Banks, lenders, and other financial institutions who submit information to credit reporting agencies should take note of a recent Third Circuit decision adopting a “reasonable reader” standard for evaluating whether a credit report was inaccurate or misleading under Fair Credit Reporting Act (“FCRA”).

Continue Reading Third Circuit Adopts “Reasonable Reader” Standard to Evaluate FCRA Claims.

Manufacturers of over-the-counter (OTC) medications often move to dismiss consumer class actions based on federal preemption.  The Federal Food, Drug, and Cosmetic Act (FDCA) contains an express preemption clause that forbids states from enforcing laws relating to OTC drugs that are “different from or in addition to, or that [are] otherwise not identical with, a requirement under” the FDCA.  21 U.S.C. § 379r(a).  (Section 379r also contains a savings clause that exempts product liability actions from its preemptive scope.  See id. § 379r(e).)  Similar preemption provisions exist for food and cosmetics.  Id. §§ 343-1(a), 379s(a).  Although most courts have interpreted the FDCA’s express preemption provisions broadly, a minority have limited their application.  As discussed below, the minority view involves distinguishable circumstances and is inconsistent with the FDCA’s statutory text.

Continue Reading A Closer Look: Express Federal Preemption for OTC Medications Subject to Monographs

            The Supreme Court recently declined to review the Sixth Circuit’s decision in Sevier County Schools Federal Credit Union v. Branch Banking & Trust Co., 990 F.3d 470 (6th Cir. 2021), which presents a potential challenge to enforcing arbitration clauses added to standard account agreements.  The cert denial serves as a reminder that companies introducing arbitration agreements should take care to follow all contractual change-of-term requirements and create a record of affirmative customer assent whenever possible.

Continue Reading A Closer Look: Arbitration Clauses Added to Account Agreements Face Risks After Supreme Court Declines Review of Sixth Circuit’s BB&T Decision

Class action plaintiffs often attempt to drag an out-of-state parent company into a forum based solely on the contacts of a subsidiary under the so-called alter ego theory of personal jurisdiction (sometimes called a jurisdictional veil-piercing theory).  This theory allows a court to impute a subsidiary’s contacts with a forum to its parent when the subsidiary is found to be an “alter ego” of the parent company. 

Companies must understand how courts apply the alter ego jurisdictional theory and best practices to minimize the unique risks this theory presents.

Continue Reading A Closer Look: Avoiding Personal Jurisdiction Under An Alter Ego Theory

We previously reported on a surge of mislabeling suits filed in District of Columbia Superior Court, following lower court decisions that purported to grant “tester” plaintiffs—individuals and organizations that purchase products simply to test whether the representations about a product are true—a right to sue on behalf of the general public under the District of Columbia Consumer Protection Procedures Act (“CPPA”).  A year later, the District of Columbia Court of Appeals has endorsed an even more expansive interpretation of the CPPA, permitting a public interest organization to bring such actions even if the organization fails to satisfy Article III’s standing requirements.  We expect even more lawsuits to be filed in the wake of this decision.

Continue Reading A Closer Look: D.C. Court of Appeals Endorses Broad Organizational Standing to Bring Consumer Protection Lawsuits

A new law signed by President Biden brings significant changes to employers’ ability to require arbitration of certain disputes with employees and could lead to an increase in sexual assault and sexual harassment claims against employers in court.  On March 3, 2022, President Biden signed into law the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” (the “Act”).  The Act amends the Federal Arbitration Act (“FAA”) to provide that predispute arbitration agreements and predispute joint-action waivers relating to sexual assault and sexual harassment disputes are unenforceable at the election of the person or class representative alleging the conduct.  The Act took effect immediately upon signing.

Continue Reading A Closer Look: New Law Ends Mandatory Arbitration for Sexual Assault and Sexual Harassment Claims

Arbitration agreements have become a fixture of American contracts, and companies have turned to them as a strategy for reducing class action exposure.  In recent years, plaintiffs have responded by initiating “mass arbitrations” – individual arbitrations filed on behalf of hundreds or thousands of customers or employees, which may immediately threaten companies with millions of dollars in arbitration-initiating fees alone.  Many companies, however, have been slow to react to the risks posed by mass arbitration.  This post discusses some of those risks, the difficulties companies have encountered in trying to address this issue, and potential strategies for mitigating the threat posed by mass arbitration.

Continue Reading A Closer Look: Avoiding a “Mass”-ive Arbitration Problem

Class-action litigation involving overdraft and nonsufficient funds charges is nothing new to many financial institutions.  But in recent years, plaintiffs’ lawyers have shifted tactics and changed the types of practices they are targeting.  Financial regulators have also signaled their intention to place increased focus on these charges.  Financial institutions should therefore re-examine their account agreements and overdraft disclosure materials to ensure they minimize risk and exposure.

Continue Reading A Closer Look: Overdraft Fees Continue to Invite New Legal Challenges and Regulatory Scrutiny

Background

Many food companies now make quantitative protein content claims on the front of pack or elsewhere on their product labels outside the Nutrition Facts Label (NFL), such as the example from a recent case below:  

FDA regulations direct manufacturers to use the “nitrogen method”—which generally calculates protein content by multiplying the nitrogen content of the food by 6.25—when calculating the amount of protein reported inside the NFL.  Companies have generally used the same method for protein claims made elsewhere on the label, i.e., outside the NFL.

Continue Reading A Closer Look: Court Upholds Industry-Standard Method for Calculating Front-of-Pack Protein Content Claims

Delivering a significant win for the financial services industry, a California federal judge upheld “valid when made” rules promulgated by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) in California v. OCC, No. 4:20-cv-05200 (N.D. Cal. Feb. 8, 2022) and California v. FDIC, No. 4:20-cv-05860 (N.D. Cal. Feb. 8, 2022).  Those rules sought to undo the Second Circuit’s 2015 decision in Madden v. Midland Funding—a decision that class-action plaintiffs’ lawyers and state regulators have invoked to bring lawsuits challenging so-called “rent-a-bank” schemes between banks and third parties.  The rules were finalized in June and July 2020, and established a bright-line rule that the interest rate charged on a bank-made loan may still be charged after the loan is sold to a third party.

Continue Reading A Closer Look: Federal Court Upholds OCC’s & FDIC’s Valid-When-Made Rules