Justia Consumer Law Opinion Summaries

The case concerns a dispute between purchasers of a used vehicle and the seller, a car dealership, over the enforcement of a vehicle service warranty contract. The purchasers alleged that after buying the vehicle and a service contract, they repeatedly sought repairs from the dealership, paid deductibles, were denied direct communication with the repair shop, and did not receive the necessary repairs. They claimed the dealership falsely represented that repairs had been completed. As a result, they filed suit for breach of contract, breach of warranty, and breach of the duty of good faith and fair dealing.The District Court for Tulsa County, presided over by Judge Damon Cantrell, reviewed the dealership’s motion for partial summary judgment. The dealership argued that Oklahoma’s Service Warranty Act, specifically Title 15, Section 141.24(B), barred tort claims for breach of the duty of good faith and fair dealing in connection with service warranty contracts. The purchasers contended that this statutory provision was an unconstitutional special law. Judge Cantrell denied the dealership’s motion, finding the statute unconstitutional.The Supreme Court of the State of Oklahoma reviewed the case on a writ of prohibition. The Court held that Title 15, Section 141.24(B) is not an unconstitutional special law because it applies uniformly to all service warranty contracts, including those issued by companies with significant assets, and does not single out a particular class for disparate treatment. The Court further held that the statute abrogates the prior judicial rule allowing tort claims for breach of the duty of good faith and fair dealing in this context. The Supreme Court granted the writ of prohibition, precluding enforcement of the lower court’s order, and remanded the case for further proceedings. View "AMERICA'S CAR MART v. CANTRELL" on Justia Law

Ajay Thakore, a resident of La Jolla, California, and owner of Gopher Media LLC, a digital marketing agency, became involved in a dispute with Andrew Melone and American Pizza Manufacturing (APM), a local “take-n-bake” restaurant. The conflict began after the City of San Diego converted parking spaces outside APM to 15-minute zones. Thakore, who frequented nearby businesses and allegedly had a financial stake in a competitor, was accused of parking for extended periods and initiating contentious exchanges. Thakore and Gopher Media sued Melone and APM in the United States District Court for the Southern District of California, alleging harassment, discrimination, and unfair competition. Melone and APM counterclaimed, alleging defamation, trade libel, and unfair business practices, including claims that Thakore and Gopher Media orchestrated negative online reviews and made false statements on social media.In response to the countercomplaint, Thakore and Gopher Media filed a motion to strike under California’s anti-SLAPP statute (Cal. Civ. Proc. Code § 425.16), arguing that the alleged conduct constituted protected speech on a public issue. The United States District Court for the Southern District of California denied the anti-SLAPP motion. Thakore and Gopher Media then sought an interlocutory appeal to the United States Court of Appeals for the Ninth Circuit, challenging the denial.The United States Court of Appeals for the Ninth Circuit, sitting en banc, reviewed whether it had jurisdiction to hear an interlocutory appeal from the denial of an anti-SLAPP motion under the collateral order doctrine. The court held that such denials do not resolve issues completely separate from the merits and are not effectively unreviewable after final judgment. Accordingly, the Ninth Circuit overruled its prior decision in Batzel v. Smith, dismissed the appeal for lack of jurisdiction, and remanded the case. View "GOPHER MEDIA LLC V. MELONE" on Justia Law

