Justia Consumer Law Opinion Summaries

A married couple who lived in West Virginia refinanced their home loan in 2004. Over the years, they regularly sent their mortgage servicer payments that included both the scheduled monthly amount and additional principal prepayments, combining the two in single checks and clearly indicating when a prepayment was included. The loan servicers, including LoanCare, LLC (which began servicing the loan in 2019), allegedly failed to apply the prepayments before the monthly payments, resulting in the couple being charged excess interest. Despite several requests for correction, LoanCare did not adjust its practices. The couple eventually paid off the loan and sought a refund for the excess interest.The couple filed a putative class action in the United States District Court for the Eastern District of Virginia, alleging that LoanCare violated two provisions of the West Virginia Consumer Credit and Protection Act (the Act): section 46A-2-127(d) and section 46A-2-128. They also asserted claims for unjust enrichment and conversion. The district court dismissed the unjust enrichment and conversion claims, but allowed the statutory claims to proceed. After discovery, LoanCare moved for summary judgment, arguing that the Act required proof of intentional misconduct, and that there was no evidence it acted intentionally.The United States District Court for the Eastern District of Virginia granted summary judgment for LoanCare, holding that the Act’s provisions at issue required proof of intentional violation, which the couple could not show. On appeal, the United States Court of Appeals for the Fourth Circuit concluded that the district court erred in requiring intent, holding that the statutory provisions impose strict liability and do not require proof of intent to violate. The appellate court vacated the judgment and remanded the case for further proceedings. View "Tederick v. Loancare, LLC" on Justia Law

A mother and the Connecticut Fair Housing Center sued a company that provides tenant screening reports, alleging that its practices contributed to the denial of a housing application for the mother’s disabled son. The apartment manager used the defendant’s screening platform to review applicants’ criminal histories, and the son’s application was denied based on a flagged shoplifting charge. The mother later had the charge dismissed. She also sought a copy of her son’s screening report from the defendant, but was told she needed to provide a power of attorney. She instead submitted documentation of her conservatorship, but the defendant rejected it as facially invalid due to a missing court seal.The United States District Court for the District of Connecticut held a bench trial. It found that the Fair Housing Act (FHA) did not apply to the defendant because it was not the decision-maker on housing applications; only the housing provider made those determinations. The district court also found the defendant’s requirement for a valid conservatorship certificate reasonable and not discriminatory toward handicapped individuals. However, the district court found the defendant liable under the Fair Credit Reporting Act (FCRA) for a period when it insisted on a power of attorney, making it impossible for the mother to obtain her son’s consumer file.On appeal, the United States Court of Appeals for the Second Circuit concluded that the Connecticut Fair Housing Center lacked standing because its diversion of resources to address the defendant’s actions did not constitute a concrete injury. The court also held that, although the FHA does not exclude certain defendants, the defendant here was not the proximate cause of the housing denial, and the mother failed to establish a prima facie case of disparate-impact discrimination. Furthermore, because she never provided a facially valid conservatorship certificate, she could not show that the defendant’s documentation requirements prevented her from obtaining the report. The court vacated, affirmed, and reversed in part, dismissing the Center’s claims, affirming no FHA liability, and reversing FCRA liability. View "CFHC v. CoreLogic Rental Prop. Sols." on Justia Law

