Consumer Law & Policy Blog

Victory for court openness

The Third Circuit held today in Delaware Coalition for Open Government v. Strine that a state-run arbitration program over which a judge presides and that results in an enforceable judgment is subject to the First Amendment right of access to judicial proceedings. The key question in the case was whether these proceedings should be treated like civil proceedings, which are presumptively public (and to which the First Amendment applies, according to all courts of appeals to consider the question), or arbitration proceedings, which are often private. Considering the nature of each type of proceeding, and comparing them to Delaware's proceeding, the court concluded:

Although Delaware’s government-sponsored arbitrations share characteristics such as informality, flexibility, and limited review with private arbitrations, they differ fundamentally from other arbitrations because they are conducted before active judges in a courthouse, because they result in a binding order of the Chancery Court, and because they allow only a limited right of appeal.

The court therefore held that the proceedings at issue are more akin to civil proceedings and applied the First Amendment right of access.

Public Citizen filed an amicus brief in support of the result the court reached.

Federal Trade Commission settles with rent-to-own outfit whose alleged privacy violations make “1984” look tame

by Bradley Girard (guest post)

File this under terrifying. Yesterday, the Federal Trade Commission settled with Aaron's, a rent-to-own furniture company, over charges that Aaron’s violated laws protecting consumer privacy. Aaron’s franchisees were allegedly renting computers with pre-installed software that secretly monitored consumers and transmitted information back to Aaron’s. Now, this would be cause for concern even if it were run-of-the-mill tracking used by many of your favorite browsers and social media platforms. But the software used here, PC Rental Agent, goes much further. PC Rental Agent, for example, monitors keystrokes, takes screenshots, and provides fake “software registration” screens that prompt users to enter private account information such as passwords for financial and email accounts. Possibly the most frightening PC Rental Agent attribute is its ability to remotely activate a user’s webcam and microphone, secretly recording images and audio of users in their own homes.

Unsurprisingly, Aaron’s neither admits nor denies the allegations in the agency's complaint and has not commented publicly because of pending lawsuits. The consent order, among other things, enjoins Aaron’s and its franchisees from using the tracking software without express consent from consumers for specified uses, but it provides no monetary payments. The agreement is subject to a 30-day comment period, which ends on Nov. 21, 2013.

For more information, read the FTC's press release. [picture courtesy of Jhack]

Another Perspective on the Recess Appointments Cases

Is Noel Canning v. NLRB a classic separation-of-powers conflict between the Senate and the President, or a false controversy created by the House of Representatives, which has no business interfering with appointments? I argue the latter in a short essay forthcoming in the Harvard Law Review's online companion, the Forum.

I have a few more thoughts on the controversy that I hope to share here in the coming weeks as well. Here's one: If you've followed the current recess appointments controversy, you know that challenges to Richard Cordray's appointment are moot since the Senate confirmed him in July and he ratified his prior actions. So the issue is moot now, but there's an unexplored argument that his appointment was always valid because the Senate consented to it.

Jeff Gelles Column: A Victory in the Fight Against Robocalls

Here.  An interesting report on a third circuit case on whether consumers can revoke their consent to receive automated calls.  The case arose in the debt collection context and given the steep penalties under the Telephone Consumer Protection Act--$500 per call and $1500 for willful violations--could lead to a lot of litigation.

The Impact of Wal-Mart v. Dukes

In June 2011, the Supreme Court decertified a class action brought by women claiming that Wal-Mart underpaid and underpromoted its female employees throughout the chain. The Court's decision in the case, called Wal-Mart v. Dukes, was predicted to have significant effect on plaintiffs' ability to litigate Title VII discrimination cases on a classwide basis. Two years later, ProPublica has reported on the impact of Dukes.

The Dukes decision has already been cited more than 1,200 times in rulings by federal and state courts, a figure seen by experts as remarkable. Jury verdicts have been overturned, settlements thrown out, and class actions rejected or decertified, in many instances undoing years of litigation. The rulings have come in every part of the country, in lawsuits involving all types of companies, including retailers (Family Dollar Stores), government contractors (Lockheed Martin Corp.), business-services providers (Cintas Corp.), and magazines (Hearst Corp.). The aftershocks have been felt in many kinds of lawsuits beyond the employment field, as well.