The case involved two related companies and three individuals who operated a business targeting immigrants detained by U.S. Immigration and Customs Enforcement (ICE) and eligible for release on immigration bonds. The companies marketed their services as an affordable way to secure release, but in reality, they charged high fees for services that were often misrepresented or not provided. The agreements were complex, mostly in English, and required significant upfront and recurring payments. Most consumers did not understand the terms and relied on the companies’ oral representations, which were deceptive. The business was not licensed as a bail bond agent or surety, and the defendants’ practices violated federal and state consumer protection laws.After the plaintiffs—the Consumer Financial Protection Bureau, Massachusetts, New York, and Virginia—filed suit in the United States District Court for the Western District of Virginia, the defendants repeatedly failed to comply with discovery obligations and court orders. They did not produce required documents, ignored deadlines, and failed to appear at hearings. The district court, after multiple warnings and opportunities to comply, imposed default judgment as a sanction for this misconduct. The court also excluded the defendants’ late-disclosed witnesses and exhibits from the remedies hearing, finding the nondisclosures unjustified and prejudicial.The United States Court of Appeals for the Fourth Circuit reviewed the case and affirmed the district court’s decisions. The Fourth Circuit held that the default judgment was an appropriate sanction for the defendants’ repeated and willful noncompliance. The exclusion of evidence and witnesses was also upheld, as was the issuance of a permanent injunction and the calculation of monetary relief, including restitution and civil penalties totaling approximately $366.5 million. The court found no abuse of discretion or legal error in the district court’s rulings and affirmed the final judgment in all respects. View "Consumer Financial Protection Bureau v. Nexus Services, Inc." on Justia Law

In this case, the plaintiff was subject to a default judgment in 2006 for an unpaid credit card debt after a process server claimed to have effected substitute service at a Hayward, California address. The plaintiff asserted he was never served, did not reside at the address where service was attempted, and only learned of the judgment in December 2022. The debt was later assigned to a new creditor, who sought to renew and enforce the judgment, which had grown substantially with interest. After the plaintiff’s motion to vacate the judgment for lack of service was denied, he filed a new action seeking equitable relief to set aside the judgment and alleging violations of the Rosenthal Fair Debt Collection Practices Act.The Superior Court of Alameda County granted the defendants’ anti-SLAPP motions, striking the complaint and dismissing it with prejudice. The court found the plaintiff’s uncorroborated declaration insufficient to rebut the presumption of valid service and concluded he had not shown a likelihood of prevailing on his equitable or statutory claims. The court also determined that, because the plaintiff admitted to owing the debt, he could not establish a meritorious defense to the underlying action.The California Court of Appeal, First Appellate District, Division Four, reversed the trial court’s judgment. The appellate court held that the trial court erred by weighing the credibility of the plaintiff’s declaration at the anti-SLAPP stage, rather than accepting it as true for purposes of determining minimal merit. The appellate court further held that, where a challenge to a default judgment is based on lack of service, due process does not require the plaintiff to show a meritorious defense to set aside the judgment. The court also found that the plaintiff’s statutory claim under the Rosenthal Act was not contingent on prevailing on his equitable claims. The judgment was reversed and costs were awarded to the plaintiff. View "Ahmed v. Collect Access, LLC" on Justia Law

The City of New York brought suit in New York state court against several major oil companies and the American Petroleum Institute, alleging violations of New York’s consumer protection laws through deceptive advertising about the environmental impact of fossil fuels. The defendants removed the case to the United States District Court for the Southern District of New York, asserting multiple grounds for federal jurisdiction. The City moved to remand the case to state court, but the district court stayed proceedings pending the outcome of a similar case, Connecticut v. Exxon Mobil Corp., in the United States Court of Appeals for the Second Circuit.After the Second Circuit affirmed the remand in the Connecticut case, the district court in New York lifted the stay and allowed the parties to re-brief the remand motion in light of the new precedent. The City renewed its motion to remand and requested attorneys’ fees and costs under 28 U.S.C. § 1447(c). The oil companies continued to oppose remand, pressing several arguments that had already been rejected by numerous federal courts, including the Second Circuit in the Connecticut case. The district court granted the motion to remand and awarded the City attorneys’ fees and costs, but only for work related to five of the six grounds for removal, and only for work performed after the Connecticut decision.On appeal, the United States Court of Appeals for the Second Circuit reviewed only the award of attorneys’ fees and costs. The court held that the district court did not abuse its discretion in awarding fees and costs for the objectively unreasonable grounds for removal pressed after the legal landscape had shifted. The Second Circuit affirmed the district court’s order, concluding that the award was justified under the “unusual circumstances” exception recognized in Martin v. Franklin Capital Corp. View "The City of New York v. Exxon Mobil Corp." on Justia Law

