Consumer Law & Policy Blog

Second Circuit Joins Growing Chorus Placing Burden of Proof on Proponent of CAFA Jurisdiction and Slams CAFA's Fake Legislative History

    By Brian Wolfman

    The Second Circuit has just joined a number of other circuits in holding that the party invoking federal jurisdiction under the Class Action Fairness Act -- usually a defendant seeking to remove a class action from state court -- bears the burden of proof on CAFA's basic jurisdictional prerequisites (100 class members, minimal diversity, $5 million in controversy).  See Blockbuster, Inc. v. Galeno, No. 05-8019-cv (2d Cir. 12/26/06).

     I have whined on this blog on multiple occasions, including here and here, that the courts have failed to point out that the Senate Report on CAFA is not genuine legislative history because it was issued after CAFA's enactment.  In Blockbuster, the Second Circuit slammed the defendant's reliance on the Senate Report for a number of reasons and then came close to holding that the Report is not worth the paper that it's written on:  "Moreover, the Senate report was issued ten days after the enactment of the CAFA statute, which suggests that its probative value for divining legislative intent is minimal."  Right on!

        So . . . After placing the burden of proof on the removing defendant, the Second Circuit remanded the case to the district court to make findings on the jurisdictional prerequisites.  (In case you're wondering, the plaintiffs in the case claim that Blockbuster's supposed "no late fee" policy was deceptive as a matter of New York statutory and common law.)

     Noted Pittsburgh consumer lawyer Mike Malakoff is among the lawyers for the plaintiffs.  [Disclosure:  I provided a bit of assistance on the appeal.]

More on Cloned Food

    By Brian Wolfman

    Following up on a CL&P Christmas Day post on cloned foods:  Today's Washington Post reports that the FDA has declared cloned meat and milk safe for human consumption.  That doesn't mean that it's cool to tear into Dolly.  A just-released FDA draft risk assessment finds that meat and milk from clones of adult cattle, pigs, and goats, and their offspring, are as safe to eat as food from conventionally bred animals.  But because of limited data on sheep clones, the FDA does not yet recommend eating cloned sheep.  Actually, you may not want to tear into a cloned Wilbur either.  Stephen Sundlof, the head of the FDA's Center on Veterinary Medicine, says that because this is a new policy that "marks the beginning of our interaction with the public on these issues, we are continuing to ask producers of clones and livestock breeders to voluntarily refrain from introducing food products from these animals into commerce so that we will have the opportunity to consider the public's comments and to issue any final documents as warranted."  Got that?

    The FDA has issued a draft risk assessment, a proposed risk management plan, and a draft guidance for industry.  Those documents and much much more are conveniently located on the FDA's cloned food home page.  The FDA's press release provides a nice overview.

     The agency is taking public comments over the next 90 days.  People wishing to comment online can do so here.

Can Everything You Search Be Used Against You?

by Greg Beck

CNET’s Declan McCullagh highlights a recent 7th Circuit decision that hasn’t received much attention until now.  The court in United States v. Schuster upheld a hacker’s fifteen-month prison sentence for breaking into a wireless network service and interfering with other users, relying in part on the defendant's Google searches for “how to broadcast interference over wifi 2.4 GHZ,” “interference over wifi 2.4 Ghz,” “wireless networks 2.4 interference,” and “make device interfere wireless network.”  As the article points out, this is not the first time Google search terms have been used to support a criminal conviction.  A North Carolina murder defendant was convicted last year in part based on his searches for the words “neck,” “snap,” “break,” and “hold” after police recovered the search data from his computer.

Although there is no indication in the court's opinion about how prosecutors in this case obtained the search data, Google has acknowledged that it can trace searches back to a particular computer or, in some cases, to a particular user.  What exactly does Google know about you?  Its privacy policy states that it automatically records information that your browser sends whenever you visit a website. This can include your search terms, IP address, date and time of your search request, and, if you have cookies enabled, possibly your personal identity.  Google also acknowledges that it can track which links you click from its search results.  In short, Google may have several years’ worth of your search activity stored in its databases, and it may be able to connect much or all of this activity back to you.

In Time For Christmas Dinner 2007?: Will the FDA Allow the Marketing of Milk and Meat from Cloned Animals?

    Recommended reading:  Today's Washington Post story indicating that the FDA may soon allow the marketing of milk and meat from cloned animals.  Here are a couple paragraphs from the story to give you a taste of the issue:

Later this week, the [FDA] is expected to release a formal recommendation that milk and meat from cloned animals should be allowed on grocery store shelves. The long-awaited decision comes as polling data to be released this week show that the public continues to have little appetite for such food, with many people saying the FDA should keep it off the market.

The FDA decision is based on a substantial cache of data from rigorous studies, all of which have concluded that milk and meat from cloned animals is virtually identical to such products from conventional animals. Scientists have also been unable to detect health problems in laboratory animals raised on clonal food.

Ninth Circuit Cuts Exxon Valdez Punitive Damages By Half to $2.5 Billion

by Brian Wolfman

    As the Washington Post reports, in a 2-to-1 ruling on Friday, the Ninth Circuit reversed a $5 billion punitive damages award (actually, $4.5 billion plus interest) in the Exxon Valdez oil spill litigation, holding that the award exceeded constitutional limits.  In contrast to the previous two times the punitive damages issue had been before the appeals court, this time the Ninth Circuit did not remand to the district court; it just set the punitive award on its own - - at $2.5 billion.  The dissent would have upheld the entire award.  The lengthy opinions in the case are available here.  All three judges agreed that Exxon's conduct -- including putting an alcoholic in command of a massive oil tanker -- was highly reprehensible, and, thus, deserving of substantial monetary punishment.

