Consumer Law & Policy Blog

Another helpful narrow reading of Comcast on "commonality of damages"

This week, the Seventh Circuit reversed the denial of class certification in Zanetti v. IKO Mfg., a case about roof tiles marketed with the allegedly false claim that they met a certain industry standard.

The district court denied class certification -- in the words of the Seventh Circuit -- "under a mistaken belief that 'commonality of damages' is legally indispensible." As Judge Easterbrook observed for the court of appeals, "If this is right, then class actions about consumers products are impossible." Fortunately, it is not right. As the Seventh Circuit explained, the Supreme Court's decision on Comcast on which the district court relied (and whose interpretation in the courts of appeals we have previous covered here, here, and here), did not support the district court's ruling; rather, the Seventh Circuit reiterated, Comcast stands only for the proposition that the theory of liability must match the theory of damages -- a standard easily met here.

So, score another one for the narrow, reasonable reading of Comcast. The tally stands at four circuits for that view (the Fifth, Sixth, Seventh, and Ninth), none against. The issue is now pending before the Second Circuit as well.

The Civil Rights Act of 1964 at age 50

As the country reflects on the Civil Rights Act of 1964 -- which went into effect on July 2, 1964 --50 years in, read this op-ed by Georgetown law prof Sheryll Cashin.

Google loses its bid for Supreme Court review in "Street View" case

You may remember that, last September, we told you about a 9th Circuit decision holding that Google violated federal Wiretap Act when it collected individual consumers' unencrypted wi-fi data while capturing "Street View" photographs. Here's what the 9th Circuit said at the time:

In the course of capturing its Street View photographs, Google collected data from unencrypted Wi-Fi networks. Google publicly apologized, but plaintiffs brought suit under federal and state law, including the Wiretap Act, 18 U.S.C. § 2511. Google argues that its data collection did not violate the Act because data transmitted over a Wi-Fi network is an “electronic communication” that is “readily accessible to the general public” and exempt under the Act. 18 U.S.C. § 2511(2)(g)(i). The district court rejected Google’s argument. In re Google Inc. St. View Elec. Commc’n Litig., 794 F. Supp. 2d 1067, 1073–84 (N.D. Cal. 2011). We affirm.

The Ninth Circuit's opinion, which was later modestly revised, can be read here .

Google's petition seeking Supreme Court review was denied on Monday. Read Google's cert petition and the plaintiffs' opposition to cert. Here is the opposition's punchy first two paragraphs:

As Google’s Street View cars drove across the country—and around the world—from 2007 to 2010, Google, like a 21st century Peeping Tom, surreptitiously intercepted and recorded private communications from inside people’s homes as the data traveled between people’s computers, smartphones, and tablets, and their WiFi routers. When caught, Google initially denied that it had intercepted and recorded those private data. Once forced to admit this intrusion, Google acknowledged that what it did was wrong—it had “screwed up,” in its terms—and regulators domestic and foreign have rightly sanctioned Google for this privacy transgression.

Google claims that the U.S. citizens whose data it secretly captured cannot bring an action against Google for statutory damages under the Wiretap Act. Google claims that Congress—in seeking to expand the privacy protections of ordinary citizens in the face of increasingly intrusive technology—actually authorized its massive and secret interception of private communications for the brief moment they traveled over the plaintiffs’ home WiFi networks.

Google may continue to pursue other defenses, including its claim that the plaintiffs lack standing to sue. But Google's apology and regulators' reactions to Google's conduct may complicate Google's defense on the merits. Perhaps settlement is on the horizon. Stay tuned.

Update: Read press accounts of the cert denial here and here.

 

 

One journalist's experiment with web privacy shows how bad it is... but also that it might improve

NPR reporter Steve Henn (who has covered both economics and technology) conducted an experiment: he asked a couple computer experts to follow his internet traffic for a week and see how much they could learn. The answer? A whole lot. They ended up knowing so much about Henn and his movements that they could have reported his news stories before he did.

But, as the piece concludes, privacy consciousness is rising in wake of Ed Snowden's disclosures, and some of the big internet players responsible for disclosing very specific information about Henn are becoming interested in data security.

The 15-minute piece, an NPR Planet Money podcast, is worth a listen, here.

