Moral Rights and Copyright Claims about Che Guevara Parodies

by Paul Alan Levy

The personal and commercial heirs of the deceased photographer Korda, best known for the iconic photograph of Che Guevara that has adorned Tshirts and posters displayed by young admirers for fifty years, have issued a takedown demand to Liberty Maniacs over its sales of parody items that display the photo’s cap and hair but replace Guevara’s visage with, alternately, Donald Trump and Alexandria Ocasio-Cortez. Advancing claims both under the doctrine of moral rights and under copyright law, Randy Yaloz, a New York lawyer based in Paris who proudly identifies himself as "combative" (but wrote using an letterhead identifying himself as an adjunct professor at his alma mater, New York Law School, where he does not currently teach), demands both that the parodies be taken off the market and that the parodist pay damages.

Our federal financial regulators are busy defending predatory loans

Read this post by law prof Adam Levitin titled "FDIC and OCC Race to Court to Defend 120.86% Interest Rate Small Business Loan." It's not a pretty thing our federal regulators are doing. Here's an excerpt from Adam's post:

FDIC and OCC filed an amicus brief in the district court in an obscure small business bankruptcy case to which a bank was not even a party in order to defend the validity of a 120.86% loan that was made by a tiny community bank in Wisconsin (with its own history of consumer protection compliance issues) and then transferred to a predatory small business lending outfit. Stay classy federal bank regulators. FDIC and OCC filed the amicus to defend the valid-when-made doctrine that the bankruptcy court invoked in its opinion. FDIC and OCC claim it is "well-settled" law, but if so, what the heck are they doing filing an amicus in the district court in this case? They doth protest too much.

 

CFPB Abandons Defense of Its Own Constitutionality

For years, subjects of CFPB enforcement actions have challenged the constitutionality of the agency's structure, arguing that separation-of-powers principles forbid Congress to grant enforcement authority to an independent agency whose director is protected against being fired without cause by the President. Throughout that time, the agency has defended its own constitutionality, and has prevailed in the only two cases that have so far resulted in final decisions by federal courts of appeals: PHH Corp. v. CFPB, in which the U.S. Court of Appeals for the D.C. Circuit upheld the agency's structure, and CFPB v. Seila Law, in which the Ninth Circuit agreed with the D.C. Circuit. Now, even as challenges continue in two other circuits, the Second and Fifth, in which the agency has so far steadfastly defended itself, the agency has joined in a filing in the U.S. Supreme Court asking the Court to overturn the Ninth Circuit's decision in Seila Law and hold the agency's structure unconstitutional.

The Department of Justice had changed sides on the issue when the Trump Administration took office, and it argued strenuously against the position taken by the agency's own lawyers in PHH Corp. The CFPB, however, held its ground not only in PHH, which was briefed while Richard Cordray remained in place as the agency's director, but also in other appellate challenges briefed and argued after he stepped down and was replaced by Trump appointees--first Mick Mulvaney as Acting Director, and then Kathy Kraninger as Director.

However, after the agency prevailed in the court of appeals in the Seila Law case, the losing party filed a petition for a writ of certiorari asking the Supreme Court to hear the issue. The Solicitor General, after obtaining multiple extensions of time to respond to the petition, today filed a brief "acquiescing" in the request that the Court hear the case. The brief is signed not only by the Solicitor General and other DOJ attorneys, but also by attorneys for the CFPB, who join fully not only in the brief's request that the Supreme Court hear the case, but also in its argument that the Court should reverse the lower court's decision and hold the CFPB's structure unconstitutional. Also today, Director Kraninger sent a letter to congressional leaders informing them that the CFPB would no longer defend the constitutionality of the statutory provisions protecting its director from Presidential removal.

Because neither DOJ nor the CFPB will now defend the agency's structure, the Supreme Court will, if it takes the case, have to appoint someone else--a friend of the court--to argue in favor of the lower court's judgment.

More Responses to the Higbee Trolling Operation

by Paul Alan Levy

Back in June 2019, the last time I had occasion to write  about Mathew Higbee’s bullying pursuit of copyright claims against alleged infringers, he had just backed away from a confrontation on the part of one of the longtime members of his stable of clients, Quang-Tuan Luong, and had, indeed, suggested that he was reconsidering whether he would pursue future demands against the hosts of interactive web sites whose users were the ones to post allegedly infringing content.  Regrettably, it appears that the lure of illegitimate profit has led him not to take that path.

Consumer Law Professors Who Want to Read or Sign On to a Comment on the CFPB's Proposed Debt Collection Rule . . .

. . .  should get in touch with @daliejimenez.

