Justia Consumer Law Opinion Summaries

Armando Ballesteros purchased a new car from Fairview Ford Sales, Inc. (Fairview) under a retail installment contract. The contract included an arbitration provision applicable to disputes between Ballesteros and Fairview. After discovering defects in the car that were not repaired, Ballesteros sued Fairview and Ford Motor Company (Ford), the car manufacturer, under the Song-Beverly Consumer Warranty Act. Both defendants moved to compel arbitration based on the contract's arbitration provision, but the trial court compelled arbitration only as to Fairview, denying the motion as to Ford.The trial court, San Bernardino County Superior Court, ruled that Ford, as a nonsignatory to the contract, could not compel arbitration. Ford appealed, arguing that Ballesteros's claims against it were intertwined with the contract and that equitable estoppel should apply to compel arbitration.The California Court of Appeal, First Appellate District, Division Five, reviewed the case. The court affirmed the trial court's decision, rejecting Ford's arguments. The appellate court concluded that Ballesteros's statutory claims against Ford were based on warranties that fell outside the contract with Fairview. The court emphasized that Ford, not being a party to the contract, could not invoke the arbitration provision. The court also noted that equitable estoppel did not apply because Ballesteros's claims did not rely on the contract's terms but on independent warranties recognized by the Song-Beverly Act. The court joined other appellate courts in disagreeing with the precedent set by Felisilda v. FCA US LLC, which had allowed a nonsignatory manufacturer to compel arbitration under similar circumstances. The court highlighted broader equitable concerns, stating that arbitration cannot be imposed on a signatory plaintiff’s claims against a nonsignatory without a clear showing of inequity, which Ford failed to demonstrate. View "Ballesteros v. Ford Motor Co." on Justia Law

Francisco Rosario filed a class action lawsuit against Nationstar Mortgage, LLC (Mr. Cooper) and The Bank of New York Mellon (BNYM), alleging that they collected illegal and unlicensed third-party loan servicing fees on his mortgage. Rosario claimed that these fees were prohibited by the mortgage contract and Rhode Island law. He sought to represent all similarly situated individuals who were charged these fees.The Superior Court granted the defendants' motion to dismiss the complaint. The court found that Rosario's claims were based on a statute that did not provide a private right of action for borrowers to recoup fees collected by unlicensed loan servicers. Rosario appealed the decision, arguing that the defendants breached the mortgage contract by charging fees in violation of Rhode Island law and that the statute should be interpreted broadly to include loan servicing activities.The Rhode Island Supreme Court reviewed the case and affirmed the Superior Court's decision. The court held that the statute in question, G.L. 1956 § 19-14.11-1, did not provide a private right of action for borrowers to recover fees collected by unlicensed loan servicers. The court also found that the statute's exception for unlicensed transactions involving lending or loan brokering did not apply to loan servicing activities. Therefore, the court concluded that Rosario's breach of contract claim could not be sustained based on the alleged statutory violations. The order of the Superior Court was affirmed. View "Rosario v. Nationstar Mortgage, LLC" on Justia Law

Lisa and Peter Woodward incurred a debt of $2,214.44 for their child's dental care, which was placed with Credit Service International Corporation (CSIC) for collection. CSIC filed a claim in conciliation court, but the Woodwards did not receive notice as the summons was sent to their previous address. CSIC obtained a default judgment and attempted to garnish the Woodwards' wages. The Woodwards hired attorney Kevin Giebel, who filed a lawsuit claiming violations of Minnesota garnishment laws and the Fair Debt Collection Practices Act (FDCPA). CSIC and Muske removed the case to federal court and offered a judgment of $2,002.00 plus reasonable attorney’s fees and costs, which the Woodwards accepted.The United States District Court for the District of Minnesota granted the Woodwards' motion for attorney’s fees in part, awarding $12,075.00 out of the $29,139.00 sought. The court used the lodestar method to determine the reasonable fee, concluding that $350 per hour was appropriate and that only 34.5 of the 72.4 hours claimed were reasonable. The Woodwards requested permission to file a motion for reconsideration, which the court denied, stating that the request did not meet the standard for reconsideration and merely reargued previously considered matters.The United States Court of Appeals for the Eighth Circuit affirmed the district court's decision. The appellate court found no merit in the Woodwards' arguments regarding the denial of their initial motion for attorney’s fees, the reduction of the hourly rate, and the number of hours deemed reasonable. The appellate court concluded that the district court did not abuse its discretion in its rulings and that the fee award was appropriate given the circumstances of the case. View "Woodward v. Credit Service Intl. Corp." on Justia Law

