Source: https://cbaclelegalconnection.com/tag/consumer-law/
Timestamp: 2019-04-22 18:48:33+00:00

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The Tenth Circuit published its opinion in Federal Trade Commission v. Chapman on Tuesday, May 7, 2013.
This consumer protection action was brought by the Federal Trade Commission and four states against several individual and corporate defendants who marketed and sold to consumers grant-related goods and services with false representations that the consumers were guaranteed or likely to receive grants. After the claims against the other defendants were settled or adjudicated, the district court held a bench trial on the remaining claim against Meggie Chapman. Following the trial, the court found that Ms. Chapman violated the Telemarketing Sales Rule by providing substantial assistance to the telemarketing defendants while knowing or consciously avoiding knowing of their deceptive telemarketing practices. The court ordered a permanent injunction and $1,682,950 in monetary damages against Ms. Chapman. The court also denied Ms. Chapman’s post-judgment motion to alter or amend the judgment or, alternatively, for remittitur. Ms. Chapman appealed.
It is undisputed the Kansas defendants violated § 310.3(a)(2) by misrepresenting material aspects of the grant-related goods or services they sold. Thus, the only disputed issues are (a) whether Ms. Chapman provided substantial assistance to the Kansas defendants and (b) whether Ms. Chapman knew or consciously avoided knowing of their misrepresentations.
Regardless of the standard of review, the Tenth Circuit concluded Ms. Chapman played an integral part in the Kansas defendants’ telemarketing scheme. The Court found no error in the district court’s determination that Ms. Chapman provided substantial assistance to the Kansas defendants. Additionally, the Tenth Circuit concluded that district court’s finding that Ms. Chapman knew or consciously avoided knowing of the Kansas defendants’ misrepresentations was supported by the record and was not clearly erroneous.
Ms. Chapman argued in the alternative that the district court erred in denying her post-judgment motion to alter or amend the judgment or for remittitur. She argued that if she knew or consciously avoided knowing of the Kansas defendants’ misrepresentations, this did not occur until some time during the course of their business relationship, and thus the damages award should not have included the entire amount she billed to the Kansas defendants from the start of their relationship.
In denying the post-judgment motion, the district court first noted that a motion to alter or amend judgment under Rule 59(e) may only be granted under certain limited circumstances, such as when there is a need to correct clear error or prevent manifest injustice. Similarly, remittitur is only appropriate if the award is so excessive that it shocks the judicial conscience and raises an irresistible inference that passion, prejudice, corruption, or other improper cause invaded the trial. The Tenth Circuit was not persuaded the district court abused its discretion by denying Ms. Chapman’s postjudgment motion to reduce the amount of damages. Accordingly, under this deferential standard of review, the Court AFFIRMED the district court’s denial of post-judgment relief.
The Tenth Circuit published its opinion in Berneike v. Citimortgage on Monday, February 25, 2013.
Over a six-month period in 2010, Adriana Berneike (“Berneike”) faxed more than one hundred letters to Citimortage (“Citi”), claiming that, despite paying in full every bill she received, she continued to be overcharged by Citi and was facing foreclosure and bankruptcy. Citi acknowledged Berneike’s inquiries and responded that it believed her account was correctly serviced.
Berneike filed suit in Utah state court alleging in part that Citi’s conduct violated the Real Estate Settlement Procedures Act (“RESPA”) and the Utah Consumer Sales Practices Act (“UCSPA”). Citi removed the case to federal court, and the court then granted Citi’s motion to dismiss Berneike’s claims pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Berneike appealed the district court’s dismissal.
Berneike raised two arguments: first, she argued the district court erroneously considered documents outside of the pleadings to find that Citi had provided notice of its qualified written request (“QWR”) address for these types of complaints; and, second, that Citi waived its right to receive QWRs at the designated address by responding to her first round of faxed letters. It was undisputed that Berneike failed to send her correspondence to the correct QWR address.
Documents Outside the Pleadings. Berneike claimed the district court erred when it considered Citi’s Welcome Letter, which included notice to Berneike of a designated address for receipt of QWRs. Generally, a court considers only the contents of the complaint when ruling on a 12(b)(6) motion. Gee v. Pacheco, 627 F.3d 1178, 1186 (10th Cir. 2010). Although the Tenth Circuit concluded that the district improperly considered the Welcome Letter, it was not reversible error for the district court to do so because the same notice containing the correct QWR address was also set forth in the monthly billing statements, which were properly before the court.
Waiver. Berneike next argued that Citi waived its right to receive QWRs at the designated address by corresponding with her. The Tenth Circuit concluded this was the incorrect inquiry. Rather, the correct inquiry was whether the correspondence satisfied the requirements of RESPA such that Citi’s duties thereunder were triggered. Because Congress has not directly addressed the precise question at issue, the Tenth Circuit proceeded to ask whether the agency’s interpretation was a permissible construction of the statute. HUD, the relevant agency, promulgated 24 C.F.R. § 3500.21, which granted servicers like Citi the authority to designate an exclusive address for receipt of QWRs.