Read this op-ed on CFPB's proposed rule authorizing debt-collection harassment

In May, the Consumer Financial Protection Bureau proposed new Fair Debt Collection Practices Act rules. In this op-ed, Jennifer Wagner (of Mountain State Justice) and Linda Frame (of the West Virginia Center on Budget and Policy) explain why the CFPB's proposed rules, issued under a law meant to curb debt-collection harassment, actually authorize debt-collection harassment. "The most brazen breach of consumer protection [in the proposed rules] ... is allowing consumers to be called up to seven times per week per debt. Someone with eight medical debts could hear the phone ringing 56 times a week." Ugh.

Federal Trade Commission issues staff report on class-action notices, redress methods, claims rates, and check-cashing rates; agency sets comment period and October 29 public meeting

The Federal Trade Commission has issued a staff report on class-action notices, redress methods, claims rates, and check-cashing rates based on the agency's survey of the results in 149 consumer class actions. The FTC has put together this home page on the report, which contains links to related information. 

Consistent with other data and anecdotal reports, the FTC staff report finds that claiming rates in consumer class actions are generally quite low. But check cashing rates -- that is, how often consumers cash checks received as relief in class actions -- generally are quite high. These two things -- (1) low claiming rates and (2) high check-cashing rates -- tell us that, whenever possible, class-action settlements should provide class members relief without requiring them to file claims. That is, so-called "claims-made" settlements should be avoided where possible. Put differently, class members want their relief, but a whole bunch of rigmarole suppresses class-member recovery. 

On October 29, 2019, the FTC will hold a public workshop in Washington, DC on improving class action settlement notices for consumers. The workshop is free and open to the public. Seating is first-come, first-served. The workshop is at the Constitution Center, 400 7th St., SW, Washington, DC, and will be webcast live. The October 29 workshop is intended to support the agency's continuing examination of the issues addressed in the staff report.

The FTC is asking for written comments on the report. Comments may be submitted electronically at Regulations.gov, or in paper form on these topics or other related topics through November 22, 2019. Paper comments may be mailed to FTC, Office of the Secretary, 600 Pennsylvania Avenue N.W., Suite CC-5610 (Annex B), Washington, DC 20580, or delivered to FTC, Office of the Secretary, 400 7th Street SW, 5th Floor, Suite 5610 (Annex B), Washington, DC 20024. Commenters should write “Class Action Notices, Project No. P024210” on the comment so that it will be identified with the workshop.

 

"CPFB head misguided in reliance on consumer education"

That's the title of this piece in The Hill by law prof Lauren Willis. WIllis's bio notes that "[s]he is a leading critic of the use of financial education, disclosures, and 'nudges' (default settings) in consumer policy-making." Willis's Hill piece applies that critique to the regulatory approach of the Consumer Financial Protection Bureau under the direction of Trump appointee Kathy Kraninger. Willis's piece starts like this:

Imagine that your city’s water treatment facility announced tomorrow that it would scale back its work. Instead, the authorities would offer online classes and put up posters around town to teach city residents about contaminants and filtration. With slogans about “empowering consumers,” they would urge residents to make their own choices about the water safety level that’s right for them, based on individual health needs and taste preferences. People would surely protest. It is both foolish and cruel to put the onus on ordinary citizens to handle an issue that requires professional training to fully understand and that can devastate people’s lives if handled poorly. It seems cynically designed to relieve city administrators — and the businesses that impact the city’s water supply — of their responsibilities. Yet this is exactly what’s happening today in the consumer financial marketplace at the federal level.

Take the Abusiveness Challenge: Identify a Valuable Consumer Financial Product Not Offered Because of Uncertainty About Whether It Is Abusive

by Jeff Sovern

The Dodd-Frank Act gives the CFPB the power to act against entities within the CFPB's jurisdiction for engaging in abusive practices. See 12 USC 5531.  Though that section explains what the limits are to the Bureau's power to proscribe abusive conduct, the industry has long claimed that it needs additional guidance as to what is abusive. The industry argues that the statute's ambiguity will cause a company to withhold from the market a product at least some consumers want because the company fears the Bureau will find the product abusive.  There's just one problem with this scenario: despite the fact that the Dodd-Frank Act has been around since 2010, no one has actually identified such a product, at least not that I know of.  I have just finished listening to the Bureau's excellent symposium on abusiveness (and if you care about what abusive means you should listen to it too) and I didn't hear a single example of such a product. If you know of such a product, please describe it in the comments. It's not just a consumer-advocate talking point; if such a product exists and can be discussed, it would make the debate about abusiveness much more concrete. In the meantime, if no one can identify such a product, the Bureau should take its time before issuing a guidance or other document concerning the meaning of abusive, just as the FTC took decades to issue policy statements explaining the meaning of unfairness and deception. 