Zesty Paws LLC and Health and Happiness (H&H) US International Inc. are competitors of Nutramax Laboratories, Inc. and Nutramax Laboratories Veterinary Sciences, Inc. in the pet supplements market. In July 2023, Zesty Paws began advertising itself as the "#1 brand of pet supplements" in the United States. Nutramax objected, asserting that its combined pet supplement sales exceeded those of Zesty Paws, making Zesty Paws’s advertising claims false. Zesty Paws responded by filing a lawsuit seeking a declaratory judgment that its advertising was not false or misleading, arguing that its claims were reasonably interpreted as comparing its aggregate sales to those of Nutramax’s individual product brands, such as Cosequin and Dasuquin, rather than to Nutramax as a whole.The United States District Court for the Southern District of New York granted Nutramax’s motion for a preliminary injunction, enjoining Zesty Paws from making the "#1 brand" claims. The district court found that Nutramax was likely to succeed on its false advertising claim under the Lanham Act, concluding that Nutramax is a brand and that its total sales exceeded those of Zesty Paws, rendering Zesty Paws’s advertising likely literally false. The court also found the claims material, likely to cause injury, and presumed irreparable harm under the Lanham Act.On appeal, the United States Court of Appeals for the Second Circuit reviewed the district court’s legal conclusions de novo and its decision to issue the injunction for abuse of discretion. The Second Circuit held that the district court erred by not properly applying the literal falsity standard, which requires that the challenged advertising be unambiguously false to a reasonable consumer. Because the district court did not adequately consider whether Zesty Paws’s interpretation was reasonable, the Second Circuit vacated the preliminary injunction and remanded for further proceedings. View "Zesty Paws LLC v. Nutramax Lab'ys, Inc." on Justia Law

A group of borrowers in California brought a class action against Flagstar Bank, alleging that the bank failed to pay interest on their mortgage escrow accounts as required by California Civil Code § 2954.8(a). Flagstar did not pay interest on these accounts, arguing that the National Bank Act (NBA) preempted the California law, and therefore, it was not obligated to comply. The plaintiffs sought restitution for the unpaid interest.The United States District Court for the Northern District of California, relying on the Ninth Circuit’s prior decision in Lusnak v. Bank of America, N.A., granted summary judgment for the plaintiffs. The court ordered Flagstar to pay restitution and prejudgment interest to the class. Flagstar appealed to the United States Court of Appeals for the Ninth Circuit, which affirmed the district court’s decision, holding that Lusnak foreclosed Flagstar’s preemption argument. However, the Ninth Circuit remanded the case to the district court to correct the class definition date and the judgment amount due to errors in the statute of limitations tolling and calculation of damages.On remand from the United States Supreme Court, following its decision in Cantero v. Bank of America, N.A., the Ninth Circuit reviewed whether it could overrule Lusnak in light of Cantero. The court held that Cantero did not render Lusnak “clearly irreconcilable” with Supreme Court precedent, and therefore, the panel lacked authority to overrule Lusnak. The Ninth Circuit affirmed the district court’s holding that the NBA does not preempt California’s interest-on-escrow law, but vacated and remanded the judgment and class certification order for modification of the class definition date and judgment amount. View "KIVETT V. FLAGSTAR BANK, FSB" on Justia Law

A consumer defaulted on credit payments, and the debt was assigned to a third-party debt collector. The collector sent a collection letter to the consumer that included mandatory language about debtor rights, but the notice used a smaller type size than required by California law. The consumer, on behalf of himself and a proposed class, filed suit alleging that the collection notices violated the type-size requirements of the Consumer Collection Notice law and, by extension, the Rosenthal Fair Debt Collection Practices Act. The suit sought statutory damages, attorney fees, costs, and injunctive relief.The Superior Court of Lake County granted summary judgment in favor of the debt collector. The court reasoned that the consumer and the class lacked standing to pursue statutory damages because they had not alleged or demonstrated any actual injury, harm, or loss resulting from the violation. The court concluded that civil liability under the relevant statutes could not be imposed without proof of actual or reasonably foreseeable harm.The California Court of Appeal, First Appellate District, Division Three, reviewed the case. The appellate court held that, under the Collection Notice law and the Rosenthal Act, a consumer has standing to seek statutory damages based solely on a statutory violation, regardless of whether the consumer suffered actual injury. The court explained that the statutory scheme authorizes recovery of statutory damages as a penalty to deter violations, not merely to compensate for actual harm. The court distinguished the relevant statutes from others that require proof of injury and rejected the argument that federal standing requirements or the use of the term “damages” limited standing to those who suffered actual harm. The judgment of the trial court was reversed. View "Kashanian v. National Enterprise Systems" on Justia Law

