Tagged: Class Actions

Fourth Circuit Revives Claim that Faxes Promoting Free Webinars are “Unsolicited Advertisements” Under the TCPA

Last month, the Fourth Circuit in Family Health Physical Medicine, LLC v. Pulse8, LLC, et al. revived Family Health’s putative class action, finding that it plausibly alleged facts sufficient to state a claim that the defendant’s fax invitation to attend a free webinar was an “unsolicited advertisement” under the Telephone Consumer Protection Act of 1991 (the TCPA). In doing so, the Fourth Circuit revisited its recent holding in Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC that an “unsolicited advertisement” does not include offers or solicitations with no commercial component or purpose. Under that reasoning, a fax promoting a free webinar would seem not to fall within the TCPA’s definition of an “unsolicited advertisement.” However, because Family Health’s complaint alleged that the webinar was being used to market Pulse8’s healthcare coding technology, the court drew a reasonable inference that Pulse8 sent the fax hoping to persuade recipients to use its products. As a transmission of “information with a commercial nexus to the sender’s business,” the fax was therefore plausibly alleged to qualify as an advertisement. To survive a motion to dismiss, the Fourth Circuit continued, Family Health was not required to plead facts alleging the specific products or services that were promoted. Rather, it was reasonable to infer that a company that invites you to...

New Jersey Supreme Court Holds “Illusory Discounts” Do Not Support a Claim of Ascertainable Loss Under the Consumer Fraud Act

In a 4-3 opinion, the New Jersey Supreme Court held that the mere purchase of a product falsely represented as “discounted” does not, without more, satisfy the “ascertainable loss” element under the New Jersey Consumer Fraud Act (NJCFA). In Robey v. SPARC Group LLC, the plaintiffs – a proposed class of shoppers at the retail clothing store Aéropostale – alleged that the store advertised clothing as being discounted when, in fact, the items had never been offered or sold at the higher prices off of which the “discount” was taken. The plaintiffs contend that this practice of so-called “illusory discounts” violated the NJCFA, the Truth in Consumer-Contract, Warranty and Notice Act (TCCWNA), and various common law contract rights. The trial court dismissed the complaint for failure to state a claim, determining that the plaintiffs failed to allege an “ascertainable loss.” The Appellate Division majority disagreed and reversed, noting some confusion as to whether the NJCFA’s “ascertainable loss” requirement was the same as the TCCWNA’s “aggrieved consumer” requirement. The Supreme Court granted certification and reversed, finding that the plaintiffs’ NJCFA claim failed because they could show neither of the two recognized types of “ascertainable loss” for a claim based on a seller’s alleged deception: an out-of-pocket loss or a loss of the benefit-of-the-bargain. First, the plaintiffs...

District Court Affirms United States Copyright Office’s Denial of Copyright Registration for AI-Generated Visual Art

Pursuant to the Copyright Act of 1976, “original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device” are eligible for immediate copyright protection, provided certain requirements are met. Against this backdrop, Stephen Thaler applied for copyright registration with the United States Copyright Office (USCO) of a piece of visual art produced by a generative artificial intelligence system he created – the “Creativity Machine.” The USCO subsequently denied the application, reasoning that Thaler’s work “‘lack[ed] the human authorship necessary to support a copyright claim,’” as “copyright law only extends to works created by human beings.” After Thaler filed suit against the USCO, both parties moved for summary judgment on the sole issue of whether a work generated entirely by an artificial system should be eligible for copyright protection. On August 18, 2023, in Thaler v. Perlmutter the United States District Court for the District of Columbia granted the USCO’s motion for summary judgment, concluding that “human authorship is an essential part of a valid copyright claim.” The court rejected as contrary to the Copyright Act’s plain language Thaler’s contention that because he created the AI system that “autonomously” produced...

