Consumer Law & Policy Blog

Richards on the Constitutionality of Data Privacy Law

Neil M. Richards of Wash U. has written Why Data Privacy Law Is (Mostly) Constitutional, forthcoming in his book, Intellectual Privacy, Oxford University Press (2014).  Here's the abstract:

This essay argues that privacy critics arguing that most privacy rules create constitutional problems overstate their case.  Since the New Deal, American law has rested on the wise judgment that, by and large, commercial regulation should be made on the basis of economic and social policy rather than blunt constitutional rules.  This has become one of the basic principles of American Constitutional law.   Although some observers have suggested that the Supreme Court’s recent decision in Sorrell v. IMS Health (2011) changes this state of affairs, such readings are incorrect.  Sorrell involved a challenge to a poorly-drafted Vermont law that discriminated on both content and viewpoint.  Such a law would have been unconstitutional if it had regulated even unprotected speech.  As the Sorrell Court made clear, the real problem with the Vermont law at issue was that it didn’t regulate enough, unlike the “more coherent policy” of the undoubtedly constitutional federal Health Insurance Portability and Accountability Act of 1996.

Data privacy law should thus rarely be thought as implicating serious constitutional difficulties, which is a good thing.  As we move into the digital age, in which more and more of our society is affected or constituted by data flows, we face a similar threat.  If “data” were somehow “speech,” virtually every economic law would become clouded by constitutional doubt.  Economic or commercial policy affecting data flows (which is to say all economic or social policy) would become almost impossible.  This might be a valid policy choice, but it is not one that the First Amendment commands.  Any radical suggestions to the contrary are unsupported by our Constitutional law.  In a democratic society, the basic contours of information policy must ultimately be up to the people and their policymaking representatives, and not to unelected judges.  We should decide policy on that basis, rather than on odd readings of the First Amendment.

Fourth Circuit distinguishes Dukes in pay-equity class action

In a significant victory for plaintiffs, the U.S. Court of Appeals for the Fourth Circuit ruled yesterday that a putative class of plaintiffs who work at Family Dollar Stores and allege disparate payment practices based on sex should be allowed to amend their complaint, and that they might be able to satisfy commonality under the Supreme Court's 2011 decision in Wal-Mart v. Dukes (holding that a nationwide class of female Wal-Mart employees had not shown that the company operated under a common policy of discrimination).

The plaintiffs alleged a set of practices that distinguish the case from Dukes, including salary policies that perpetuate prior discrimination, a practice of granting exceptions to pay ranges disproportionately in favor of men, and a policy providing higher pay for mangers hired from outside (a group that is disproportionately male) as compared to those promoted from within (a group that is disproportionately female).

The 2-1 panel majority distinguished Dukes in two ways: first, even though there is some reliance on discretion (as in Dukes), here, specific corporate policies and practices were alleged; and second, the discretion was applied at the level of upper management, not local supervisors.

 

Fairfield Paper on Do-Not-Track

Joshua Fairfield of Washington and Lee University has written Do-Not-Track as Default, 11 Northwestern Journal of Technology and intellectual Property (2013). Here's the abstract:

Do-Not-Track is a developing online legal and technological standard that permits consumers to express their desire not to be tracked by online advertisers. Do-Not-Track has the ability to change the relationship between consumers and advertisers in the information market. Everything will depend on implementation. The most effective way to allow users to achieve their privacy preferences is to implement Do-Not-Track as a default feature.

The World Wide Web Consortium’s (W3C) standard setting body for Do-Not-Track has, however, endorsed a corrosive standard in its Tracking Preferences Expression (TPE) draft. This standard requires consumers to set their privacy preference by hand. This "bespoke" standard follows in a long line of privacy preference controls that have been neutered by increased transaction costs.
This article argues that privacy controls must be firmly in consumers’ hands, and must be automated and integrated to be effective. If corporations can deprive consumers of privacy through automated End User License Agreements or Terms of Service, while consumers are constrained to set their privacy preferences by hand, consumers cannot win. Worse, the TPE bespoke standard is anticompetitive. Already, browsers like Microsoft’s Internet Explorer 10 (IE10) will launch with default Do-Not-Track enabled. But the TPE bespoke standard offers advertisers a free pass to ignore the Do-Not-Track flags that will be set by IE10 and prohibits other browsers from offering automatic, integrated, and therefore useable privacy features.