"How Amazon Hooked America on Fast Delivery While Avoiding Responsibility for Crashes"

ProPublica has a new report out today called "The Deadly Race: How Amazon Hooked America on Fast Delivery While Avoiding Responsibility for Crashes." The report explains that "Amazon has built a huge logistics operation in recent years to get more goods to customers’ homes in less and less time. As it moves to reduce its reliance on legacy carriers like United Parcel Service, the retailer has created a network of contractors across the country that allows the company to expand and shrink the delivery force as needed, while avoiding the costs of taking on permanent employees." But, the report continues,"Amazon’s promise of speedy delivery has come at a price, one largely hidden from public view. An investigation by ProPublica identified more than 60 accidents since June 2015 involving Amazon delivery contractors that resulted in serious injuries, including 10 deaths."

The full report is here.

Dep't of Education rejects 99% of requests for Public Service Loan Forgiveness

The Public Service Loan Forgiveness program encourages graduates to work in public service jobs by forgiving federal student loan balances for borrowers who have made 10 years of payments while in certain public service jobs. In 2018, after the Department of Education forgave few loans, Congress temporarily expanded the program to include more borrowers.

According to a report by the Government Accountability Office, the Department of Education continues to reject requests for loan forgiveness under the program--rejecting 99% of the requests. From May 2018 to May 2019, the Department processed roughly 54,000 requests and approved just 661. It spent only $27 million of the $700 million allocated by Congress.

The GAO report, as well as a short fact sheet, is here.

Companies lobby for changes to California's consumer privacy law

Last year, the California legislature passed the California Consumer Privacy Act, which grants internet users the right to see the personal information that companies collect about them and stop it from being sold. The law applies only to residents of California, but privacy advocates hope it might serve as a model for other states or Congress and that it will eventually force the tech giants to change their practices with respect to consumer privacy.

Today, the Washington Post reports on an effort by tech companies, retailers, and other businesses to convince the legislature to revise the law before it goes into effect this coming January.

The article is here.

James Nehf Paper: The Failure of 'Notice and Consent' as Effective Consumer Policy

James P. Nehf of Indiana--Indianapolis has written The Failure of 'Notice and Consent' as Effective Consumer Policy. Here's the abstract:

Over the past several decades, the preferred model for consumer protection in most countries has emphasized a notice and consent (or choice) approach with less emphasis on normative laws that prohibit or mandate certain contract terms, acts or practices. In this essay, I argue that it is time for consumer advocates and policy makers to recognize that a notice and consent approach to standard contract terms and conditions is not likely to protect consumer interests in modern day contractual settings. Indeed, policy makers are doing more harm than good by continuing to focus on notice and consent, thereby giving a misleading impression that consumer interests are being protected when they are not. Moreover, by adhering to a notice and consent regime, they avoid discussing the more difficult yet most fundamental questions about what commercial practices should be permitted and which should be banned.

Ninth Circuit: FOIA's "reading room" provision is judicially enforceable

The Ninth Circuit today issued its decision in Animal Legal Defense Fund v. USDA. Here's the court's summary of the decision:

The panel reversed in part and affirmed in part the district court’s dismissal for lack of subject matter jurisdiction of plaintiffs’ action against the U.S. Department of Agriculture, alleging claims under the Freedom of Information Act (“FOIA”) and the Administrative Procedure Act (“APA”).

FOIA requires federal agencies to make certain agency records “available for public inspection in an electronic format.” 5 U.S.C. § 552(a)(2). FOIA’s judicial-review provision authorizes district courts to enjoin violations of this “reading room” provision. The Animal and Plant Health Inspection Service (“APHIS”) enforces the Animal Welfare Act on behalf of the U.S. Department of Agriculture. In February 2017, APHIS removed various compliance and enforcement records from its website, and has represented that it will no longer post certain records.

Plaintiffs are animal rights organizations, and they alleged that defendants violated FOIA’s reading-room provision. Plaintiffs requested that the district court enjoin the agency from withholding the records and order the agency to make the records publicly available in an electronic format on an ongoing basis.

The panel held that plaintiffs have standing because their inability to inspect documents in virtual reading rooms harmed them in real-world ways, their injuries were different from the injuries sustained by other Americans who never regularly visited the online reading rooms, and their alleged injuries were “fairly traceable” to the agency’s action, and likely to be redressed by their requested relief.

The panel held that 5 U.S.C. § 552(a)(4)(B) provided district courts with authority to order an agency to post records in an online reading room, and reversed the dismissal of the FOIA claims. The panel rejected APHIS’s challenges to this holding. In addition to the text and structure of FOIA, several lines of Supreme Court and Ninth Circuit precedent support interpreting FOIA’s judicial-review provision as authorizing district courts to order agencies to comply with their § 552(a)(2) obligations. The panel noted its disagreement with the D.C. Circuit’s analysis in Citizens for Responsibility & Ethics in Washington v. DOJ (“CREW I”), 846 F.3d 1235, 1238–44 (D.C. Cir. 2017) (holding that FOIA constrains judicial enforcement of the reading-room provision).

The panel left it to the district court on remand to decide in the first instance whether plaintiffs have exhausted their reading room claim, or whether such exhaustion would be futile.

