Cases of Interest

The latest published decisions relevant to consumer protection from the California Supreme Court and Courts of Appeal.

Young v. Midland Funding

Oct. 7, 2022 — First App. District, Div. 4 — The plaintiff sued Midland Funding, LLC, alleging they violated the Rosenthal Fair Debt Collection Practices Act for falsely and deceptively claiming they had properly served her with a debt collection lawsuit and obtaining a default judgment against her based on this falsehood. Midland filed an anti-SLAPP motion, arguing that they did not have knowledge of the wrongful service. The trial court granted the anti-SLAPP motion, and the court of appeal reversed. The court held that the plaintiff was likely to prevail on her action under Rosenthal, and that she was not required to demonstrate that Midland knowingly made the false representation.

City of San Diego v. Experian Data Corp.

Apr. 26, 2022 — Fourth App. Dist. — The City of San Diego sued Experian Data Corp. for violating the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.). The City hired three private law firms to represent it on a contingency fee basis. Experian filed a motion to disqualify the private law firms for violating the prosecutor's duty of neutrality. The trial court denied Experian’s motion, and the Court of Appeal affirmed. The Court further held that the "agreements to pay the private law firms from any penalties recovered from Experian do not violate Business and Professions Code section 17206’s requirement that all funds recovered in a UCL action be paid to the City’s treasurer."

City of Austin, Texas v. Reagan National Advertising of Austin, LLC

Apr. 21, 2022 — Supreme Court — In a 6-3 decision authored by Justice Sotomayor, the Supreme Court ruled that a city ordinance treating signs differently depending on whether they have a connection to the site where they are located is content-neutral and therefore not subject to strict scrutiny, the most stringent constitutional test. Austin's ordinance was challenged as a content-based restriction of First Amendment free speech rights, but the court concluded that the ordinance does not “single out any topic or subject matter for differential treatment.” The case will be sent back to the lower courts to consider whether the sign code can survive under intermediate scrutiny.

People v. Johnson & Johnson

Apr. 11, 2022 — Fourth Dist., Div. 1 — The Attorney General's office brought a case against Johnson & Johnson, Ethicon, Inc., and Ethicon US, LLC (collectively, Ethicon) for willfully circulating misleading medical device instructions and marketing communications that misstated, minimized, and/or omitted the health risks of Ethicon’s surgically-implantable transvaginal pelvic mesh products. The trial court levied nearly $344 million in civil penalties against Ethicon after trial. Ethicon appealed, and the Court of Appeal reduced the penalties based on deceptive statements Ethicon purportedly made during one-on-one conversations with doctors, since there was no evidence of what Ethicon employees actually said. The Court otherwise affirmed the judgment.

Aronow v. Superior Court of San Francisco County

Mar. 28, 2022 — First District, Div. 4 — In this legal malpractice action, the defendants filed to compel arbitration. The Court of Appeal held that the trial court that granted a defendant’s petition to compel arbitration has jurisdiction to lift the stay of trial court proceedings where a plaintiff demonstrates financial inability to pay the anticipated arbitration costs. Further, the court may require defendant either to pay plaintiff’s share of arbitration costs or to waive the right to arbitration.

Reyes v. Beneficial State Bank

Mar. 22, 2022 — Fifth App. Dist. — In this lemon law case, the prevailing plaintiffs made a motion for attorneys' fees pursuant to the FTC Holder Rule. The trial court denied the motion, but the Fifth District reversed, agreeing with the court in Pulliam v. HNL Automotive Inc. (2021) 60 Cal.App.5th 396 and Melendez v. Westlake Services, LLC (2022) 74 Cal.App.5th 586, and disagreeing with Lafferty v. Wells Fargo Bank, N.A. (2018) 25 Cal.App.5th 398 and Spikener v. Ally Financial, Inc. (2020) 50 Cal.App.5th 151, that consumers may be awarded attorneys' fees above what they paid on their contracts pursuant to the Holder Rule. This question will be settled by the Supreme Court's forthcoming decision in Pulliam.

Lee v. Amazon.com, Inc

Mar. 11, 2022 — First App. Dist. — Plaintiff sued Amazon for offering skin lightening creams on its site that allegedly contained illegally high levels of mercury. The plaintiff alleged that Amazon violated California law by not including Prop 65 warnings on the products. The trial court held that Amazon was immune from liability under the federal Communications Decency Act (CDA) and that the plaintiff failed to establish several elements of the case. However, the First District reversed, holding that Amazon was not immune under the CDA and that the trial court erred in its view of the evidence required of the plaintiff.

Sheen v. Wells Fargo Bank

Mar. 7, 2022 — California Supreme Court — Plaintiff asked Wells Fargo to modify two junior loans that used his home as collateral. Wells Fargo did not respond to that request, but informed the plaintiff of actions it might take against him for nonpayment. Eventually the loans were sold to a third party, which foreclosed on the house. Plaintiff sued Wells Fargo for negligence, but the Supreme Court held that Wells Fargo had no tort duty to respond to plaintiff's request to modify his loans.

