Justia Consumer Law Opinion Summaries

Carol Rose, a prominent figure in the American Quarter Horse industry, entered into a series of agreements with Lori and Philip Aaron in 2013. The Aarons agreed to purchase a group of Rose’s horses at an auction, lease her Gainesville Ranch with an option to buy, and employ her as a consultant. The relationship quickly soured after the auction, with both sides accusing each other of breaches. Rose locked the Aarons out of the ranch and asserted a stable keeper’s lien for charges exceeding those related to the care of the Aarons’ horses. The Aarons paid the demanded sum and removed their horses. Litigation ensued, including claims by Jay McLaughlin, Rose’s former trainer, for damages related to the value of two fillies.The bankruptcy filings by Rose and her company led to the removal of the ongoing state-court litigation to the United States Bankruptcy Court. After trial, the bankruptcy court ruled in favor of the Aarons on their breach of contract and Texas Theft Liability Act (TTLA) claims, awarding damages and attorneys’ fees, and in favor of McLaughlin on his claim. The United States District Court for the Eastern District of Texas reversed the bankruptcy court’s rulings on the Aarons’ claims and McLaughlin’s claim, vacating the damages and fee awards.On appeal, the United States Court of Appeals for the Fifth Circuit affirmed the district court’s reversal of the damages award for the Aarons’ breach of contract claim, holding that the Aarons failed to prove damages under any recognized Texas law measure. The Fifth Circuit reversed the district court’s judgment on the TTLA claim, holding that Rose’s threat to retain the Aarons’ horses for more than the lawful amount could constitute coercion under the TTLA, and remanded for further fact finding on intent and causation. The court also reversed and remanded the judgment regarding McLaughlin’s claim, finding his damages testimony legally insufficient. The court left the issue of attorneys’ fees for further proceedings. View "Rose v. Equis Equine" on Justia Law

Several individuals brought a class action lawsuit against a group of insurance companies after a data breach compromised the driver’s license numbers of nearly three million people. The breach occurred when hackers exploited the companies’ online insurance quoting platform, which auto-populated sensitive information using data from both customers and third-party sources. The plaintiffs, whose information was compromised, alleged various harms, including time spent monitoring their financial records, increased risk of identity theft, emotional distress, and, for two plaintiffs, discovery of their driver’s license numbers on the dark web.The United States District Court for the Eastern District of Virginia dismissed the consolidated class action complaint, finding that none of the named plaintiffs had standing to pursue their claims. The district court concluded that the alleged injuries were either too speculative or not sufficiently concrete to satisfy Article III’s standing requirements, and granted the defendants’ motion to dismiss under Rule 12(b)(1).On appeal, the United States Court of Appeals for the Fourth Circuit reviewed whether the plaintiffs had standing to bring suit. The Fourth Circuit held that two plaintiffs, who alleged that their driver’s license numbers were actually posted on the dark web, suffered a concrete and particularized injury analogous to the common-law tort of public disclosure of private information. This injury was sufficient to confer standing to seek damages. However, the court found that the other plaintiffs, who did not allege their information was made public, lacked standing because their alleged injuries—such as increased risk of future harm, time spent on mitigation, and emotional distress—were either not imminent or not independently sufficient for standing. The Fourth Circuit therefore affirmed the district court’s dismissal as to those plaintiffs, reversed as to the two plaintiffs with information posted on the dark web, and remanded for further proceedings. View "Holmes v. Elephant Insurance Co." on Justia Law

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