Articles Posted in Consumer Law

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Plaintiff opened a credit card account with Defendant Citibank, N.A. and purchased a credit protector plan. Defendant later amended the original agreement by adding an arbitration provision. The provision waived the right to seek public injunctive relief in any forum. The arbitration provision became effective in 2001. In 2011, Plaintiff filed this class action based on Defendant’s marketing of the Plan and the handling of a claim she made under it when she lost her job, alleging claims under the Consumers Legal Remedies Act (CLRA), the unfair competition law (UCL), and the false advertising law. Defendant petitioned to compel Plaintiff to arbitrate her claims on an individual basis pursuant to the arbitration provision. Based on the Broughton-Cruz rule, the trial court ordered Plaintiff to arbitrate all claims other than those for injunctive relief under the UCL, the CLRA, and the false advertising law. The Court of Appeal reversed and remanded for the trial court to order all of Plaintiff’s claims to arbitration, concluding that the Federal Arbitration Act preempts the Broughton-Cruz rule. The Supreme Court reversed, holding that the arbitration provision was invalid and unenforceable because it waived Plaintiff’s right to seek public injunctive relief in any forum. Remanded. View "McGill v. Citibank, N.A." on Justia Law

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This case involved the practice of short-term deferred deposit lending, often referred to as “payday” or “cash advance” lending. After the Legislature enacted the California Deferred Deposit Transaction Law (the Law), which limits the size of each loan and the fees that lenders may charge, some deferred deposit lenders sought affiliation with federal recognized Indian tribes, which are generally immune from suit on the basis of tribal sovereign immunity. In this case, a pair of federally recognized tribes created affiliated business entities, which provide deferred deposit loans through the internet to borrowers in California under terms that allegedly violated the Law. At issue in this case was whether these tribally affiliated entities were immune from suit as “arms of the tribe.” The Supreme Court clarified the legal standard and burden of proof for establishing arm-of-the-tribe immunity and held that the entities in this case failed to show by a preponderance of the evidence that they were entitled to tribal immunity as an arm of its affiliated tribe. Remanded for the trial court to address the issue of whether the parties had the opportunity to fully litigate their claims under that standard. View "People ex rel. Owen v. Miami Nation Enterprises" on Justia Law

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The Automobile Sales Finance Act (ASFA) is a consumer protection law that governs the sale of vehicles in which the buyer finances all or part of the car’s purchase. Plaintiffs were consumers who purchased vehicles from Raceway Ford, Inc., an automobile dealership. Plaintiffs alleged that Raceway violated ASFA when (1) after agreeing to an initial finance contract, Raceway would enter into a subsequent finance contract with a buyer and backdate the second contract to the date of the first contract, and (2) a computer error caused Raceway to incorrectly include smog-related fees in buyers’ purchase contracts. The trial court found in favor of Raceway on all claims relevant to this appeal. The court of appeal affirmed with respect to Plaintiffs’ smog fee claims but reversed with respect to Plaintiffs’ backdating claims. The Supreme Court affirmed in part and reversed in part, holding (1) Raceway’s practice of backdating contracts did not violate the ASFA; and (2) Raceway did violate the ASFA when its disclosed inaccurate smog fees, but Plaintiffs were not entitled to a remedy under ASFA because the violation was due to an accidental or bona fide error in computation. View "Raceway Ford Cases" on Justia Law

Posted in: Consumer Law

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This case was a putative class action challenging an herb grower’s (Defendant) marketing of its herbs as organic. Defendant sought judgment on the pleadings on federal preemption and primary jurisdiction grounds, arguing that the Organic Foods Production Act of 1990 vests the United States Department of Agriculture with exclusive authority to to regulate the labeling and marketing of organic products and both expressly and impliedly preempts state truth-in-advertising requirements. The trial court agreed and entered a judgment for Defendant. The Court of Appeals affirmed, concluding that the express preemption provisions in the Organic Food Act did not foreclose state false advertising suits, but such suits were impliedly preempted. The Supreme Court reversed, holding that a state law claim that produce is being intentionally mislabeled as organic is neither expressly nor impliedly preempted. Remanded. View "Quesada v. Herb Thyme Farms, Inc." on Justia Law

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At issue in this case was whether insurance practices that violate the Unfair Insurance Practices Act (UIPA) can support an Unfair Competition Law (UCL) action. In 1988, the Supreme Court held in Moradi-Shalal v. Fireman's Fund Insurance Companies that the Legislature did not intend to create a private cause of action under the UIPA for commission of various unfair practices listed in Cal. Ins. Code 790.03(h). In this case, Plaintiff sued Insurer for, among other causes of action, violation of California's unfair competition law (UCL) for engaging in false advertising. The trial court concluded that the UCL claim was an impermissible attempt to plead around Moradi-Shalal's bar against private actions for unfair insurance practices under section 790.03. The court of appeal reversed. The Supreme Court affirmed, holding (1) private UIPA actions are absolutely barred, and litigants may not rely on the proscriptions of section 790.03 as the basis for a UCL claim; (2) however, when insurers engage in conduct that violates both the UIPA and obligations imposed by other statutes or the common law, a UCL action may lie; and (3) here, Plaintiff alleged causes of action that provided grounds for a UCL claim independent from the UIPA. View "Zhang v. Superior Court" on Justia Law

