Consumer Law & Policy Blog

20 Cases and About 6 Weeks to Go at the Supreme Court

As Tony Mauro explains, the Supreme Court is in the home stretch, with 20 cases to be decided before the Court recesses at the end of June. Aside from the obvious biggie (the Affordable Care Act case), Mauro's piece stresses some key First Amendment cases.

An important pending case for consumers is First American Financial Corp. v. Edwards, which asks whether a private plaintiff has constitutional standing to sue under the Real Estate Settlement Procedures Act if she does not allege financial harm stemming from the defendant's unlawful conduct. If the defendant wins in Edwards, depending on the Court's reasoning, the decision could draw into question the constitutionality of provisions of some federal consumer protection statutes that provide statutory damages even when the plaintiff does not allege actual damages. Edwards was argued way back on November 28. This week's Supreme Court decisions are expected today (Monday) and Thursday. (Perhaps we'll have a decision in Edwards this morning.)

UPDATE: No decision in Edwards today. Maybe Thursday.

Arbitration and Agencies

Bloomberg's Carter Dougherty has a comprehensive story this morning reporting on steps by two agencies, the CFPB and the SEC, to study the use of mandatory arbitration clauses in consumer contracts, as mandated by the Dodd-Frank Act, with a view to possible regulation. This piece represents the most in-depth reporting on the issue so far. Read it here.

One thing missing from the story (presumably because it's outside Doughtery's beat) is a discussion of developments in the employment context--specifically, the NLRB's recent decision in D.R. Horton, which declares the use of class-action bans in arbitration clauses to be an unfair labor practice under federal law, the pending challenge to that ruling, and the NLRB's even more recent efforts to enforce the ruling in specific cases.

Citizens United Revisited?

This article by the Washington Post's Robert Barnes poses the question whether "anything [has] changed in the world of campaign finance that might give pause to the five members of the Supreme Court who decided Citizens United v. Federal Election Commission." The vehicle for considering that question is a decision of the Montana Supreme Court that upheld a state statutory ban on direct corporate political spending. The losers in that case have sought Supreme Court review. Barnes says that the Supreme Court may just summarily reverse the Montana decision on the basis of Citizens United. But that's not stopping a small flood of amicus briefs, including one from Senators John McCain and Sheldon Whithouse, discussed by Barnes: 

Those urging the court to grant a full hearing of the Montana case take aim at the most important finding of Citizens United. That was the declaration in Justice Anthony M. Kennedy’s majority opinion that “we now conclude that independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption.” “That cannot be so,” the new bipartisan team of Sens. John McCain (R-Ariz.) and Sheldon Whitehouse (D-R.I.) told the court. “Whether independent expenditures pose dangers of corruption or apparent corruption depends on the actual workings of the electoral system; it is a factual question, not a legal syllogism.”

Toxic Chemicals and Political Influence

These Chicago Tribune articles are about the role politics plays in our exposure to toxic chemicals -- in particular, chemicals claimed to be flame retardants. Here's the Trib's abstract (though reading the whole shebang is recommended):

The average American baby is born with 10 fingers, 10 toes and the highest recorded levels of flame retardants among infants in the world. The toxic chemicals are present in nearly every home, packed into couches, chairs and many other products. Two powerful industries -- Big Tobacco and chemical manufacturers -- waged deceptive campaigns that led to the proliferation of these chemicals, which don't even work as promised.

Here's the Trib's editorial that emerged from its reporters' investigative journalism. And here's a story about Senator Dick Durbin's response to the Trib's work. The Trib's coverage also includes inside industry documents and a series of videos, one of which is linked here.

Does U.S. Farm Policy Help Drive the Obesity Epidemic?

This interesting NPR story from last year considers many of the arguments and concludes probably not. Go here for the audio version of the story. The audio includes the views of Margo Wootan of the Center for Science in the Public Interest who says that corporate food marketing, not U.S. agricultural policy, is pushing obesity.

A relevant article is William Eubanks, "A Rotten System: Subsidizing Environmental Degradation and Poor Public Health with Our Nation's Tax Dollars," 28 Stan. Envtl. L.J. 213 (June 2009).

