Justia Georgia Supreme Court Opinion Summaries

Articles Posted in Consumer Law
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Wendy and Janet Norman alleged that Xytex Corporation, a sperm bank, sold them human sperm under false pretenses about the characteristics of its donor, and that the child conceived with that sperm once born suffered from a variety of impairments inherited from the sperm donor. The Court of Appeals affirmed the dismissal of all but one of the Normans’ claims on the basis of Etkind v. Suarez, 519 SE2d 210 (1999), and Atlanta Obstetrics & Gynecology Group v. Abelson, 398 SE2d 557 (1990). The Georgia Supreme Court granted review, and held that claims arising from the very existence of the child were barred, but claims arising from specific impairments caused or exacerbated by defendants’ alleged wrongs could proceed, as could other claims that essentially amounted to ordinary consumer fraud. Therefore, the Court affirmed in part, reversed in part, and remanded the case for further proceedings. View "Norman et al. v. Xytex Corp., et al." on Justia Law

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Plaintiffs alleged in 2016, an anonymous hacker stole the personally identifiable information, including Social Security numbers, addresses, birth dates, and health insurance details, of at least 200,000 current and former patients of Athens Orthopedic Clinic (“the Clinic”) from the Clinic’s computer databases. The hacker demanded a ransom, but the Clinic refused to pay. The hacker offered at least some of the stolen personal data for sale on the so-called “dark web,” and some of the information was made available, at least temporarily, on Pastebin, a data-storage website. The Clinic notified plaintiffs of the breach in August 2016. Each named plaintiff alleges that she has “spent time calling a credit reporting agency and placing a fraud or credit alert on her credit report to try to contain the impact of the data breach and anticipates having to spend more time and money in the future on similar activities.” Plaintiffs sought class certification and asserted claims for negligence, breach of implied contract, and unjust enrichment, seeking damages based on costs related to credit monitoring and identity theft protection, as well as attorneys’ fees. They also sought injunctive relief under the Georgia Uniform Deceptive Trade Practices Act (“UDTPA”), and a declaratory judgment to the effect that the Clinic must take certain actions to ensure the security of class members’ personal data in the future. The Clinic filed a motion to dismiss based on both OCGA 9-11-12 (b) (1) and OCGA 9-11-12 (b)(6), which the trial court granted summarily. The Georgia Supreme Court concluded the injury plaintiffs alleged they suffered was legally cognizable. Because the Court of Appeals held otherwise in affirming dismissal of plaintiffs’ negligence claims, the Supreme Court reversed that holding. Because that error may have affected the Court of Appeals’s other holdings, the Court vacated those other holdings and remanded the case. View "Collins et al. v. Athens Orthopedic Clinic, P.A." on Justia Law

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In Cherokee Funding v. Ruth, 802 SE2d 865 (2017), the Georgia Court of Appeals decided that neither the Industrial Loan Act, nor the Payday Lending Act, applied to certain transactions in which a financing company provides funds to a plaintiff in a pending personal-injury lawsuit, the plaintiff is obligated to repay the funds with interest only if his lawsuit is successful, and his obligation to repay is limited to the extent of the damages that he recovers in the lawsuit. The Georgia Supreme Court granted certiorari to review the decision in Cherokee Funding. Ronald Ruth and Kimberly Oglesby sustained injuries in automobile accidents, and they retained attorney Michael Hostilo to represent them in connection with lawsuits to recover damages for their injuries. While their lawsuits were pending, Ruth and Oglesby obtained funds from Cherokee Funding pursuant to financing agreements that Hostilo signed on their behalf. Cherokee Funding would provide funds to Ruth and Oglesby for personal expenses, and for the most part, their obligation to repay those funds was contingent upon the success of their lawsuits. If they recovered nothing, they would have no obligation to repay. If they recovered damages, however, they would be required to repay the amounts that Cherokee Funding had provided, as well as interest at a rate of 4.99 percent per month and various other “fees,” up to the amount of their recovery. In no event would they be required to pay Cherokee Funding any amounts in excess of their lawsuit recovery. In fact, Ruth and Oglesby would not have been in default under the financing agreements if they dismissed their underlying lawsuits and kept the money they received from Cherokee Funding. Cherokee Funding provided $5,550 to Ruth in several small installments between April 2012 and June 2013. Ruth settled his case for an unspecified amount; Cherokee Funding sought to recover more than $84,000 from Ruth pursuant to the terms of his agreement. Similarly, Oglesby settled her lawsuit for an unspecified amount, and money was deducted from her settlement proceeds to repay Cherokee Funding. The two then sued Cherokee Funding seeking relief for themselves and a putative class of similarly situated people to whom Cherokee Funding provided funds under agreements facilitated by Hostilo. The Georgia Supreme Court affirmed the appellate court’s determination that the Payday Lending Act nor the Industrial Loan act applied in this case. View "Ruth v. Cherokee Funding, LLC" on Justia Law

