Consumer Law & Policy Blog

What Happened to “Lord Newton B. Jones” Assault on a Union Member’s Free Speech Rights

by Paul Alan Levy

Last month I described a motion filed to quash a subpoena sent to Facebook, seeking to identify an anonymous union member who set up a Facebook parody page (included as pages 25-27 of the document that is linked here) that made fun of the leader of the Boilermakers Union for having inherited his office from his father, put relatives on the payroll, and drawn an unusually large salary as well as other compensation from the union.

The union leader’s immediate response to the motion was to withdraw the subpoena, to try to cancel the hearing that had been set to consider that motion, and to ask the court to dismiss the subpoena proceeding.  However, withdrawal of the subpoena left the issue of attorney fees to be considered, and a new California statute  provides for awards of attorney fees in favor of anonymous Internet speakers who prevail on motions to quash subpoenas seeking to identify them.  And California has rejected the principle adopted by the Supreme Court of the United States in the Buckhannon case that allows parties that violate civil rights or civil liberties to avoid awards of attorney fees through a unilateral discontinuation of challenged conduct.  Consequently, we asked the Court to keep the hearing on the schedule, so that the issue of attorney fees could be addressed.

We were looking forward to the opportunity to litigate the first case addressing how these principles apply under California’s new SLAPP-like statute governing fees for successful attacks on identification subpoenas.  However, as of today all matters involved in the subpoena-related litigation were settled, including attorneys fees.

Especial thanks to Mark Goldowitz, the country's leading anti-SLAPP lawyer, for being our local counsel in the case.

Peter Holland on Junk-Debt-Buyer Lawsuits

Peter A. Holland of Maryland has written Defending Junk-Debt-Buyer Lawsuits, 46 Clearinghouse Review No. 1-2 (May/June 2012). Here is the abstract:

Junk debt buyer lawsuits have overwhelmed the courts all across the United States. These lawsuits wreak havoc on consumers and their families. Often overlooked is the fact that judgments against consumers which are based on junk debt are part of a zero sum game, where every bogus judgment deprives a legitimate creditor of the chance to get paid from scarce resources. Thus, the legitimate creditor to whom money is owed is materially harmed by the junk debt buyer who extracts money based on an illegitimate claim, or who causes someone to declare bankruptcy. Providing representation to this otherwise unrepresented population will not only help individual consumers. It could improve the entire U.S. economy, by preserving precious resources to pay what is legitimately owed, and avoiding paying for what is not. This article surveys the landscape of the junk debt buyer industry and provides advice for consumer advocates engaged in the battle against unscrupulous junk debt buyers.

Paul Carrington on Concepcion and Rule 23

Recently, we told you about Andrew Pincus's articles defending the U.S. Supreme Court's decision in AT&T v. Concepcion and extolling what he sees as the virtues of individual arbitration. (As you will recall, Concepcion upheld AT&T's class action ban, which was laundered through an arbitration clause in the company's form contracts with its cell-phone service subscribers. The California Supreme Court had held in an earlier case (Discover Bank) that a similar class action ban was unconscionable under generally applicable state contract law, but the U.S. Supreme Court held in Concepcion that California law conflicted with the Federal Arbitration Act.)

In this response to Pincus, Duke law professor Paul Carrington (pictured to the right) explains that Concepcion undermines the policy of the federal civil rulemakers who, when they drafted Federal Rule of Civil Procedure 23(b) in 1965, sought to provide plaintiffs with a practical mechanism for combatting large-scale business fraud (which is often small on an individual basis, but massive in the aggregate). Carrington goes on:

The facts of the Concepcion case provide a premier example of the reason for the [class action] rule. AT&T Mobility cheated many thousands of customers out of $30 apiece by promising to provide a new phone for free and then billing each recipient for a $30 sales tax. Of course the firm's executives who approved this scam were fully aware that it was a fraud. They also knew that very few of those who were cheated would care enough about $30 to pursue a claim.

Carrington laments that the Supreme Court's decision upheld AT&T's ban on class aribtration (as well as class litigation) on the ground that class arbitration is incompatible with the Federal Aribtration Act. As he puts it, "[a]ggregation in arbitration would perhaps have been a reasonable compromise that would have spared AT&T the cost and the disgrace of having its misdeeds the subject of public litigation, but would have made efficient enforcement of consumers' rights a possibility."

Carrington concludes that the "small-scale consumer frauds that the Court effectively deterred by its 1965 promulgation of Rule 23(b)(3) can be expected to return on a large scale."

Humana and Aetna Jump on the Bandwagon

We discussed yesterday United Healthcare's pledge to retain in their health insurance policies key benefits of the Affordable Care Act even if the Supreme Court rules that Congess didn't have the power to pass the law, and we asked whether United Healthcare's competitors would follow suit. Well, two of them -- Humana and Aetna -- have.

