Consumer Law & Policy Blog

Grandpa's coca-cola

by Brian Wolfman

We have covered the interaction between consumer protection law and efforts to stem the obesity epidemic, including NYC Mayor Michael Bloomberg's effort to ban large-sized sugary drinks (which has failed so far in the New York courts).

If that topic interests you, I think you'll want to watch two videos, which are linked here and here and can be viewed by clicking on the embedded videos below. The first  video is the latest in Coke's anti-obesity advertising campaign, which suggests that you should eat, exercise, and otherwise emulate "grandpa's" lifestyle a couple generations ago--that is, you should walk and bike (rather than drive everywhere) and eat sit-down balanced meals (rather than grab junk food on the run). The second video drives home a point that Coke's ad ignores: grandpa's coke was less than a third the size of today's average coke.

Bloomberg gets that (as do others, such as Richard Posner).

 

 

 

 

Litigation and national politics

At the end of the last century and the beginning of this one, one political party was anti-litigation, the other more friendly. Why? By last year's election, the issue had faded away, at least nationally. Why? These issues are taken up in "Unspoken Truths and Misaligned Interests: Political Parties and the Two Cultures of Civil Litigation" by law professor Stephen Yeazell. Here is the abstract:

During the last four decades the United States has witnessed first the emergence and then the disappearance of civil litigation as a topic of partisan debate in national politics. Following two centuries in which neither party thought the topic worth mention, in the last decades of the twentieth and first of the twenty-first century, both parties made it part of their agendas. Republican candidates and presidents denounced litigation as a blight; Democratic candidates and presidents embraced it as a panacea. This Essay traces the emergence of this issue, the apparent oddness of the two parties’ stances toward civil litigation, and the ways in which both parties chose to ignore salient characteristics of modern civil litigation — the unspoken truths of my title. Finally, I’ll tentatively suggest some reasons for the disappearance of this issue — at least temporarily — from the political scene.

Potential connections between plastic food packaging and diabetes and obesity in kids

As the Consumerist reports, "[b]ecause there are apparently not enough studies to convince the Food and Drug Administration that controversial chemical Bisphenol-A (BPA) should not be used in just about every form of food packaging, yet another study has been published linking BPA to childhood obesity. Meanwhile, a separate study released today showed a possible connection between a widely used plasticizer and diabetes." The studies, both to be published in the journal Pediatrics, can be found here and here.

President Obama meets with key financial regulators to urge prompt, independent implementation of Dodd-Frank financial reform legislation

Read about it here. Here are excerpts:

The closed-door meeting [with President Obama] included Richard Cordray, the newly-confirmed director of the Consumer Financial Protection Bureau, as well as the chairs of the board of governors of the Federal Reserve System, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation and the U.S. Securities and Exchange Commission. Obama ... urge[d] them to put rules and regulations in place outside of the influence of Wall Street firms and large financial institutions seeking to water down the Dodd-Frank law, White House Principal Deputy Press Secretary Josh Earnest said at a press conference. "He's going to convey to them the sense of urgency that he feels about getting these regulations under Wall Street reform implemented promptly, and most importantly implemented in a way that protects the long-term stability of our financial system and the financial interests of middle class families across the country," Earnest said.

Courts Increasingly Un-Amused by Corporations Who Litigate in Court for a While Before Invoking Arbitration Clauses

By Paul Bland @PblandBland

          The last few years have often been pretty discouraging for consumer advocates who are trying to preserve their clients’ rights to take disputes to court.  As the Supreme Court majority’s madcap love affair with forced arbitration just keeps getting more passionate (ick), courts at all levels seem to be enforcing arbitration clauses that would have been deemed to be abusive or excessive just a few years before.  Go here, for instance.

         But there is one exception in this area of law, where a wave of courts have refused to enforce arbitration clauses.  There's been a mini-boomlet in good law, with three important new cases in the last few weeks.  In situations where corporations decide to litigate a case in court for some period of time first (maybe to see how they’ll do), and then later decide that they’ve changed their mind and they’d rather take the case to arbitration (maybe they didn’t like the judge in court, and have decided to try to opt for a change of venue to the private sector), more and more courts have been saying “no way.”  The idea that corporations can lose their right to invoke arbitration clauses if they choose to litigate in court first isn’t new.  I’ve argued and won cases in the U.S. Court of Appeals for the Eighth Circuit,  Lewallen v. Green Tree Servicing, LLC , 487 F.3d 1085 (8th Cir. 2007) (read our successful brief, which was principally authored by my old buddy Mike Quirk), and the Florida Supreme Court, Raymond James Fin. Servs., Inc. v. Saldukas , 896 So.2d 707 (Fl. 2005) (read our brief in that case), where courts did not allow corporations to litigate for a while and then change course in midstream to arbitration.  Nonetheless, there does seem to be a recent run of good cases.

