Consumer Law & Policy Blog

"Organic" food is not worth it

According to this article by consumer reporter David Lazarus.

DC Circuit: credit card number in alleged national security investigation is "consumer report" under FCRA

When one comes across a case called Abdelfattah v. DHS alleging a pattern of law enforcement and immigration-authority harassment against a Jordanian national, the Fair Credit Reporting Act is usually not the first remedy that comes to mind. But in the D.C. Circuit's decision in that case this past Friday, an FCRA claim is the only one that survived (rejected were claims based on the Privacy Act, due process, and other sources of law, though many of these had procedural problems such as waiver).

Reversing the dismissal of the FCRA claim, the court held that credit card information about the plaintiff does qualify as a "consumer record" so as to bring the furnishing of that information and DHS's receipt of that information in the course of its investigation of Abdelfattah within the ambit of the FCRA. The allegation in the case is that this information was provided and received for an improper purpose under the FCRA. The D.C. Circuit reversed the dismissal and remanded for further proceedings on the claim.

Perhaps this result points a new way forward for plaintiffs in security-related abuse-of-power cases who have difficulty overcoming the various procedural doctrines (such as Bivens limitations) and tradition of judicial deference that shield government agencies and officials from liability on claims relating to national security and immigration. The decision is here.

New Jersey Appellate Court rejects "ascertainability" as a class-certification requirement

Last week, in Daniels v. Hollister Co., the New Jersey Appellate Division rejected the notion that the plaintiffs in a damages class action must show that the class is "ascertainable" before it may be certified.

The court responded at length to recent federal-court ascertainability precedent, coming especially from the Third Circuit, requiring the named plaintiffs to come up with a precise method for identifying the class members at the class-certification stage. The Third Circuit has imposed this requirement even in small-claims consumer cases where the defendant's failure to maintain sales records makes it difficult to specify a method for obtaining the class members identities at the front end. This requirement threatens consumer class actions. After all, most consumers don't keep receipts for their small- or medium-cost purchases, so it's hard for consumers to prove that they are class members except through their say-so, a method of proof the Third Circuit rejected in a decision called Carrera (where class members' under-oath claims of class membership were deemed insufficient). (Recently, as we've explained, the Third Circuit itself may be putting on the brakes, although in what circumstances and to what degree remains unclear.)

The entire decision in Daniels is worth a read. In the meantime, take a look at the following passage to get a flavor:

Ascertainability, as defined by defendant, is particularly misguided when applied to a case where any difficulties encountered in identifying class members are a consequence of a defendant's own acts or omissions. Had defendant obtained the identities of consumers when giving out $25 gift cards, the problems it now offers as grounds for upending certification would not exist. Allowing a defendant to escape responsibility for its alleged wrongdoing by dint of its particular recordkeeping policies - an outcome admittedly un-troubling to some federal courts - is not in harmony with the principles governing class actions. See Byrd, supra , 2015 U.S. App. LEXIS 6190 , at *50 (Rendell, J., concurring) (recognizing that "[w]ithout the class action mechanism, corporations selling small-value items for which it is unlikely that consumers would keep receipts are free to engage in false advertising, overcharging, and a variety of other wrongs without consequence"). In the final analysis, "ascertainability" does not benefit the chief goal of our court rules - the fair and efficient administration of justice; the Third Circuit's experiences suggest the doctrine is practically unworkable in application and is being exploited by defendants in unsuitable cases to evade liability. See Hughes v. Kore of Ind. Enter., Inc., 731 F.3d 672 , 677 (7th Cir. 2013) (recognizing that "when what is small is not the aggregate but the individual claim . . . that's the type of case in which class action treatment is most needful[,]" and emphasizing that a class action "has a deterrent as well as a compensatory objective").

HT to Jon Taylor.