    Is the litigation now over?  Don't bet on it.  With so much at stake, you have to figure the parties will at least petition the Ninth Circuit for en banc review.  And, with Exxon claiming that a proper punitive award should not have exceeded $25 million, why wouldn't the company, if en banc review is denied, keep the $2.5 billion in its coffers and spend a little more dough to petition the Supremes for further review?

    By the time Exxon is required to file its Supreme Court petition, we may have heard from the High Court in Phillip Morris v. Williams, which involves a punitive damages award in a tobacco personal-injury case.  Deepak Gupta blogged about the Halloween argument in Williams here.  It's possible that Exxon will be able to parlay the Supreme Court's eventual ruling in Williams into a plea to remand the Exxon Valdez litigation back to the Ninth Circuit for reconsideration in light of Williams.  It's too early to tell, of course, but rest assured that both Exxon and the plaintiffs' counsel are already considering these (and no doubt other) possibilities.

    In case you're wondering, the Exxon Valdez ran aground in 1989.

Video Explaining "Net Neutrality"

Should Internet service providers ("ISP") be able to play favorites among web sites for their own purposes?  For example, should an ISP be able to block access to one web site (Google, say) so that the ISP's customers will be more likely to use a competitor's web site (a competing search engine, for example) that just happens to pay the ISP to block access to the first web site?  This is an issue of "net neutrality," which appears to be an up and coming consumer issue.  You can find a brief video explaining net neutrality at You Tube, courtesy of Public Knowledge.

Times Takes a Look at Payday Lending

Today's New York Times has an article on payday lending, "Seductively Easy, Payday Loans Often Snowball." The piece focuses on Gallup, New Mexico, a town with a population of 22,000 that has over 40 storefront payday lending outfits, many of whose clientelle are Navajo or Hispanic. Although the Times presents the industry's spin and uses the term 'predatory lending' in scare quotes, the overall picture is one of an industry run amok at the expense of the most vulnerable consumers.

Payday lending is a hot topic around the country right now. Here are some other interesting articles from past few days: An piece in the Virginian-Times Pilot discusses North Carolina's successful efforts to combat payday lending, including providing low-cost alternatives: Will Virginia adopt North Carolina's example? In Arkansas, this article reports, legislators have introduced a bill to curb payday lending because the state supreme court hasn't enforced the state constitution's usury cap. And in Oregon, the industry has found ways to get around recent anti-payday-lending laws. (For more information, see this page at Center for Responsible Lending's website.)

Partial D.C. Circuit Victory in Hurricane Katrina Housing Assistance Case

by Deepak Gupta

A few weeks ago, I posted about our victory on behalf of Hurricane Katrina evacuees in a lawsuit against FEMA in the U.S. District Court for the District of Columbia. The court ruled that FEMA's procedures for notifying hurricane evacuees of their ineligibility for housing assistance were so inadequate that they violated minimal constitutional standards of due process. To remedy that violation, the court ordered FEMA to provide new notices and appeal rights to thousands of families (most of them in Houston and other cities in Texas), restore their short-term housing assistance, and make retroactive payments to those whose benefits were cut off after the case was filed. Over the past several weeks, we've been fighting FEMA's efforts to resist complying with the court's order, while at the same time fighting FEMA's efforts to stay the order in the D.C. Circuit. Many of the filings in the case can be found at this link.

Today, the D.C. Circuit ruled on FEMA's stay request, granting in part and denying in part. The court left intact the injunction requiring new notices to the evacuees, but stayed the prospective restoration and retroactive relief. You can read the court of appeals ruling here and a report by the Houston Chronicle here. Earlier, excellent coverage of the story in the Chronicle is available here, here, here.

Below the jump, I've posted the statement of my colleague Mike Kirkpatrick, lead counsel in the case.

Center for Responsible Lending Report Predicts 2.2 Million Subprime Borrowers Face Foreclosure

A study by the Center for Responsible Lending predicts that nearly one out of every five subprime loans issued in the last two years will end up in foreclosure and that foreclosures will cost homeowners $164 billion.  That's a frightening--if not terrifying--prediction.  Of course, the lenders and borrowers on those loans must have a different expectation.  The Report also contains some policy recommendations and discusses some of the effects such high foreclosure rates might have. 

Don't Forget About NCLC's Consumer Law Practice Manuals

by Brian Wolfman

    The recent publication of revised editions of two National Consumer Law Center practice manuals reminded me that I wanted to post something about the availability of NCLC's publications.  This month, NCLC came out with the 6th edition of Fair Credit Reporting and the 8th edition of Consumer Bankruptcy Law and Practice.  These manuals are part of NCLC's 17-volume set of consumer law practice manuals.  They are available as a set or one-by-one.  Each volume provides a comprehensive textual review of the subject matter supported by the relevant legal authorities. The manuals come with searchable CD-Roms that contain statutes, legislative histories, agency documents, sample pleadings, and other items.  I find the manuals extremely useful because they help me get a jump-start on research, giving me ideas for further inquiry and saving me time.  And, for the uninitiated, the manuals also provide a background understanding of the relevant body of law before delving into the nitty-gritty.  My personal favorites are Fair Debt Collection and Consumer Class Actions.

    I'm not NCLC's publicist, I'm not on commission, and NCLC didn't ask me to do this.  But I know a good thing when I see it.  If you are interested in learning more about NCLC's publications, everything you need to know is available here.