        Just a few weeks ago, for example, on my son’s birthday as it happens, an Illinois Court of Appeal refused to allow Sears to try to invoke an arbitration clause after litigating a consumer class action in court for nearly 10 years.  The case, where the plaintiffs allege that Sears illegally disclosed confidential personal information and credit card data to third parties, is a classic example of a case which can only be pursued as a class action by 99.9% (if not all) of the consumers, and the type of case that today would be stomped out in all likelihood by recent U.S. Supreme Court 5-4 decisions elevating arbitration clauses over consumer protection and civil rights laws.  But the court held that Sears had decided to fight the case in court for too long before calling for arbitration, and Sears missed out on its get-out-of-jail-free card.

        Similarly, a few weeks ago, a Florida district court of appeals refused to allow a bank that sued a borrower in court to then change course and try to move a case to arbitration when the orrower filed counterclaims back. Having affirmatively decided to start a case in court, the court had some trouble accepting the idea that the bank could reverse court when it changed its mind and decided a more clever legal strategy would be to stay in arbitration.

        Finally, just last week, in Cole v. New Jersey Medical Center, the New Jersey Supreme Court refused to let a medical provider litigate a case in court for 21 months and then, only three days before the scheduled start of a jury trial (!), demand to shift the case over to arbitration.  After analyzing the extreme facts, the Court had to reverse a trial court who had taken the policy in favor of arbitration to a fairly extreme length.

         This trend is hopefully a pretty good omen for Public Justice, which has a case pending right now in the Alaska Supreme Court, where our principal argument is that a debt collection law firm waived its right to demand arbitration of allegations that it jacked up its attorneys’ fees to illegal and inappropriate levels, by bringing cases in court first.  Read our opening brief. The case should be argued in November by my super smart colleague Matt Wessler.  There are no guarantees in litigation, obviously, but it does seem like a LOT of courts have lately refused to allow corporations to litigate energetically in court when it suited them to do so, and only later change their mind and try to arbitrate.  Courts seem to feel that they are not mere tools to be used by corporations when it’s in their favor, and then to be tossed aside later if the company decides they’d rather be somewhere else. 

        Makes sense to me.

11th circuit decision on the numerosity requirement of CAFA's mass-action provision

by Brian Wolfman

The Class Action Fairness Act (CAFA) provides jurisdiction in federal district court (originally and by removal) for most minimally diverse class actions and for so-called "mass actions." Under CAFA, a mass action is, as relevant to this post

any civil action ... in which monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiffs’ claims involve common questions of law or fact

28 U.S.C. 1332(d)(11)(B)(i).

Consider this case, which arises from a terrible tragedy. A cruise ship wrecks and people die and are seriously injured. Fewer than 100 people sue in state court. But more people indicate their desire to join the suit, and their joinder would bring the total number of plaintiffs to 104. The plaintiffs want to stay in state court. So, the plaintiffs dismiss their first case, and refile as two separate cases in the same state court: one case with 48 plaintiffs and the other with 56 plaintiffs. Again, together that's 104.

The defendant removes the two cases to federal court, saying that the federal court has jurisdiction under CAFA's mass-action provision. The plaintiffs and defendants agree that all CAFA requirements are met except numerosity. The defendant says that there is numerosity because the total number of plaintiffs is 100 or more and when the prospective plaintiffs earlier wanted to join the suit that constituted a "suggestion" to try more than 100 cases together.

The 11th circuit rejected the cruise line's arguments last month in Scimone v. Carnival Corporation on plain-language grounds, noting that the 7th and 9th circuits had come to the same conclusion on similar facts. The court held that the "propos[al]" to try the cases together must come from the plaintiffs (not also the defendant, as Carnival had argued). The 11th circuit also rejected the defendant's argument that the plaintiffs' "artful pleading" shouldn't be allowed to undermine CAFA's purposes. Again, the court said that the text of the s tatute controlled:

Carnival is only entitled to a federal forum if the plaintiffs filed a single complaint in state court that involved 100 or more persons’ claims or otherwise proposed a joint trial for multiple complaints that in the aggregate contain 100 or more plaintiffs.

