Justia Consumer Law Opinion Summaries

Two former tenants sued the owner and manager of a residential apartment complex, alleging that they were charged unlawful rental application fees and excessive lock change fees, in violation of the Massachusetts security deposit statute and consumer protection laws. They sought to represent a statewide class of similarly situated tenants. After contentious discovery, the Superior Court sanctioned the defendants, precluding them from contesting certain liability facts. The court granted summary judgment to the plaintiffs on the security deposit claims but denied summary judgment on the consumer protection claims. Before trial, the parties reached a proposed class action settlement that established a fund for class members, with unclaimed funds to be distributed partly to charities and partly returned to the defendants.The Superior Court, after scrutiny and required revisions, approved the settlement. The court capped the amount of unclaimed funds that could revert to the defendants and required that a portion go to designated charities. However, the Massachusetts IOLTA Committee, a nonparty potentially entitled to notice under Mass. R. Civ. P. 23(e)(3), was not notified prior to settlement approval. After final approval and claims processing, the committee received notice for the first time and objected to the final distribution of unclaimed funds, arguing that the lack of timely notice violated the rule and that final judgment should be set aside. The motion judge agreed there was a violation but declined to vacate the settlement, finding no prejudice.On direct appellate review, the Supreme Judicial Court of Massachusetts held that the IOLTA Committee had standing to appeal the denial of its procedural right to notice and an opportunity to be heard on the disposition of residual funds, but lacked standing to challenge the overall fairness or structure of the settlement. Assuming a violation of the rule occurred, the Court found no prejudice because the committee ultimately received the opportunity to be heard before judgment entered. The judgment was affirmed. View "Ortins v. Lincoln Property Company" on Justia Law

An Iranian citizen, living in the United States, held a credit card account with a large financial institution. Due to United States sanctions against Iran, federal regulations prohibit U.S. banks from providing services to accounts of individuals ordinarily resident in Iran, unless those individuals are not located in Iran. The bank had a compliance policy requiring account holders from such sanctioned countries to regularly provide documents showing they were not residing in those countries. The plaintiff, subject to this policy, submitted various documents as proof of U.S. residency. After the bank mistakenly treated one of his residency documents as temporary rather than permanent, it closed his account when he failed to submit additional documentation.The plaintiff sued in state court, alleging violations of federal and state anti-discrimination and consumer protection statutes, including 42 U.S.C. § 1981, the Equal Credit Opportunity Act, the California Unruh Civil Rights Act, and the California Unfair Competition Law. The defendant bank removed the case to the United States District Court for the Southern District of California. The district court granted summary judgment for the bank on all claims except for an ECOA notice claim and a related UCL claim, both of which the plaintiff later voluntarily dismissed. The plaintiff then appealed.The United States Court of Appeals for the Ninth Circuit held that the International Emergency Economic Powers Act’s liability shield provision immunizes the bank from liability for good faith actions taken in connection with compliance with sanctions regulations, even if such actions are not strictly compelled by the regulations. The court found that the bank’s policy was consistent with federal guidance and that the plaintiff failed to show a genuine dispute of material fact regarding the bank’s good faith. The Ninth Circuit affirmed the district court’s judgment in favor of the bank. View "NIA V. BANK OF AMERICA, N.A." on Justia Law

