Consumer Law & Policy Blog

Will The Lawyer Surplus Be Good News For Consumers?

As discussed in this New York Times article by Catherine Rampell, survey data show that in every state except Wisconsin and Nebraska (plus D.C.) more lawyers are passing the bar exam each year than there are "annual job openings" for lawyers in those states. In many states, the  lawyer surpluses are large (click on the chart to enlarge):

There's at least a couple things screwy here. First, the D.C. statistics tell us nothing. Few people take (and pass) the D.C. bar because it makes more sense to be barred somewhere else and then waive into D.C. (in light of D.C.'s very liberal rule on waiving in). So, the number of jobs in D.C. will always exceed the number of people who pass the D.C. bar exam regardless of the health of the legal job market in D.C. This same phenomenon may screw up the stats in other states as well.

Second, what does the survey mean by "annual job openings" for lawyers? Does it mean jobs at private law firms and goverment? What about jobs for lawyers in businesses? Does the survey include "openings" for lawyers who pass the bar and go into law practice for themselves? The system of law school accreditation, law schools' decisions to limit the size of their classes, and the requirement that lawyers pass a bar exam before being licensed to practice law -- all of which are signifcant anti-free-market barriers to entry -- artificially keep the supply of lawyers lower than it would otherwise be. So, why is there a surplus of lawyers at all? Shouldn't there be a shortage of lawyers?

In any event, if there is a substantial surplus, that's bad news for law graduates saddled with large debts who cannot find jobs. But it may be good news for consumers who should be able to hire lawyers at lower prices. Are legal fees declining?

Watch "Hot Coffee" Tonight on HBO

A new HBO documentary entitled "Hot Coffee: Is Justice Being Served?" premiers tonight, Monday, June 27, at 9 pm eastern and pacific time (8 pm central time) (People in the mountain states are not permitted to watch.) The documentary concerns the corporate disinformation campaign -- largely successful to date -- to depict the civil justice system as corrupt and rife with frivolous litigation that benefits only lawyers, not injured people and not society at large. The documentary's title refers to the famous McDonald's Coffee Case, erroneously depicted by the anti-civil-justice system crowd as the epitome of frivilous litigation. Read about the real facts of the McDonald's case here.

View the film's official trailer here:

   

 

Supreme Court Strikes Down Arizona Public Financing Statute On First Amendment Grounds

The Arizona law provided public funds to candidates who opted in to the system. The funds could be adjusted upward, in limited amounts, to offset privately funded competitors. By a vote of 5-to-4 (with Chief Justice Roberts writing, and Justices Scalia, Kennedy, Thomas, and Alito joining him), the Supreme Court held today that the Arizona law (and presumably therefore others around the nation like it) is unconstitutional because it violates the free-speech rights of the privately-funded candidates:

Here is the begining of Justice Kagan's dissent:

Imagine two States, each plagued by a corrupt political system. In both States, candidates for public office accept large campaign contributions in exchange for the promise that, after assuming office, they will rank the donors’ interests ahead of all others. As a result of these bargains, politicians ignore the public interest, sound public policy languishes, and the citizens lose confidence in their government.

Recognizing the cancerous effect of this corruption,voters of the first State, acting through referendum, enact several campaign finance measures previously approved by this Court. They cap campaign contributions; require disclosure of substantial donations; and create an optional public financing program that gives candidates a fixed public subsidy if they refrain from private fundraising. But these measures do not work. Individuals who “bundle” campaign contributions become indispensable tocandidates in need of money. Simple disclosure fails to prevent shady dealing. And candidates choose not to participate in the public financing system because thesums provided do not make them competitive with their privately financed opponents. So the State remains afflicted with corruption.

Voters of the second State, having witnessed this failure, take an ever-so-slightly different tack to cleaning up their political system. They too enact contribution limits and disclosure requirements. But they believe that the greatest hope of eliminating corruption lies in creating an effective public financing program, which will break candidates’ dependence on large donors and bundlers. These voters realize, based on the first State’s experience, thatsuch a program will not work unless candidates agree to participate in it. And candidates will participate only if they know that they will receive sufficient funding to run competitive races. So the voters enact a program that carefully adjusts the money given to would-be officeholders, through the use of a matching funds mechanism, in order to provide this assurance. The program does not discriminate against any candidate or point of view, and it does not restrict any person’s ability to speak. In fact, by providing resources to many candidates, the program creates more speech and thereby broadens public debate. And just as the voters had hoped, the program accomplishes its mission of restoring integrity to the political system. The second State rids itself of corruption.

