Consumer Law & Policy Blog

FTC: Food Health Claims Must Be Backed by Good Science

As explained in this article by Jenna Greene, "the Federal Trade Commission in a final decision issued January 16 will require juice maker POM Wonderful to conduct extensive clinical trials before it can make any claims about the health benefits of its products." And those clinical trials must produce "competent and and reliable scientific evidence" showing that what POM Wonderful says about the health benefits of its products is true. The Commission went further, spelling out what it means by "competent and reliable scientific evidence" in its final order in the POM Wonderful case:

at least two randomized and controlled human clinical trials of the Covered Product that are randomized, well controlled, based on valid end points, and conducted by persons qualified by training and experience to conduct such studies. Such studies shall also yield statistically significant results, and shall be double-blinded unless Respondents can demonstrate that blinding cannot be effectively implemented given the nature of the intervention.

For our previous coverage of the POM Wonderful case, go here and here.   

More on Generic Drugs, Preemption, and Access to the Courts to Redress Drug-Related Injuries

We have posted several times recently (go here, here, and here) about Mutual Pharmaceutical Company v. Bartlett, a pending Supreme Court case that presents the question whether FDA approval of a generic prescription drug preempts a state-law damages claim premised on the drug's design defect. (The Supreme Court held 5-4 in PLIVA v. Mensing (2011) that FDA approval of a generic prescription drug and its labeling generally preempts a state-law damages claim premised on a failure to warn of the drug's hazards.) The drug company in Mutual has just filed its opening Supreme Court merits brief.

Relatedly, on Monday, we posted about a recent ruling of the Alabama Supreme Court that a patient who took a generic version of a drug could, as a matter of Alabama law, sue the brand-name drug manufacturer for failing to warn about the drug’s risks. That ruling may leave open an avenue of relief for people harmed by generic drugs because the Supreme Court held in Wyeth v. Levine (2008) that failure-to-warn suits against brand-name manufacturers generally are not preempted. In this regard, readers may also be interested in taking a look at Conte v. Wyeth, a 2008 decision of the California Court of Appeal, which, like the Alabama Supreme Court, held that state law authorizes someone harmed by a generic drug to hold the brand-name manufacturer responsible for failing to warn of the product's hazards.

Is enforcement of a security interest (e.g. a foreclosure) "debt collection" under the FDCPA?

Yes, says the Sixth Circuit, in Glazer v. Chase Home Finance, issued yesterday. This is good news for FDCPA plaintiffs, who have had to contend for years with a district court consensus that the enforcement of a security interest is not subject to most of the provisions of the Act. An odd type of split is developing on this issue: most district courts are getting it wrong, whereas most courts of appeals are getting it right. Usually, one expects the districts to follow the circuits, but the narrow view of debt collection continues to prevail at the district court level. (The circuits also have the better reading of the statute, in my view, which makes it all the more strange that the split seems to have persisted for so many years.)

Chamber of Commerce Doesn't Want SEC to Require Public Companies to Disclose Their Campaign Contributions

Should public companies be forced to disclose to their shareholders -- and thus to the world -- their campaign contributions (rather than funnelling them secretively through third parties, such as the Chamber of Commerce)? The SEC is considering a disclosure rule, but the Chamber of Commerce is opposed, as explained in this article by Sue Reisinger. Here are some excerpts:

The fight over whether public companies should be forced to reveal their political contributions made through third parties continues to roil on several fronts, with a coalition of 30 business associations opposing the idea of the Securities and Exchange Commission considering a new disclosure rule. ... Speaking for the [Chamber], attorney Andrew Pincus told CorpCounsel.com, “There is no policy justification for this [proposed rule]. The theory of proponents is that the management and board can’t be trusted to ensure that the company’s political expenditures are consistent with the corporation’s interests. There is absolutely no basis, no evidence, for that theory.” Pincus ...said such disclosure could actually hurt the value of a company because certain shareholders who don’t like the policies being supported could use the disclosure to “beat up on the company,” and thereby “damaging the brand and trying to stop the company from doing things that are in the long-term best interests of the company.” ... [Columbia law professor Robert] Jackson noted that opponents say disclosure is bad while contributions are in the best interests of the corporation. “If that’s true, then why wouldn’t you tell shareholders about [these contributions]?” Jackson asked. “It’s a puzzle.”

