Consumer Law & Policy Blog

California Supreme Court allows "pay-to-delay" suit to proceed

The California Supreme Court has revived a series of antitrust suits against drug manufacturers Bayer and Barr Laboratories. The cases stem from an agreement between brand-name manufacturer Bayer and generic manufacturer Barr, under which Bayer agreed to pay Barr $398.1 million in exchange for Barr postponing the sale of the generic version of Bayer’s antibiotic Cipro.

Such agreements, called “pay-to-delay” agreements, have been frequently challenged under the antitrust laws.

In a unanimous decision discussing the intersection between antitrust and patent law, the California court explained:

Under federal antitrust law, these settlements are not immune from scrutiny, even if they limit competition no more than a valid patent would have. (Federal Trade Commission v. Actavis, Inc. (2013) 570 U.S. ___, ___ (Actavis).) We conclude the same is true under state antitrust law. Some patents are valid; some are not. Sometimes competition would infringe; sometimes it would not. Parties illegally restrain trade when they privately agree to substitute consensual monopoly in place of potential competition that would have followed a finding of invalidity or noninfringement. The Court of Appeal ruled to the contrary; we reverse.

The decision is here.

DC court rejects challenge to use of cellphones during take-off and landing

Ruling in a case brought by the nation’s largest flight attendant union, the US Court of Appeals for the DC Circuit ruled on Friday that the Federal Aviation Administration acted within its authority when it decided, in 2013, to allow airline passengers to use cellphone and other electronics during takeoffs and landings.

The Association of Flight Attendants argued that electronic devices could distract passengers from safety announcements and be used as dangerous projectiles, and that the FAA had revised a regulation without going through required notice-and-comment procedures.

The court rejected both parts of the challenge.

On the record before us, it is clear that [the FAA notice] does not purport to amend any FAA regulation, and it does not otherwise carry the force of law. FAA regulations prohibit the use of most [personal electronic devices] during flight unless an airline determines that they will not interfere with the aircraft’s navigation or communications. 14 C.F.R. § 121.306. The FAA has long advised that [personal electronic devices] use be allowed during the main portion of flights, but barred during takeoff and landing. Although the agency’s recommendations are nonbinding, most airlines followed this approach. In 2012, the FAA reconsidered its stance. The agency created a streamlined procedure for airlines to use to determine whether expanded [personal electronic devices] use poses a safety risk. Although the FAA’s guidance on [personal electronic devices] remained nonbinding, many airlines have adopted new procedures that permit passengers to use [personal electronic devices] for the entire duration of their flights.

The DC Circuit’s opinion is here.

Appellate court holds that debt collector's use of Ohio attorney general's letterhead violated FDCPA

The Sixth Circuit Court of Appeals issued an opinion on Friday holding that private attorneys under contract with the Ohio attorney general’s office to collect debts owed to the state improperly used the office’s letterhead to scare debtors into paying. The court held that use of the letterhead of the Ohio attorney general’s office was a “false, deceptive or misleading” communication in violation of the Fair Debt Collection Practices Act, 15 U.S.C. § 1692e. With one judge on the three-judge panel dissenting, the court vacated a district court’s decision for the debt collector and the attorney general’s office, which had appeared in the case as an intervenor on the side of the defendant.

Read the decision in Gillie v. Law Office of Eric A. Jones, LLC.

BoA and JPMChase to clear bad debts from consumer records

A big victory for consumers, as the New York Times explained late last week:

Two of the nation’s biggest banks will finally put to rest the zombies of consumer debt — bills that are still alive on credit reports although legally eliminated in bankruptcy — potentially providing relief to more than a million Americans.

Bank of America and JPMorgan Chase have agreed to update borrowers’ credit reports within the next three months to reflect that the debts were extinguished.

The move is a victory for borrowers whose credit reports have been marred as a result of the reported debts, imperiling their job prospects and torpedoing their chances of getting new loans.

Why the change? The two banks (and several others) were sued for ignoring bankruptcy discharges so that they could sell off consumers’ debt and enable the debt buyers to make a profit because the consumers, facing marks against their credit score, had an incentive to pay off the debts even though they no longer legally owed them.

The Times estimates the changes could help more than one million Americans, who labor under erroneously marred credit reports. Citigroup, another of the defendants in the lawsuit, appeared poised to join its co-defendants in implementing this change, based on the comments of its lawyers.

Read the story here.

 

Elizabeth Warren Expected to Propose Bill to Give CFPB Power to Regulate Auto Dealer Lending

The Hill has the story here.

Drug company sues over ban on marketing a drug for rejected use

In a lawsuit filed today against the Food and Drug Administration, the drug manufacturer Amarin Pharma claims that the FDA's bar on drug companies marketing their products for uses that have not been approved by the FDA violates the company's right to free speech. In this case, not only is the use unapproved, but the FDA has specifically rejected the use because the company failed to show that it had any health benefit.

A New York Times article has details.

Read the complaint here.

Drug companies have for years pushed against the federal prohibition against promoting their products for unapproved uses. The companies say that they want to give information about additional potential benefits to physicians. And of course, marketing for additional uses may lead to a big boost in profits.

The Food, Drug, and Cosmetic Act, however, allows companies to market their drugs only for FDA-approved uses. FDA approval ensures than an objective expert agrees with the company's claims that the product is safe and effective for the stated use(s). In this way, patients are protected from buying snake-oil in the guise of medication. If a drug company could use FDA approval for one use as license to push its drug for different unapproved uses, the company would have no motivation to seek FDA approval for those other uses. As a consequence, we would never have an objective evaluation of the products' safety and effectiveness for those other uses.

Allowing companies to market drugs for unapproved uses is no more required by the First Amendment than allowing companies to sell snake oil.

Bill: no forced arbitration or class-action bans in college enrollment contracts

Last week, Sen. Dick Durbin of Illinois and Rep. Maxine Waters of California introduced the Court Legal Access and Student Support (CLASS) Act of 2015, which would eliminate forced arbitration clauses and class-action bans from college enrollment contracts. This protection, if enacted, would particularly timely in light of all the schools that have been discovered to have misled students into enrolling with false claims about their post-graduation employment rates and the like (see, for instance, here). 

More pro-privacy news

The FBI has announced it will be submitting to greater oversight (i.e., seeking warrants for) its practice of scanning cell phone signals from airplanes to sweep up information about thousands of individuals.

The detailed Wall St. Journal story on this is behind a paywall, so here's an accessible report.

(BREAKING) Second Circuit: NSA metadata program unlawful

In the first federal appellate ruling on the issue, the U.S. Court of Appeals for the Second Circuit has ruled that the federal law authorizing government record collection does not cover the bulk collection of Americans' metadata. (The collection program, you'll recall, was revealed as a result of the leaks by Edward Snowden).

The ruling rests on government's lack of statutory authority under the Patriot Act (whose reauthorization is currently under debate) and therefore does not reach the plaintiffs' constitutional arguments.

The opinion in today's case, ACLU v. Clapper, is here.

Warren/CFPB and (separately) auto safety in this week's New Yorker

A lot of interesting stuff in this week's issue, including the G.E. Capital column I mentioned earlier in the week, plus these two stories that may be of interest:

-A political profile of Elizabeth Warren that chronicles her rise as a champion of the consumer, the fight for the CFPB, and her efforts to push other members of her party away from the influence of the banking lobby. Great story. Read it here.

-A Malcolm Gladwell piece about auto safety and how the calculus of recalls looks different to an engineer than a politician or policymaker. Thought provoking. See here.