Articles Posted in Consumer Law

by
After plaintiff began missing loan payments on a house she bought in Long Beach, ReconTrust initiated a non-judicial foreclosure. In this case, the lender was Countrywide, the borrower was plaintiff and the trustee was ReconTrust. Plaintiff subsequently filed suit alleging that ReconTrust violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692e(2)(A), by sending her notices that misrepresented the amount of debt she owed. Plaintiff also sought to rescind her mortgage transaction under the Truth in Lending Act (TILA), 15 U.S.C. 1635(a), on the ground that defendants had perpetrated fraud against her. The district court twice dismissed plaintiff's rescission claim without prejudice and then granted ReconTrust's motion to dismiss the FDCPA claims. The court held that actions taken to facilitate a non-judicial foreclosure, such as sending the notice of default and notice of sale, are not attempts to collect “debt” as that term is defined by the FDCPA; the court's holding affirms Hulse v. Ocwen Federal Bank; the court acknowledged that the Fourth and Sixth Circuit declined to follow Hulse; and the notices at issue in this case didn’t request payment from plaintiff, they merely informed plaintiff that the foreclosure process had begun and explained the foreclosure timeline. Therefore, the court affirmed the dismissal of the FDCPA claim. The court also concluded where, as here, the district court dismisses a claim and instructs the plaintiff not to refile the claim unless he includes certain additional allegations that the plaintiff is unable or unwilling to make, the dismissed claim is preserved for appeal even if not repleaded. Therefore, the court remanded to the district court to consider plaintiff's TILA rescission claim in light of Merritt v. Countrywide Fin. Corp. View "Vien-Phoung Thi Ho v. ReconTrust Co." on Justia Law

Posted in: Banking, Consumer Law

by
Plaintiff filed suit against defendant, a law firm and debt collection agency, alleging claims under the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692(e)(11). Plaintiff alleged that defendant was attempting to collect a debt on behalf of American Express and that by leaving the September 25th voicemail message, defendant violated the FDCPA by failing to disclose in subsequent communications that the communication was from a debt collector in violation of section 1692e(11). The court held that if a subsequent communication is sufficient to disclose to the least sophisticated debtor that the communication was from a debt collector, there is no violation of section 1692e(11) even if the debt collector did not expressly state, “this communication is from a debt collector.” Accordingly, defendant did not violate the FDCPA and the court reversed the district court's judgment in favor of plaintiff. View "Davis v. Hollins Law" on Justia Law

Posted in: Consumer Law

by
Plaintiff filed a putative class action, alleging that WZP violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692(g)(a), by sending a debt collection letter that lacked the disclosures required by section 1692(g)(a) of the FDCPA. Applying well-established tools of statutory interpretation and construing the language in section 1692g(a) in light of the context and purpose of the FDCPA, the court held that the phrase “the initial communication” refers to the first communication sent by any debt collector, including collectors that contact the debtor after another collector already did. The court held that the FDCPA unambiguously requires any debt collector - first or subsequent - to send a section 1692g(a) validation notice within five days of its first communication with a consumer in connection with the collection of any debt. In this case, the district court erred in concluding that, because WZP was not the first debt collector to communicate with plaintiff about her debt, it had no obligation to comply with the statutory validation notice requirement. Accordingly, the court reversed and remanded. View "Hernandez v. Williams, Zinman & Parham PC" on Justia Law

Posted in: Consumer Law

by
Plaintiff filed suit against defendants, debt collectors, alleging that they violated the Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692i, when they sued her in the wrong judicial district to collect a debt that had been transferred to them. The district court concluded that the complaint was time-barred pursuant to the FDCPA’s one-year statute of limitations. The court concluded that, instead of applying Naas v. Stolman, the district court should have applied Mangum v. Action Collection Service, Inc., which is almost directly on point. The court held that the discovery rule applies equally regardless of the nature of the FDCPA violation alleged by a plaintiff. In this case, the court found that plaintiff's complaint was timely filed where she first learned of the collection action when she received service of process, and that she had no reason to suspect that she had been sued in Monterey County, a venue that is considerably distant from her residence in San Diego County. Accordingly, the court reversed and remanded. View "Lyons v. Michael & Assocs." on Justia Law

Posted in: Consumer Law

by
Pow! Mobile (the Company), not a party here, is a mobile content provider that marketed a “reverse auction” game called “Bid and Win.” Both Mobile Messenger and m-Qube (defendants) are “billing aggregators” who serve as financial intermediaries between customers and content providers. Plaintiff filed a class action alleging that defendants have engaged in a scheme “that causes Washington consumers to become unknowingly and unwittingly subscribed to premium text message services.” The district court held that defendants are not intended third-party beneficiaries entitled to enforce the arbitration clause at issue and denied defendants' motion to compel arbitration. The court concluded that the Terms and Conditions in this case create a direct obligation from the subscriber to the Company’s suppliers. The signatory to the Terms and Conditions agrees to waive all claims against the Company’s suppliers. Therefore, the Company’s suppliers are intended third-party beneficiaries of the Terms and Conditions. Thus, if defendants are suppliers of the Company, they may enforce the arbitration clause. The court remanded for the district court to make determinations in the first instance regarding assent to the Terms and Conditions, and whether defendants are Pow! Mobile’s suppliers. View "Geier v. m-Qube Inc." on Justia Law