“Say Cheese!” CVS Passport Photo Practices Subject to BIPA Suit

In May 2022, a group of plaintiffs brought a putative class action against CVS Pharmacy, Inc. (CVS) alleging the company violated several provisions of the Illinois Biometric Information Privacy Act (BIPA) through its practices for taking passport photos. On May 4, 2023, in Daichendt and Odell v. CVS Pharmacy, Inc., the United States District Court for the Northern District of Illinois denied CVS’s motion to dismiss, holding the plaintiffs sufficiently stated a claim under Section 15(b) of BIPA. Section 15(b) of BIPA prohibits private entities from collecting “or otherwise obtain[ing] a person’s or a customer’s biometric identifier or biometric information, unless it first”: (1) provides notice of collection; (2) provides notice of the specific purpose of collection; and (3) obtains affirmative written consent. Here, the plaintiffs alleged that CVS required them to “enter[] their names, email addresses, and phone numbers into a computer terminal inside defendant’s stores prior to scanning their biometric identifiers.” Thereafter, CVS’s system would “check” and “verify” an individual’s facial features (i.e., whether the individual is smiling) to comply with government requirements. Against this backdrop, the plaintiffs argued this system violated Section 15(b) because it “collected and stored their personal contact data (‘real-world identifying information’), such as their names and email addresses,” thus allowing CVS the ability to identify the plaintiffs “when...

I’m Sorry, Motion Denied: Washington District Court Rejects Second Try at Class Action Suit Over Amazon Alexa’s Collection of Voice Data

In June 2022, a group of plaintiffs brought a putative class action against Amazon.com (“Amazon”) alleging the company violated several statutory and common law rights through its use of voice data collected through Alexa, its digital assistant software. After the court granted Amazon’s motion to dismiss, the named plaintiffs moved for leave to file an amended complaint. On March 29, 2023, in James Gray and Scott Horton v. Amazon.com, et. al., the United States District Court for the Western District of Washington denied the motion, concluding the plaintiff’s proposed amended complaint (PAC) failed to allege new material facts. The PAC alleged that Amazon failed to disclose to its consumers that it would use the data collected from the voice recordings made by Alexa devices for the purposes of targeted advertising. Accordingly, the plaintiffs asserted, as they had done previously, that Amazon: (1) breached the implied covenant of good faith and fair dealing; (2) violated Washington’s Consumer Protection Act (CPA) and Personality Rights Act (PRA); and (3) violated common law privacy rights. The court dismissed the plaintiffs’ implied covenant claim because the PAC “merely repeat[ed] the same arguments the Court ha[d] already rejected.” For example, the court previously rejected the plaintiffs’ argument that Amazon’s terms and conditions failed to inform them of Amazon’s use of their...

Fifth Circuit Affirms District Court’s Grant of a Motion to Strike Class Allegations

The Fifth Circuit Court of Appeals recently affirmed the grant of a pre-discovery motion to strike class allegations. In Elson v. Black, 14 women from seven states sought to bring a putative class action against the defendant companies, alleging that the defendants falsely advertised its FasciaBlaster product. Specifically, the plaintiffs alleged that the FasciaBlaster had been falsely advertised as a product that would eliminate cellulite, help with weight loss, and relieve pain. The district court, in a three-sentence opinion, struck the class allegations, finding that the class failed to establish commonality. The next day, the district court dismissed the remainder of the plaintiffs’ claims in their entirety. While the Fifth Circuit Court of Appeals found the district court opinion to be “inappropriately brief,” it agreed that the class could not be certified, nor could the plaintiffs establish their claims of fraud. However, the appellate court reversed and remanded the district court’s ruling dismissing two plaintiffs’ express warranty claims, finding that the court failed to apply the law of a specific jurisdiction. The appellate court held that the class could not be certified under Rule 23(a)’s commonality requirement and Rule 23(b)(3)’s predominance requirement. First, the plaintiffs’ claims were governed by different states’ laws, and the plaintiffs were unable to meet their burden establishing that “such differences...

District of New Jersey Analyzes Article III Standing Requirement in the Class Action Context Under the Supreme Court’s Decision in TransUnion

In a post-TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021) victory for the class action defense bar, the District of New Jersey has further clarified the standing requirement for showing concrete harm. In Schultz v. Midland Credit Management., Inc., the Honorable Madeline Cox Arleo, U.S.D.J. granted defendant Midland Credit Management, Inc.’s (“Midland”) motion for summary judgment because the plaintiffs failed to establish concrete harm and thus lacked standing. In Schultz, the plaintiffs filed a putative class action against Midland alleging that the collection agency issued collection letters with false Internal Revenue Service (IRS) reporting language in violation of the Fair Debt Collection Practices Act (FDCPA). Midland sent letters to the plaintiffs stating: “We will report forgiveness of debt as required by IRS regulations. Reporting is not required every time a debt is canceled or settled, and might not be required in your case.” Pursuant to the Department of Treasury and IRS regulations, Midland only needed to report discharges of indebtedness greater than $600. As the plaintiffs’ debts were below the $600 threshold, the plaintiffs argued that the IRS reporting language was false, deceptive, and misleading in violation of the FDCPA because the language implied that “there could be ‘negative consequences with the [IRS]’ and ‘deliberately fail[ed] to disclose that such reporting is required under...

