Justia Consumer Law Opinion Summaries

A 2018 data breach at Barracuda Networks exposed protected health information of patients of Zoll Services LLC, a subsidiary of Zoll Medical Corporation. Zoll had contracted with Fusion LLC for data security services, and Fusion in turn relied on Barracuda’s technology. The agreements between these companies included certain liability and indemnification provisions, as well as a right for Barracuda to audit Fusion’s customer contracts. After the breach, Zoll settled a class action brought by its customers whose data was compromised.Following these events, Zoll initiated arbitration against Fusion and filed suit against Barracuda in the U.S. District Court for the District of Massachusetts. Fusion intervened and asserted additional claims against Barracuda. The district court dismissed most claims but allowed Zoll’s equitable indemnification claim and Fusion’s breach of contract and breach of the covenant of good faith and fair dealing claims to proceed. After arbitration and settlements, Axis Insurance Company, as assignee and subrogee of Zoll and Fusion, was substituted as plaintiff. Barracuda moved for summary judgment on the remaining claims, which the district court granted.On appeal, the United States Court of Appeals for the First Circuit reviewed the district court’s summary judgment rulings de novo. The appellate court held that Axis failed to present evidence of a relationship between Zoll and Barracuda that would support derivative or vicarious liability necessary for equitable indemnification under Massachusetts law. The court found that Fusion did not meet a condition precedent in its contract with Barracuda, and Barracuda had not waived or was estopped from asserting that condition. Further, Axis could not show that Barracuda breached the covenant of good faith and fair dealing, as no relevant contractual right existed. The First Circuit affirmed the district court’s grant of summary judgment in favor of Barracuda on all claims. View "Axis Insurance Company v. Barracuda Networks, Inc." on Justia Law

A consumer brought a lawsuit against a national retail pharmacy chain after receiving electronically printed receipts that displayed the first six and last four digits of her prepaid debit card number when she added funds to her card at one of the chain’s stores. She alleged that the retailer willfully violated the Fair and Accurate Credit Transactions Act (FACTA) by printing more than the last five digits of her card number, and she claimed this exposed her to a heightened risk of identity theft and invasion of her privacy. The consumer sought to represent a nationwide class of similarly situated individuals and requested statutory damages, punitive damages, attorney fees, and costs.The case began in the Circuit Court of Lake County, Illinois, where the retailer moved to dismiss, arguing that the consumer lacked standing because she had not alleged an actual injury and was merely a “no-injury” plaintiff. The circuit court denied the motion, reasoning that a statutory violation alone was sufficient for standing under Illinois law, and subsequently granted the plaintiff’s motion for class certification, with some modifications to the class definition. The retailer petitioned for leave to appeal this certification order. The Appellate Court of Illinois affirmed the circuit court’s decision, holding that the plaintiff had standing based on the three-part test for standing under Illinois law and finding that the violation of FACTA constituted a distinct and palpable injury, fairly traceable to the retailer’s conduct, and capable of being redressed by the requested relief.On further appeal, the Supreme Court of the State of Illinois reversed both the appellate and circuit courts. The supreme court held that the plaintiff lacked standing because she failed to allege a concrete injury—her asserted risk of future identity theft was deemed too speculative. The court concluded that, without such an injury, the plaintiff could not maintain her individual or class claims under FACTA, and directed the circuit court to dismiss the case for lack of standing. View "Fausett v. Walgreen Co." on Justia Law

