Consumer Law & Policy Blog

Coke's sweet little lies

By Steve Gardner, Center for Science in the Public Interest

My most-excellent colleague at CSPI, Erika Knudsen, wrote a great piece for CSPI's Food Day blog. Check it out.

It's a great read overall, and as an extra added bonus, it includes a link to a recent Colbert Report segment mocking Coke for Vitaminwater. Spoiler alert--the Colbert bit includes a little cussing.

The Importance of the American Express Arbitration Case

by Paul Bland, Public Justice

Consumer and plaintiffs' lawyers know that there have been a long string of cases where the Supreme Court has enforced arbitration clauses. In the course of doing that, though, the Court has always said that enforcing arbitration clauses won’t cause any harm, because (the Court has insisted and promised) arbitration is a forum where anyone with a valid legal claim can be heard fairly. The Supreme Court has always said that arbitration is only acceptable where parties can “effectively vindicate their substantive rights.”  About 8 Supreme Court decisions make that statement.

In In re American Express Merchants Litigation, we’ll learn if the Court actually MEANT any of those promises. This is the most important consumer case involving a challenge to an arbitration clause since AT&T v. Concepcion. In American Express, a number of small business merchants brought a class action in court alleging that Amex is violating the Sherman Act with a tying arrangement (using its monopoly power over charge cards to force merchants to take all Amex-branded credit cards -- and pay higher fees). Citing its arbitration clause with the merchants, AmEx moved to force the case into individual arbitration (with no class action possible). The plaintiffs PROVED, with admissible evidence that was never controverted, that it would be impossible for them to pursue their antitrust claims, in court or arbitration, if they had to go forward on an individual basis. It would cost them hundreds of thousands of dollars to prove each of their cases, even though their claims are typically only worth about $5,000.

But AmEx, backed by the Chamber of Commerce, wants the Court to abandon the “effective vindication” doctrine, or more likely to re-define it in a way that would make it completely meaningless. They want the Supreme Court to enforce AmEx’s arbitration clause, and class action ban, even though it means that small business plaintiffs will lose all their substantive rights under the antitrust laws. 

Public Justice filed today an amicus brief objecting to AmEx’s radical position. Our brief explains that if the Court severs the link between arbitration and the opportunity to be heard and obtain justice, then statutes that Congress enacted to protect consumers, small businesses, and workers from more powerful corporations will be gutted. We point out that, if AmEx wins, the small-business plaintiffs suing Amex in this case might as well move to a nation that has no antitrust laws. We point out that arbitration will become nothing more than a convenient way for stronger parties to immunize themselves from the law. It will have no arguable legitimacy; it will just be an exercise of power. 

 In our conclusion, we say that AmEx's “proposal would change the underlying statute from the Federal Arbitration Act to the Federal Corporate Immunity Act, and would rob it of its legitimacy.”

Many Americans, lacking savings, live on their own fiscal cliff

A fascinating and troubling story from NPR this morning about Americans with little or no savings is worth a listen (or read) to get a sense of many Americans' financial vulnerability. Here's the opening:

In his inaugural address, President Obama talked about a country where even "a little girl born into the bleakest poverty knows that she has the same chance to succeed as anybody else." But in reality, that's not always the case. A new report finds that one of the biggest obstacles for many Americans is that they don't have the savings or assets they need to help them get ahead.

Nearly 44 percent of Americans don't have enough savings or other liquid assets to stay out of poverty for more than three months if they lose their income, according to Wednesday's report by the Corporation for Enterprise Development. Almost a third have no savings accounts at all.

Should Businesses Continue to Comply With CFPB Regulations?

Legal reporter Jenna Greene says here that "[t]The Consumer Financial Protection Bureau was dealt a devastating—if indirect—blow last week, when the U.S. Court of Appeals for the D.C. Circuit ruled that three recess appointments to the National Labor Relations Board were invalid." That remains to be seen, as the D.C. Circuit likely won't have the final word about the recess appointments to the NLRB or the CFPB. But what happens before we know the final answer? Greene's article discusses whether businesses will continue to cooperate with the CFPB and follow its regs in light of the D.C. Circuit's ruling.

Bottomside Briefs in American Express Arbitration Case, Including Briefs of the U.S. Solicitor General and 22 States

by Deepak Gupta

Since at least 2009, this blog has covered (e.g. here and here) the long-running saga of American Express v. Italian Colors, an antitrust dispute that raises fundamental questions about the limits of federal arbitration jurisprudence. The case, now before the Supreme Court, presents the question whether an arbitration clause should be enforced when there is no dispute that a litigant has shown that it would be unable effectively to vindicate its federal statutory rights in the arbitral forum. (Along with Paul Clement of Bancroft PLLC, I represent the respondents before the Court.)

Last week, we filed our merits brief. Today, amicus briefs supporting the respondents were filed by 22 States, national business groups (including separate briefs from the National Retail Federation and National Grocers Association), professional arbitrators, leading scholars (of antitrust, arbitration, and civil procedure), and public interest groups (including both Public Citizen and Public Justice). Notably, the stack of briefs supporting the respondents includes an amicus brief from the Solicitor General of the United States. The Solicitor General's submissions receive special attention from the Justices, and so the filing of an SG amicus brief is always noteworthy. But today's brief is even more significant because the SG has generally stayed out of recent arbitration cases, but made a judgment that this case was different. I'll collect all of the bottomside briefs as they come in and post them here, so interested readers can find them in one place.

Will Doctors Refuse to Take on New Patients Who Obtain Coverage Under the Affordable Care Act?

