Consumer Law & Policy Blog

Lawyers Who Sued Tobacco Companies Now Suing Food Companies

The last decade has seen a substantial uptick in suits against food sellers maintaining that the claims about food products are false or deceptive. Co-blogger Steve Gardner is one of the leading lawyers representing consumers who bring those claims. He recently blogged here about sellers' claims that their products are "natural." Now, this article by Stephanie Strom asserts that there's a new wave of food claims filed by lawyers who were prime movers in the litigation against the tobacco industry. As the article puts it, "[w]hile there has been a barrage of litigation against the industry in recent years, the tobacco lawyers are moving particularly aggressively. [For instance, t]hey are asking a federal court in California to halt ConAgra’s sales of Pam cooking spray, Swiss Miss cocoa products and some Hunt’s canned tomatoes."

Times Report on E-Scores

Here.  An excerpt:

These digital scores, known broadly as consumer valuation or buying-power scores, measure our potential value as customers. What’s your e-score? You’ll probably never know. That’s because they are largely invisible to the public. But they are highly valuable to companies that want — or in some cases, don’t want — to have you as their customer.

[E-scores] can take into account facts like occupation, salary and home value to spending on luxury goods or pet food, and do it all with algorithms that their creators say accurately predict spending.

A growing number of companies, including banks, credit and debit card providers, insurers and online educational institutions are using these scores to choose whom to woo on the Web. These scores can determine whether someone is pitched a platinum credit card or a plain one, a full-service cable plan or none at all. They can determine whether a customer is routed promptly to an attentive service agent or relegated to an overflow call center.

Federal regulators and consumer advocates worry that these scores could eventually put some consumers at a disadvantage, particularly those under financial stress. In effect, they say, the scores could create a new subprime class: people who are bypassed by companies online without even knowing it. Financial institutions, in particular, might avoid people with low scores, reducing those people’s access to home loans, credit cards and insurance.

Will e-scores lead to discrimination?  Should they be regulated under the Fair Credit Reporting Act or a similar statute?  The article notes that USPIRG's Ed Mierzwinski and Jeffrey Chester of the Center for Digital Democracy have a forthcoming article in the Suffolk University Law Review that may shed more light on how they should be regulated.

CFPB's Head of Regulations Joins Morrison & Foerster

The Consumer Financial Protection Bureau's chief rulewriter, Leonard Chanin, is leaving the Bureau next month to join the law firm of Morrison & Foerster, where he previously practiced for many years. Because of Chanin's background in private practice and the Fed, he has strong industry contacts and a deep understanding of banks' perspectives on regulation. For the past year and a half, he oversaw the Bureau's Office of Regulations, which now has a staff of 40 or so attorneys dedicated to writing new regulations across the spectrum of consumer finance markets. When I was at the CFPB, those attorneys always seemed like the busiest people in a busy place. And they continue to have their work cut out for them, particularly given the Dodd-Frank Act's imminent deadlines for new mortgage rules.

The American Banker breaks the news of Chanin's departure and quotes Alan Kaplinsky. "He's going to be a hard person to replace," says Kaplinsky, an attorney for Ballard Spahr who knows Chanin from his current job and his previous work overseeing financial protection regulations as a deputy director of the Federal Reserve Board. "There was a level of comfort the banking industry had with Leonard, because they dealt with him for many years during his tenure at the Fed. . . . I think this would be a setback for the CFPB because they're right in the midst of an avalanche of mortgage lending regulations." (The American Banker article also mentions my new law firm, which it describes as a "consumer advocacy law firm"; actually, we're doing appellate and policy work more broadly, including consumer protection.)

Here's a recent interview with Chanin.

Millions of Americans Still Lack Access to Broadband

A 1996 law required the Federal Communications Commission (FCC) to issue annual reports on Americans' broadband access to the Internet. Despite progress since 1996, the FCC reported yesterday that 19 million Americans have no access -- that is, no broadband available -- and 100 million Americans in fact lack access to broadband (probably in many cases because of cost). In other words, on America has quick access to the Internet; another does not. To quote the FCC,

approximately 19 million Americans—6 percent of the population—still lack access to fixed broadband service at threshold speeds. In rural areas, nearly one-fourth of the population—14.5 million people—lack access to this service. In tribal areas, nearly one-third of the population lacks access. Even in areas where broadband is available, approximately 100 million Americans still do not subscribe. The report concludes that until the Commission’s Connect America reforms [which include efforts to make broadband more available to low-income Americans] are fully implemented, these gaps are unlikely to close. Because millions still lack access to or have not adopted broadband, the Report concludes broadband is not yet being deployed in a reasonable and timely fashion.

The FCC's report is here. Related materials are here.

Avoiding Toxic School Supplies

It's back-to-school time. you may want to avoid toxic, potentially unsafe school supplies. According to Vermont PIRG, here's how you do it.

Judge Alsup's Continued Pursuit of Paying Relationships With Those Who Express Opinions About Litigation

by Paul Alan Levy

Eric Goldman’s comments on Judge Alsup’s followup to his “identify your shills order” contains a line that reminds me what irks me so about the series of orders: “Perhaps one lesson to take away from all this: if you're a litigant and your filings cite a published work by your expert/consultant, maybe you need to disclose that.” 

But that’s the problem, isn’t it?  There is no general rule here; it is Justice Owen Roberts’ proverbial “restricted railroad ticket, good for this day and train only.”  Judge Alsup’s new order says, “If a treatise author or blogger is paid by a litigant, should not that relationship be known?” Well, sure, we are all curious about such the information; but as the public debate about the order reveals, there are arguments to be made both for and against general disclosure requirements across the class of all cases.

