Consumer Law & Policy Blog

Public Justice on Zombie Debt

Here (HT: Peter Holland).

More historical perspective on the Fair Housing Act

As we've discussed recently, the Supreme Court is set to decide by June whether the Fair Housing Act covers policies and practices that contribute to racial segregation in housing where there has been no showing they were intended to do so. (See here and here, for instance.)

This morning, Brian discussed some of the historical practices that motivated the Fair Housing Act and other civil rights laws of the 1960s.

As a complement to the Epps piece Brian highlighted, check out Washington Post opinion writer Charles Lane's discussion of the role of the government in perpetuating housing discrimination during the mid-20th century, including the government's embrace of racially-restrictive covenants on who could buy homes. These contractual provisions -- designed to keep out "what the federal government called 'inharmonious racial groups'" -- were "actively encouraged" by the Federal Housing Administration from 1934 to 1948, Lane recounts.

Noting the progress made since the passage of the Fair Housing Act in 1968 but also that census data still show a lot of racial segregation in housing, Lane frames the argument about the continued vitality of disparate-impact housing discrimination claims this way:

[T]he question is how active Big Government should still be in the fight to undo the residential segregation that Big Government did so much to create.

I am reminded of Justice Ginsburg's metaphor from her dissent in Shelby County v. Holder, in which the Supreme Court struck down the statutory formula that undergirded the preclearance requirement, a key element of the Voting Rights Act: "Throwing out preclearance when it has worked and is continuing to work to stop discriminatory changes is like throwing away your umbrella in a rainstorm because you are not getting wet."

"Is Racial Segregation Legal, If It's Not Deliberate?"

That's the question posed by law professor and writer Garrett Epps in this article about Wednesday's Supreme Court oral argument (and the issues raised by it) in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc. -- the case about whether the Fair Housing Act authorizes claims based on disparate impact (and not only deliberate discrimination). The piece starts with a history lesson about how disparate-impact analysis began shortly after enactment of the Civil RIghts Act of 1964:

The year was 1965. The ink on the Civil Rights Act of 1964 was hardly dry. Duke Power Company executives at the Dan River Steam Station near Draper, N.C., needed a new personnel policy. The old one had been simple: segregation. African Americans worked as laborers; only whites could do other jobs. But Title VII of the new Act forbade employers to discriminate by “race, color, religion, sex, or national origin.” On July 2, 1965—the day the Act took effect—Duke Power announced a new policy. New hires had to have a high school education and pass two standardized tests—unless, that is, they wanted to work as … laborers. If laborers wanted to transfer to other jobs, they either had to have a high school diploma or had to pass the tests. At that time, 34 percent of whites in North Carolina had finished high school; only 12 percent of blacks had done the same. Federal agencies ran experiments using the tests; 58 percent of whites passed, but just 6 percent of blacks. The company argued that tests would produce an educated, skilled workforce. It would also produce a new post-segregation plant that looked a lot like the old segregated one, but there was no evidence that this was its aim.

Epps's piece ends with a statement about U.S. housing patterns in 2015:

The sunny, “look how far we’ve come” view [of race discrimination] seems particularly hard to justify in housing. Anyone who can look at American cities—their housing patterns, their employment figures, or their police policies—and see a new dawn of color-blindness is wearing glasses unavailable to me. A ruling cutting back the [Fair Housing Act] would compare to the Court’s earlier mistakes in the context of schools and voting. An opinion destroying disparate impact altogether would be a disaster.

Elizabeth Warren op-ed on what's at stake in the fair housing case

Here, in the Washington Post

More on the St. John's Arbitration Study

by Jeff Sovern

Peter Holland has an interesting blog post pulling together a lot of the most significant findings of our arbitration study and adding his own commentary.  Meanwhile, Ballard Spahr lawyers Alan Kaplinsky, Mark Levin, and Daniel McKenna responded to my earlier American Banker op-ed in an op-ed of their own, claiming Consumers Fare Better with Arbitration.  American Banker posted my response today, Arbitration Tricks Consumers into Giving Up Their Rights. 

CFPB changes "know before you owe" mortgage disclosure rules

The Consumer Financial Protection Bureau this week finalized changes to the “Know Before You Owe” mortgage disclosure rules. The changes were proposed in October and address (1) when consumers will receive updated disclosures after locking in an interest rate and (2) how consumers receive information regarding certain construction loans. The final rule is posted here.

The Hill summarized the changes:

The new rule, gives creditors more time to draft disclosure forms. Now, creditors have three days to provide a revised loan estimate once a consumer locks in a floating interest rate. Previously, the loan estimates were due on the day the rate was locked.

Another change will give creditors more leeway in revising estimates for construction loans. Because construction loans take longer to settle than other loans, the CFPB said estimated charges often change. Under the new rule, there is a space on the loan estimate form where creditors can notify consumers they could receive a revised estimate if the loan does not settle in 60 days.

