Consumer Law & Policy Blog

Drahozal Article Examines Arbitral Issue Preclusion as a Substitute for Class Actions

Christopher R. Drahozal of Kansas has written The Issue Preclusive Effect of Arbitration Awards, Proceedings of the NYU 69th Annual Conference on Labor: Mediation and Arbitration of Employment and Consumer Disputes, Forthcoming.  Here's the abstract:

Courts in the United States have two primary means (in addition to individual adjudication) by which to resolve disputes in which numerous claimants have claims against a defendant that raise the same or similar issues. The first is the class action, in which the class representative brings suit on behalf of similarly situated but absent plaintiffs. A judgment in the class action (assuming that a class has been certified) binds the defendant and the absent class members. Since the Supreme Court’s decisions in Concepcion and Italian Colors, however, businesses can reduce if not avoid the risk of class actions by using arbitration clauses with class arbitration waivers in their standard form contracts with consumers and employees. When businesses use such contract provisions, disputes are to be resolved in individual arbitration, with no aggregation of claims either in arbitration or in court.

The second primary means of resolving duplicative litigation of similar claims is the doctrine of issue preclusion (also referred to as collateral estoppel). Issue preclusion bars a party from relitigating an issue that was resolved in a prior case involving the same party or parties. The issue must have been fully and fairly litigated and actually decided in the prior case, and only a party to the prior litigation or one in privity with a party is bound by the prior judgment. But a non-party to the prior case can, in appropriate circumstances, rely on issue preclusion against a party to the prior case (what is called “nonmutual issue preclusion”) and preclude relitigation of the issue — i.e., hold the other party bound by the resolution of that issue in the prior case.

This paper examines the extent to which arbitration awards have issue preclusive effect, such that issue preclusion might substitute for class actions when businesses use arbitration clauses with class waivers. It further suggests that the law governing issue preclusion in arbitration might develop in ways parallel to the law governing class actions and arbitration: with businesses using “issue preclusion waivers” to avoid the issue preclusive effect of awards, consumers and employees challenging such waivers as unenforceable, and businesses relying on FAA preemption in response.

HT: Gregory Gauthier.  I haven't posted lately because I'm swamped with a tight deadline for grading exams ("Make America Grade Again!"), but I hope to be back posting soon.

David Lazarus on health care, the free market, and insulin pricing

In this column, using the controversy over sky-high insulin prices as his case in point, David Lazarus explains why he thinks replacing the Affordable Care Act with a free-market health care system is "doomed from the start."

“Country Rap” Singer Mikel Knight’s Effort to Suppress Criticism of His Employment Practices on Right of Publicity Grounds

by Paul Alan Levy

Could Donald Trump, who is notorious for his intolerance of public criticism, and who has promised to "open up the libel laws," evade the First Amendment and section 230 stricture on defamation claims by repackaging them under the rubric of the right of publicity?  That is the question presented by an appeal now pending in the California Court of Appeal for the First District, home to many of the companies that host the country’s leading social media networks, consumer review sites, and blogging platforms: think Facebook, Twitter, Yelp, Word Press; the list goes on.

Politico: CORDRAY WANTS TO STAY

Report here.  Here's what it says:

 POLITICO's Lorraine Woellert: "Richard Cordray 'has no plans' to leave the top job at the CFPB, the agency said today. 'Director Cordray was confirmed by a bipartisan group of 66 senators to serve a term until July 2018 and has no plans to step down,' CFPB Communications Director Jen Howard said in an email.

"Cordray's future has been the subject of speculation since Election Day, with some industry trade groups pushing for him to be replaced. At the same time, they're asking Congress to rethink the agency's structure, which vests power in a single director. ... Meanwhile, Cordray's public calendar already is filling up, another sign he's sticking around. In March, he's scheduled to appear at a meeting of the National Community Reinvestment Coalition"

CFPB's fair-lending priorities in the new year

The Consumer Financial Protection Bureau's blog post about its fair-lending priorities for 2017 is here.

Consumer groups complain to FTC about Google's privacy policy

The Washington Post reports:

Consumer advocates have filed a complaint with the Federal Trade Commission charging that Google violated user privacy through a policy change that gives the company more leeway to build profiles of people as they browse the Web and use Google services.

The complaint, submitted Thursday by Consumer Watchdog and the Privacy Rights Clearinghouse, alleges that Google acted in a “highly deceptive manner” in changing its privacy policy in June to allow the merging of data collected by various services owned by the company, such as Google Maps, Google search and the DoubleClick online advertising service. The result, the groups say, allows for the gathering of more comprehensive information on most people who use the Web.

The full article is here.

