Justia Consumer Law Opinion Summaries

A Virginia-based company provided tax debt relief services to clients in Idaho, assisting them in negotiating settlements or payment plans for tax debts owed to the IRS and the State of Idaho. The company did not offer services for other types of debt and employed IRS-enrolled agents to represent clients in administrative tax proceedings. Despite conducting substantial business in Idaho, the company did not register as a corporation in the state or obtain a license under the Idaho Collection Agency Act (ICAA). After receiving multiple complaints from Idaho residents about the company’s practices, the Idaho Department of Finance investigated and determined that the company was operating as a “debt counselor” under the ICAA and required a license.The Department initiated an administrative enforcement action, resulting in a hearing officer’s order imposing civil penalties and restitution. The company appealed to the Director of the Department of Finance, who largely upheld the hearing officer’s findings but reduced the restitution amount. The company then sought judicial review in the District Court of the Fourth Judicial District, which affirmed the Director’s final order. The company appealed to the Idaho Supreme Court.The Supreme Court of the State of Idaho held that the company’s activities—negotiating and managing tax debts—fell within the ICAA’s definition of a “debt counselor,” and that unpaid taxes constitute “debt” or “indebtedness” under the Act’s plain language. The Court also found that the ICAA was not preempted by federal law, that the Director did not abuse her discretion in evidentiary or sanction decisions, and that the civil penalties and restitution were supported by substantial evidence. The Court affirmed the district court’s decision and awarded costs, but not attorney fees, to the Department on appeal. View "Wall & Associates, Inc. v. Idaho Department of Finance" on Justia Law

Russell Johnson, a resident of a continuing care retirement community operated by Stoneridge Creek, filed a class action lawsuit alleging that Stoneridge Creek unlawfully increased residents’ monthly care fees to cover its anticipated legal defense costs in ongoing litigation. Johnson claimed these increases violated several statutes, including the Health and Safety Code, the Unfair Competition Law, the Consumer Legal Remedies Act (CLRA), and the Elder Abuse Act, and breached the Residence and Care Agreement (RCA) between residents and Stoneridge Creek. The RCA allowed Stoneridge Creek to adjust monthly fees based on projected costs, prior year per capita costs, and economic indicators. In recent years, Stoneridge Creek’s budgets for legal fees rose sharply, with $500,000 allocated for 2023 and 2024, compared to much lower amounts in prior years.The Alameda County Superior Court previously denied Stoneridge Creek’s motion to compel arbitration, finding the RCA’s arbitration provision unconscionable. Johnson then moved for a preliminary injunction to prevent Stoneridge Creek from including its litigation defense costs in monthly fee increases. The trial court granted the injunction, finding a likelihood of success on Johnson’s claims under the CLRA and UCL, and determined that the fee increases were retaliatory and unlawfully shifted defense costs to residents. The court also ordered Johnson to post a $1,000 bond.The California Court of Appeal, First Appellate District, Division Four, reviewed the case and reversed the trial court’s order. The appellate court held that the fee increases did not violate the CLRA’s fee-recovery provision or other litigation fee-shifting statutes, as these statutes govern judicial awards of fees, not how a defendant funds its own legal expenses. The court further concluded that Health and Safety Code section 1788(a)(22)(B) permits Stoneridge Creek to include reasonable projections of litigation expenses in monthly fees. However, the court remanded the case for the trial court to reconsider whether the fee increases were retaliatory or excessive, and to reassess the balance of harms and the appropriate bond amount. View "Johnson v. Stoneridge Creek Pleasanton CCRC" on Justia Law