CFPB's student loan ombudsman issues his annual report

The Consumer Financial Protection Bureau's student loan ombudsman, Rohit Chopra, issued his annual report today. Here is the executive summary:

* In the Dodd-Frank Wall Street Reform and Consumer Protection Act, Congress established an ombudsman for student loans within the Consumer Financial Protection Bureau. The CFPB began accepting student loan complaints in March 2012.

* This report analyzes and discusses complaints submitted by consumers from October 1, 2012, through September 30, 2013. During this period the Bureau received approximately 3,800 private student loan complaints. Eighty-seven percent of all complaints were directed at eight companies. This is not surprising, given that the private student lending and servicing markets are highly concentrated.

* Opaque or inaccurate payment processing emerged as a significant trend in complaints received during the reporting period. It is unlawful for any private student lender to impose a penalty on a borrower making an early payment or making a payment in excess of the minimum amount due. However, borrowers remitting extra payments in order to pay off their loans more quickly find that payments are not always properly allocated.

* Just under half of all private student loan complaints received were related to consumers seeking a loan modification or other option to reduce their monthly payment in a time of distress.

* In last year’s report, we noted a range of inappropriate – and potentially unlawful – practices directed at military families seeking to repay private student loans. This year’s complaints suggest that some lenders and servicers have attempted to correct their deficiencies concerning the Servicemembers Civil Relief Act (SCRA); however, problems persist for many men and women in uniform repaying student debt.

* Many of the private student loan complaints mirror the problems heard from consumers in the mortgage market following the wake of the financial crisis. Recent changes to mortgage servicing and credit card servicing practices may shed some insight on possible approaches to remedy student loan servicing concerns.

Report says low-wage fast-food workers cost taxpayers in public benefit payouts

We have covered the question whether raising the minimum wage will help or hurt workers and the "living wage" movement more generally (for instance, go here and here). Now, this article by Michael Fletcher discusses a cost of the low-wage econony: the outlay of public benefits for people whose wages are so low that they are in poverty. Here's an excerpt:

Taxpayers are spending nearly $7 billion a year to supplement the wages of fast-food workers, even as the leading fast-food companies earn billions of dollars in annual profits, according to a pair of reports released Tuesday.More than half of the nation’s 1.8 million “core” fast-food workers rely on the federal safety net to make ends meet, the reports said. Together, they collect nearly $1.9 billion through the earned income tax credit, $1 billion in food stamps and $3.9 billion through Medicaid and the Children’s Health Insurance Program, according to a report by economists at the University of California at Berkeley’s Labor Center and the University of Illinois.

Should consumers be allowed to sue creditors directly (without first notifying the credit bureau) when they refuse to provide accurate information?

Jeffrey Bils, a UCLA law student, has published Fighting Unfair Credit Reports: A Proposal to Give Consumers More Power to Enforce the Fair Credit Reporting Act, in the latest UCLA Law Review Discourse. Here's a summary:

Credit reports play a central role in some of our most important transactions, such as buying a house or car, or even getting a job. Yet an alarming number of credit reports contain damaging inaccuracies. The primary purpose of the Fair Credit Reporting Act (FCRA) is to protect consumers against these inaccuracies, but the FCRA also makes it very difficult for consumers to force creditors to fix errors. In particular, there is no private right of action to enforce the creditor’s duty of accuracy unless a consumer first notifies a third party—a consumer reporting agency such as Experian, TransUnion, or Equifax—and unless that agency in turn notifies the creditor. This structure raises significant procedural hurdles for a consumer and can make it extremely difficult to sufficiently plead a cause of action against a creditor. This Essay argues that Congress should change the law to give consumers the private right of action they now lack.

Supreme Court dismisses what was thought to be a major employment case

In Madigan v. Levin, the Supreme Court granted cert to decide this significant question (stated from the petitioner's perspective):

Whether the Seventh Circuit erred in holding, in an acknowledged departure from the rule in at least four other circuits, that state and local government employees may avoid the federal Age Discrimination in Employment Act’s comprehensive remedial regime by bringing age discrimination claims directly under the Equal Protection Clause and 42 U.S.C. § 1983.

After an oral argument on the opening day of the Court’s new term, which highlighted that the issue that prompted cert might not be presented by the case and that the issue might not be ripe for review, the Court today dismissed the writ of certiorari as improvidently granted.

More on NCLC's property exemption report

Last Thursday, Jon Sheldon posted about the National Consumer Law Center's comprehensive report on property exemption laws around the country. A testament to the value of NCLC's report is Chris Morran's lengthy and useful summary in The Consumerist, which notes that, in Vermont, debt collectors can’t seize your goats or bees, but your car may well be in jeopardy!