A trade association representing the dietary supplement industry challenged a New York law that prohibits the sale of dietary supplements marketed for weight loss or muscle building to individuals under eighteen. The law was enacted in response to concerns about health risks to minors from such supplements. The statute defines covered products based on how they are labeled or marketed, and authorizes the Attorney General to seek injunctions against violators. The association argued that the law violates the First Amendment, is unconstitutionally vague, and is preempted by federal law.The United States District Court for the Southern District of New York denied the association’s motion for a preliminary injunction, finding that the association was unlikely to succeed on the merits of its claims, had not shown irreparable harm, and that the balance of equities and public interest weighed against granting relief. The District Court later dismissed the vagueness and preemption claims but allowed the First Amendment claim to proceed.On appeal, the United States Court of Appeals for the Second Circuit affirmed the District Court’s denial of a preliminary injunction. The Second Circuit held that the law satisfies intermediate scrutiny under the Central Hudson test for commercial speech, finding that New York has a substantial interest in protecting minors’ health, that the law directly advances that interest, and that it is not more extensive than necessary. The court also concluded that the age verification requirement does not unconstitutionally compel speech, that the statute is not unconstitutionally vague or overbroad, and that it is not preempted by federal law. The court further found that the association failed to demonstrate irreparable harm or that the public interest favored an injunction. The order denying the preliminary injunction was affirmed. View "Council for Responsible Nutrition v. James" on Justia Law

The plaintiff purchased products from a company’s “Sustainability Collection,” which were advertised as sustainable and environmentally friendly. She alleged that these representations were false because the products were made with virgin synthetic and non-organic materials that are harmful to the environment. The plaintiff claimed that she would not have bought the products, or would have paid less, had she known the truth. She brought a putative class action under the Missouri Merchandising Practices Act, asserting that the company’s advertising was misleading.The United States District Court for the Eastern District of Missouri first considered and dismissed the plaintiff’s initial complaint for failure to state a claim, after which she filed an amended complaint. The company again moved to dismiss, arguing that the amended complaint lacked sufficient factual support and did not plausibly allege that a reasonable consumer would be misled. The district court agreed, finding that the amended complaint failed to provide facts making the plaintiff’s claims plausible and did not meet the required pleading standards. The court dismissed the case without specifying whether the dismissal was with or without prejudice. The plaintiff then filed a post-judgment motion for reconsideration and for leave to amend, which the district court denied, citing her failure to properly request leave to amend before judgment and her delay in doing so.On appeal, the United States Court of Appeals for the Eighth Circuit reviewed only whether the district court abused its discretion by dismissing the amended complaint with prejudice. The Eighth Circuit held that, under Federal Rule of Civil Procedure 41(b), a Rule 12(b)(6) dismissal operates as an adjudication on the merits (i.e., with prejudice) unless the order states otherwise. The court found no abuse of discretion and affirmed the district court’s judgment. View "Ellis v. Nike USA, Inc." on Justia Law

The State of Nevada brought a consumer protection action against TikTok, Inc. and related entities, alleging violations of the Nevada Deceptive Trade Practices Act (NDTPA). The State claimed that TikTok knowingly designed its social media platform to addict young users, causing various harms to minors in Nevada, and made misrepresentations and material omissions about the platform’s safety. The complaint detailed TikTok’s collection and sale of young users’ personal data to advertisers, the use of design features to maximize user engagement, and public statements about youth safety that the State alleged were misleading.The case was first heard in the Eighth Judicial District Court of Nevada, where TikTok moved to dismiss for lack of personal jurisdiction and failure to state a claim, arguing that the court lacked jurisdiction, and that the Communications Decency Act (CDA) § 230 and the First Amendment immunized it from liability. The district court denied TikTok’s motion in part, finding that it had specific personal jurisdiction over TikTok based on purposeful conduct directed at Nevada, and that the State’s NDTPA claims were not barred by CDA § 230 or the First Amendment. Other claims were dismissed without prejudice.The Supreme Court of Nevada reviewed TikTok’s petition for writ relief. The court held that the district court properly exercised specific personal jurisdiction over TikTok, as the State made a prima facie showing that TikTok purposefully directed its conduct at Nevada through targeted marketing and data collection. The court further held that the CDA § 230 and the First Amendment do not bar the State’s NDTPA claims at the pleading stage, as the claims target TikTok’s own alleged misrepresentations and harmful design features, not third-party content or expressive activity. The Supreme Court of Nevada denied TikTok’s petition. View "TikTok, Inc. v. District Court" on Justia Law

