Justia Consumer Law Opinion Summaries

Dr. Padma Rao brought a defamation suit against JP Morgan Chase Bank and its employee, Keifer Krause, after Krause informed the administrator of her late mother’s estate that Rao, acting under a power of attorney, had designated herself as the payable on death (POD) beneficiary of her mother’s accounts. This statement led the estate administrator to accuse Rao of fraud and breach of fiduciary duty in probate court. The dispute centered on whether Rao had improperly used her authority to benefit herself, which would be illegal under Illinois law.The case was initially filed in Illinois state court, but Chase removed it to the United States District Court for the Northern District of Illinois before any defendant was served, invoking “snap removal.” The district court dismissed all claims except for defamation per se. On summary judgment, the court ruled in favor of the defendants, finding that Krause’s statements were not defamatory, could be innocently construed, and were protected by qualified privilege. Rao appealed both the dismissal of her consumer fraud claim and the grant of summary judgment on her defamation claim.The United States Court of Appeals for the Seventh Circuit first addressed jurisdiction, dismissing Krause as a party to preserve diversity jurisdiction. The court affirmed the dismissal of Rao’s consumer fraud claim, finding she had not alleged unauthorized disclosure of personal information. However, it reversed the summary judgment on the defamation per se claim against Chase, holding that Krause’s statements could not be innocently construed and that a qualified privilege did not apply, given evidence of possible recklessness. The case was remanded for a jury to determine whether the statements were understood as defamatory. View "Padma Rao v J.P. Morgan Chase Bank, N.A." on Justia Law

Joanne Sudakow entered into a contract with CleanChoice Energy, Inc. to purchase electricity. The initial agreement, which she accepted in October 2021, did not include an arbitration clause and specified that New York would be the exclusive venue for any lawsuits. About three weeks after the contract was executed, CleanChoice sent Sudakow a “Welcome Package” containing new terms, including an arbitration provision, but Sudakow did not sign or otherwise expressly assent to these new terms. She continued to pay for her electricity service until she terminated it in August 2022.Sudakow later filed a putative class action in the United States District Court for the Southern District of New York, alleging breach of contract and deceptive business practices by CleanChoice. CleanChoice moved to compel arbitration based on the arbitration provision in the subsequently mailed terms. The district court denied the motion, finding that Sudakow did not have sufficient notice of the arbitration provision and had not assented to it.On appeal, the United States Court of Appeals for the Second Circuit reviewed the district court’s denial of the motion to compel arbitration de novo. The Second Circuit held that Sudakow was not bound by the arbitration provision because CleanChoice failed to provide clear and conspicuous notice of the new terms, and a reasonable person would not have understood that making payments constituted assent to those terms. The court also found that the language of the subsequent terms indicated that a signature was required for assent, which Sudakow never provided. Accordingly, the Second Circuit affirmed the district court’s judgment denying CleanChoice’s motion to compel arbitration. View "Sudakow v. CleanChoice Energy, Inc." on Justia Law

Ashley Popa visited a website operated by PSP Group LLC, which used a session-replay technology called “Clarity,” owned by Microsoft Corporation. This technology recorded users’ interactions with the website, including mouse movements, clicks, and some text inputs. Popa alleged that Clarity collected information such as her browsing activity and partial address details, and that this data was used to recreate her visit for analysis by PSP. She filed a putative class action, claiming violations of Pennsylvania’s Wiretapping and Electronic Surveillance Control Act (WESCA) and intrusion upon seclusion.Popa initially filed her complaint in the United States District Court for the Western District of Pennsylvania, later amending it. The case was transferred to the United States District Court for the Western District of Washington. Both defendants moved to dismiss; PSP argued lack of subject matter jurisdiction and failure to state a claim, while Microsoft moved to dismiss for failure to state a claim. The district court found that Popa failed to establish Article III standing, concluding that the information collected did not constitute the type of private information historically protected by law. The court dismissed the action without prejudice and denied Microsoft’s motion as moot.On appeal, the United States Court of Appeals for the Ninth Circuit reviewed the district court’s dismissal de novo. The Ninth Circuit held that Popa did not allege a “concrete” injury sufficient for Article III standing, as required by TransUnion LLC v. Ramirez. The court found that the alleged harm was not analogous to common-law privacy torts such as intrusion upon seclusion or public disclosure of private facts, as Popa did not identify any highly offensive or private information collected. The Ninth Circuit affirmed the district court’s dismissal. View "Popa v. Microsoft Corp." on Justia Law

A food and beverage server brought a class action lawsuit against several hotel and resort entities, alleging that from 2010 to 2016, the hotels imposed service charges on customers but failed to distribute the full amount of those charges as gratuities to employees. Instead, the hotels retained a portion of the service charges without clearly informing customers that not all of the service charge would go to employees as tips. The disclosures provided by the hotels during this period stated that “a portion” of the service fee was allocated to employees as “tips or wages” and another portion to cover other costs, but did not specify the exact amount or percentage distributed to employees.In the Circuit Court of the First Circuit, both parties moved for summary judgment. The circuit court ruled in favor of the plaintiff, finding that the hotels’ disclosures were insufficient because they did not specify the portion of the service charge distributed to employees. The hotels appealed, and the Intermediate Court of Appeals (ICA) reversed the circuit court’s decision. The ICA held that the statute did not require disclosure of the specific amount or percentage distributed to employees and that the hotels’ disclosures were sufficient.The Supreme Court of the State of Hawai‘i reviewed the case and held that the ICA erred in concluding the hotels’ disclosures satisfied Hawai‘i Revised Statutes § 481B-14. The court determined that merely reciting statutory language or stating that “a portion” of the service charge goes to employees is ambiguous and does not clearly inform consumers. The court held that when only part of a service charge is distributed as tips, the employer must disclose the amount or percentage paid to employees. The Supreme Court vacated the ICA’s judgment, affirmed the circuit court’s judgment, and remanded for further proceedings. View "Rodriguez v. Mauna Kea Resort LLC." on Justia Law

George Jackson purchased a RainSoft home water treatment system from Carolina Water Systems, which operated as an authorized service provider for Home Depot in North Carolina and South Carolina. At the time of purchase, Carolina Water Systems was running a promotion that offered customers rebates or refunds for referring other potential buyers, with the possibility of a full refund for sufficient referrals. Jackson later defaulted on payments for the system, leading to a debt-collection action by Citibank. In response, Jackson argued that his debt was void under North Carolina’s referral statute, which prohibits sales promotions offering consideration for customer referrals. He subsequently brought a putative class action against the defendants, seeking relief for himself and others who purchased systems during the promotion.After preliminary issues were resolved, including a federal court removal and arbitration challenges, Jackson moved in the Superior Court of Mecklenburg County to certify a class of all purchasers of RainSoft systems from the defendants between November 2012 and November 2016. The trial court granted class certification, finding that the requirements for class actions were met and that a class action was the superior method for resolving the dispute.On appeal, the Supreme Court of North Carolina reviewed the class certification order. The Court held that North Carolina’s referral statute does not require proof that the illegal sales promotion induced each buyer to make a purchase, thus supporting class certification for North Carolina residents. However, the Court found that South Carolina’s referral statute does require inducement, which would necessitate individualized inquiries and defeat the predominance requirement for class certification. Therefore, the Supreme Court of North Carolina vacated the trial court’s class certification order and remanded the case for further proceedings. View "Jackson v. Home Depot U.S.A., Inc." on Justia Law

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