Justia Consumer Law Opinion Summaries

In this case, the plaintiff executed a deed in lieu of foreclosure on her home in 2016 after defaulting on her mortgage, and subsequently received a Chapter 13 bankruptcy discharge in 2018. When she reviewed her credit report in 2022, the report stated that she had both a bankruptcy discharge and an outstanding balance on her mortgage account, along with a balloon payment due in the future. She argued that this combination of information was inaccurate or misleading, given her bankruptcy discharge and the deed in lieu of foreclosure.The United States District Court for the Northern District of Illinois dismissed her complaint. The district court determined that her claim depended on resolving legal questions—specifically, whether her mortgage was discharged in bankruptcy and the effect of the deed in lieu of foreclosure on her debt status. The court found that these were legal issues and that the Fair Credit Reporting Act (FCRA) does not require a consumer reporting agency to resolve such questions. Therefore, the court concluded that she failed to allege a factual inaccuracy that could support a claim under the FCRA.The United States Court of Appeals for the Seventh Circuit reviewed the dismissal de novo. It affirmed the lower court’s judgment, holding that the FCRA does not obligate credit reporting agencies to make legal determinations regarding the discharge status or enforceability of debts. The court reasoned that the alleged inaccuracy was not objectively apparent from the records available to the credit reporting agency, and resolving it would require legal analysis beyond the agency’s competency. Therefore, the plaintiff’s claim could not proceed, and the district court's dismissal was affirmed. View "Sykes v Experian Information Solutions, Inc." on Justia Law

Several vape industry businesses and a vape user challenged a North Carolina law that restricts the sale of vape products lacking approval from the Food and Drug Administration (FDA). North Carolina’s statute, enacted in 2024, requires manufacturers to certify annually to the North Carolina Department of Revenue that their vape products either have FDA approval, were on the market by August 8, 2016 with a timely FDA application, or are exempt due to superficial changes. Products not listed in the resulting state directory cannot be sold in North Carolina, and violations can result in fines, product seizure, or lawsuits for deceptive trade practices.Before reaching the United States Court of Appeals for the Fourth Circuit, the plaintiffs sued North Carolina officials in the United States District Court for the Eastern District of North Carolina, arguing that the state law was preempted by federal law and violated the Equal Protection Clause. They sought a preliminary injunction to block enforcement of the law, relying only on the preemption argument. The district court denied the motion, finding that the plaintiffs had standing due to the threat of economic harm but were unlikely to succeed on the merits because the federal Tobacco Control Act did not preempt North Carolina’s regulation of vape product sales.The United States Court of Appeals for the Fourth Circuit affirmed the district court’s decision. The court held that the commercial plaintiffs had standing due to the risk of substantial economic harm from enforcement of the law. On the merits, the court concluded that North Carolina’s law was not preempted by the relevant federal statutes. The state law was found to regulate sales, an area expressly preserved for state regulation by the federal Tobacco Control Act’s savings clause, and did not amount to impermissible enforcement of the FDA’s exclusive authority under federal law. The denial of a preliminary injunction was therefore affirmed. View "Vapor Technology Association v. Wooten" on Justia Law

Two competing companies in the athleticwear market, both producing bioceramic materials embedded in textiles, became involved in litigation over allegedly false advertising. One company, after settling the initial lawsuit by agreeing to pay $2.5 million and refrain from claiming FDA approval or health benefits for its product, filed for bankruptcy before completing the settlement payments. The plaintiff then brought a new action against the CEO of the defendant company, alleging both tortious interference with the settlement agreement and false advertising in violation of the Lanham Act, asserting that the defendant continued to falsely represent the product's health benefits and FDA approval.The United States District Court for the Central District of California presided over a jury trial. The jury found in favor of the plaintiff on the Lanham Act claim and awarded nominal damages. On post-trial motions, the district court granted judgment as a matter of law for the plaintiff on the tortious interference claim, awarded $2.5 million in damages, and further awarded the plaintiff disgorgement of the CEO’s salary (trebled) as "profits" under the Lanham Act, in addition to nearly $600,000 in attorneys’ fees.Upon appeal, the United States Court of Appeals for the Ninth Circuit reviewed the district court’s rulings. The Ninth Circuit held that, under California law, a corporate officer acting within the scope of agency and not at the expense of the corporation is immune from tortious interference claims, and reversed the district court’s denial of immunity and its tortious interference damages award. The court also reversed the district court’s disgorgement award, concluding that the CEO’s salary was not equivalent to profits under the Lanham Act. However, the Ninth Circuit affirmed the award of attorneys’ fees, finding no abuse of discretion in the district court’s determination that the case was “exceptional.” The case was remanded for further proceedings. View "MULTIPLE ENERGY TECHNOLOGIES, LLC V. CASDEN" on Justia Law

