Consumer Law & Policy Blog

Class of egg donors argues that guidelines on payments constitute illegal price fixing

The New York Times reports:

In a federal lawsuit, a group of women are challenging industry guidelines that say it is “inappropriate” to pay a woman more than $10,000 for her eggs. The women say the $10,000 limit amounts to illegal price-fixing, and point out that there is no price restriction on the sale of human sperm. A federal judge has certified the claim as a class action, which will most likely go to trial next year.

The guidelines do not have the force of law, though they have been widely followed. But demand for eggs has increased and put pressure on their price. So some high-end fertility clinics and egg-donor agencies are ignoring the guidelines and paying far more — on rare occasions in the six figures — while donors are shopping around to get the best price.

The $80 million egg-donation market continues to evolve, the Times explains. There is some evidence suggesting the guidelines are ignored. But the lawsuit still raises questions about the fairness of a guideline for egg donors that was set based on the prevailing rate for sperm donors, increased for the higher proportion of time spent to donate an egg -- a calculation that ignores the pain and health risk to the egg donor.

Read the story here.

Economists consider what a tax on the top tier could achieve

The NYT points out that even a hike of a few percent on the ultra-rich could yield massive returns. For instance:

If the tax increase were limited to just the 115,000 households in the top 0.1 percent, with an average income of $9.4 million, a 40 percent tax rate would produce $55 billion in extra revenue in its first year.

That would more than cover, for example, the estimated $47 billion cost of eliminating undergraduate tuition at all the country’s four-year public colleges and universities . . . .

The article also notes that "most mainstream economists" agree that cutting taxes would leave a budget gap rather than paying for itself.

Finally, the article is worth a read for its informative chart breaking down incomes and taxes by income quintile as well as a further breakdown of the top quintile to show how dramatically the top incomes dwarf the rest.

Check it out, here.

Actors draw attention to pay equity

Although none of the A-list stars in the conversation are living paycheck to paycheck, Hollywood (led by Jennifer Lawrence, one of the highest paid actresses in the world, according to Forbes) is taking note of the differences between pay for men and women -- and that it extends to high-paying as well as low-paying jobs. NPR summarizes the discussion, with links, here.

Takata airbag investigation expands

From the NYT:

The recall of exploding Takata airbags, one of the largest and most complex auto recalls in the nation’s history, may grow even larger.

On Thursday, officials from the National Highway Traffic Safety Administration, the top federal auto safety regulator, said it had expanded its investigation of the defect beyond the airbags situated in front of the driver and front-seat passenger to include side airbags and was also examining all model years, not just older inflaters. If these are determined to be defective, the regulator said, the already spiraling recall may need to be widened to include more vehicles.

(For some background on the recall, including the fight between the manufacturer and NHTSA, see our prior discussion here.)

Today's NYT story is here. 

FCC fines six companies $30M for misleading consumers of prepaid calling cards

The Federal Communications Commission has fined six companies a combined $30 million for deceptively marketing prepaid calling cards. The FCC found that the companies falsely advertised that their low-cost prepaid calling cards could allow consumers far more calling minutes than were in fact being sold.

The FCC press release explains that "[t]he companies targeted advertising to immigrant consumers promising that the prepaid calling cards, which cost only a few dollars, could be used for hundreds or thousands of minutes in international phone calls. In fact, for that price, the consumers would be able to use only a fraction of the promised minutes due to the companies’ assessment of multiple fees and surcharges that were not clearly and conspicuously disclosed to consumers."

Fined $5 million each, the six companies are Locus Telecommunications, Inc.; Lyca Tel, LLC; NobelTel, LLC; Simple Network, Inc.; STi Telecom Inc.; and Touch-Tel USA, LLC.

The FCC's press release is here.

Elizabeth Warren in HuffPo: The Banking Industry's Transparent Attempt to Weaken the CFPB

Here. The entire essay is worth reading, but here's an excerpt to whet your appetite:

 

The latest industry-sponsored bill would fundamentally change the structure of the CFPB by replacing the agency's single, independent director with a commission of political appointees.

* * * [T]he agency is working, which may be exactly why the big banks and their Republican friends are pushing so hard to tangle it up with a different administrative structure. 

* * *

Let's face it: The quickest way to undermine an agency's effectiveness is to make it a commission -- which is why I want a single director and the banking industry doesn't.

* * *

Votes over the CFPB present the same choice today that they always have -- a choice between big banks and predatory lenders on one side and families on the other.

Klonoff Predicts the Future for Class Actions

Robert H. Klonoff of Lewis & Clark has written Class Actions in the Year 2025: A Prognosis, Forthcoming in the Emory Law Journal. Here is the abstract:

In this Article, I reflect on what the federal judiciary has done in recent years, and I attempt to predict what the class action landscape will look like a decade from now. My predictions fall into several categories:

First, I discuss whether the basic class action framework — Federal Rule of Civil Procedure 23 — is likely to be revamped in the next decade. I predict that there is little chance that the basic structure of Rule 23 will change.  Calls by some scholars to rewrite Rule 23 will not make headway.  The only caveat to this prediction is that either Congress or the Supreme Court could repudiate so-called no injury classes — i.e., classes in which some unnamed class members suffered no harm — a result that would not change the text of Rule 23 but would adversely impact certain kinds of class actions, such as consumer cases.

