Justia Consumer Law Opinion Summaries

Forquest Ventures was formed to operate a placer mining enterprise in Helena, Montana. Ken Hagman relied on purported assay reports of the site allegedly performed by Advanced Analytical before incorporating Forquest. Following incorporation, Forquest sold or issued stock to investors, including Investors. Because there was little precious metal content at the site, Forquest realized no profits and Investors received no return on their investments. Emilio and Candice Garza, individually and on behalf of all similarly situated Forquest investors, sued. The Garzas then filed an amended complaint adding the other Investors as named plaintiffs. Forquest filed a third-party complaint against Advanced Analytical. The district court granted summary judgment to Investors on their Montana Securities Act (Act) claims and granted Advanced Analytical’s motion to dismiss. The Supreme Court affirmed in part and reversed in part, holding that the district court (1) correctly determined that Investors timely asserted their claims under the Act; (2) did not err in determining that the non-Garza Investors’ claims relate back to the original complaint’s filing date; (3) correctly determined that there were no genuine issues of material fact regarding Forquest’s failure to use reasonable care in the sale of securities to Investors; but (4) erred in dismissing Advanced Analytical for lack of personal jurisdiction. View "Garza v. Forquest Ventures, Inc." on Justia Law

Brown filed a class action complaint, alleging that she contacted Defender by telephone in response to its advertisement for a home security system; that, during several calls, she provided Defender with personal information; and that Defender recorded those calls without her permission and without notifying her of the recording. Brown claimed violations of California Penal Code 632, which prohibits the recording of confidential telephone communications without the consent of all parties. Defender owned a commercial general liability insurance policy issued by First Mercury, covering “personal injury” and “advertising injury.” In a separate definitions section, the policy defined both “advertising injuries” and “personal injuries” as those “arising out of … [o]ral or written publication of material that violates a person’s right of privacy.” The parties eventually reached a settlement. Defender provided First Mercury with timely notice of the Brown suit. First Mercury denied coverage and refused to defend. The Seventh Circuit affirmed dismissal of Defender’s suit against First Mercury. Defender’s Policy requires “publication,” which was neither alleged nor proven. View "Defender Sec. Co. v. First Mercury Ins. Co." on Justia Law

The state filed a complaint, alleging that letters mailed by MPHJ to Vermont businesses informing them that they may be infringing certain patents were deceptive and violated the Vermont Consumer Protection Act, 9 V.S.A. 2451. MPHJ is a non-practicing entity incorporated in Delaware that acts through shell corporations incorporated in many states. MPHJ removed the case twice to federal court, once under the original complaint and once under an amended complaint. The district court remanded the case to state court both times. The Federal Circuit affirmed. While 28 U.S.C. 1442(a)(2), provides jurisdiction “in any civil action arising under, or in any civil action in which a party has asserted a compulsory counterclaim arising under, any Act of Congress relating to patents,” the patents at issue were transferred to MPHJ from the original patent owner; they were not directly “derived from a federal officer.” The complaint neither alleged violation of nor sought relief under the Vermont Bad Faith Assertions of Patent Infringement Act so there is no risk that the state court action can affect the validity of federal law. View "Vermont v. MPHJ Tech. Inv., LLC" on Justia Law

