Consumer Law & Policy Blog

Justices Sotomayor and Kagan in the spotlight

This has been a revealing week for President Obama's two appointees to the Supreme Court, who are becoming two of the strongest voices on the Court. On Monday, Justice Sotomayor made national headlines with her opinion regarding a denial of cert. (beginning at page 13 of this Order List) -- though agreeing on procedural grounds with the decision to deny review, she rightly excoriated a prosecutor who argued in a criminal case that the presence of African-Americans, Hispanics, and money in a room should give rise to an inference that a drug deal was taking place. On Tuesday, Justices Sotomayor and Kagan were the only votes for the FDCPA plaintiff's position in Marx v. GRC (which we discussed here); the dissent included this forceful criticism of the majority's self-serving legislative history analysis:

Some Members of the majority have expressed doubt about the relevance of legislative history, claiming that relying upon it is analogous to “entering a crowded cocktail party and looking . . .for one’s friends.” Conroy v. Aniskoff, 507 U. S. 511, 519 (1993) (SCALIA, J., concurring in judgment). But speculating whole cloth about congressional intent, as the majority does, is surely more problematic. The majority is saved the trouble of having to look for its friends at the party; it simply invites them.

And yesterday, both Justices were quite active -- and willing to challenge their more conservative colleagues directly -- in the oral argument over the Voting Rights Act; for a good description of some of the courtroom exchanges and a discussion of the two new Justices' evolving role on the Court, check out this Washington Post op-ed.

More on Payday Loans

On Sunday, Brian posted a link to the Times story, Major Banks Play Key Role in Payday Loans Banned by States.  Yesterday, the Times followed up with a report, Dimon Pledges to Change JPMorgan’s Practices on Payday Loans. The specific practice that has drawn Dimon's ire is of withdrawing money from depositors' accounts to repay payday loans even over the objection of the depositor.   But the original article also noted that the federal government also plays an important role in thwarting applcation of state usury laws by providing that the usury law (or lack thereof) of the state where the lender is located applies to consumer loans, not the law where the consumer lives.  While three years ago duiring consideration of what became the Dodd-Frank Act, the Senate reconsidered that law--called the exportation doctrine because states export their usury laws to other states-- some Democrats joined all nearly all the Republican senators to preseve the exportation doctrine.

Meanwhile, Pew has issued a new study, Payday Lending in America: How Borrowers Choose and Repay Payday Loans.  According to the accompanying press release:

Pew’s survey results reveal that people choose these loans to avoid outcomes like long-term debt, borrowing from family or friends, overdraft fees, and cutting back further on expenses. But the average loan requires a repayment of more than $400 in two weeks, the typical duration, when the average borrower can only afford $50. When borrowers have trouble paying off the loan, they return to the very same choices they initially tried to avoid.

 

Bloomberg: FTC Commissioner Edith Ramirez Named by Obama as Chairman

Here.  According to the report, Ramirez was an intellectual property lawyer before joining the FTC.  It's not clear how much expertise she had in consumer law before becoming a commissioner. 

More on movement between industry and congressional staffs

We posted recently on the revolving door between industry and congressional staffs. Now, we've been provided more detail with this joint review by Remapping Debate and the Center for Responsive Politics. The review looked at the chiefs of staff and legislative directors of the new members of the 113th Congress to detemine who previously worked as industry or non-profit lobbyists. The review includes of a chart listing each staffer, the staffer's congressional boss, and the staffer's prior lobbying connections. The chart can be sorted by a number of variables, including staffer, congressperson, and political party.

looked at the Chiefs-of-Staff and Legislative Directors for new members of this session’s (113th) Congress to determine how many were at some point in the past associated with a lobbying entity. - See more at: http://www.remappingdebate.org/map-data-tool/top-staffers-new-members-congress-uncovering-their-previous-jobs-lobbying-entities#sthash.CCJYO4mz.dpuf

looked at the Chiefs-of-Staff and Legislative Directors for new members of this session’s (113th) Congress to determine how many were at some point in the past associated with a lobbying entity. - See more at: http://www.remappingdebate.org/map-data-tool/top-staffers-new-members-congress-uncovering-their-previous-jobs-lobbying-entities#sthash.CCJYO4mz.dpuf

looked at the Chiefs-of-Staff and Legislative Directors for new members of this session’s (113th) Congress to determine how many were at some point in the past associated with a lobbying entity. - See more at: http://www.remappingdebate.org/map-data-tool/top-staffers-new-members-congress-uncovering-their-previous-jobs-lobbying-entities#sthash.CCJYO4mz.dpuf

looked at the Chiefs-of-Staff and Legislative Directors for new members of this session’s (113th) Congress to determine how many were at some point in the past associated with a lobbying entity. - See more at: http://www.remappingdebate.org/map-data-tool/top-staffers-new-members-congress-uncovering-their-previous-jobs-lobbying-entities#sthash.CCJYO4mz.dpuf