The panel affirmed the district court’s dismissal of plaintiffs’ Administrative Procedure Act claims because the potential for meaningful relief under FOIA displaced these claims.

Judge Callahan dissented in part. For the reasons set forth in CREW I, Judge Callahan would hold that FOIA provided an adequate alternative remedy, and courts lacked authority under FOIA to order agencies to make records available for public inspection. She would affirm the dismissal of plaintiffs’ FOIA claim for lack of subject matter jurisdiction.

Adam Levitin on auto-loan abuses

Law prof Adam Levitin has written The Fast and the Usurious: Putting the Brakes on Auto Lending Abuses. Here is the abstract:

The car loan market is rife with consumer abuses: inflated pricing, discriminatory lending, and a variety of deceptions and scams. These abuses all stem from the dealer-centric nature of the auto finance market that ties the vehicle purchase to the vehicle financing. 

The overwhelming majority of consumers finance their purchases through the car dealer, but consumers cannot learn dealer financing terms in advance. They learn the financing terms offered only after spending substantial time and energy negotiating a car price, a trade-in price, warranties, insurance, and vehicle add-ons. At this point, because most consumers lack alternative financing options, they face a take-it-or-leave-it choice that leaves them especially vulnerable to dealer abuses. 

Not only does the lack of alternative financing options deprive consumers of the protection of competition in auto loans, but competition in the dealer-based lending market actually works against consumers. Dealers auction off loans to financial institutions based largely on which institution allows the dealer the greatest compensation in the form of a markup on the loan. These ultimate lenders compete for the dealer’s business, not the consumer’s, which results in consumers paying supracompetitive rates because of the dealer markup. The discretionary nature of the markups also enables discriminatory lending, with women and minorities often charged more for car loans, as well as a number of outright frauds and scams that cannot occur with third-party financing. 

This Article proposes to fix these auto lending abuses by requiring a three-business day waiting period before delivery of the vehicle for consumers who do not have a bona fide third-party financing offer, as well as a fee-free right of rescission for the loan during this period. A penalty default waiting period would incentivize consumers to shop for financing separately from the vehicle purchase transaction, creating positive competitive forces that will reduce dealers’ supracompetitive markups of financing, reduce opportunities for discriminatory lending, and protect consumers from other deceptive practices. 

What consumer-protection law can do when the FAA doesn't get in the way: Eleventh Circuit strikes down contractual forum-selection and class-action-waiver clauses as contrary to public policy

Yesterday, in Davis v. Oasis Legal Finance Operating Company, the Eleventh Circuit struck down contractual forum-selection and class-action-waiver clauses as contrary to public policy. In Davis, a class of borrowers sued lenders, claiming that their loan agreements violated Georgia usury laws. The lenders sought to tank the case on the basis of contractual forum-selection and class-action-waiver clauses. The court of appeals began its opinion this way:

American courts have long refused to enforce contractual provisions that contravene public policy. See, e.g., Marshall v. Baltimore and Ohio R.R., 57 U.S. 314, 334 (1853) (“It is an undoubted principle of the common law that it will not lend its aid to enforce a contract to do an act that is illegal, or which is inconsistent with sound morals or public policy. . . .”). In Georgia, “[n]o principle of jurisprudence is better settled than this.” Glass v. Childs, 71 S.E. 920, 921 (Ga. Ct. App. 1911).

The court then went on to hold that the forum-selection clause and class-action waiver violated public policy, specifically "Georgia’s Payday Lending Act and Industrial Loan Act, [which] articulate a clear public policy against enforcing forum selection clauses in payday loan agreements and in favor of preserving class actions as a remedy for those aggrieved by predatory lenders."

Boom. 

If you wondering about why arbitration didn't come into play, well . . .

The Supreme Court, in multiple cases, has ruled that § 2 of the FAA overrides a state statute or common-law doctrine that attempts to undercut the enforceability of an arbitration agreement. See Kindred Nursing Ctrs. Ltd. P’ship v. Clark, 137 S. Ct. 1421, 1425, 1426 (2017); DIRECTV, Inc. v. Imburgia, 136 S. Ct. 463, 468, 471 (2015). The class action waiver here is not contained in an arbitration agreement, so § 2 of the FAA does not stand in the way of enforcing Georgia’s public policy. 

Davis gives you a sense of what state-law consumer protection might look like if not for the Supreme Court's Federal Arbitration Act decisions. 