Fecteau Residential Homes, Inc. (seller) was in the business of selling manufactured modular homes. In early November of 2010, Janet and Mark McKinstry (buyers) entered into a written contract with seller for the purchase of a demonstrator modular home on seller's lot. Buyers tendered a $5000 deposit toward the purchase price, obtained financing, and engaged a contractor to lay the necessary footings and foundation for the home. Shortly thereafter, however, seller's owner Vic Fecteau called buyers to offer them a new, identical modular home at the same price instead of the demonstrator model for which they had contracted for reasons related to financial difficulties in obtaining a replacement floor model from that particular manufacturer. Buyers rejected the offer, the parties argued, and Fecteau cancelled the deal and subsequently returned the $5000 deposit. Buyers purchased a slightly larger modular home from a different dealer, which required modifications to the partially completed foundation to install. Buyers then filed this action under the Consumer Protection Act, alleging that seller misrepresented its intention to sell them the demonstrator model for which they had contracted; that they relied to their detriment on the misrepresentation, in part by paying for a foundation "to meet the dimensions of the home sold to them by [seller]"; and that they incurred additional expenses when forced to install a different model. Buyers sought damages, exemplary damages, and attorney's fees. Seller moved for summary judgment, asserting that buyers had failed to establish an essential element of consumer fraud by showing a misrepresentation or omission of material fact at the time of contracting, failed to establish that they were "consumers" within the meaning of the Act, and failed to mitigate their damages. The trial court denied the motion. Following a two-day trial, the jury returned a special verdict in favor of buyers, finding that there consumer fraud, and awarded $1,000 in damages. Seller moved to offset any attorney's fee award by the $5000 deposit refunded to buyers in order to a "preclude double recovery" under the Act. The trial court found, "Given the minimal recovery, the fact that recovery was questionable from the start, and the lack of any public purpose served by this case," a reasonable fee award for recovery was $15,000. The court granted buyers' request for costs for a total of $1360. Turning to the $5000 offset, the court concluded that, under the Act, buyers were not entitled to both a return of their consideration and an award of damages, and determined that "the $5000 will be treated as a credit toward the attorney's fees." Seller subsequently moved for judgment notwithstanding the verdict to overturn the entire judgment. Buyers opposed the motion, and also moved for reconsideration of the attorney's fee award, asserting that the $5000 offset was improper. The Supreme Court found that the evidence was sufficient to find a misrepresentation or omission of material fact, and that the return of the deposit had nothing to do with buyers' claim that seller violated the Act. It found no basis for the $5000 set-off against attorney's fees ordered by the trial court. The $1000 damage award was affirmed. The attorney's fee award was modified to eliminate the $5000 set off, resulting in a total judgment of $17,360. View "McKinstry v. Fecteau Residential Homes, Inc." on Justia Law

Plaintiff appealed the district court's dismissal of his claims against Staples for breach of contract and for violations of New York General Business Law (N.Y. G.B.L.) Sections 349 and 350 for failure to state a claim. Sections 349 and 350 prohibit deception of consumers and false advertising. Plaintiff alleged, among other things, that the district court erred in finding that the language of the Protection Plan Brochure (the Contract) that plaintiff purchased for his computer was unambiguous. The court concluded that plaintiff has adequately alleged both a materially misleading practice and an actual injury under N.Y. GBL Sections 349 and 350; with respect to the breach of contract claim, the district court erred in finding the Contract to be unambiguous, in requiring plaintiff to allege a “material” breach, and in finding that plaintiff had failed to adequately allege damages; construing the contract’s ambiguities in plaintiff’s favor, he has alleged Staples’s failure to perform in the first year of the contract and damages in the amount of his restitution interest; and should plaintiff seek damages beyond his restitution interest, he should amend his complaint. Accordingly, the court vacated and remanded with instructions. View "Orlander v. Staples, Inc." on Justia Law

Appellants brought this action against BAC Home Loans Servicing, LP, asserting fraud and consumer fraud. The district court granted BAC’s motion to dismiss but allowed Appellants leave to file an amended complaint. Thereafter, Appellants filed a first amended complaint, again asserting fraud and consumer fraud. The district court dismissed the amended complaint, allowing Appellants leave to amend. Instead of filing a second amended complaint, however, Appellants appealed. The Supreme Court dismissed the appeal for lack of jurisdiction, holding that the district court’s order granting BAC’s second motion to dismiss was not final and appealable because it allowed Appellants leave to amend. View "Bergenfield v. BAC Home Loans Servicing, LP" on Justia Law

