Consumer Law & Policy Blog

Class certified for challenge to D.C. tax-lien scheme

You may recall an excellent and eye-opening series from the Washington Post in the fall of 2013 showing how a combination of relatively small tax underpayments could add up, with fees and penalties, to losing your home in the nation's capital. (Here's Brian's blog about it, with links.) A class action was filed in September 2013 to challenge the taking of individuals' home under D.C.'s tax-lien laws; the basis of the suit was the Fifth Amendment's Takings Clause. (Here's our discussion.)

Earlier this month, the federal district court here in D.C. certified the class. The court first summarized the case:

Benjamin Coleman brought this lawsuit to challenge a District of Columbia law that directed the sale of a lien on his home after he failed to pay a $133.88 property-tax bill. That law permitted the private purchaser of the lien to add $4,999 in interest, costs, and fees to Mr. Coleman's bill and, when Mr. Coleman could not pay, to institute a foreclosure proceeding. After the foreclosure proceeding, the private purchaser obtained title to Mr. Coleman's home. Mr. Coleman, however, received nothing, although the amount of equity he had in his home far surpassed the amount he admittedly owed in taxes, interest, costs, and related fees. Because the loss of this surplus equity was dictated by District of Columbia law, Mr. Coleman sued to challenge that law. His claim is that the taking of his excess equity–the amount of equity minus the taxes and related costs he admits that he owed–violated his constitutional rights under the Takings Clause of the Fifth Amendment to the United States Constitution. 

Among the court's key holdings in certifying a class: The court rejected D.C.'s challenge to standing and certified both a damages class and a class for declaratory relief. Although the class consists of only 34 individuals, the court held that numerosity is satisfied because of the difficulty of joining these uniquely vulnerable, economically disadvantaged individuals. And the court rejected the District's theory that the need for individual valuations of the plaintiffs' properties defeated predominance -- the common questions related to District law and the property owners' rights outweighed individual valuation questions, which could be answered by looking to the District's own assessments.

The decision is Coleman v. District of Columbia, 2015 WL 1641097.

House committee eliminates provision to delay consumer protection for service members

We told you yesterday (see here and here) about a provision of the National Defense Authorization Act, now pending in Congress, that would delay protections for service members against predatory lending.

Happily, today the House Armed Services Committee removed the provision, by just a two-vote margin. The Military Times has the story. Here is Public Citizen's press release celebrating the victory for consumers in uniform.

New bipartisan bill in Congress would ban use of non-disparagement clauses nationwide

You may recall that last September, California enacted the nation's first ban on non-disparagement clauses in consumer contracts -- that is, clauses prohibiting consumers from criticizing (however truthfully) companies they do business with.

Today, Representatives Darrell Issa, Eric Swalwell, Blake Farenthold, and Brad Sherman (two Democrats and two Republicans) jointly proposed in Congress the Consumer Review Freedom Act of 2015, which would ban non-disparagement clauses nationally. We at Public Citizen have litigated cases against the use of such clauses (for instance in the KlearGear case, as well as the Cox case). The proposed bill, which is similar to one introduced last session (by Democrats only), also prohibits a business from imposing a clause requiring consumers to sign away their intellectual property rights in communications about the business. We've challenged that type of clause, too. Today's bill authorizes enforcement by the Justice Department and by state attorneys general.

Here's our statement on the bill.

Rep. Issa's press release (soon to be available on his website) mentions KlearGear and notes that organizations supporting the bill include (in addition to Public Citizen) Public Participation Project, Yelp, TripAdvisor, Angie’s List, National Consumer Law Center, and Consumer Federation of America.

Here's the bill's text.

More on the Attempt to Delay Predatory Lending Protections for Soldiers

Scott blogged earlier today about the pending vote to delay protections. Here's Ed Mierzwinski's HuffPo post, House Launches Attack on Servicemember Lending Protections, and Chris Morran of Consumerist weighs in with Congress May Delay Predatory Lending Protection For Military Personnel.

Update: the Times' Brent Staples adds "The offending legislation, now before the House Armed Services Committee, deserves to die a swift death."

Auto regulator wants manufacturers to try harder on safety recalls

The New York Times reports today that the head of the National Highway Traffic Safety Administration (part of the U.S. Department of Transportation) is promising aggressive action on vehicle recalls that move too slowly and continue to endanger lives.

