Justia Consumer Law Opinion Summaries

At age 56, Newman purchased a long-term-care insurance plan MetLife, opting for one of MetLife’s non-standard options for paying her insurance premiums, “Reduced-Pay-at 65.” From the outset, Newman paid the elevated premium associated with her Reduced-Pay option. When she reached age 65, her premium was cut in half. When Newman was 67 years old, she was startled to discover that MetLife that year more than doubled her insurance premium. The Seventh Circuit reversed the dismissal of Newman’s proposed class action, alleging breach of contract, deceptive and unfair business practices, and common-law fraud. The allegations raised in the complaint were enough to entitle Newman to prevail on the liability phase of her contract claim and to go forward on her remaining claims. The policy language is at least ambiguous, because it can be read reasonably to fix a person’s premium, if she had opted for the Reduced-Pay option. Illinois construes ambiguous contracts against the insurer. Newman’s complaint also alleged facts that plausibly show that MetLife’s policy was both deceptive and unfair under the Illinois Consumer Fraud Act and adequately alleged fraudulent concealment and reasonable reliance. View "Newman v. Metropolitan Life Insurance Co" on Justia Law

At age 56, Newman purchased a long-term-care insurance plan MetLife, opting for one of MetLife’s non-standard options for paying her insurance premiums, “Reduced-Pay-at 65.” From the outset, Newman paid the elevated premium associated with her Reduced-Pay option. When she reached age 65, her premium was cut in half. When Newman was 67 years old, she was startled to discover that MetLife that year more than doubled her insurance premium. The Seventh Circuit reversed the dismissal of Newman’s proposed class action, alleging breach of contract, deceptive and unfair business practices, and common-law fraud. The allegations raised in the complaint were enough to entitle Newman to prevail on the liability phase of her contract claim and to go forward on her remaining claims. The policy language is at least ambiguous, because it can be read reasonably to fix a person’s premium, if she had opted for the Reduced-Pay option. Illinois construes ambiguous contracts against the insurer. Newman’s complaint also alleged facts that plausibly show that MetLife’s policy was both deceptive and unfair under the Illinois Consumer Fraud Act and adequately alleged fraudulent concealment and reasonable reliance. View "Newman v. Metropolitan Life Insurance Co" on Justia Law

Credit One repeatedly called A.D.’s (a minor) cell phone about payments owed on her mother’s account. A.D., by and through her mother, Serrano, brought a putative class action under the Telephone Consumer Protection Act, 47 U.S.C. 227(b)(1)(A), seeking compensation for telephone calls placed by Credit One to her telephone number in an effort to collect a debt that she did not owe. During discovery, Credit One realized that its caller ID capture system had added A.D.’s phone number to its database when Serrano used A.D.’s phone to access her account. A.D. had apparently used the card, once, at her mother’s request, when she was 14 years old, in 2014. Credit One moved to compel arbitration and to defeat A.D.’s motion for class certification based on a cardholder agreement between Credit One and Serrano. The district court granted the motion to compel arbitration but certified for interlocutory appeal the question whether A.D. is bound by the cardholder agreement. The Seventh Circuit reversed the order compelling arbitration. A.D. is not bound by the terms of the cardholder agreement to arbitrate and has not directly benefited from the cardholder agreement such that equitable principles require the application of the arbitration clause against her. View "A.D. v. Credit One Bank, N.A." on Justia Law

AT&T notified Walton that she owed $268.47 on her closed AT&T account number 119864170 and that failure to pay “may cause your account to be referred to an outside collection agency.” Walton did not pay the bill. She received a debt-collection letter from EOS, stating that she owed AT&T $268.47 on account 864119170. AT&T had swapped the first three digits with the second three in providing the information. Walton contacted EOS, acknowledged that her name and mailing address were correct, but falsely denied that the last four digits of her social security number matched those the representative gave to confirm her identity. After investigating, EOS sent Walton another letter stating it had verified that her name, address, and her social security number, and stating a balance of $268.47. EOS again listed an incorrect account number. EOS reported Walton’s debt to credit-reporting agencies, informing them that the account was disputed. Walton wrote to the agencies to dispute the debt; the agencies notified EOS. After learning that she disputed the account number, EOS advised the agencies to delete Walton’s debt record. Walton sued under the Fair Debt Collection Practices Act, 15 U.S.C. 1692, for not verifying her debt with the creditor, and the Fair Credit Reporting Act, 15 U.S.C. 1681, for not reasonably investigating the disputed information. The Seventh Circuit affirmed summary judgment, finding that EOS complied with its statutory obligations. View "Walton v. EOS CCA" on Justia Law

A seller’s fraudulent statements about the fitness of a vehicle for the purpose for which it was purchased make disclaimers in purchase documents stating that the buyer purchased the vehicle “as is” ineffective.The district court in this case awarded relief to the buyer on both fraud and breach of warranty theories. The Supreme Court affirmed, holding (1) the buyer’s fraudulent statements about the fitness of the vehicle being sold for the purpose for which the vehicle was purchased made the “as is” disclaimers of implied warranties in the purchase documents ineffective under Minn. Stat. 336.2-316(3)(a); and (2) under the Uniform Commercial Code, a party may seek remedies for fraud, including breach of warranty, even after the rescission of a purchase contract, and therefore, the district court did not err in awarding damages under both fraud and breach of an implied warranty theories of liability. View "Sorchaga v. Ride Auto, LLC" on Justia Law