National Highway Traffic Safety Administration issues proposed rule aimed at saving thousands of lives by requiring vehicle-to-vehicle communications

Last week, the National Highway Traffic Safety Administration (NHSTA) issued a notice of proposed rulemaking on a range of vehicle-to-vehicle communications to be required in all new cars and light trucks. The agency thinks the rule is revolutionary. As the proposed rule's executive summary explains:

The National Highway Traffic Safety Administration (NHTSA) is proposing to issue a new Federal Motor Vehicle Safety Standard (FMVSS) No. 150, to require all new light vehicles to be capable of Vehicle-to-Vehicle (“V2V”) communications, such that they will send and receive Basic Safety Messages to and from other vehicles. The proposal contains V2V communication performance requirements predicated on the use of on-board dedicated shortrange radio communication devices to transmit Basic Safety Messages about a vehicle’s speed, heading, brake status, and other vehicle information to surrounding vehicles, and receive the same information from them. When received in a timely manner, this information would help vehicle systems identify potential crash situations with other vehicles and warn their drivers. . . . The agency believes that V2V has the potential to revolutionize motor vehicle safety. By providing drivers with timely warnings of impending crash situations, V2V-based safety applications could potentially reduce the number and severity of motor vehicle crashes, thereby reducing the losses and costs to society that would have resulted from these crashes.

Among other things, the proposed rule contains extensive discussions of the various required technologies, the rule's costs and benefits, the rule's impacts on health and privacy, and consumers' expected acceptance of the new technologies.

NHSTA estimates that, in year 30, the rule's costs will range from $135 to $300 per vehicle. Over all vehicles, the costs would be $2.2 billion to $5 billion per year. That cost, according to the agency, would be greatly outweighed by the savings from far fewer and less serious crashes. (See proposed rule, at page 18.)

The public has 90 days to comment on the proposal. The agency proposes an effective date two years after it is finalized. From that date, the rule would be phased in for another two years. So, for instance, if the rule is finalized in 2019, it would become effective in 2021 and fully implemented in all new light vehicles by 2023.

For more information on the proposed rule, visit NHSTA's website.

Should older patients seek out female doctors?

Possibly, yes, according to this study published in JAMA Internal Medicine. The study tested the following question: "Do patient outcomes differ between those treated by male and female physicians?" by examining a "nationally representative data of hospitalized Medicare beneficiaries." It came to the following conclusion: " Elderly hospitalized patients treated by female internists have lower mortality and readmissions compared with those cared for by male internists. These findings suggest that the differences in practice patterns between male and female physicians, as suggested in previous studies, may have important clinical implications for patient outcomes."

Read more about this study in this article by Casey Ross.

Consumer Product Safety Commission issues guidance on court secrecy

Hat tip to Arthur Bryant who tells us that the U.S. Consumer Product Safety Commission has issued a guidance urging judges and litigants to ensure that every protective order and agreement in litigation “specifically allow for disclosure” to the “CPSC and other government public health and safety agencies.” The CPSC guidance is here. Arthur has blogged about it here.  

How the FTC Demonstrates Why We Need a Strong, Independent, Pro-Consumer CFPB

by Jeff Sovern

The FTC is a terrific agency that has done a lot of good for consumers.  Every FTC staffer I've ever met has impressed me as dedicated to consumer welfare, hard-working, and talented.  And yet, the FTC could do more if it weren't hamstrung by precisely the limits the financial industry and the House Financial Services want to impose on the CFPB.  Two examples of what more it could do: first, though the Dodd-Frank Act gave the FTC the power to issue regulations governing auto dealer in section 1029, the FTC hasn't used that power.  In contrast, during the six years since that Act was enacted, the CFPB started up and has issued many regulations protecting consumers. Second, the FTC continues to reach consent decrees that permit sellers to describe used cars as "certified" even though the cars have been recalled and the recall repair has not been done.  I wrote about this here, and it happened again last week. Personally, I think it's crazy to expect consumers to check to see if their certified car has been recalled or even to read disclosures closely enough to discover that certified does not mean the car is safe; surely consumers paying extra for a certified car are doing it at least in part because they think they are getting a safe car.

So why doesn't the FTC do more?  I suspect it's because the FTC is saddled with a commission-structure--which is often a recipe for gridlock--and is subject to the congressional appropriations process.  That gives industry lobbyists a lot of power to urge members of Congress to cut the FTC's budget if it doesn't do what the lobbyists want--and much of that is too much "inside baseball" to draw the attention of the media or voters, with the result that countervailing arguments are not given enough attention.  Congress has shown a willingness to whack the FTC when it thought the FTC was protecting consumers too aggressively.  Commissioners would be wise to eschew battles with Congress over controversial items and devote Commission resources to attacking practices that are universally-condemned, rather than draw industry ire and risk being deprived of any resources to aid consumers.  But the result is that the FTC is less protective of consumers than it could be.

The CFPB could still help consumers even if it starts to look like the FTC.  But consumers would be far better off if the FTC started to look more like the CFPB.