Consumer Law & Policy Blog

The drop in male workforce participation

As the unemployment rate has dropped considerably to below 5% from double that during the Great Recession, another, seemingly paradoxical, trend has continued: a drop in adult male workforce participation, which was nearly 100% in the 1960s and is below 90% today. Read this NPR story on the topic or listen to it by clicking on the embedded button below.

 

Bradley Smith v Deborah Garcia: Reputation Management by “Consent Order” Gets Even Weirder

by Paul Alan Levy

This blog has carried a number of articles recently about the bizarre story of “Patel v. Chan”  a case in which a pro se lawsuit, seeking relief for defamation based on comments posted on several interactive consumer review sites, was filed in Baltimore without the signatures of any real people. The idea was to obtain the real signature of a real judge on a “consent order” which could then be presented to neutral sites to persuade them to exercise their discretion to disable access to the reviews.  Patel hired a lawyer who proclaimed that his client never authorized the filing of the lawsuit in  his name, but admitted that his client had retained a reputation management company with tied to Maryland, and said that he was investigating whether that company had filed the case.  Today, this story takes a turn that is even more bizarre.

A Consent Order Obtained in Federal Court in Rhode Island

After I wrote about the Patel case, I heard privately from Adam Steinbaugh, who sent me copies of some papers he had located on the ECF site of the US District Court for the District of Rhode Island – a complaint along with a “consent motion” and a proposed “consent order,” also signed by a pro se plaintiff and defendant, that contained some awkward phrasings that are suspiciously similar to the language in the Patel v. Chan papers.  This time, though, instead of directing that the order be sent to the site hosting the comments – this time, the "Get Out of Debt Guy" web site, a blog about the debt relief industry which has a policy of not removing comments, preferring that the poster make a public retraction — the “consent order” provided that it was to be provided to Google and other search engines so that the entire article (which was not alleged to have anything tortious) could be removed from search engine data bases.    The pages to be removed (here and here) were two articles criticizing a number of specific debt relief companies – an industry that to my mind has a goodly number of sleazy outfits that take advantage of people in desperate circumstances, although I have no personal opinions about the specific companies discussed in those articles.

Arbitration Uber Alles?

The U.S. Court of Appeals for the Ninth Circuit ruled yesterday that drivers for the alt-cab company Uber have to arbitrate claims against the company. The decision means that those drivers are out of court on most of their claims, but also that they cannot proceed on a classwide basis. The case is Mohamed v. Uber Technologies.

The cases involve claims under the Fair Credit Reporting Act and state-law analogs (based on Uber's use of information in credit reports to terminate drivers) as well as under wage and hour laws (based on arguments that Uber misclassified drivers as contractors rather than employees). One silver lining for the drivers: The court held that a driver who signed an older version of Uber's arbitration agreement can proceed in court with a representative action under California's Private Attorney Generals' Act (PAGA).

In a nutshell, the court held that under Uber's arbitration clause, drivers who did not opt out agreed to arbitrate all their claims against Uber, including claims that the arbitration agreement itself is unenforceable. In the 2013 version of the agreement, the provision requiring arbitration of unenforceability claims (called a "delegation clause") had a carve-out allowing claims about the enforceability of the agreement's waiver of PAGA representative action claims. Because California and Ninth Circuit precedents hold such PAGA waivers unenforceable, the driver who had signed only the 2013 version was permitted to proceed with his PAGA claim, which can seek penalties for violations involving other drivers who are subject to arbitration agreements. Thus, Uber still faces the possibility of a very large PAGA case in court.

However, the decision that claims of other Uber driver have to be arbitrated may, if it holds up, put a monkey-wrench into efforts to achieve a nationwide class action settlement to replace the one rejected by a federal district court last month.

Other key features of the decision: The court holds that under California law, an arbitration agreement with an opt-out clause can virtually never be unconscionable (a holding contrary to the California courts' own interpretation of their law). Moreover, a footnote finds that an opt-out provision is also a sufficient basis for holding that an otherwise mandatory arbitration clause does not violate workers' right to engage in concerted action under the NLRA, notwithstanding last month's Ninth Circuit ruling that arbitration agreements involving employees otherwise run afoul of the NLRA.