Eleventh Circuit says no Article III standing in TCPA suit over receipt of one unsolicited text message

The Eleventh Circuit has just held in Salcedo v. Hanna that, under the circumstances pleaded there, a plaintiff who received one unsolicited text message lacked Article III standing to sue under Telephone Consumer Protection Act. The court relied on the Supreme Court's decision in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), and maintained that that the "history and judgment" of Congress in enacting the TCPA did not support standing. The court viewed its decision as conflicting with Van Patten v. Vertical Fitness Group, LLC, 847 F.3d 1037 (9th Cir. 2017). Eleventh Circuit judge Jill Pryor concurred only in the judgment "to  emphasize [her] understanding that the majority’s holding is narrow and the conclusion that Salcedo lacks standing is driven by the allegations in his complaint that Hanna sent him only one text message," "leav[ing] unaddressed whether a plaintiff who alleged that he had received multiple unwanted and unsolicited text messages may have standing to sue under the TCPA." 

CFPB is hiring, after significant loss of staff under Trump

The Wall Street Journal reports that the Consumer Financial Protection Bureau is hiring again, following a 15 percent loss of staff since the Trump Administration took over the agency in late 2017. The CFPB "recently lifted a nearly two-year hiring freeze, according to an internal email reviewed by The Wall Street Journal. It also has accelerated recruiting for senior officials in recent weeks, according to recent public job postings."

The full story is here. (Subscription required.)

Oh where, oh where has verification gone in the CFPB's proposed FDCPA regulation?

by Jeff Sovern 

Section 1692g(a)(4) requires debt collectors to send consumers a "a statement that if the consumer notifies the debt collector in writing within the thirty-day period that the debt, or any portion thereof, is disputed, the debt collector will obtain verification of the debt or a copy of a judgment against the consumer and a copy of such verification or judgment will be mailed to the consumer by the debt collector . . . . " But as best I can tell, the CFPB's proposed debt collection regulation doesn't provide for notification of this right to verification if you use the safe harbor of Model Form B-3, which appears at page 491 of the proposal.  Here's what the model form says about this (I apologize for not getting the formatting correct; as one of my children likes to point out far too gleefully, I'm not great at tech):

How can you dispute the debt?

Call or write to us by November 12, 2019, to dispute all
or part of the debt. If you do not, we will assume that our
information is correct. If you write to us by November 12, 2019,
we must stop collection on any amount you dispute until we
send you information that shows you owe the debt.

You may use the form below or you may write to us without the
form. You may also include supporting documents. We accept
disputes electronically at www.example.com/dispute.

What else can you do?

Write to ask for the name and address of the original
creditor. If you write by November 12, 2019, we will stop
collection until we send you that information. You may use the
form below or write to us without the form. We accept such
requests electronically at www.example.com/request.

Nowhere there does it refer to verification.  But the Bureau thinks the form does cover the consumer's verification rights, and indeed, that it meets the requirement of § 1692g(a)(4) of specifying that verification requests much be in writing. The Proposal states at page 253 "While Model Form B–3 would alert consumers to an oral dispute option, the form would clarify that only a written dispute would invoke verification rights pursuant to FDCPA sections 809(a)(4) and (5).” Maybe the Bureau thinks that a right to verification is limited to the right to obtain the name and address of the original creditor.  But that has to be wrong as a matter of standard statutory interpretation because § 1692g(a)(5) already requires the validation notice to say that the consumer can request the original creditor's name and address.  In other words, (a)(4) would have no independent meaning if all verification meant was that the consumer can get the original creditor's name and address and so would be surplussage. Courts usually construe statutes to avoid surplussage.

That definition of verification also seems inconsistent with what at least some courts say verification means.  For example, in Haddad v. Alexander, Zelmanski, Danner & Fioritto, PLLC, 758 F.3d 777, 783–86 (6th Cir. 2014) (per curiam), the court wrote that a verifying collector:

[S]hould provide the date and nature of the transaction that led to the debt, such as a purchase on a particular date, a missed rental payment for a specific month, a fee for a particular service provided at a specified time, or a fine for a particular offense assessed on a certain date.

That's a lot more than the name and address of the original creditor though I should note that some courts require less (for more on  what verification requires, and consumer survey results on that question, see the article I co-authored here).

Now maybe the Bureau thinks that the right to verification is encapsulated in the right to dispute the debt, especially as the model form includes a tear-off which lists several reasons the consumer might to dispute the debt, as follows:

I want to dispute the debt because I think:
□ This is not my debt.
□ The amount is wrong.
□ Other (please describe on reverse or
attach additional information).
 I want you to send me the name and
address of the original creditor.

[There's supposed to be a check box before the last item too; more glee from my offspring]. But I don't think that's the Bureau's position based on the statement quoted above from page 253 that only a written notice of dispute invokes verification rights when the model form also indicates you can dispute debts orally. In addition, it bears repeating that nothing in the form says that you have to use the tear-off or an equivalent writing to assert verification rights; the only thing it says you have to do in writing is request the name and address of the original creditor. 

While Proposed § 1006.34(c)(3)(i) provides for the validation notice to include a “statement that specifies . . . that, if the consumer notifies the debt collector in writing before the end of the validation period that the debt, or any portion of the debt, is disputed, the debt collector must cease collection of the debt, or the disputed portion of the debt, until the debt collector sends the consumer either the verification of the debt or a copy of a judgment,” that provision does not appear in the model form.