A patient with a long history of severe depression and multiple suicide attempts underwent 95 electroconvulsive therapy (ECT) treatments at a Nebraska hospital between 2014 and 2016. The ECT was administered using a device manufactured by Somatics, LLC. After the treatments, the patient experienced significant memory loss and was diagnosed with a neurocognitive disorder. In 2020, he filed suit against Somatics in the United States District Court for the Middle District of Florida, alleging negligence, strict product liability, breach of warranties, violation of Nebraska’s Consumer Protection Act, and fraudulent misrepresentation, primarily claiming that Somatics failed to adequately warn of the risks associated with ECT.The district court dismissed the claims under Nebraska’s Consumer Protection Act and for fraudulent misrepresentation, merged the strict liability and breach of implied warranty claims, and granted summary judgment to Somatics on the design defect, manufacturing defect, and breach of express warranty claims. The remaining claims for negligence and strict liability, both based on failure to warn, were merged for trial. The jury found that while Somatics failed to provide adequate warnings, this failure was not the proximate cause of the plaintiff’s injuries, and awarded no damages. The district court denied the plaintiff’s post-trial motions, including for a new trial.On appeal, the United States Court of Appeals for the Eleventh Circuit reviewed the district court’s decisions de novo for summary judgment and for abuse of discretion on evidentiary and procedural rulings. The Eleventh Circuit held that the district court properly granted summary judgment on the design defect claim, correctly merged the negligence and strict liability claims, gave an appropriate jury instruction on proximate cause, and did not abuse its discretion in excluding certain evidence and expert testimony. The judgment of the district court was affirmed. View "Thelen v. Somatics, LLC" on Justia Law

Scranton Products sued Bobrick Washroom Equipment in 2014, alleging false advertising regarding the fire compliance of Scranton’s toilet partitions. Bobrick counterclaimed, asserting Scranton’s advertising was itself false. Scranton voluntarily dismissed its claims, and the parties entered into a settlement agreement that included a provision waiving their rights to appeal any court orders arising from the agreement or enforcement motions. The District Court approved the agreement, dismissed the case, and retained jurisdiction to enforce the settlement. Subsequently, both parties filed enforcement motions related to compliance with the agreement, leading to a public evidentiary hearing. During post-hearing proceedings, Scranton moved to seal certain documents, and the District Court issued two sealing orders: one temporarily sealing documents during the pendency of enforcement motions, and another indefinitely sealing them after the motions were resolved.The United States District Court for the Middle District of Pennsylvania denied all enforcement motions and issued the second sealing order, directing the parties to confer about sealing and stating that, absent agreement, the status quo of sealing would remain. Bobrick appealed both sealing orders, arguing that the indefinite sealing was overbroad and contrary to the public’s right of access to judicial records.The United States Court of Appeals for the Third Circuit reviewed the case. It held that it lacked jurisdiction to review the first, temporary sealing order because it was no longer in effect, rendering the appeal moot. The court found it had jurisdiction to review the second, indefinite sealing order under the collateral order doctrine, as it was final and appealable. However, the Third Circuit enforced the appellate waiver in the settlement agreement, declining to exercise jurisdiction over the appeal and affirming the District Court’s indefinite sealing order. The court also denied Bobrick’s alternative request for a writ of mandamus. View "Bobrick Washroom Equipment Inc v. Scranton Products Inc" on Justia Law