A person familiar with our country’s core values—our devotion to democratic self-governance, as well as to “uninhibited, robust, and wide-open” debate, New York Times Co. v. Sullivan, 376 U. S. 254, 270 (1964)—might expect this Court to celebrate, or at least not to interfere with, the second State’s success. But today, the majority holds that the second State’s system—the system that produces honest government, working on behalf of all the people—clashes with our Constitution. The First Amendment, the majority insists, requires us all to rely on the measures employed in the first State, even when they have failed tobreak the stranglehold of special interests on elected officials.

I disagaree.

Cramming on Phone Bills Gone Wild

As explained in yesterday's LA Times, the practice of phone company "cramming" -- that is, the placement of bogus charges on your phone bill -- has gotten out of control:

Cramming — the process of placing unauthorized charges on phone bills — has grown to epidemic proportions and affects 15 million to 20 million people each year, said Federal Communications Commission Chairman Julius Genachowski, who should know. These charges are often so surreptitious that consumers never see them. Only 1 in about 20 victims of cramming realize it, according to an FCC study. The rest pay their bills never knowing that the total is inflated by unauthorized fees, Genachowski said. As a result, relatively minor charges add up to hundreds of dollars each year. *** Cramming charges typically amount to between 99 cents and $19.99 a month. The reason such charges are commonly overlooked is that they're often described in generic language like "service fee" or "call plan" or "membership." This happens even though the FCC's truth-in-billing rule demands clear, plain-English disclosures.

Go here to listen to a speech by FCC Chair Julius Genachowski on the topic.

Don't forget that that the companies that perpetrate cramming are the same companies that include class action bans in aribration clauses in their take-it-or-leave-it contracts with consumers. These are the bans that the Supreme Court has said the states are powerless to render unenforceable through state-law unconscionability doctrine.

Diabetes Health Crisis Worsening

As explained by the Washington Post here, the worldwide diabetes crisis is worsening because people in developed and developing countries are becoming fatter and more inactive. Beyond the increases in serious illnesses, as today's obese and sedentary children become older, the economic costs to society will be staggering: 

Nearly 10 percent of the world’s adults have diabetes, and the prevalence of the disease is rising rapidly. As in the United States and other wealthy nations, increased obesity and inactivity are the primary cause in such developing countries as India and in Latin America, the Caribbean and the Middle East. That’s the sobering conclusion of a study published Saturday in the journal Lancet that traces trends in diabetes and average blood sugar readings in about 200 countries and regions over the past three decades. The study’s findings predict a huge burden of medical costs and physical disability ahead in this century, as the disease increases a person’s risk of heart attack, kidney failure, blindness and some infections.

The Bible and the Consumer Financial Protection Bureau

by Jeff Sovern

Many opponents of the CFPB come from the so-called Bible Belt, so it's interesting to see what the Bible says about consumer protection.  I am not by any means a biblical scholar, but in the course of studying consumer law, I've come across some relevant quotes.  If you know of others, please add them to the comments.

Leviticus 19:14 commands "You shall not put a stumbling block in the path of the blind."  A Jewish studies student explained to me that this has been interpreted as meaning that you should not deceive ignorant consumers.  Of course, we now know that such consumer ignorance led to the Great Recession.  One of the Bureau's goals has been to aid consumers in understanding consumer credit contracts; to this end, it has already begun its "Know Before You Owe" campaign.

Similarly, the Bible warns against stealing another's mind.  Ancient sages saw this too as an injunction against deception.  Thus, the Talmud, a text written centuries ago by rabbis, instructs butchers not to sell meat from a diseased animal, even at a fair price for meat from such an animal, without disclosing the source of the meat.  So again we see a focus on disclosure and understanding.  More support for the Bureau.

Leviticus also states "Just weights and measures shall you have."  Lev. 19:36.  The Talmud expanded on this when it instructed shopkeepers on how often they are obliged to clean their weights.  Certainly the predatory loans the Bureau is intended to prevent are not "just." 

Exodus 22:25 says: "If you lend money to any of my people with you who is poor, you shall not be to him as a creditor, and you shall not exact interest from him."   Debt buyers, to take only one example, act as creditors, and so violate this command, and the Bureau has some authority to regulate the behavior of debt collectors.  I won't even address the part of the sentence that speaks to exacting interest, since Congress defeated an attempt to give the Bureau jurisdiction over usury.

In short, the Bureau's goals are aligned with the Bible's.  How then, can those who purport to follow the Bible's commands justify opposing the Bureau?