Some opponents of the Affordable Care Act claimed that the Act could self-destruct because providers would refuse to take on newly covered (supposedly, non-lucrative) patients, particularly those covered under the Act's massive Medicaid expansion. Not so, at least according to a new study in Michigan conducted by the Ann Arbor-based Center for Healthcare Research & Transformation. That study found that 81% of Michigan primary care physicians were interested in taking on newly insured patients. And of those doctors, 90% percent of family physicians, internal medicine practitioners, and pediatricians said they'd take on new Medicaid patients. Read about the study here.

States as enforcers of federal consumer financial protection law

Michigan State University College of Law Professor Mark Totten has written Credit Reform and the States: The Vital Role of Attorneys General after Dodd-Frank. Here is the abstract:

Congress employed multiple strategies in the wake of the Great Recession to provide greater protections for consumers in the financial marketplace. One strategy aimed at agency design and resulted in creation of the Consumer Financial Protection Bureau. Another strategy created new substantive prohibitions and corresponding rulemaking powers. A third strategy channeled the forces of federalism, placing a limit on agency preemption and empowering state attorneys general to enforce federal law. Scholars have focused on the first two strategies, plus the new constraints on preemption, but so far have not given sustained attention to the role of states as co-enforcers of federal consumer financial protection law. This Article seeks to fill that void, focusing on implementation and charting a path for normative assessment.

    I begin by placing this dual enforcement scheme within the context of recent history and the evolving infrastructure for consumer financial protection in the United States. I then consider several interpretive issues to account for the substantive, procedural, and remedial powers Congress placed in the hands of state attorneys general. Recognizing that the success of this concurrent enforcement regime will depend in part on early coordination, I next identify several implementation priorities necessary to create a scheme that is both effective and efficient. Finally, I identify key questions and offer preliminary observations toward a normative assessment of this scheme and its implications both for consumer finance and American federalism.

How Can Consumers Reduce The Prices They Pay on the Internet?

Consumers shop on the Internet for low prices and convenience. But both low prices and convenience are at risk because prices for consumer goods and services on the Internet change frequently, making it hard to get the best (or even a good) price without a lot of search and monitoring time. This article by Stephanie Clifford explains that new web-based services are popping up that inform prospective purchasers of price reductions on goods and services that they are thinking about buying. One of those services is Hukkster.

Interesting new FDCPA class action decision

by Brian Wolfman

Last Thursday, Judge Arthur Spatt, a federal district judge in Brooklyn, postponed a decision on final approval of a settlement in a Fair Debt Collection Practices Act (FDCPA) class action on the ground of inadequate notice. See Corpac v. Rubin & Rothman, 2013 WL 265318 (E.D.N.Y. Jan. 24, 2012). The plaintiff alleged that the defendant had sent written collection notices that falsely represented or implied that an attorney had meaningfully reviewed the plaintiff's account and was meaningfully involved with the decision to send the communication, in violation of the FDCPA. The proposed settlement would have paid $9,400 to an unnamed charitable organization (unnamed, at least, in the court's opinion) and $75,000 to plaintiff's counsel.

Three things about the decision seemed noteworthy to me.

First, as noted, the court refused to approve the settlement, at least for now, on the ground of inadequate notice. Applying the Second Circuit's decision in Hecht v. United Collection Bureau, 691 F.3d 18 (2012), Judge Spatt held that a one-time summary notice of the action in the New York Post violated the class members' due process rights. (I don't understand why the court did not hold that individual notice was required by Federal Rules of Civil Procedure 23(b)(3) and (c)(2).)

Second, the court disqualified defendant's counsel on the ground that he had a close personal relationship with, and frequently was co-counsel in FDCPA cases with, the plaintiff's counsel. Here are the key passages of the court's decision on that issue:

Here, as stated above, if the notice to the class members was valid and if the Court were to approve the settlement, there would be no reason to disqualify [defense counsel] Robert L. Arleo. His prior extensive business relationship with [plaintiff's counsel] Horn did not, in any manner, involve the prosecution or the proposed settlement of the case. The settlement was consummated between Horn and defendant's counsel Joseph A. Latona in March 2011. Arleo signed in as an attorney for the defendant on December 21, 2011. There is no evidence that attorney Arleo had anything to do with the settlement. However, that settlement has not yet been approved by the Court. The notice used by the parties has been held to be invalid. Now, the plaintiff's counsel must initiate a new proposed notice to the prospective class members. The result of such a more publicized notice is unknown. However, with reasonable certainty, a more publicized notice may bring in additional prospective class members and objectors. The potential class is large. Whether this new and much more publicized procedure will result in a settlement approved by the Court is also unknown. This means that if Robert Arleo remains as co-counsel for the defendant, he will have an opportunity to be in-volved in the future notice, possible objection hearings, settlement procedures, and a trial if necessary. In the Court's view this presents a future potential serious problem. *** In light of the intervening change in the posture of this case attributable to Hecht, there may be additional class action members, additional objectors and the chance of a revised class action settlement or even a trial. In view of these circumstances, the Court is well aware of its obligation to protect the class members and to make sure that the processes involved in this case are transparent to the class members and to the defendant. Balancing the right of a client to counsel of his or her choice against the enforcement of ethical rules and fair play, Robert Arleo should no longer be in this reactivated case.

Third, the plaintiff's counsel had alleged a "kickback" scheme in which non-profit organizations would receive fees for referring cases to objector's counsel. This allegation was not true, and plaintiff's counsel later admitted that it was not true and apologized to objector's counsel and to the court. The court decided not to refer the plaintiff's counsel to the chief judge for disciplinary action. 

"True Believers in Justice"

That's the name of the video linked here. Many of the readers of this blog work for justice in the civil courts. The video is about people who represent poor people in criminal cases.