Wells Fargo initiated a lawsuit to collect credit card debt from a woman identified as Mary Myers (Mary 1) based on a consumer agreement and supporting documentation that included her address, date of birth, and the last four digits of her social security number. The company provided directions for service to the Lawrence County Sheriff, but the deputy mistakenly served a different woman with the same name (Mary 2) at a different address. Mary 2, who was not the debtor, retained counsel and notified Wells Fargo’s attorney of the error, demanding dismissal and reimbursement of legal expenses.After receiving no response from Wells Fargo’s attorney, Mary 2’s counsel filed motions to dismiss and for sanctions under Rule 11 of the South Dakota Rules of Civil Procedure. Wells Fargo’s attorney explained that he had conducted due diligence before filing the complaint and, after reviewing further information, believed he had filed against the correct person. The Circuit Court of the Fourth Judicial Circuit found that Wells Fargo’s attorney violated Rule 11 by not communicating with Mary 2’s attorney after being informed of the mistaken service and by not rectifying the error. The court dismissed Mary 2 from the lawsuit and ordered Wells Fargo to pay her attorney’s fees as a sanction.The Supreme Court of the State of South Dakota reviewed the award of attorney’s fees. It held that Rule 11 sanctions apply only to the filing, signing, or advocacy of documents presented to the court, not to all attorney conduct within litigation. The court concluded that Wells Fargo’s complaint had evidentiary support against Mary 1, and the mistaken service on Mary 2 did not render the pleading sanctionable. Therefore, the Supreme Court reversed the award of attorney’s fees, finding that the circuit court abused its discretion by misapplying Rule 11. View "Wells Fargo v. Myers" on Justia Law

The plaintiff purchased a vehicle in 2017 and later alleged it was defective, suing the manufacturer in 2021. The parties eventually settled, with the plaintiff surrendering the vehicle and dismissing the suit, and the manufacturer agreeing to pay $100,000. The settlement specified the plaintiff would be deemed the prevailing party for purposes of attorney fees, and the manufacturer would pay the amount determined by the trial court upon noticed motion. After the settlement was reported to the Superior Court of San Diego County, the court ordered dismissal within 45 days. When no dismissal was filed, the clerk issued notice that the case would be deemed dismissed without prejudice on August 15, 2023, unless a party showed good cause otherwise. No such cause was shown, and the plaintiff subsequently filed a motion for attorney fees.The motion for attorney fees was opposed by the manufacturer, arguing it was untimely under California Rules of Court, as it was not served within 180 days of the dismissal date. The plaintiff countered that the 180-day deadline did not apply, claiming the case had not been formally dismissed and no judgment had been entered. The Superior Court of San Diego County disagreed, finding the case had been dismissed on August 15, 2023, per the clerk’s notice and court rules, and denied the motion as untimely. The plaintiff appealed the denial, and a signed minute order dismissing the complaint was later entered, but the court maintained that the earlier date controlled.The California Court of Appeal, Fourth Appellate District, Division One, reviewed the matter de novo. It held that a voluntary dismissal, even if not appealable, starts the clock for filing a motion for attorney fees when it concludes the litigation. The court found the case was dismissed on August 15, 2023, and the plaintiff failed to timely serve the fee motion. The order denying attorney fees was affirmed. View "Hatlevig v. General Motors LLC" on Justia Law

Edward and Linda Diaz purchased a motorhome from a California dealer, receiving warranties from the manufacturer that included a clause requiring any legal disputes related to the warranties to be litigated exclusively in Indiana, where the motorhome was manufactured. The warranties also contained a choice-of-law provision favoring Indiana law and a waiver of jury trial. After experiencing issues with the vehicle that were not remedied under warranty, the Diazes sued the manufacturer, dealer, and lender in California under the Song-Beverly Consumer Warranty Act, alleging failure to repair defects and refusal to replace or refund the vehicle.The Superior Court of Los Angeles County granted the defendants’ motion to stay the California action, enforcing the forum selection clause. The manufacturer had offered to stipulate that it would not oppose application of California’s Song-Beverly Act or a jury trial if the Diazes pursued their claims in Indiana. The court ordered the manufacturer to sign such a stipulation, holding that the Diazes could seek to lift the stay if Indiana courts declined to apply California law.On appeal, the California Court of Appeal, Second Appellate District, Division Eight, concluded that the forum selection clause was unenforceable. The court held that the warranty’s terms, including the forum selection and choice-of-law provisions, violated California public policy by purporting to waive unwaivable statutory rights under the Song-Beverly Act. The court determined that the manufacturer’s post hoc offer to stipulate to California law did not cure the unconscionability present at contract formation and that severance of the unlawful terms would not further the interests of justice. As a result, the Court of Appeal reversed the trial court’s order staying the California action and directed entry of a new order denying the stay. View "Diaz v. Thor Motor Coach, Inc." on Justia Law

