Consumer Law & Policy Blog

Federal Judge Sends Disgusting, Racist Anti-Obama Email to Six of His "Old Buddies" and Acquaintances

This blog is dedicated to informing our readers about developments in consumer law and policy. Fair treatment in the courts -- in consumer cases, as in all other cases -- depends on a judiciary that treats litigants with dignity. A racist judge cannot be trusted to honor that principle. This blog entry is posted with that thought in mind.

Richard Cebull, Chief Judge of the U.S. District Court for the District of Montana, has acknowledged that he forwarded a racist email to six of his "old buddies" and acquaintances. Judge Cebull admits that the email -- which Judge Cebull received, read, and then deliberately forwarded to his "buddies" -- was a racist attack on President Obama. Judge Cebull further admits that he is "not a fan" of the President.

The judge's "explanation" for his conduct? The communication with his pals was intended to be "private," and, although the email's content is racist, "I'm not that way." To read the forwarded email and Judge Cebull's bizarre cover note to his friends, click on the link above.

Suzanna Sherry on Advocacy in Last Term's Class Action Cases

Suzanna Sherry 

of Vanderbilt has written Hogs Get Slaughtered at the Supreme Court, Supreme Court Review (forthcoming).  Here's the abstract:

Class action plaintiffs lost two major five-to-four cases last Term, with potentially significant consequences for future class litigation: AT&T Mobility v. Concepcion and Wal-Mart v. Dukes. The tragedy is that the impact of each of these cases might have been avoided had the plaintiffs’ lawyers, the lower courts, and the dissenting Justices not overreached. In this Article, I argue that those on the losing side insisted on broad and untenable positions and thereby set themselves up for an equally broad defeat; they got greedy and suffered the inevitable consequences. Unfortunately, the consequences will redound to the detriment of many other potential litigants. And these two cases are not isolated tragedies; they provide a window into a larger problem of Rule 23. When plaintiffs’ lawyers chart a course for future litigants, they may be tempted to frame issues broadly for the “big win” – with disastrous consequences. I suggest that it is up to the courts, and especially to those judges most sympathetic to the interests of class-action plaintiffs, to avoid the costs of lawyers’ overreaching. That is exactly what the dissenting Justices (and the judges below) failed to do in these cases.

On-Line Rating Provider -- Ratingz -- Preemptively Sues Law Firm Under Section 230 of the Communications Decency Act

Ratingz posts consumers' reviews for all sorts of products and services, including services provided by  lawyers. According to a recently filed declaratory judgment suit filed by Ratingz, one law firm, Adrian Philip Thomas, P.A., claimed that it was harmed by negative (and, it said, libelous) ratings posted on Ratingz' site. Adrian Philip Thomas threatened to sue Ratingz, and so Ratings acted preemptively, suing for a declaratory judgment that it has a right as a website operator, under section 230 of the Communications Decency Act, to display third-party content on its website.

Ratingz is represented by the non-profit group Electronic Frontier Foundation. EFF's press release says that the law firm's

claims are meritless and run afoul of bedrock legal principles protecting website operators. ... Section 230 of the Communications Decency Act categorically protects providers of 'interactive computer services' from suits such as this one seeking to make them responsible for the speech of their users. Without such protections, valuable sites like LawyerRatingz.com – or Facebook or Yelp or individual blogs that rely upon user comments – simply could not exist.

Read Ratingz' federal court complaint here.

Joshua Frank on How Banks Use Misleading Marketing to Generate Overdraft Opt-Ins

Joshua M. Frank

 of the Center for Responsible Lending has written Banks Collect Overdraft Opt-Ins Through Misleading Marketing: Survey Finds Low Opt-In Rate, High Number of Misperceptions. Here's the abstract:

A survey was conducted regarding consumers choices whether to "opt-in" to overdraft coverage for their checking accounts. Many banks routinely cover any transaction that overdraws a customer’s account, including checks, ATM withdrawals, and point-of-sale debit transactions for a fee of about $34 -- often called “overdraft protection.” The Federal Reserve Board issued a rule requiring that banks and credit unions obtain customer consent before approving debit card transactions for a fee. Many banks responded by conducting aggressive campaigns aimed at getting customers to opt-in. The survey results find that only 33 percent of account holders opted-in to overdraft coverage. Most who did opt-in based their decision on misunderstandings of the nature of this coverage. Sixty percent of consumers who opted in stated that an important reason they did so was to avoid a fee if their debit card was declined. In fact, a declined debit card costs consumers nothing. Sixty-four percent (64%) of consumers who opted in stated that an important reason they did so was to avoid bouncing paper checks. The truth is that the opt-in rules cover only debit card and ATM transactions. For almost half of those who opted in, simply stopping the bank from contacting them with opt-in messages by mail, phone, email, in person, and online banking was a factor in their decision.