The plaintiff resided at an apartment complex with his son, who was arrested for aggravated armed robbery by the local police department. After the arrest, the police informed the apartment management, which then evicted both the plaintiff and his son based on a lease provision prohibiting criminal conduct. The plaintiff sought information about his son’s arrest from the city and police department under the Texas Public Information Act, but his request was denied after the city consulted the Texas Attorney General and invoked a law-enforcement exception.In the United States District Court for the Southern District of Texas, the plaintiff filed suit against the city, the police department, the apartment complex, a debt collection agency, and the Texas Attorney General, alleging violations of the U.S. Constitution, the Fair Debt Collection Practices Act, and Texas law. All defendants either appeared, filed answers, or moved to dismiss. The plaintiff moved for default judgment against each defendant, but the district court denied those motions and granted the defendants’ motions to dismiss. On appeal, the plaintiff only challenged the denial of default judgment, as he did not brief arguments regarding the dismissals and thus forfeited them.The United States Court of Appeals for the Fifth Circuit reviewed only the denial of default judgment for abuse of discretion. The court held that default judgment was not warranted because the city, police department, and debt collector had all appeared or answered, and the Attorney General had not been properly served. The court also found that arguments regarding attorney conflict and judicial bias were either forfeited or unsupported. The Fifth Circuit affirmed the district court’s denial of default judgment. View "Clark v. City of Pasadena" on Justia Law

A group of grocery retailers and public interest organizations challenged federal regulations that established a national uniform disclosure standard for foods containing genetically modified ingredients. Congress had directed the Secretary of Agriculture to create this standard, which was delegated to the Agricultural Marketing Service (AMS). The AMS’s regulations, effective January 1, 2022, required certain foods to disclose if they were “bioengineered” or contained “bioengineered” ingredients, but generally excluded highly refined foods where genetically modified material was undetectable. Plaintiffs argued that this exclusion, the mandated use of the term “bioengineered” instead of more familiar terms like “GMO,” and the allowance of QR code and text-message disclosure options were unlawful or arbitrary under the Administrative Procedure Act (APA).The United States District Court for the Northern District of California granted summary judgment to the plaintiffs only on their challenge to the QR code and text-message disclosure options, remanding those provisions to the AMS without vacating them. The court denied summary judgment on all other claims, which the Ninth Circuit construed as a final judgment granting summary judgment to the AMS and intervenor-defendants on the remaining claims. Plaintiffs appealed.The United States Court of Appeals for the Ninth Circuit held that the plaintiffs had standing and that the AMS committed legal error by generally excluding highly refined foods from the definition of “bioengineered foods.” The court reversed the district court’s grant of summary judgment to the defendants on this issue, remanded with instructions to grant summary judgment to the plaintiffs, and directed the district court to determine whether any regulatory provisions should be vacated. The Ninth Circuit affirmed the district court’s rejection of the claim that the use of “bioengineered” was arbitrary and capricious, finding the agency’s choice reasonable. The court also held that the district court abused its discretion by not vacating the two disclosure-format regulations and directed prospective vacatur after further input from the parties. The judgment was otherwise affirmed. View "NATURAL GROCERS V. ROLLINS" on Justia Law