ARcare, Inc., a nonprofit community health center receiving federal funding, suffered a data breach in early 2022 when an unauthorized third party accessed confidential patient information, including names, social security numbers, and medical treatment details. After ARcare notified affected individuals, several patients filed lawsuits alleging that ARcare failed to adequately safeguard their information as required under federal law. Plaintiffs reported fraudulent invoices and that their information was found for sale on the dark web.The actions were removed to the United States District Court for the Eastern District of Arkansas, where six class actions were consolidated. ARcare sought to invoke absolute immunity under 42 U.S.C. § 233(a) of the Federally Supported Health Centers Assistance Act (FSHCAA), which provides immunity for damages resulting from the performance of “medical, surgical, dental, or related functions.” ARcare moved to substitute the United States as defendant under the Federal Tort Claims Act, arguing the data breach arose from a “related function.” The district court denied the motion, finding that protecting patient information from cyberattacks was not sufficiently linked to the provision of health care to qualify as a “related function” under the statute.On appeal, the United States Court of Appeals for the Eighth Circuit reviewed the statutory immunity issue de novo. The court affirmed the district court’s denial of immunity, holding that the FSHCAA’s language does not extend statutory immunity to claims arising from a health center’s data security practices. The court reasoned that “related functions” must be activities closely connected to the provision of health care, and data security is not such a function. Therefore, ARcare is not entitled to substitute the United States as defendant, and the denial of statutory immunity was affirmed. View "Hale v. ARcare, Inc" on Justia Law

Two individuals each purchased a Mercedes-Benz vehicle that included a subscription-based system called “mbrace,” which provided various features through a 3G wireless network. When newer cellular technology rendered the 3G-dependent system obsolete, both customers asked their dealerships to replace the outdated system at no charge, but their requests were denied. Subsequently, they filed a class action lawsuit against Mercedes-Benz USA, LLC and Mercedes-Benz Group AG, asserting claims including breach of warranty under federal and state law.The United States District Court for the Northern District of Illinois, Eastern Division, considered Mercedes’s motion to compel arbitration pursuant to the Federal Arbitration Act, based on the arbitration provision within the mbrace Terms of Service. The district court found in favor of Mercedes, concluding that the plaintiffs were bound by an agreement to arbitrate their claims. Since neither party requested a stay, the court dismissed the case without prejudice. The plaintiffs appealed, arguing that they had not agreed to arbitrate.The United States Court of Appeals for the Seventh Circuit reviewed the district court’s factual findings for clear error and legal conclusions de novo. Applying Illinois contract law, the appellate court determined that Mercedes had provided sufficient notice of the arbitration agreement to the plaintiffs through the subscription activation process and follow-up communications. The court found that Mercedes established a rebuttable presumption of notice, which the plaintiffs failed to overcome, as they only stated they did not recall receiving such notice, rather than expressly denying it. The Seventh Circuit held that the plaintiffs had assented to the agreement by subscribing to the service and thus were bound by the arbitration provision. The judgment of the district court was affirmed. View "Jim Rose v Mercedes-Benz USA, LLC" on Justia Law

