Seventh Circuit

Johnson v. Enhanced Recovery Co., 961 F.3d 975 (7th Cir. 2020)

Seventh Circuit reiterates the Fair Debt Collection Practices Act “unsophisticated consumer” standard.

Plaintiff filed a putative class action alleging that defendant debt collector violated the Fair Debt Collection Practices Act (FDCPA) by sending misleading letters to consumers. On appeal, plaintiff argued that, by including the date of May 26, 2016 with the first listed settlement offer, and stating that the delinquent account “may be reported” to credit bureaus, followed by the assurance that “[p]ayment of the offered settlement amount will stop collection activity on this matter,” the letter gave the impression that credit reporting could be avoided by accepting the first listed settlement offer and paying by May 26, 2016. The Seventh Circuit first ruled that the district court had properly denied defendant’s motion to dismiss because it was plausible that a debtor would be misled by such language.

The panel then addressed the district court’s decision to grant defendant’s motion for summary judgment because plaintiff failed to present any evidence beyond her own opinion that the letter was misleading. Plaintiff argued that no further extrinsic evidence was necessary upon a showing of ambiguity in the language of the letter, as the ambiguity itself should be enough to show confusion. The Seventh Circuit noted that it had rejected the “least sophisticated consumer” standard used by other circuits in favor of its own “unsophisticated consumer” standard, under which a letter must be confusing to “a significant fraction of the population.” The panel further explained that, when the debt collection language is not deceptive or misleading on its face but could be construed so by the unsophisticated consumer, plaintiff cannot prevail without producing evidence showing that unsophisticated consumers are in fact confused or misled. The Seventh Circuit reasoned that, although plaintiff explained how the letter could be read, plaintiff failed to present evidence on how the letter is actually read by consumers and thus failed to meet her burden.  

Rios v. Bayer Corp., 2020 IL 125020 (Ill. 2020)

Illinois Supreme Court ruled that Illinois courts lack personal jurisdiction over nonresident defendants when there is no meaningful link between defendants’ conduct in Illinois and the nonresident plaintiff’s claims.

This appeal addressed a jurisdictional dispute between a nationwide group of 95 plaintiffs and defendant manufacturers of a contraceptive device. Plaintiffs argued that “Illinois courts had specific personal jurisdiction over” defendants because defendants marketed the product in Illinois while also “us[ing] Illinois to develop, label, or work on the regulatory approval for” the product. The Court disagreed, highlighting the need to “assess whether the nonresident defendants’ contacts with Illinois suffice to satisfy both federal and Illinois due process.” Relying on Bristol-Myers Squibb Co. v. Superior Court of California, 137 S. Ct. 1773 (2017), the Illinois Supreme Court found that plaintiffs’ theory of specific personal jurisdiction failed. The Court held that, despite defendants’ activity in Illinois, where they conducted clinical trials and developed marketing strategies, these activities did not have any meaningful relation to plaintiffs’ claims and thus failed to provide a basis for specific personal jurisdiction.

Lewis v. Lead Indus. Ass’n, 2020 IL 124107 (Ill. 2020)

Illinois Supreme Court rules that plaintiffs cannot maintain a claim that rests solely upon economic injury without having suffered an economic loss.

This case involved a class action under Illinois’ Family Expense Act and Public Aid Code. After having their children undergo blood lead screening in accordance with the Illinois Lead Poisoning Prevention Act, plaintiff parents asserted a variety of allegations against defendants to recover costs for the blood tests. While plaintiffs conceded that the testing had been paid for by Medicaid and third-party insurers, they argued that, under the collateral-source rule that these payments did not negate their economic injury. The circuit court disagreed and granted defendants’ motion for summary judgement, dismissing all claims. The court determined that plaintiffs had no liability nor obligation to pay for the blood testing under state or federal law and held that plaintiffs had suffered no injury.

The Illinois Supreme Court held that plaintiffs’ claim was invalid due to the absence of an economic injury. The Court determined that arguments based on the collateral source rule “put the cart before the horse, as the relevant threshold question was whether plaintiffs could establish an injury at all.” In assessing both the Family Expense Act and Public Aid Code, the Court determined that neither act created any obligation or liability for plaintiffs. Based upon this finding, the Court determined that plaintiffs had failed to establish an economic injury, a required element of their intentional misrepresentation claim.

Eighth Circuit Class Action Update Summer 2020

Vogt v. State Farm Life Ins. Co., __ F.3d __, 2020 WL 3477011 (8th Cir. June 26, 2020)

Eighth Circuit affirms $34 million jury verdict in favor of a class.

This case involved allegations that the defendant life insurer had impermissibly included non-enumerated factors when it calculated the Cost of Insurance (COI) fees assessed on plaintiffs’ life insurance policies. Defendant allegedly had “deducted from the monthly premium payments more than what [their policies] stated would be included in the COI fees” thus violating the terms of the policies. The district court certified the class and eventually a jury returned a $34 million verdict in the class’s favor.

On appeal, defendant argued that some class members received a credit during the period in which the alleged overcharges occurred and that the credit “created a set-off that left the class members without any damages.” Because of this, defendant argued that the class members did not suffer an injury, did not have standing, and their inclusion in the class caused class certification to be inappropriate.  The panel rejected this argument, reiterating the holding in Stuart v. State Farm Fire and Casualty Company, 910 F.3d 371 (8th Cir. 2018). Specifically, the Vogt panel concluded that this argument went to the merits of the plaintiff’s claims – not standing – because “a party to a breached contract has a judicially cognizable interest for standing purposes.” Because of this, and because the district court amended “the class definition following the jury trial to exclude those class members who suffered no damages,” the panel affirmed the district court’s grant of class certification.

Tenth Circuit Class Action Update Summer 2020

Amy G. v. United Healthcare, No. 17-cv-413, 2020 WL 3065414 (D. Utah June 9, 2020)

District of Utah denies motion for class certification because proposed class lacked commonality.

In a case involving health insurers’ denial of insurance coverage for wilderness therapy programs, plaintiffs sought to certify a class of “any member of a health benefit plan governed by ERISA in the time frame from May 17, 2013, to the present whose health benefit plan was administered by Defendants, who paid for a wilderness therapy program, and for whom Defendants refused to authorize or pay the wilderness therapy program claim based on an exclusion that the wilderness therapy was experimental, investigational, or unproven.” Their efforts failed, though, because the District of Utah held, among other things, that the proposed class lacked commonality. 

Before plaintiffs’ class certification motion, the parties had engaged in discovery showing that some individual’s claims for wilderness therapy had been paid in full or in part by defendants. According to the court, the existence of those individuals “undercut[] the premise that defendants [had] a uniform policy of exclusion based on wilderness therapy being experimental, investigational, or unproven.” The court also explained that there were “[d]ifferences in the proposed class members’ medical conditions, the type of wilderness therapy and programs for which coverage was sought, and the terms of the proposed class members’ benefits plans.” As such, the court held that there were no “common question of law or fact ... capable of classwide resolution” and denied the motion for certification.