Justia Consumer Law Opinion Summaries

Plaintiffs filed a putative class action raising warranty claims arising out of crashes or injuries caused by the alleged "rollaway effect" of certain Honda Civic vehicles. The district court dismissed plaintiffs' claims under the Magnuson-Moss Warranty Act (MMWA) and state law for express and implied warranty against Honda.The Ninth Circuit held that the Class Action Fairness Act (CAFA) may not be used to evade or override the MMWA's specific numerosity requirement. In this case, plaintiffs name only three individuals, but argue that, by satisfying CAFA requirements, they are relieved of the MMWA's obligation to name at least one hundred plaintiffs. The panel rejected plaintiffs' argument and affirmed the district court's dismissal of the MMWA claim. The panel vacated the district court's dismissal of the state law claims, holding that the district court erred in not considering whether plaintiffs' state law claims met the diversity requirements of CAFA even if the MMWA claim failed. Therefore, the district court improperly dismissed the state law claims based only on lack of supplemental jurisdiction. View "Floyd v. American Honda Motor, Co." on Justia Law

In this case where Plaintiff selected the remedy of restitution under the Song-Beverly Consumer Warranty Act, Cal. Civ. Code 1790 et seq. after Mercedes-Benz USA LLC (Mercedes) was unable to repair defects in the vehicle Plaintiff leased from Mercedes the Supreme Court held that Mercedes was required to reimburse vehicle registration renewal and nonoperation fees Plaintiff paid if the fees were incurred as a result of Mercedes' breach of its duty to promptly provide a replacement vehicle or restitution.At issue was whether the Act required Mercedes to reimburse the vehicle registration renewal and nonoperation fees Plaintiff paid after the initial lease of his vehicle either as collateral charges or as incidental damages. The trial court excluded the vehicle registration renewal fees and the nonoperation fee from the restitution award. The court of appeals affirmed. The Supreme Court reversed and remanded the case for further proceedings, holding (1) the fees at issue were not recoverable as collateral charges because they were not auxiliary to and did not supplement the price paid for the vehicle; but (2) the fees were recoverable as incidental damages if they were incurred as a result of the manufacturer's breach of its duty to promptly provide a replacement vehicle or restitution under the Act. View "Kirzhner v. Mercedes-Benz USA, LLC" on Justia Law

Navient sells student loans to borrowers and services and collects on student loans. Its “subprime loans,” which had high variable interest rates and origination fees, benefited schools by maximizing enrollment. Student borrowers were not informed that the loans had a high likelihood of default. In 2000-2007, 68-87% of Navient’s high-risk loans defaulted. Navient allegedly steered borrowers into consecutive forbearances after they had demonstrated a long-term inability to repay their loans. Navient would sometimes place borrowers in forbearance even though they would have qualified for $0 per month payments in an Income-Driven Repayment (IDR) plan. In 2011-2015, more than 60% of Navient’s borrowers who enrolled in IDR plans failed timely to renew their enrollment, allegedly because of deficient notifications. Navient also allegedly made misrepresentations concerning releases for cosigners and misapplied payments, resulting in borrowers and cosigners being improperly charged late fees and increased interest.Pennsylvania sued Navient under the Consumer Financial Protection Act, 12 U.S.C. 5552, and the state’s Unfair Trade Practices and Consumer Protection Law. Nine months earlier, the Consumer Financial Protection Bureau and the states of Illinois and Washington had filed similar lawsuits. The Third Circuit affirmed the denial of a motion to dismiss. The federal Act permits concurrent action. The Higher Education Act, 20 U.S.C. 1001, preempts state law claims based on failures to disclose required information but does not preempt claims based on affirmative misrepresentations. View "Commonwealth of Pennsylvania v. Navient Corp" on Justia Law

The Ninth Circuit affirmed the district court's grant of summary judgment in favor of defendants in an action brought by plaintiff, alleging that defendants' garnishment of his wages violated the Fair Debt Collection Practices Act and California law.The panel held that the Hatch Act Reform Amendments of 1993, the federal statute permitting garnishment of federal employees' wages, 5 U.S.C. 5520a, waived the federal government's sovereign immunity and subjected a federal employee's pay to legal process in the same manner and to the same extent as if the agency were a private person. Therefore, under the statute, federal employees' wages are subject to garnishment to the extent allowed by state law. In this case, plaintiff's federal wages were properly garnished under California law where the garnishment order was properly served on the federal government and plaintiff remained a government employee. The panel held that plaintiff's remaining arguments are unpersuasive. View "Farrell v. Boeing Employees Credit Union" on Justia Law

The Supreme Court reversed the order of the district court dismissing Plaintiff's complaint against Defendant, his student loan servicer, as expressly preempted by the Higher Education Act (HEA), 20 U.S.C. 1098g, holding that Plaintiff's state law claims were not expressly or implicitly preempted by the HEA.Plaintiff raised claims that Defendant violated the Consumer Protection Act, was negligent in its accounting of his payments, breached the implied covenant of good faith and fair dealing, and engaged in deceit, negligent misrepresentation, or constructive fraud. The district court dismissed the complaint, determining that the HEA expressly preempted Plaintiff's claims. The Supreme Court reversed, holding that Plaintiff's state law claims as pleaded were neither expressly preempted by 20 U.S.C. 1098g, nor were they preempted under conflict preemption, and thus the claims survived dismissal. View "Reavis v. Pennsylvania Higher Education Assistance Agency" on Justia Law

