Consumer Law & Policy Blog

Med Express / Medical Specialists Changes Its Lawyers Again to Delay Paying Attorney Fees

by Paul Alan Levy

The last time I blogged about Med Express, the eBay seller that brought a defamation suit against two eBay customers for leaving truthful and mildly critical feedback, then apologized and blamed its lawyer for filing a different lawsuit from the one it wanted to file, we had just gone to trial on the motion for sanctions. Med Express’s principal, Richard Radey, testified at the trial that that he personally witnessed the defendants leaving “Detailed Seller Ratings” about the incidents which, he asserted, were demonstrably false statements of fact.   My blog post pointed out that eBay maintained electronic records rebuttingRadey’s testimony.

We then moved for leave to add the eBay documentation to the record of the sanctions hearing. When the parties appeared at a hearing on that motion, having also filed post-trial briefs on the sanctions issue, the judge urged the parties to settle the sanctions issue lest he have to make findings on the record about whether Radey had perjured himself at the sanctions hearing.  The result was an agreement whereby Med Express promised to make monthly payments totaling a portion of the fee application, while allowing a judgment to be entered in the full amount of the fees if Med Express missed any payments.  The parties agreed that only the settlement amount would remain confidential, but that even that confidentiality would be lost if payments were missed.

However, Med Express has missed the first of the agreed payments, and has refused to sign the documentation of the oral agreement that was announced in court because he wants a confidentiality clause.  The lawyer who had entered the case for Med Express after sanctions were sought, and obtained a delay in the sanctions hearing so that he could become familar with the case, moved for leave to withdraw in favor of yet another new lawyer.    Rather than allow the sanctions issue to be dragged out any further, defendants have now moved to enforce the oral settlement agreement.  

Stay tuned.

For those who wish to consider this history in deciding with whom to do business on eBay, Med Express has changed the name of its eBay account to "Medical Specialists."

UPDATE

Med Express' new lawyer has appeared, and file an opposition brief that rather reinforces the points made in our motion to enforce.

The relationship between medical-malpractice caps, patient safety, and tort law's ability to deter negligence

That's the topic of The Deterrent Effect of Tort Law: Evidence from Medical Malpractice Reform by profs Zenon Zabinski and Bernard Black. Here is the abstract:

A principal goal of tort law is to deter negligent behavior, but there is limited empirical evidence on whether it does so. We study that question for medical malpractice liability. We examine whether medical malpractice reforms affect in-hospital patient safety, using Patient Safety Indicators (PSIs) – measures of adverse events developed by the Agency for Healthcare Research and Quality – as proxies for overall safety. In Difference-in-Differences analyses of five states that adopt caps on non-economic damages during 2003-2005, we find consistent evidence that patient safety generally falls after the reforms, compared to control states.

 

Uncle Sam's debt collectors?

As the Washington Post reports, a proposal pending before the Senate would require the IRS to turn unpaid tax bills over to private debt collectors. The proposal would, in the Post's words, "reviv[e] a program that has previously led to complaints of harassment and has not saved taxpayers money." The leading proponent is Democrat Chuck Schumer, whose state is home to two of the four debt collection firms that stand to benefit, the Post reports.

The IRS's National Taxpayer Advocate opposes the idea, explaining that "outsourcing the collection of federal tax debts . . . disproportionately impacts low income and other vulnerable taxpayers, and despite two attempts at making it work, the program has lost money both times, undermining the sole rationale for its existence."

Read the Post story here.

Media Matters Talks to Paul Bland about Class Actions and Justice

Co-blogger Paul Bland, the new Executive Director of Public Justice, was recently interviewed by Media Matters.  In an engaging interview in his office Paul discusses his singular career as a champion for consumer rights, the importance of class actions as a means of challenging corporate wrondoing, and the pro-corporate bent of the Roberts Court. It's a nicely produced video, complete with animations, and Paul is as articulate a spokesperson as we have on these issues. Well worth watching and distributing widely.

