Consumer Law & Policy Blog

Supreme Court to hear case about privacy of hotel guest information

A Los Angeles ordinance requires hotel and motel operators to collect information from their guests -- including the guest's name and address, number of people in the party, arrival and departure dates, room number, vehicle information, and more -- and authorizes law enforcement to inspect this information without a warrant. The Ninth Circuit ruled that the ordinance was unconstitutional because it authorized what amounted to an administrative search without a procedure to challenge the search beforehand.

Although the challengers to the ordinance are L.A. motel owners and so the privacy rights of the guests themselves are not technically before the Court, the case will have implications for what information federal, state, and local governments can effectively require that travelers reveal and how easily law enforcement can access that information.

SCOTUSblog has coverage of today's decision to hear the case, City of Los Angeles v. Patel.

Pennsylvania government reports on fracking emissions incomplete

The Pittsburgh Post-Gazette reports today:

Three widely cited state studies of air emissions at Marcellus Shale gas development sites in Pennsylvania omit measurements of key air toxics and calculate the health risks of just two of more than two dozen pollutants.

State regulators and the shale gas drilling industry over the past four years have repeatedly used the regional studies to support their positions that air emissions from drilling, fracking wastewater impoundments and compressor stations don’t pose a public health risk.

The relevations arise from the deposition testimony of state officials in a lawsuit in which three southwestern Pennsylvania families allege that air and water pollution from gas drilling and storage of wastewater made them sick. Read more here.

Philadelphia Inquirer's Jeff Gelles: Consumers rarely use the right to cancel a contract

by Jeff Sovern

Here. Disclosure: the story quotes me and discusses my article on cooling-off periods.

Times Privacy Op-Ed and WaPo Story on Rent to Own

Frank Pasquale of Maryland has a terrific op-ed in today's Times, The Dark Market for Personal Data, about lists of consumers with various characteristics.  An excerpt:

There are three problems with these lists. First, they are often inaccurate. For example, as The Washington Post reported, an Arkansas woman found her credit history and job prospects wrecked after she was mistakenly listed as a methamphetamine dealer. It took her years to clear her name and find a job.

Second, even when the information is accurate, many of the lists have no business being in the hands of retailers, bosses or banks. Having a medical condition, or having been a victim of a crime, is simply not relevant to most employment or credit decisions.

Third, people aren’t told they are on these lists, so they have no opportunity to correct bad information.

Meanwhile, the Washington Post ran a piece yesterday on rent-to-own headlined Rental America: Why the poor pay $4,150 for a $1,500 sofa. 

Pennsylvania Bill Aimed at Speech by a Hated Convict Instead Shows Its Advocates’ Ignorance

by Paul Alan Levy
                    
In the short space of a few days, the House and Senate of the Pennsylvania legislature have passed a bill allowing judges to issue injunctions, or grant any other “appropriate relief” if there is “conduct” by a criminal “offender” that “perpetuates the continuing effect of the crime on the victim,” in any manner reason including that it “causes a temporary or permanent state of mental anguish.” 

Press reports reflect that the bill was proposed as a response to the fact that Goddard College played a pre-recorded commencement speech from one of its graduates, who was convicted many years ago of killing a police officer.   Campaigns to overturn his death penalty and conviction have been trendy among some on the left (I have long been astonished at the arguments advanced on this point by otherwise sensible people), while at the same time sparking outrage among law enforcement officials and right-wing bloggers and politicians.   Claiming that the very fact that he was allowed to speak (without, apparently, mentioning his conviction or the charges against him) “revictimized” the police officer’s widow, the bill was apparently intended as a variant on the Son of Sam law that the Supreme Court struck down under the First Amendment in Simon and Schuster v. New York Crime Victims Board.  But in an apparent effort to avoid charges that the bill is aimed at free speech, it is written as providing a cause of action against “conduct” that causes mental anguish.