I would be interested in hearing comments on this if anyone thinks I have gone off the track.

Ninth Circuit holds that ERISA claims are arbitrable, overruling its own precedent based on later Supreme Court arbitration ruling

The Ninth Circuit has held, in Dorman v. Charles Schwab, that ERISA claims (brought in court in a class action) can be forced out of court and into individual arbitration through an arbitration clause in an amendment to an ERISA 401(k) plan forced on Schwab's employees. Here's how the Ninth Circuit's informal summary explains the decision:

The panel reversed the district court’s order denying defendants’ motion to compel arbitration of claims and remanded in a class action suit brought by a former participant in an ERISA retirement plan, alleging that defendants violated ERISA and breached their fiduciary duties by including certain investment funds in the plan. The panel concluded that Amaro v. Continental Can Co., 724 F.2d 747 (9th Cir. 1984), which held that ERISA claims are not arbitrable, is no longer good law in light of intervening Supreme Court case law, including American Express Co. v. Italian Colors Restaurant, 570 U.S. 228 (2013).

Here's the panel's full explanation about why it was okay to overrule its prior precedent:

Since Amaro, the Supreme Court has ruled that arbitrators are competent to interpret and apply federal statutes. See, e.g., Am. Express Co., 570 U.S. at 233 (holding that there is nothing unfair about arbitration—even arbitration on an individual basis—as long as individuals can vindicate their statutory rights in the arbitral forum). Recently, in Munro v. Univ. of S. Cal., 896 F.3d 1088 (9th Cir. 2018), we noted that “there is considerable force” to the argument that Amaro has been overruled. Id. at 1094 n.1. [footnote omitted] We agree.

Generally, a three-judge panel may not overrule a prior decision of the court. Miller v. Gammie, 335 F.3d 889, 899 (9th Cir. 2003) (en banc). If, however, “an intervening Supreme Court decision undermines an existing precedent of the Ninth Circuit, and both cases are closely on point[,]” the three-judge panel may then overrule prior circuit authority. Id. The issue decided by the higher court need not be identical. Id. at 900. The appropriate test is whether the higher court “undercut the theory or reasoning underlying the prior circuit precedent in such a way that the cases are clearly irreconcilable.” Id.

“[W]here the reasoning or theory of our prior circuit authority is clearly irreconcilable with the reasoning or theory of intervening higher authority, a three-judge panel should consider itself bound by the later and controlling authority, and should reject the prior circuit opinion as having been effectively overruled.” Miller, 335 F.3d at 893. The holding in American Express Co. that federal statutory claims are generally arbitrable and arbitrators can competently interpret and apply federal statutes, 570 U.S. at 233, constitutes intervening Supreme Court authority that is irreconcilable with Amaro. Amaro, therefore, is no longer binding precedent.

Seventh and Third Circuits Issue Pro-Consumer FDCPA Decisions

Two recent appellate decisions have continued the courts' exploration of how the Supreme Court's Spokeo standing decision affects cases under the Fair Debt Collection Practices Act (FDCPA). Both find that a debt collector's actions violated a right conferred on consumers by the statute and that the deprivation of the right was an injury sufficient to give the consumer standing to sue. The decisions also contain interesting holdings about how debt collectors' uses of electronic technologies may violate the FDCPA.

In Lavallee v. Med-1 Solutions, LLC, the U.S. Court of Appeals for the Seventh Circuit held that a consumer was injured when a debt collector failed to make the disclosures required by the FDCPA after an initial contact with a consumer. The consumer had discovered by coincidence that two medical debts had been referred to a collection agency, and she called the agency to discuss them. That call was her initial communication with the debt collector, and the debt collector failed to provide any of the required initial disclosures concerning the amount of the debt, the right to dispute it, and information about the creditor. The debt collector had previously sent the debtor two emails that contained links that, had she followed them, would eventually have led the debtor to the required disclosures. But she hadn't followed those links. and the court held that the emails themselves (which said nothing about any debt or about what the recipient would see if she foolishly clicked on a link in an unsolicited email) weren't initial communications, and the links that the debtor never saw were not disclosures. Thus, the court concluded, the debtor had received no initial disclosures at all, and the complete deprivation of the information the statute required the debt collector to provide her was a concrete injury.

The court's decision is important both on the subject of standing and also on the substantive issue of how a debt collector must comply with its disclosure obligations. Hiding disclosures behind a chain of links in an unsolicited email--the kind of links that savvy consumers are trained never to click on--won't qualify as disclosure, at least in the Seventh Circuit.

