Consumer Law & Policy Blog

Continuing issues of redactions of the judicial records in the Rosetta Stone trademark appeal

by Paul Alan Levy

Last month, I discussed the appellate brief filed by Rosetta Stone in its appeal from a trial court’s dismissal of its trademark lawsuit over Google’s practice of allowing advertisers to pay for ads directed to Google users who express an interest in trademarked terms.  The redactions were not based on any objective determination of the need for secrecy, but instead on unilateral stamping of discovery materials as “confidential” coupled with the parties’ consent to allow such restriction son public access because neither had any interest in contesting even the flimsiest of the other side’s claims of need for secrecy.   Public Citizen told the parties that, unless the brief were filed in unredacted form, it would seek leave to intervene to seek unsealing.

CL&P Roundup

by Deepak Gupta

Arbitration and Class Actions: On Saturday, The New York Times ran an editorial entitled "The Arbitration War," supporting consumers and state law in AT&T v. Concepcion. The Wall Street Journal's ed board, allowing its antipathy to class actions to trump core federalism principles, has taken the opposite side of the debate. You can watch me attempt to defend our side on Fox Business:

For a much broader perspective on the Supreme Court's FAA jurisprudence, check out the recent posts by Lawrence Cunningham of George Washington Law at Concurring Opinions (here, here, and here), discussing Concepcion and previewing his forthcoming law review article on the uneasy relationship between the Court's cases and traditional notions of contract law.

The Fed and Foreclosures: That's the title of a Times editorial from yesterday's paper, taking aim at a a troubling proposal by the Federal Reserve Board that would, as PIRG's Ed Mierzwinski puts it, effectively "rescind the homeowner's right to rescind" -- a key protection under the Truth in Lending Act -- just when consumers need it most. Hundreds of consumer, civil rights, legal services, community and labor groups and private and public interest attorneys representing homeowners, along with the coalition Americans for Financial Reform, have urged the Board to withdraw the proposed rule.

Elizabeth Warren, the CFPB, and the White House: At the Huffington Post, Simon Johnson of MIT defends "The Economics and Politics of Elizabeth Warren" and Shahien Nasiripour looks at Warren's pivotal role in getting President Obama to veto an under-the-radar bill on foreclosure documentation that had somehow passed both houses of Congress without public attention. The WSJ and Bloomberg pick through Professor Warren's schedule and focus on her meetings with bankers.

Kiplinger: Elizabeth Warren Explains What We Can Expect from the New Consumer Agency

Here.  Sounds like the initial focus is on making disclosures for credit cards and mortgages readable so that consumers can compare them.  That is a worthwhile goal, but some of us are skeptical about how much disclosures can accomplish.  Perhaps those limits will be addressed later--or maybe better disclosures will be more effective than some of us think.

Paper on Capping the Costs of Consumer Arbitration

Michelle Eviston and Richard A. Bales, the latter of Northern Kentucky University - Salmon P. Chase College of Law, have written Capping the Costs of Consumer and Employment Arbitration, forthcoming in the University of Toledo Law Review.  Here's the abstract:

Arbitration agreements requiring arbitration but imposing costs of thousands of dollars can effectively make it impossible for consumers and employees to bring their disputes in any forum. The Supreme Court has stated that high costs can make an arbitration agreement unenforceable, but has not articulated clear standards. Lower courts are split two ways on the issue: some courts have adopted a per se approach and others a case-by-case approach. This article argues that the Federal Arbitration Act should be amended to take a third approach: arbitration fees paid by consumers or employees should be limited to what consumers or employees would pay if they litigated their claim.

 

Come "Hell or High Water"

Back in the day, scammers would rely on the holder-in due-course doctrine to enforce promissory notes against consumers who purchased worthless or defective goods. Today, it is the “hell or high water” lease of Article 2. Preying mostly on small businesses, the scam involves “leasing” equipment to a business, paid for through a finance lease or Equipment Rental Agreement [ERA]. The lease is either assigned to a third party or set up as a separate transaction, and the lessor claims no liability when the vendor delivers defective goods, fails to deliver, or files bankruptcy The lease contains provisions precluding any warranty liability, a choice of law clause and a forum selection clause. Under the provisions of the lease, the consumer is required to pay hundreds of dollars a month for several years, for a product that was either never delivered or never functioned.