Maybe we will say, one day, that Judge Alsup had a good idea, and maybe we will be grateful that it led to the adoption of a general rule by some authority that has the power to make judgments about such requirements.   But it should not be enough that he is the judge in the case and the litigants have to do what he orders them to do (or spend a great deal of money and good will on an appeal), whether or not there is a proper legal basis for his orders.

If the judge were to provide an explanation of why he is determined to require specific disclosures in this specific cases, his exercise of power would be more accountable — the public could assess whether the factual predicate is sound, and whether there is a good legal basis for ordering disclosures based on that factual record.   Without any explanation before the fact, how do we know that he isn’t just being arbitrary?

It is good to see that Judge Alsup has eliminated some of the evident overbreadth of the previous order by excluding bloggers who simply run Google ads.  On the other hand, it is a bit disturbing that he has expressly exempted testifying experts whose names were disclosed pursuant to Rule 26(a)(2) and (b)(4); Judge Alsup is implicitly requiring the parties to identify any nontestifying experts who have, without any encouragement from the parties, expressed views publicly about the case. Under Rule 26(b)(4)(D), the parties are entitled not to disclose such relationships, precisely to avoid the negative inferences that arise if retained experts come up with contrary opinions.

Public Citizen seeks rehearing of "dangerous" employee speech case

Burbank (Calif.) detective Angelo Dahlia blew the whistle after he witnessed his fellow officers engaging in abusive conduct against suspects, including physical beatings, grasping a suspect around the throat, and placing a gun directly under a suspect’s eye; and after officers threatened Dahlia himself to keep him quiet (for instance, one officer called Dahlia into his office, brandished a gun, and stated, “Fuck with me and I will put a case on you, and put you in jail”). In retaliation for disclosures to his officers association and to another law enforcement agency, Dahlia was suspended, an action that cost him pay and promotional opportunity.

Dahlia sued under the First Amendment, but his case was dismissed, and the Ninth Circuit affirmed. The court’s reasoning was that, under Garcetti v. Ceballos, 547 U.S. 410 (2006), the First Amendment protects a public employee only when speaking “as a citizen” not as part of his job duties, and uncovering illegal activity is inherently part of the job of every California officer.

Today Public Citizen, working with a California law firm that represents officers, filed a petition for en banc review. Several aspects of the decision are notable. First, the panel thought its own decision was incorrect but that it was bound by a prior Ninth Circuit case that had plucked a general job description for police officers from a 1939 state case and held that reporting wrongdoing is part of the job duties of every California police officer -- and therefore all officer whistleblowing is unprotected speech. In unusually strong terms, the panel called out the prior decision as "wrongly decided and unsupported by the sole authority it relies upon." The Supreme Court in Garcetti said that the scope of job duties is a "practical" inquiry, and the rest of Ninth Circuit law, as well as that of other circuits, rejects categorical approaches to the scope-of-job-duties question, which is treated a question of fact.

Beyond the intra- and inter-circuit split, there is a more fundamental question of public policy: what type of employee speech ought to be protected? Defining an officer’s job duties so broadly that any report of misconduct is unprotected speech will destroy what little protection there is for courageous whistleblowers like Dahlia, who may be the public’s best (or even only) available source of information about police corruption and abuse. The result of such a rule would be to deter important whistleblowing speech on matters of serious public concern, such as (here) whether the Burbank Police Department is plagued by a culture of violence and impunity that results in the beating, choking and threatening of suspects. It is this result that led the panel in this case to describe its own holding as "dangerous."

Let's hope the full court agrees, and rehears the case en banc.

Si Lazarus on NFIB v. Sebelius

Si Lazarus of the Constitutional Accountability Center has written this piece in the New Republic on the Supreme Court's health care decision in which he explains why he thinks Justice Roberts's upholding the law under the taxing power is consistent with a conservative legal philosophy.

Class Action Alleges Price Fixing Agreement Between Travel Websites and Certain Hotels

This complaint filed yesterday in federal court in California alleges that major travel websites (including Expedia, Travelocity, Orbitz, and Priceline) agreed with certain hotels (including Marriott and Trump International) to fix hotel prices. Specifically, this article by Hugo Martin says the suit alleges that:

Some of the largest hotel companies have conspired with online travel agencies to fix hotel prices .... The [class-action] suit was filed by ... Nakita Turik from Chicago and Eric Balk of Cedar Falls, Iowa, who both booked hotel rooms using travel websites over the past two years. ... Many travel websites say they pass low hotel rates on to consumers by buying blocks of unsold rooms. But the lawsuit claims that as part of an agreement to work together, hotels set a minimum room rate that online travel websites could offer to consumers. Hotels agree to the fixed prices for fear of losing the business brought in by online travel websites, the suit claims.

Former Governor Romney's Tax Plan

Bruce Bartlett has penned this column on that topic. He outlines a number of features of former Governor Romney's tax plan, including that it provides more favorable tax treatment for capital investments than for labor (that is, wages). (That's true, too, of President Obama's tax plan, which, as I understand it, would increase the capital gains tax rate, but not to the level paid on ordinary income such as wages.) Bartlett sets up his discussion with some statistics showing who gets hit hardest (and softest) by differntial tax treatment of capital and labor:

According to the Tax Policy Center, in 2011 those in the middle of income distribution got about 70 percent of their income from labor and only about 3 percent from capital. By contrast, those in the top 1 percent of income distribution got 30 percent of their income from labor and 35 percent from capital. The disparity is even more pronounced when one looks at the distribution of aggregate capital income. The total came to $1.1 trillion last year. Of this, 86 percent was earned by those in the top 20 percent of households, ranked by income. But this figure is misleading, because within the top quintile, the vast bulk of capital income went only to those at the very top.