Class-Action

Court Finds Student Loan Servicer can be Sued Under State Consumer Protection Law

July 27, 2019 | Peter S. Lubin and James V. DiTommaso

A student loan debtor sued her loan servicer, arguing that the servicer had violated Illinois consumer fraud law by asserting that its customer representatives were experts in repayment options and acted in a borrower’s best interest when they were in fact instructed to steer borrowers into payment options that benefited the servicer more than the borrower. The district court dismissed the suit, finding that federal disclosure law preempted the suit, but the appellate court reversed, holding that penalizing loan servicers for making affirmative misrepresentations did not impose additional disclosure requirements on servicers, and thus was not preempted.

Nicole Nelson financed her education with federal student loans. Great Lakes, Nelson’s loan servicer, manages borrowers’ accounts, processes payments, assists borrowers with alternative repayment plans, and communicates with borrowers about the repayment of their loans. Nelson began repaying her loans in December 2009. In September 2013, she changed jobs and her income dropped. She contacted Great Lakes, and its representative led Nelson to believe that “forbearance” was the best option for her personal financial situation. A few months later, Nelson lost her new job. She contacted Great Lakes again in March 2014. This time, the representative again did not inform her of income-based repayment options, and instead steered her into deferment.

Forbearance is the temporary cessation of payments, allowing an extension of the term of the loan, or temporarily accepting smaller payments than were previously scheduled. Under forbearance, unpaid interest is capitalized, which can substantially increase monthly payments after the forbearance period ends. Federal law requires lenders and loan servicers to offer income-driven repayment plans, which Nelson argues are more appropriate in situations of longer-term financial hardship. Enrolling callers in these plans is, however, time-consuming for customer service representatives. Nelson eventually sued Great Lakes on behalf of a putative class, arguing that Great Lakes breach Illinois consumer protection law when it held itself out as an expert on student loan plans and caused her to rely on their assertions that they would operate on her behalf. The district court dismissed Nelson’s complaint, finding that her claims were preempted by federal law that stated that federal student loans were not subject to state-law disclosure requirements. Nelson then appealed. Continue reading ›

In Class Action Defense Win, Supreme Court Holds that Class Arbitration Barred in Absence of Express Consent

July 19, 2019 | Peter S. Lubin and James V. DiTommaso

Earlier this year, the U.S. Supreme Court ruled in Lamps Plus, Inc. v. Varela that an ambiguous arbitration agreement does not provide a sufficient basis to conclude that parties agreed to class arbitration. In a 5-4 vote, the Supreme Court reversed the Ninth Circuit’s decision that the arbitration agreement between Lamps Plus and one of its employees permitted pursuing class claims in arbitration despite the fact that the arbitration agreement did not expressly address the issue of class arbitration. This is a follow-up to an earlier post where we discussed the District Court’s ruling in this case.

By way of background, the case stemmed from a dispute regarding whether an employer properly protected the tax information of its nearly 1300 employees. After a fraudulent tax return was filed in the name of one of the employees, the employee filed suit against his employer, Lamps Plus. Lamps Plus responded by seeking to dismiss the lawsuit and compel arbitration, relying on the arbitration provision in the employee’s employment contract. Citing the Supreme Court’s 2010 decision in Stolt-Nielsen, S.A. v. Animal Feeds Int’l Corporation, which bars arbitrating claims on a class basis in the absence of a “contractual basis for concluding” that the parties agreed to class arbitration, Lamps Plus sought to compel the employee to arbitrate on an individual basis. The District Court ruled in favor of Lamps Plus on the request to dismiss the case and compel arbitration but rejected the employer’s request to require the employee to arbitrate his claims on an individual basis. Continue reading ›

Paralegal Is Pro-Privacy, Not Anti-Technology

July 2, 2019 | Peter S. Lubin and James V. DiTommaso

The line between security and privacy has always been a bit blurry and it continues to get blurrier every day as technology advances. One of the latest developments in surveillance technology has been facial recognition software, which is allegedly capable of identifying you with just a quick scan of your face. While this could have far-reaching effects in the crime-solving world, it also eliminates much of our personal privacy in the process.

Brian Hofer is a paralegal in California who has been fighting to ban facial recognition software for the past five years. As soon as he became aware of the technology in 2014, he joined activist groups to try to get the technology banned from his hometown of Oakland. Once that was accomplished, he started working with other local government bodies across California to ban the technology from their streets. Since then, Hofer has drafted 26 different privacy laws for cities and counties all over the state of California, and all 26 have been approved.