by
Chance Gordon, a licensed California attorney, appealed the district court's order of summary judgment for the CFPB on its enforcement action for violations of the Consumer Financial Protection Act, 12 U.S.C. 5531, 5536, and Regulation O, 12 C.F.R. 1015.1-11. On January 4, 2012, President Obama, relying on his recess-appointment power, named Richard Cordray as the CFPB’s initial Director. President Obama renominated Cordray as Director on January 24, 2013. The parties agree that while Cordray’s initial January 2012 recess appointment was invalid, his July 2013 confirmation was valid. The court concluded that, while the failure to have a properly confirmed director may raise Article II Appointments Clause issues, it does not implicate the court's Article III jurisdiction to hear this case. That its director was improperly appointed does not alter the Executive Branch’s interest or power in having federal law enforced. The subsequent valid appointment, coupled with Cordray’s August 30, 2013 ratification, cures any initial Article II deficiencies. Because the CFPB had the authority to bring the action at the time Gordon was charged, Cordray’s August 2013 ratification, done after he was properly appointed as Director, resolves any Appointments Clause deficiencies. On the merits, the court concluded that CFPB is entitled to summary judgment on all counts because there is no dispute as to material fact regarding Gordon's liability. Because the district court conscientiously tailored the injunction at issue, it did not abuse its discretion in granting equitable judgment. However, because the district court may have impermissibly entered a monetary judgment against Gordon for a time period prior to the enactment or effective date of the relevant provisions of the CFPA and Regulation O, the court vacated and remanded for further consideration. View "Consumer Fin. Prot. Bureau v. Gordon" on Justia Law

by
Florencio Pacleb filed a class action complaint against Allstate, alleging that he received unsolicited automated calls to his cell phone in violation of the Telephone Consumer Protection Act (TCPA), 47 U.S.C. 227. Allstate deposited $20,000 in full settlement of Pacleb’s individual monetary claims in an escrow account “pending entry of a final District Court order or judgment directing the escrow agent to pay the tendered funds to Pacleb, requiring Allstate to stop sending non-emergency telephone calls and short message service messages to Pacleb in the future and dismissing this action as moot.” The court affirmed the district court's order denying Allstate’s motion to dismiss for lack of subject matter jurisdiction. The court concluded that, even if the district court entered judgment affording Pacleb complete relief on his individual claims for damages and injunctive relief, mooting those claims, Pacleb would still be able to seek class certification under Pitts v. Terrible Herbst, Inc., which remains good law under Gomez v. Campbell-Ewald Co. The court also concluded that, even if Pitts were not binding, and Allstate could moot the entire action by mooting Pacleb’s individual claims for damages and injunctive relief, those individual claims are not now moot, and the court will not direct the district court to moot them by entering judgment on them before Pacleb has had a fair opportunity to move for class certification. View "Chen v. Allstate Ins. Co." on Justia Law

by
Plaintiff filed a putative consumer class action against Fresh, alleging that Fresh’s label, tube design, and packaging are deceptive and misleading. Plaintiff alleged that the tube design for Fresh's Sugar Lip Treatment product line uses a screw mechanism that allows only 75% of the product to advance up the tube. Each Sugar tube contains a weighted metallic bottom and is wrapped in oversized packaging. The district court granted Fresh's Rule 12(b)(6) motion to dismiss. Although the court concluded that neither the safe harbor doctrine nor the Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. 301 et seq., preemption bars plaintiff’s supplemental statement claim, this label claim ultimately fails on the merits because plaintiff cannot plausibly allege that the omission of supplemental disclosures about product weight rendered Sugar’s label “false or misleading” to the reasonable consumer. The court also concluded that the district court did not err in dismissing plaintiff's package-based claims under various California consumer laws because plaintiff cannot plausibly allege that Sugar’s design and packaging is deceptive. When viewed in the proper context of the high-end cosmetics market, Sugar’s elaborate packaging and the weighty feel of the tube is commonplace and even expected by a significant portion of Fresh’s “targeted consumers.” Finally, the district court correctly concluded that the First Amended Complaint fails to allege a violation of California Fair Packaging and Labeling Act, Cal. Bus. & Prof. Code 12606(b). Any further amendment to the complaint would be futile. The court affirmed the judgment. View "Ebner v. Frech, Inc." on Justia Law

Posted in: Consumer Law

by
Plaintiffs filed a putative class action against Wells Fargo and U.S. Bank, alleging federal and state law claims arising out of the modification of the deed of trust for plaintiffs' home. At issue is the retroactivity of 15 U.S.C.1641(g), a 2009 amendment to the 1968 Truth in Lending Act (TILA). Section 1641(g) requires a creditor who obtains a mortgage loan by sale or transfer to notify the borrower of the transfer in writing. The court held that section 1641(g) does not apply retroactively because Congress did not express a clear intent to do so. The court noted that its holding is consistent with numerous district court decisions. Accordingly, the court affirmed the judgment. View "Talaie v. Wells Fargo Bank" on Justia Law

Posted in: Banking, Consumer Law

by
Plaintiff filed suit against defendant, a debt collector, alleging that by sending a collection letter that sought ten percent interest on a debt, defendant violated the federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. 1692(f)(1) and thereby violated California's Fair Debt Collection Practices Act (the Rosenthal Act), Cal. Civ. Code 1788-1788.33. The district court granted summary judgment in favor of plaintiff. The court reversed and remanded, concluding that defendant's debt collection letter did not violate the FDCPA or the Rosenthal Act where the district court's grant of summary judgment was based on an incorrect reading of California Civil Code section 3287. The court concluded that section 3287(a) can entitle a creditor to prejudgment interest on a debt that is certain or capable of being made certain even without a prior judgment. View "Diaz v. Kubler Corp." on Justia Law

Posted in: Consumer Law