Consumer Law & Policy Blog

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Friday, August 06, 2010

Houlihan Smith Drops Its Lawsuit Against 800Notes

by Paul Alan Levy

As previously discussed here, Houlihan Smith, a Chicago investment bank, obtained a temporary restraining order against 800Notes.com after it refused to remove negative comments from consumers (and former employees) but then was denied a preliminary injunction after Julia Forte, the operator of 800Notes, got notice of the suit and was able to call to the Court's attention section 230 of the Communications Decency Act, as well as the plaintiff’s factual misrepresentations and faulty legal arguments.   Houlihan Smith has now dismissed its action with prejudice.  Houlihan Smith initially refused to withdraw its suit, even after Forte moved to dismiss, but also missed the deadline for opposing the motion to dismiss and finally began to pay attention to the case again after Forte threatened to seek Rule 11 sanctions.  Forte has begun the process of seeking an award of attorney fees under the same statutory fee provisions that Houlihan Smith itself had invoked in its complaint.

Posted by Paul Levy on Friday, August 06, 2010 at 01:53 PM | Permalink | Comments (0) | TrackBack (0)

State Anti-Predatory Lending Laws Mitigated Foreclosures

by Alan White

Foreclosure-sign Following up on our prior studies, we have posted a new paper finding that states with effective anti-predatory mortgage lending laws had fewer risky subprime loan originations and lower default and foreclosure rates than states without effective laws.  This new paper relies on loan-level data for 1.2 million mortgages observed monthly through 2008, and standard regression analysis to control for non-legal variables differing between states with and without effective laws. The effectiveness of state laws holds both at the state-wide level and when looking at metropolitan areas on borders between states with and without effective laws. 

Posted by Alan White on Friday, August 06, 2010 at 01:11 PM in Consumer Law Scholarship, Consumer Legislative Policy, Foreclosure Crisis, Preemption | Permalink | Comments (0) | TrackBack (0)

CL&P Roundup

by Deepak Gupta

  • Banks Pressure Consumers As Overdraft Deadline Nears: Facing an August 15th deadline for existing bank customers to opt in to high-cost overdraft programs, bankers are using aggressive, often misleading marketing to target the most vulnerable cusomers, according to a new report. [Center for Responsible Lending]
  • Elena-kagan  Kagan and Consumer Issues: Do we know anything about near-Justice Elena Kagan's views on consumer law and policy, or on particular issues like preemption, arbitration, or class actions?  The answer, in my view, is no--not really. One journalist predicts Justice Kagan will be a pro-regulation "pocketbook pragmatist."  
  • The Justice That Wasn't.  At least one of Kagan's fellow shortlisters, by contrast, had a significant paper trial on consumer issues. Judge Diane Wood of the Seventh Circuit, a prolific scholar, has written knowledgeably about the problems of mandatory arbitration in the consumer context: "The problems we are encountering today have come as arbitration has expanded to two new areas: consumer transactions, and statutory claims. If arbitration is to play a significant role in the enforcement of public law, then arbitration itself must become more publicly accountable." Maybe she'll get the next seat?
  • Professor Tribe on Taking Adjudication Private: Speaking to a gathering of state chief justices in his capacity as Senior Counselor for Access to Justice in the Obama Administration, Larry Tribe notes the hazards of private dispute resolution. "Adjudication conducted out of the public's sight mystifies instead of educating, depriving democracy of one of its essential wellsprings, that of seeing justice done." [ADR Prof Blog]

Posted by Public Citizen Litigation Group on Friday, August 06, 2010 at 07:00 AM in CL&P Roundups | Permalink | Comments (0) | TrackBack (0)

Thursday, August 05, 2010

Will the Supreme Court Issue a Wildly Activist Decision in AT&T Mobility v. Concepcion?

by Paul Bland, Claire Prestel, and Melanie Hirsch

658238_u_s__supreme_court_hallway The consumer and civil rights communities are closely watching AT&T Mobility v. Concepcion, a case that will be argued in the Supreme Court this November.  Depending on how broadly the Court reads the question presented in Concepcion, the case could decide the fate of consumer and employee class actions for years to come.

[Disclosure: Deepak Gupta of Public Citizen Litigation Group, which hosts this blog, is counsel of record for the respondents in Concepcion. The views expressed in this article are solely those of the authors.]

The Corporate Abuse at the Heart of Concepcion

The Concepcion case involves the widespread corporate practice of using standard-form contracts to ban class actions.  Many state courts have held such class-action bans unenforceable, but AT&T Mobility (“ATTM”) has asked the Supreme Court to find that at least some of that state law is preempted by the Federal Arbitration Act (“FAA”).  To understand why the Court’s holding in Concepcion could be so significant, it is important to understand how class-action bans come to be and why they are often disastrous for consumers and employees.

Class-action bans are contract terms that purport to prevent consumers and employees from ever participating in class proceedings.  As in Concepcion, they are often buried in companies’ standardized arbitration clauses. Class-action bans favor companies at consumers’ and employees’ expense, but companies can impose them unilaterally because they draft the contracts. Consumers and employees rarely have time to read the lengthy agreements companies send them, let alone the ability to understand their dense legalese. And even if they did, few consumers or employees could negotiate the contracts’ terms.