While facial recognition technology may have been the catalyst for Hofer to start fighting for each citizen’s right to privacy, it has extended beyond that to include demands that companies and governing bodies be transparent about the kind of technology they’re using for their surveillance efforts. He has also convinced some cities, including Richmond and Berkeley, to cancel their contracts with tech companies like Vigilant Solutions and Amazon – both Richmond and Berkeley have sanctuary policies and both Vigilant Solutions and Amazon share information with ICE, so Hofer successfully argued that maintaining both the sanctuary policies and contracts with those companies constituted a conflict. Continue reading ›

Getty Allegedly Required Payment for Public Domain Photos — Best Chicago Class Action Defense Counsel and Attorneys

May 23, 2019 | Peter S. Lubin and James V. DiTommaso

Any time you need photos for any kind of marketing material, but don’t want to spend a fortune on a professional photographer, you probably go online and search for photos that are either in the public domain (and can, therefore, be used for free) or photos with licenses that can be bought for a price that fits your budget. But how can you tell if the entity you’re paying for the rights to the photo really has the license?

Getty is the go-to source of high quality, affordable photos for many people. You pay them a small fee for the license of the photo you want and you’re free to use it within the restrictions of the license. Except, according to a recent proposed consumer class action lawsuit against Getty, you were always free to use some of those photos without having to pay Getty anything. Continue reading ›

Congress Considers Two New Bills Limiting Arbitration and Class Action Waivers in Consumer Contracts — Chicago Class Action Defense Attorneys Near Oak Brook and Naperville

May 8, 2019 | Peter S. Lubin and James V. DiTommaso

Congress is currently considering two new bills that take aim at the practice of requiring consumers to agree to resolve all disputes through binding arbitration and including class action waivers in consumer contracts. If passed and signed into law, the laws could dramatically change the way businesses contract and resolve disputes with consumers.

The first bill being considered is the Forced Arbitration Injustice Repeal Act (“FAIR Act”). Introduced by Senator Richard Blumenthal of Connecticut in the Senate (S. 620) and Representative Hank Johnson of Georgia in the House (H.R. 1423), the FAIR Act seeks to amend the Federal Arbitration Act (“FAA”), 9 U.S.C. §1, et seq., and would prohibit the inclusion of mandatory arbitration clauses in contracts with employees and consumers. Continue reading ›

Mercado v. Verde Energy Court Denies Motion to Dismiss Breach of Contract Claim Alleging that Utilitily Over Charged its Customers — Chicago Business Dispute and Class Action Lawyers

April 7, 2019 | Peter S. Lubin and James V. DiTommaso

Where a class of consumers sued an energy company for breach of contract, fraud, and unjust enrichment, the district court dismissed some, but not all, of the claims. The district court found that the consumers had sufficiently alleged that the energy company violated its agreement to charge rates for electricity based on market conditions and that the consumers had pled a claim for unjust enrichment in the alternative. However, the court found that the consumers failed to allege adequate details of a fraudulent scheme.

Verde Energy USA, Inc. was sued by a class of consumers in federal court for the Northern District of Illinois. The consumers alleged that Verde violated the Illinois Consumer Fraud and Deceptive Business Practice Act, breached its contract, or alternatively was guilty of unjust enrichment with respect to the class. The consumers’ complaint alleged that Verde had taken advantage of the deregulation of the Illinois energy market, convincing consumers to switch from their prior energy company to Verde by offering a teaser rate that was lower than the utilities’ actual rates for electricity. The consumers alleged that, after the teaser rate expired, Verde switched consumers to a variable rate that was not based on market conditions as required by the contract the consumers had with Verde. Continue reading ›

Rosenbach v. Six Flags Entertainment Corp. — Statutory Damages Provided for in Biometric Legistatation Create Right to Pursue Suit — Chicago Privacy Rights and Class-Action Lawyers

March 13, 2019 | Peter S. Lubin and James V. DiTommaso

Where a person whose biometric information was collected by a private entity who failed to comply with the requirements of the Illinois Biometric Information Privacy Act was an aggrieved person entitled to sue within the meaning of the act even if they had sustained no further injury beyond the violation of the act itself.

Six Flags Entertainment Corporation and its subsidiary Great America LLC own and operate the Six Flags Great America amusement park in Gurnee, Illinois. As part of this operation, Six Flags sells repeat-entry passes to the park. Since 2014, Six Flags has used a fingerprinting process when issuing those passes. The Six Flags system scans pass holders’ fingerprints, collects, records and stores “biometric” identifiers and information gleaned from the fingerprints, and then stores that data in order to quickly verify customer identities upon visits by pass holders to the park.

In May or June 2014, while the fingerprinting system was in operation, Stacy Rosenbach’s 14-year-old son, Alexander, visited the amusement park on a school field trip. In anticipation of the trip, Rosenbach purchased Alexander a season pass online. Rosenbach paid for the pass and provided personal information about Alexander, but Alexander was required to complete the sign-up process at the amusement park. Alexander was asked to scan his thumb into Six Flags’ biometric data capture system. He was then issued a season pass card. Rosenbach allegedly learned that Alexander’s fingerprints had been taken for the first time when Alexander returned home from the field trip.