looked at the Chiefs-of-Staff and Legislative Directors for new members of this session’s (113th) Congress to determine how many were at some point in the past associated with a lobbying entity. - See more at: http://www.remappingdebate.org/map-data-tool/top-staffers-new-members-congress-uncovering-their-previous-jobs-lobbying-entities#sthash.CCJYO4mz.dpuf

looked at the Chiefs-of-Staff and Legislative Directors for new members of this session’s (113th) Congress to determine how many were at some point in the past associated with a lobbying entity. - See more at: http://www.remappingdebate.org/map-data-tool/top-staffers-new-members-congress-uncovering-their-previous-jobs-lobbying-entities#sthash.CCJYO4mz.dpufv

looked at the Chiefs-of-Staff and Legislative Directors for new members of this session’s (113th) Congress to determine how many were at some point in the past associated with a lobbying entity. - See more at: http://www.remappingdebate.org/map-data-tool/top-staffers-new-members-congress-uncovering-their-previous-jobs-lobbying-entities#sthash.CCJYO4mz.dpuf

looked at the Chiefs-of-Staff and Legislative Directors for new members of this session’s (113th) Congress to determine how many were at some point in the past associated with a lobbying entity. - See more at: http://www.remappingdebate.org/map-data-tool/top-staffers-new-members-congress-uncovering-their-previous-jobs-lobbying-entities#sthash.CCJYO4mz.dpuf

looked at the Chiefs-of-Staff and Legislative Directors for new members of this session’s (113th) Congress to determine how many were at some point in the past associated with a lobbying entity. - See more at: http://www.remappingdebate.org/map-data-tool/top-staffers-new-members-congress-uncovering-their-previous-jobs-lobbying-entities#sthash.CCJYO4mz.dpuf

looked at the Chiefs-of-Staff and Legislative Directors for new members of this session’s (113th) Congress to determine how many were at some point in the past associated with a lobbying entity. - See more at: http://www.remappingdebate.org/map-data-tool/top-staffers-new-members-congress-uncovering-their-previous-jobs-lobbying-entities#sthash.CCJYO4mz.dpuf

looked at the Chiefs-of-Staff and Legislative Directors for new members of this session’s (113th) Congress to determine how many were at some point in the past associated with a lobbying entity. - See more at: http://www.remappingdebate.org/map-data-tool/top-staffers-new-members-congress-uncovering-their-previous-jobs-lobbying-entities#sthash.CCJYO4mz.dpuf

Supreme Court Hears Oral Arguments in Major Arbitration Case: American Express v. Italian Colors

by Deepak Gupta

Along with the historic Voting Rights Act arguments this morning, the Supreme Court heard oral arguments in American Express v. Italian Colors -- a major antitrust arbitration case that we've mentioned on the blog several times over the years (e.g., here and here).  I've been serving as co-counsel for the plaintiffs/respondents in the Supreme Court along with Paul Clement, who argued for our side today. Deputy Solicitor General Malcolm Stewart also appeared -- making a rare appearance for the U.S. government in an arbitration case -- as amicus curiae supporting the plaintiffs/respondents. 

The argument transcript is available here and all of the briefing here.  You can find an illuminating discussion of the case at the Point of Law blog here, with pro and con submissions by Myriam Gilles and Ted Frank.  An early report from Bloomberg is here.

There was some dispute today about exactly what the question presented is, but the basic legal issue in the case -- in layman's terms -- is whether a court must send a case to arbitration even where it is undisputed that the plaintiffs can't vindicate their federal statutory claims in the arbitral forum. I say there was some dispute because even though it was uncontested below that the plaintiffs couldn't vindicate their claims, the petitioners seemed to want to retreat from that position and some of the Justices questioned whether they could do so, leaving open the possibility of some kind of limited remand.

I'm not going to venture any predictions here, but I can safely say that our best arguments were ably presented and that the Justices seemed to understand that this case was not about the availability of class actions, but about whether there will be some kind of ultimate safety valve in the arbitration system at least where important federal statutory rights are at stake.

American Banker Reports House Financial Services Chair Jeb Hensarling Resumes Attacks on CFPB

by Jeff Sovern

Here.  According to the story, Representative Hensarling called the CFPB "Orwellian-titled."  So I guess he doesn't think the Bureau actually protects consumers (or maybe he thinks it isn't really a bureau).  I would love to hear Representative Hensarling's reasoning on that one.  Does he believe, for example, that clearer disclosures are harmful to consumers?  Or that barring lenders from making mortgages to consumers who can't repay them is bad for consumers? 

Fourth Circuit Refuses to Enforce Arbitration Clause for Lack of Mutuality, Allowing Class Action to Go Forward

The Fourth Circuit has held, in Noohi v. Toll Brothers, that an arbitration clause in a contract between home buyers and a real estate development company is unenforceable because the clause lacked mutuality of consideration under governing Maryland law. (The clause lacked mutuality because it forced the home buyers but not the development company to submit disputes to arbitration.) After coming to its Maryland law no-mutuality holding, the court of appeals rejected the defendants' argument that the Maryland's no-mutality rule is preempted by the Federal Arbitration Act. The ruling has the effect of allowing the plaintiffs' class action to go forward in court. Worth a look.