A resident of a memory-care facility in Massachusetts alleged that the facility’s court-appointed receiver, KCP Advisory Group, LLC, conspired with others to unlawfully evict residents, including herself, by falsely claiming that the local fire department had ordered an emergency evacuation. The resident, after being transferred to another facility, filed suit in the United States District Court for the District of Massachusetts, asserting several state-law claims against KCP and other defendants. The complaint alleged that KCP’s actions violated statutory and contractual notice requirements and were carried out in bad faith.KCP moved to dismiss the claims against it, arguing that as a court-appointed receiver, it was entitled to absolute quasi-judicial immunity. The district court granted the motion in part and denied it in part, holding that while quasi-judicial immunity barred claims based on negligent performance of receivership duties, it did not bar claims alleging that KCP acted without jurisdiction, contrary to law and contract, or in bad faith. The court thus denied KCP’s motion to dismiss several counts, including those for violation of the Massachusetts Consumer Protection Act, intentional infliction of emotional distress, civil conspiracy, fraud, and breach of fiduciary duty. KCP appealed the denial of immunity as to these counts.The United States Court of Appeals for the First Circuit reviewed the district court’s denial of absolute quasi-judicial immunity de novo. The appellate court held that KCP’s alleged acts—removing residents from the facility—were judicial in nature and within the scope of its authority as receiver. Because KCP did not act in the absence of all jurisdiction, the court concluded that quasi-judicial immunity barred all of the resident’s claims against KCP. The First Circuit therefore reversed the district court’s denial of KCP’s motion to dismiss the specified counts. View "Suny v. KCP Advisory Group, LLC" on Justia Law

Fifteen individuals who purchased new motorcycles from a major American manufacturer received a limited warranty with their purchases. The warranty provided for free repair or replacement of defective parts for up to 24 months but excluded coverage for defects or damage caused by non-approved or non-manufacturer parts. The plaintiffs, concerned that using non-manufacturer parts would void their warranties, opted to buy higher-priced parts from the manufacturer. They later alleged that the company’s warranty practices unlawfully conditioned warranty coverage on the exclusive use of its own parts, in violation of the Magnuson-Moss Warranty Act and various state antitrust laws.The United States Judicial Panel on Multidistrict Litigation consolidated the plaintiffs’ lawsuits and transferred them to the United States District Court for the Eastern District of Wisconsin. The district court dismissed the consolidated complaint for failure to state a claim. It found that the limited warranty did not condition benefits on exclusive use of manufacturer parts and that the risk of losing warranty coverage was insufficient to establish an anticompetitive tying arrangement or economic coercion under state antitrust law. The court also dismissed related state law claims premised on the same conduct.On appeal, the United States Court of Appeals for the Seventh Circuit affirmed the district court’s dismissal. The Seventh Circuit held that the warranty’s terms did not create an express or implied tie prohibited by the Magnuson-Moss Warranty Act, nor did the complaint plausibly allege violations of the Act’s disclosure or pre-sale availability requirements. The court further held that the plaintiffs failed to plausibly allege sufficient market power or anticompetitive effects to support their state antitrust claims, and that the warranty’s terms were available to consumers at the time of purchase, precluding a Kodak-style lock-in theory. The court affirmed dismissal of all claims. View "Heymer v. Harley-Davidson Motor Company Group, LLC" on Justia Law

An individual whose nursing license was revoked in 2011 was subsequently excluded from participating in federally funded health care programs, a status that remains ongoing. When she later applied for a job involving health care consulting, the prospective employer requested a background check from a consumer reporting agency. The agency’s report disclosed both her current exclusion from federal health care programs and the fact that her license had been revoked in 2011. As a result, her job offer was rescinded. She disputed the report but was unsuccessful.She then filed a class action lawsuit in the United States District Court for the District of Arizona, alleging that the agency violated the Fair Credit Reporting Act (FCRA) by including adverse information more than seven years old in its report. The district court granted summary judgment for the agency, holding that reporting the ongoing exclusion was permissible because it was a continuing event, and that reporting the reason for the exclusion (the license revocation) was also allowed. The court further found that, even if there was a violation, the agency’s interpretation of the FCRA was not objectively unreasonable, so there was no negligent or willful violation.On appeal, the United States Court of Appeals for the Ninth Circuit held that the agency did not violate the FCRA by reporting the ongoing exclusion, as such exclusions may be reported for their duration and for seven years after they end. However, the court found that reporting the underlying license revocation, which occurred more than seven years before the report, did violate the FCRA. Despite this, the Ninth Circuit affirmed the district court’s judgment because the agency’s interpretation of the statute was not objectively unreasonable, and thus its violation was neither negligent nor willful. View "Grijalva v. ADP Screening and Selection Services, Inc." on Justia Law