The story has some examples of cases that were certified as class actions post-Dukes. Overall, though, the article shows the very significant barrier that the Supreme Court's decision has created to litigation of large class actions, in civil rights cases and otherwise.

 

When Trademark Bullying Gets Expensive

by Paul Alan Levy

Over the past few years I have blogged about our defense of some documentary filmmakers who had to defend the use of the name "Jenzabar" (a software company) in the meta tags and title tag for a web page about a software company called Jenzabar (it was founded by one of the leading figures in their most important documentary).   Before the documentarists found us, they came close to running out of money defending themselves through a private law firm; eventually we obtained a summary judgment that was affirmed on appeal. 

In a ruling that we received today, the Superior Court handed Jenzabar its comeuppance — an award to defendants of more than $500,000 in attorney fees and expenses.  The judge did not accept the basic fees standard — invoking the Ninth Circuit’s decision in Mattel v. Walking Mountain, we had argued that when a trademark has been used for expressive purposes, it is enough that the lawsuit to suppress the use was legally unreasonable.  Instead, the judge applied an abuse of process standard derived from Seventh Circuit case law and found that Jenzabar’s ulterior purpose in pursuing the litigation was to punish the documentarists for their audacity in criticizing the plaintiffs: "The overall record of this case leaves no doubt that . . . Jenzabar . . . subjected Long Bow to protracted and costly litigation not to protect the goodwill of its trademark from misappropriation, but to suppress criticism of Jenzabar's principals and its corporate practices." 

We are grateful to Rebecca Tushnet for asking us to take a look at this case.

CFPB investigates eBay's "Bill Me Later" Program

The Consumer Financial Protection Bureau has subpoenaed documents from eBay relating to its "Bill Me Later" financing service, which allows financing of purchases from many online stores, apparently over concerns that the finance charges imposed by "Bill Me Later" are excessive. The Wall Street Journal has details about the CFPB investigation.

Bloomberg: Banks Pushed by Regulators Send ‘Nastygrams’ to Car Dealers

Remember how car dealers fought to avoid being subject to the Consumer Financial Protection Bureau's jurisdiction, and won?  It turns out that the dealers are still experiencing pressure to comply with the Bureau's edicts. From Carter Dougherty's story:

Under pressure from the agency, large banks that routinely buy auto loans have been reviewing records to ensure the dealers they work with aren’t discriminating against customers on the basis of race or gender. When firms including Bank of America Corp. find evidence of possible unfair treatment, they are sending warning letters to the dealers.

* * *

Dealers are learning a “painful lesson,” said Richard Hunt, head of the Consumer Bankers Association, which represents large institutions. “If you provide a financial product to consumers, you will be under the oversight of the CFPB -- one way or another.”

 

D.C. moves to dismiss tax-lien suit

We've previously written about a Takings Clause case filed to challenge Washington D.C.'s practice of permitting private companies to buy tax liens, institute foreclosure proceedings, and keep the entire value of the property (not just the amount needed to satisfy the debt). On Friday, D.C. moved to dismiss the suit on a variety of procedural grounds plus one substantive one: according to the District, citing mostly authority from the 1950s and '60s, the Takings theory is a loser. In the words of one of D.C.'s key authorities, "[t]he total forfeiture seems extremely harsh when overdue taxes amount to only two or three percent of the property's value. But oppressive statutes must be tempered by the legislature, not the courts." Balthazar v. Mari Ltd., 301 F. Supp. 103, 106 n.6 (N.D. Ill. 1969), aff’d, 396 U.S. 114 (1969) (citing Nelson v. New York City, 352 U.S. 103, 110-11 (1956)). Nelson, in turn, rejected a Takings Clause claim against New York City's retention of property (in one instance) or proceeds of a property sale (in a second instance) in excess of amounts the owners of the properties owed the city, although the chief claims in that case appear to have been procedural due process and equal protection.

These cases were decided long before the Supreme Court's modern Takings Clause jurisprudence. I wonder what today's Court would think.

"60 Minutes" report on self-dealing in Congress

In case you didn't see it, go here or click on the embedded video below for a 60 Minutes report claiming that members of Congress use "Leadership" PACs, the hiring of family members on campaigns, and high-interest loans to themselves to enrich their lifestyles and, sometimes, their and their family members' personal bank accounts. And, 60 Minutes says, it's all perfectly legal.