Consumer Law & Policy Blog

Medical Injustice – Contracts That Suppress Patient Comments About Their Doctors or Dentists

by Paul Alan Levy

Yesterday we filed a class action complaint on behalf of the patients of a New York dentist, Stacy Makhnevich, over a form agreement that she imposes on all new patients to try to suppress any online comments on her work that she finds disagreeable.  In the form, Makhnevich promises not to evade HIPAA’s patient privacy protection in return for patients’ commitment not to disparage her, not to post any comments about her publicly; if the patient writes anything about the dentist, the patient assigns the copyright in those comments to Makhnevich.   Relying on the form, Makhnevich sent one of her patients invoices purporting to bill him a daily hundred-dollar fine for having posted comments about her on Internet review web sites.

The copyright assignment aspect of the agreement is especially dastardly.  It is intended to enable the dentist to send a DMCA takedown notice to the host of any web site where the criticism is posted.  Because the DMCA protects site hosts from liability for copyright infringement, but only if they act expeditiously to remove infringing material once they receive notice of its presence on their servers, hosts generally respond like Pavlov’s dog to such notices.  In theory, copyright could be asserted regardless of whether a comment is true or false, and regardless of whether it is an opinion that is constitutionally protected from libel claims; copyright can also be used as a basis for seeking awards of statutory damages even if there are no real damages.

Supreme Court Hears Argument in Two Consumer Protection Cases

The issue in one case, Mims v. Arrow Financial Services, is whether the federal courts have jurisdiction over private claims under the federal Telephone Consumer Protection Act; the Times has a story on that here. Ronald Mann has more at the SCOTUS Blog.The second case, First American Financial v. Edwards, involves standing to sue under RESPA's anti-kickback provision; the National Law Journal has coverage of the oral arguments in both cases here (paid subscription required). The SCOTUS blog also has a piece on Edwards by Christopher Wright.

An Open Letter to Minnesota Senator Amy Klobuchar Regarding SB 978

Dear Ms. Klobuchar:

I'm writing to object to SB 978, a bill you are sponsoring that would make it a felony for people to post covers of copyrighted material to sites like YouTube and Facebook.

This bill is targeted at children. It is calculated to stifle creativity and prevent the emergence of new talent. You may not have intended these results, but if your bill becomes law it will turn kids (and many adults) into criminals while doing little to protect copyright holders.

First, you haven't been honest about what the bill would do. You said it would only apply to people who post video covers in order to make money. That's not what your bill says. It says it applies if the video is viewed 10 or more times and the copyright holder values the "infringement" at $2,500 or more, or if the fair market value of a license to perform the material is greater than $5,000. There isn't any requirement that the performer actually make any money from the video, and both of the "objective value" components are set by the copyright holders.

Pretty much every video posted to the internet is viewed 10 or more times. And so far, copyright holders have claimed that even one unauthorized copy of a song should be valued at more than a million dollars. So, contrary to your assertion, it seems like this bill would apply to pretty much everyone who posts a cover to the internet, whether it's a four-year-old girl covering Nicki Minaj or Justin Bieber covering Usher or thousands of people dancing along to Beyonce's "Put a Ring on It."

Second, do we really want to criminalize this? This isn't stealing, it's (arguably) copying. The losses suffered are purely financial, and they are often theoretical. There's no fraud going on here. Just people who are such big fans of their favorite artists that they want to sing along on video with hundreds or thousands of other people doing the same thing. If this is really copyright infringement, shouldn't civil damages be enough to cover it?

Moreover, the people you are targeting with this bill are mostly kids. They are doing the 21st-century equivalent of singing along with their favorite music on MTV in their living room with a group of their friends. Except that there isn't any music on MTV anymore, so kids film themselves singing along and share those videos with their friends who also film themselves singing along.

Third—and this is the really important one, for me—what the heck were you thinking? This bill was obviously drafted by the music or movie industry and put on your desk by a lobbyist. You can't have come up with this on your own, because you've actually done some pretty great work for consumers during your time in the Senate.

I can only assume you had a lapse, which I hope was momentary, and forgot one of the most important rules: don't trust lobbyists. They are in sales, and you are the customer. Lobbyists may be knowledgeable and well-intentioned, but they are still selling their client's product. Don't trust them. They aren't looking out for the best interests of your constituents; they are looking out for the best interests of their constituents. In this case, the lobbyist was selling the last schemes of a dying industry that is so utterly bereft of ideas and value that all it can come up with is raiding the savings accounts of children.

This cannot be what you meant to do. This was a mistake. We know that. We'll forgive you if you own up to it and kill this bill. But you have to really kill it. Own up to your mistake. Admit that this bill was pushed across your desk by a lobbyist, so that the next representative that gets it won't have any excuse for promoting this kind of thing.