Bloomberg Businessweek Article: The Limits of Mandatory Disclosure Laws

Here.  A lot of it is about Omri Ben-Shahar's and Carl Schneider's new book, More Than You Wanted to Know: The Failure of Mandated Disclosure. I'm still reading the book's introduction, but so far it looks very good.

Despite fierce and widespread opposition, FCC moves forward with plan to do worse than nothing on net neutrality

by Andrew Selbst, guest blogger

A few weeks ago, the FCC Chairman Tom Wheeler proposed a new “net neutrality” plan which is clearly anything but. While the new proposal would prevent Internet Service Providers (ISPs) from blocking competitors’ websites outright, it would also permit ISPs to make agreements with services such as Netflix for internet “fast lanes,” so that the ISPs can prioritize their traffic in exchange for cash. Of course, any proposal that allows ISPs to offer fast lanes means that the other services that cannot afford to pay, such as smaller startups and journalism outlets, will receive slow lanes by comparison. 

Yesterday, despite widespread opposition from both sides of the political aisle, a slew of tech companies, and the protestors literally camped outside of the FCC, the Commission moved forward with the proposal. While Democratic Commissioner Jessica Rosenworcel has voiced some opposition to the plan, wishing Chairman Wheeler had delayed the decision to continue talking with consumers, the vote passed 3-2 along party lines to open the proposed rules for comment.

Thus, the FCC is currently seeking public comments about both the fast lane policy and the legal authority (or lack thereof) that the Commission has to promulgate these rules under Section 706 of the Telecommunications Act. In response to the opposition, Chairman Wheeler did expand the scope of the desired comments to include the possibility of reclassification under Title II of the Communications Act. (The Notice of Proposed Rulemaking is here.) As I said in my previous post on the topic, any attempt to impose net neutrality without reclassifying is doomed to failure. Unfortunately, the lesson Chairman Wheeler seems to have taken away from this fact is that net neutrality should be abandoned, not that the FCC should reclassify broadband services. Hopefully he can be convinced otherwise by the torrent of comments he is sure to receive in the next sixty days.

The initial comment period is open until July 15. If you wish to submit a comment on this plan, this post tells you how. For other possible kinds of action, including phone calls and letters, go here.

Department of Transportation fines GM in connection with GM's failure to report safety defect

From DOT's press announcement:

The U.S. Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) today announced that General Motors (GM) has agreed to pay a record $35 million civil penalty and to take part in unprecedented oversight requirements as a result of findings from NHTSA’s timeliness investigation regarding the Chevrolet Cobalt and the automaker’s failure to report a safety defect in the vehicle to the federal government in a timely manner. The defect resulted in the non-deployment of airbags in certain Chevrolet Cobalt and other GM models. This action represents the single highest civil penalty amount ever paid as a result of a NHTSA investigation of violations stemming from a recall.

Hoofnagle on Big Data, Privacy, and the FCRA

Chris Jay Hoofnagle of Berkeley has written How the Fair Credit Reporting Act Regulates Big Data for the Future of Privacy Forum Workshop on Big Data and Privacy: Making Ends Meet, 2013. Here is the abstract:

This short essay, prepared for the Future of Privacy Forum's Big Data and Privacy: Making Ends Meet event in September 2013, makes two observations concerning "big data." First, big data is not new. Consumer reporting, a field where information about individuals is aggregated and used to assess credit, tenancy, and employment risks, achieved the status of big data in the 1960s. Second, the Fair Credit Reporting Act of 1970 (FCRA) provides rich lessons concerning possible regulatory approaches for big data.

Some say that "big data" requires policymakers to rethink the very nature of privacy laws. They urge policymakers to shift to an approach where governance focuses upon "the usage of data rather than the data itself."  Consumer reporting shows us that while use-based regulations of big data provided more transparency and due process, they did not create adequate accountability. Indeed, despite the interventions of the FCRA, consumer reporting agencies (CRAs) remain notoriously unresponsive and unaccountable bureaucracies.