An 81-year-old man purchased a Maserati from a car dealership and its principal, claiming they orally promised him a $6,500 credit for his trade-in vehicle but only credited $2,000 in the written contract. He alleged that he would not have completed the transaction had he known the true trade-in value. Based on these events, he sued the sellers for financial elder abuse, violation of the Consumers Legal Remedies Act (CLRA), and several related claims. During discovery, the sellers served requests for admission, which the plaintiff denied or withdrew. The case proceeded to trial, where a jury found in favor of the sellers on all claims, concluding there was no misrepresentation.After prevailing at trial, the sellers sought approximately $490,000 in attorney fees, specifically cost-of-proof fees under Code of Civil Procedure section 2033.420 and CLRA fees under Civil Code section 1780, subdivision (e). The Superior Court of Orange County denied the fee motion in its entirety, holding that the unilateral fee provision in Welfare and Institutions Code section 15657.5, subdivision (a) barred prevailing defendants from recovering attorney fees on financial elder abuse claims and any intertwined claims. The court found all claims were based on the same transaction and thus inextricably linked, relying on precedent that prohibits fee awards to prevailing defendants in such circumstances.The California Court of Appeal, Fourth Appellate District, Division Three, reviewed the case. It held that the trial court erred in categorically denying cost-of-proof fees, finding that such fees serve a distinct purpose—encouraging efficient litigation—and do not conflict with the unilateral fee provision, which is designed to protect plaintiffs from adverse fee awards for losing on elder abuse claims. However, the appellate court affirmed the denial of CLRA fees, as the sellers failed to provide a separate, adequate argument for their entitlement. The order was affirmed in part, reversed in part, and remanded for further proceedings on cost-of-proof fees. View "Gamo v. Merrell" on Justia Law

A nonprofit organization focused on corporate accountability brought suit against a California-based company that exports açaí products, alleging that the company made false and misleading statements about the labor conditions in its supply chain. The complaint asserted that the company’s marketing materials claimed its products were ethically sourced and free from child labor, but the nonprofit alleged these claims were not supported by the realities of the supply chain, including reports that the company purchased fruit from sources outside its registered network without verifying labor conditions.The Superior Court of the District of Columbia reviewed the case after the company moved to dismiss, arguing that California’s Unfair Competition Law (UCL) should apply under District of Columbia choice-of-law rules, and that the nonprofit lacked standing under the UCL. The trial court agreed, finding a conflict between the District’s Consumer Protection Procedures Act (CPPA) and the UCL, and concluded that the UCL applied because the relevant conduct and parties’ connections were centered in California. The court then dismissed the complaint, holding that the nonprofit lacked standing under the UCL, which does not provide for associational standing unless the organization has suffered a loss of money or property.On appeal, the District of Columbia Court of Appeals held that the nonprofit failed to preserve its argument that there was no true conflict between the CPPA and the UCL, so the court assumed a conflict existed. However, the appellate court found that the trial court erred in determining, at the motion to dismiss stage, that the UCL should apply. The appellate court held that, given the limited factual record, it was premature to resolve the choice-of-law issue against the nonprofit, and that the law of the forum (the CPPA) should apply unless further development shows otherwise. The order dismissing the case was reversed and remanded for further proceedings. View "Corporate Accountability Lab v. Sambazon, Inc." on Justia Law