The court left open the question whether a state court's decision to try together claims of 100 plaintiffs, even if dispersed among cases each of which involve fewer than 100 plaintiffs, would be enough to create federal jurisdiction under CAFA's mass-action provision.

Unemployment Discrimination

The country suffers from continuing high unemployment. The current official unemployment rate is 7.4%. The real unemployment rate is considerably higher because some unemployed people have stopped looking for work and don't get counted as unemployed. So, that's a lot of unemployed people. The unemployed people looking for work have trouble finding it in part because some employers, in a buyer's market, don't want to hire people who are unemployed. Sometimes they say so explicitly: "Unemployed people need not apply."

This article by law professor E. Ericka Kelsaw argues that unemployment discrimination should be illegal. Here is the abstract:

Fifteen years ago, a Note in the Harvard Law Review presented a thought-provoking discussion on the jobless and their place, or lack thereof, in discrimination theory. The Note advocated that “[b]eing jobless makes one a member of a large and disparate social class, one that has heretofore often gone unrecognized.” In the ensuing fifteen years, no additional articles have considered whether the jobless deserve a place in discrimination theory, eerily confirming that the “invisibility of the jobless causes them to be virtually disregarded.” This Article extends that investigation into the current controversy surrounding employers’ refusal to hire unemployed workers in the midst of a massive unemployment crisis. Although the unemployed as a class have historically experienced covert discrimination, in 2010, employers across the country began to boldly include in jobs ads that candidates “must be currently employed.” As a result of this alarming practice, federal, state, and local legislatures across the country responded by proposing legislation prohibiting unemployment discrimination. Looking at unemployment discrimination through the lens of cognitive psychology, this Article supports the notion that unemployment discrimination should be prohibited. Employment status is an arbitrary and unfair hiring criterion and current anti-discrimination law fails to adequately protect the unemployed, a vulnerable and powerless group. The Article argues that federal, state, and local governments should amend their employment discrimination laws to include protection for the unemployed.

Casebook Teacher's Manual Now Available

by Jeff Sovern

The Teacher's Manual for our casebook is now available.  Professors thinking of teaching the course who wish to see it and have not already heard from West should get in touch with their account manager to obtain access to to the Manual. 

Why the U.S. Justice Department is going after the proposed U.S. Airways-American merger

In the three-and-half decades since enactment of the 1978 Airline Deregulation Act, airfares have plummeted in real terms. That reduction in price includes those dreaded fees for baggage, seat upgrades, etc., which make up only a small fraction of consumers' overall cost of travel.

But beginning in 2009, fares began to creep up, as indicated in the chart below.  With that in mind, read this article by Steven Pearlstein explaining why the U.S. Justice Department has gone to court to block the proposed U.S. Airways-American merger.

The Justice Department has put together a nice graph (below), which provides a time line of U.S. airline consolidation from 2005 to the present. In 2005, there were 9 major domestic airlines. Today, there are 5.

David Skeel Paper on Behavioral Economics and the CFPB

David A. Skeel Jr. of NYU, Penn, and the European Corporate Governance Institute has written Behavioralism in Finance and Securities Law.  Here is the abstracgt:

In this Essay, I take stock (as something of an outsider) of the behavioral economics movement, focusing in particular on its interaction with traditional cost-benefit analysis and its implications for agency structure.  The usual strategy for such a project — a strategy that has been used by others with behavioral economics — is to marshal the existing evidence and critically assess its significance.  My approach in this Essay is somewhat different.  Although I describe behavioral economics and summarize the strongest criticisms of its use, the heart of the Essay is inductive, and focuses on a particular context: financial and securities regulation, as recently revamped by the Dodd-Frank Act and subsequent rule making.   To lay the foundation for the Essay, I begin by briefly describing behavioral economics and by surveying the most significant critiques of its use.  I then consider how behavioral economics has informed, or might inform, the work of the Consumer Financial Protection Bureau; SEC rulemaking on proxy access; and the efforts of the new financial legislation to ban bailouts.  I suggest, among other things, that behavioralism’s implications are quite different for rules and rulemaking than for questions of regulatory structure.