"Mr. Rosekind, who took over as administrator of the National Highway Traffic Safety Administration in December, took particular aim at Fiat Chrysler Automobiles, saying that its efforts to fix more than a million Jeep sport utility vehicles with potentially dangerous gas tanks had fallen far short of expectations," the article explains.

The full article is here.

House committee wants to delay protection for service members against predatory lending

In this year's proposed National Defense Authorization Act, currently before the House Armed Services Committee, there's a provision to delay for one year DoD regulations to protect service members from predatory lenders. What's the year for? Further study.

Rep. Tammy Duckworth of Illinois, herself a veteran, is expected to try to remove the delay provision.

Here's Public Citizen's statement opposing the delay.

Some statistics for Baltimore

As the people of Baltimore recover from this week's rioting and try to make sense of the shocking event that sparked it, 538.com reflects on some relevant statistics about economic conditions in Baltimore:

    -The median income for African-American households: $33,000 (white households make nearly double     that amount).

    -The unemploment rate for African-American men 20 to 24 is 37% (whites that age: 10%).

    -Nearly 1 in 4 Baltimore residents lives in poverty (U.S. as a whole: 1 in 6).

Read the whole story, "How Baltimore's Young Black Men Are Boxed In," here.

Also, in potentially pertinent non-economic statistics, the arrest rate for police officers and the number of people police kill in Baltimore are both high among the nation's cities, reports 538.

Maryland Trial Judge Wrongly Enjoined Criticism of Convergex Caribbean

In a brief filed in the Maryland Court of Special Appeals, we have asked the Court to enforce the Supreme Court’s rule forbidding temporary injunctions to protect the reputation of a business against allegedly defamatory criticisms.  The facts of the case show the wisdom of the rule.

How the Appeal Came About

In the fall of 2013, a lawyer representing Convergex Caribbean, which describes itself as “a global financial services, in the business of enabling organizations and individuals to obtain access to sources of private capital funding for investment purposes,” filed a lawsuit in state court in Prince Frederick, Maryland against an Arizona man named Douglas Anthes who was a dissatisfied customer of Convergex.  The suit revealed that Anthes had posted several reviews on such sites as Ripoff Report and Reviews Talk complaining that he had paid $10,000 to get introduced to Convergex, which exacted another $25,000 payment in return for an introduction to a third company, which demanded yet another fee to discuss financing. Anthes described the arrangement as a scam; Convergex’s lawsuit claimed these accusations were defamatory.

The lawsuit went very quickly: it was filed on November 12, 2013, and by November 15, 2013, without Anthes having received any notice that the lawsuit was pending, not to speak of notice that a TRO was being sought, the trial court had issued a temporary restraining order lasting 35 days, requiring Anthes to remove his accusations against Convergex from the sites where he has posted them, and forbidding him from posting any further defamatory postings about Convergex. The TRO was extended for another 35 days on December 18, again without notice to Anthes,

Corinthian Colleges closing

We discussed previously a "debt strike" launched by students of the for-profit chain Corinthian Colleges, which faces multiple legal actions from state and federal regulators over claims that it misled students about job prospects and graduation rates (see our prior discussion about one such action here).

Now the company is closing its schools, reports the Washington Post:

Controversial for-profit giant Corinthian Colleges said Sunday it is closing the doors of its remaining 28 schools, capping the year-long collapse of one of the country’s largest career college chains.

The closure will leave some 16,000 students without certificates or degrees but with a good chance of having their federal student loans forgiven.

This development is a testament to the power of active government regulators to police fraud.

Read the whole Post story here.

Supreme Court to consider whether violation of consumer statute is enough to confer standing if plaintiff unharmed

Today the Supreme Court granted certiorari in Spokeo, Inc. v. Robins, a Fair Credit Reporting Act claim about an incorrect report. Spokeo, a company that publishes information about people online, challenged the plaintiff's standing to proceed in the absence of concrete harm flowing from the inaccurate report of facts about the plaintiff. The plaintiff, Robins, did allege harm to his employment prospects, but the court of appeals, in holding that Robins had standing, relied on a more general rule: the willful violation of a statutory right is itself a concrete injury. It appears that proposition will be tested now before the Supreme Court, which avoided the same issue when it dismissed First American Corp. v. Edwards in 2011.

You can read the documents from the case on SCOTUSblog, here. (CL&P Blog's own Deepak Gupta is counsel for Robins.)