A few decades ago, an oil spill occurred on property in Salem, Massachusetts that was owned by Peabody Essex Museum. The pollution from the spill migrated to the land of a down gradient neighbor, Heritage Plaza. In 2003, Heritage Plaza discovered the subsurface contamination and notified the Museum. The Museum, in turn, gave prompt notice to state environmental authorities and to its insurer, United States Fire Insurance Company (U.S. Fire). The Museum filed a coverage suit against U.S. Fire and, in 2013, secured a judgment requiring U.S. Fire to pay the Museum over $1.5 million, including punitive damages under Mass. Gen. Laws ch. 93A. In this appeal, the parties challenged multiple district court rulings. The First Circuit affirmed the challenged rulings related to insurance coverage but reversed the finding of Chapter 93A liability and vacated the district court’s associated award of punitive damages, holding that U.S. Fire’s conduct under these circumstances was not the kind that the Massachusetts Supreme Judicial Court has condemned as egregious settlement misconduct that is actionable under Chapter 93A. View "Peabody Essex Museum, Inc. v. U.S. Fire Ins. Co." on Justia Law

The district court denied a motion to certify a class to sue Zions Bank and its payment-processor subsidiaries for alleged civil violations of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1962(c), (d). The complaint that the defendants conspired to conduct a fraudulent telemarketing scheme that caused unauthorized debits from bank accounts owned by Reyes and members of the proposed class. The court concluded that there were no issues common to the class and Reyes could therefore satisfy neither the commonality requirement of Federal Rule of Civil Procedure 23(a), nor the predominance requirement of Rule 23(b)(3). The court recognized Reyes’ theory of a sham enterprise, but focused on the fact that different sales pitches were used and different products were pitched. The Third Circuit vacated, reasoning that the district court did not adequately consider evidence of the structure of each of the alleged fraudulent schemes and related FTC investigations. If absolute conformity of conduct and harm were required for class certification, unscrupulous businesses could victimize consumers with impunity merely by tweaking the language in a telemarketing script to get access to personal information such as account numbers. View "Reyes v. Netdeposit, LLC" on Justia Law

Robert Benson appealed the denial of his motion for attorney fees and costs from respondent Southern California Auto Sales, Inc. (SCAS), after he obtained a favorable judgment based on the Consumer Legal Remedies Act (CLRA). The court found that SCAS had offered Benson an appropriate correction upon receiving the statutorily required notice of problems with its used car. Benson contended the trial court erred in deciding SCAS had offered him an appropriate correction under the CLRA, and further that he was entitled to attorney fees as the prevailing party. After review, the Court of Appeal chose to defer to the trial court's determination of whether a correction offer was appropriate in this case. "Whether a plaintiff can recover attorney fees and costs incurred in an action for damages after being offered an appropriate correction is a matter of statutory interpretation, and we conclude CLRA fees and costs are not available under these circumstances." View "Benson v. Southern Cal. Auto Sales" on Justia Law

This appeal arose from two related class-action lawsuits that were first brought by Appellees almost fifteen years ago. Appellees sought damages from Appellants, Ganley Chevrolet and Ganley Management Company, as well as declaratory and injunctive relief, alleging violations of the Ohio Consumer Sales Practices Act (OCSPA). The trial court eventually certified a class of plaintiffs and ruled that all class members could recover damages. The trial court then ruled that Appellants violated the OCSPA and awarded damages to each class member. The appellate court affirmed the trial court’s order certifying the class without squarely addressing Appellants’ claim that there was no showing that all class members had suffered damages. The Supreme Court reversed the judgment of the court of appeals and vacated the trial court’s order certifying the class, holding (1) all members of a plaintiff class must have suffered injuries as a result of the conduct challenged in the suit; and (2) because the class certified in this case included plaintiffs whose damages were inchoate, the class as certified was inconsistent with the law. View "Felix v. Ganley Chevrolet, Inc." on Justia Law