Valerie Thomas received a notice claiming she owed $187, which she disputed. Resurgent Capital Services notified TransUnion about the debt before opening Thomas's letter and reported the dispute 29 days later. Thomas sued under the Fair Debt Collection Practices Act, seeking statutory damages for the delay. A jury awarded her $250. The clerk delayed entering the judgment, which was eventually entered on June 11, 2024. Resurgent filed a notice of appeal four days earlier, narrowly avoiding missing the appeal deadline.The United States District Court for the Northern District of Illinois concluded that Resurgent should have notified TransUnion earlier. Resurgent appealed, arguing that Thomas lacked standing because the delay did not injure her. District Judge Bucklo initially ruled that Thomas was injured as a matter of law, referencing Ewing v. Med-1 Solutions, LLC, which treated the absence of a dispute notice as defamation. However, the court noted that injury must be proven and not assumed.The United States Court of Appeals for the Seventh Circuit reviewed the case. It found that Thomas did not provide evidence of injury before or during the trial. She did not attempt to show that her credit score or insurance costs were affected by the delay. Judge Bucklo had precluded Thomas from introducing evidence of actual injury, and Thomas did not challenge this ruling or seek a new trial. The appellate court held that Thomas lacked standing to sue due to the absence of evidence showing injury. Consequently, the judgment of the district court was reversed, and the case was remanded with instructions to dismiss for lack of a justiciable controversy. View "Thomas v LVNV Funding, LLC" on Justia Law

Diana Delgado owed money on a department store credit card, and Midland Credit Management, Inc. purchased the debt and sued her in Minnesota state court. Delgado did not respond to the summons, leading to a default judgment in favor of Midland. Instead of seeking reconsideration or appealing the default judgment, Delgado filed a federal lawsuit against Midland, alleging violations of the Fair Debt Collection Practices Act, including that Midland tried to collect the debt without owning it.The United States District Court for the District of Minnesota dismissed Delgado's case, concluding that the issue of debt ownership had already been resolved in the state-court action and gave the default judgment issue-preclusive effect. Delgado appealed the decision.The United States Court of Appeals for the Eighth Circuit reviewed the case de novo. The court held that a Minnesota state-court default judgment can have issue-preclusive effect in a subsequent federal lawsuit. The court relied on the Minnesota Supreme Court's decision in Herreid v. Deaver, which established that a default judgment is conclusive on the facts essential to its existence, even if the defendant did not participate in the proceedings. The court found that Midland's ownership of the debt was essential to the default judgment and that Delgado had a full and fair opportunity to contest the issue in state court.The Eighth Circuit affirmed the district court's judgment, concluding that the default judgment was a final determination on the merits and that applying collateral estoppel did not work an injustice in this case. View "Delgado v. Midland Credit Mgmt., Inc." on Justia Law

Oscar and Audrey Madrigal purchased a car from Hyundai Motor America in 2011 for $24,172.73. The car allegedly did not function as warranted, and repeated repair attempts failed. The Madrigals requested Hyundai to repurchase the car under the Song-Beverly Consumer Warranty Act, but Hyundai refused, leading the Madrigals to sue for violations of the Act. Hyundai made two settlement offers under California Code of Civil Procedure section 998, which the Madrigals did not accept. On the first day of trial, after the court tentatively ruled against the Madrigals on pretrial motions, the parties settled for $39,000, with the Madrigals retaining the right to seek costs and attorney fees by motion.The Placer County Superior Court ruled that section 998 did not apply because the case settled before trial, and awarded the Madrigals $84,742.50 in attorney fees and $17,681.05 in other costs. Hyundai appealed, arguing that the Madrigals should not recover any postoffer costs because they settled for less than the second 998 offer. The Court of Appeal reversed, holding that section 998’s cost-shifting provisions applied and remanded for further proceedings.The Supreme Court of California affirmed the Court of Appeal’s decision. The Court held that section 998’s cost-shifting provisions apply even when a case settles before trial but after a section 998 offer is rejected or deemed withdrawn. The Court reasoned that the statute’s language and purpose—to encourage the settlement of lawsuits before trial—support this interpretation. The Court clarified that parties are free to agree on their own allocation of costs and fees as part of a settlement agreement, but absent such an agreement, section 998’s default cost-shifting rules apply. View "Madrigal v. Hyundai Motor America" on Justia Law

Tracy Hall filed a class action lawsuit against Walgreens Boots Alliance, Inc. and Walgreen Co., alleging that the company deceptively marketed a cough medicine containing dextromethorphan hydrobromide as "nondrowsy," despite drowsiness being a known side effect. The FDA regulates over-the-counter medicines, including antitussives, but does not require a drowsiness warning for the specific drug in question. Hall claimed that the labeling violated Washington's Consumer Protection Act (CPA).The United States District Court for the Northern District of Illinois reviewed the case and denied Walgreens' motion to dismiss. Walgreens argued that the labeling fell within the CPA's statutory safe harbor, which exempts actions permitted by regulatory bodies. The federal court then certified the question to the Supreme Court of the State of Washington, asking whether the labeling decision fell within the statutory safe harbor under RCW 19.86.170.The Supreme Court of the State of Washington concluded that the statutory safe harbor applies only to actions expressly permitted by a regulatory body. Since the FDA had not specifically permitted labeling the cough medicine as "nondrowsy," the court held that the activity did not fall within the statutory safe harbor. The court answered the certified question in the negative, indicating that the labeling did not qualify for the exemption under the CPA. View "Hall v. Walgreens Boots Alliance, Inc." on Justia Law