The agency class action

The fairness and effectiveness of class litigation has been questioned by courts in recent years. In Inside the Agency Class Action law profs Michael Sant'Ambrogio and Adam Zimmerman argue that aggregation techniques criticized by courts have been used fairly and effectively in agency class actions (such as EEOC class actions). Here is the abstract:

Federal agencies in the United States hear almost twice as many cases each year as all the federal courts. But agencies routinely avoid using tools that courts rely on to efficiently resolve large groups of claims: class actions and other complex litigation procedures. As a result, across the administrative state, the number of claims languishing on agency dockets has produced crippling backlogs, arbitrary outcomes and new barriers to justice.

A handful of federal administrative programs, however, have quietly bucked this trend. The Equal Employment Opportunity Commission has created an administrative class action procedure, modeled after Rule 23 of the Federal Rules of Civil Procedure, to resolve “pattern and practice” claims of discrimination by federal employees before administrative judges. Similarly, the National Vaccine Injury Compensation Program has used “Omnibus Proceedings” resembling federal multidistrict litigation to pool common claims regarding vaccine injuries. And facing a backlog of hundreds of thousands of claims, the Office of Medicare Hearings and Appeals recently instituted a new “Statistical Sampling Initiative,” which will resolve hundreds of common medical claims at a time by statistically extrapolating the results of a few hearing outcomes.

This Article is the first to map agencies’ nascent efforts to use class actions and other complex procedures in their own hearings. Relying on unusual access to many agencies — including agency policymakers, staff and adjudicators — we take a unique look “inside” administrative tribunals that use mass adjudication in areas as diverse as employment discrimination, mass torts, and health care. In so doing, we unearth broader lessons about what aggregation procedures mean for policymaking, enforcement and adjudication. Even as some fear that collective procedures may stretch the limits of adjudication, our study supports a very different conclusion: group procedures can form an integral part of public regulation and the adjudicatory process itself.

 

 

Georgia Consumer Asks Baltimore Judge to Vacate Dentist Mitul Patel's Bogus “Consent Order”

by Paul Alan Levy    

I blogged here last month about a peculiar pro se lawsuit and consent order which, in retrospect, has all the hallmarks of a sloppy effort by some blackhat SEO outfit trying to help a dentai client, Mitul Patel, rid the Internet of pesky consumer criticisms.  As the Streisand Effect engulfed his client in a wave of publicity, Patel's lawyer proclaimed that Patel had had no involvement in the filing of a lawsuit that could benefit only himself; but he admitted as well that his client had hired a reputation management company and said that he was investigating whether that company might have been responsible.  Yelp itself never took down the consumer's critical review, and Kudzu restored the review after I reached out to its management.  Patel's lawyer, though, has never responded to me about the fruits of his investigation.

However, the consumer has now filed a pro se motion in the circuit court for Baltimore City to vacate the judgment against him.  I, for my part, have asked Patel's lawyer to preserve all records of Patel's relationship with the reputation management company, because I suspect, based on information helpfully supplied by Adam Steinbaugh over at Popehat, that the Baltimore proceeding on behalf of Patel is part of a larger pattern of abuse by an as-yet-identified operation.  I hope to have more specifics to announce about that shortly.

NY launches antitrust investigation into maker of EpiPen

As widely reported over the last two weeks, EpiPen, which stops potentially fatal allergic reactions by injecting a precise dose of epinephrine, now costs about $600 for a two-pack, up from roughly $100 when Mylan acquired EpiPen in 2007. The Week summarizes the story in a piece called "The EpiPen uproar, explained," available here.

Today, more EpiPen news, when the New York's Attorney General announced that his office has opened a probe into whether Mylan Pharmaceuticals broke antitrust law in writing contracts to provide EpiPens to some schools systems. The NY AG's short press release is here. According to Reuters, "there had been allegations that schools which had used Mylan's EpiPen4Schools program, which gives many schools the devices for free, were contractually barred from buying products from Mylan competitors for a year. Senators Richard Blumenthal and Amy Klobuchar asked the Federal Trade Commission on Tuesday to investigate the allegation."