Like today's big data firms, CRAs lacked a direct relationship with the consumer, and this led to a set of predictable pathologies and externalities. CRAs have used messy data and fuzzy logic in ways that produce error costly to consumers. CRAs play a central role in both preventing and causing identity fraud, and have turned this problem into a business opportunity in the form of credit monitoring. Despite the legislative bargain created by the FCRA, which insulated CRAs from defamation suits, CRAs have argued that use restrictions are unconstitutional.

Big data is said to represent a powerful set of technologies. Yet, proposals for its regulation are weaker than the FCRA. Calls for a pure use-based regulatory regime, especially for companies lacking the discipline imposed by a consumer relationship, should be viewed with skepticism.

 

ToyoMotors of Phoenix Bullying of a Critical Consumer

by Paul Alan Levy

In mid-2009, Jennifer Choi posted a scathing Yelp review of a Phoenix repair shop called ToyoMotors, contending that her car was diagnosed as needing repairs that other shops assured her were unnecessary, and that its fees were excessive by comparison with its competitors.  Four years later, ToyoMotors went on the offensive.  It signed on with “Demand Force,” a digital marketing operation that elicits positive feedback from customers to spray around the Internet.  A look at ToyoMotors' page on DemandForce reveals a feel-good version of Yelp, featuring a slew of positive reviews, the sort of web page we would see more often if the recent European Court of Justice decision, allowing people to purge the web of unfavorable information they would like to be forgotten, were to take hold in the United States.

But because American companies do not have any generalized right to have bad news forgotten, the only way to purge the web of Choi's criticism was for ToyoMotors to sue Choi.  I am in no position to assess the soundness of Choi's criticisms, except to note that a few other consumers made similar criticisms in subsequent years, on Yelp and elsewhere.  Moreover, some of the statements that ToyoMotors complaint alleges to be false strike me as rhetorical hyperbole that are unlikely to be found defamatory.

Federal district court grants default judgment against KlearGear

As we've discussed before on the blog (see, for instance, here and here), in 2012 an online retailer called KlearGear tried to extort $3500 from its customer John Palmer because his wife Jen criticized the company online; when John refused to pay, KlearGear reported the supposed “debt” to the credit agencies, ruining John’s credit for more than a year. The claimed basis for the “debt” was entirely bogus: it was based on a “non-disparagement clause” that the company tried to impose on John years after it did business with him and which would be unenforceable anyway.

In December, Public Citizen sued KlearGear on behalf of the Palmers. In February of this year, KlearGear's own debt collector agreed the supposed "debt" was void. Meanwhile, KlearGear never showed up in court to defend the lawsuit, and so we moved for a default judgment in March.

Today, the district court granted that judgment, which:

-Declares that “John Palmer does not now, and never did, owe KlearGear.com or any other party any money based on KlearGear.com's ‘non-disparagement clause’”;

-Holds KlearGear liable on all of the Palmers' claims, which were for violation of the Fair Credit Reporting Act, for defamation, for interference with prospective economic relations, and for intentional infliction of emotional distress; and

-Sets a hearing to determine damages, at which the judge will hear from the plaintiffs about the harms they have suffered.

This step does not end the case entirely, because the judge must still determine the amount of KlearGear's liability. But today's order does resolve most of the disputes in the case.

You can read the two-page judgment here. (An oddity about the dates on the document: although the dates printed or written on the order suggest that it was signed or filed before today, it was released through the electronic case filing just today. Also note that we will be asking for the hearing to be rescheduled because of a scheduling conflict.)

Astonishingly, KlearGear has put its non-disparagement clause -- which threatens users of its website with a $3500 penalty for speaking ill of the company -- back in its terms of use. This development lends additional urgency to the legislative efforts to protect consumers' right to speak freely: as Law360 reports (subscription required), the California Assembly and the U.S. House of Representatives are considering bills to protect consumers from non-disparagement clauses.