Justia U.S. 8th Circuit Court of Appeals Opinion Summaries

Craig and Brianna Dulworth discovered that Experian, a credit-reporting agency, incorrectly reported their automobile loan as discharged through bankruptcy, despite their reaffirmation and continued payments. After Experian ignored their correction letters, the Dulworths sued in Indiana state court, alleging violations of the Fair Credit Reporting Act. Experian removed the case to federal court and issued broad subpoenas to the Dulworths' law firm, Stecklein & Rapp, seeking extensive information, including details about the firm's business structure and interactions with other clients.Stecklein & Rapp sought relief from the subpoenas in the United States District Court for the Western District of Missouri, where compliance was required. The district court found the requested materials irrelevant to the Dulworths' lawsuit, quashed the subpoenas, and awarded $93,243.50 in attorney fees and costs to Stecklein & Rapp. Experian appealed both the fee award and the discovery ruling.The United States Court of Appeals for the Eighth Circuit reviewed the district court's decision for abuse of discretion. The appellate court affirmed the district court's ruling, agreeing that the subpoenas were overly broad and irrelevant to the case. The court emphasized that the Fair Credit Reporting Act required Experian to conduct a reasonable reinvestigation upon receiving a dispute notice, regardless of whether the notice came directly from the consumer or through their attorney. The court also upheld the attorney fees award, noting that Experian failed to take reasonable steps to avoid imposing an undue burden on Stecklein & Rapp, justifying the sanctions under Rule 45(d)(1) of the Federal Rules of Civil Procedure. View "Stecklein & Rapp Chartered v. Experian Information Solutions, Inc." on Justia Law

A joint state and federal criminal investigation, "Operation Back Cracker," uncovered a scheme where Minnesota healthcare providers, primarily chiropractors, recruited car accident victims and fraudulently billed auto insurers for their treatment. In related civil settlements, some providers agreed not to bill certain insurance companies, including Illinois Farmers Insurance Company, for any treatment provided to their insureds. Plaintiffs, representing a class of insured individuals, sued Farmers, alleging that these no-bill agreements violated the Minnesota No-Fault Automobile Insurance Act.The United States District Court for the District of Minnesota granted summary judgment to the plaintiffs' injunctive class, enjoining Farmers from entering into or enforcing the no-bill agreements. The court found that these agreements effectively provided managed care services and set preestablished limitations on medical expense benefits, both of which are prohibited under the No-Fault Act. Farmers appealed the decision.The United States Court of Appeals for the Eighth Circuit reviewed the case and vacated the injunction. The court held that the no-bill agreements did not constitute managed care services as defined by the No-Fault Act because they excluded, rather than used, the providers under contract with Farmers. Additionally, the court found that the agreements did not place preestablished limitations on medical expense benefits since they did not limit reimbursement for reasonable expenses incurred by insureds. The court concluded that an insurer does not violate the No-Fault Act by enforcing a no-bill agreement against a provider, as long as it does not refuse to reimburse an insured who has incurred a qualifying expense. The case was remanded for further proceedings consistent with this opinion. View "Taqueria El Primo LLC v. IL Farmers Insurance Co." on Justia Law

Cybercriminals hacked into T-Mobile's computer systems, stealing personal information of approximately 76.6 million customers. Several customers filed class action lawsuits against T-Mobile, which were centralized in the U.S. District Court for the Western District of Missouri. The parties reached a settlement, with T-Mobile agreeing to create a $350 million fund for affected customers and to spend an additional $150 million on data security improvements. Class counsel requested $78.75 million in attorneys' fees, which two class members, Cassie Hampe and Connie Pentz, objected to as excessive.The district court struck Hampe's and Pentz's objections and overruled them on the merits. The court found Hampe's objection to be in bad faith, influenced by her attorneys' history as serial objectors, and struck it under Federal Rule of Civil Procedure 12(f). Pentz's objection was struck as a discovery sanction after she refused to cooperate with class counsel's discovery efforts. Both objectors appealed the district court's decisions.The United States Court of Appeals for the Eighth Circuit reviewed the case. The court held that the district court abused its discretion in striking Hampe's objection, as Rule 12(f) does not apply to objections and there was no evidence of bad faith in this case. The court also found that the district court erred in awarding attorneys' fees, determining that the fee award was unreasonable given the relatively short duration and limited discovery of the case. The court affirmed the decision to strike Pentz's objection but reversed the decision to strike Hampe's objection and the award of attorneys' fees, remanding for further proceedings. View "Daruwalla v. Hampe" on Justia Law