Buyers of over-the-counter nasal decongestants containing oral phenylephrine brought numerous class actions against drug manufacturers and retailers, alleging that for years these companies sold and advertised decongestant products they knew to be ineffective. The plaintiffs claimed that scientific studies, particularly since 2016, had shown oral phenylephrine to be no better than a placebo at relieving congestion, yet the companies continued to market their products as effective decongestants and complied with Food and Drug Administration (FDA) labeling requirements. The FDA, despite mounting evidence, did not remove oral phenylephrine’s designation as an effective decongestant under its regulations.The Judicial Panel on Multidistrict Litigation consolidated nearly one hundred class actions and transferred them to the United States District Court for the Eastern District of New York. Plaintiffs filed a complaint asserting New York statutory and common-law claims as well as a federal RICO claim. The district court granted the defendants’ motion to dismiss, holding that the Federal Food, Drug, and Cosmetic Act (FDCA) expressly preempted the state law claims because the drugs’ labels complied with FDA requirements, and that the plaintiffs lacked standing to bring the RICO claim. The court also dismissed a Lanham Act claim brought by one pharmacy plaintiff.On appeal, the United States Court of Appeals for the Second Circuit held that the FDCA expressly preempts most of the state law claims because the federal regime requires manufacturers to follow the FDA-approved labeling, but it vacated the dismissal for claims regarding “Maximum Strength” labeling and brand-name drugs approved via the New Drug Application process, remanding those for further proceedings. The court affirmed dismissal of the RICO claim, adopting the indirect purchaser rule, and upheld denial of the pharmacy’s motion for reconsideration regarding its Lanham Act claim. View "Yousefzadeh v. Johnson & Johnson Consumer Inc." on Justia Law

A group of consumers who purchased products from a coffee company’s website filed a class action lawsuit, claiming that the website’s terms and conditions improperly restricted their right to post negative reviews about the company or its products. The website included clauses stating that users could not submit content intended to cause commercial harm or use the company’s trademarks in a way that would disparage the brand. The plaintiffs did not allege that the company ever threatened to enforce these provisions against them or that they experienced any economic harm as a result.In the Superior Court of Los Angeles County, the company responded with a demurrer, arguing that the plaintiffs failed to state a claim because merely including such provisions in the terms and conditions does not violate California Civil Code section 1670.8 unless there is an attempt to enforce or threaten enforcement of the provision. The court agreed, finding that section 1670.8 only permits a consumer to seek civil penalties when a business attempts to enforce or otherwise penalizes a consumer under such a clause, not merely for including the clause in a contract. The court also dismissed the plaintiffs’ related claim under the Unfair Competition Law, as no economic harm was alleged. The court denied leave to amend the Civil Code section 1670.8 claim and entered judgment in favor of the company.On appeal, the California Court of Appeal, Second Appellate District, Division One, reviewed the interpretation of section 1670.8. The appellate court held that while non-disparagement clauses in consumer contracts are void and unenforceable, a business can only be held liable for civil penalties if it threatens to enforce or seeks to enforce such a provision or penalizes a consumer for protected speech. The judgment of the trial court was affirmed. View "Arterberry v. Peet's Coffee" on Justia Law