Companies love imposing class-action bans because they dramatically undermine enforcement of consumer- and employee-protection laws.  Unlike European countries which mostly rely on large and powerful government agencies to enforce consumer protection and civil rights laws, the U.S. has relatively small government agencies which handle relatively few cases.  Most enforcement of these laws in the U.S. is done by private parties.  We rely upon individual consumers or employees who’ve been cheated or discriminated against to bring cases enforcing these laws.  Many types of illegal behavior can be addressed through individual cases by a single consumer.  But the reality is that many types of illegal behavior that harm very large numbers of people – thousands, sometimes hundreds of thousands of individuals – can only be meaningfully addressed through class actions.

Continue reading "Will the Supreme Court Issue a Wildly Activist Decision in AT&T Mobility v. Concepcion?" »

Posted by Paul Bland on Thursday, August 05, 2010 at 11:28 AM in Arbitration, Class Actions, Preemption, U.S. Supreme Court | Permalink | Comments (3) | TrackBack (0)

Wednesday, August 04, 2010

Colbert Report Takes on CFPB, Elizabeth Warren, Mandatory Arbitration, and Barney Frank

Among other things, listen to Stephen read from the mandatory arbitration clause in his credit card agreement. Enjoy:
The Colbert ReportMon - Thurs 11:30pm / 10:30c
Consumer Protection Agency - Barney Frank
www.colbertnation.com
Colbert Report Full Episodes2010 ElectionFox News

Posted by Public Citizen Litigation Group on Wednesday, August 04, 2010 at 11:40 PM in Arbitration, Consumer Financial Protection Bureau, Consumer Legislative Policy, Unfair & Deceptive Acts & Practices (UDAP) | Permalink | Comments (0) | TrackBack (0)

The Push For Elizabeth Warren To Head The CFPB Continues

162 former students and 140 academics have written President Obama urging Elizabeth Warren's appointment as head of the new Consumer Financial Protection Bureau.

Posted by Brian Wolfman on Wednesday, August 04, 2010 at 10:03 PM | Permalink | Comments (0) | TrackBack (0)

Jeff Gelles Comment on WSJ Credit Card Tricks Article

by Jeff Sovern

Brian posted a link earlier this week to the Wall Street Journal article on new tricks to get around the Credit CARD Act.  Jeff Gelles of the Philadelphia Inquirer has written a comment on the WSJ article, arguing, I think correctly, that while pricing mechanisms that conceal the true price from consumers--some of which were described in the article--do indeed qualify as tricks and traps, merely increasing prices openly is not a trick because it doesn't deceive consumers (though, of course, price increases don't make consumers happy).

Posted by Jeff Sovern on Wednesday, August 04, 2010 at 08:27 PM in Other Debt and Credit Issues | Permalink | Comments (0) | TrackBack (0)

Amici Invited to Argue in Hot News Appeal

by Paul Alan Levy

In a sign of interest in the broader policy ramifications of the appeal of the “hot news” ruling that forbade flyonthewall.com from providing prompt reports on investment recommendations, the United States Court of Appeals for the Second Circuit has invited counsel for amici curiae supporting each side, as well as one amicus supporting neither party, to participate in the oral arguments on Friday. 

Posted by Paul Levy on Wednesday, August 04, 2010 at 02:23 PM | Permalink | Comments (0) | TrackBack (0)

Tuesday, August 03, 2010

Petitioner's Brief Filed in AT&T v. Concepcion (Enforceability of Class-Action Bans)

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by Deepak Gupta

We're previously mentioned AT&T v. Concepcion, a case in which the U.S. Supreme Court will decide whether class-action bans in consumer and employment contracts may be held unconscionable, and hence unenforceable, under generally applicable state contract law.  Because they have embedded these class-action bans in their standard arbitration agreements, corporate defendants have repeatedly argued that such state-law rulings are preempted by the Federal Arbitration Act of 1925. The lower courts, both state and federal, have uniformly rejected that preemption argument.  Public Citizen Litigation Group represents the respondents, Vincent and Liza Concepcion, the California consumers who seek to bring a consumer fraud class action against AT&T.

Yesterday, AT&T filed its opening brief. Read it here. 

When the amicus briefs supporting AT&T are filed next week, we'll post them here as well.

Posted by Public Citizen Litigation Group on Tuesday, August 03, 2010 at 09:41 PM in Arbitration, Class Actions, Preemption, U.S. Supreme Court | Permalink | Comments (0) | TrackBack (0)

WSJ: Credit Card Companies Have "New Credit-Card Tricks"

Credit-cards  The Wall Street Journal explains here that after the new Credit Card Act became effective last February, credit card companies were barred from making profits in certain ways. For instance, the Act generally bans "universal default" -- that is, credit card companies cannot raise rates on one credit card account (or all of a consumer's other accounts) just because the consumer was late or missed a payment on another, separate account. 

So, the companies are turning to other ways to make money, some of which are perfectly legal, such as raising annual fees, and some that may "skirt[] the new rules." This raises the question whether the new Consumer Financial Protection Bureau established by the Dodd-Frank legislation will go beyond the Credit Card Act and seek to bar some credit card company practices as unfair and/or deceptive.

Posted by Brian Wolfman on Tuesday, August 03, 2010 at 02:43 PM in Consumer Financial Protection Bureau, Consumer Legislative Policy, Unfair & Deceptive Acts & Practices (UDAP) | Permalink | Comments (0) | TrackBack (0)

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