Justia Consumer Law Opinion Summaries

by
Jeremiah Smith filed a class action complaint against LoanMe, Inc., alleging that LoanMe violated the California Invasion of Privacy Act. Smith alleged that LoanMe violated Penal Code section 632.7 by recording a phone call with Smith without his consent while he was using a cordless telephone, and he claimed that a “beep tone” at the beginning of the call did not constitute sufficient notice that LoanMe was recording the call. In a bifurcated trial about the beep tone issue, the trial court concluded that: (1) the beep tone provided sufficient notice to Smith that the call was being recorded; and (2) Smith implicitly consented to being recorded by remaining on the call. The Court of Appeal concluded section 632.7 prohibited only third party eavesdroppers from intentionally recording telephonic communications involving at least one cellular or cordless telephone. Conversely, section 632.7 did not prohibit the participants in a phone call from intentionally recording it. Consequently, Smith failed to state a claim against LoanMe under section 632.7. The Court therefore affirmed dismissal of Smith’s lawsuit. View "Smith v. LoanMe, Inc." on Justia Law

by
Nationwide Credit sent Horia a letter seeking to collect a debt owed to Gottlieb Hospital. By return mail, Horia disputed the claim. The Fair Debt Collection Practices Act requires a debt collector that notifies a credit agency about the debt to reveal whether the claim is disputed, 15 U.S.C. 1692e(8). Horia claims that Nationwide notified Experian about the debt but not about the dispute, injuring his credit rating and causing him mental distress. Horia previously complained about the same type of violation, based on a different letter that Nationwide sent, attempting to collect a different debt to a different creditor. The suit was settled. Days later Horia filed this second suit. Nationwide cited claim preclusion. The district court dismissed, ruling that Horia has split his claims impermissibly. The Seventh Circuit reversed. The doctrine of bar forecloses repeated suits on the same claim, even if a plaintiff advances a new legal theory or a different kind of injury but applies only to “the same claim.” Federal law defines a “claim” by looking for a single transaction, which usually means all losses arising from the same essential factual allegations. Horia has alleged two transactions. The two claimed debts are owed to different creditors. The wrongs differ—Nationwide could have given proper notice for one debt but not the other—and the injury differs. Each failure to notify could have caused additional harm to credit score or peace of mind. View "Horia v. Nationwide Credit & Collection, Inc." on Justia Law

by
The Ninth Circuit affirmed the district court's grant of summary judgment for defendant, a nonprofit guaranty agency, on claims under the Fair Debt Collection Practices Act (FDCPA) and the Due Process Clause. In this case, defendant caused an offset against plaintiff's Social Security benefits, in order to recover on a judgment obtained after plaintiff defaulted on his student loans. The panel held that defendant fulfilled the criteria of the fiduciary exception for the definition of a debt collector under the FDCPA. The panel explained that, although defendant regularly collects or attempts to collect debts asserted to be owed or due another, defendant's collection activities were incidental to a bona fide fiduciary obligation. The panel also held that, assuming without deciding that defendant is a state actor, defendant did not violate plaintiff's due process rights because plaintiff was provided with notice of the debt, defendant's intention to seek an offset, and the means by which plaintiff could respond. View "Lima v. Educational Credit Management Corp." on Justia Law

by
A debt collector is entitled to collect a lawful, outstanding debt even if the statute of limitations has run, so long as the debt collector does not use means that are deceptive or misleading and otherwise complies with legal requirements. The Ninth Circuit affirmed the district court's grant of summary judgment for defendant in an action under the Fair Credit Reporting Act (FCRA), alleging that a debt collector's letter was deceptive or misleading under 15 U.S.C. 1692e because it attempted to persuade him to pay time-barred debt. The panel held that Midland's disclosure would not mislead or deceive the least sophisticated debtor into thinking that Midland could use legal means to collect the debt; Midland's letter was not deceptive or misleading for not warning about the potential for revival of the statute of limitations; the panel rejected plaintiff's argument that a letter is deceptive or misleading if a debt collector tries to persuade debtors to pay what they owe; and thus plaintiff has not identified anything false, deceptive, or misleading in Midland's letter. View "Stimpson v. Midland Credit Management, Inc." on Justia Law

by
Health benefit plans sued GSK, the manufacturer of the prescription drug Avandia, under state consumer-protection laws and the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. ch. 96 (RICO), based on GSK’s marketing of Avandia as having benefits to justify its price, which was higher than the price of other drugs used to treat type-2 diabetes. The district court granted GSK summary judgment, finding that the state-law consumer-protection claims were preempted by the Federal Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. ch. 9; the Plans had failed to identify a sufficient “enterprise” for purposes of RICO; and the Plans’ arguments related to GSK’s alleged attempts to market Avandia as providing cardiovascular “benefits” were “belated.” The Third Circuit reversed, applying the Supreme Court’s 2019 "Merck" decision. The state-law consumer-protection claims are not preempted by the FDCA. The Plans should have been given the opportunity to seek discovery before summary judgment on the RICO claims. Further, from the inception of this litigation, the Plans’ claims have centered on GSK’s marketing of Avandia as providing cardiovascular benefits as compared to other forms of treatment, so the district court’s refusal to consider the Plans’ “benefits” arguments was in error because those arguments were timely raised. View "In re: Avandia Marketing, Sales and Products Liability Litigation" on Justia Law