Rosenbach eventually filed suit, acting in her capacity as mother and next friend of Alexander, against Six Flags. Continue reading ›

McIntosh v. Walgreens Boots Alliance — Illinois Appellate Court Finds Voluntary Payment Doctrine Does Not Defeat Consumer Fraud Claims

January 24, 2019 | Peter S. Lubin and James V. DiTommaso

The Illinois Appellate Court reversed a decision by the Illinois Circuit Court in a class action concerning the Consumer Fraud Act, where a retailer was alleged to have improperly collected taxes on exempt bottled water products. The court found that the voluntary payment doctrine did not apply to a payment that was allegedly obtained through deceptive business practices or acts. The court also found that an intent to deceive could be shown by evidence that the payment of the tax by the consumer was a predictable consequence of the retailer asking the consumer to pay the tax.

In 2008, the City of Chicago began imposing a five-cent tax on the sale of bottled water within city limits. Retailers are required to include the tax in the price of bottled water. The city excludes certain bottled beverages from the tax including certain brands of sparkling and mineral water, and other flavored and carbonated water products.

Destin McIntosh sued Walgreens Boots Alliance in Illinois state court. McIntosh filed a class action alleging that Walgreens violated the Consumer Fraud and Deceptive Business Practices Act by charging the bottled water tax on sparkling water sales that were supposed to be exempt. Walgreens attempted to dismiss the case, arguing that McIntosh’s claim was barred because the tax was disclosed to McIntosh at the time of purchase and that the tax was remitted to the city. The Illinois circuit court granted the motion, and McIntosh appealed. Continue reading ›

7th Circuit Opinion in Beaton v. SpeedyPC Affirming Class Certification Order

January 23, 2019 | Peter S. Lubin and James V. DiTommaso

Where district court did not err when it certified a class of consumers of software that promised to improve the function of their computers, and then ran worthless fixes. The appellate panel found that the class requirements were satisfied because all consumers saw the same advertisements, and the software allegedly functioned the same on every user’s machine.

Archie Beaton saw an advertisement on the internet for SpeedyPC Pro software. The advertisement suggested that SpeedyPC Pro could improve the performance of a user’s computer, and offered a free test to check the user’s machine for flaws. Beaton downloaded a free trial of the software and ran its test on his machine. The test reported hundreds of errors, and told Beaton that purchase of the full version of the software could fix the errors and improve performance. Beaton dutifully purchased the full version of the software, but after running its fix feature several times, nothing changed on his machine.

Beaton later sued SpeedyPC in federal court in the Northern District of Illinois. Beaton filed a class action, alleging that SpeedyPC fraudulently told all users of its software that their computers were in need of fixes, and then, after the users bought the full version of SpeedyPC Pro, performed functionally worthless fixes. Beaton defined the class in his case as that of “all individuals and entities in the United States who purchased SpeedyPC Pro.” He also defined a subclass representing only Illinois consumers. The district court certified Beaton’s proposed class and subclass for claims of the breach of implied warranties of fitness and merchantability, and claims under the Illinois Consumer Fraud and Deceptive Business Practices Act for the subclass. SpeedyPC filed an interlocutory appeal challenging the class certification. Continue reading ›

Campbell’s Hit with Lawsuit over Soups Labeled Preservative Free – Chicago Class Action and Consumer Rights Attorneys Near Schaumburg

September 1, 2018 | Peter S. Lubin and James V. DiTommaso

As consumers become increasingly aware of the potentially harmful side effects of certain chemicals used to extend the shelf life of prepared foods, the demand for packaged foods that are free of preservatives has gone up and continues to go up. Many consumers are prepared to pay a higher price for foods bearing labels such as “organic” and “all natural,” while others simply refuse to buy any foods they cannot be certain are free from artificial preservatives.

The more scrupulous buyers check the ingredients of everything they buy before taking it to the checkout counter, and over the years, people have come up with a few different rules regarding what to look for in the ingredients label. For example, some say you shouldn’t buy anything containing any ingredients you can’t pronounce, while others claim you simply shouldn’t buy anything with more than five ingredients.

Still others just rely on the product’s label. If the company claims their product is free of artificial preservatives, most customers will take that claim at face value and grab the product without bothering to check the ingredients label. Others rely on labels with terms like “all natural,” even though products don’t need to meet any legal qualifications in order to put that label on their products (as opposed to the term “organic,” which does require the product to be certified organic by the U.S. Department of Agriculture). Continue reading ›