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Until 2001, the federal Truth in Savings Act (TISA), 12 U.S.C. 4310 et seq., allowed civil damages to be sought for failure to comply with its requirements. The provision authorizing lawsuits was later repealed, however. After Congress's repeal of section 4310, Plaintiffs filed a class action against Bank of America, alleging unlawful and unfair business practices based on violations of TISA disclosure requirements. The trial court sustained the Bank's demurrer, and the court of appeal affirmed, concluding that Congress's repeal of section 4310 reflected its intent to bar any private action to enforce TISA. The Supreme Court reversed, holding that TISA posed no impediment to Plaintiffs' claim of unlawful business practice under California's unfair competition law, where by leaving TISA's savings clause in place, Congress explicitly approved the enforcement of state laws such as the unfair competition law.View "Rose v. Bank of Am., N.A." on Justia Law

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Plaintiff-consumers brought an action against Defendant-retailer under two consumer protection statutes, alleging that Defendant improperly charged them sales tax reimbursement on sales of hot coffee sold “to go,” when, according to Plaintiffs, the tax code rendered such sales exempt from sales tax. Plaintiffs sought a refund of the asserted unlawful charges, damages, and an injunction forbidding collection of sales tax reimbursement for such sales. The trial court sustained Defendant’s demurrer, and the court of appeal affirmed. The Supreme Court affirmed, holding (1) the Revenue and Taxation Code provides the exclusive means by which Plaintiffs’ dispute over the taxability of a retail sale may be resolved, and Plaintiffs’ current lawsuit was inconsistent with tax code procedures; and (2) the consumer statutes under which Plaintiffs brought their action could not be employed to avoid the limitations and procedures set out in the tax code. View "Loeffler v. Target Corp." on Justia Law

Posted in: Consumer Law, Tax Law

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The Song-Beverly Credit Card Act governs the issuance and use of credit cards. One of its provisions, Cal. Civ. Code 1747.08, prohibits retailers from recording or requesting personal information from a credit card holder as a condition to accepting a credit card as payment. In this case, Plaintiff alleged that Defendant Apple Inc. required him to provide him his address and telephone number as a condition of accepting his credit card as payment in violation of section 1747.08. The trial court overruled Apple's demurrer in which Apple argued that the Act does not apply to online transactions and that deciding otherwise would undermine the prevention of identity theft and fraud. The court of appeal summarily denied Apple's petition for writ of mandate seeking review. After analyzing the statute's text, structure, and purpose, the Supreme Court reversed and remanded with directions to issue the writ, holding that section 1747.08 does not apply to online purchases in which the product is downloaded electronically. View "Apple Inc. v. Superior Court" on Justia Law

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Defendant MBNA America Bank issued a credit card to Plaintiff Allan Parks. As part of its service to cardholders, MBNA extended credit to Plaintiff by sending him convenience checks that did not include disclosures required by Cal. Civ. Code 1748.9. Plaintiff later sued MBNA on behalf of himself and similarly situated MBNA customers, alleging that the bank engaged in unfair competition by failing to make the disclosures mandated by section 1748.9. MBNA argued that the National Bank Act of 1864 (NBA) preempted the state disclosure law. The trial court granted judgment on the pleadings on MBNA's motion, concluding that the bank's failure to attach the statutorily mandated disclosures to its convenience checks was not unlawful. The court of appeal reversed. The Supreme Court reversed the court of appeal, holding that NBA preempts section 1748.9 because the state law standards act as an obstacle to the broad grant of power given by the NBA to national banks to conduct the business of banking. Remanded. View "Parks v. MBNA Am. Bank, N.A." on Justia Law

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In this case, the court addressed the remedies available to a patient when a debt collector, acting on behalf of a medical professional, was asserted to have illegally disclosed confidential patient information to various consumer reporting agencies in the course of a dispute over an alleged medical debt. At issue was whether all state law claims arising from the furnishing of information to consumer reporting agencies were preempted by the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. 1681t(b)(1)(F). The court concluded that, because of the dual state and federal responses to the protection of an individual's privacy and accuracy interests, when the interests overlap, as in this case, the question of what remedies were available was a federalism problem. The court subsequently held that Congress did not intend for the state remedies to be preempted. Accordingly, the court reversed and remanded for further proceedings. View "Brown v. Mortensen" on Justia Law