Justia Consumer Law Opinion Summaries

A Missouri consumer purchased several containers of coffee that prominently displayed the number of servings each container could make. He claimed these representations were misleading, arguing that following the recommended single-serving brewing method would not produce as many servings as advertised. He filed a lawsuit against the coffee manufacturer and its parent company, alleging violations of the Missouri Merchandising Practices Act (MMPA) and unjust enrichment. The plaintiff sought to represent a class of Missouri consumers who purchased the same products.Multiple similar lawsuits from around the country were consolidated in the United States District Court for the Western District of Missouri. The district court appointed interim class counsel and, at the parties’ suggestion, considered whether to certify a Missouri class before addressing other states. The district court ultimately certified the Missouri class, finding that the plaintiff’s claims were suitable for class treatment under Federal Rule of Civil Procedure 23(b)(3), which requires that common questions predominate over individual ones.On appeal, the United States Court of Appeals for the Eighth Circuit held that the district court erred in certifying the class. The appellate court determined that individual questions about whether consumers saw, interpreted, or relied upon the product representations would predominate over common questions. The court rejected the plaintiff’s argument that all class members suffered harm due to alleged price inflation, reasoning that only those who were actually misled or cared about the representations could have incurred an ascertainable loss under the MMPA. The court also found the unjust enrichment claim similarly unsuited to class treatment because it would require individualized inquiries into whether each transaction was unjust. The Eighth Circuit reversed the class certification order and remanded the case for further proceedings. View "Sorin v. The Folger Coffee Company" on Justia Law

A consumer purchased a used vehicle from a dealership, with the transaction documented in two contracts: a purchase order and a retail installment sale contract (RISC). The purchase order included an arbitration provision for disputes arising from the purchase or financing of the vehicle, while the RISC detailed the financing terms but did not include an arbitration clause. The RISC contained an assignment clause by which the dealership assigned its interest in "this contract" (the RISC) to a third-party lender, and defined the agreement between the buyer and the assignee as consisting "only" of the RISC and any addenda. The consumer later filed a class action against the lender, alleging improper fees under Maryland law.The Circuit Court for Baltimore City found for the lender, ruling that the purchase order and RISC should be read together as one contract for the purposes of the transaction, and that the arbitration agreement was enforceable against the consumer. The court granted the lender’s motion to compel arbitration. On appeal, the Appellate Court of Maryland affirmed, holding that the consumer was bound by the arbitration provision and that the assignee lender could enforce it, even though the consumer did not receive or sign a separate arbitration agreement.The Supreme Court of Maryland reviewed the case, focusing on contract interpretation and the scope of the assignment. The court held that, even if the purchase order’s arbitration provision was binding between the consumer and the dealer, it was not within the scope of the assignment to the lender. The RISC’s assignment language made clear that only the RISC and its addenda, not the purchase order or its arbitration clause, were assigned to the lender. As a result, the Supreme Court of Maryland reversed the judgment of the Appellate Court and remanded the case for further proceedings. View "Lyles v. Santander Consumer USA" on Justia Law

Several individuals operated two multi-level marketing businesses, Success by Health and VOZ Travel. Success by Health sold coffee, tea, and nutraceuticals, promising affiliates “financial freedom” through a compensation structure that incentivized recruitment over product sales. VOZ Travel, launched in 2019 to offset losses, purported to sell travel services, but never produced the promised products. Both businesses generated substantial revenues, largely through affiliate recruitment. One of the individuals, James Noland, was already subject to a 2002 permanent injunction prohibiting him and those acting with him from running unlawful multi-level marketing schemes.The Federal Trade Commission (FTC) filed suit in the United States District Court for the District of Arizona, alleging violations of the Federal Trade Commission Act and related consumer protection rules. The district court granted an ex parte temporary restraining order, followed by a preliminary injunction that froze assets and installed a receiver. Summary judgment was entered for the FTC on some claims, and after an 11-day bench trial, the district court found the defendants liable for operating a pyramid scheme, making material misrepresentations, and violating two consumer protection rules. The court imposed monetary damages, a permanent injunction barring participation in multi-level marketing, and, for some defendants, a civil compensatory sanction for contempt of the 2002 injunction. The defendants appealed only the scope and nature of the relief.The United States Court of Appeals for the Ninth Circuit reviewed the case and affirmed in all respects. The court held that challenges to the preliminary injunction were moot. It found no abuse of discretion in the district court’s calculation and imposition of a civil compensatory sanction based on net revenues, nor in the award of monetary relief under Section 19 of the FTC Act without the need for prior administrative proceedings. The court also upheld the permanent injunction prohibiting future participation in multi-level marketing, finding it appropriately tailored to the defendants’ conduct. View "FEDERAL TRADE COMMISSION V. NOLAND" on Justia Law

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