Several individuals who allegedly owed debts to Kentucky public institutions—either for medical services at the University of Kentucky or for educational services at the University of Kentucky, Morehead State University, or the Kentucky Community & Technical College System—challenged the referral of their debts to the Kentucky Department of Revenue for collection. The plaintiffs argued that the statutes used to justify these referrals did not apply to their debts and that the Department unlawfully collected the debts, sometimes without prior court judgments or adequate notice. The Department used its tax collection powers, including garnishments and liens, to recover these debts, and in some cases, added interest and collection fees.In the Franklin Circuit Court, the plaintiffs sought declaratory and monetary relief, including refunds of funds collected. The Circuit Court ruled that the Department was not authorized by statute to collect these debts and held that sovereign immunity did not protect the defendants from the plaintiffs’ claims. The court also certified the medical debt case as a class action. The Court of Appeals reviewed these interlocutory appeals and held that while sovereign immunity did not bar claims for purely declaratory relief, it did bar all claims for monetary relief, including those disguised as declaratory relief.The Supreme Court of Kentucky reviewed the consolidated appeals. It held that sovereign immunity does not bar claims for purely declaratory relief or for a refund of funds that were never due to the state, nor does it bar constitutional takings claims. However, the court held that sovereign immunity does bar claims for a refund of funds that were actually due to the state, even if those funds were unlawfully or improperly collected. The court affirmed in part, reversed in part, and remanded for further proceedings to determine which funds, if any, were never due to the state and thus subject to refund. The court also found that statutory changes rendered prospective declaratory relief in the medical debt case moot, but not retrospective relief. View "LONG V. COMMONWEALTH OF KENTUCKY" on Justia Law

A Missouri consumer incurred a medical debt that was later assigned to a debt collection agency. Several years after the initial collection letter, the consumer sent a fax to the agency disputing the debt and requesting no further contact. In response, the agency mailed a letter verifying the debt and indicating that collection efforts would resume. The consumer then filed suit, alleging that the agency violated the Fair Debt Collection Practices Act (FDCPA) by communicating after being asked not to.The United States District Court for the Western District of Missouri reviewed cross-motions for summary judgment based on stipulated facts. The court found that the consumer had suffered a concrete injury because the unwanted letter intruded upon her seclusion and privacy. It granted summary judgment for the consumer, awarded statutory damages and attorneys’ fees, and denied the agency’s motion for reconsideration.On appeal, the United States Court of Appeals for the Eighth Circuit reviewed the district court’s standing determination de novo. The appellate court held that the consumer lacked Article III standing because she did not suffer a concrete injury. The court reasoned that the agency’s letter was a required response under the Fair Credit Reporting Act (FCRA) after the consumer disputed the debt in connection with her credit report, and that a single, invited letter verifying a debt does not amount to an intrusion upon seclusion or a highly offensive act. The Eighth Circuit vacated the district court’s judgment and remanded the case with instructions to dismiss the complaint. View "Denmon v. Kansas Counselors, Inc." on Justia Law

After registering to receive an email newsletter from a news publication, the plaintiff visited the publication’s website and watched videos there. The website contained a tracking tool, the Meta Pixel, which transmitted information about the videos she viewed to Meta (Facebook’s owner) without her knowledge or consent. The plaintiff did not access the website or its videos through the newsletter, nor did she allege that the newsletter itself transmitted any information about her video viewing to Meta.The plaintiff filed suit in the United States District Court for the District of Columbia, alleging that the news publication’s owner violated the Video Privacy Protection Act (VPPA) by disclosing her personally identifiable information to Meta. The district court dismissed the complaint for failure to state a claim, holding that the plaintiff was not a “consumer” under the VPPA because she had not purchased, rented, or subscribed to the specific videos or similar audio-visual materials at issue. The court found that merely subscribing to the newsletter, which was unrelated to the videos she watched on the website, was insufficient to establish the necessary connection under the statute.On appeal, the United States Court of Appeals for the District of Columbia Circuit affirmed the district court’s dismissal. The appellate court held that to state a claim under the VPPA, a plaintiff must allege that she purchased, rented, or subscribed to the specific video or similar audio-visual good or service, and that the protected information disclosed must concern that same good or service. Because the plaintiff did not subscribe to or otherwise acquire the videos she watched on the website, she was not a “consumer” protected by the VPPA with respect to those videos. The judgment of dismissal was affirmed. View "Pileggi v. Washington Newspaper Publishing Company, LLC" on Justia Law