Sincerely,

Sam Glover

Trouble in Toyland

Just in time for the Nation's gift-buying orgy that started today, U.S. PIRG has issued its 26th annual Trouble in Toyland, which surveys the dangers to kids posed by toys. The report covers toxins (such as lead and pthalates), choking hazards, excessively loud toys, and strangulation hazards. It's chock full of data on toys that maim and kill and makes policy recommendations. The executive summary is here.

The SEC-Citigroup Case and Consumer Law

by Jeff Sovern

Earlier today Judge Rakoff refused to approve the SEC's settlement with Citigroup because the consent decree provided that Citigroup neither admitted nor denied the SEC's allegations.  Inasmuch as consumer protection agencies, such as the FTC, enter into consent decrees containing similar language, the opinion raises questions about whether consumer protection consent decrees will also be rejected on such grounds (though FTC consent decrees reached in the administrative process are not subject to court approval).  It is only one judge's opinion, and a district court judge at that; we shall have to see if other courts agree. If Judge Rakoff's view prevails, it may affect the willingness of defendants to settle; some may fear that admissions of liability will make it impossible to defend cases brought by injured plaintiffs and so refuse to settle cases they formerly would have been willing to settle.  Given the budgetary constraints administrative agencies face, if defendants are unwilling to settle, we may see lengthier litigations, which would use up agency resources, with the result that agencies would be forced to reduce the number of cases they could bring.  Of course, increases in agency budgets would resolve that problem. 

Fracking, Mortgages and Insurance

Homeowners who sign gas leases to permit hydraulic fracturing for shale gas in Maryland, New York, West Virginia, Pennsylvania and other states may be defaulting on their mortgages, risking loss of title insurance and homeowners' insurance coverage, and preventing future buyers from obtaining title insurance or mortgage loans on affected property.  These are the consequences described by attorney Elizabeth Radow in an article in the New York State Bar Journal available here.  The  story has also been covered in the New York Times stories here and here.  Several members of Congress have asked mortgage regulators including FHA and FHFA, the overseer of Fannie Mae and Freddie Mac, to determine how many families may unwittingly have breached their mortgage terms, and presumably what can be done to balance the risks to lenders with the potentially harsh consequences for families.  While homeowners may be caught in the middle, the potential dispute may bring large financial institutions and the energy industry face to face in a battle over the genuine risks of fracking, on the one hand, and the validity of somewhat obscure mortgage contract terms, on the other.

Should There Be State Regulation of Health Insurance Rates?

The LA Time explains that

Harvey Rosenfield, the combative attorney and consumer advocate who wrote California's landmark Proposition 103 more than two decades ago, is preparing a ballot initiative that would force health insurers to get state government approval before they could raise premiums.

Read about it here.

Groups Push for Recusals in Health Care Challenge Before Supreme Court

Interest groups are pushing for Justices Elena Kagan and Clarence Thomas to recuse from the constitutional challenges to the Affordable Care Act currently pending before the Supreme Court. The arguments are chiefly that Justice Kagan should recuse because of her or her office's involvement in defending the Act when she was Solicitor General and that Justice Thomas should recuse because of his wife's work opposing the Act. For various views go here, here, here, here, here, and here.

Two New Class Action Decisions on the Cy Pres Doctrine

Two recent federal appellate decisions question the uncabined use of the cy pres doctrine in class actions. Under that doctrine, courts give class action settlement funds to charities, sometimes after an initial distribution to class members and other times before any distribution to class members. In both instances, the theory of the charitable distribution is that it is impractical and/or uneconomical to distribute the funds to the class members. In its wide-ranging opinion in Klier v. Elf Atochem North America (a case that I argued), the Fifth Circuit ruled that the left over settlement money had to be distributed pro-rata to a group of class members suffering from serious illnesses sought to be addressed in the lawsuit rather than to charities. Alison Frankel wrote about the decision when it came down in late September. Just yesterday, in Nachsin v.AOL, the Ninth Circuit held that leftover class settlement money should not have been distributed to the charities chosen by the district court because those charities had nothing to do with the class members or their claims, thus violating the cy pres doctrine's fundamental requirement that the leftover money go to the "next best" use if it cannot go to the class members themselves.

Why is the Occupy Movement Overwhelmingly White?

This Washington Post opinion piece by Stacey Patton notes that . . .

A few prominent African Americans, such as Cornel West, Russell Simmons, Kanye West and Rep. John Lewis (D-Ga.), have made appearances at Occupy protests. “Occupy the Hood,” a recent offshoot, has tried to get more people of color involved. But the main movement remains overwhelmingly white: A Fast Company survey last month found that African Americans, who are 12.6 percent of the U.S. population, make up only 1.6 percent of Occupy Wall Street.

and then attempts to explain why.