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In November 2013, the Consumer Credit Research Foundation (CCRF) entered a consulting agreement with the Kennesaw State University Research and Service Foundation under which Dr. Jennifer Lewis Priestley, a professor at Kennesaw State University (KSU), would research the effects of payday loans on the financial health of their consumers. As part of this project, Dr. Priestley – but not KSU or the KSU foundation – signed a confidentiality agreement with CCRF agreeing not to disclose any information “relating in any manner to CCRF or CCRF’s contributing sponsors.” Dr. Priestley published an article about her findings in December 2014. In June 2015, the Campaign for Accountability (CFA) sent a request to KSU under Georgia’s Open Records Act, asking for copies of all correspondence, electronic or otherwise, between Dr. Priestley and a number of organizations and individuals, including CCRF and its chairman and CEO. After KSU notified CFA and CCRF that it intended to disclose the requested records subject to possible redactions, CCRF filed a complaint against the Board of Regents of the University System of Georgia (the Board). CCRF sought a declaratory judgment that the records requested by CFA were exempt from disclosure under OCGA 50-18-72(a)(35) and (36) and a permanent injunction prohibiting the Board from disclosing the records. The trial court granted CFA’s motion to intervene in the case as a party defendant. The Court of Appeals held, based on its reading of the Georgia Supreme Court’s decision in Bowers v. Shelton, 453 SE2d 741 (1995), Georgia’s Open Records Act prohibited the disclosure of all information that was not required to be disclosed based on the ORA exemptions listed the statute. The Georgia Supreme Court granted certiorari to address that issue, disapproved of the Court of Appeals’ broad reading of Bowers and reversed the court’s judgment. View "Campaign for Accountability v. Consumer Credit Research Foundation" on Justia Law

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After RAC Acceptance East, LLC swore out a warrant for Mira Brown’s arrest for theft by conversion of furniture that she had rented from RAC, Brown filed a lawsuit against RAC alleging malicious prosecution and other torts. The trial court entered an order granting RAC’s motion to compel Brown to arbitrate her claims pursuant to the arbitration agreement incorporated into the parties’ rental agreement. The Court of Appeals affirmed that order, concluding that whether RAC had waived its right to demand arbitration by its conduct in initiating the related criminal proceeding against Brown was a matter for the court to decide and that the trial court had correctly ruled that RAC did not waive arbitration. The Georgia Supreme Court granted certiorari, and affirmed the Court of Appeals’ judgment on the ground that the delegation provision in the parties’ arbitration agreement clearly gave the arbitrator, not the courts, the authority to determine that RAC did not waive by prior litigation conduct its right to seek arbitration, and the arbitrator’s decision on the waiver question could not be properly challenged as legally erroneous. View "Brown v. RAC Acceptance East, LLC" on Justia Law