Jason and Abigail Franco purchased a yogurt product marketed as “sugar free” by Chobani, LLC. The product, however, contained four grams per serving of allulose, a naturally occurring sweetener. The Francos alleged that Chobani’s labeling was deceptive and violated various state consumer protection laws. Their claims depended on whether allulose is considered a “sugar” under federal regulations; if so, Chobani’s labeling would violate federal standards, and the state-law claims could proceed. If not, the Federal Food, Drug, and Cosmetic Act (FDCA) would preempt the action.The United States District Court for the Northern District of Illinois reviewed Chobani’s motion to dismiss under Rule 12(b)(6), focusing on the issue of preemption. The court deferred to FDA enforcement guidance that excluded allulose from “total sugars,” found that the Francos’ claims were preempted by federal law, and dismissed the case.On appeal, the United States Court of Appeals for the Seventh Circuit applied de novo review. The court received input from the FDA, which clarified that the relevant regulation unambiguously includes all monosaccharides—including allulose—in the definition of “total sugars.” The court found the FDA’s interpretation persuasive and concluded that the regulation’s definition of “total sugars” encompasses allulose. As a result, the Francos’ claims, which sought to enforce requirements identical to federal standards, were not preempted.The Seventh Circuit also held that the Francos plausibly alleged consumer deception, as the complaint claimed Chobani labeled its product “sugar free” despite containing allulose. The court reversed the district court’s dismissal and allowed the Francos’ suit to proceed. View "Franco v Chobani, LLC" on Justia Law

PhantomALERT, a developer of a traffic app that crowdsources real-time data, modified its app in early 2020 to help users spot and avoid Covid-19 outbreaks. Apple rejected PhantomALERT’s updated app from its App Store, citing new guidelines limiting Covid-19-related apps to those from recognized health entities and requiring apps in highly regulated fields to be submitted by legal entities, not individual developers. PhantomALERT was invited to revise and resubmit its app for compliance. The Google Play Store also rejected the app for similar reasons. Apple later updated its guidelines, allowing certain Covid-related apps endorsed by government entities, but PhantomALERT alleged it was not notified of this change.PhantomALERT sued Apple in the United States District Court for the District of Columbia, claiming violations of the Sherman Antitrust Act, California antitrust law, and California unfair competition law. Apple moved to dismiss, and PhantomALERT missed the deadline for an opposition brief, instead filing an amended complaint. The district court dismissed the original complaint without prejudice as conceded and denied leave to late-file the amended complaint, finding it futile. The court determined PhantomALERT’s antitrust allegations failed to define a relevant product or geographic market and that prerequisites for injunctive relief under California law were not met.The United States Court of Appeals for the District of Columbia Circuit reviewed the district court’s order de novo, finding the dismissal was final and appealable. The Circuit affirmed, holding that PhantomALERT failed to plausibly allege relevant product markets for its Sherman Act claims, including the alleged App Store single-brand aftermarket and submarket for Covid-19-related tracing apps. The court concluded the amended complaint did not state a claim under federal or California antitrust laws, nor under California’s unfair competition law. The dismissal was affirmed without prejudice. View "PhantomALERT Inc. v. Apple Inc." on Justia Law

A private company operating an automated license plate recognition (ALPR) system collected and stored images of license plates and related data, including date, time, and location, from vehicles in public areas in California. The company maintained a written usage and privacy policy, posted on its website, which set out authorized uses of the ALPR information and procedures for access and security. A California resident whose license plate information was collected by this system filed a class action lawsuit, alleging that the company violated the ALPR statute by failing to meaningfully implement or publicly disclose a compliant usage and privacy policy, by failing to enact adequate security measures, and by improperly allowing customers to use the data for unauthorized purposes. The plaintiff claimed harm based on an asserted invasion of privacy due to the collection and storage of his information, but did not allege any unauthorized access, disclosure, or tangible injury.The Superior Court of San Diego County granted summary judgment to the company, finding that the plaintiff lacked standing because he had not suffered actual harm as required by the ALPR statute. The court also denied another class member’s ex parte application to intervene as a substitute plaintiff, partly because the application was untimely and partly because he too failed to demonstrate actual harm resulting from a statutory violation.On appeal, the California Court of Appeal, Fourth Appellate District, Division One, affirmed both rulings. The appellate court held that standing to sue under the ALPR statute requires a showing of actual harm arising from a violation of the statute, not merely a statutory violation or a subjective sense of privacy invasion. The court concluded the plaintiff had not suffered actual harm, and therefore lacked standing. The appellate court also found no reversible error in the denial of the motion to intervene, as the movant failed to address all grounds for the trial court’s decision. View "Mata v. Digital Recognition Network, Inc." on Justia Law