 

The (un)constitutionality of mandatory pre-dispute arbitration imposed through take-it-or-leave-it form contracts

That's the topic of Diffusing Disputes: The Public in the Private of Arbitration, the Private in Courts, and the Erasure of Rights by law professor Judith Resnik. Here is the abstract:

Two developments frame this discussion: the demise of negotiated contracts as the predicate to enforcing arbitration obligations under the Federal Arbitration Act and the reorientation of court-based procedures to assimilate judges’ activities to those of other dispute resolution providers. From 1925 until the mid-1980s, obligations to arbitrate rested on consent. Thereafter, the U.S. Supreme Court shifted course and enforced court and class action waivers mandated when consumers purchased goods and employees applied for jobs. To explain the legitimacy of precluding court access for federal and state claims, the Court developed new rationales — that arbitration had procedural advantages over adjudication, and that arbitration was an effective enforcement mechanism to “vindicate” public rights. The result has been the mass production of arbitration clauses without a mass of arbitrations. Although hundreds of millions of consumers and employees are obliged to use arbitration as their remedy, almost none do so — rendering arbitration not a vindication but an unconstitutional evisceration of statutory and common law rights. The diffusion of disputes to a range of private, unknowable alternative adjudicators also violates the constitutional protections accorded to the public — endowed with the right to observe state-empowered decision makers as they impose binding outcomes on disputants. Closed processes preclude the public from assessing the qualities of what gains the force of law and debating what law ought to require. The cumulative effect of the Supreme Court’s jurisprudence on arbitration has been to produce an unconstitutional system that undermines both the legitimacy of arbitration and the functions of courts.

Ninth Circuit Reverses Garcia v. Google as Only Judge Kozinksi Dissents

In an opinion issued this morning, an almost unanimous en banc Court of Appeals for the Ninth Circuit has overturned the panel opinion in Garcia v. Google, which last year granted a mandatory injunction requiring Google to remove the video “Innocence of Muslims” from YouTube on the ground that, when an actress was tricked into playing a bit role for a movie, she acquired a copyright that she could assert against the broadcast of the whole film unless her part was removed.  Only Judge Kozinski dissented; Judge Watford would have reversed only on the ground that there was insufficient evidence that the relief awarded by Judge Kozinski’s panel would have helped protect Garcia against irreparable harm.

Has the En Banc Ninth Circuit Reversed Garcia v. Google?

This morning we have a broad hint that the Ninth Circuit's en banc opinion in Garcia v. Google is to be expected today, and that the ruling will reverse Judge Kozinski's opinion for the panel.  

What the ground of that opinion will be, who will write, and what the split among the judges will be remains to be seen.  I can only read from the tea leaves provides by an order issued this morning denying rehearing of the preliminary injunction that Judge Kozinski's panel granted.  In a dissent from that denial, Judge Reinhardt tells us that the position of the panel will be reversed, that "the suppression of speech ended with the en banc opinion," and that he agrees with the en banc opinion.

What else?  Stay tuned.

And surely this is a bizarre way for us to find out.

UPDATE

About an hour after this post was published, the en banc court issued its opinion, discussed here.

DC A.G. files complaint charging home renovator for shoddy and illegal work

In the complaint, A.G. Karl Racine says the defendants, a married couple named Hofgard who control at least 28 entities, renovated and sold 15 homes since 2013 that had not been properly permitted or inspected. In one instance, according to the complaint, the shoddy work caused the partial collapse of a neighboring property's wall.

"They represent that the properties are safe and sound and have been fully renovated and they mark up the price. People are left holding the bag, oftentimes having to go back and fix things that were represented to be fixed and otherwise live in a state not knowing if a new patio is going to hold. These are serious offenses," said Racine in an interview with WAMU.

WAMU has the story here. The complaint is here.

Supreme Court will take up important mootness issues

The Supreme Court granted review this morning in Campbell-Ewald Company v. Gomez, which presents the following important issues about mootness:

1. Whether a case becomes moot, and thus beyond the judicial power of Article III, when the plaintiff receives an offer of complete relief on his claim.

