Consumer Law & Policy Blog

Is the Crisis in Legal Education Like the Foreclosure Crisis?

So says consumer law professor Creola Johnson of Ohio State in her new book, Is a Law Degree Still Worth the Price? 

Geoffrey Stone Speaks at Public Citizen Symposium About Findings of NSA Review

by Allen B. Isaacson, guest blogger

On Thursday, Geoffrey Stone, University of Chicago’s Edward H. Levi Distinguished Service Professor of Law, summarized the findings of a 300-page report titled Liberty and Security in a Changing World, released on December 12^th by a panel of five law and intelligence experts (including Stone) appointed by President Obama to analyze and make recommendations for reform of the National Surveillance Administration's extensive domestic and international surveillance programs. Stone then fielded questions from the media and other attendees. The entire event was broadcast live to the public and is still available online for viewing.

Stone began his summary by briefly explaining the panel's process, which required that they meet with many advocacy groups, congressional intelligence committees, intelligence agencies, and others for discussion and analysis over several months. He affirmed his trust in the panel's findings and recommendations. However, at times, Stone also expressed that the report was limited by its short timeline and the panel's unfamiliarity with the technical aspects of the NSA surveillance programs. Stone did emphasize that all 46 recommendations outlined in the report were endorsed unanimously by all of the panel members, despite their disparate views. Stone described the process “like being in a foxhole for five months.”

The D.C. Circuit's Net Neutrality Decision Is Bad For Consumers

by Andrew D. Selbst, guest blogger

Yesterday, the D.C. Circuit decided Verizon v. FCC, overturning part of the Federal Communications Commission’s Open Internet Order, and holding that the FCC lacked the authority under its current regulatory scheme to require broadband providers to comply with net neutrality. This decision, while entirely predictable, and probably legally correct, is terrible for consumers, and could have been avoided.

 The decision takes a deep dive into the history of the FCC’s regulation, but the important result is this: In 2002, the FCC classified cable broadband as an “information service” rather than a “telecommunications service.” In 2005, after the Supreme Court upheld this classification as a rational interpretation of the statute, the FCC classified the rest of broadband similarly. Under the Telecommunications Act of 1996, different regulatory schemes apply to the two classifications. Information services, such as blogs, news, entertainment, or cloud storage cannot be subject to so-called “common carrier” regulations. Telecommunications services, like telephone lines, are. Net neutrality is a common carrier regulation. Thus, the court decided, because broadband ISPs are classified as “information services,” the FCC cannot impose net neutrality on them.

 

Additive Free Cigarettes: Winstons and American Spirit

by Jeff Sovern

Those who use our casebook may recall the note about R.J. Reynolds advertising that its Winston cigarettes don't have additives. In the new edition, it's at pages 92-93. The casebook reports that Winston's sales increased by 9% as a a result of the ads, and that the FTC brought a case against Reynolds which ultimately settled with Reynolds agreeing to include in its Winston ads for a year the statement, "No additives in our tobacco does NOT mean a safer cigarette."  When we reached that note in class today, a student observed that American Spirit cigarettes uses similar advertising about the absence of additives. After class, I did a search for American Spirit and found that its ads do say things like "100% additive free," and that they also include the agreed-upon disclosure.  Interestingly, American Spirit is also a Reynolds cigarette. You can see one such ad here.  The ad's focus seems to be less on safety and more on taste. Not everybody is happy about the American Spirit ads, as you can tell from the Campaign for Tobacco-free Kids statement Reynolds American Deceives Consumers by Marketing American Spirit Cigarettes As "Eco Friendly".  Reynolds doesn't have to tout American Spirit as additive-free so the fact that they do so suggests they believe that the claim helps market the cigarettes even with the FTC-Reynolds disclaimer. So does that mean Reynolds believes the disclaimer is ineffective?  I wonder if they have done tests on consumers to see what impact it has.  Or is it just that they're not trying to sell the cigarette as less dangerous but as better-tasting (I'm skeptical about that)?  Anyway, the ads might merit mention in classes that spend time on that note.

 

Report: Solutions to Help Consumers' Credit Histories Harmed by the Foreclosure Crisis and the Great Recession

The economic destruction of the foreclosure crisis and the Great Recession included not only the 4.5 million families who lost their homes and 8 million workers who lost their jobs, but the crippling aftereffect of poor credit histories that affected the ability of these consumers to obtain affordable credit, jobs, rental housing, and insurance.

 A new white paper by the National Consumer Law Center (NCLC) explores these aftereffects and proposes solutions to help afflicted consumers. Solving the Credit Conundrum: Helping Consumers' Credit Records Impaired by the Foreclosure Crisis and the Great Recession, by NCLC staff attorney Chi Chi Wu, reviews both the harm to individual consumers and the wider impact on economic recovery.  It also documents the credit reporting problems caused by errors and anomalies, and discusses the broader problem of relying on past credit history to judge future performance, arguing that such a broad-brush approach fails to distinguish between consumers who are simply unlucky and those who are truly irresponsible.  Finally, the paper makes policy recommendations to assist consumers whose credit reports were damaged by the foreclosure crisis and Great Recession.

Available at: http://www.nclc.org/images/pdf/credit_reports/report-credit-conundrum-2013.pdf

 

Deference to the Senate in Noel Canning

As Gerard Magliocca noted in October, he and I are the only commentators who’ve taken the position that the courts ought to defer to the Senate’s view of its own recess in NLRB v. Noel Canning. Given that, I was pleased that the notion of deferring to the Senate received so much attention at oral argument yesterday. I was disappointed, though, that the justices didn’t question the dominant view of the Senate’s wishes. Instead, they appeared to accept at face value the claim by a group of minority-party senators that the Senate, as a body, opposed the appointments.