In DiNaples v. MRS BPO, LLC, the U.S. Court of Appeals for the Third Circuit confronted a different FDCPA issue posed by a debt collector's e-shenanigans. The debt collector sent the debtor a letter with a "QR" code on the outside of the envelope that, if scanned, revealed the debtor's account number with the collection agency. She brought suit, alleging violation of an FDCPA provision that prohibits debt collectors from placing language or symbols other than their own return addresses on envelopes containing communications with debtors. The purpose of the provision is to avoid infringing the debtor's privacy by revealing information that could be used to determine that she is the subject of debt-collection efforts. 

The court held that the debtor had standing to sue because the disclosure of confidential information (in the form of a code revealing her account number) inflicted a harm that Congress had determined was an injury. The court reasoned that, through the QR code, "protected information has been made accessible to the public," and this disclosure "is itself the harm" Congress intended to protect against. Thus, the debtor suffered an injury through the public display of private information regardless of whether anyone actually scanned the barcode and read the account number.

For similar reasons, the court held that the QR code violated the statutory prohibition on the use of symbols. Although the debt collector argued that the QR code fell within an implicit exception to the statute for "benign language," the court held there was nothing "benign" about a code that would, if scanned, reveal the debtor's account number. 

The decisions should serve as reminders to debt collectors that hiding behind technology may run afoul of the FDCPA.

Call for Abstracts for Second Annual Berkeley Consumer Law Scholars Conference

We have received the following call for abstracts (last year's conference was excellent):

The Berkeley Center for Consumer Law and Economic Justice, its director Ted Mermin, and co-organizers Abbye Atkinson, Kathleen Engel, Manisha Padi, Rory Van Loo, and Lauren Willis are pleased to announce the second annual Consumer Law Scholars Conference (CLSC), which will be held the afternoon and evening of March 5 and all day March 6, 2020, in Berkeley, CA.

The conference will support in-progress scholarship, foster a community of consumer law scholars, and build bridges with scholars in other disciplines who focus on consumer issues. The bulk of the conference will consist of paper workshop sessions at which discussants, rather than authors, introduce and lead discussions of the papers. Everyone who attends a session will be expected to have read the paper; everyone is a participant. The conference will also feature keynotes by leading practitioners and prominent policymakers, as well as time to discuss ideas and collaborate informally.

If you would like to workshop an unpublished paper, please submit: (1) a title, (2) a short abstract that grounds your work in relevant literature, and (3) an outline HERE by October 11, 2019. We will announce accepted abstracts in early November.

Potential topics may range across the full breadth of issues involving consumers in the marketplace, including, e.g.: student loan servicing and debt cancellation; online product endorsement; racial, ethnic and other disparities in treatment by lenders and by merchants; debt collection; public health disclosures; credit reporting; commercial speech and the First Amendment; the proposed Restatement of Consumer Contracts; the CFPB in theory and practice; issues of federalism, preemption, and sovereign immunity in small-dollar lending regulation; UDA(A)P and disclosure laws; consumer behavior; fintech; and the application of consumer law to abuses in the criminal justice system.

Workshop versions of the papers will be due February 3, 2020. We reserve the right to cancel workshops if the paper draft is not provided sufficiently in advance for meaningful review by participants.

Conference participants will be expected to read the papers in advance. 15 papers will be discussed over the course of 5 sessions (3 concurrently per session), meaning that each participant should be prepared to read and comment on 5 of the selected papers. Thus, please calendar at least two days of preparation time in advance of the conference. The final schedule of sessions will be distributed in early February.

LOGISTICS

Participants will cover their own travel and lodging expenses. (Berkeley Law has a very small amount available for those who could not otherwise attend.) The Berkeley Center for Consumer Law and Economic Justice will provide breakfast and lunch to all attendees on Friday. Presenters and moderators are invited to attend dinner on Thursday evening. We will reserve a block of hotel rooms nearby and will share further details on how to register soon.

Judicial identity, politics, and class certification

Law profs Stephen Burbank and Sean Farhang have written Politics, Identity, and Class Certification on the U.S. Courts of Appeals, which asks whether there are associations between personal characteristics of appellate judges and the party of the presidents who appointed those judges, among other things, and class-certification decisions. Here is the abstract:

This article draws on novel data and presents the results of the first empirical analysis of how potentially salient characteristics of Court of Appeals judges influence precedential lawmaking on class certification under Rule 23. We find that the partisan composition of the panel (measured by the party of the appointing president) has a very strong association with certification outcomes, with all-Democratic panels having more than double the certification rate of all-Republican panels in precedential cases. We also find that the presence of one African American on a panel, and the presence of two females (but not one), is associated with pro-certification outcomes. Contrary to conventional wisdom in the scholarship on diversity on the bench, such diversity may be consequential to lawmaking beyond policy areas conventionally thought to be of particular concern to women and racial minorities.