Haamid Khan created an account with Coinbase, Inc., an online platform for buying, selling, and storing digital currencies. Khan alleged that Coinbase charged customers a hidden “Spread Fee” during transactions, which was not clearly disclosed to users. He claimed that the fee was only revealed if a customer clicked a tooltip icon and that the platform’s design misled less sophisticated users by imposing the fee only on those using the default trading option. Khan sought an injunction under California’s unfair competition and false advertising laws to prohibit Coinbase from continuing these practices.Coinbase responded by filing a petition in the City & County of San Francisco Superior Court to compel arbitration, citing a user agreement that included an arbitration clause and a waiver of class and public injunctive relief. The trial court denied Coinbase’s petition, finding that Khan’s claims sought public injunctive relief, which could not be waived or compelled to arbitration under California law, specifically referencing McGill v. Citibank, N.A. The court determined that the relief sought would benefit the public at large, not just Khan or a defined group of users.The California Court of Appeal, First Appellate District, Division Three, reviewed the case de novo. The appellate court affirmed the trial court’s order, holding that Khan’s complaint seeks public injunctive relief under the standards set forth in McGill. The court found that the arbitration agreement’s waiver of public injunctive relief was invalid and unenforceable. It concluded that Khan’s requested injunction would primarily benefit the general public by prohibiting ongoing deceptive practices, and thus, his claims could proceed in court rather than arbitration. The order denying Coinbase’s petition to compel arbitration was affirmed. View "Kahn v. Coinbase, Inc." on Justia Law

A homebuyer entered into an agreement to purchase a property in Titusville, Pennsylvania, and, before completing the purchase, orally contracted with a home inspector to perform an inspection. The inspector delivered a report that did not disclose any structural or foundational issues. Relying on this report, the buyer purchased the property. The following winter, a burst pipe led to the discovery of significant defects, including the absence of a proper foundation and improper ductwork, which had not been disclosed in the inspection report. The buyer filed suit against the inspector more than two years after the report was delivered, alleging violations of the Pennsylvania Home Inspection Law, breach of contract, and violations of the Unfair Trade Practices and Consumer Protection Law.The Court of Common Pleas of Crawford County overruled most of the inspector’s preliminary objections and denied a motion for judgment on the pleadings, finding ambiguity in the statute governing the time to bring actions arising from home inspection reports. The trial court reasoned that the statute could be interpreted as either a statute of limitations or a statute of repose and declined to grant judgment for the inspector. On appeal, the Superior Court reversed, holding that the statute in question was a statute of repose, not a statute of limitations, and that all of the buyer’s claims were time-barred because they were filed more than one year after the inspection report was delivered.The Supreme Court of Pennsylvania reviewed whether the relevant statutory provision, 68 Pa.C.S. § 7512, is a statute of repose or a statute of limitations. The Court held that the statute is a statute of repose, barring any action to recover damages arising from a home inspection report if not commenced within one year of the report’s delivery, regardless of when the claim accrues. The Court affirmed the Superior Court’s judgment. View "Gidor v. Mangus" on Justia Law

An elderly homeowner in New Jersey was approached by a door-to-door salesman who offered her “free” rooftop solar panels. She accepted the offer after some hesitation, but was never shown or asked to sign any paperwork. Later, her son discovered that she had been signed up for a 25-year loan of nearly $100,000, with documents digitally signed in her name and sent to a fake email address created by the salesman. The solar panels were installed but were unusable due to the home’s condition. When the homeowner tried to cancel, the companies involved refused. She then sued the solar company, its CEO, and the lenders who financed the panels, alleging fraud and violations of both state and federal law.The United States District Court for the District of New Jersey dismissed her claims against the lenders, Sunlight Financial LLC and Cross River Bank, finding that she had not plausibly alleged that the salesman was acting as their agent. The court allowed some claims against the solar company and its CEO to proceed, but the plaintiff later voluntarily dismissed those remaining claims. She then appealed the dismissal of her claims against the lenders.The United States Court of Appeals for the Third Circuit reviewed the case de novo. It held that the plaintiff failed to plausibly allege an agency relationship between the salesman and the lenders, as required for vicarious liability under the New Jersey Consumer Fraud Act. The court also found that the plaintiff did not plead direct liability with the particularity required by Rule 9(b), and that the lenders’ actions in obtaining her credit report were permissible under the Fair Credit Reporting Act. The Third Circuit affirmed the District Court’s dismissal of all claims against the lenders. View "Migliore v. Vision Solar LLC" on Justia Law