Morran posted NCLC's clickable map, which provides each state's basic rules on what household goods are protected from seizure. Here it is:

More From Linda Mullenix on the Supreme Court's Arbitration Decisions

Linda Mullenix of Texas has written The Court's 2012 Class Act:  A Little Bit of This, a Little Bit of That, 40 Preview of U. S. Supreme Court Cases 328 (2013). Here's the abstract:

Building on the Court’s heightened interest in class action litigation, the Court during the 2012-13 term issued an unprecedented six decisions dealing with class action issues. However, scholars searching for coherent class action jurisprudence will have to await another day (maybe another decade); consistent with its other recent decisions, the Court rendered class action opinions that favored both sides of the docket. Plaintiff and defense counsel both may claim some large and small victories in this term’s class action decisions.

Nonetheless, the Court continues its plodding case-by-case approach to class litigation that fails to illuminate any overarching abstract theory of aggregate litigation. Instead, the Court’s attitude towards class action litigation is chiefly characterized by pragmatism and not-so-veiled policy concerns. Moreover, the 2012-13 class action decisions highlight the Court’s liberal and conservative division, with the Court’s conservative wing prevailing generally in its antipathy toward class litigation. As the Court’s conservatives incrementally make it more difficult to pursue class litigation, the Court’s liberals have become more vociferous in expressing their dismay over shrinking access to justice for large groups of claimants.

The Court’s six class action cases embraced a grab bag of issues. The two most closely watched cases, Amgen, Inc. v. Connecticut Retirement Plans and Trust Funds (Docket No.11-1085) and Comcast v. Behrend (Docket No.11-864), dealt with class certification requirements. In another pair of appeals the Court again returned to its fascination with problems of class-wide arbitration clauses:  Oxford Health Plans LLC v. Sutter (Docket No.12-135) and American Express Co. v. Italian Colors Restaurant (Docket No.12-133).  Finally, two appeals addressed jurisdictional requirements for class actions:  in Standard Fire Ins. Co. v. Knowles (Docket No.11-1450), the Court considered pleading issues under the Class Action Fairness Act of 2005, and in Genesis HealthCare Corp. v. Symczyk (Docket No.11-1059) the Court focused on standing issues for collective actions under the Fair Labor Standards Act.

This article evaluates the significance and impact of the Court’s six class action decisions during the 2012-13 term, commenting on the Court’s incremental refinement of Rule 23 as well as the Court’s failure to address significant class action issues.

9th Circuit appeal on background-screening companies & fair credit reporting

by Deepak Gupta

I thought readers might be interested in a new appeal that my firm is handling in the Ninth Circuit, Moran v. The Screening Pros, concerning the state and federal regulation of background-check companies. You can read our opening brief here. The Consumer Financial Protection Bureau and the Federal Trade Commission have weighed in with an amicus brief, discussing a relatively narrow question of federal law. An amicus brief by the East Bay Community Law Center -- on behalf of a coalition of 18 public-interest organizations including the National Consumer Law Center and the ACLU -- discusses the broader policy implications.

Landlords and employers have increasingly come to rely on background-check companies to provide them with criminal history and other sensitive information about prospective tenants and employees. But the industry is more fragmented and less visible that the traditional credit bureaus and advocates are concerned that it routinely skirts state and federal fair-credit-reporting laws, with grave consequences for those who seek jobs and housing. NCLC put out a great report on this topic last year: Broken Records: How Errors by Criminal Background Checking Companies Harm Workers and Businesses.

At issue on appeal is the constitutionality of California's Investigative Consumer Reporting Agencies Act, one of the nation's strongest protections against background-screening company abuses. The district court held the Act unconstitutionally vague because it overlaps with another state fair-credit-reporting law and the court couldn't figure out which one applied. But, as the Eleventh Circuit explained in a 2009 case that also happened to arise in the fair-credit-reporting context (Harris v. Mexican Specialty Foods), it's well established that there's no vagueness when a statute "clearly defines what conduct is prohibited and the potential range of fine that accompanies noncompliance.”

The appeal also presents a question of federal statutory interpretation: How long, under the Fair Credit Reporting Act, can a consumer-reporting agency report negative criminal-history information? The FCRA prohibits the reporting of adverse information for more than seven years. The CFPB's and FTC's brief argues that for a dismissed criminal charge, the seven-year period begins on the date of the charge, not the date of the dismissal. The district court's conclusion to the contrary relied on out-of-date FTC commentary that preceded relevant amendments to the statute.