Articles Posted in Consumer Law

Echlin received treatment at PeaceHealth but ignored multiple requests for payment. PeaceHealth referred her accounts to CCI, a purported collection agency. Under a 2004 agreement, for a fixed fee, CCI performed services related to debt-collection and PeaceHealth would suspend its in-house collection efforts. CCI independently screened each account for potential collection problems. Although PeaceHealth was generally aware of the standard format of CCI’s letters, CCI alone controlled their content without PeaceHealth’s approval. The letters were written on CCI letterhead, mailed from CCI’s in-house mailing center, and listed CCI’s contact information (PeaceHealth’s information was labeled “Creditor Detail”). The letters directed debtors to a CCI website. CCI handled correspondence from PeaceHealth debtors.CCI had no ability to process or negotiate payments but forwarded to PeaceHealth any payments it received. After two letters, accounts were returned to PeaceHealth. CCI did not participate in subsequent collection steps. Echlin filed a putative class action under the Fair Debt Collection Practices Act, 15 U.S.C. 1692e, 1692j. The Ninth Circuit affirmed summary judgment in favor of the defendants. CCI did not engage in “flat-rating,” in which a third party sends a delinquency letter to a debtor, portraying itself as a debt collector, when it actually has no real involvement in the debt collection effort. CCI meaningfully participated in PeaceHealth’s debt-collection efforts, screening the accounts, independently composing and mailing letters, responding to customer questions, and maintaining a website that allowed customers to access individualized information. View "Echlin v. PeaceHealth" on Justia Law

Heryford, Trinity County, California's District Attorney, sued American Bankers and others, on behalf of the people under California’s Unfair Competition Law (UCL), alleging they had “engaged in deceptive marketing and sales practices.” Private parties may seek injunctive relief and restitution under the UCL; only a public prosecutor may pursue civil penalties. The complaint listed private law firms as “Special Assistant District Attorneys.” An agreement required the Firms to “provide all legal services that are reasonably necessary,” and to “conduct negotiations and provide representations at all hearings, depositions, trials, appeals, and other appearances” with authority to control the performance of their work “under the direction of the District Attorney,” stating that Heryford’s office did “not relinquish its constitutional or statutory authority or responsibility” and retained “sole and final authority to initiate and settle.” Heryford retained the Firms on a contingency-fee basis. American Bankers challenged the contingency-fee agreement as a violation of its federal due process rights that gave the Firms “a direct and substantial financial stake in the imposition of civil penalties and restitution,” which “compromise[d] the integrity and fairness of the prosecutorial motive and the public’s faith in the judicial process.” The Ninth Circuit affirmed the dismissal of the suit. Heryford’s retention of private counsel to pursue civil penalties cannot be meaningfully distinguished from a private relator’s pursuit of civil penalties under the qui tam provisions of the False Claim Act, an arrangement that does not violate due process. View "American Bankers Management Co. v. Heryford" on Justia Law

The Ninth Circuit reversed the district court's dismissal of plaintiff's claims based on lack of Article III standing. Plaintiffs filed suit against online retailer Zappos.com, alleging that they were harmed by hacking of their accounts. The panel held that plaintiffs sufficiently alleged standing based on the risk of identity theft under Krottner v. Starbucks Corp., 628 F.3d 1139 (9th Cir. 2010). Plaintiffs also alleged an injury in fact under Krottner, based on a substantial risk that the Zappos hackers will commit identity fraud or identity theft. The panel explained that it assessed standing at the time the complaints were filed, not as of the present. Finally, the panel held that plaintiffs sufficiently alleged that the risk of future harm was fairly traceable to the conduct being challenged and that their identity theft injury was redressable. The panel addressed an issue raised by sealed briefing in a concurrently filed memorandum disposition. View "Stevens v. Zappos.com, Inc." on Justia Law

The Ninth Circuit reversed the district court's dismissal of plaintiff's claims based on lack of Article III standing. Plaintiffs filed suit against online retailer Zappos.com, alleging that they were harmed by hacking of their accounts. The panel held that plaintiffs sufficiently alleged standing based on the risk of identity theft under Krottner v. Starbucks Corp., 628 F.3d 1139 (9th Cir. 2010). Plaintiffs also alleged an injury in fact under Krottner, based on a substantial risk that the Zappos hackers will commit identity fraud or identity theft. The panel explained that it assessed standing at the time the complaints were filed, not as of the present. Finally, the panel held that plaintiffs sufficiently alleged that the risk of future harm was fairly traceable to the conduct being challenged and that their identity theft injury was redressable. The panel addressed an issue raised by sealed briefing in a concurrently filed memorandum disposition. View "Stevens v. Zappos.com, Inc." on Justia Law