Ninth Circuit: The Food, Drug, and Cosmetic Act Trumps the Lanham Act

The Lanham Act authorizes a suit by one company against a competitor who uses a false or misleading description or representation about the competitor's goods. See 15 U.S.C. 1125(a). So, let's say you make pomegranate juice, and you sue under the Lanham Act, claiming that a competitor markets a product that it calls pomegranate juice that contains little or no pomengranate. Well, the Ninth Circuit just said in Pom Wonderful v. Coca-Cola, No. 10-55861 (May 17, 2012), that the Lanham Act claim is no good because of the FDA's supposedly comprehensive control over the naming and labeling of juice products. Here's a key part of the opinion:

We do not suggest that mere compliance with the FDCA or with FDA regulations will always (or will even generally) insulate a defendant from Lanham Act liability. We are primarily guided in our decision not by Coca-Cola’s apparent compliance with FDA regulations but by Congress’s decision to entrust matters of juice beverage labeling to the FDA and by the FDA’s comprehensive regulation of that labeling. To give as much effect to Congress’s will as possible, we must respect the FDA’s apparent decision not to impose the requirements urged by Pom. And we must keep in mind that we lack the FDA’s expertise in guarding against deception in the context of juice beverage labeling. In the circumstances here, “the appropriate forum for [Pom’s] complaints is the [FDA].” [citation omitted]

This passage strikes me as odd. The Ninth Circuit says that "mere" compliance in fact with the FDA's rules won't always (or "even generally") be a defense to a Lanham Act claim, but then goes on to suggest that even less will preclude application of the Lanham Act: a sort of field preemption based on Congress's decision to "entrust matters of juice beverage labeling to the FDA." A bit troubling.

The Ninth Circuit remanded for a ruling on whether Pom Wonderful has standing on its California state-law claims against Coke. But those claims don't look promising for two related reasons: First, aside from the potential standing impediment, Coke is arguing that the state-law claims are preempted by the FDCA, and the Ninth Circuit's ruling hardly bodes well on that score. Second, in an earlier phase of the case, the district court had bumped the state-law claims on federal preemption grounds.

UPDATE: Go here for a law.com article on the decision.

 

President Obama on Efforts to Cripple and Roll Back Dodd-Frank

In his weekly address, President Obama seizes on J.P. Morgan's gigantic trading loss as an illustration of why the American people should oppose "Republicans in Congress and an army of financial-industry lobbyists," who are "waging an all out battle to delay, dismantle and deform" the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Reiterating the themes of economic fair play from his brilliant speech late last year in Osawatomie, Kansas, the President explained that "unless you run a financial institution whose business model is built on cheating consumers or making risky bets that could damage the whole economy, you have nothing to fear from Wall Street reform." I expect we'll see the language and themes of the Osawatomie speech echoed throughout the campaign--particularly its insistence on a system in which "everyone engages in fair play and everybody gets a fair shot and everybody does their fair share."

What price must web hosts pay for discarding data that identifies their users?

by Paul Alan Levy

A Superior Court judge in Los Angeles has made a decision with chilling implications for journalists and, indeed, for anybody who hosts speech by others.

I have blogged previously about a case in which we represent a journalist who reports on the digital music industry, on the blog called Digital Music News.  Back in October, an anonymous person posted a critical comment to one of the blogger’s news stories about another company called Escape Media Group; the anonymous comment accused Escape of deliberately infringing the copyright in various sound recordings.  Escape  subpoenaed Digital to produce any identifying information about the poster of this comment.    In papers filed last week, we argued that enforcement of the subpoena would contravene both the First Amendment and California’s Shield Law.  After we filed our papers, Escape Media submitted an affidavit showing that the anonymous comment contained false statements.

Despite this showing, we felt that the standards for identifying anonymous speakers was not met in other respects, so we argued the motion on Tuesday.  Superior Court Judge Richard Stone ordered the identity produced; he indicated that he was troubled in several respects, and considered it a close case, but in the end ruled against Digital.   We disagree with the judge’s analysis because he appears to have applied the wrong legal standard, but until there is a transcript of the oral ruling, I am reluctant to discuss his reasoning. Digital plans to seek appellate review, and in the meantime the judge indicated that the identification order will be stayed but that he expects any identifying information be preserved pending appellate review.

Test Your Credit Score IQ!

Take the Consumer Federation of America's great credit score quiz. If you are like me, you'll get a third of your answers wrong and learn alot in the process!

Orwell vs. The U.S. House of Representatives

Although it's not directly related to consumers as such, readers might be interested (as I was) in the progress of H.R. 2168, the Geolocational Privacy and Surveillance Act, a bill to require law enforcement agents to secure a warrant based upon probable cause before obtaining geolocational information -- in other words, to put a judge between you and the cops sticking a tracking device on your car whenever they like.

Today a House Judiciary subcommittee held a hearing on the bill, which has some bipartisan support. For an excellent analysis of the issue, including details about the chilling tracking capacity of modern technology, see the testimony of the ACLU's Catherine Crump, available here. The Supreme Court began to examine the issue this Term in United States v. Jones, 132 S. Ct. 945 (2012), which held that round-the-clock GPS monitoring via tracking device placed on a person's car is a "search" for constitutional purposes, but did not address the question whether the Constitution required that it be supported by a warrant and probable cause.