Meta Platforms, Inc. and Instagram, LLC were sued by the Commonwealth for allegedly engaging in unfair business practices by designing the Instagram platform to encourage compulsive use among children, misleading the public about the platform's safety, and creating a public nuisance through these practices. The Commonwealth argued that Meta intentionally exploited young users’ vulnerabilities through specific design features, made deceptive statements regarding safety, and failed to effectively prevent underage users from accessing the platform despite public claims to the contrary.The case originated in the Massachusetts Superior Court. There, Meta moved to dismiss the complaint, asserting that Section 230(c)(1) of the Communications Decency Act (CDA) provided them with immunity from the Commonwealth’s claims. The judge denied Meta's motion, concluding that Section 230 did not bar the claims because the alleged harms stemmed from Meta’s own conduct and speech, rather than from third-party content. Meta then sought interlocutory review, claiming an immediate right to appeal under the doctrine of present execution due to the asserted immunity from suit.The Supreme Judicial Court of Massachusetts granted direct appellate review. The court held that the doctrine of present execution allowed an interlocutory appeal regarding Section 230 immunity because the statute confers immunity from suit, not merely from liability. On the merits, the court found that Section 230(c)(1) did not bar the Commonwealth’s claims at this preliminary stage. The court reasoned that the claims were based on Meta’s own design choices and misrepresentations, not on holding Meta liable as a publisher of third-party information. The court therefore affirmed the Superior Court’s denial of Meta’s motion to dismiss as to Section 230(c)(1). View "Commonwealth v. Meta Platforms, Inc." on Justia Law

A consumer purchased a pair of leggings from a national retailer’s website at an advertised sale price of $6.00, which was displayed alongside a struck-out “regular price” of $12.50. The consumer believed, based on the website’s representations, that the leggings were normally sold at $12.50 and that the $6.00 price reflected a genuine discount. After purchasing and collecting the leggings, the consumer learned that the “regular price” was rarely charged and alleged that the higher reference price was misleading. She brought a putative class action in the United States District Court for the Eastern District of Washington, claiming that the retailer’s “false discounting” scheme violated the Washington Consumer Protection Act (CPA). She alleged three forms of injury: that she would not have purchased the leggings but for the misrepresentation (“purchase price” theory), that she did not receive the benefit of the bargain, and that she paid an inflated price due to artificially increased demand (“price premium” theory).The district court dismissed the complaint with prejudice under Federal Rule of Civil Procedure 12(b)(6), finding that, although deceptive conduct was sufficiently alleged, the consumer failed to allege injury cognizable under the CPA. The court reasoned that she did not claim the leggings were worth less than the $6.00 paid or differed from what was advertised, but only that they were not worth the higher reference price.On appeal, the United States Court of Appeals for the Ninth Circuit found Washington law unclear on whether the consumer’s allegations constituted an injury to “business or property” under the CPA and certified the question to the Supreme Court of the State of Washington. The Washington Supreme Court held that, without more, a consumer who receives and retains a fungible product at the price she agreed to pay, but was influenced by a misrepresentation about price history, does not allege a cognizable injury to business or property under the CPA. The court clarified that subjective disappointment or being misled into believing one obtained a bargain does not amount to an objective economic loss as required by the statute. View "Montes v. SPARC Group LLC" on Justia Law

Several plaintiffs, including a truck driver and employees, alleged that their employers or associated companies collected their biometric data, such as fingerprints or hand geometry, without complying with the requirements of the Illinois Biometric Information Privacy Act (BIPA). Each plaintiff claimed that every instance of data collection constituted a separate violation, resulting in potentially massive statutory damages. Some claims were brought as class actions, raising the possibility of billions in liability for the defendants.In the United States District Court for the Northern District of Illinois, the district judges addressed whether a 2024 amendment to BIPA Section 20, which clarified that damages should be assessed per person rather than per scan, applied retroactively to cases pending when the amendment was enacted. The district courts determined that the amendment did not apply retroactively and certified this question for interlocutory appeal under 28 U.S.C. § 1292(b).The United States Court of Appeals for the Seventh Circuit reviewed the certified question de novo. The court considered Illinois’s established law of statutory retroactivity, which distinguishes between substantive and procedural (including remedial) changes. The Seventh Circuit held that the BIPA amendment was remedial because it addressed only the scope of available damages and did not alter the underlying substantive obligations or standards of liability. The court reasoned that, under Illinois law, remedial amendments apply to pending cases unless precluded by constitutional concerns, which were not present here.The Seventh Circuit concluded that the 2024 amendment to BIPA Section 20 applies retroactively to all pending cases. The court reversed the district courts’ rulings and remanded the cases for further proceedings consistent with its holding. View "Clay v Union Pacific Railroad Company" on Justia Law

