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

Plaintiff, a North Carolina attorney, believed he uncovered fraud perpetrated by forty-five adult care homes upon the United States and the State of North Carolina. According to Plaintiff, Defendants violated a North Carolina Medicaid billing regulation, and did so knowingly, as evidenced by the clarity of the regulation and by the fact Defendants did not ask the regulators for advice. The district court granted Defendants’ motion for summary judgment, holding that Plaintiff failed to proffer evidence showing “that the bills submitted by Defendants to North Carolina Medicaid for PCS reimbursement were materially false or made with the requisite scienter.”   The Fourth Circuit affirmed the district court’s decision. The court held that no reasonable juror could find Defendants acted with the requisite scienter on Plaintiff’s evidence. The court explained that The False Claims Act (“FCA”) imposes civil liability on “any person who . . . knowingly presents, or causes to be presented” to the Federal Government “a false or fraudulent claim for payment or approval.” The Act’s scienter requirement defines “knowingly” to mean that a person “has actual knowledge of the information,” “acts in deliberate ignorance of the truth or falsity of the information,” or “acts in reckless disregard of the truth or falsity of the information.” Here, Plaintiff failed to identify any evidence that Defendants knew, or even suspected, that their interpretation of the relevant policy and the guidance from NC Medicaid was incorrect. Nor did Plaintiff identify any evidence that Defendants attempted to avoid discovering how the regulation applied to adult care homes. View "US ex rel. Stephen Gugenheim v. Meridian Senior Living, LLC" on Justia Law

Following a data breach targeting servers owned by Defendant, Plaintiffs alleged that Defendant violated federal securities laws by omitting material information about data vulnerabilities in their public statements.The Fourth Circuit affirmed the district court’s dismissal of the complaint, finding that the investors did not adequately allege that any of Defendant’s statements were false or misleading when made.The court explained that to state a claim under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, a plaintiff must first allege a “material misrepresentation or omission by the defendant.” However, not all material omissions give rise to a cause of action. Here, Plaintiffs focus on statements about the importance of protecting customer data; privacy statements on Defendant's website; and cybersecurity-related risk disclosures. The court found that Plaintiffs failed to allege that any of the challenged statements were false or rendered Defendant's public statement misleading. Although Defendant could have disseminated more information to the public about its vulnerability to cyberattacks, federal securities law does not require it to do so. View "Construction Laborers Pension Trust Southern CA v. Marriott International, Inc." on Justia Law

Morgan’s credit reports reflected purported overdue home loan payments. Morgan wrote to his loan servicer: Please find a report ... stating as of 10/13/15 I owe Caliber $16,806[.] [A]lso on 9/20/16 I called Caliber and talked to Thomas ID#27662[.] [H]e stated I owe $30,656.89 and the $630.00 on my record is late charges. Can you please correct your records[?] Your office reporting the wrong amount to the credit agency is effecting [sic] my employment. Morgan included a copy of a credit report. Morgan alleges the defendant continued to report adverse loan information.When Johnson fell behind on her mortgage payments, the defendant reported to credit reporting agencies. While seeking a loan modification, Johnson sent a letter, challenging the existence of “title issues” and requesting “a reasonable investigation,” correction of the “errors,” and “an accounting of all sums you have imposed." The parties ultimately finalized a loan modification but in the interim, the defendant continued reporting adverse information.Johnson and Morgan filed a putative class action. Qualified written requests (QWRs) under the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. 2601 or Consumer Financial Protection Bureau Regulation X, trigger an obligation to cease providing adverse information to credit reporting agencies. The Fourth Circuit reversed the dismissal of Morgan’s claim but affirmed the dismissal of Johnson’s claim. Where a written correspondence to a loan servicer provides sufficient information to identify the account and an alleged servicing error, such correspondence is a QWR; if it merely challenges a contractual issue, it does not implicate a servicing issue and is not a QWR. Johnson’s correspondence did not concern the servicing of her account. View "Morgan v. Caliber Home Loans, Inc." on Justia Law