Receiving an overly revealing credit card receipt -- unseen by others and unused by identity thieves-- was not a sufficient injury to confer Article III standing. The Ninth Circuit affirmed the district court's dismissal of a putative class action alleging a violation of the Fair Credit Reporting Act. In this case, plaintiff filed suit alleging that ABM violated the Act's requirement that businesses redact certain credit card information on printed receipts. 15 U.S.C. 1681c(g). The panel joined the Second and Seventh Circuits in affirming dismissal under identical circumstances and held that plaintiff failed to allege a concrete injury sufficient to give him standing. View "Bassett v. ABM Parking Services, Inc." on Justia Law

The Ninth Circuit affirmed the district court's grant of summary judgment for defendants in a class action under the Telephone Consumer Protection Act (TCPA), 47 U.S.C. 227. In this case, plaintiff received a text message from AC Referral, a non-party, that violated the TCPA. Plaintiff claimed that three lenders and two marketing companies ratified the unlawful text messages. The panel held that, although one of the marketing companies, Click Media, had an agency relationship with AC Referral, it was not bound by AC Referral's acts because it lacked knowledge that AC Referral was violating the TCPA and did not have knowledge of facts that would have led a reasonable person to investigate further. Therefore, Click Media could not be deemed to have ratified AC Referral's actions and was not vicariously liable. View "Kristensen v. Credit Payment Services" on Justia Law

The Ninth Circuit reversed the dismissal of an action against a debt collector under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692 et seq. The panel remanded for further proceedings, holding that federal law preempts a private party's use of state execution procedures to acquire and destroy a debtor's FDCPA claims against it. The panel explained that such a procedure frustrates the Act's purpose. View "Arellano v. Clark County Collection Service" on Justia Law

California consumers who can seek in California state court an order requiring the manufacturer of an allegedly falsely advertised product to cease the false advertising may also seek such an order in federal court. A consumer's inability to rely in the future upon a representation made on a package, even if the consumer knew or continued to believe the same representation was false in the past, is an ongoing injury that may justify an order barring the false advertising.The Ninth Circuit reversed the dismissal of an action alleging that Kimberly-Clark falsely advertised that four cleansing wipes they manufactured and sold were flushable. The action was filed in state court and then removed to federal court. The panel held that plaintiff plausibly alleged that Kimberly-Clark engaged in false advertising and that she will suffer further harm in the absence of an injunction. Accordingly, the panel remanded for further proceedings. View "Davidson v. Kimberly-Clark Corp." on Justia Law

A liability insurance policy that unequivocally and broadly excludes coverage for invasion of privacy claims also excludes coverage for Telephone Consumer Protection Act (TCPA) claims. After Federal denied insurance coverage and declined to defend the Lakers in an underlying suit for invasion of privacy, the Lakers filed suit against Federal for breach of contract and tortious breach of the implied covenant of good faith and fair dealing. The Ninth Circuit affirmed the district court's dismissal of the suit under Federal Rule of Civil Procedure 12(b)(6). The panel held that a TCPA claim was inherently an invasion of privacy claim and thus Federal correctly concluded that the underlying TCPA claim fell under the insurance policy's broad exclusionary clause. In this case, Federal did not breach the policy, or the implied covenant of good faith and fair dealing, under any cognizable legal theory, when it declined to defend against or cover the underlying complaint. View "LA Lakers v. Federal Insurance Co." on Justia Law

Anaya Law Group, a debt collector, filed suit in state court to collect an unpaid credit card debt, but the complaint overstated both debtor's principal due and the applicable interest rate. Debtor then filed suit against Anaya in federal court for violations of the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692 et seq., and of California's Rosenthal Fair Debt Collection Practices Act. The district court granted summary judgment to Anaya. The Ninth Circuit held, however, that the false statements made by Anaya were material because they could have disadvantaged a hypothetical debtor in deciding how to respond to the complaint. Accordingly, the panel vacated summary judgment as to the FDCPA claim and remanded. In regard to the Rosenthal Act claim, the panel affirmed summary judgment on an alternative ground. The panel held that Anaya corrected the misstatements within fifteen days of discovering the violation and thus satisfied the requirements necessary to avail itself of a defense under the Rosenthal Act. View "Afewerki v. Anaya Law Group" on Justia Law