Justia U.S. 4th Circuit Court of Appeals Opinion Summaries

Tiffany Johnson and Tracy Crider, Maryland residents, obtained credit card accounts from Continental Finance Company, LLC and Continental Purchasing, LLC. They filed separate class-action lawsuits in Maryland state court, alleging that Continental violated Maryland usury laws by charging excessive interest rates through a "rent-a-bank" scheme. They sought statutory damages and declaratory judgments to void their loans. Continental removed the cases to the District of Maryland and moved to compel arbitration based on a cardholder agreement containing an arbitration provision.The District of Maryland consolidated the cases and denied Continental's motions to compel arbitration. The court held that it was responsible for determining whether the arbitration agreement was illusory, not the arbitrator. It also found that the choice-of-law provisions in the agreements could not be applied before establishing the existence of a valid contract. Finally, the court concluded that the arbitration agreement was illusory under Maryland law due to a "change-in-terms" clause allowing Continental to unilaterally alter any term at its sole discretion.The United States Court of Appeals for the Fourth Circuit reviewed the case and affirmed the district court's decision. The Fourth Circuit agreed that the court, not the arbitrator, should determine the contract's formation. It also concurred that the choice-of-law provisions could not be enforced before establishing a valid contract. Finally, the court held that the arbitration agreement was illusory under Maryland law because the change-in-terms clause allowed Continental to escape its contractual obligations, rendering the agreement non-binding. The judgment of the district court was affirmed. View "Johnson v. Continental Finance Co., LLC" on Justia Law

Plaintiffs, business entities owning recovery rights assigned by health insurers and other third-party Medicare payors, alleged that Defendants, including a drug manufacturer, a specialty pharmacy, and healthcare nonprofits, colluded to inflate the price and quantity of the drug Xenazine. This alleged scheme purportedly violated the Racketeer Influenced and Corrupt Organizations Act (RICO) and various state laws, causing the Assignors to reimburse inflated Xenazine prescriptions at supra-competitive prices.The United States District Court for the Eastern District of Virginia dismissed the class-action complaint with prejudice, concluding that Plaintiffs failed to adequately allege that Defendants’ conduct proximately caused their injuries. The court emphasized that RICO’s proximate-causation requirement focuses on the directness of the harm, not its foreseeability. The court found the alleged causal chain too attenuated, involving numerous independent actors like physicians and pharmacists, and dismissed the state-law claims for similar reasons.The United States Court of Appeals for the Fourth Circuit affirmed the district court’s dismissal of the federal RICO claims, agreeing that Plaintiffs failed to establish proximate causation. The court noted that the alleged scheme had more direct victims, such as distributors and wholesalers, and that the volume of Xenazine prescriptions depended on the independent decisions of doctors. The court also affirmed the dismissal of the state-law consumer-protection and unjust-enrichment claims, finding them insufficiently pleaded.The Fourth Circuit reversed the district court’s conclusion that Plaintiffs had standing to bring claims on behalf of unidentified assignors, remanding those claims for dismissal without prejudice. The court upheld the district court’s denial of post-judgment relief and leave to amend the complaint, concluding that further amendment would be futile. View "MSP Recovery Claims, Series LLC v. Lundbeck LLC" on Justia Law

The City of Martinsville, Virginia, sued Express Scripts and OptumRx in state court, alleging public nuisance and harm related to the opioid epidemic. The defendants removed the case to federal court under the Class Action Fairness Act, but the district court remanded it back to state court. In 2024, the defendants again removed the case to federal court under the federal-officer-removal statute. The district court granted Martinsville's motion to remand the case to state court.The defendants appealed the remand order before it was mailed to the state court and requested a stay of the remand order pending appeal, citing the Supreme Court's decision in Coinbase, Inc. v. Bielski. The district court denied the stay, interpreting Coinbase narrowly to apply only to orders compelling arbitration. The defendants then sought a stay from the United States Court of Appeals for the Fourth Circuit.The Fourth Circuit granted the stay, holding that the district court was automatically stayed from mailing the remand order once the defendants filed their notice of appeal. The court applied the "Griggs principle," which divests the district court of control over aspects of the case involved in the appeal. The court found that the district court's interpretation of Coinbase was too narrow and that the automatic stay applied to the remand order. The court concluded that the district court lacked the authority to mail the remand order while the appeal was pending. View "City of Martinsville v. Express Scripts, Inc." on Justia Law

