Archive for the ‘Consumer Protection’ Category

Tim McCollough sued Johnson, Rodenburg & Lauinger, a debt-collection law firm, for pursuing his credit card bet after the statute of limitations had expired. McCollough claimed that he and his wife fell behind in paying their credit card bills after he suffered a brain injury while working as a school custodian and his wife underwent surgery. He stopped making payments on his account with Chase Manhattan Bank in 1999 when there was an unpaid balance of about $3,000. In 2005, another debt-collection agency sued McCollough, but the lawsuit was dismissed because the five-year statute of limitations had already expired.

Johnson, Rodenburg & Lauinger then became involved and were incorrectly informed that McCollough had paid $75 on his account in 2004, effectively resetting the clock to run through 2009. The 2004 activity was not a payment; however, it was the return of court costs to the other debt-collection agency for an earlier attempt to pursue McCullough’s debt. No one at Johnson, Rodenburg & Lauinger requested documentation of the activity. Instead, the firm simply sued McCullough in 2007 for about $10,000. In his pro se answer to the complaint, McCullough again wrote that the statute of limitations had expired:


McCullough eventually retained a lawyer, and Johnson, Rodenburg & Lauinger dismissed the suit with prejudice. He then filed suit against the firm, claiming it had violated the federal and state fair debt laws, as well as state torts of malicious prosecution and abuse of process. A Montana jury ordered Johnson, Rodenburg & Lauinger to pay Tim McCollough $250,000 in damages for emotional distress. The trial court refused to reduce the award or give Johnson, Rodenburg & Lauinger a new trial.

On appeal, the Ninth Circuit Court of Appeals found that Johnson, Rodenburg & Lauinger filed an average of five collection lawsuits a day in Montana between January 2007 and July 2008, which amounted to about 2,700 total. On one day, the North Dakota firm filed 40 lawsuits. About 90% of the firm’s suits end in a default judgment. The court affirmed the trial court’s ruling, noting that the
firm’s error was its own to prevent.

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After A.G., a minor, had two benign moles removed in 2004, his doctor gave him a prescription for ibuprofen. His parents, the Gaetas, bought an over-the-counter generic ibuprofen manufactured by Perrigo Pharmaceuticals (“Perrigo”). Later, A.G. developed a high fever and had to be rushed to the hospital and treated for liver failure. A.G. needed a liver transplant less than two weeks after the mole surgery and later had dead tissue from his fingers and toes amputated. Doctors determined that the ibuprofen had clashed with the anesthetic Halothane, which had been administered during the mole-removal surgery. Halothane is hepatotoxic or known to cause liver failure in some circumstances.

The Gaetas sued Perrigo and other manufacturers of generic ibuprofen, alleging defective design, defective marketing, breach of express and implied warranties, negligence and gross negligence, and deceit by concealment. The Gaetas claimed that Perrigo failed to warn doctors and consumers that ibuprofen could cause liver injury if mixed with other drugs. In response, Perrigo argued that the Gaetas’ state-law failure-to-warn claims were preempted by the labeling and marketing regulations of the Food and Drug Administration (“FDA”) governing generic drugs. The trial court agreed, concluding that since federal law required generic drugmakers to conform to the approved labeling of brand-name drugs, Perrigo could not have changed its labeling without violating federal law.

The Gaetas appealed the decision to the Ninth Circuit Court of Appeals. While the appeal was pending, the United States Supreme Court issued its opinion in Wyeth v. Levine, holding that approval of medication by the FDA does not shield a manufacturer of brand-name medications from liability under state law. After Levine, the Gaetas won a limited remand from the Ninth Circuit so that the trial court could reconsider its decision with the Supreme Court ruling in mind. The trial court denied the motion for reconsideration, however, and ruled that the high court’s decision only applied to brand-name drug manufacturers.

The Gaetas again appealed the trial court’s decision. With its holding, the Ninth Circuit joins the Fifth and Eighth Circuits in applying Levine to generic drugs as well. The court noted that (1) manufacturers are primarily responsible for warning consumers about possible drug dangers because they have better access to information about their products than the FDA, and (2) there is nothing in Levine that limits this responsibility to brand-name drug manufacturers. The court stated that both sets of manufacturers must take specific steps when they learn of new risks associated with their products. Finally, the court concluded that compliance with both state and federal law was not “impossible.” Accordingly, the court remanded the case to the trial court for further proceedings.

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Maria Pintos parked her SUV, with expired registration, on the street.  Police had the vehicle towed, and it was eventually sold when Pintos failed to claim the vehicle or pay impound costs.  The towing company filed a deficiency claim against Pintos and then transferred the claim to Pacific Creditors Association (“PCA”), a collection agency.  PCA obtained a copy of Pintos’s credit report through Experian.

Pintos filed suit, alleging that PCA violated the Fair Credit Reporting Act.  PCA argued that it had pulled the credit report in order to collect on an account.  The trial court agreed and granted summary judgment to PCA.  Pintos appealed to the Ninth Circuit Court of Appeals, who reversed the trial court’s decision.  The court noted that mere ownership of a vehicle did not mean that Pintos had initiated a credit transaction.  Accordingly, no federal law granted PCA authority to obtain Pintos’s credit report.

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Class actions were filed against Mexican Specialty Foods and Rave Motion Pictures Birmingham, LLC, regarding violations of the Fair and Accurate Credit Transactions Act, which amended the Fair Credit Reporting Act (“FCRA”) to prohibit printing of more than the last five numbers of a consumer’s credit or debit card on a receipt.  Defendants filed for summary judgment, asserting that the statutory damages allowed under the FCRA ($100 to $1000 for willful violations) was unconstitutional.  The trial court struck down the provision as unconstitutional, but the Eleventh Circuit Court of Appeals vacated that finding.  The court noted that the FCRA clearly defined prohibited conduct and the range of fines for failing to comply with those standards.  For the full story, click here.

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