Consumer Law & Policy Blog

Sunday's NY Times Haggler Column and Class Actions

(Also take note of the engaging debate in the Comments.)

by Jeff Sovern

Every other week, the Sunday Times Business Section runs a column called The Haggler, written by David Segal (who may be better known to law professors as the author of several critical articles on law schools).  This week's version is headed A Little Walmart Gift Card for You, A Big Payout for Lawyers, and as the headline implies, the column is critical of some class action plaintiffs' lawyers.  The Haggle describes a scenario in which he says "it sound[s] as though the lawyers for Walmart and those for the plaintiffs had devised a settlement that would pump up fees for the latter while limiting outlays from the former."

I don't know if the facts are as reported in the column, though I have no reason to doubt it.  And the article can be criticized on several grounds: it gives considerable space to the views of class-action critic Ted Frank without giving any space to supporters of class actions (Segal reports that the lawyers for the plaintiff class, BakerHostetler, declined his interview request).  It doesn't note that even class actions that return little to the class members may benefit them and consumers generally by deterring future misconduct. 

But the article makes a good case that the lawyers found a loophole in CAFA's restriction on coupons in class action settlements by agreeing to an award of gift cards instead (class members had the choice of requesting a check, but for slightly less than the gift card amount; Frank claims that class members could request the gift card online, but had to ask for a check via snail mail, and that that pushed them to get the gift card). Because, according to the article, the lawyers' fees were based on the amount awarded in checks and gift cards, rather than the amount of those gift cards redeemed, the lawyers probably got more than they would have received if fees were based only on the amounts redeemed.  I don't know about you, but I have gift cards that I have never redeemed, and I bet plenty of the class members have them too.

Campbell Lecture on Paternalistic Intervention in Consumer Financial Affairs

John Y. Campbell of Harvard's Department of Economics has written Restoring Rational Choice: The Challenge of Consumer Financial Regulation.  Here is the abstract: 

This lecture considers the case for consumer financial regulation in an environment where many households lack the knowledge to manage their financial affairs effectively. The lecture argues that financial ignorance is pervasive and unsurprising given the complexity of modern financial products, and that it contributes meaningfully to the evolution of wealth inequality. The lecture uses a stylized model to discuss the welfare economics of paternalistic intervention in financial markets, and discusses several specific examples including asset allocation in retirement savings, fees for unsecured short-term borrowing, and reverse mortgages.

Saturday Night Live takes on food safety

It's "Almost Pizza"!

Watch it here.

Consumer Reports: Two-thirds of consumers misled by natural labels

Consumer Reports released this week a survey of consumers understanding of "natural" on food labels. The report found that almost two-thirds of consumers are misled by foods labeled as “natural.”

Of 1,005 adults polled in December, more than half incorrectly believed that natural claims on labels had been independently verified, and nearly two-thirds thought the “natural” label meant more than it does. In fact, for processed foods, that term has no clear meaning and is not regulated by any agency.

The Consumer Reports report is here. An article from The Hill about the survey is here.

Can a Bar Grievance Provide Relief Against a Law Blogger When Defamation Law Will Not?

by Paul Alan Levy

Dr. Rosalind Griffin, a Michigan psychiatrist who apparently derives a significant part of her income by testifying as a medical expert for parties defending against tort claims, but also serves as a member of the Michigan Attorney Discipline Board — the adjudicatory arm of the Attorney Grievance Commission — has initiated a bar grievance that ought to be of grave concern to law bloggers everywhere.   The fact that the prosecutorial arm of the Grievance Commission has given every evidence of being willing to serve as Griffin’s cat’s paw in pursuing her critic is not encouraging.

The case involves a Michigan lawyer, Steven Gursten, who specializes in representing accident victims.   On November 13, 2014, he published a blog post excoriating Griffin personally (he calls her one of the “notorious” Michigan doctors who aids the defense) and decrying her testimony in one of his cases (he calls it a “hatchet job” and asks readers to decide whether she perjured herself, based on several detailed examples from transcripts of her testimony and the case file).  Her complaint to the Grievance Commission, dated November 19, 2015, singles out the words quoted above (much of which strikes me as non-actionable rhetoric and as opinion based on disclosed facts).  Griffin also quotes out of context a general statement on the blog that “many thousands of innocent and seriously hurt people lose everything because of so-called ‘independent medical exams,’ such as this example by Michigan psychiatrist Dr. Rosalind Griffin;” her grievance characterizes the blog as accusing her of having “intentionally set out to cause ‘seriously hurt people [to] lose everything.’”  More generally, her complaint alleges that Gursten’s “one-sided and inaccurate description . . . is defamatory and places me in a false light." 

Griffin claims that the speech in the blog post is “ conduct [that] involves dishonesty and misrepresentations which reflect adversely on his honest, trustworthiness and fitness as a lawyer within the meaning of MRPC 8.4,” and also that it is “prejudicial to the administration of justice” in that it portrays the legal system in a bad light.  She goes on to complain that the blog post “is the first item returned when someone uses the Google search engine on my name.”  The remedy requested is that Gursten “be required to delete his outrageous posting and remove the link to Google results for my name.”  (This  forensic psychiatrist may be very good at what she does, but plainly she does not understand that private parties do not get to remove links from Google search results.)

Investing in other people's litigation

The Feb. 8 issue of Forbes alerts readers to a strange and troubling new phenomenon: litigation investing. Companies like Mighty provide "investors" (more accurately: gamblers? loan sharks?) the opportunity to make loans to plaintiffs to help them while their lawsuit is pending, with repayment contingent on success.

Some problems: First, interest rates are predatory -- upwards of 30% most of the time, reports Forbes. So it's not exactly a great opportunity for the plaintiff. The Forbes piece recounts the story of one plaintiff who received multiple "investments" and ended up get hounded even in bankruptcy. Second, will gambling on other peoples' lawsuits taint the judicial process? What if one of the "investors" knows a juror?

Read more from Forbes here. Above the Law also has this interview with Mighty's founder.

(HT: Dan Brown.)

Data mining for your health

Stanford researchers are trying to test whether the use of algorithms on health data could improve the way we screen for certain genetic diseases. The implications are concerning for privacy but exciting for disease prevention. And the current test has some privacy protections built in, as FiveThirtyEight explains: The researchers plan "to flag doctors who have a large number of patients who make good screening candidates and contact them. The patient data the foundation received doesn’t include personal information, so the researchers can’t see who the people are, but they can alert doctors that they have a large number of patients who should be screened[.]"

Read more here.

National Student Debt Day event at UDC Thursday features Sen. Warren

Details here.

FTC alleges DeVry ads misled students about employment and income prospects

The Federal Trade Commission announced today:

The [FTC] has filed suit against the operators of DeVry University, alleging that DeVry’s advertisements deceived consumers about the likelihood that students would find jobs in their fields of study, and would earn more than those graduating with bachelor's degrees from other colleges or universities.

In its complaint against DeVry, the FTC alleges that the defendants’ claim that 90 percent of DeVry graduates actively seeking employment landed jobs in their field within six months of graduation was deceptive. The complaint charges that another key claim made by DeVry, that its graduates had 15 percent higher incomes one year after graduation on average than the graduates of all other colleges or universities, also was deceptive.

The full FTC press release is here.

Sen. Thune and Rep. Issa urge action on the Consumer Review Freedom Act

This bipartisan bill to bar the use of "gag clauses" (or "non-disparagement clauses") in consumer contracts passed the Senate last month and awaits action in the House.

Read today's Thune/Issa op-ed in the Huffington Post.

Read prior coverage on our blog here and here.