In September 2021, cybercriminals targeted a chain of pawnshops, a payday lender, and a prepaid-card company, exposing customers' personal information. The companies informed customers of the breach weeks later, leading to three nationwide class-action lawsuits in the District of Minnesota. The companies moved to dismiss the cases, arguing lack of standing and failure to state a claim, but did not mention arbitration. They continued to engage in litigation activities, including briefing issues, preparing a discovery plan, and requesting a pretrial conference. There is a dispute about whether the companies mentioned arbitration during the pretrial conference, but no formal motion to compel arbitration was filed until months later.The United States District Court for the District of Minnesota found that the companies had waived their right to arbitration by substantially engaging in litigation. The court noted that the companies had no credible explanation for their delay in filing the motion to compel arbitration, despite allegedly deciding to do so during the pretrial conference.The United States Court of Appeals for the Eighth Circuit reviewed the case and affirmed the district court's decision. The appellate court applied a two-part test to determine waiver of the right to arbitration, focusing on whether the party knew of the right and acted inconsistently with it. The court concluded that the companies had knowledge of their right to arbitration and acted inconsistently by engaging in extensive litigation activities. The companies' actions, including participating in a motion-to-dismiss hearing and scheduling mediation, were deemed to have substantially invoked the litigation machinery, thus waiving their right to arbitration. The court emphasized that the companies' delay and litigation conduct were inconsistent with promptly seeking arbitration. View "Thomas v. Pawn America Minnesota, LLC" on Justia Law

During the early stages of the COVID-19 pandemic, American Screening, LLC, a Louisiana company, promised buyers that it would ship personal protective equipment (PPE) more quickly than it actually did. The Federal Trade Commission (FTC) sued American Screening, alleging that its shipping policies and practices violated the FTC Act and the Mail, Internet, or Telephone Order Merchandise Rule (MITOR). The company's website contained a shipping policy that stated orders would be processed and shipped within 24-48 hours. However, in practice, it took about six weeks for PPE to be shipped after the customer had purchased it.The district court granted the FTC summary judgment and ordered American Screening to return almost $14.7 million to consumers and permanently enjoined it from advertising or selling PPE. American Screening challenged the district court's ordered remedies on appeal.The United States Court of Appeals for the Eighth Circuit affirmed the district court's decision. The court rejected American Screening's contention that the court should have considered whether each individual consumer had relied on American Screening's shipping representations and had sustained an injury as a result. The court also disagreed with American Screening's argument that the district court's equitable monetary relief went beyond what was necessary to redress consumers and so amounts to an award of exemplary or punitive damages. The court found that the relief was tailored to ensure that dissatisfied consumers are made whole while also ensuring that American Screening does not have to pay unharmed customers as punishment.Finally, the court rejected American Screening's challenge to the scope of the permanent injunction barring it from advertising or selling PPE. The court agreed with the district court that the egregiousness of American Screening's conduct weighed in favor of the injunction. The court also found that the injunction's effect on American Screening was more modest than its breadth might suggest. View "FTC v. American Screening, LLC" on Justia Law