2. Whether the answer to the first question is any different when the plaintiff has asserted a class claim under Federal Rule of Civil Procedure 23, but receives an offer of complete relief before any class is certified.

The Court also granted on a third question:

3. Whether the doctrine of derivative sovereign immunity recognized in Yearsley v. W.A. Ross
Construction Co., 309 U.S. 18 (1940), for government contractors is restricted to claims arising out of property damage caused by public works projects.

Go here, for all the papers filed to date in the case. Public Citizen is co-counsel to the plaintiffs.

 

Study shows Supreme Court's 2009 decision on pleading standards has significant impact

In 2009, the U.S. Supreme Court decided a case called Ashcroft v. Iqbal. The issue before the Court was the adequacy of the complaint filed in the case, and the Court held that the case should be dismissed, prior to discovery, because the allegations in the complaint were too conclusory and not plausible. Although the Court purported to be alloying the traditional pleading standard of Federal Rule of Civil Procedure 8, many lawyers viewed the case, as well as the 2007 decision in Bell Atlantic v. Twombly, as setting a new and higher bar for plaintiffs.

A study to be published in a forthcoming edition of the Virginia Law Review examines the effect of the Court’s Iqbal and Twombly decisions and concludes that its effect has been significant. The article's abstract summarizes its findings:

First, this Article provides data showing that dismissals of employment discrimination and civil rights cases have risen significantly in the wake of Iqbal. These results remained significant even after controlling for potential confounding factors. Second, the data also suggest that certain factors interact with the plausibility standard to influence the resolution of a motion to dismiss, including perhaps most importantly the institutional status of the plaintiff and defendant. Individuals have fared poorly under the plausibility regime, at least when compared to corporate and governmental agents and entities. These effects remained significant even after controlling for several potentially confounding variables. Finally, by analyzing data on the progress of cases after a motion to dismiss has been adjudicated, this Article shows that the advent of heightened pleading has not resulted in higher quality claims.

The study found that cases brought by individuals represented by lawyers were dismissed 42 percent of the time before Iqbal and 59 percent after. For corporate plaintiffs, the dismissal rate was almost unchanged, moving from 37 up to 38 percent.

Further, the data show that dismissals of employment discrimination and civil rights cases have risen significantly in the wake of Iqbal.

The upcoming article, Measuring the Impact of Plausibility Pleading, by Professor Alex Reinert, is available here.

For a short summary and background, the New York Times has an article here.

Is Senator Shelby Trying to Sabotage Mortgage Disclosures? Does He Want Another Great Recession?

by Jeff Sovern

Senator Shelby, chair of the Senate Banking Committee, Housing and Urban Affairs Committee, has released a discussion draft of “The Financial Regulatory Improvement Act of 2015.” The draft provides in Section 117, that the CFPB's new mortgage disclosures (sometimes called the "TRID Rule"), promulgated way back in November of 2013 and scheduled to take effect this August, could be ignored by lenders providing the old mortgage disclosures (you know, the ones that consumers couldn't understand) until thirty days after the CFPB Director certifies that the new disclosures "are accurate and in compliance with all State laws."  Some in the industry have complained that 19 months wasn't enough time to comply with the new rules for forms.  The CFPB Monitor Blog explains "Potentially the concept is intended to address a concern raised by the industry that many state laws in some fashion incorporate the existing disclosures under TILA and RESPA, and have not been updated to reflect the Loan Estimate and Closing Disclosure under the TRID rule." So under this bill, if a single state wants to keep the new rules from taking effect in the entire country, all it would have to do  is refuse to amend its laws to comply with the new rule.  Which means that lobbyists just have to block action in one state to shoot down a rule for the entire country.  Oh, and in case anyone forgot, the mortgage disclosures that Senator Shelby would preserve are barely changed from the ones that led to the subprime crisis that led to the Great Recession.  After all, waiting for the states to fix their laws is more important than preventing another Great Recession.