The Tenth Circuit held that this grant of authority to servicers to designate an exclusive address was a permissible construction of the statute, since RESPA recognizes that servicers will not have a statutory duty to respond to all inquiries or complaints from borrowers, and that failure to send the QWR to the designated address does not trigger a servicer’s duties. Since receipt at the designated address is necessary to trigger RESPA duties, and it was undisputed that Citi did not receive Berneike’s letters at the designated address, the district court did not err in dismissing Berneike’s RESPA claim.
Berneike next contended that the district court erred by dismissing her state consumer protection claim. Specifically, she disagreed with the district court’s conclusion that UCSPA did not apply to mortgage loan transactions and that she was barred from asserting a UCSPA claim because the conduct she complained of is governed by other, more specific law. Since the Utah Supreme Court had not ruled on whether the UCSPA applies to loan servicing, the Tenth Circuit interpreted and applied the law of Utah as the Court believed the Utah Supreme Court would. While the Utah Supreme Court had not explicitly decided whether a borrower can assert a USCPA claim under these circumstances, it has ruled that a USCPA claim is barred when the complained-of conduct is governed by other, more specific law. Because the alleged wrongful conduct is governed by more specific statutes than the UCSPA, Berneike was barred from asserting a USCPA claim.
On Wednesday, January 9, 2013, Sen. Jessie Ulibarri introduced SB 13-018 – Concerning the Use of Consumer Credit Information by Employers. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.
Assigned to the Business, Labor, and Technology Committee.
The Colorado Court of Appeals issued its opinion in Payan v. Nash Finch Co. on August 16, 2012.
Colorado Consumer Protection Act—Civil Theft—Fee Award—Lodestar Amount.
Plaintiffs appealed the trial court’s order awarding attorney fees in their favor against defendant Nash Finch Company, doing business as Avanza Supermarket (Nash Finch). The order was affirmed in part and reversed in part, and the case was remanded.
In June 2008, Nash Finch implemented a misleading pricing scheme in two of its Denver metro area supermarkets. Customers were led to believe they would receive an additional 10% savings compared to regular prices, when in fact, the cashier added 10% to the price at checkout. Plaintiffs were customers at these supermarkets who did not immediately realize they had paid more than the advertised price. Plaintiffs ultimately litigated their Colorado Consumer Protection Act (CCPA) and civil theft claims at trial. Three days before trial, Nash Finch filed an admission of liability and confession of judgment for the full amount of the statutory damages sought by plaintiffs, a total of $4,200. The trial court entered an order awarding plaintiffs attorney fees.
Plaintiffs asserted that the trial court’s fee award was in error in numerous respects. First, plaintiffs contended the trial court did not take the proper arithmetical steps in calculating the lodestar amount before it made subsequent adjustments to that amount. The trial court should have applied the percentage reductions to the total hours billed before applying the hourly rate multiplier. Therefore, the court’s calculation of the lodestar amount was in error, and that amount should be recalculated on remand.
Plaintiffs further contended that the trial court abused its discretion and committed legal error in making certain downward adjustments to counsel’s billed hours. A trial court retains discretion to reduce the hours billed based on block billing if the court is unable to determine whether the amount of time spent on various tasks was reasonable. Therefore, the court did not abuse its discretion in making such adjustments to counsel’s billed hours.
Plaintiffs next contended that the trial court abused its discretion by making a reduction for time spent on dismissed claims and the class action complaint. Plaintiffs failed to present any proof as to the number of hours actually spent on the dismissed claims. Therefore, the trial court’s decision was not disturbed on appeal.
Plaintiffs also argued that the trial court erred in making a reduction for lack of complexity. The trial court was in the best position to observe and determine the relative complexity of the issues and arguments presented to it. Therefore, the trial court’s reduction of 5% for lack of complexity was not an abuse of discretion.
Plaintiffs also contended that the trial court erred in determining reasonable hourly rates for plaintiffs’ counsel based on its view of appropriate staffing of the case. The trial court did not abuse its discretion in making such a determination.
Furthermore, the trial court correctly determined that (1) the rule of proportionality could not be applied; (2) the court’s 10% reduction in the lodestar amount for lack of public importance was not an abuse of discretion, because the record supports the conclusion that plaintiffs’ suit was not a factor in inducing Nash Finch to cease its improper conduct; and (3) the court did not abuse its discretion in denying plaintiffs’ motion for discovery of Nash Finch’s billing records, given that both experts were able to produce their reports without the aid of such discovery.
On January 11, 2012, Sen. Carroll and Rep. Fischer introduced SB 12-003 – Concerning the use of consumer credit information by employers. This summary is published here courtesy of the Colorado Bar Association’s e-Legislative Report.

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