An individual purchased a digital camera from a vendor. Several years after the purchase—and after the expiration of the camera’s one-year express warranty and the four-year implied warranty period—the camera developed a malfunction in its aperture-control mechanism. The buyer, after discovering through online research that others had reported similar issues, claimed that the vendor’s failure to publicly disclose this defect was a deceptive omission. The buyer alleged that, had he known about the defect, he would not have bought the camera. He sought to recover damages based on Pennsylvania’s Unfair Trade Practices and Consumer Protection Law (UTPCPL), asserting that the vendor’s nondisclosure violated the statute’s “catch-all” provision prohibiting fraudulent or deceptive conduct.At the trial level, the Court of Common Pleas of Philadelphia County sustained the vendor's preliminary objection, finding that the buyer had not alleged any pre-purchase interaction or statement from the vendor, nor justifiable reliance on any representation. The buyer appealed. The Superior Court of Pennsylvania affirmed but did so for a different reason: it relied on its earlier decision in Romeo v. Pittsburgh Associates, which held that a deceptive omission under the UTPCPL is only actionable if the vendor had an affirmative duty to disclose the defect. The Superior Court concluded that the buyer had not alleged any such duty.The Supreme Court of Pennsylvania reviewed the case to determine whether the holding in Romeo remains sound law. The Supreme Court held that, to state a claim under the UTPCPL’s catch-all provision based on an omission, a plaintiff must allege that the vendor had a duty to disclose the omitted information. Because the buyer failed to allege any such duty, he failed to state a claim. The Supreme Court affirmed the Superior Court’s judgment. View "Halpern v. Ricoh U.S.A., Inc." on Justia Law

Two Illinois residents obtained online loans of $600 each from a lender operating under the laws of the Otoe-Missouria Tribe of Indians, with interest rates approaching 500% per year. The loan agreements included an arbitration clause, which delegated to the arbitrator all questions including the enforceability and formation of the agreement, specifying that such issues would be determined under “tribal law and applicable federal law.” At the time the loans were issued, the referenced tribal law did not exist.After receiving the loans, the borrowers filed a putative class action in the United States District Court for the Northern District of Illinois, alleging violations of Illinois consumer-protection statutes and federal laws. The defendants moved to compel arbitration under the terms of the loan agreements. The district court denied the motion, finding that the arbitration and delegation provisions were unenforceable because they effectively forced the plaintiffs to waive their substantive rights under Illinois law, applying the “prospective waiver” doctrine.On appeal, the United States Court of Appeals for the Seventh Circuit reviewed the district court’s denial de novo. The Seventh Circuit affirmed, holding that there was no mutual assent to the arbitration and delegation provisions. The court determined that, at the time of contracting, the specified tribal law did not exist, and federal law does not supply substantive contract-formation rules. Because the contract’s governing law provision referred to a body of law that was nonexistent and subject to unilateral creation by the defendants’ affiliate, there was no meeting of the minds as to an essential term. The Seventh Circuit concluded that the absence of mutual assent rendered the arbitration and delegation provisions unenforceable and affirmed the district court’s order denying the motion to compel arbitration. View "Harris v W6LS, Inc." on Justia Law

A dispute arose between two bourbon companies, each owned by African Americans, regarding which could claim to be the first to distill bourbon in Kentucky. Victory Global, operating as Brough Brothers, began by sourcing bourbon from Indiana in 2020 and later opened its own distillery in Louisville, filling its first barrel of Kentucky bourbon at the end of that year. Fresh Bourbon, started by the Edwardses, developed its recipe and, lacking a distillery, began distilling bourbon at Hartfield & Co. in Bourbon County in 2018 with increasing hands-on involvement. Fresh Bourbon sold its Kentucky-made bourbon in 2020 and later opened its own distillery in Lexington in 2022 or 2023. Both companies marketed themselves as African American-owned, but Brough Brothers objected to Fresh Bourbon’s claims of being the first, arguing those statements were false or misleading.The United States District Court for the Eastern District of Kentucky reviewed the case on summary judgment. Brough Brothers alleged false advertising under the Lanham Act, asserting that Fresh Bourbon’s marketing contained literally false statements about being the first African American distillery or having the first African American master distiller since slavery. The district court found that the contested statements were, at most, misleading rather than literally false, and that Brough Brothers had not introduced evidence that consumers were actually deceived. It also concluded there was no showing of material impact on consumer decisions.The United States Court of Appeals for the Sixth Circuit reviewed the district court’s decision de novo. The Sixth Circuit affirmed summary judgment for Fresh Bourbon, holding that the statements in question were ambiguous and not literally false. The court emphasized that, absent unambiguously false statements, Brough Brothers needed to present evidence of consumer deception, which it failed to do. Thus, Brough Brothers’ claims under the Lanham Act could not survive. The decision of the district court was affirmed. View "Victory Global, LLC v. Fresh Bourbon, LLC" on Justia Law

