CL&P Blog

Company Doe (Ergobaby) coda

As we've recounted, this is the case of the company that tried to litigate in secret and under a pseudonym in challenging the Consumer Product Safety Commission's decision to post a product report on its product safety database, saferproducts.gov. The district court granted the seal and permission to use a pseudonym, and at the same time it ruled in the company's favor on the merits in a significantly redacted opinion. This spring, the Fourth Circuit reversed the seal and pseudonym rulings and held that the First Amendment required that the case be litigated in the open.

This month, on remand from the Fourth Circuit, the district court ordered the record unsealed in its entirety and the case name amended to The ERGO Baby Carrier Inc. v. Tenenbaum. (Tenenbaum was the chair of the CPSC when the case was filed.) You can now read the district court's full unredacted opinion explaining why it held that a report linking a baby carrier to an infant's death was materially inaccurate and that the agency's decision to publish it violated the Administrative Procedure Act.

Supreme Court: closely-held corporations with religious objections are exempt from Obamacare contraception mandate

Key holdings of today's 5-4 decision: corporations are entitled to protection under the federal Religious Freedom Restoration Act; requiring closely-held corporations to pay for contraception despite their owners' have sincere religious objections  is a substantial burden on religious freedom; government's program is not narrowly tailored.

However, the majority opinion suggests that the Department of Health & Human Services (HHS) solution to accommodating religious non-profits while providing contraceptive coverage for their employees could be extended to closely-held for-profits with religious objections:

HHS has already devised and implemented a system that seeks to respect the religious liberty of religious nonprofit corporations while ensuring that the employees of these entities have precisely the same access to all FDA-approved contraceptives as employees of companies whose owners have no religious objections to providing such coverage. The employees of these religious non-profit corporations still have access to insurance coverage without cost sharing for all FDA-approved contraceptives; and according to HHS, this system imposes no net economic burden on the insurance companies that are required to provide or secure the coverage. Although HHS has made this system available to religious nonprofits that have religious objections to the contraceptive mandate, HHS has provided no reason why the same system cannot be made available when the owners of for-profit corporations have similar religious objections. We therefore conclude that this system constitutes an alternative that achieves all of the Government’s aims while providing greater respect for religious liberty. And under RFRA, that conclusion means that enforcement of the HHS contraceptive mandate against the objecting parties in these cases is unlawful.

Read the full decision in Burwell v. Hobby Lobby here.

A mid-season baseball tort

As we hit the middle of the U.S. major-league baseball season, I wanted to update our readers on the latest baseball-related (but not baseball-inherent) tort.

As any major-league baseball consumer knows, at many major-league stadiums, between innings, fans are bombarded with hot dogs (and/or t-shirts) propelled into the stands from large bazooka-style air guns. At Kauffman Stadium in Kansas City, the "Hotdog Launch" is carried out by the Kansas City Royals' mascot, Sluggerrr. Sluggerrrs' air gun runs out of ammo from time to time. And, so, while Sluggerrrs' flunkies are reloading the gun with dogs, Sluggerrr apparently throws dogs to (or at) fans sitting in the stands. On September 8, 2009, Sluggerrr threw a dog in the direction of a fan. The fan sued the Royals, saying that the dog hit him in the eye, causing serious injuries, including a detached retina.

The Royals said it wasn't liable because getting hit in the eye with a hot dog tossed by a team mascot is an "unavoidable risk" of attending a major-league baseball game, like getting hit with a foul ball. And, so, the Royals maintained, the fan assumed the risk.

No way, said the Missouri Supreme Court last Tuesday in Coomer v. Kansas City Royals Baseball Corporation. To quote the Court: "the risk of being injured by Sluggerrr’s hotdog toss is not one of the inherent risks of watching a Royals home game."

Two other points:

(1) On the evening of Sluggerrrs' tort, the Royals won "a thrilling 7-5 effort that snapped the first-place Tigers’ six-game winning streak."

(2) This may not have been Sluggerrrs' first tort: "the jury heard testimony from another fan who claimed to have been injured by a hotdog toss from Sluggerrr under similar circumstances."

 

A Comment on an American Tort Reform Association CPA Roundtable Event

by Jeff Sovern

Back in April, the American Tort Reform Association had a roundtable discussion about UDAP statutes with FTC Commissioner (and former George Mason professor) Joshua Wright, Joanna Shepherd-Bailey of Emory, Peter Holland of Maryland Law School, and Cary Silverman of Shook Hardy & Bacon. You can watch it here. Given the host, you can probably imagine that the speakers, other than Peter, were not sympathetic to UDAP statutes.  I wanted to address two of the arguments.

Professor Shepherd-Bailey argued that UDAPS statutes provide for multiple incentives to consumers, in the form of statutory damages, treble damages, and attorney's fees, and seemed to call for elimination of some of those incentives on the ground that fewer were needed. From a theoretical law-and-economics perspective, the statutes may indeed appear to provide for more incentives than needed.  But as a practical matter, that seems not to be the case.  An extensive literature, sparked by Best & Andreasen's classic article, Consumer Response to Unsatisfactory Purchases: A Survey of Perceiving Defects, Voicing Complaints, and Obtaining Redress, 11 Law & Soc. Rev. 701(1977), demonstrates that very few consumers do anything about defective products, much less sue.  Accordingly, existing incentives seem inadequate in the real world, rather than excessive. Sometimes, theory can lead people astray.