In one of the first reported cases to challenge this practice, the Federal Trade Commission used §5 as a basis to assert a claim. Federal Trade Commission v. IFV Credit Corp involved the sale of telecommunications equipment. IFC, a privately held Illinois corporation in the equipment leasing business, sometimes purchases portfolios of equipment leases from other companies. Between 2003 and 2004, it purchased from NorVergence at a substantial discount about 800 of the ERAs with a face value of $ 21 million. The complaint charges that after three years, NorVergence's scheme collapsed, leaving the lessees with no telecommunications services, a worthless MATRIX box, and lease payments that in some cases approached $160,000. The lease in question had the typical “hell or high water” language:

YOUR DUTY TO MAKE THE RENTAL PAYMENTS IS UNCONDITIONAL DESPITE EQUIPMENT FAILURE, DAMAGE LOSS OR OTHER PROBLEM. RENTER IS RENTING THE EQUIPMENT "AS IS", WITHOUT ANY WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE IN CONNECTION WITH THIS AGREEMENT. IF THE EQUIPMENT DOES NOT WORK AS REPRESENTED BY THE MANUFACTURER OR SUPPLIER, OR IF THE MANUFACTURER OR SUPPLIER OR ANY OTHER PERSON FAILS TO PROVIDE SERVICE OR MAINTENANCE, OR IF THE EQUIPMENT IS UNSATISFACTORY FOR ANY REASON, YOU WILL MAKE ANY SUCH CLAIM SOLELY AGAINST THE MANUFACTURER OR SUPPLIER OR OTHER PERSON AND WILL MAKE NO CLAIM AGAINST US.

The court denied the defendant’s motion for summer judgment, quoting Justice Story, "It would be strange, indeed, if parties could be allowed, under the protection of its forms, to defeat the whole objects and purpose of the law itself."

I have seen similar leases, with even more egregious facts, in Texas. My guess is that this is a major consumer scam. Hopefully, the FTC and state attorney generals will act promptly to stop it.

 

 

WSJ Report: How Republicans Plan to Attack the CFPB

Here.  The article reports that two Members of Congress have "sent letters to the inspectors general of both the Treasury Department and the Federal Reserve, directing them to conduct an investigation into the work being done to establish the new bureau."

Consumer Groups File FTC Complaint To Curb Unfair and Deceptive Online Health Care Marketing

Today, the Center for Digital Democracy, U.S. PIRG, Consumer Watchdog, and World Privacy Forum filed this 144-page complaint demanding that the Federal Trade Commission investigate unfair and deceptive advertising practices faced by consumers when they seek health information and services online. According to the consumer groups' joint press release . . .

Consumers now confront a sophisticated and largely stealth interactive medical marketing apparatus that has unleashed an arsenal of techniques designed to promote the use of specific brand drugs and influence consumers about treatments for health conditions. Much of the online health marketing system has been deliberately structured to collect personal information and other data on consumers, including through the use of free e-newsletters on specific medical concerns; discounts for prescription drugs and services; and via the growing number of other online data profiling techniques.

The complaint names Google, Microsoft, QualityHealth, WebMD, Yahoo, AOL, HealthCentral, Healthline, and Everyday Health as among the culprits. The complaint seeks a wide range of relief, including that the FTC

• Examine and analyze the data collection and usage practices of pharmaceutical advertisers, in order to assess the extent of consumer information collected through websites, social networks, online video sites, and other interactive means.
• Require companies engaged in digital marketing of health products to provide information on the kinds of online targeting techniques and methods they employ, especially behavioral advertising and retargeting.
• Conduct a review of the privacy policy pages on health and pharmaceutical websites and services, including the leading social networks promoting health products. * *  *
• Investigate whether there is a violation of the FTC’s Endorsement guidelines ... when advice is given to patients or consumers from seemingly independent health bloggers who fail to disclose that they are paid or sponsored by pharmaceutical or other companies.
• Investigate the use of “unbranded” sites funded by pharmaceutical companies, in order to assess whether such sites are structured and designed to support the promotion of specific drugs.
• Conduct an inquiry on the use of neuromarketing-related techniques designed to influence or measure subconscious responses. *  *  *
• Work with the Food and Drug Administration and other appropriate agencies to develop a set of policies for regulating the use of behavioral targeting, data collection, and other digital techniques in the marketing of drugs and health-related products.

Federal Prosecutors on Verge of Announcing Major Insider Trading Indictments

Apparently, the U.S. Attorney's Office in Manhattan, working with the FBI, will soon be announcing criminal charges in a major insider trader case that will target Wall Street traders and executives.

DOJ's Access to Justice Initiative Announces New Programs

The head of the Department of Justice's Access to Justice Initiative, Harvard law prof Laurence Tribe, announced three new programs today: (1) a toll-free number that will connect overtime and minimum wage claimants to an American Bar Association-sponsored lawyer referral service; (2) a joint Department of Veterans Affairs/Legal Services Corporation project, including a website, to provide veterans advice on many legal issues, including those related to foreclosure, consumer fraud, and employment; and (3) efforts (including a report issued today) to improve the effectiveness of foreclosure-avoidance mediation programs. Read about it here and here. Professor Tribe will be leaving his DOJ post and returning to Harvard next month.

New Yorker Article on Debt Collector

The October 11 issue of the New Yorker has a piece titled Letter from Buffalo: Pay Up by Jake Halpern that presents an interesting profile of a Buffalo debt collector.  The debt collector is struggling to make enough money to keep his business afloat and care for his family, and the article describes how he resists the temptation to engage in illegal debt collection activities even though eschewing them may cost him his business.  A link is not available to the article, but if you are interested in debt collection, it would be worth it to pick the piece up.  (Hat tip to Dee Pridgen).