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Sunday, February 03, 2008

Texas Supreme Court: Threat or Menace?

The Texas Supreme Court, since the turn of the Millennium, never met a defendant it didn’t like. In an opinion delivered on February 1, it once again proved that to be the case, when it reversed and rendered judgment in yet another class action case, DaimlerChrysler Corp. v. Inman.

But wait there’s more: There is a dissent! And the dissent is written by the Chief Judge!! And there are three more justices on the dissent, making this a 5-4 decision!!!

Because the majority decision is allegedly based on standing law, it’s important to understand the basis of the case. The seat belts on plaintiffs’ cars (and trucks — this is Texas, after all) could accidentally come unlatched in an accident. Since none of them was unfortunate enough to have already been hurt when the belts failed in a collision, plaintiffs only asked for economic damages — the cost of replacing defective belts with ones that actually worked.

Telling the plaintiffs, “You’re not dead yet,” the majority held that the possibility of harm was just too darn small, so no standing.

When plaintiffs attempted to point out that this would be a merits decision in any normal court, the majority responded that “standing, and the concrete injury it requires, is quite distinct from the merits of a claim and the injury required to prove it.”

Okay, let me see if I understand this. If I have a meritorious claim and can prove my injury, in Texas I am simply out of luck if five justices decide that I am whining about unimportant things.

The Chief Justice, in dissent, concluded that, “Today, the Court conducts an extraordinary and unworkable reading of both pleading and precedent . . ..  We have never before stretched the doctrine this far. The Court’s opinion reveals a visceral distaste for class actions.”

”Oh, yeah?“ say his five brethren (yup — all men; the lone woman on the court is in dissent). And here’s the rebuttal “We simply think that the rights of ten million vehicle owners and lessees across the United States should not be adjudicated in an action brought by three plaintiffs who cannot show more than the merest possibility of injury to themselves.“ An interesting argument in rebuttal, since it seems to provide support for the position asserted.

Okay, let me see if I understand this. The majority does not have a visceral distaste for class actions — it simply doesn’t believe they should exist at all.

Another point of note came fairly early, when the majority wrote, “In designing seatbelt buckles, the risk of injury from accidental release of easy-to-unlatch buckles must be balanced against the risk of injury from non-use of hard-to-unlatch buckles, for either way, there is risk. The National Highway Traffic Safety Administration is charged with being sure that balance is struck in the right place for vehicles sold throughout the country. The decision is not one for a jury in one state or another to make for the rest of the nation. NHTSA has never required that the Gen-3 buckles be recalled and replaced.”

Absolutely right, your honors! Why in the world should we respect the rules of court or the fundamental tenets of our judicial system, if NHTSA hasn’t done anything?

Thank goodness Texas has a radically activist court willing to leap into the breach to protect someone. Pity it’s a German multinational.

Posted by Steve Gardner on Sunday, February 03, 2008 at 01:56 PM | Permalink | Comments (1) | TrackBack (0)

The mortgage mess explained

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The good folks at NEDAP in New York have made a wonderful video of one woman's testimony about how an ordinary, well-educated middle class homeowner can find herself facing foreclosure. We need more first-person accounts from foreclosure victims like this one.

Posted by Alan White on Sunday, February 03, 2008 at 11:10 AM in Predatory Lending | Permalink | Comments (0) | TrackBack (0)

Saturday, February 02, 2008

Groups to Congress: Make BofA clean up Countrywide

Fishcartoon1_2In a February 1 letter, four community development and advocacy groups have called on Congress to hold hearings on the BankofAmerica acquisition of Countrywide, a merger that will make BofA the nation's largest mortgage lender and servicer. The groups want Congress to determine whether BofA will devote adequate resources to foreclosure prevention and loan modifications, given BofA's past record of following acquisitions with layoffs.

The groups also call attention to the fact that after the merger BofA will have more than 10% of all bank deposits nationwide, which could violate federal law. BofA says there is a loophole, and that deposits held by federally-chartered thrifts like Countrywide FSB don't count towards the 10% concentration cap. For banking law geeks, this is a question governed by 12 USC 1842 and the definitions in 12 USC 1841.

Meanwhile a hedge fund wants to block the merger on the grounds that the $8 per share offered by BofA to Countrywide shareholders is too low (?). Countrywide Financial (CFC) has been trading between $6.00 and $7.50 in the last few days.

Posted by Alan White on Saturday, February 02, 2008 at 04:45 PM | Permalink | Comments (0) | TrackBack (0)

Friday, February 01, 2008

CPSC Drags Its Feet on Critical Safety Warnings

Cpscbanner5_2  A new Public Citizen report, Hazardous Waits: CPSC Lets Crucial Time Pass Before Warning Public About Dangerous Products, takes the Consumer Product Safety Commission to task for failing to compel manufacturers to provide prompt notice of hazardous products and raps the CPSC for dragging its feet on passing those warnings on to the public.  A study of 46 cases since 2002 in which the CPSC fined companies for violating the reporting law — which calls on manufacturers to notify the agency "immediately" after learning of product safety risks — found that companies waited an average of 993 days, or 2.7 years, before informing the CPSC. The CPSC then delayed an average of 209 additional days before warning the public. 

The hazards that were kept from the public are serious. They included coffee makers and vacuum cleaners prone to catching fire, treadmills that spontaneously accelerated to an Olympic miler’s pace, all-terrain vehicles with throttles that became stuck in the “go” position, bicycles with forks that could break under normal use, and infant swings that could cause strangulation and were implicated in six deaths.

Continue reading "CPSC Drags Its Feet on Critical Safety Warnings" »

Posted by Public Citizen Litigation Group on Friday, February 01, 2008 at 04:56 PM in Consumer Legislative Policy, Consumer Product Safety | Permalink | Comments (1) | TrackBack (0)

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