Williams v. National Western Life Ins. Co.

Mar. 3, 2022 — Third App. Dist. — Plaintiff sued National Western Life Insurance Company (NWL) for negligence and elder abuse arising from an NWL annuity sold to plaintiff. After a remand from the Supreme Court, the Court of Appeal affirmed the judgment finding NWL liable for negligence and financial elder abuse. However, punitive damages assessed against NWL were reversed.

Anderson v. Ford Motor Co.

Feb. 8, 2022 — Third App. Dist. — The plaintiffs sued Ford after experiencing unfixable engine issues with their Ford pickup truck. The jury found in favor of the plaintiffs on their claims under the Song-Beverly Consumer Warranty Act (California's "lemon law"), the Consumer Legal Remedies Act, and their cause of action for fraud in the inducement-concealment. The jury awarded damages, civil penalties, punitive damages, and attorneys' fees. The Court of Appeal affirmed the judgment and the damages awards.

Melendez v. Westlake Services, LLC

Jan. 28, 2022 — Second App. Dist. — Plaintiff sued his auto dealer, Southgate Auto, and the assignee of his credit contract, Westlake Services, after buying a used Toyota. After default was entered against the dealer, the plaintiff settled with Westlake. He then requested attorneys' fees, which the court awarded. Westlake appealed, claiming that pursuant to the FTC Holder Rule, the plaintiff could not recover attorneys' fees against the assignee above what he paid on the contract. The Court of Appeal, however, followed the reasoning of Pulliam v. HNL Automotive (2021) 60 Cal.App.5th 396, review granted April 28, 2021, S267576, holding that the FTC Holder Rule does allow defrauded plaintiffs to recover attorneys' fees as well as costs from assignees of credit contracts.

Duff v. Jaguar Land Rover North America, LLC

Jan. 27, 2022 — Fourth App. Dist — After a bench trial, plaintiff prevailed on one claim under the Song-Beverly Consumer Warranty Act and received $1 in nominal damages. The court awarded him $684,250 in attorney fees. The Court of Appeal held that the trial court used the incorrect legal standard in finding that the plaintiff was the prevailing party, and remanded for the superior court to apply the correct standard. The Court also rejected Jaguar's argument that the plaintiff had rejected its 998 offer to compromise and did not receive a more favorable judgment, finding that its offer was not sufficiently specific.

TitleMax of Delaware, Inc. v. Weissman

Jan. 24, 2022 — U.S.. Court of Appeals, Third Circuit — The Third Circuit determined that applying Pennsylvania usury laws to an out-of-state lender did not violate the dormant Commerce Clause. TitleMax provides car loans at interest rates as high as 180%. It provided those loans to consumers from Pennsylvania, though the loans were made at brick-and-mortar locations outside of the state. TitleMax received payments from Pennsylvania consumers and repossessed vehicles in Pennsylvania. After the Pennsylvania Department of Banking and Securities issued a subpoena requesting documents regarding TitleMax's interactions with Pennsylvanians, TitleMax stopped making loans to Pennsylvania residents and sought an injunction for violations of the Commerce Clause. The Third Circuit determined that Pennsylvania's usury cap applied to TitleMax's auto loans.

San Francisco Apartment Ass'n v. City and County of San Francisco

Jan. 24, 2022 — First. App. Dist. — The Court of Appeal rejected an attempt by landlord interest groups to preclude the City and County of San Francisco from thwarting bad faith efforts to circumvent the city’s lawful restrictions on the right to evict residential tenants whose rent the city cannot regulate. The landlord interest groups sued the city over an ordinance that landlords could not raise the rent in bad faith for the purpose of evicting tenants, even when the property is exempt from rent control.

Sellers v. JustAnswer, LLC

Dec. 30, 2021 — Fourth App. Dist. — Plaintiffs filed a class action lawsuit against JustAnswer, alleging it routinely enrolled online consumers like them in automatic renewal membership programs without providing “clear and conspicuous” disclosures and obtaining their “affirmative consent” as mandated by the Automatic Renewal Law. JustAnswer filed a motion to compel arbitration, and the trial court denied it. The court of appeal affirmed, holding that the company's arbitration agreement was not sufficiently conspicuous and therefore plaintiffs should not be held to it.

Bad Boys Bail Bonds Bonding Corp. v. Caldwell

Dec. 29, 2021 — First App. Dist. — The court of appeal held that the requirement under Civil Code section 1799.91 that notice be afforded to cosigners of consumer credit contracts about the risks of guaranteeing such an agreement applies to bail bond premium financing agreements. As such, a person who cosigns a bail bond financing agreement on behalf of an arrestee must be provided with this statutory notice.

De Leon v. Pinnacle Property Management Services, LLC

Dec. 8, 2021 — Fourth App. Dist. — A property management company appealed the denial of its motion to compel arbitration. The trial court found the arbitration agreement procedurally and substantively unconscionable because the plaintiff was required to sign the arbitration agreement as a precondition to his employment and because of the agreement limited on discovery and shortened the statute of limitations to one year on all claims. The court of appeal affirmed the denial of the motion to compel arbitration.

