Justia Consumer Law Opinion Summaries

In this appeal and cross-appeal stemming from litigation that followed the termination of an almost forty-year business relationship between a company that manufactured and supplied soup base products (Manufacturer) and a company that distributed them (Distributor), the First Circuit reversed in part and vacated in part Distributor's appeal and affirmed in Manufacturer's cross appeal, holding that the district court erred in part.Following a trial, the jury awarded Distributor $255,000 in damages for its state law breach of contract and tortious interference with business relationships claims against Manufacturer. The district court granted summary judgment to Manufacturer on Distributor's claim against it under Mass. Gen. Laws ch. 93A and to Manufacturer on its counterclaim for breach of contract, for which the court awarded Manufacturer $97,843 in damages. The First Circuit held that the district court (1) erred in granting summary judgment on the Chapter 93A claim; (2) erred in striking as duplicative the jury's damages award on Distributor's breach of contract claim; (3) erred in denying Distributor prejudgment interest on the damages award it received on the tortious interference with business relations claim; and (4) erred in denying Distributor's offset request. View "Primarque Products Co. v. Williams West & Witt's Products Co." on Justia Law

In a putative class action, plaintiffs Joe Maldonado, Alfredo Mendez, J. Peter Tuma, Jonabette Michelle Tuma, and Roberto Mateos Salmeron (collectively referred to as “the Customers”), claimed Fast Auto Loans, Inc., (Lender) charged unconscionable interest rates on loans in violation of California Financial Code sections 22302 and 22303. Lender filed a motion to compel arbitration and stay the action pursuant to an arbitration clause contained within the Customers’ loan agreements. The court denied the motion on the grounds the provision was invalid and unenforceable because it required consumers to waive their right to pursue public injunctive relief, a rule described in McGill v. Citibank, N.A., 2 Cal.5th 945 (2017). On appeal, Lender argued the “McGill Rule” did not apply, but even if it did, other claims were subject to arbitration. Alternatively, Lender contended the McGill Rule was preempted by the Federal Arbitration Act . Finding Lender’s contentions on appeal lacked merit, the Court of Appeal affirmed the trial court’s order. View "Maldonado v. Fast Auto Loans" on Justia Law

Plaintiff filed suit against PDQ, a restaurant he patroned, after a data breach that exposed PDQ customers' personal financial information. The Eleventh Circuit affirmed the district court's dismissal without prejudice and held that plaintiff did not have standing to sue based on the theory that he and a proposed class of PDQ customers are now exposed to a substantial risk of future identity theft. The court explained that plaintiff failed to allege either that the data breach placed him in a "substantial risk" of future identity theft or that identity theft was "certainly impending." The court stated that evidence of a mere data breach does not, standing alone, satisfy the requirements of Article III standing, and thus plaintiff does not have standing here based on an "increased risk" of identity theft. In the alternative, the court held that plaintiff has not suffered actual, present injuries in his efforts to mitigate the risk of identity theft caused by the data breach. View "I Tan Tsao v. Captiva MVP Restaurant Partners, LLC" on Justia Law

The plaintiffs are a non-profit organization “dedicated to improving the care, quality of life, and choices for California’s long-term care customers,” residents and former residents of facilities managed by CVSC, and the estates of formers residents at the defendant's facility. The defendant is licensed by the California Department of Public Health (CDPH) to operate or manage a skilled nursing facility (SNF). The defendant had an agreement with CVSC, a corporation engaged in the nursing home business as a management company, to operate the SNF. This Management Services Agreement is allegedly representative of similar agreements executed by CVSC to operate other California SNFs. The plaintiffs asserted that state law requires that an SNF be operated and managed by the entity that holds the license to operate the SNF, not by a management company.The trial court held that approval of unlicensed management companies to operate licensed SNFs does not violate state or federal law. The court of appeal affirmed, rejecting an argument that the management agreements are illegal because the licensee (not an unlicensed management company) must operate and manage the SNF. The operation of a SNF by an unlicensed management company does not diminish the continuing responsibility of a licensee to its SNF. View "California Advocates for Nursing Home Reform v. Aragon" on Justia Law

The overarching issue here presented for the Tenth Circuit's review centered on whether the economic-loss rule prevented use of tort remedies for a lender’s failure to carry out its promises. The claims grew out of Plaintiff-appellant Mary Mayotte’s mortgage with U.S. Bank, which used Wells Fargo to service the loan. Mayotte sought modification of the loan and alleged that Wells Fargo had agreed to modify her loan if she withheld three payments. Based on this alleged understanding, Mayotte withheld three payments. But Wells Fargo denied agreeing to modify the loan, and U.S. Bank eventually foreclosed. The foreclosure spurred Mayotte to sue U.S. Bank and Wells Fargo, asserting statutory claims (violation of the Colorado Consumer Protection Act), tort claims (negligence, negligent supervision, and negligent hiring), and a claim for a declaratory judgment. The district court granted summary judgment to U.S. Bank and Wells Fargo, relying in part on the economic-loss rule and Mayotte’s failure to present evidence of compensatory damages. The district court ultimately entered judgment in favor of defendants-lenders, rejecting Mayotte's effort to recover tort remedies for wrongful conduct consisting solely of alleged contractual breaches. To this, the Tenth Circuit agreed with the district court and affirmed judgment. View "Mayotte v. U.S. Bank" on Justia Law