Second, I examine the likely state of class action jurisprudence in the year 2025.  In that regard, I make several predictions: Securities class actions will continue to flourish, but consumer, employment, and personal injury class actions will continue to decline. The Supreme Court will curtail the ability of plaintiffs to establish liability or damages through expert statistical sampling (referred to frequently as “trial by formula”). The “ascertainability” requirement imposed by the Third Circuit will be repudiated by the Supreme Court or by the Third Circuit itself. The Supreme Court will conclude, as have numerous circuits, that an unaccepted offer of judgment to a class representative pursuant to Federal Rule of Civil Procedure 68 is a legal nullity and does not moot the individual’s claim or the putative class action. Defendants will advance several arguments against class certification that, until now, have had only limited success.  These will include expansive applications of Rule 23’s typicality, predominance, and superiority requirements. Although defendants will not be fully successful with these arguments, they will succeed in erecting some additional barriers to class certification. During the next decade, courts addressing class certification and the fairness of settlements will give greater weight to allegations of unethical behavior by class counsel and by counsel representing objectors to settlements. The future of class actions will ultimately lie in the hands of a small number of appellate court judges who have a special interest and expertise in aggregate litigation.

Third, I focus on the administration and resolution of class actions and offer two predictions: (1) by 2025, a significantly larger number of class action cases will go to trial than at any time since 1966; and (2) technological changes will fundamentally alter the mechanics of class action practice, offering more sophisticated tools for notice, participation by class members, and distribution of settlement proceeds.

Fourth Circuit: major loan servicer is not arm of the state, can be sued

In two cases today (one of them litigated by Public Citizen), the Fourth Circuit held that the Pennsylvania Higher Education Assistance Agency (PHEAA) is not entitled to claim Pennsylvania's sovereign immunity because PHEAA is not an arm of the state. In fact, PHEAA is effectively an independent business, which holds, services or guarantees more than $100 billion in loans to students all over the country. Its chief financial officer has estimated that it is the tenth largest loan servicer in the country with respect to federal loans alone.

The Fourth Circuit's decisions today rejected the argument that PHEAA's affiliation with Pennsylvania renders it immune from suit; accordingly, PHEAA can be held accountable in court for wrongdoing. Central to the court's reasoning were the facts that PHEAA “is financially independent from the Commonwealth,” it “exercises control over its commercially generated revenues” and it “sets policy and makes the substantive fiscal and operational decisions” for itself.

The case litigated by Public Citizen (which we've discussed before, here) is the Fair Credit Reporting Act case of a Virginia resident whose credit was marred when PHEAA misattributed to him defaulted student loans that weren't his, and subsequently refused to correct its error. The district court had granted immunity to PHEAA; the court of appeals today reversed and sent the case back for trial.

The other case decided today, in which the court reached the same result regarding PHEAA's status, is a whistleblower's suit claiming that PHEAA defrauded the federal government.

Here is Public Citizen's case page containing both decisions and additional background. Here is our press release.

A good set of rulings for corporate accountability.

Has the Ninth Circuit “Sub Silentio Overrule[d Its Own] 'Initial Interest Confusion' Doctrine"?

by Paul Alan Levy

Earlier this year, I discussed a troubling decision from the United States Court of Appeals for the Ninth Circuit that reinstated a complaint by Multi-Time Machine, a maker of fancy watches, based on the way in which Amazon’s internal search engine returned results when users entered the search string “mtm special ops.”  MTM has deliberately withheld its products from sale on Amazon, suggesting rather snootily that it regards Amazon as a purveyor of cheap goods, and used the litigation to try to force Amazon to tell searchers that it does not carry MTM watches instead of pointing consumers to competing products.

I argued that the court had reversed a recent trend of downplaying the doctrine of “initial interest confusion” in a way that threatened to enable trademark users to subject defendants to the expense of a trial simply by chanting the formula “initial interest confusion” and speculating about the way in which someone might experience confusion looking at the search results.  The Ninth Circuit had recently receded from the most extreme approaches to initial interest confusion, and this decision threatened to retract that newer approach.  Indeed, in an amicus brief in support of Amazon’s petition for rehearing en banc, Public Citizen and EFF jointly urged the Ninth Circuit to undertake a searching examination of the doctrine of “initial interest confusion” and undo the damage that its sixteen year old decision in Brookfield Communications had wrought.

Instead of leaving the case open for en banc review, the panel has now reversed itself in an opinion by Circuit Judge Barry Silverman, the author of the original dissenting opinion, and affirmed the lower court’s grant of summary judgment.  In dissent, Circuit Judge Carlos Bea (the author of the now-discarded majority opinion) angrily charges that the majority “sub silentio overrules this court’s ‘initial interest confusion’ doctrine.”  Would that it were so!

Obamacare Is Beating Its Goal of Reducing the Uninsured Rate

That's the name of this article by Kevin Drum.  Here's an excerpt:

In 2010, just after Obamacare passed, CBO estimated that the uninsured rate would hit 8 percent by 2016. This was based on the original law, but in 2012 the Supreme Court made Medicaid expansion voluntary and most red states opted out. In July CBO updated its projections to account for this, increasing its estimate
of uninsured by three percentage points. The next CBO estimate thus projected that the uninsured rate would be 11 percent by 2016. So how does that compare to reality? In its most recent survey, the CDC estimates that in the first quarter of 2015 the actual number of uninsured clocked in at 10.7 percent, and that's likely to decline to about 10 percent or so by the end of 2016.