But even assuming that judges addressing the constitutionality of the statute are fooled by this figleaf, you have to wonder at the exceptional breadth of the statute.   If a criminal defendant files an appeal from his conviction, would that cause the victim mental anguish?  What if the defendant merely pleads not guilty and forces the holding of a public trial in which the victim has to testify about the facts of the crime?  Can appealing, or pleading not guilty, be enjoined?

The web site of the Pennsylvania Legislature reflects that the bill’s primary sponsor withdrew; I'd like to think it was because of embarrassment at having his or her name associated with the legislation after the media focused on its patent unconstitutionality.  Apparently, however, that was not enough to prevent a majority of the members of the two houses from passing a bill the threatens to make Pennsylvania a national laughing stock.  This language was adopted by the state senate by vote of 37-11; the vote was reportedly unanimous in the state house, where not a single legislator had the guts to say that the emperor has no clothes. 

Media reports are that Governor Tom Corbett plans to put his name on the bill by signing it.  Has he really no shame?

Alabama Supreme Court Reverses Gag Order

by Paul Alan Levy

Last February, I discussed on this blog our appeal on behalf of an Alabama law firm and about a hundred of their clients who were subjected to an exceptionally broad gag order that forbade them from saying anything publicly or even privately about an extermination company that they had sued for false advertising.  We originally sought both mandamus and a stay pending appeal.

In an opinion issued this morning, the Alabama Supreme Court unanimously reversed.  Although the gag order was promoted below as being justified on the ground that some of the statements about the exterminating company were defamatory and harmful to its business, and as a form of professional discipline, the Supreme Court addressed only the third justification: that talking about the litigation might prejudice the exterminator's right to a fair trial.  The court went out of its way to insist that it did not want to tie a trial judge’s hands in protecting the fairness of a possible jury trial, but said that the order was far broader than could possibly be justified by that claimed objective.  What was needed, the court said, quoting from a Fifth Circuit decision, is “a nuanced approach to the delicate balance between the necessity of avoiding a tainted jury pool and the rights of parties to freely air their views and opinions in the 'market square' now taking the form of the electronic square known as the Internet."

As the advocate for the people whose speech was restrained, I am inclined to think that it was irresponsible for the Alabama Supreme Court to ignore the issue of a stay pending appeal, leaving a grossly overbroad prior restraint in place for eight months.  But at least the order is now overturned, with a clear message to lower courts not to overreach against free speech.

Jake Halpern, author of "Bad Paper," on Fresh Air

We've recommended before the insightful investigative journalism of Jake Halpern on the debt collection industry (see here for a post earlier this month and here for a story from 2010). Last week, Halpern appeared on Fresh Air to discuss his new book, Bad Paper: Chasing Debt from Wall Street to the Underworld. Eye opening and definitely worth a listen, here. Among his recurring themes is the lack of regulation of the industry.

Benefits of Class Actions - A New Study

A study released today reports on class actions that have "helped victims of corporate law-breaking and led to changes in corporate behavior that protect us all from many types of illegal conduct." Prepared by the Center for Justice and Democracy, the study looks at more than 150 class actions that have been litigated since 2005 in areas including financial discrimination, workplace discrimination, antitrust, invasions of privacy, and healthcare.

The report is full of good stories and easy to read--no law degree required. And it makes a strong counter, based on fact, to the powerful corporate voices working to block people's access to the civil justice system.

The study and press release are available here.

 

Zywicki & Durkin: Why Everything Elizabeth Warren Told You About Consumer Credit Is Wrong

by Jeff Sovern

The op-ed is here, at Forbes.com.  Except that if you want to find out why everything Warren said is wrong, maybe the op-ed wouldn't be the place to look.  Here's the lead:

Why do people borrow? To hear law professor turned Senator Elizabeth Warren, it is because they are seduced by rapacious lenders and a consumerist culture into living beyond their means, buying big-screen televisions, new cars, and expensive vacations. And before you know it, you are under the thumb of the big banks—or, even worse, of the street corner payday lender.

