Justia Consumer Law Opinion Summaries

The Commissioner of Financial Regulation of the Department of Labor, Licensing, and Regulation brought an administrative enforcement action against CashCall, Inc., a California corporation that marketed high-interest loans to consumers through television and internet advertisements, and John Paul Reddam (together, Petitioners), the corporation’s president and owner, alleging that Petitioners violated the Maryland Credit Services Business Act (MCSBA). The Commissioner concluded that CashCall was subject to the MCSBA, ordered Petitioners to cease and desist from engaging in the credit services business, and ordered that Petitioners pay a civil penalty. The circuit court reversed, concluding that CashCall was not a “credit services” business under the MCSBA. The Court of Special Appeals affirmed. The Court of Appeals affirmed, holding that the MCSBA’s definition of a “credit services business” requires there to be a direct payment from a consumer to an entity whose primary business is to assist consumers in obtaining loans that would be usurious under Maryland law. View "CashCall, Inc. v. Comm'r of Fin. Regulation" on Justia Law

In May 2013, plaintiffs Annemarie Morgan and Tiffany Dever filed suit against defendants Sanford Brown Institute, its parent company, Career Education Corporation, and Sanford Brown's chief executive officer, admission and financial aid officers, and clinical director. Sanford Brown was a private, for-profit educational institution with a campus in Trevose, Pennsylvania, that offered medical-related training programs. In the complaint, plaintiffs claimed that defendants misrepresented the value of the school's ultrasound technician program and the quality of its instructors, instructed students on outdated equipment and with inadequate teaching materials, provided insufficient career-service counseling, and conveyed inaccurate information about Sanford Brown's accreditation status. The complaint further alleged that Sanford Brown employed high-pressure and deceptive business tactics that resulted in plaintiffs financing their education with high-interest loans, passing up the study of ultrasound at a reputable college, and losing career advancement opportunities. The Sanford Brown enrollment agreement included payment terms for tuition and fees, disclaimers, and an arbitration provision. Without answering the complaint, defendants filed a motion to compel arbitration and to dismiss plaintiffs' claims. The Appellate Division found the parties clearly and unmistakably agreed an arbitrator would determine issues of arbitrability and that plaintiffs failed to specifically attack the delegation clause. The panel therefore determined that arbitrability [was] for the arbitrator to decide. The Supreme Court reversed, finding that the Appellate Division and trial court did not have the benefit of "Atalese v. U.S. Legal Servs. Grp.," (219 N.J. 430, 436 (2014), cert. denied, __ U.S. __, 135 S. Ct. 2804, 192 L. Ed.2d 847 (2015)) at the time they rendered their decisions. The New Jersey Court held in "Atalese" that an arbitration provision in a consumer contract that fails to explain in some minimal way that arbitration is a substitute for a consumer s right to pursue relief in a court of law was unenforceable. This case was therefore remanded for further proceedings in light of Atalese. View "Morgan v. Sanford Brown Institute" on Justia Law

Consumer, an Ohio resident, defaulted on credit-card debt. Consumer was sued by the entities that purchased her debt in an effort to collect on the debt. Consumer counterclaimed, alleging violations of the federal Fair Debt Collection Practices Act (FDCPA) and the Ohio Consumer Sales Practices Act (OCSPA). The trial court entered judgment against Consumer. The Appellate Court reversed and remanded. The Supreme Court affirmed, holding (1) the underlying cause of action for default on the credit card in this case accrued in Delaware, the home state of the bank that issued the credit card and where Consumer’s payments were made; (2) Delaware’s statute of limitations determines whether the collection action was timely filed; (3) the filing of a time-barred collection action may form the basis of a violation under the FDCPA and the OSCPA; (4) a consumer can bring actionable claims under the FDCPA and the OSCPA based upon debt collectors’ representations made to courts in legal filings; and (5) debt buyers collecting on credit-card debt and their attorneys are subject to the OSCPA. View "Taylor v. First Resolution Inv. Corp." on Justia Law

The Blatt firm filed a collection lawsuit against Oliva in the first municipal district of the Circuit Court of Cook County. Oliva resided in Cook County. Under the Seventh Circuit’s 1996 “Newsom” decision, interpreting the Fair Debt Collection Practices Act (FDCPA) venue provision, debt collectors were allowed to file suit in any of Cook County’s municipal districts if the debtor resided in Cook County or signed the underlying contract there. While the Oliva suit was pending, the Seventh Circuit overruled Newsom, with retroactive effect (Suesz, 2014). One week later, Blatt voluntarily dismissed the suit. Oliva sued Blatt for violating the FDCPA’s venue provision as newly interpreted by Suesz. The district court granted Blatt summary judgment, finding that it relied on Newsom in good faith and was immune from liability under the FDCPA’s bona fide error defense, 15 U.S.C. 1692k(c), which precludes liability for unintentional violations resulting from a good‐faith mistake. The Seventh Circuit affirmed, rejecting an argument that the defense should not apply because the firm’s violation resulted from its mistaken interpretation of the law. In relying on Newsom, the firm simply followed the circuit's controlling law; its failure to foresee the retroactive change of law was not a mistaken legal interpretation, but an unintentional bona fide error View "Oliva v. Blatt, Hasenmiller, Leibsker & Moore, LLC" on Justia Law