In 2005, Lyons opened a Home Equity Line of Credit (HELOC) with PNC’s predecessor, signing an agreement with no arbitration provision. In 2010, Lyons opened deposit accounts at PNC and signed a document that stated he was bound by the terms of PNC’s Account Agreement, including a provision authorizing PNC to set off funds from the account to pay any indebtedness owed by the account holder to PNC. PNC could amend the Account Agreement. In 2013, PNC added an arbitration clause to the Account Agreement. Customers had 45 days to opt out. Lyons opened another deposit account with PNC in 2014 and agreed to be bound by the 2014 Account Agreement, including the arbitration clause. Lyons again did not opt out. Lyons’s HELOC ended in February 2015. PNC began applying setoffs from Lyons’s 2010 and 2014 Accounts.Lyons sued under the Truth in Lending Act (TILA). PNC moved to compel arbitration. The court found that the Dodd-Frank Act amendments to TILA barred arbitration of Lyons’s claims related to the 2014 Account but did not apply retroactively to bar arbitration of his claims related to the 2010 account. The Fourth Circuit reversed in part. The Dodd-Frank Act 15 U.S.C. 1639c(e) precludes pre-dispute agreements requiring the arbitration of claims related to residential mortgage loans; the relevant arbitration agreement was not formed until after the amendment's effective date. PNC may not compel arbitration of Lyons’s claims as to either account. View "Lyons v. PNC Bank" on Justia Law

A class action claimed Nationstar violated consumer protection laws in servicing class members’ mortgage loans. Years later, the parties filed a notice of settlement. A magistrate granted preliminary approval. In order of priority, the parties proposed that the $3,000,000 settlement fund pay for administrative expenses up to $300,000, attorneys’ fees, a class representative award, and class claims. The settlement proposed notice by Email, Postcard, and Longform. The Email and Postcard Notice informed class members of the amount of the settlement, how to submit a claim, how to opt-out of the class, and where to find the Longform Notice. The Longform Notice explained the attorneys’ fee arrangement. The notices did not estimate each class member's recovery. Nationstar agreed not to oppose class counsel’s fee request up to $1,300,000. Class counsel submitted records that supported $1,261,547.50 in fees and $217,657.26 in unreimbursed expenses but requested only $1,300,000. The value of a class member’s claim is determined by a points system based on Nationstar’s treatment of their account and the class member’s expenses.An absent class member, having sued Nationstar in California state court, objected to the settlement, arguing that the notice was insufficient; the settlement was unfair and inadequate; the release was unconstitutionally overbroad; and the attorneys’ fee award was improper. The magistrate overruled those objections. The Fourth Circuit affirmed, noting that over 97% of the nearly 350,000 class members received notice and the low opt-out rate. View "McAdams v. Nationstar Mortgage, LLC" on Justia Law

The district court dismissed a class action, alleging that Carrington violated the Maryland Consumer Debt Collection Act (MCDCA) and the Maryland Consumer Protection Act (MCPA) by charging $5 convenience fees to borrowers who paid monthly mortgage bills online or by phone. The district court held that in charging the convenience fees, Carrington was not a “collector” for either MCDCA claim, that Carrington was not a “debt collector” under the Fair Debt Collection Practices Act (FDCPA, 15 U.S.C. 1692f(1)), that plaintiffs’ choice to use the online payment option was “permitted by law,” that Carrington’s convenience fees were not “incidental” to plaintiffs’ mortgage debt, and that Carrington had the “right” to collect the convenience fees since none of the mortgage documents expressly prohibited the fees and plaintiffs voluntarily chose to make payments online.The Fourth Circuit reversed in part. Carrington need not be a debt collector under federal standards for plaintiffs’ state claim to proceed. Carrington violated the MCDCA by engaging in conduct violating the FDCPA, so the derivative MCPA claim can also proceed. The FDCPA prohibits “[t]he collection of any amount . . . unless such amount is expressly authorized by the agreement creating the debt or permitted by law.” View "Alexander v. Carrington Mortgage Services" on Justia Law

The federally-recognized Native American Tribe (in California) started an online lending business, allegedly operated by non-tribal companies owned by non-tribal Defendants on non-tribal land. The Plaintiffs are Virginia consumers who received online loans from tribal lenders while living in Virginia. Although Virginia usury law generally prohibits interest rates over 12%, the interest rates on Plaintiffs’ loans ranged from 544% to 920%. The Plaintiffs each electronically signed a “loan agreement,” “governed by applicable tribal law,” and containing an “Arbitration Provision.” The borrowers defaulted and brought a putative class action against tribal officials and two non-members affiliated with the tribal lenders.The district court denied the defendants’ motion to compel arbitration and motions to dismiss on the ground of tribal sovereign immunity except for a Racketeer Influenced and Corrupt Organizations Act (RICO) claim. The Fourth Circuit affirmed. The choice-of-law clauses of this arbitration provision, which mandate exclusive application of tribal law during any arbitration, operate as prospective waivers that would require the arbitrator to determine whether the arbitration provision impermissibly waives federal substantive rights without recourse to federal substantive law. The arbitration provisions are unenforceable as violating public policy. Substantive state law applies to off-reservation conduct, and although the Tribe itself cannot be sued for its commercial activities, its members and officers can be. Citing Virginia’s interest in prohibiting usurious lending, the court refused to enforce the choice-of-law provision. RICO does not give private plaintiffs a right to injunctive relief. View "Hengle v. Treppa" on Justia Law