And here's how Zywicki & Durkin respond to that claim:

* * * Although there are exceptions to any rule, for most [consumers, the reason they borrow] bears little resemblance to Senator Warren’s picture of hapless victims goaded into debt by rapacious credit card issuers. Instead, consumers borrow for essentially the same reasons that businesses borrow: for capital investments and to smooth disruptions in income and expenses. * * *

So "everything" Warren said is wrong, but as for Zywicki's & Durkin's explanation, there are "exceptions" and the explanation applies only to most consumers anyway.  I don't know but I suspect that Warren would agree that most consumers borrow for the reasons Zywicki & Durkin state, but she would also say that some are lured into unwise borrowing (remember the Great Recession, which was triggered by unwise lending?) and that Zywicki & Durkin would agree, judging by their "exceptions," that sometimes that happens.

Here's another paragraph commenting on Warren:

But aren’t people today different—more prone to living beyond their means? As then-Professor Warren herself put it in a 2004 interview with PBS, “The [credit card] industry has no evidence that people were being turned down for loans in the early 1980s. What they have is evidence that people more often in the early 1980s preferred to pay cash than to pay on credit.” Yet hand-wringing about how other people use consumer debt is as old as debt itself. For example, the New York Times warned in the 70s that American consumers were “borrowing trouble”—the 1870s, that is.

I don't see that that particular quote demonstrates either hand-wringing about how people use consumer credit or that people are living beyond their means.  Nor do I see anything wrong with saying that a problem that existed in the 1870s is still with us, even assuming that Warren said that.  But on top of that, given the role of unwise consumer lending in creating the Great Recession, which we are still recovering from, isn't a little hand-wringing about that appropriate?

Durkin, Zywicki, Gregory Elliehausen, and Michael Staten have written a new book, Consumer Credit and the American Economy, and are trying to sell it. That's perfectly appropriate.  I hope to find time to read the book soon myself.  I want to see if it's going to change my thinking on consumer credit issues, for one thing. But if this op-ed is any example, it won't.  Here's more. After mentioning proposals to outlaw payday lending, they write:

And if you take away legal, high-cost options? Well, history shows the unintended consequences of that policy too: When New York’s legendary Genovese crime boss Anthony “Fat Tony” Salerno was indicted in 1973 on 11 counts of loan-sharking (and one count of criminal solicitation to have a victim’s leg broken) it was estimated that his operation had some $80 million a day outstanding—that’s $429 million in today’s dollars, in just his territory alone. Nor was Fat Tony alone: according to a 1968 U.S. Senate Report, loan-sharking was the second-largest revenue source of the mafia at the time.

I worry about what consumers who use payday lending appropriately--and apparently there are some, though they are out-numbered by consumers for whom payday lending turns out to be more of a problem than a solution--would do if payday lending was barred.  But if the best evidence that barring payday lending is a bad idea is that more than forty years ago there were loan-sharks, I'm going to be less worried.  Plenty of states bar payday lending already. If prohibitions on payday lending lead to loan-sharking, wouldn't we be seeing  a lot more loan sharking in those states?  I hope there's more about this in the book, because the op-ed doesn't convince me.

 

Forced arbitration as a campaign issue

Yesterday, the Washington Post endorsed Brian Frosh for Attorney General of Maryland. Among his opponents' weaknesses, according to the Post, is that he "wants to promote arbitration as an alternative to consumers suing businesses."

On the other side of the issue, a congressional candidate in Virginia (running for an open seat in the D.C. suburb of Alexandria) has touted his opposition to forced arbitration, including removing such clauses from both the employment and consumer contracts used by his own car dealership business.

Will be interesting to see if campaign stands like these translate into interest in legislative action on the issue.

(HT Paul Levy and Christine Hines)

[Correction: an earlier version of this post mischaracterized the Post as attributing the pro-arbitration stance to Frosh, rather than to his opponent. Kudos to alert reader Gregory Gauthier for flagging the error.]