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Drummond Financial Services, LLC and TMX Finance Holdings, Inc. were competitors in the automobile title loan business. Both companies were based in Georgia, with TMX doing business as “TitleMax.” In 2014, Drummond and several of its affiliated companies filed a lawsuit against TitleMax and several of its affiliated companies, alleging that TitleMax was “engaged in a nationwide campaign to systematically and illegally steal [Drummond’s] customers.” Based on these allegations, Drummond asserted claims against TitleMax under the laws of Georgia and various other states for trespass, misappropriation of trade secrets, tortious interference with contracts, and unfair competition. Drummond filed a motion for a nationwide interlocutory injunction to prevent TitleMax from continuing to engage in practices that Drummond alleged were tortious and illegal. Following a hearing, the trial court granted a nationwide interlocutory injunction that prohibited TitleMax from “[e]ntering any of [Drummond’s] [s]tores or the parking lots [or certain portions of the parking lots] of [Drummond’s] [s]tores” to solicit Drummond customers or to record their license plate numbers or vehicle identification numbers (other than for purposes permitted by the Driver’s Privacy Protection Act). In addition, the injunction prohibited TitleMax from offering compensation to Drummond employees to refer Drummond customers to TitleMax. TitleMax appealed. Those aspects of the injunction appeared to the Georgia Supreme Court to have been based on the claims for trespass and misappropriation of trade secrets, but the laws of trespass and trade secrets (at least in Georgia) did not support the scope of the injunction. Accordingly, the Court vacated the injunction in those respects, and remanded for the trial court to reconsider the scope of its injunction. To the extent that the parties on remand might rely on law that varies significantly from state to state, the Court reminded them that activities in one state are not due to be enjoined simply because they might be unlawful if done in another state. View "TMX Financial Holdings, Inc. v. Drummond Financial Services, LLC" on Justia Law

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In cases consolidated for review, the issues presented for the Supreme Court involved the scope of the State’s authority to regulate so-called “payday loans” pursuant to OCGA 16-17-1, et seq., known as the Payday Lending Act. Pursuant to the statute, the State filed suit alleging that CashCall, Inc. (“CashCall”), Delbert Services Corporation (“Delbert Services”), Western Sky Financial, LLC (“Western Sky”), and Martin A. Webb (collectively “Defendants”) violated OCGA 16-17-2 (a) by engaging in a small-dollar lending enterprise that collected illegal usurious interest from Georgia borrowers. Defendants operated outside the State of Georgia and their dealings with Georgia borrowers occurred telephonically or over the Internet, and when a loan is funded, the funds are transferred to the borrower via electronic transfer to the borrower’s bank account. The State sought civil penalties and injunctive and other equitable relief. Defendants filed motions to compel arbitration and to dismiss the action. The trial court referred the case to a special master who recommended the case be dismissed, but the trial court rejected the special master’s recommendation and denied Defendants’ motion to dismiss, finding that the State’s claim was not barred by the language of OCGA 16-17-1 (d). Because the trial court found a substantial likelihood that the State would prevail on the merits of the claim at trial, and found a substantial threat existed that the State would suffer irreparable injury in that there might not be sufficient funds available to satisfy a judgment should the State prevail at trial, the trial court ordered Defendants to deposit a $15 million sum into the court’s registry and to make quarterly deposits of any additional amounts that could be collected from Georgia borrowers in the future. The trial court, however, agreed to stay the granted relief during an appeal, upon the Defendants’ deposit of an additional $1 million into the escrow account created following entry of the consent order requiring the deposit of $200,000. In a separate order, the trial court denied the State’s motion to add as defendants J. Paul Reddam and WS Funding, LLC (“WS Funding”). Defendants filed a notice of appeal and the State filed a notice of cross-appeal. After review, the Supreme Court affirmed the order denying Defendants’ motion to dismiss, affirmed the modification of the injunction order, and reversed the order denying the State’s motion to add defendants. View "Western Sky Financial, LLC v. Georgia" on Justia Law

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The issue this case presented for the Supreme Court's review arose from a deficiency action brought by appellant SunTrust Bank (“SunTrust”) as the assignee under a motor vehicle conditional sales contract following its repossession and sale of a motor vehicle purchased by appellee Mattie Venable. Specifically, the issue was which statute of limitations applied here: the four-year statute of limitation set forth in OCGA 11-2-725 (1) applicable to actions on contracts for the sale of goods, or the six-year statute of limitation found in OCGA 9-3-24, generally applicable to actions on simple written contracts. After review, the Court concluded that this action was subject to the four-year statute of limitation found in 11-2-725 (1). View "SunTrust Bank v. Venable" on Justia Law