Phillip and Sara Alig, along with Daniel and Roxanne Shea, filed a class action lawsuit against Quicken Loans, Inc. (now Rocket Mortgage, LLC) and Title Source, Inc. (now Amrock, Inc.). They alleged that during the refinancing of their home mortgage loans, they paid for appraisals that were not independent because the defendants had provided appraisers with the homeowners' estimates of their homes' value. They claimed this made the appraisals worthless and asserted statutory, breach of contract, and conspiracy claims.The United States District Court for the Northern District of West Virginia certified a class of West Virginia citizens who refinanced mortgage loans with Quicken and received appraisals that included an estimate of the property's value. The court granted summary judgment to the plaintiffs, awarding over $10.6 million in damages. The court found that the plaintiffs had established a conspiracy between the defendants.The United States Court of Appeals for the Fourth Circuit affirmed the class certification and summary judgment on the statutory and conspiracy claims but vacated and remanded the breach of contract claim. The Supreme Court vacated the Fourth Circuit's judgment and remanded the case for reconsideration in light of TransUnion LLC v. Ramirez, which emphasized that every class member must have Article III standing to recover damages.On remand, the district court reinstated its original judgment, stating that TransUnion did not affect the class's standing. However, the Fourth Circuit concluded that the plaintiffs failed to establish that class members suffered concrete harm from the defendants' actions. The court reversed the district court's judgment certifying the class and awarding damages, affirming the judgment on the named plaintiffs' statutory and conspiracy claims, and vacating the judgment on the breach of contract claim, remanding it for further proceedings. View "Alig v. Rocket Mortgage, LLC" on Justia Law

The case involves Andris Pukke, Peter Baker, and John Usher, who were found liable for violations of the Federal Trade Commission Act, the Telemarketing Sales Rule, and a permanent injunction from a prior fraud case. They were involved in a real estate scam, selling lots in a development called "Sanctuary Belize" through deceptive practices. The district court issued an equitable monetary judgment of $120.2 million for consumer redress, imposed an asset freeze, and appointed a receiver.The United States District Court for the District of Maryland found the defendants liable after a bench trial and issued permanent injunctions against them. The court also held them in contempt for violating a prior judgment in a related case, ordering them to pay the same $120.2 million in consumer redress. The defendants appealed, and the United States Court of Appeals for the Fourth Circuit affirmed the district court's decision, except for vacating the monetary judgment to the extent it relied on FTC Act Section 13(b).The United States Court of Appeals for the Fourth Circuit reviewed the case and affirmed the district court's decision to maintain the receivership and asset freeze. The court held that the receivership and asset freeze were necessary to effectuate the injunctive relief and ensure that the defendants did not continue to profit from their deceptive practices. The court also found that the contempt judgment supported maintaining the receivership and asset freeze until the judgment was satisfied. The court emphasized the defendants' history of deceptive conduct and the need for a professional receiver to manage and distribute the assets to defrauded consumers. The judgment was affirmed. View "Federal Trade Commission v. Pukke" on Justia Law

Marco Fernandez applied to rent an apartment, and RentGrow, Inc. provided a tenant screening report to the property owner. The report inaccurately indicated that Fernandez had a "possible match" with a name on the OFAC list, which includes individuals involved in serious crimes. However, the property manager did not understand or consider this information when deciding on Fernandez's application. Fernandez sued RentGrow, alleging that the company violated the Fair Credit Reporting Act (FCRA) by not ensuring the accuracy of the OFAC information.The United States District Court for the District of Maryland certified a class of individuals who had similar misleading OFAC information in their reports. The court rejected RentGrow's argument that Fernandez and the class lacked standing because they did not demonstrate a concrete injury. The district court held that the dissemination of the misleading report itself was sufficient to establish a concrete injury.The United States Court of Appeals for the Fourth Circuit reviewed the case and disagreed with the district court's conclusion. The appellate court held that reputational harm can be a concrete injury, but only if the misleading information was read and understood by a third party. In this case, there was no evidence that anyone at the property management company read or understood the OFAC information in Fernandez's report. Therefore, Fernandez failed to demonstrate a concrete injury sufficient for Article III standing. The Fourth Circuit vacated the district court's class certification order and remanded the case for further proceedings. View "Fernandez v. RentGrow, Inc." on Justia Law