More Information on Car Crashworthiness

We posted recently on the government's vehicle crashworthiness ratings, commenting that they had the virtue of simplicity. (They are rated one to five stars, both overall and in several sub-catagories.) Go here to see the Insurance Institute for Highway Safety's version. It contains crashworthiness ratings for cars, vans, and trucks -- rated good, acceptable, marginal, or poor.

Report Says that Insurers Unfairly Low-Ball Bodily Injury Claims

The Consumer Federation of America has issued this report that finds "that computerized claims’ systems used by most of the nation’s largest insurance companies can be easily adjusted to make broad-scale 'lowball' claims’ payments to injured consumers that are less than what they should receive under their insurance policies." The executive summary is here. The report's introduction provides a nice synopsis as well:

Over the past ten to fifteen years, the payment of bodily injury claims covered by automobile or home and property insurance has evolved from a system based primarily upon the experience and knowledge of claims’ adjusters to a computer-based assessment that has the potential to be easily and broadly manipulated by insurers. This technology has enabled many insurers to increase profits by reducing the amount paid to consumers who file bodily injury liability claims, including uninsured and underinsured motorist claims. Insurers have also been able to hire less-experienced employees to handle these types of claims, since the computer programs conduct much of the decision-making. Few consumers have knowledge of these practices, while even less understand the significant impact that the practices can have on their financial lives. The authors’ primary objective in writing this report is to inform regulators about the technical complexity of this topic and the need to exercise better oversight regarding how these systems can be manipulated to the detriment of consumers. Expanding on a previous CFA report, we hope to further educate consumers filing bodily injury claims about how they can avoid unfair tactics employed by some insurers who use computer-based assessment systems and receive a fair settlement.

Economic Depression Devasted American Families' Net Worth

As explained in this article by Yian Q. Mui, "[t]he recent recession wiped out nearly two decades of Americans’ wealth, according to government data released Monday, with ­middle-class families bearing the brunt of the decline. The Federal Reserve said the median net worth of families plunged by 39 percent in just three years, from $126,400 in 2007 to $77,300 in 2010. That puts Americans roughly on par with where they were in 1992." 

Go here to read the relevant Federal Reserve report. 

Read This Model Debt Collection Law

Bob Hobbs and Chi Chi Wu of the National Consumer Law Center have drafted a model debt collection law that they call the Model Financial Protection Act. Read the Act here, including an 8-page introduction explaining the need for the legislation. Here's the Act's basic structure:

Title I of the Model Family Financial Protection Act protects consumers from the most common abuses in the credit and collections industries, restoring balance to an increasingly lopsided system of justice. While Title I ensures that consumers receive basic protections as creditors pursue judgments, Title II modernizes the personal and Model Family Financial Protection Act residential property shielded from debt collectors once a judgment has been obtained, allowing families a chance to get back on their feet after a period of financial hardship.

United Healthcare -- the Country's Largest Health Insurer -- Will Retain Some ACA Mandates Even if the Supreme Court Nixes the Law

As explained here in today's Washington Post, the nation's largest health insurer, United Healthcare, says that it will retain some of the Affordable Care Act's important benefits even if the Supreme Court holds that the Act is unconstitutional.

Here's an excerpt from the Post article:

The nation’s largest health insurer will keep in place several key consumer provisions mandated by the 201 health-care law regardless of whether the statute survives Supreme Court review. Officials at UnitedHealthcare will announce Monday that whatever the outcome of the court decision — expected this month — the company will continue to provide customers preventive health-care services without co-payments or other out-of-pocket charges, allow parents to keep adult children up to age 26 on their plans, and maintain the more streamlined appeals process required by the law. UnitedHealthcare would also continue to observe the law’s prohibitions on putting lifetime limits on insurance payouts and rescinding coverage after a member becomes ill, except in cases where a member intentionally lied on an insurance application.

Could it be that the ACA has nudged United Health to change its policies (at least for the time being)? Is it just good business for United Healthcare to maintain provisions already in effect that are popular with its insureds? United Healthcare's announcement makes me think that, despite the ACA's supposed lack of popularity, many parts of the law that are in effect are in fact quite popular. (We know that the provision mandating that children under age 26 must be offered insurance on their parents' plans has proved very popular. (Go here as well.)) Presumably, United Health is not interested in foisting on its insureds benefits that they dislike.

Now let's see whether some of United Healthcare's competitors follow suit.

The Issues Before the Supreme Court in the Affordable Care Act Case

As we get closer to the Supreme Court's rulings on the constitutionality of the Affordable Care Act (and related issues), which are expected by the end of this month, some of our readers may want to aquaint (or reaquaint) themselves with the basic arguments in the case. As we told you back in mid-January, I. Glenn Cohen of Harvard Law School sat for this audio interview in which he describes, clearly and with sophistication, each of the challenges to the Affordable Care Act now before the Supreme Court. It's very good and definitely worth a listen.