Smith sued under the Fair Debt Collection Practices Act, 15 U.S.C.1692g(a)(3). GC’s debt-collection letter stated: If you dispute this balance or the validity of this debt, please let us know in writing. If you do not dispute this debt in writing within 30 days after you receive this letter, we will assume this debt is valid. The Act does not say how a consumer may dispute a debt’s validity. Smith argued that the consumer is entitled to choose how to dispute. In an earlier appeal, the Seventh Circuit held that GC had waived any entitlement to arbitrate the dispute. The district court then held that Smith had not established injury and dismissed the suit.The Seventh Circuit affirmed, without addressing whether a debt collector violates section 1692g(a)(3) by telling consumers to put disputes in writing. Smith did not allege injury, because she did not try to show how a dispute would have benefitted her. Smith does not contend that the letter’s supposed lack of clarity led her to take any detrimental step, such as paying money she did not owe. She is no worse off than if the letter had told her that she could dispute the debt orally. The requirement of injury-in-fact is an essential element of standing, regardless of whether the asserted violation is substantive or procedural. View "Smith v. GC Services Limited Partnership" on Justia Law

To fight his hair loss, Greenberg bought an $8 bottle of biotin. The product label states that biotin “helps support healthy hair and skin” and has an asterisk that points to a disclaimer: “This statement has not been evaluated by the Food and Drug Administration. This product is not intended to diagnose, treat, cure, or prevent any disease.” A Supplement Facts panel on the bottle states that the biotin amount in the product far exceeds the recommended daily dosage. Greenberg filed a putative class action under California’s Unfair Competition Law, alleging that the labels are deceptive because most people do not benefit from biotin supplementation.The panel affirmed summary judgment in favor of the manufacturer and distributors. The plaintiff’s state law claims were preempted by the federal Food, Drug, and Cosmetic Act (FDCA), under which the FDA requires that dietary supplement labels be truthful and not misleading; 21 U.S.C. 343(r)(6)(B) authorizes several categories of statements, including disease claims and structure/function claims. The FDCA includes a preemption provision to establish a national, uniform standard for labeling. The challenged statement was a permissible structure/function claim. There was substantiation that biotin “helps support healthy hair and skin”; that statement was truthful and not misleading. The label had the appropriate disclosures and did not claim to treat diseases. The state law claims amounted to imposition of different standards from the FDCA. View "Greenberg v. Target Corp." on Justia Law

The Supreme Court held that a unilateral attorney's fee provision in a credit card contract was made reciprocal to prevailing debtors under Fla. Stat. 57.105(7) where the debtors prevailed in an account stated action brought to collect unpaid credit card debt.The First District Court of Appeal held that the debtors could not recover attorney's fees on the grounds that section 57.105(7) was inapplicable because the actions for account stated did not rely upon the credit card contracts containing the fee provisions. The Supreme Court quashed the decision below, holding that section 57.105(7) allowed the debtors to recover reciprocal attorney's fees because the conditions required by the statute were met. View "Ham v. Portfolio Recovery Associates, LLC" on Justia Law

In a matter of first impression, the Pennsylvania Supreme Court granted review in this case to consider whether Section 310.74(a) of the Insurance Department Act of 1921 prohibited a licensed insurance producer from charging fees in addition to commissions in non-commercial, i.e. personal, insurance transactions. During its investigation, the Department discovered that, between March 2011 and October 2015, appellants charged a non-refundable $60- $70 fee to customers seeking to purchase personal insurance products. These fees were collected from the customers before appellants prepared the insurance policy applications. One consumer complaint indicated appellants kept an “un- refundable broker application fee” when the consumer declined to buy a policy. The Department’s investigation also revealed appellants paid a “one-time” $50 referral fee to car dealership sales personnel when they referred their customers in need of insurance. The Department concluded appellants’ fee practices included improper fees charged to consumers “for the completion of an application for a contract of insurance” and prohibited referral payments to the car dealerships. The Supreme Court held lower tribunals did not err when they determined Section 310.74(a) of the Act did not authorize appellants to charge the $60-$70 non-refundable fee to their customers seeking to purchase personal motor vehicle insurance. The Commonwealth Court’s decision upholding the Commissioner’s Adjudication and Order was affirmed. View "Woodford v. PA Insurance Dept." on Justia Law

Nettles defaulted on her credit card account. Midland acquired the debt. Midland sued Nettles. The parties entered a consent judgment requiring a monthly repayment plan with automatic draws from her bank account. The automatic draws ceased after three months when Midland’s law firm went out of business. Midland sent Nettles a collection letter that overstated her remaining balance by about $100. Nettles filed a proposed class action under the Fair Debt Collection Practices Act, 15 U.S.C. 1692, alleging that the letter is false, misleading, or otherwise unfair or unconscionable. The credit card agreement contains an arbitration provision giving either party the right to require arbitration of any dispute relating to the account, including collection matters. Midland moved to compel arbitration. The district judge denied the motion.The Seventh Circuit remanded for dismissal of the suit for lack of jurisdiction, without reaching the arbitration question. Nettles sued for violation of sections 1692e and 1692f but did not allege any injury from the alleged statutory violations. A plaintiff does not automatically satisfy the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right; Article III standing requires a concrete injury even in the context of a statutory violation. View "Nettles v. Midland Funding, LLC" on Justia Law