A flow chart analysis of the Supreme Court's Spokeo decision

Law profs Craig Konnoth and Seth Kreimer have written Spelling Out Spokeo. Here is the abstract:

For almost five decades, the injury-in-fact requirement has been a mainstay of Article III standing doctrine. Critics have attacked the requirement as incoherent and unduly malleable. But the Supreme Court has continued to announce “injury in fact” as the bedrock of justiciability. In Spokeo v. Robins, the Supreme Court confronted a high profile and recurrent conflict regarding the standing of plaintiffs claiming statutory damages. It clarified some matters, but remanded the case for final resolution. This Essay derives from the cryptic language of Spokeo a six stage process (complete with flowchart) that represents the Court’s current equilibrium. We put each step in the context of standing precedent and demonstrate that, while Spokeo added some structure to the injury in fact doctrine, each stage of the analysis allows play in the joints that leaves future courts and litigants substantial room for maneuver.

Former CFPB Staffer Op-Ed in Weekly Standard Criticizes Proposed Debt Collection Regs

Here. The staffer, Ronald L. Rubin, has also served as senior counsel to the House Financial Services Committee and as a partner at a big law firm.  Excerpts:

Nobody should be charged, harassed, or sued for a debt they've already paid or for someone else's debt. However, the CFPB's proposed solution is a hopelessly complex system of debt validation requirements and procedures—with rounds of notices, statements, information requests, and document transfers between debtors, creditors, and debt collectors. The new rules will create so many loopholes that debtors with [clever] lawyers . . . will never pay a dime, and may even get rich suing collectors.

The CFPB could prevent mistaken debt collection attempts far more effectively and efficiently by creating and maintaining a central debt registry * * *

* * *

The CFPB won't consider the debt registry solution for two reasons. First, like the bureau's Internet complaint database, it would be a big project. The agency might have to repurpose the tens of millions of advertising dollars it spends promoting itself each year. Second, the registry would eliminate uncertainty and make it harder for consumers to avoid paying legitimate debts. Heaven forbid.

 

 

Newman Paper: Free Things Aren't

John M. Newman of Memphis has written The Myth of Free.  Here's the abstract:

Myths matter. This Article is the first to squarely confront a powerful myth that pervades modern economic, technological, and legal discourse: the Myth of Free. The prevailing view is that consumers capture massive welfare surplus from an ever-rising flood of innovative new products that are offered free of charge. This windfall was made possible, we are told, by the convergence of digitization and networking, which eliminated the marginal costs of such products. Free was born, heralding the end of scarcity and an age of abundance.

But that orthodox origin story is fatally flawed. This Article first formalizes, then critiques, the Myth of Free. It addresses four questions raised by the Myth’s premises: (1) have the marginal costs of digital goods fallen to zero? (2) if not, is “close to zero” close enough for firms to round down the difference? (3) do suppliers of Free products employ marginalist pricing strategies? (4) are Free markets perfectly competitive?

Unsurprisingly, given its faulty premises, the Myth’s conclusion is incorrect: there is still “no such thing as a free lunch.” Free signals neither the end of capitalism nor the demise of standard economic theory. In place of the Myth, this Article provides a revisionist history of Free, explaining its origins and forecasting its future.

Moreover, the Myth of Free is not benign. It has led to an undeserved protected status for certain suppliers, who receive immunity or favorable treatment in close cases involving contract, antitrust, privacy, and consumer-protection laws. It has motivated policy proposals that would eliminate market interventions or (paradoxically) competitive markets themselves, without adequate justification in either case. Worse yet, policies designed for a post-scarcity world necessarily overlook the persistent problems attendant to scarcity. This Article seeks to dispel the Myth of Free before it can wreak further harm.

Employer's Lawyer Explains That Arbitrators Favor Employers Out of Self-Interest

Irvine lawyer Greg Labate is quoted in the Orange County Register:

Labate advises clients to get their employees to sign arbitration agreements, waiving their right to sue in court, and sending disputes to privately hired arbitrators.

* * *

“People question whether arbitration tends to favor employers,” Labate told a [Professionals in Human Resources Association] conference session. “I believe they do. I use the same arbitrators over and over, and they get paid when I pick them. They know where their bread and butter comes from.”