Plaintiffs filed suit alleging that pressure tactics used by Quicken Loans and TSI to influence home appraisers to raise appraisal values to obtain higher loan values on their homes constituted a breach of contract and unconscionable inducement under the West Virginia Consumer Credit and Protection Act. The district court granted summary judgment to plaintiffs.The Fourth Circuit concluded that class certification is appropriate and that plaintiffs are entitled to summary judgment on their claims for conspiracy and unconscionable inducement. However, the court concluded that the district court erred in its analysis of the breach-of-contract claim. The court explained that the district court will need to address defendants' contention that there were no damages suffered by those class members whose appraisals would have been the same whether or not the appraisers were aware of the borrowers' estimates of value—which one might expect, for example, if a borrower's estimate of value was accurate. The court agreed with plaintiffs that the covenant of good faith and fair dealing applies to the parties' contract, but concluded that it cannot by itself sustain the district court's decision at this stage. The district court may consider the implied covenant of good faith and fair dealing to the extent that it is relevant for evaluating Quicken Loans' performance of the contracts. Accordingly, the court affirmed in part and vacated and remanded in part. View "Alig v. Quicken Loans Inc." on Justia Law

The Fourth Circuit affirmed the district court's dismissal of a complaint against federal employees in their individual capacities, alleging violations of the Telephone Consumer Protection Act (TCPA), based on sovereign immunity grounds.The court concluded that the Supreme Court's decision in Lewis v. Clarke, 137 S. Ct. 1285 (2017), does not purport to break from the Court's substantive approach to its real-party-in-interest jurisprudence, and plaintiff supplies the court with no compelling reason to extract any contrary holding. The court explained that the statutory mandate at the center of this case is the requirement that CMS "establish a system" for ensuring that applicants "receive notice of eligibility for an applicable State health subsidy program." The court concluded that, unlike the defendant in Lewis, defendants, as CMS employees, were plainly acting in furtherance of this federal mandate when they signed the contract with GDIT and instructed GDIT to place its automated calls. Therefore, defendants were acting in the course of their official duties and the United States is the real party in interest. View "Cunningham v. Lester" on Justia Law

Plaintiff filed suit alleging that PDR Network violated the Telephone Consumer Protection Act (TCPA) by sending unsolicited advertisements by fax. The district court held that the Hobbs Act did not require it to adopt the FCC's interpretation of the TCPA (the 2006 FCC Rule) because the Hobbs Act does not control when no party "has challenged the validity of the FCC's interpretation of the TCPA." The district court concluded that, under the TCPA, unsolicited fax advertisements are not actionable unless they have a commercial purpose. The district court then determined that PDR Network's fax was not commercial in nature and dismissed the complaint without granting leave to amend.Plaintiff appealed and the Fourth Circuit held that the district court erred in conducting a Chevron analysis, and interpreted the 2006 FCC Rule to mean that a fax offering free goods and services qualifies as an "advertisement" under the TCPA, regardless of whether it has an underlying commercial purpose. PDR Network petitioned for certiorari and the Supreme Court granted review. The Supreme Court determined that to the extent to which the 2006 FCC Rule binds the lower courts may depend on the resolution of two preliminary sets of questions that were not aired before the Court of Appeals.On remand from the Supreme Court, the Fourth Circuit resolved the first five of seven issues submitted to the parties by concluding that a remand to the district court for discovery was not necessary; the relevant portions of the 2006 FCC Rule are interpretive rather than legislative; and thus the third, fourth, and fifth issues are moot. In regard to the sixth issue regarding what level of deference (if any) must the district court afford the 2006 FCC Rule, the court declined to decide in the first instance and remanded for the district court to have the first opportunity to perform the applicable analysis. Given the court's remand to the district court to consider what level of deference the court should afford the 2006 FCC Rule and what the proper meaning of "unsolicited advertisement" is in light of that deference, the court found it unnecessary to resolve the issue of whether the district court erred by failing to grant leave to amend. View "Carlton & Harris Chiropractic, Inc. v. PDR Network, LLC" on Justia Law