Great summary of what's wrong with forced arbitration

Definitely read this op-ed in the L.A. Times by Nan Aron, president of the Alliance for Justice. Perfectly encapsulates the myriad problems with forced arbitration, and includes this pithy metaphor:

Imagine the Dodgers have just won the pennant and are going to play the Yankees in the World Series. But the rules have changed: All games will be played in Yankee Stadium. And there are new umpires, hired and paid by the Yankees. With rules like that, the Dodgers wouldn't stand much of a chance.

A state AG's parens patriae action is not a "mass action" under the Class Action Fairness Act

Says the Supreme Court this morning. No surprise there. Here's the first paragraph of Justice Sotomayor's unanimous opinion:

Under the Class Action Fairness Act of 2005 (CAFA or Act), defendants in civil suits may remove “mass actions” from state to federal court. CAFA defines a “mass action” as “any civil action . . . in which monetary relief claims of 100 or more persons are proposed to be tried jointly on theground that the plaintiffs’ claims involve common questions of law or fact.” 28 U. S. C. §1332(d)(11)(B)(i). The question presented is whether a suit filed by a State as the sole plaintiff constitutes a “mass action” under CAFA where it includes a claim for restitution based on injuries suffered by the State’s citizens. We hold that it does not. According to CAFA’s plain text, a “mass action” mustinvolve monetary claims brought by 100 or more personswho propose to try those claims jointly as named plaintiffs. Because the State of Mississippi is the only named plaintiff in the instant action, the case must be remanded to state court.

Class counsel in Facebook "Sponsored Stories" case seeks to impose $32,000 appeal bond on class-action objectors

In May, we told you about a privacy case against Facebook that was settled without much benefit to the class. The case involved Facebook’s practice (called “Sponsored Stories”) of featuring the names and images of its users in advertising without the users’ consent. As alleged in the complaint, when a user interacts with a company on Facebook (for instance, by clicking "Like"), the interaction is repackaged by Facebook into an ad for the company. Public Citizen represents objectors to the settlement, and in September, we filed an appeal on behalf of five parents who objected to the settlement's allowance of the use of their kids' images for marketing without parent consent, in violation of several state laws.

In general, appellate filing fees are unlikely to exceed a few hundred dollars. But late last week, class counsel filed a motion asking the court to require that each one of the parent-objectors post an appeal bond of $32,000, almost all of which would be to cover "administrative expenses" associated with administering the settlement during appeal. That's one expensive appeal!

The motion, which appears to be an attempt to intimidate objectors from appealing, was filed not by Facebook but by class counsel, The Arns Law Firm, which stands to gain millions of dollars in fees if the settlement is affirmed, and whose fees will be reduced by settlement administrative expenses. This motion is troubling for a number of reasons.

First, the motion seeks to hold class action objectors responsible for "administrative expenses" incurred by the settlement administrator during appeal. That position is not supported by the governing case law. And rightly not. Our system does not require objecting class members to cover any “administrative expenses” associated with their original objections; if they were responsible for such expenses on appeal, the threat of massive liability would deter all but the wealthiest and most confident objectors from obtaining appellate review. Objectors play an important role in ensuring that class action settlements are fair to absent class members; this role continues on appeal. Huge appeal costs would all but eliminate objectors’ appeals.

Second, although class counsel estimates the total costs will be $32,000, the motion seeks a bond in that amount against each of 15 objectors (Public Citizen's clients, plus all of the others who have appealed). The purpose of a bond is to make sure a party recovers its costs. Even assuming counsel is entitled to $32,000 in administrative expenses if the settlement is upheld on appeal, imposing a $32,000 on 15 different people secures 15 times the amount of money counsel could actually claim. It's hard not to draw the conclusion that the goal here is intimidation of the objectors.

Third, the appeal-bond motion casts aspersions on the motivations of the objectors -- "whose primary interest," class counsel intones (with no sense of irony), "is their own compensation." I can't speak for the motivations of anyone other than Public Citizen's clients, but the parents Public Citizen represents don't stand to gain a cent if their appeal is successful; the only issue they are raising on appeal is the privacy of their children.

Opponents of class actions denigrate them as a vehicle to enrich class counsel while providing little or no benefit to the class. Strong-arm tactics like trying to impose exorbitant bonds on objectors who assert their right to appeal are troubling not just because they hinder access to justice but also because they play into the negative stereotype about class actions and class counsel, distracting from the great good that class actions can do in helping to redress systemic wrongs that would be difficult or economically infeasible to tackle on an individual basis.

For a few examples illustrating the usefulness of the class action device, consider this case about illegal debt collection practices, this case about defective car brakes, and this case about deceptive marketing by a for-profit college.

Facebook retires name "Sponsored Stories," but will continue to display ads with users' images

We've written before about Facebook's "Sponsored Stories" program that repackages its users' interactions with companies as ads for those companies. (Public Citizen objected when the case was settled without much benefit to the class.)

Now Facebook is apparently retiring the "Sponsored Stories" name but not the general idea. According to Facebook's blog post last week, "marketers will no longer be able to purchase sponsored stories separately; instead, social context — stories about social actions your friends have taken, such as liking a page or checking in to a restaurant — is now eligible to appear next to all ads shown to friends on Facebook." So what's the next step for marketers, according to Facebook? Well (again quoting their blog), "we gave notice to our ad partners that this change relating to sponsored stories will start in the first quarter of this year so they can update their tools and continue supporting the marketers they work with." Sounds like business as usual to me.

Not sure it's much comfort when a parent sees an image of her daughter popping up in an ad on Facebook that it's just her daughter's "Social Context" rather than a "Sponsored Story."