Plaintiffs, tenants of a building in Queens, alleged that the defendant engaged in a fraudulent scheme to inflate rents unlawfully. The building participated in the Real Property Tax Law § 421-a program, which required compliance with rent stabilization laws. Plaintiffs claimed that the previous owner registered both a preferential rent and a higher legal regulated rent, allowing for illegal rent increases. This scheme allegedly continued for years, affecting many tenants. Plaintiffs also accused the defendant of concealing this conduct by registering a legal regulated rent that matched the preferential rent.The Supreme Court denied the defendant's motion to dismiss, finding that plaintiffs had alleged sufficient indicia of fraud to invoke the fraud exception to the four-year statute of limitations. The Appellate Division reversed, holding that plaintiffs' claims were time-barred because they could not have reasonably relied on the inflated rent figures, which were disclosed in the registration statements and leases.The New York Court of Appeals reviewed the case and clarified that to invoke the fraud exception, a plaintiff does not need to demonstrate each element of common-law fraud, including reliance. Instead, the complaint must allege sufficient indicia of fraud. The Court modified the Appellate Division's order and remitted the case for further proceedings to determine if the plaintiffs' complaint met the established standard for alleging a fraudulent scheme. The Court affirmed the dismissal of one plaintiff's overcharge claim based on a rent concession, as the defendant's evidence refuted the allegations. View "Burrows v. 75-25 153rd St., LLC" on Justia Law

Connie Lange purchased a fifth-wheel camping trailer from GMT Auto Sales in August 2020, which included a $199 administrative fee. Lange later filed a class action petition alleging that GMT violated the Missouri Merchandising Practices Act by charging this fee, arguing that fifth-wheel camping trailers do not qualify as "motor vehicles," "vessels," or "vessel trailers" under the relevant statute. GMT initially moved to dismiss the case but later moved to compel arbitration based on an arbitration clause in the retail installment contract.The Circuit Court of St. Louis County overruled GMT's motion to dismiss and later granted GMT's motion to compel arbitration. The arbitrator awarded Lange $199 and $5,000 in attorney fees. Lange then filed a motion to vacate the arbitration award and reconsider the order compelling arbitration, which the circuit court denied. Lange appealed, arguing that GMT waived its right to arbitration by filing the motion to dismiss and that the arbitration provision was unenforceable.The Missouri Court of Appeals reversed the circuit court's judgment, agreeing with Lange that GMT waived its right to arbitration. The Supreme Court of Missouri granted transfer and reviewed the case de novo. The court found that GMT did not waive its right to arbitration by filing the motion to dismiss, as it timely moved to compel arbitration and raised it as an affirmative defense in its responsive pleading. The court also found that the arbitration provision remained enforceable despite the assignment of the retail installment contract to a bank. Lange's argument regarding the unconscionability of the arbitration provision was deemed unpreserved for review.The Supreme Court of Missouri affirmed the circuit court's judgment confirming the arbitration award. View "Lange v. GMT Auto Sales, Inc." on Justia Law

James Hulce, on behalf of himself and others similarly situated, filed a putative class action suit against Zipongo Inc., doing business as Foodsmart. Hulce alleged that Foodsmart violated the Telephone Consumer Protection Act (TCPA) by making unsolicited calls and sending text messages to him, despite his number being on the national do-not-call registry. Foodsmart's communications were about free nutritional services offered through Hulce's state and Medicaid-funded healthcare plan, Chorus Community Healthcare Plans (CCHP).The United States District Court for the Eastern District of Wisconsin granted Foodsmart's motion for summary judgment. The court found that the calls and messages did not constitute "telephone solicitations" under the TCPA because they were not made for the purpose of encouraging the purchase of services. Instead, the communications were about services that were free to Hulce, with Foodsmart billing CCHP directly.The United States Court of Appeals for the Seventh Circuit reviewed the case de novo. The court affirmed the district court's decision, holding that the calls and messages did not fall within the definition of "telephone solicitation" under the TCPA. The court concluded that "telephone solicitation" requires the initiation of a call or message with the purpose of persuading or urging someone to pay for a service. Since Foodsmart's communications were about free services and did not encourage Hulce to make a purchase, they did not meet this definition. The court emphasized that the purpose of the call must be to persuade someone who makes the purchasing decision to buy the services, which was not the case here. View "Hulce v Zipongo Inc." on Justia Law