Should Courts Approve Settlements Proposed By Government Regulators In Which The Alleged Wrongdoer Does Not Admit Liability?

As this New York Times article explains, a couple federal judges recently rejected settlements struck by the Securities and Exchange Commission containing clauses in which the alleged wrongdoer refused to admit liability or to agree to facts on which the enforcement action was based. The judges reasoned that when those clauses are present no basis exists for finding that a settlement is worthy of approval.

Another federal judge considering approving of a settlement struck by the Federal Trade Commission has delayed approval on similar grounds. The Times says that Judge Renee Bumb of the U.S. District Court in Camden, New Jersey, ordered the FTC and a company accused of deceptively marketing weight-loss products to come up with more evidence for approval. She was concerned because, the Times said, "the  lack of an admission ... left her with no facts with which to judge whether the negotiated deal was fair, adequate and in the public interest."

We know why a for-profit company does not want to admit wrongdoing. It's bad for the company's reputation, could undermine the value of its shares, and, perhaps above all, could harm the company in private civil litigation.

And we can see why the government might want to settle without an admission of liability: The government might not get any settlement, including important injunctions against future harmful conduct. The article quotes FTC official David Vladeck as saying that the agency's “settlements serve the public interest and meet any applicable standard of judicial review.”

But we can also see why judges don't want to be rubber stamps. An appeal pending in the U.S. Court of Appeals for the Second Circuit from a controversial ruling last November by U.S. District Judge Jed Rakoff may tell us a lot about whether and to what extent judges may take into account the presence of a "no admission" clause in considering settlement approval (or rejection). Judge Rakoff rejected a $285 million settlement with a "no admission" clause.

Budget Deficits and the Republican Presidential Candidates

The non-partisan Committee for a Responsible Budget has analyzed the Rebublican Presidential candidates' tax and spending proposals and found that under the Romney, Santorum, or Gingrich proposals, the federal budget deficit would increase as a percentage of GDP. With Santorum's and Gingrich's proposals in place, the increases would likely be substantial; for Romney's proposals, the increase would likely be quite modest. Only under a President Paul, would the deficit likely decrease. Read CRB's full report and an addendum regarding Romney's proposals.

Comparison Shop for Prescription Drugs on the Internet

A new (and free) Internet tool called GoodRx allows you to comparison shop for prescription drugs. Read about it here.

CFPB Looking Into Checking Account Overdraft Fees

The National Law Journal explains that

The Consumer Financial Protection Bureau is setting its sights on checking account overdraft fees, proposing a standard "penalty fee box" [on monthly bank statements] to convey key consumer information and requesting data from banks for further inquiry. "We are concerned that overdraft practices employed by some banks unnecessarily increase consumer costs by making it difficult to anticipate and avoid fees," said CFPB Director Richard Cordray. ... "The bureau plans to take action against financial institutions that exploit consumers with deceptive marketing about opting in to overdraft or other unlawful overdraft practices. It is wrong to confuse consumers deliberately for financial gain."

Read Cordray's entire statement. I wonder whether the CFPB also will target minimum balance fees or ATM usage fees.

 

Obama Administration to Announce Internet Privacy Voluntary Guidelines

The Washington Post is reporting that

The Obama administration on Thursday [February 23] plans to announce voluntary guidelines for Web companies to protect consumers’ privacy online, a win for Google, Facebook and other Internet giants that have fought against heavier federal mandates. The White House did not include a much-debated “do not track” rule that would have forced companies to offer users the choice of stopping advertisers from tracking their activities across the Web.

The White House already has a lenghty fact sheet up on its website describing what it calls "The Consumer Privacy Bill of Rights."

David Lazarus Interview with Richard Cordray on Proposed Rules for CFPB to Supervise Large Credit Bureaus and Debt Collectors

by Jeff Sovern

Here.  Lazarus has an interesting quote from Cordray: "Unlike most services or products where consumers can shop around among different providers, consumers can't do that with these businesses," Cordray said. "Consumers don't get to choose their debt collector, and they don't get to choose whether to have the consumer credit reporting agencies keep track of their credit history."

That's an important point.  Free-marketers argue that government regulation is generally unnecessary because the free market will discipline poorly-performing businesses.  But there is no free market as to debt collectors or credit bureaus, with the result that the market cannot be expected to address such businesses when they misbehave.  That's another reason we needed the CFPB as well as the Fair Credit Reporting Act and the Fair Debt Collection Practices Act.