It's Not Over: The Aftermath of Wal-Mart For the Class Members

As the Wal-Mart decision is dissected by the media, politicians, and academics, a lot is at stake for Wal-Mart's current and former female employees. It's not clear what will happen to the hundreds of thousands of women whose class discrimination claims were nixed yesterday by the Supreme Court. It's possible that the plaintiffs will attempt to construct a narrower class (by region or state or even by store), or perhaps some class members, particularly those with relatively large monetary claims, will file charges with the EEOC and then pursue individual actions (or perhaps through non-class joinders or aggregates). The lawyers for the class are standing by the class. Their post-decision press release indicates that they will help in any way they can, including in some cases by assisting class members proceed individually. I have heard that, already, 12,000 class members have contacted their lawyers seeking information. The Wal-Mart class action website provides class members with extensive advice on how to proceed.

Second Circuit Strikes Down “Hot News” Injunction Against Flyonthewall — but Will the Misappropriation Tort Become More Invasive?

by Paul Alan Levy

In a major decision yesterday,  the Second Circuit struck down an injunction issued by a federal court in New York forbidding an aggregator from selling to its clients information that it had obtained about investment recommendations by major investment houses. When I blogged about the district court’s injunction last year, decrying the possible impact of the hot news doctrine (or, to use the more technical legal term, the tort of misappropriation), I described the Second Circuit’s previous venture into the area, NBA v. Motorola, as only strong dictum rather than a holding.  The Second Circuit took the same position yesterday, issuing a very narrow decision that tells us little more than that, in this case, the aggregator wins and the plaintiffs loses. 

There are many things to cheer about in this decision.  An injunction based on reasoning that was highly threatening to other aggregators has been overturned, and hence no longer stands as precedent to be cited against them.  And the ruling is full of language expressing skepticism about hot news claims and their standard justifications, and that will, therefore, appeal to many free speech advocates.

At the same time, perhaps this is a case of, be careful what you ask for. In previous posts on this subject, I raised grave concerns about the impact of the tort of misappropriation.  If companies have the right to own facts or information and to forbid others from publishing or discussing those facts (as opposed to the right to prevent copying of original expression), they could gain the right to prevent consumers from learning about, and speaking their minds about, subjects of wide public interest.  I warned as well  that the hot news doctrine is a vague and unpredictable doctrine whose chief function may be to allow big companies with large litigation budgets to rattle their sabers at smaller companies and even individuals to prevent them from re-reporting and discussing their information. In those respects, today’s majority ruling and concurring opinion may threaten to make matters worse.

FDA Issues 9 Graphic Cigarette Labels

As explained here,the Food and Drug Administration has issued 9 graphic cigarette labels, one of which is pictured to the right. (The other 8 appear at the end of this blog post.)

The labels will go into effect in September 2012. One of the 9 labels will take up the top half of each cigarette package and at least 20% of each cigarette adverstisement. Each new label will include a national quit-smoking hotline telephone number, 1-800-QUIT-NOW.

The FDA explains that it "will require larger, more prominent cigarette health warnings on all cigarette packaging and advertisements in the United States.These warnings mark the first change in cigarette warnings in more than 25 years and are a significant advancement in communicating the dangers of smoking." Because of a massive public education campaign, smoking rates in the U.S. dropped from about 40% in 1970 to about 20% in 2004. But, since 2004, the decline has stalled, and no one is sure why. We are sure, however, that smoking still kills about 443,000 Americans every year. Perhaps the label campaign will help jump-start a new downward trend. Here are the other 8 labels:

 

 

 

 

 

 

More Bad News from the Supreme Court for Class Action Plaintiffs

In May, in AT&T v. Concepcion, the Supreme Court held that the Federal Arbitration Act renders states powerless through contract-law unconscionability doctrine to strike down contractual bans on class actions so long as the bans are laundered through aribtration clauses (even if the laundering takes place in adhesion contracts). Lots of people were upset. Today, in Wal-Mart Stores v. Dukes, the Supreme Court threw out a class certification on behalf of current and former female Wal-Mart employees claiming systematic sex discrimination in pay and promotions. In an opinion by Justice Scalia, the Court held unanimously that the class's back-pay claims could not be certified under Federal Rule of Civil Procedure 23(b)(2), which is typically used to certify cases involving declaratory and injunctive relief and does not provide class members a right to opt out. The Court's opinion left unclear what kinds of monetary relief, if any, can be included in a (b)(2) certification. The Court also held, this time by a 5-4 vote (with Justice Ginsburg writing the dissent), that the case did not present any "common question of law or fact" that would authorize certification under Rule 23(a)(2). Why did the Court feel it had to deal with both issues? The Rule 23(a)(2) ruling would have been enough to nix the certification, and yet all nine justices decided to issue extensive dicta on the Rule 23(b) issue.