Alabama Court holds patient injured by generic drug can sue brand-name manufacturer

The Alabama Supreme Court ruled on Friday in Wyeth v. Weeks that a patient who took a generic version of a drug may sue a brand-name drug manufacturer for failing to warn about a drug’s risks. In June 2011, the U.S. Supreme Court held in Pliva v. Mensing that injured patients' state-law failure-to-warn claims against generic-drug manufacturers are preempted by federal law because the Food and Drug Administration requires those manufacturers to use labeling that is the same as the brand-name labeling. Therefore, a suit against the brand-name company may be a patient's only avenue to seek compensation for injuries. Although most courts have held that a patient who took the generic drug cannot sue the brand-name company because that company owes no duty to an individual who was not its customer, the issue is a state-law question, and the answer may vary from state to state.

On a related issue, the opening brief in the U.S. Supreme Court is due this week in Mutual Pharmacuetical Co. v. Bartlett. The Court will consider in that case whether a design-defect claim brought under New Hampshire law against a generic-drug manufacturer is impliedly preempted by federal law.

Get Notices of Regulatory Recalls by Email

You can get notices via email of government recalls of various products. You don't have to get notices for everything regulated by the relevant agency. For instance, you can get recall notices that concern only the make and model of the car that you own.

To sign up for emails from the Consumer Product Safety Commission (various consumer products), go here.

For the National Highway Traffic Safety Administration (vehicles and associated products), go here.

For products regulated by the Food and Drug Administration (foods, drugs, medical devices, diagnostic tests, etc.), go here.

 

Senators Call for a Ban on Payday Lending by Federally Regulated Banks

Five U.S. senators, led by former Connecticut Attorney General (now Senator) Richard Blumenthal, has called on the Fed and the FDIC to ban payday lending by federally regulated banks. The Consumerist has a nice write up.

Basic Tax Advice for Consumers from the CFPB

This tax advice from Holly Patreus, the Consumer Financial Protection Bureau's head of Servicemember Affairs, is directed at members of the military and their families, but much of the advice is useful to consumers generally.

Paper on Payment Card Security Measures

Edward A. Morse of Creighton and Vasant Raval of Creighton Business have written Private Ordering in Light of the Law: Acheiving Consumer Protection through Payment Card Security Measures, 10 DePaul Business & Commercial Law Journal 213 (2012).  Here's the abstract:

A private ordering regime has developed within the payment card industry to define appropriate security practices and to monitor compliance by network participants. Market demands for trustworthy systems upon which consumers and merchants could rely provide incentives for security, which the card brands supplement by privately designed fines and sanctions imposed through contract. Although private ordering has functioned sufficiently well to make payment cards a trusted payment method, the system is not completely secure, as data security breaches continue to occur. This is not surprising, as complete security is not a feasible goal. Nevertheless, some have questioned whether additional government regulation is necessary to protect consumers. This article explores the effects of legal intervention, including disclosure laws, on this private ordering system. It questions whether additional government intervention would enhance consumer welfare, particularly when consumers will likely bear the ultimate costs of such regulation. It recommends modifications in breach disclosure laws to eliminate individual notice requirements in favor of public notices, which may reduce costs and enhance consumer welfare. It challenges “bounty” enforcement regimes, such as FACTA, which offer little marginal benefit to consumers while substantially raising costs. It identifies practical and political problems presented by the different capacities of large and small firms to bear security costs, which are not easily solved under either private ordering or legislative approaches. Finally, it offers a set of policy issues as a possible agenda for consideration by policy makers and researchers in this domain.

 

 

Omri Ben-Shahar Paper Looks at Which Consumers Are Hurt Most by Arbitration Clauses

Omri Ben-Shahar of Chicago has written Arbitration and Access to Justice: Economic Analysis. Here is the abstract:

Mandatory arbitration clauses in consumer contracts are widely regarded as problematic because they limit consumer’s access to judicial forums, to fair procedures, and potentially to any kind of remedy. But rather than looking at consumers as a group, I examine which sub groups of consumers are affected by this limitation more than others. I argue that in most circumstances, access to courts benefits the elite, not the weak. It is a species of open-access policy that has an unintended regressive effect. Paradoxically, rules that limit the use of pre-dispute arbitrations clauses hurt, rather than protect, weaker consumers, as they mandate a regressive reallocation. I also consider the role of class actions, and whether weak consumers are potentially the indirect beneficiaries of class action litigation. This argument has theoretical merit, but it, too, is limited in ways that are often unappreciated.