William Lyons opened a Home Equity Line of Credit (HELOC) account with National City Bank in 2005, which was later acquired by PNC Bank. PNC withdrew funds from Lyons' deposit accounts to offset outstanding HELOC payments without prior notification. Lyons contested these withdrawals, claiming they were unauthorized. PNC responded, asserting their right to make the withdrawals. Lyons then sued for economic and statutory damages, as well as emotional distress.The case was initially heard in the United States District Court for the District of Maryland. PNC moved to compel arbitration on the Truth in Lending Act (TILA) claim, which the district court partially granted. Both parties appealed, and the United States Court of Appeals for the Fourth Circuit held that the Dodd-Frank Act prohibits arbitration of claims related to residential mortgage loans. The case was remanded to the district court, which ruled in favor of PNC on both the TILA and Real Estate Settlement Practices Act (RESPA) claims. The district court held that TILA’s offset provision does not apply to HELOCs and that the CFPB had the authority to exempt HELOCs from RESPA’s requirements.The United States Court of Appeals for the Fourth Circuit reviewed the case. The court held that TILA’s offset provision does apply to HELOCs, reversing the district court’s decision on the TILA claim. The court found that the term "credit card plan" includes HELOCs when accessed via a credit card. However, the court affirmed the district court’s decision on the RESPA claim, agreeing that the CFPB has the authority to exempt HELOCs from RESPA’s definition of “federally related mortgage loans.” The case was reversed and remanded in part and affirmed in part. View "Lyons v. PNC Bank, N.A." on Justia Law

The United States Court of Appeals for the Fourth Circuit examined a dispute between the plaintiffs, John and Dawn Harrell, and the defendant, Douglas DeLuca. The Harrells sued DeLuca, a general contractor from whom they purchased a home, for fraudulent inducement, constructive fraud, breach of contract, and violations of the Virginia Consumer Protection Act. The district court granted summary judgment in favor of DeLuca regarding the Harrells’ fraud claims based on one category of misrepresentations. The case otherwise proceeded to a bench trial where the court found DeLuca liable for breaching the contract, but not for the remaining claims. The Harrells appealed, arguing that summary judgment was inappropriate and that the district court should have made explicit findings related to their constructive fraud and breach-of-contract claims.The Court of Appeals upheld parts of the lower court's decision but also vacated parts of it. It agreed with the Harrells that the summary judgment was inappropriate, vacated it, and remanded the case for additional proceedings. It also agreed that the district court should have made explicit findings related to one of each of their constructive fraud and breach-of-contract claims. However, it affirmed the resolutions of the remaining claims which were not challenged by the Harrells on appeal. The court remanded the case back to the district court for further proceedings consistent with its opinion. View "Harrell v. Deluca" on Justia Law

The United States Court of Appeals for the Fourth Circuit affirmed the district court's decision to remand two lawsuits back to Maryland state court. The lawsuits were brought by the City of Annapolis and Anne Arundel County against more than 20 energy companies, including BP P.L.C. The local governments accused the companies of misrepresenting and concealing information about the environmental impact of their fossil fuel products in violation of Maryland's Consumer Protection Act and various state tort laws. The companies tried to remove the cases to federal court, arguing that because they had acted under federal authority in their operations, the court had federal question jurisdiction. However, the appeals court found that the company's activities related to fossil fuel production were not relevant to the claims brought by the local governments, which were based on alleged concealment or misrepresentation of information about fossil fuel products. The court also rejected the companies' argument that the First Amendment question related to their right to free speech provided a basis for federal jurisdiction, as this question was a defense rather than a necessary element of the plaintiffs' state-law claims. View "Anne Arundel County v. BP P.L.C." on Justia Law

Plaintiff, a chiropractic office, filed suit under the Telephone Consumer Protection Act after it received an unsolicited fax offering a free eBook with information about prescription drugs. The district court dismissed its complaint, holding that the plaintiff had not alleged that the fax, which tendered a product for free rather than for sale, was sufficiently commercial to bring it within the statutory prohibition on “unsolicited advertisements.” On appeal, Defendant-PDR Network defends both steps in the district court’s reasoning, arguing that a fax must be “commercial” to qualify as an “advertisement” under the TCPA and that Carlton & Harris has not alleged the requisite commercial character. Carlton & Harris disputes both portions of the court’s reasoning, contending that a prohibited “advertisement” may be entirely non-commercial and that, in any event, it has adequately alleged that the fax it received was commercial in nature. Further, Plaintiff asserts that PDR Network profits when its fax persuades a medical practitioner to accept the proffered eBook.   The Fourth Circuit vacated the district court’s order and remanded. The court concluded that Plaintiff had adequately alleged that the fax offer had the necessary commercial character to make it an “unsolicited advertisement” under the Act. The court explained that for present purposes, we accept as true Plaintiff’s commission allegation and find it adequate, at this preliminary stage, to state a claim that the fax offer of a free eBook is a commercial “advertisement” subject to the TCPA. View "Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC" on Justia Law