Gamboa v. Northeast Community Clinic

Nov. 30, 2021 — Second App. Dist. — The plaintiff sued the Northeast Community Clinic (Clinic) for employment related claims. The Clinic moved to compel arbitration under Code of Civil Procedure section 1281.2.1 The trial court denied the motion. The Court of Appeal affirmed, holding that the Clinic failed to prove the existence of an arbitration agreement by a preponderance of the evidence after Gamboa produced evidence disputing an agreement.

Ngu v. City Bail Bonds

Nov. 15, 2021 — Second App. Dist. — Plaintiff Lana Sieu Ngu sued bail agents Mylinh Kha and Ethan Kha, doing business as City Bail Bonds, for restitution under California’s unfair competition law (UCL) (Bus. & Prof. Code, §§ 17200, et seq.) based on defendants’ unlawful solicitation of bail in violation of California Code of Regulations, title 10, section 2079. After a bench trial, the trial court ruled in plaintiff’s favor, awarding her $38,666 in restitution. On appeal, defendants argued that the trial court erred in finding defendants unlawfully solicited bail from plaintiff and in finding that their conduct caused plaintiff economic injury. The Court of Appeal affirmed.

Dept. of Fair Employment & Housing v. M&N Financing Corporation

Sept. 27, 2021 — Second App. Dist. — The Department of Fair Employment and Housing (the Department) filed a complaint against M&N Financing Corporation (M&N) and Mahmood Nasiry, who operated a business that purchased retail installment sales contracts from used car dealerships. In deciding how much to pay for the contracts, defendants used a formula that considered the gender of the car purchaser and would pay more for a contract with a male purchaser than for a contract with a female purchaser. The trial court entered judgment in favor of the Department on the first and second causes of action, but dismissed other causes of action. The Court of Appeal held that the trial court erred in dismissing the fifth cause of action but otherwise affirmed.

Strobel v. Johnson & Johnson

Sept. 21, 2021 — First. App. Dist. — In this products liability action for mesothelioma due allegedly caused by asbestos in Johnson & Johnson baby powder, the court of appeal reversed summary judgment to Johnson & Johnson and held that the not all of the plaintiff's experts should have been excluded.

Elmassian v. Flores

Sept. 10, 2021 — Los Angeles Appellate Div. — The court held that a tenant may assert the defense to being evicted based upon domestic violence causing a nuisance on rented property even if non-domestic violence grounds are also asserted.

McHugh v. Protective Life Insurance Co.

Aug. 30, 2021 — CA Supreme Court — In 2012, the Legislature created certain protections to shield consumers from losing life insurance coverage because of a missed premium payment, which went into effect on January 1, 2013. Soon thereafter, the defendant terminated one of the life insurance policies at issue in this case because the policy owner had failed to make a payment. The Supreme Court concluded that those protections apply to all life insurance policies in force when the two sections went into effect, regardless of when the policies were originally issued.

Pilliod v. Monsanto

Aug. 8, 2021 — First App. Dist, Div. 2 — Alberta & Alva Pilliod sued Monsanto, the manufacturer of Roundup herbicide, because they each developed non-Hodgkin’s lymphoma after years of spraying the product on their property. After a six-week trial, the jury found for the Pilliods, awarding them billions in compensatory and punitive damages, which the trial court reduced to $87 million. On appeal, Monsanto put forth various theories why the judgment should be reversed. Monsanto also argued that the punitive damages awards should be stricken or further reduced because they were unsupported by evidence and constitutionally excessive. In their cross appeal, the Pilliods argued that the trial court erred in reducing the jury’s awards for compensatory and punitive damages. The Court of Appeal affirmed the judgment.

Best v. Ocwen Loan Servicing

May 21, 2021 — 4th App. Dist, Div. 2 — In this case, plaintiff homeowners alleged that defendants attempted to collect a debt secured by their home, despite having no legal right to do so. They further alleged that, in the process, the Bank engaged in unlawful, unfair, and fraudulent debt collection practices. Based on these allegations, they asserted six causes of action, including one under the Rosenthal Fair Debt Collection Practices Act (Rosenthal Act) (Civ. Code, § 1788 et seq.). In the trial court, the Bank demurred in part on the ground that the Rosenthal Act does not apply to conduct in connection with a nonjudicial foreclosure. The Court of Appeal reversed in part, holding that the Rosenthal Act can apply to a nonjudicial foreclosure.

Smith v. LoanMe

Apr. 1, 2021 — CA Supreme Court — Holding that Cal Penal Code 632.7 prohibiting recordings of phone conversations without both parties consent applies to parties as well as third party eavesdroppers. LoanMe recorded plaintiff's conversation with them without informing him or getting consent.

Villanueva v. Fidelity

Mar. 18, 2021 — CA Supreme Court — Holding that if a title insurer charges rates without filing them, a consumer can challenge the charges as unlawful in court.