The plaintiff, Chiya Lloyd, filed a complaint against FedLoan Servicing LLC, Equifax Information Services, LLC, Trans Union, LLC, and Experian Information Solutions, Inc., alleging violations of the Fair Credit Reporting Act (FCRA). The case centered around Lloyd's nine federal student loans serviced by FedLoan, which reported to Experian that Lloyd's payments for certain months were overdue. Lloyd disputed these delinquencies, and Experian requested further information from FedLoan. After several rounds of disputes and investigations, all delinquent marks were removed from Lloyd's credit report. However, Lloyd initiated a civil action against the defendants, alleging that FedLoan failed to properly investigate the accuracy of the information it reported to Experian, and Experian failed to follow its procedures to discover FedLoan’s mistakes.The district court granted summary judgment in favor of Experian, finding that Lloyd could not show Experian failed to follow reasonable procedures or conduct a reasonable reinvestigation. The court also granted summary judgment in favor of FedLoan, concluding that Lloyd did not present sufficient evidence of damage to support her claim.On appeal, the United States Court of Appeals for the Eighth Circuit affirmed the district court's decision. The appellate court found that Experian had followed the steps set forth by the FCRA for conducting a reinvestigation, and Lloyd failed to show that Experian did not satisfy its statutory requirements. The court also found that Lloyd failed to present a cognizable claim against Experian. Regarding FedLoan, the court found that Lloyd failed to present evidence sufficient to allow a jury to find that FedLoan’s investigation was unreasonable. The court also found that Lloyd failed to provide sufficient evidence to raise a jury question that she sustained actual damages from FedLoan’s reporting. Therefore, her claim failed. View "Lloyd v. FedLoan Servicing" on Justia Law

Yasmin Varela filed a class action lawsuit against State Farm Mutual Automobile Insurance Company (State Farm) after a car accident. Varela's insurance policy with State Farm entitled her to the "actual cash value" of her totaled car. However, she alleged that State Farm improperly adjusted the value of her car based on a "typical negotiation" deduction, which was not defined or mentioned in the policy. Varela claimed this deduction was arbitrary, did not reflect market realities, and was not authorized by Minnesota law. She sued State Farm for breach of contract, breach of the covenant of good faith and fair dealing, unjust enrichment, and violation of the Minnesota Consumer Fraud Act (MCFA).State Farm moved to dismiss the complaint, arguing that Varela's claims were subject to mandatory, binding arbitration under the Minnesota No-Fault Automobile Insurance Act (No-Fault Act). The district court granted State Farm's motion in part, agreeing that Varela's claims for breach of contract, breach of the covenant of good faith and fair dealing, and unjust enrichment fell within the No-Fault Act's mandatory arbitration provision. However, the court found that Varela's MCFA claim did not seek the type of relief addressed by the No-Fault Act and was neither time-barred nor improperly pleaded, and thus denied State Farm's motion to dismiss this claim.State Farm appealed, arguing that Varela's MCFA claim was subject to mandatory arbitration and should have been dismissed. However, the United States Court of Appeals for the Eighth Circuit dismissed the appeal for lack of jurisdiction. The court found that State Farm did not invoke the Federal Arbitration Act (FAA) in its motion to dismiss and did not file a motion to compel arbitration. The court concluded that the district court's order turned entirely on a question of state law, and the policy contained no arbitration provision for the district court to "compel." Therefore, State Farm failed to establish the court's jurisdiction over the interlocutory appeal. View "Varela v. State Farm Mutual Automobile Insurance Co." on Justia Law