Ward’s daughter used his personal information, including his social security number and driver’s license, to apply for a residential lease in Texas in his name. Without Ward’s knowledge or permission, she lived in the property, failed to pay rent, and was eventually evicted. The landlord then transferred the outstanding debt to National Credit Systems, Inc. (NCS), which reported the delinquent debt under Ward’s name to various credit reporting agencies. Upon discovering the debt on his credit report, Ward disputed its validity, claiming he was a victim of identity theft. Despite Ward submitting documentation, NCS concluded the debt information was accurate and continued reporting it.The United States District Court for the District of Colorado permitted Ward’s claim against NCS under the Fair Credit Reporting Act (FCRA) to proceed to trial. The jury found NCS liable for negligently failing to conduct a reasonable investigation of Ward’s dispute and awarded Ward $500,000 for emotional distress. NCS filed a post-trial motion under Rule 50(b), arguing that Ward had not proven the information was inaccurate under the FCRA, but the district court denied the motion.Upon review, the United States Court of Appeals for the Tenth Circuit held that inaccuracy is a prima facie element of a claim alleging an unreasonable investigation under the FCRA. To establish this, a consumer must demonstrate that the disputed information was objectively and readily verifiable as containing a mistake or error by the furnisher. The Court concluded that Ward’s claim did not meet this standard, as the alleged inaccuracy depended on subjective assertions about identity theft, which were not objectively verifiable. The Tenth Circuit reversed and vacated the district court’s judgment, remanding with instructions to enter judgment for NCS. View "Ward v. National Credit Systems" on Justia Law

A professional track and field athlete received a bottle of Gatorade Recovery Gummies at an award ceremony hosted by Gatorade, which were labeled as “NSF Certified for Sport,” indicating independent testing for banned substances. After consuming the gummies, the athlete submitted a routine drug test that later returned positive for cardarine, a banned performance-enhancing drug, resulting in immediate suspension from elite competition. Subsequent investigation revealed that the gummies lot the athlete received had never been NSF certified, and Gatorade was aware of the mislabeling before distributing the product. The athlete suffered significant consequences, including loss of eligibility to compete, loss of a scholarship, and forfeiture of endorsement opportunities.The athlete initiated legal action in the United States District Court for the Southern District of New York, alleging strict products liability, negligence, negligent misrepresentation, violation of Texas’s Deceptive and Unfair Trade Practices Act, tortious interference with contract, and intentional infliction of emotional distress. The district court dismissed all claims. It found no “cognizable injury outside of purely economic damages” for the strict liability, negligence, and misrepresentation claims, applying New York’s economic loss doctrine. Additional claims were dismissed based on statutory definitions and insufficient allegations of extreme conduct or distress.On appeal, the United States Court of Appeals for the Second Circuit reviewed the dismissal de novo. It affirmed the district court’s dismissal of the tortious interference, consumer protection, and emotional distress claims. However, the court recognized uncertainty in New York law regarding tort recovery for nonconsensual bodily changes detectable only by laboratory testing and the boundaries of the economic loss doctrine. Accordingly, the Second Circuit deferred decision and certified two questions to the New York Court of Appeals concerning the scope of the economic loss doctrine and whether the athlete’s injury is cognizable in tort under New York law. View "Asinga v. Gatorade Co." on Justia Law