Plaintiff filed suit against defendants, debt collectors, alleging that they violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692i, when they sued her in the wrong judicial district to collect a debt that had been transferred to them. The district court concluded that the complaint was time-barred pursuant to the FDCPA’s one-year statute of limitations. The court concluded that, instead of applying Naas v. Stolman, the district court should have applied Mangum v. Action Collection Service, Inc., which is almost directly on point. The court held that the discovery rule applies equally regardless of the nature of the FDCPA violation alleged by a plaintiff. In this case, the court found that plaintiff's complaint was timely filed where she first learned of the collection action when she received service of process, and that she had no reason to suspect that she had been sued in Monterey County, a venue that is considerably distant from her residence in San Diego County. Accordingly, the court reversed and remanded. View "Lyons v. Michael & Assocs." on Justia Law

This appeal arose out of a $17 million verdict rendered in favor of Francis Maybank for claims sounding in contract, tort, and the South Carolina Unfair Trade Practices Act (UTPA). Maybank brought this action alleging he received faulty investment advice from Branch Banking and Trust (BB&T - the Bank) through BB&T Wealth Management (Wealth Management) and BB&T Asset Management (Asset Management), all operating under the corporate umbrella of BB&T Corporation (collectively, Appellants). Appellants appealed on numerous grounds, and Maybank appealed the trial court's denial of prejudgment interest. After review, the Supreme Court reversed as to an award of punitive damages based on a limitation of liability clause. The Court affirmed on all other grounds. View "Maybank v. BB&T" on Justia Law

The court issued a post-trial opinion holding that the loan agreement between plaintiff and National was unconscionable and that National violated the federal Truth in Lending Act (TILA), 15 U.S.C. 1601 et seq. At issue is the court's award of attorneys' fees and costs to plaintiff. The court concluded that, because plaintiff prevailed on her TILA claims, and because plaintiff's other claims arose out of the same common core of facts as her TILA claims, the fee award extends to all of plaintiff's attorneys' fees and costs. The court also concluded that the bad faith with which National and its counsel acted throughout the litigation provides an independent basis for awarding plaintiff her attorneys' fees. Finally, the court rejected National's various procedural arguments. Therefore, plaintiff is entitled to the full amount sought and, given the seriousness of the misconduct in which National and its counsel engaged, they are jointly and severally liable for the fee award. View "James v. National Financial, LLC" on Justia Law

Adams dropped out of school in the 11th grade, moved to West Virginia, and receives social security disability on the basis of severe hypertension, migraine headaches, and mild mental retardation with marginal illiteracy. In 2007, Adams began receiving calls from a collection agency regarding a $2,500 guaranteed student loan procured in her name in 1986, for the purpose of attending school in Florida. Adams denied entering into the loan agreement, executing an application or promissory note, or attending school, but, nonetheless entered into a “rehabilitation agreement,” and made about 30 payments of $86.00/month to remove the “default” status of the loan, which was then owned by the Department of Education as a federally guaranteed Stafford Loan. She claims the agency threatened to take her social security if she did not make payments. In 2010, she again disavowed the loan, claiming identity theft. An investigation was launched. Adams eventually agreed to assume responsibility again, but, in 2011, asserted that she was entitled to discharge because she was disabled. She submitted her social security award decision, but failed to produce a required physician’s report. She retained counsel, but the agency continued written and telephone contact. The circuit court entered summary judgment for the agency, holding that the debt collection activity is required by Federal Family Education Loan Program regulations promulgated under the Higher Education Act of 1965. The Supreme Court of Appeals of West Virginia affirmed, finding her state Consumer Credit and Protection Act claim preempted by federal law. View "Adams v. Pa. Higher Educ. Assistance Agency" on Justia Law

Pow! Mobile (the Company), not a party here, is a mobile content provider that marketed a “reverse auction” game called “Bid and Win.” Both Mobile Messenger and m-Qube (defendants) are “billing aggregators” who serve as financial intermediaries between customers and content providers. Plaintiff filed a class action alleging that defendants have engaged in a scheme “that causes Washington consumers to become unknowingly and unwittingly subscribed to premium text message services.” The district court held that defendants are not intended third-party beneficiaries entitled to enforce the arbitration clause at issue and denied defendants' motion to compel arbitration. The court concluded that the Terms and Conditions in this case create a direct obligation from the subscriber to the Company’s suppliers. The signatory to the Terms and Conditions agrees to waive all claims against the Company’s suppliers. Therefore, the Company’s suppliers are intended third-party beneficiaries of the Terms and Conditions. Thus, if defendants are suppliers of the Company, they may enforce the arbitration clause. The court remanded for the district court to make determinations in the first instance regarding assent to the Terms and Conditions, and whether defendants are Pow! Mobile’s suppliers. View "Geier v. m-Qube Inc." on Justia Law

California’s Online Privacy Protection Act of 2003 (OPPA), under the unfair competition law (Bus. & Prof. Code 17200 et. seq.), addresses the obligations of an operator of a commercial Web site or online service regarding the posting of a privacy policy on the Internet. The state sought damages and injunctive relief under OPPA, alleging that Delta’s Fly Delta mobile application violated the privacy policy requirements. The trial court dismissed, finding the suit expressly preempted by the Airline Deregulation Act of 1978 (49 U.S.C. 41713 (b)(1)). The court of appeal affirmed. To compel Delta to comply with the OPPA would effectively interfere with the airline’s “selection and design” of its mobile application, a marketing mechanism “appropriate to the furnishing of air transportation service,” for which state enforcement has been held to be expressly preempted. View "Harris v. Delta Air Lines" on Justia Law