Class action doctrine is a form of trans-substantive procedural law that traverses many policy areas. The effects of gender and racial diversity on the bench, through making more precertification law, radiate widely across the legal landscape, influencing implementation of consumer, securities, labor and employment, antitrust, prisoner’s rights, public benefits, and many other areas of law. The results highlight how the consequences of diversity extend beyond conceptions of “women’s issues” or “minority issues.” The results also suggest the importance of exploring the effects of diversity on trans-substantive procedural law more generally.

Our findings on gender panel effects in particular are novel in the literature on panel effects and the literature on gender and judging. Past work focusing on substantive antidiscrimination law found that one woman can influence the votes of males in the majority (mirroring what we find with respect to African American judges in class certification decisions). These results allowed for optimism that the panel structure — which threatens to dilute the influence of underrepresented groups on the bench because they are infrequently in the panel majority — actually facilitates minority influence, whether through deliberation, cue taking, bargaining, or some other mechanism.

Our gender results are quite different and more normatively troubling. We observe that women have more pro-certification preferences based on outcomes when they are in the majority. However, panels with one female are not more likely to yield pro-certification outcomes. Female majority panels occur at sharply lower rates than women’s percentage of judgeships, and thus certification doctrine underrepresents their preferences relative to their share of judgeships.

Our suggestions regarding mechanisms that may help to explain these results are speculative and tentative. Recent scholarship on the gender gap in political discussions and decision-making illuminates some disquieting possibilities. If the dynamics identified by this research are at play, one possibility is that a female judge in the minority who vigorously advocates for a preferred outcome is less successful because, as a panel minority in a substantive domain that, unlike anti-discrimination law, does not elicit gender-based deference, she is regarded as less authoritative and influential. Another is that the reinforcement of a female majority increases her propensity to advocate preferences that differ systematically from those of her male colleagues in areas without obvious gender salience.

Luguri & Strahilevitz paper on how online companies manipulate consumers using dark patterns--and UDAP laws

Jamie Luguri and Lior Strahilevitz, both of Chicago, have written Shining a Light on Dark Patterns. Here is the abstract:

Dark patterns are user interfaces whose designers knowingly confuse users, make it difficult for users to express their actual preferences, or manipulate users into taking certain actions. They typically exploit cognitive biases and prompt online consumers to purchase goods and services that they do not want, or to reveal personal information they would prefer not to disclose. Research by computer scientists suggests that dark patterns have proliferated in recent years, but there is no scholarship that examines dark patterns’ effectiveness in bending consumers to their designers’ will. This article provides the first public evidence of the power of dark patterns. It discusses the results of the authors’ large-scale experiment in which a representative sample of American consumers were randomly assigned to a control group, a group that was exposed to mild dark patterns, or a group that was exposed to aggressive dark patterns. All groups were told they had been automatically enrolled in an identity theft protection plan, and the experimental manipulation varied what acts were necessary for consumers to decline the plan. Users in the mild dark pattern condition were more than twice as likely to remain enrolled as those assigned to the control group, and users in the aggressive dark pattern condition were almost four times as likely to remain enrolled in the program. There were two other striking findings. First, whereas aggressive dark patterns generated a powerful backlash among consumers, mild dark patterns did not – suggesting that firms employing them generate substantial profits. Second, less educated subjects were significantly more susceptible to mild dark patterns than their well-educated counterparts. Both findings suggest that there is a particularly powerful case for legal interventions to curtail the use of mild dark patterns.

The article concludes by examining legal frameworks for ameliorating the dark patterns problem. Many dark patterns appear to violate federal and state laws restricting the use of unfair and deceptive practices in trade. Moreover, in those instances where consumers enter into contracts after being exposed to dark patterns, their consent could be deemed voidable under contract law principles. The article proposes a quantitative bright-line rule for identifying impermissible dark patterns. Dark patterns are presumably proliferating because firms’ secret and proprietary A-B testing has revealed them to be profit maximizing. We show how similar A-B testing can be used to identify those dark patterns that are so manipulative that they ought to be deemed unlawful.

WSJ article about how debt settlement firms can harm consumers

Here.  Excerpt:

Companies like National Debt Relief seek out heavily indebted consumers with a promise to help them get out from under it. But regulators say these debt-settlement programs can leave customers worse off, facing high fees, damaged credit scores and unexpected income-tax bills.

* * *

Data from credit-reporting companies has been used by some debt-settlement firms to solicit consumers as their debt is rising and when many are trying to sort out their financial situation. Other firms flood mailboxes with offers of loans, but when consumers call, the pitch can be very different. * * *

Former GreenLink employees said only a small number of people who responded to the company’s mailings were offered loans. Instead, they were pitched a debt-settlement program that GreenLink sells on behalf of San Mateo, Calif.-based Freedom Debt Relief, the former employees said.

GreenLink’s salespeople were taught to “get the client’s guard down,” according to a GreenLink telephone sales script reviewed by the Journal. The Journal couldn’t determine the date of the script.