The plaintiffs, who were long-time friends of the defendants, invested significant sums in a biopharmaceutical company controlled by the defendants. The defendants did not disclose that the company was in serious financial distress, under a substantial obligation to a lender, and prohibited from incurring additional debt. The investment was structured through promissory notes, which included false warranties regarding the company’s financial status and claimed the formation of a new entity that never materialized. Instead of funding a new venture, the defendants used the investment to pay off existing company debt. Less than two years later, the company declared bankruptcy, making the notes essentially worthless.The plaintiffs brought claims under federal and Massachusetts securities laws, the Massachusetts consumer protection statute, and for common law fraud and negligent misrepresentation in the United States District Court for the District of Massachusetts. The defendants moved to dismiss the action, relying on a forum selection clause in the promissory notes requiring litigation in Delaware courts. The district court granted the motion and dismissed the case without prejudice, concluding that the clause applied to the plaintiffs’ claims.On appeal, the United States Court of Appeals for the First Circuit reviewed the dismissal de novo. The plaintiffs argued that their claims did not “arise out of” the notes and that the forum selection clause was unenforceable as contrary to Massachusetts public policy. The First Circuit rejected both arguments, holding that the claims arose from the notes and that the plaintiffs did not meet the heavy burden required to invalidate the clause on public policy grounds. The First Circuit affirmed the district court’s dismissal without prejudice, leaving the plaintiffs free to pursue their claims in the contractually designated Delaware courts. View "Manzo v. Wohlstadter" on Justia Law

After Doris and Harold Fasching executed a mortgage with a bank in 1998, their interest in the property passed to their heirs upon their deaths in 2021. Sandra Fiecke-Stifter, one of the heirs, did not make mortgage payments as scheduled in late 2021 and early 2022, resulting in the initiation of nonjudicial foreclosure proceedings by the bank. During this period, she made several partial and full payments, some of which were credited and later refunded by the bank, and received statements with varying amounts due. After the foreclosure process began, Fiecke-Stifter requested a payoff amount from the bank’s attorney, but the amount was never provided. The property was sold at a sheriff’s auction, and Fiecke-Stifter later redeemed it by paying more than the last stated loan balance.Proceedings began in the United States District Court for the District of Minnesota, where Fiecke-Stifter alleged that the bank violated the Truth in Lending Act (TILA) by refunding previously credited payments and assessing late fees, and that the bank’s attorney violated the Fair Debt Collection Practices Act (FDCPA) by proceeding with foreclosure without a present right to possession. The district court dismissed both claims, finding there was no TILA violation because the statute only prohibits delay in crediting payments, not the return of already credited payments, and dismissed the FDCPA claim after permitting an amendment.On appeal, the United States Court of Appeals for the Eighth Circuit affirmed the dismissal of the TILA claim, holding that TILA section 1639f(a) does not prohibit a servicer from refunding payments that were initially credited. However, the court vacated the dismissal of the FDCPA claim, determining that whether the alleged failure to provide a reinstatement or payoff amount under Minnesota law equates to the absence of a “present right to possession” is a question best addressed by the district court in the first instance. The case was remanded for further proceedings on the FDCPA claim. View "Fiecke-Stifter v. MidCountry Bank" on Justia Law