The dispute stems from a series of lawsuits initiated by a borrower after a nonjudicial foreclosure was attempted on a Maui property he purchased in 2003. Following his default on the mortgage in 2008, the property was sold in a nonjudicial foreclosure in 2010 and title transferred to a bank. The bank, through its attorneys, sought to evict the borrower and later filed a judicial foreclosure counterclaim after the borrower challenged the foreclosure's validity. The borrower remained in possession of the property throughout, and subsequent litigation centered on the conduct of both the lender and its attorneys.After an initial summary judgment against the borrower in his wrongful foreclosure suit, the Hawai‘i Intermediate Court of Appeals (ICA) vacated and remanded for further proceedings. On remand, the parties settled most claims except those against certain attorneys. Separately, the borrower filed new claims against the bank’s law firm and its attorneys, alleging fraud, unfair and deceptive acts, wrongful foreclosure, and other torts related to their legal filings and conduct during the foreclosure process. The Circuit Court of the Second Circuit granted judgment on the pleadings in favor of the attorneys and declared the borrower a vexatious litigant due to a pattern of abusive litigation.On appeal, the ICA affirmed most of the circuit court’s rulings but reinstated the borrower’s claim alleging fraud on the court. The Supreme Court of the State of Hawai‘i held that the ICA erred by reinstating this claim, reasoning that even if the borrower’s allegations were true, they did not meet the high threshold required for an independent action for fraud on the court. The Supreme Court affirmed the circuit court’s dismissal of all claims against the attorneys and the vexatious litigant order, and vacated the ICA’s ruling to the extent it had revived the fraud on the court claim. View "Greenspon v. Deutsche Bank National Trust Company" on Justia Law

Two individuals were seriously injured during a 2022 mass shooting at the Edmund Burke School in Washington, D.C. The shooter, a 23-year-old man from Virginia, used an AR-15 and various accessories and ammunition manufactured by multiple U.S. and foreign companies. The shooter built his arsenal by purchasing and assembling these products, which were then used in the attack. Both plaintiffs, a parent picking up her child and a school security guard, survived but suffered severe physical and emotional injuries.The plaintiffs filed suit in the United States District Court for the Eastern District of Virginia, asserting claims under Virginia’s False Advertising Statute and Consumer Protection Act, and alleging negligence and negligence per se for violations of the National Firearms Act and Virginia’s Uniform Machine Gun Act. The defendants moved to dismiss, arguing that the plaintiffs lacked Article III standing because their injuries were not “fairly traceable” to the defendants’ conduct. The district court agreed, dismissing the case for lack of subject-matter jurisdiction under Rule 12(b)(1). Despite this, the court also reached the merits and dismissed the claims under Rule 12(b)(6), finding them barred by the Protection of Lawful Commerce in Arms Act (PLCAA).On appeal, the United States Court of Appeals for the Fourth Circuit reversed the district court’s standing ruling, holding that the plaintiffs had alleged sufficient facts to demonstrate that their injuries were “fairly traceable” to the defendants’ alleged misconduct, thus satisfying Article III’s requirements. The Fourth Circuit vacated the district court’s alternative merits ruling under the PLCAA as advisory and beyond its jurisdiction, remanding the case for further proceedings consistent with its opinion. View "Lowy v. Daniel Defense, LLC" on Justia Law

A Texas nonprofit health center, CentroMed, experienced a data breach in 2024 that exposed the personal information of its patients. Arturo Gonzalez, representing himself and others affected, filed a class action in Bexar County, Texas, alleging that CentroMed failed to adequately protect their private information. CentroMed, which receives federal funding and has occasionally been deemed a Public Health Service (PHS) employee under federal law, sought to remove the case to federal court, claiming removal was proper under 42 U.S.C. § 233 and 28 U.S.C. § 1442.After CentroMed was served, it notified the Department of Health and Human Services (HHS) and the United States Attorney, seeking confirmation that the data breach claims fell within the scope of PHS employee immunity. The United States Attorney appeared in state court within the required 15 days, ultimately informing the court that CentroMed was not deemed a PHS employee for the acts at issue because the claims did not arise from medical or related functions. Despite this, CentroMed removed the case to the United States District Court for the Western District of Texas 37 days after service. The district court granted Gonzalez’s motion to remand, concluding that removal was improper under both statutes: the Attorney General had timely appeared, precluding removal under § 233, and removal under § 1442 was untimely.On appeal, the United States Court of Appeals for the Fifth Circuit affirmed the district court’s remand. The Fifth Circuit held that CentroMed could not remove under § 233 because the Attorney General had timely appeared and made a case-specific negative determination. The court further held that removal under § 1442 was untimely, as CentroMed did not remove within 30 days of receiving the initial pleading. Thus, the remand to state court was affirmed. View "Gonzalez v. El Centro Del Barrio" on Justia Law