"Policeman, Citizen, or Both? A Civilian Analogue Exception to Garcetti v. Ceballos"

That's the name of this article by Caroline Flynn. Here's the abstract:

The First Amendment prohibits the government from leveraging its employment relationship with a public employee in order to silence the employee’s speech. But the Supreme Court dramatically curtailed this right in Garcetti v. Ceballos by installing a categorical bar: if the public employee spoke 'pursuant to her official duties,' her First Amendment retaliation claim cannot proceed. Garcetti requires the employee to show that she was speaking entirely 'as a citizen' and not at all 'as an employee.' But this is a false dichotomy - especially because the value of the employee’s speech to the public is no less if she is speaking pursuant to mixed motivations. A recent Second Circuit case, Jackler v. Byrne, suggests an exception to Garcetti’s categorical bar. Because the public employee’s speech in Jackler had a civilian analogue - that is, because an ordinary citizen could speak in the same manner and to the same audience - the court allowed the employee’s claim to proceed. The Second Circuit’s exception contradicts Garcetti, but it nonetheless furthers significant First Amendment values while adequately protecting public employers’ interest in controlling employee speech. As such, the Supreme Court should adopt the civilian analogue exception to ameliorate Garcetti’s problematic rule.

Supreme Court: plaintiffs need not prove materiality to get class certification in a federal securities-fraud class action

In an 6-3 decision authored by Justice Ruth Bader Ginsburg, the Supreme Court held today in Amgen v. Connecticut Retirement Plans that plaintiffs in a federal securities-fraud class action need not prove that the defendant's allegedly fraudulent statements were material to obtain class certification. Justice Ginsburg's opinion contains this nice synopsis:

The issue presented concerns the requirement stated in [federal class-action] Rule 23(b)(3) that “the questions of law or fact common toclass members predominate over any questions affecting only individual members.” [Defendant] Amgen contends that to meet the predominance requirement, Connecticut Retirementmust do more than plausibly plead that Amgen’s alleged misrepresentations and misleading omissions materially affected Amgen’s stock price. According to Amgen, certification must be denied unless [plaintiff] Connecticut Retirement proves materiality, for immaterial misrepresentations or omissions, by definition, would have no impact on Amgen’s stock price in an efficient market.

While Connecticut Retirement certainly must prove materiality to prevail on the merits, we hold that such proof is not a prerequisite to class certification. Rule 23(b)(3) requires a showing that questions common to the class predominate, not that those questions will be answered, on the merits, in favor of the class. Because materiality is judged according to an objective standard, the materiality of Amgen’s alleged misrepresentations and omissions is a question common to all members of the class Connecticut Retirement would represent. The alleged misrepresentations and omissions, whether material or immaterial, would be so equally for all investors composing the class. As vital, the plaintiff class’s inability to prove materiality would not result in individual questions predominating. Instead, a failure of proof on the issue of materiality would end the case, given that materiality is an essential element of the class members’ securities-fraud claims. As to materiality, therefore, the class is entirely cohesive: It will prevail or fail in unison. In no event will the individual circumstances of particular class members bear on the inquiry.

At first read, this decision looks like a significant win for court access in securities-fraud cases. The Supreme Court's ruling affirmed a decision of the Ninth Circuit.

 

Federal Court Rejects Assertion of Copyright in Lawyer-Created Court Documents

As explained in this article by Jessica Dye, U.S. district judge Jed Rakoff has thrown out a suit brought by a lawyer against Westlaw and Lexis claiming a copyright in documents he created and filed in court. That may be good news for consumers looking for access to court documents. The case is called Edward White v. West Publishing Corp, No. 12-1340 (S.D.N.Y.).

Westlaw and Lexis make many federal-court briefs available on its databases for a fee. Federal-court briefs and all other pleadings are available on the U.S. Courts electronic filing system, PACER, also for a fee. Then, there's RECAP, the free, though incomplete, version of PACER, which contains thousands of briefs. And of course lawyers and non-lawyers alike pass around other lawyers' briefs on the Internet all the time. That makes those briefs freely available to be appropriated for use in other briefs and arguments made by profit-seeking and non-profit lawyers (as well as by consumers acting as their own lawyers). The freer the flow of court-filed information the lower the cost of law practice and legal understanding.

According to Dye, Westlaw and Lexis argued "that they were entitled to use the documents under the doctrine of fair use .... They noted that the documents were generally available to the public via the Pacer filing system. They also argued that their use of the documents was 'transformative,' taking the documents and enhancing them to make them searchable and useful for legal practitioners."

Judge Rakoff said that he was dismissing the suit and would issue an opinion later.