Second, one of the speakers (I'm not sure who as I listened to the roundtable while driving), argued that private claims under UDAP statutes should be limited because public agencies can enforce the statute.  Public agencies can and do enforce UDAP statutes, but are not able sufficiently to deter unfair and deceptive practices.  Sometimes that's because they lack resources (of course, industry often supports legislators who want to starve regulators of funds, as with the CFPB).  Other times, regulators don't get the job done because their focus is elsewhere or they are captured by the entities they are supposed to regulate. Here are two examples: while Congress gave the Federal Reserve the power to act against unfair and deceptive mortgages practices back in 1994--well before the subprime disaster--the Fed did not use that power until after the Great Recession hit years later. And while the Office of the Comptroller of the Currency was supposed to ensure the safety and soundness of national banks, when states enacted laws to prevent predatory lending, the OCC ruled that those laws were preempted as to its client banks.  The result of those actions, along with plenty of others, was that national banks made bad mortgage loans and needed bailouts.  Not a great argument for letting the agencies protect us by themselves. Don't get me wrong: agencies have an important role to play in protecting consumers, but so do private litigants.

Disclosure: My law school recently received a grant from the American Association for Justice for me and others to conduct research, though the research is not about private UDAP claims.

Subprime Mortgage Lending is Back

So says the Times. Not so much as before the Great Recession, and they're called non-qualified mortgages now, and maybe you can't get so-called "liar's loans" or negative amortization loans, but those with weak credit ratings can get mortgages again.

Fed Up -- the movie about sugar's relationship to the obesity epidemic

We posted yesterday about the New York Court of Appeals' decision invalidating the New York City Board of Health's ban on the sale of large sugary drinks. The Board of Health targeted sugar because it believed that the best science shows that excessive sugar consumption is at the root of the obesity epidemic. There's a new documentary on the topic, narrated by Katie Couric, called Fed Up. To watch the trailer, click here or on the embedded video below.

 

 

Court awards $306,750 in damages for KlearGear's misconduct

For those of you who have been following the saga of Palmer v. KlearGear (see here for a summary), a big development this week: On Wednesday afternoon in Salt Lake City, after hearing testimony from the plaintiffs John and Jen Palmer about the damages they suffered as a result of their ordeal, the judge awarded $102,250 in compensatory damages and $204,500 in punitive damages, for a total of $306,750. That was the number we were asking for on the Palmers' behalf, based on our evidence and the willful and outrageous nature of KlearGear's misconduct in abusing the credit reporting system to ruin John Palmer's credit because Jen wrote an online review expressing a critical opinion of the company.

At the hearing, our clients gave moving testimony, and the judge, after listening closely, asked a few questions of counsel before announcing the award from the bench.

In an interview with the reporter who first broke the story of the Palmers' difficulties as a result of KlearGear's misconduct, the Palmers expressed relief that John’s credit has been restored and said they hoped no one else would have to go through what they did.

Collecting the judgment against KlearGear (which, as you'll recall, failed to appear in court or answer the complaint) could be complicated, but for now, it's gratifying to see the judicial system stand up for consumers whom corporations have punished for expressing their opinion.

 

Drahozal on FAA Preemption After Concepcion

Christopher R. Drahozal of Kansas has written FAA Preemption after Concepcion, 35 Berkeley Journal of Employment and Labor Law 153 (2014, Forthcoming). Here is the abstract:

AT&T Mobility LLC v. Concepcion is an important case for its holding that the FAA preempts application of state unconscionability doctrine to invalidate an arbitration clause with a class arbitration waiver. But in a number of respects, the effect of Concepcion has been overstated, including its effect on application of state unconscionability doctrine to arbitration clauses. Concepcion does not preempt all or even most state unconscionability doctrine as applied to arbitration agreements. Properly construed, Concepcion preempts state unconscionability doctrine only when that doctrine conditions enforcement of arbitration agreements on procedures inconsistent with “fundamental attributes of arbitration” of the sort illustrated in Concepcion itself ― such as the use of juries, court-monitored discovery, evidentiary rules, and, of course, class arbitration. If, however, the Supreme Court were to construe Concepcion more broadly (or eliminate application of unconscionability to invalidate arbitration clauses altogether), courts would retain some residual authority to police the fairness of arbitration clauses, but only by finding a dispute resolution process not to be arbitration at all.

Chemerinksy: Supreme Court rulings making it harder and harder to maintain suits against government officials

Read this piece by law professor and dean Erwin Chemerinsky.

New York's highest court throws out New York City's ban on the sale of large sugary drinks

The New York Court of Appeals -- New York's highest court -- today threw out the New York City Board of Health's ban on the sale of large sugary drinks. The ban was a significant component of former NYC Mayor Michael Bloomberg's fight against obesity. Read the court's 4-2 decision and Michael Grynbaum's article about it. The first paragraph of Judge Piggot's majority opinion summarizes why the court did what it did:

We hold that the New York City Board of Health, in adopting the "Sugary Drinks Portion Cap Rule", exceeded the scope of its regulatory authority. By choosing among competing policy goals, without any legislative delegation or guidance, the Board engaged in law-making and thus infringed upon the legislative jurisdiction of the City Council of New York.

We have covered the ban extensively. Go, for instance, here, here, here, and here.