Plaintiff, a retail customer, brought a putative class action under the Class Action Fairness Act against clothing retailers The Gap, Inc. and its wholly-owned subsidiary, Old Navy, LLC (“Defendants”). Plaintiff alleged that she purchased numerous products at Old Navy stores and online at discount prices that were deceptively advertised because Defendants did not sell a substantial quantity of these products at the advertised “regular” prices prior to selling them at the advertised “sale” prices. She sought class-wide compensatory damages under the Missouri Merchandising Practices Act (“MMPA”). The district court granted Defendants’ motion to dismiss Plaintiff’s Amended Complaint with prejudice, Plaintiff appealed, arguing that she plausibly pleaded ascertainable loss under Missouri’s benefit-of-the-bargain rule.   The Eighth Circuit affirmed. The court agreed with the district court’s decision to “join a growing number of courts in finding that complaints based solely on a plaintiff’s disappointment over not receiving an advertised discount at the time of purchase have not suffered an ascertainable loss.” Further, the court wrote that Plaintiff’s Amended Complaint also alleged that the actual fair market value of some of the products she purchased “may have even been less than the discounted prices that she paid.” This theory of ascertainable loss does not depend on Defendants’ comparison pricing for the value represented component of the benefit-of-the-bargain rule. Plausible allegations of such immediate injury would satisfy an MMPA plaintiff’s burden to show an ascertainable loss. However, these allegations are based solely on information and belief, which are generally insufficient under Rule 9(b). View "Jill Hennessey v. The Gap, Inc." on Justia Law

Debt collector Rent Recovery Solutions (“RRS”) called Plaintiff to collect an alleged $900 debt to her former landlord. In June, without sending the relevant documents to Plaintiff, RRS reported her debt to TransUnion, a credit reporting agency, failing to tell TransUnion that the debt was disputed. Plaintiff commenced this action against RRS, alleging that it violated the Fair Debt Collection Practices Act (“FDCPA”). Plaintiff requested an award of $18,810 in attorneys’ fees for work by two attorneys and a paralegal. RRS challenged the fees requested by both attorneys, who submitted sworn declarations and detailed billing records. The district court, applying the lodestar method of calculating an attorney fee award, found that the attorneys’ claimed hourly rates were reasonable, but the hours expended on the case were excessive. The court reduced the claimed attorney hours by fifty percent, exclusive of paralegal work, and awarded Plaintiff $9,480 in attorneys’ fees. Plaintiff’s attorneys accused the district court of departing from the lodestar calculation by imposing a “cap” that violates FDCPA policies and deprives counsel of full compensation for bringing consumer enforcement actions under this complex federal statute.   The Eighth Circuit affirmed. The court explained that the district court followed the lodestar method, reducing the award based on its determination of the number of attorney hours reasonably expended on litigation. There is a “strong presumption” that the lodestar method represents a reasonable fee. The court wrote that the district court did not abuse its substantial discretion in finding that fifty hours was unreasonable for such a claim. View "Adrianna Beckler v. Rent Recovery Solutions, LLC" on Justia Law

Plaintiff’s dog, Clinton, suffered from health problems. The solution, at least according to a veterinarian, was to feed him specialized dog food available only by prescription. It has different ingredients than regular dog food but includes no special medication. Prescription dog food is expensive. The crux of Plaintiff’s complaint is that the “prescription” requirement is misleading because the Food and Drug Administration never actually evaluates the product. And the damages came from its higher sales price. The original complaint, which included only state-law claims, reflected these theories. Brought on behalf of all similarly situated Missouri consumers, it alleged a violation of Missouri’s antitrust laws, claims under Missouri’s Merchandising Practices Act, and unjust enrichment. Plaintiff initially filed her complaint in state court, but Royal Canin and Nestle Purina quickly removed it to federal court. The district court then remanded it.   The Eighth Circuit vacated the district court’s judgment and send this case back to the district court with directions to remanded it to Missouri state court. The court explained that just on the face of the amended complaint, the answer is clear. Only the carryover claims and their civil-conspiracy counterpart remain, and neither one presents a federal question. It is no longer possible to say that “dependence on federal law permeates the allegations” of Plaintiff’s complaint. Further, the court wrote that the manufacturers hope to keep the case in federal court through supplemental jurisdiction. It is too late, however, to turn back the clock. View "Anastasia Wullschleger v. Royal Canin U.S.A., Inc." on Justia Law