progressive to advance her payment. Alpizar-Fallas signed the document. The document was actually a broadly written comprehensive general release of all claims. Barbosa failed to advise Alpizar-Fallas to seek legal counsel and did not communicate with her in Spanish, her native language. Alpizar-Fallas sought damages for the personal injuries she sustained in the accident and amended her complaint to include a class action claim against Progressive and Barbosa under the New Jersey Unfair Claims Settlement Practices Regulations (UCSPR) and the Consumer Fraud Act (CFA). The district court dismissed Alpizar-Fallas’s class action claim to the extent it alleged a violation of the UCSPR because those regulations do not provide a private right of action, then dismissed Alpizar-Fallas’s CFA claim, as a claim for denial of insurance benefits, and construing the CFA to only apply to the “sale or marketing” of insurance policies. The Third Circuit vacated, finding that Alpizar-Fallas’s complaint alleged deception that would be covered by the CFA. View "Alpizar-Fallas v. Favero" on Justia Law
Schultz v. Midland Credit Management, Inc.
Midland sent six letters to the Schultzes, attempting to collect separate outstanding debts that had been outsourced to Midland for collection after default. None of the debts exceeded $600. Each letter offered to settle for less than the full amount owing and each stated: We will report forgiveness of debt as required by IRS regulations. Reporting is not required every time a debt is canceled or settled, and might not be required in your case.” Since the Treasury only requires an entity to report a discharge of indebtedness of $600 or more to the IRS, the Schultzes claimed that the statement was “false, deceptive and misleading” in violation of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692. Their putative class action complaint was dismissed. The Third Circuit reversed, finding that the statement may violate the FDCPA. A dunning letter is false and misleading if it implies that certain outcomes might befall a delinquent debtor, when legally, those outcomes cannot occur. Even if the least sophisticated debtor can distinguish between “may” and “must,” the language at issue references an event that would never occur. It is reasonable to assume that a debtor would be influenced by potential IRS reporting and that, if that reporting cannot occur, it could signal a potential FDCPA violation regardless of the conditional language. View "Schultz v. Midland Credit Management, Inc." on Justia Law
Long v. Southeastern Pennsylvania Transportation Authority
Plaintiffs, convicted of drug offenses between 1997 and 2007, applied to Southeastern Pennsylvania Transportation Authority (SEPTA) for jobs that involved operating vehicles. Each filled out a form disclosing his criminal history and authorizing SEPTA to obtain a background check. SEPTA denied them employment. SEPTA did not send Plaintiffs copies of their background checks before it decided not to hire them, nor did it send them notices of their rights under the Fair Credit Reporting Act (FCRA), which required SEPTA to send both before it denied them employment, 15 U.S.C. 1681b(b)(3). Plaintiffs filed a putative class action, which the district court dismissed for lack of standing, reasoning there was only a “bare procedural violation,” not a concrete injury in fact because Plaintiffs alleged that SEPTA denied them jobs based on their criminal history, which Plaintiffs disclosed before the background checks. The Third Circuit affirmed the dismissal of the claim based on failure to provide notice of FCRA rights. Plaintiffs became aware of their FCRA rights and were able to file this lawsuit within the prescribed limitations period, so they were not injured. The court reversed the dismissal of the claim based on failure to provide copies of the consumer reports. That right exists whether the report is accurate or not; FCRA clearly expresses Congress’s “intent to make [the] injury redressable.” View "Long v. Southeastern Pennsylvania Transportation Authority" on Justia Law
Posted in: Civil Procedure, Consumer Law, Labor & Employment Law, US Court of Appeals for the Third Circuit
Levins v. Healthcare Revenue Recovery Group, LLC
The Levins allege that HRRG violated the Fair Debt Collection Practices Act, 15 U.S.C. 1692- 1692p by leaving telephone voice messages that did not use its true name, did not meaningfully disclose its identity, and used false representations and deceptive means to attempt to collect a debt or obtain information about a consumer. They complained that messages in which HRRG went by the name of “ARS” were insufficient to identify it as HRRG or even as “ARS ACCOUNT RESOLUTION SERVICES,” which is HRRG's alternative business name. The Third Circuit reversed, in part, the dismissal of the complaint, finding that the Levinses stated a plausible claim that HRRG violated section 1692e(14)’s “true name” provision, but have not stated plausible claims under 1692d(6) or 1692e(10). ARS is neither HRRG’s full business name, the name under which it usually transacts business, nor a commonly used acronym of its registered name. With respect to section 1692d(6), the court stated that the messages provided enough information about the caller’s identity for the least sophisticated debtor to know that the call was from a debt collector and was an attempt to collect a debt. Nothing in the messages rises to the level of being materially deceptive, misleading, or false under section 1692e(10). View "Levins v. Healthcare Revenue Recovery Group, LLC" on Justia Law
St. Pierre v. Retrieval Masters Creditors Bureau, Inc.
St. Pierre used New Jersey E-ZPass and agreed to maintain a positive balance in a prepaid account from which highway tolls are automatically deducted. When he failed to maintain a positive balance, E-ZPass assigned his account to a private debt collection agency, which sent St. Pierre a collection letter for $1,200.75. The envelope in which the letter was sent had a glassine window through which was visible St. Pierre’s name and address, a “quick response” code and St. Pierre’s account number. The Fair Debt Collection Practices Act, 15 U.S.C. 1692a-1692p, prohibits the use of “any language or symbol, other than the debt collector’s address, on any envelope when communicating with a consumer by use of the mails,” in the collection of a “debt,” defined as an “obligation . . . of a consumer to pay money arising out of a transaction in which the money, property, insurance, or services which are the subject of the transaction are primarily for personal, family, or household purposes.” The district court concluded that the matter was not a debt, but a legal obligation in the nature of a tax. The Third Circuit affirmed the dismissal of St. Pierre’s suit. Violation of section 1692f(8) is a legally cognizable injury that confers standing on St. Pierre but the FDCPA is not implicated where, as here, the bulk, if not all services rendered, are made “without reference to peculiar benefits to particular individuals or property.” View "St. Pierre v. Retrieval Masters Creditors Bureau, Inc." on Justia Law