The rule will become effective on August 1.

Consumer issues will remain after Supreme Court's gay marriage ruling

Reporter Linda Greenhouse had this op-ed in yesterday's New York Times about issues that have arisen and will remain if the Supreme Court strikes down state bans on gay marriage. She notes a "a pipeline’s worth of cases in which florists, bakers and owners of wedding venues are invoking claims of conscience to shield them from having to do business with gay men and lesbians." And she notes a bill pending in the Virginia House of Delegates that would permit any licensed business, private or public, to refuse service to gay or bisexual people because of “religious or moral convictions” held by the business owner “with respect to same-sex ‘marriage’ or homosexual behavior.”

At Slate, writer Mark Stern writes that the Virginia bill would have broad application:

Because the bill applies to both private and public enterprises, and because these enterprises almost always need some kind of “license, registration, or certificate” from the government, its reach is essentially endless. University professors could refuse to teach gay students; doctors in state-run hospitals could refuse to treat gay patients. Hotels, restaurants, movie theaters, and bars could simply put up a sign reading “No gays allowed.” Police officers and ambulance drivers could refuse to aid not just gay couples, but also gay individuals. County clerks and DMVs could turn away gays at the door. Public school teachers could kick out gay students. Daycares could refuse to look after the children of gay couples.

On the other hand, this Washington Post article discusses a range of Virginia legislative proposals to ban discrimination against homosexuals.

As Linda Greenhouse observes: "However the justices proceed to resolve the increasingly audacious claims of religious conscience in a post-Hobby Lobby, post-marriage equality world, it’s safe to predict that politicians will be confronting these issues under the glare of a public spotlight. [Politicians] who expect the Supreme Court to give them a pass from having to take a stand are in for a rude surprise."

FTC issues study on accuracy of credit reports

The Federal Trade Commission yesterday issued a study on credit report accuracy. The study found that "most consumers who previously reported an unresolved error on one of their three major credit reports believe that at least one piece of disputed information on their report is still inaccurate."

The congressionally mandated study on national credit report accuracy follows a 2012 FTC study that examined how many consumers had errors on one of their three major credit reports.

The FTC press release summarizes the findings:

The 2012 study found, among other things, that one in five consumers had an error that was corrected by a credit reporting agency (CRA) after it was disputed on at least one of their three credit reports. The study also found that about 20 percent of consumers who identified errors on one of their three major credit reports experienced an increase in their credit score that resulted in a decrease in their credit risk tier, making them more likely to be offered a lower auto loan interest rate. 

The follow-up study ... focuses on 121 consumers who had at least one unresolved dispute from the 2012 study and participated in a follow-up survey. It finds that 37 of the consumers (31 percent) stated that they now accepted the original disputed information on their reports as correct. However, 84 of these consumers (nearly 70 percent) continue to believe that at least some of the disputed information is inaccurate.  Of those 84 consumers, 38 of them (45 percent) said they plan to continue their dispute, and 42 (50 percent) plan to abandon their dispute, while four consumers are undecided.

The new study also looked at whether any negative information that had been removed subsequently reappeared on the credit reports of consumers whose reports were modified after they disputed that information. The study found only two instances, representing about 1 percent of the consumers in the study.

 

Disparate impact argument transcript

Here's the transcript of this morning's Supreme Court arguments in Texas Department of Housing, the case about disparate-impact liability under the Fair Housing Act.

Appellate court rejects use of copyright to block Costco's sale of Omega watches

In 2004, Costco bought some Omega watches from a third party in New York and sold them at a discount in its U.S. stores. The watches, otherwise sold only in Europe, had a small globe design on the back, and Omega sued Costco, arguing that the sale of the watches violated Omega's copyright in the globe design. Over abut a decade, the case went up to the U.S. Supreme Court and back down again. With a ruling yesterday from the Ninth Circuit Court of Appeals, it may finally be over.

The Ninth Circuit held that under a 2013 decision of the Supreme Court in a case called Kirtsaeng v. John Wiley & Sons, Inc., the "first sale doctrine" barred Omega’s claim. Under that doctrine, Omega’s copyright distribution and importation rights expired after an authorized first sale of the watches in a foreign jurisdiction.

In a concurrence, Judge Wardlaw explained that she would have ruled for Costco on the ground that Omega's claim constituted "copyright misuse"—which was the theory on which the district court had granted summary judgment to Costco. "Omega attempted to use the copyrighted Globe Design to decrease competition in the U.S. importation and distribution of its watches by it and its authorized dealers—an obvious leveraging of a copyright to control an area outside its limited monopoly on the design," she wrote.

The bottom line is that if you buy a watch, you own the watch. You can sell it, trade it, or ... wear it.