by
The Supreme Court affirmed the judgments of the superior court granting summary judgment in favor of Plaintiff, Midland Funding, LLC, in these consolidated credit card debt collection appeals, holding that Defendant failed to set forth facts that established a genuine issue of material fact as to whether the credit card accounts were in fact her accounts. The complaints in this case sought to recover the unpaid balance due on two credit card accounts. The district court granted summary judgment for Plaintiff in both cases. On appeal, Defendant argued that there existed an issue of fact as to the ownership of the accounts. The Supreme Court affirmed, holding that the evidence was insufficient to give rise to a genuine issue of material fact. View "Midland Funding LLC v. Raposo" on Justia Law

by
If the principal secured by a mortgage or deed of trust becomes due because of the borrower’s default in making payments Civil Code 2924c allows the borrower to reinstate the loan and avoid foreclosure by paying the amount in default, plus specified fees and expenses. Under section 2953, the right of reinstatement cannot be waived in any agreement “at the time of or in connection with the making of or renewing of any loan secured by a deed of trust, mortgage or other instrument creating a lien on real property.” The borrowers missed four monthly payments on a mortgage loan that had been modified after an earlier default. The modification deferred amounts due on the original loan and provided that any default would allow the lender to void the modification and enforce the original loan. The borrowers sought to reinstate the modified loan by paying the four missed payments, plus fees and expenses. The lender argued that section 2953 does not apply to the modified loan and that the borrowers may reinstate the original loan by paying the amount of the earlier default on the original loan plus the missed modified payments. The court of appeal ruled in favor of the borrowers. Modification is appropriately viewed as the making or renewal of a loan secured by a deed of trust and is subject to the anti-waiver provisions. Section 2924c gives the borrows the opportunity to cure their precipitating default (the missed modified monthly payments) by making up those missed payments and paying the associated late charges and fees, to avoid the consequences of default on the modified loan. View "Taniguchi v. Restoration Homes LLC" on Justia Law

by
This case involved the sale of a certified preowned Mercedes Benz that still had a portion of the new vehicle warranty remaining, and which was accompanied by an additional used vehicle warranty issued by the manufacturer. An uncurable defect manifested after the expiration of the new vehicle warranty, but during the duration of the used vehicle warranty. Mercedes Benz refused to repurchase the vehicle, and the plaintiff sued. A jury found Mercedes Benz liable under the Song-Beverly Consumer Warranty Act for breach of both the express warranty and the implied warranty of merchantability, and, pursuant to the stipulation of the parties as to the amount of damage, awarded the same compensatory damages on both causes of action. The court entered judgment on the jury’s special verdict after striking the damages for breach of the implied warranty, presumably to avoid a double recovery. Mercedes Benz appealed. The Court of Appeal affirmed the jury's verdict on the breach of express warranty claim. "Although the Song-Beverly Act generally binds only distributors and retail sellers in the sale of used goods, we conclude Mercedes Benz stepped into that role by issuing an express warranty on the sale of a used vehicle." Accordingly, judgment was affirmed. View "Kiluk v. Mercedes-Benz USA, LLC" on Justia Law

by
The Fair Debt Collection Practices Act (FDCPA) authorizes private civil actions against debt collectors “within one year from the date on which the violation occurs,” 15 U.S.C. 1692k(d). Klemm sued Rotkiske to collect an unpaid debt and attempted service at an address where Rotkiske no longer lived. An individual other than Rotkiske accepted service. Rotkiske failed to respond to the summons; Klemm obtained a default judgment in 2009. Rotkiske claims that he first learned of this judgment in 2014 when his mortgage application was denied. He filed suit, alleging that Klemm violated the FDCPA by contacting him without lawful ability to collect. Rotkiske argued for the application of a “discovery rule” to delay the beginning of the limitations period until the date that he knew or should have known of the alleged FDCPA violation. The Third Circuit and Supreme Court affirmed the dismissal of the suit. Absent the application of an equitable doctrine, section 1692k(d)’s limitations period begins to run when the alleged FDCPA violation occurs, not when the violation is discovered. Rotkiske cannot rely on the application of an equitable, fraud-specific discovery rule to excuse his otherwise untimely filing, having neither preserved that issue before the Third Circuit nor raised it in his certiorari petition. View "Rotkiske v. Klemm" on Justia Law

by
Each plaintiff purchased an opaque, seven-ounce box of Fannie May chocolates for $9.99 plus tax. Although the boxes accurately disclosed the weight of the chocolate within and the number of pieces, the boxes were emptier than each had expected. A box of Mint Meltaways contained approximately 33% empty space, and a box of Pixies contained approximately 38% empty space. The plaintiffs filed a putative class action, alleging violations of the Illinois Consumer Fraud and Deceptive Business Practices Act and asserting claims for unjust enrichment and breach of implied contract. The Seventh Circuit affirmed the dismissal of the case. The court rejected the district court’s reasoning that the claims were preempted by the Food, Drug, and Cosmetic Act, 21 U.S.C 301–399, but reasoned that the Illinois Act requires proof of actual damage. The plaintiffs never said that the chocolates they received were worth less than the $9.99 they paid for them, or that they could have obtained a better price elsewhere. That is fatal to their effort to show a pecuniary loss. The receipts embody the contract between the parties. State law does not recognize an implied contract in this situation View "Benson v. Fannie May Confections Brands, Inc." on Justia Law