The plaintiffs obtained payday loans from AWL, an online entity owned by the Otoe-Missouria Tribe of Indians. The loan agreement stated that the loan was governed by tribal law and that the borrowers consented to the application of tribal law. The plaintiffs filed a purported class action, asserting that AWL charged unlawfully high interest rates, in violation of federal and Pennsylvania law, including the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. 1961-1968. The defendants moved to compel arbitration. The district court denied their motion, holding that the loan agreements, which provided that only tribal law would apply in arbitration, stripped the plaintiffs of their right to assert statutory claims and were therefore unenforceable. The Third Circuit affirmed. Because AWL permits borrowers to raise disputes in arbitration only under tribal law, and such a limitation constitutes a prospective waiver of statutory rights, its arbitration agreement violates public policy and is therefore unenforceable. View "Williams v. Medley Opportunity Fund II, LP" on Justia Law

Plaintiff Regina Little asserted claims on her own behalf and on behalf of other New Jersey owners and lessees of 1997, 1998, 1999, and 2000 Kia Sephia vehicles distributed by defendant Kia Motors America, Inc., alleging that those vehicles had a defective brake system. The central question in this appeal was whether the trial court properly permitted plaintiff’s theory of damages based on the cost of brake repairs to be asserted classwide, supported only by aggregate proofs. The jury determined that defendant had breached its express and implied warranties and that the class had sustained damages. The jury found that the class members had suffered $0 in damages due to diminution in value but that each class member had sustained $750 in damages “[f]or repair expenses reasonably incurred as a result of the defendant’s breach of warranty.” The trial court granted defendant’s motion to decertify the class as to the quantum of damages each individual owner suffered. The parties cross-appealed. The Appellate Division reversed the trial court’s post-trial determinations, reinstated the jury’s award for out-of-pocket repair costs based on plaintiff’s aggregate proofs, and remanded for an award of attorneys’ fees. The appellate court held that, notwithstanding the jury’s rejection of plaintiff’s diminution-in-value theory, the trial court should have ordered a new trial on both theories of damages, which it found were not “fairly separable from each another.” Although aggregate proof of damages can be appropriate in some settings, the New Jersey Supreme Court considered such proof improper as presented in this case. The trial court erred when it initially allowed plaintiff to prove class-members’ out-of-pocket costs for brake repairs based on an estimate untethered to the experience of plaintiff’s class. The trial court properly ordered individualized proof of damages on plaintiff’s brake-repair claim based on the actual costs incurred by the class members. Thus, the trial court’s grant of defendant’s motions for a new trial and for partial decertification of the class were a proper exercise of its discretion. View "Little v. Kia Motors America, Inc." on Justia Law

Defendant Javier Torres signed a promissory note (Note) secured by a residential mortgage (Mortgage). Torres defaulted on the Note. CitiMortgage, Inc., discovered that it had lost the original Note but had retained a digital copy setting forth its terms. CitiMortgage assigned the Mortgage and its interest in the Note to plaintiff Investors Bank (Investors). In this appeal, the issue presented for the New Jersey Supreme Court's review was whether Investors could enforce the Note. The Supreme Court affirmed the trial court: Investors Bank could enforce the note. Relying on two statutes addressing assignments, N.J.S.A. 2A:25-1 and N.J.S.A. 46:9-9, as well as common-law assignment principles, the Court held Investors had the right as an assignee of the Mortgage and transferee of the Note to enforce the Note. The Court construed N.J.S.A. 12A:3-309 to address the rights of CitiMortgage as the possessor of a note or other instrument at the time that the instrument was lost, but not to supplant New Jersey assignment statutes and common law in the setting of this appeal or to preclude an assignee in Investors’ position from asserting its rights according to the Note’s terms. Read together, "N.J.S.A. 12A:3-309, N.J.S.A. 2A:25-1, and N.J.S.A. 46:9-9 clearly authorized the assignment and entitled Investors to enforce its assigned Mortgage and transferred Note." View "Investors Bank v. Torres" on Justia Law

The Eleventh Circuit held that plaintiffs lacked Article III standing to pursue their claims under the Fair Debt Collection Practices Act (FDCPA). Plaintiffs alleged that collection letters were misleading and unfair in falsely suggesting that they could be sued or that the debt could be reported to credit-rating agencies. The court wrote that plaintiffs seek to recover for representations that they contend were misleading or unfair, but without proving even that they relied on the representations, much less that the reliance caused them any damages. View "Trichell v. Midland Credit Management, Inc." on Justia Law

The Fourth Circuit vacated the district court's dismissal of plaintiff's complaint alleging claims under the Fair Debt Collection Practices Act (FDCPA). The district court concluded that the entire complaint was time-barred because the more recent violations that plaintiffs alleged were of the "same type" as other violations that occurred outside the one-year limitations period.The court disagreed with the district court's analysis and held that each violation of the FDCPA gives rise to a separate claim governed by its own limitations period. In this case, plaintiffs have alleged at least two potential violations of the FDCPA that are not barred by the one-year limitations period provided by the Act. Therefore, the court remanded for further proceedings. View "Bender v. Elmore & Throop, P.C." on Justia Law