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A mandatory arbitration clause is contained in each deposit agreement for customers of appellee SunTrust Bank. The clause permits an individual depositor to reject the agreement’s mandatory arbitration clause by giving written notice by a certain deadline. SunTrust claimed it drafted the arbitration clause in such a way that only an individual depositor may exercise this right to reject arbitration on his or her own behalf, thereby permitting that individual to file only an individual lawsuit against the bank. But SunTrust asserted that even if, as it has been determined here, the filing of a lawsuit prior to the expiration of the rejection of arbitration deadline operated to give notice of the individual plaintiff’s rejection of arbitration, the complaint could not be brought as a class action because the filing of a class action could not serve to reject the arbitration clause on behalf of class members who have not individually given notice. Jeff Bickerstaff, Jr., who was a SunTrust Bank depositor, filed a complaint against SunTrust on behalf of himself and all others similarly situated alleging the bank’s overdraft fee constitutes the charging of usurious interest. At the time Bickerstaff opened his account (thereby agreeing to the terms of SunTrust’s deposit agreement), that agreement included a mandatory arbitration provision. In response to the ruling of a federal court in an unrelated action finding the arbitration clause in SunTrust’s deposit agreement was unconscionable at Georgia law, and after Bickerstaff’s complaint had been filed, SunTrust amended the arbitration clause to permit a window of time in which a depositor could reject arbitration by sending SunTrust written notification that complied with certain requirements. SunTrust had not notified Bickerstaff or its other customers of this change in the arbitration clause of the deposit agreement at the time Bickerstaff filed his complaint, but the complaint, as well as the first amendment to the complaint, was filed prior to the amendment’s deadline for giving SunTrust written notice of an election to reject arbitration. It was only after Bickerstaff’s complaint was filed that SunTrust notified Bickerstaff and its other existing depositors, by language printed in monthly account statements distributed on August 24, 2010, that an updated version of the deposit agreement had been adopted, that a copy of the new agreement could be obtained at any branch office or on-line, and that all future transactions would be governed by the updated agreement. SunTrust appealed the order denying its motion to compel Bickerstaff to arbitrate his claim, and the Court of Appeals affirmed the trial court, finding that the information contained in the complaint filed by Bickerstaff’s attorney substantially satisfied the notice required to reject arbitration. Bickerstaff appealed the order denying his motion for class certification, and in the same opinion the Court of Appeals affirmed that decision, holding in essence, that the contractual language in this case requiring individual notification of the decision to reject arbitration did not permit Bickerstaff to reject the deposit agreement’s arbitration clause on behalf of other putative class members by virtue of the filing of his class action complaint. The Georgia Supreme Court reversed that decision, holding that the terms of the arbitration rejection provision of SunTrust’s deposit agreement did not prevent Bickerstaff’s class action complaint from tolling the contractual limitation for rejecting that provision on behalf of all putative class members until such time as the class may be certified and each member makes the election to opt out or remain in the class. Accordingly, the numerosity requirement of OCGA 9-11-23 (a) (1) for pursuing a class complaint was not defeated on this ground. View "Bickerstaff v. SunTrust Bank" on Justia Law

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In this case, Subodh Raysoni raised consumer fraud claims under the Fair Business Practices Act of 1975 against Payless Auto Deals, LLC, alleging that Payless gave false assurances that a used minivan never had been in a collision or otherwise damaged - assurances upon which he relied - when he purchased the minivan from Payless. Contending that the terms of their written contract rendered any such reliance unreasonable as a matter of law, Payless moved for judgment on the pleadings. The trial court granted that motion, and the Court of Appeals affirmed. Payless relied on several provisions of the contract disclaiming warranties, but the Supreme Court held that its reliance was misplaced because these disclaimers were not absolute and unequivocal enough to warrant judgment on the pleadings: "We cannot say as a matter of law that the contractual disclaimers of warranties - which are, at least arguably, equivocal and limited - preclude any reasonable reliance in this case on a written Carfax report furnished by Payless. We do not mean to suggest that the provisions of the contract upon which Payless relies would not have been most reasonably understood by a customer just as Payless argues. On these pleadings, we cannot say as a matter of law that Raysoni will be unable to show that his reliance on representations that the minivan was undamaged and never had been in a wreck - particularly the written Carfax report - was reasonable." Judgment on the pleadings ought not have been awarded to Payless. The case was reversed and remanded for further proceedings. View "Raysoni v. Payless Auto Deals, LLC" on Justia Law