House Financial Services Committee's Continued Efforts to Weaken the CFPB

by Jeff Sovern

In its ongoing efforts to weaken the CFPB and consumer protection generally, the House Financial Services Comittee's Subcommittee on Financial institutions and Consumer Credit held a hearing on May 21 on eleven bills.  I will talk in this post about only one, the so-called ‘‘Preventing Regulatory Abuse Act of 2014, sponsored by Representative Barr. As regular readers of the blog are likely to know, the Dodd-Frank Act authorized the CFPB to take action against entities within its jurisdiction that engage in unfair, deceptive, or abusive practices.  Mr. Barr's bill would direct the CFPB to issue a proposed rule defining abusive within fifteen days of the bill's enactment and would block the Bureau from using its power under the abusive prong until the rule was issued.

I can appreciate that the industry would like to know what "abusive" means. Congress did too, and no doubt that's why it defined abusive in the statute.  Here's what Congress wrote:

The Bureau shall have no authority under this section to declare an act or practice abusive in connection with the provision of a consumer financial product or service, unless the act or practice—

            (1)             materially interferes with the ability of a consumer to understand a term or condition of a consumer financial product or service; or         

             (2)             takes unreasonable advantage of—             

                 (A)                 a lack of understanding on the part of the consumer of the material risks, costs, or conditions of the product or service;             

                 (B)                 the inability of the consumer to protect the interests of the consumer in selecting or using a consumer financial product or service; or             

                 (C)                 the reasonable reliance by the consumer on a covered person to act in the interests of the consumer.

 

That's a pretty good definition, in my view.  But the industry claims it needs to know more so it can predict whether particular actions are abusive.  Personally, I would love to hear examples of the conduct that the industry speculates might be abusive under that definition but isn't certain about.  So far, I haven't heard any, which makes me wonder whether the rule is really needed or whether this is part of a different agenda, the anti-consumer protection, anti-CFPB agenda.  I can't remember hearing calls for similar rules when the Fed was given the power to block abusive lending in 1994, a power the Fed basically ignored until 2008, though perhaps I just overlooked those calls.  Maybe what's really going on is that instead of an agency that was sympathetic to lenders having the power to ban abusive practices, the power is now in the hands of an agency charged with protecting consumers, and the industry wants to prevent that agency from using that power. But let's assume that the industry genuinely needs clarification.  That still leaves open the question of whether this is a good bill.

 

The bill calls upon the Bureau to act within 15 days!  Haven't they ever heard that haste makes waste, look before you leap, or Rome wasn't built in a day? Those cliches are cliches because they reflect a basic truth: that moving too quickly often leads to errors. if Mr. Barr genuinely wanted a good rule, wouldn't he want the Bureau to take the time to craft it well? No doubt the Bureau is still figuring out how best to use its abusiveness power.  The Federal Trade Commission had decades of experience with its power to ban deceptive practices before it issued its 1983 policy statement on deception, and likewise had decades of experience with its power to ban unfair practices before it issued its 1980 policy statement on unfairness.  The Bureau may not need decades before it is ready to issue a policy statement or rule on abusiveness, but surely it needs much more time than it has had.  And why a rule? Why isn't a policy statement, which was good enough for the FTC, good enough for the Bureau?  Yes, rules are subject to notice and comment, but is the industry having difficulty making its voice heard? Not, apparently, in the House.

In Facebook privacy case, a procedural win for class action objectors' appellate rights

When a group of class-action objectors appealed the settlement of the privacy case against Facebook for (among other things) the unlawful use of minors’ images for advertising without parental consent, class counsel sought to impose on each objector-appellant an appeal bond of $32,000. (For more background, see here.) One of class counsel’s arguments was that if the appellants lose they should be responsible for the administrative costs incurred by the settlement administrator while the appeal was pending.

Yesterday, in a decision that could be influential to district courts in the Ninth Circuit, the district court denied the motion to impose a bond, ruling that settlement administrative costs are not part of appellate costs that can be shifted to a losing appellant under the federal rules.

This is a win not only for the objectors to the Facebook settlement but also for access to justice more generally: if large appeal bonds for administrative costs can be required of class-action objectors, some objectors will be deterred from appealing at all.