New Jersey Appellate Division Finds No Ascertainable Loss Where a Plaintiff Never Used a Product and Made Hypothetical Allegations of Loss

On May 31, 2022, the Appellate Division in Hoffman v. Pure Radiance, Inc. affirmed the trial court’s order granting summary judgment for a defendant and dismissing the plaintiff’s Consumer Fraud Act (CFA) claims because the plaintiff could not show that he suffered an ascertainable loss where he never used the product and his allegations were not supported by facts. In this putative class action, serial plaintiff Harold Hoffman sued defendant Pure Radiance, Inc., alleging that it falsely marketed a hair growth product. Specifically, Pure Radiance advertised that its product Re-Nourish could help an individual regrow “a thick, full head of hair, even after years of balding” and was “the world’s first and only hair loss solution that revives dead hair follicles” to regrow hair “in just 30 days.” The advertisement also showed a before-and-after picture of a man’s head, with the before picture showing a balding head and the after picture showing a full head of hair. Based on this advertisement, Hoffman purchased the product and then, after researching the product but before ever trying it himself, filed a proposed class action alleging, among other things, that the ad contained material misrepresentations and that he suffered an ascertainable loss by reason of his purchase of the product for $108.90. Significantly, Hoffman did not receive the...

Eighth Circuit Rules That Plaintiff Can File Motion to Strike Class Action Without Waiving Right to Compel Arbitration

In Donelson v. Ameriprise Financial Services, Inc., the Eighth Circuit reversed and remanded a district court’s decision that had denied both a motion to strike class action allegations and a motion to compel arbitration. The plaintiff was invited to create an Ameriprise account by defendant Sachse, who worked as a broker and investment advisor at defendant Ameriprise. The two met over lunch, where Sachse brought, and filled out himself, a copy of the account application. After the account application was signed, but not read, by the plaintiff, it was alleged that Sachse “badly mishandled [Plaintiff’s] investment account.” The plaintiff brought suit alleging violations of § 10(b) and § 20(a) of the Securities Exchange Act and Rule 10b-5, as well as breach of fiduciary duty under 15 U.S.C. § 80b-6, and, after finding other Sachse clients who had experienced similar problems with their accounts, sought to represent them in a Rule 23(b)(2) class action. The defendants moved to strike the class action allegations and to compel arbitration, which the district court denied. The defendants appealed. On appeal, the court addressed the question of whether the defendants waived their right to arbitrate when they simultaneously moved to strike the class action allegations. The court found that they had not. Ultimately, the court determined that when the defendants...

Class Action Dismissal Highlights Limits to the “Picking Off” Exception to Mootness

The District of New Jersey recently dismissed a putative class action lawsuit against Capital One Bank, finding the plaintiff’s recovery during the suit of the full amount of damages sought mooted her claim. The would-be class representative, plaintiff Ellen Fensterer, sued Capital One Bank to recover funds used to purchase British Airways flight tickets. After COVID-19 imposed travel restrictions and caused the flights to be canceled, Fensterer sought recovery of $4,906.31 in expended funds and rewards points. Neither British Airways nor Capital One Bank provided Fensterer’s requested refund, causing Fensterer to file a putative class action against Capital One Bank—and not British Airways—for recovery of the funds. Then, during the pendency of the lawsuit, British Airways issued the full refund sought by Fensterer, and Capital One Bank processed that refund and credited Fensterer’s account. Because a non-party ultimately provided the exact remedy sought, the District of New Jersey applied the general rule of mootness, rather than the “picking off” exception, and accordingly dismissed Fensterer’s claim. The “picking off” exception prevents the loophole that would otherwise allow Capital One Bank (or any defendant) to simply buy off the named plaintiff’s claims before class certification, thereby preventing class certification indefinitely, causing piecemeal litigation, and undermining the purpose of class action litigation generally. But that did not happen...