A plaintiff who alleges that he was injured from his use of a generic drug because of a failure to warn of the drug’s side effects cannot bring a common-law general negligence claim against the brand-name manufacturer that created the warning label. The plaintiff, however, may bring a common-law recklessness claim against the brand-name manufacturer if it intentionally failed to update the label on its drug, knowing or having reason to know of an unreasonable risk of death or grave bodily injury associated with its use. Further, a plaintiff who is injured by a generic drug due to a failure to warn cannot bring a claim under Mass. Gen. Laws ch. 93A, 9 against a brand-name manufacturer that did not advertise, offer to sell, or sell that drug because such failure did not occur in the conduct of “trade or commerce” as defined in section 1(b).In the instant case, the trial judge dismissed Plaintiff’s claims against Merck & Co, Inc. asserting negligence for failure to warn and a violation of Mass. Gen. Laws ch. 93A, 9. The Supreme Judicial Court vacated the order dismissing Plaintiff’s common-law claim and remanded with instructions that Plaintiff be granted leave to amend his complaint and affirmed the order dismissing Plaintiff’s chapter 93A claim. View "Rafferty v. Merck & Co., Inc." on Justia Law

Heryford, Trinity County, California's District Attorney, sued American Bankers and others, on behalf of the people under California’s Unfair Competition Law (UCL), alleging they had “engaged in deceptive marketing and sales practices.” Private parties may seek injunctive relief and restitution under the UCL; only a public prosecutor may pursue civil penalties. The complaint listed private law firms as “Special Assistant District Attorneys.” An agreement required the Firms to “provide all legal services that are reasonably necessary,” and to “conduct negotiations and provide representations at all hearings, depositions, trials, appeals, and other appearances” with authority to control the performance of their work “under the direction of the District Attorney,” stating that Heryford’s office did “not relinquish its constitutional or statutory authority or responsibility” and retained “sole and final authority to initiate and settle.” Heryford retained the Firms on a contingency-fee basis. American Bankers challenged the contingency-fee agreement as a violation of its federal due process rights that gave the Firms “a direct and substantial financial stake in the imposition of civil penalties and restitution,” which “compromise[d] the integrity and fairness of the prosecutorial motive and the public’s faith in the judicial process.” The Ninth Circuit affirmed the dismissal of the suit. Heryford’s retention of private counsel to pursue civil penalties cannot be meaningfully distinguished from a private relator’s pursuit of civil penalties under the qui tam provisions of the False Claim Act, an arrangement that does not violate due process. View "American Bankers Management Co. v. Heryford" on Justia Law

Plaintiffs filed suit against UTC and Honeywell under the Telephone Consumer Protection Act (TCPA), 47 U.S.C. 227, alleging that the companies were vicariously liable for illegal calls made by telemarketers promoting UTC and Honeywell products. The Fourth Circuit affirmed the district court's denial of the Federal Rule of Civil Procedure 56(d) motion because plaintiffs failed to show that they did not have an opportunity to discover specific evidence that was essential to their opposition to summary judgment. The court also affirmed the district court's grant of summary judgment because plaintiffs failed to proffer more than a scintilla of evidence to support the conclusion that UTC and Honeywell were vicariously liable for the telemarketers' alleged TCPA violations. View "Hodgin v. UTC Fire & Security Americas Corp." on Justia Law

At issue in this appeal was whether a mortgage servicer could be considered a "debt collector" under California's Rosenthal Fair Debt Collection Practices Act (the Rosenthal Act; Civ. Code,1 sec. 1788 et seq.). There was a split of authority among the many federal district courts that have considered the issue, and there was “a paucity of California authority addressing the question.” In this case, plaintiff Edward Davidson brought a putative class action against Seterus and its parent company, International Business Machines, Inc. (IBM), alleging that the defendants violated the Act and the Unfair Competition Law (UCL). The defendants demurred to Davidson's complaint, arguing that neither of them was a " 'debt collector' " who engages in " 'debt collection' " under the Act. The trial court sustained the defendants' demurrer, concluding that the defendants "are not 'debt collectors' because servicing a mortgage is not a form of collecting 'consumer debts.' " On appeal, Davidson contended the trial court erred in determining that mortgage servicers were not "debt collectors" under the Rosenthal Act. The Court of Appeal ultimately agreed with Davidson's contention, in no small part due to the Court’s adherence to "the general rule that civil statutes for the protection of the public are, generally, broadly construed in favor of that protective purpose." The Court therefore reversed the trial court and remanded this case for further proceedings. View "Davidson v. Seterus, Inc." on Justia Law

The Ninth Circuit reversed the district court's dismissal of plaintiff's claims based on lack of Article III standing. Plaintiffs filed suit against online retailer Zappos.com, alleging that they were harmed by hacking of their accounts. The panel held that plaintiffs sufficiently alleged standing based on the risk of identity theft under Krottner v. Starbucks Corp., 628 F.3d 1139 (9th Cir. 2010). Plaintiffs also alleged an injury in fact under Krottner, based on a substantial risk that the Zappos hackers will commit identity fraud or identity theft. The panel explained that it assessed standing at the time the complaints were filed, not as of the present. Finally, the panel held that plaintiffs sufficiently alleged that the risk of future harm was fairly traceable to the conduct being challenged and that their identity theft injury was redressable. The panel addressed an issue raised by sealed briefing in a concurrently filed memorandum disposition. View "Stevens v. Zappos.com, Inc." on Justia Law