Consumer Law & Policy Blog

Democrats to Introduce Bills Today to Block Arbitration Clauses

From the press release:

On Tuesday, March 7, Senator Al Franken (D-Minn.) and top Senate and House Democrats will hold a press conference to push legislation to stop the use of unfair forced arbitration clauses, which are widely used by corporations to limit consumers’ and employees’ access to justice.

 The lawmakers will be joined by individuals who have been personally harmed by forced arbitration, including former Fox News anchor Gretchen Carlson.

 From nursing home contracts and employment agreements to credit card and cell phone contracts, Corporate America uses forced arbitration clauses to restrict Americans’ access to justice by stripping consumers and workers of their right to go to court. Instead, consumers and workers are forced into an arbitration system where corporations can write the rules; everything can be done in secret, without public rulings; discovery can be limited, making it hard for consumers to get the evidence they need to prove their case; and there’s no meaningful judicial review, so consumers and employees are often unable to appeal a decision even if the arbitrator gets it wrong. 

Senate and House Democrats will reintroduce and discuss legislation aimed at limiting forced arbitration in a wide variety contexts. And as the Senate Judiciary Committee prepares for its hearing on the nomination of Neil Gorsuch to the Supreme Court, Democrats will highlight the effects of mandatory arbitration on ordinary Americans’ access to the courts to hold powerful corporations accountable.  

FOR PLANNING PURPOSES ONLY:

 

WHO:            Senator Al Franken (D-Minn.)

                        Senator Patrick Leahy (D-Vt.)

                        Senator Dick Durbin (D-Ill.)

                        Senator Sheldon Whitehouse (D-R.I.)

                        Senator Richard Blumenthal (D-Conn.)

Congressman Hank Johnson (D-Ga.)

                        Congressman David Cicilline (D-R.I.)

Congressman Brad Sherman (D-Calif.)

Gretchen Carlson is a former Fox News anchor, whose Fox News employment contract would have barred her from speaking publicly about her allegations of sexual harassment against former Fox News chairman Roger Ailes.

Aaron Brodie is a victim of Wells Fargo’s illegal practice of establishing accounts without permission. Aaron is now suing Wells Fargo, and Wells Fargo is attempting to force him to submit to arbitration instead of being able to hold the bank accountable in court.

Kevin Ziober is a Navy reservist who was fired by his former employer in 2012 after he informed them that he would be deployed to Afghanistan. He filed suit when he returned under a federal law which forbids retaliation against deployed military service members, but his company forced his dispute into private arbitration. 

DC Circuit denies injunction pending appeal in Company Doe v CFPB

In January, a company calling itself "Company Doe" filed suit against the CFPB to challenge its constitutionality. The theory of the complaint was that, in light of the DC Circuit's (now vacated) decision in PHH v. CFPB finding the structure of the CFPB unconstitutional, the agency should be enjoined from taking any action against Company Doe. The plaintiff sought a preliminary injunction, which the district court denied. Company Doe a filed a motion asking the DC Circuit for an injunction pending appeal.

In a 2-1 decision, the court denied the motion. The majority found that the Company failed to show either irreparable harm or a likelihood of success on the merits of its case. Judge Kavanaugh dissented, stating that he would have granted the motion.

The opinion and dissent are here.

Meanwhile, in the en banc proceedings in PHH v. CFPB, the petitioner's brief and amicus briefs in support of the petitioner are due this Friday. The CFPB's brief and amicus briefs in support of it are due on March 31.

A class member is seeking to opt out of the proposed Trump University class-action settlement

This article by Steve Eder explains the situation. A notice sent out at the class-certification stage in 2015 gave class members the right to opt out -- as is required in all Rule 23(b)(3) class actions (such as the Trump University class action).

But now a class member named Sherri Simpson is seeking to opt out at the settlement stage. Simpson is apparently asking the judge, Gonazalo Curiel, to invoke Federal Rule of Civil Procedure 23(e)(4), which provides:

The following procedures apply to a proposed settlement, voluntary dismissal, or compromise: . . . If the class action was previously certified under Rule 23(b)(3), the court may refuse to approve a settlement unless it affords a new opportunity to request exclusion to individual class members who had an earlier opportunity to request exclusion but did not do so. (emphasis added)

Stay tuned.

House Passes Bill to Require OMB to Review Some CFPB Regs Before Issuance

by Jeff Sovern

As an independent agency, the CFPB can issue regulations without approval from the Office of Management and Budget.  But the House has now passed a bill that would require OMB to review major regulations promulgated by independent agencies, including the CFPB and the FTC (though the FTC seldom produces regulations, a topic for another day).  The bill is presumably subject to the filibuster in the Senate, unless the Senate changes those rules.  The bill and a summary can be found here.  This looks like an attempt to prevent or delay issuance of significant regulations from a body that opposes regulations. 

How Uber avoids regulators

The New York Times, in a story called "How Uber Deceives the Authorities Worldwide," reported on Friday:

Uber has for years engaged in a worldwide program to deceive the authorities in markets where its low-cost ride-hailing service was resisted by law enforcement or, in some instances, had been banned.

The program, involving a tool called Greyball, uses data collected from the Uber app and other techniques to identify and circumvent officials who were trying to clamp down on the ride-hailing service. Uber used these methods to evade the authorities in cities like Boston, Paris and Las Vegas, and in countries like Australia, China and South Korea.

The Washington Post has a follow-up story today.

In a different Uber-related story about evading regulators, the New York Times reported last week that "Uber, in defiance of California state regulators, went ahead with a self-driving car experiment on the streets of San Francisco," with some problematic results.

Edith Roberts at SCOTUS Blog on Judge Gorsuch's Arbitration Jurisprudence

Here.  (HT: Gregory Gauthier)

Eric Goldman Article on the Consumer Review Fairness Act

Eric Goldman of Santa Clara has written Understanding the Consumer Review Fairness Act of 2016, Michigan Telecommunications and Technology Law Review, Forthcoming. Here's the abstract

Consumer reviews are vitally important to our modern economy. Markets become stronger and more efficient when consumers share their marketplace experiences and guide other consumers toward the best vendors and away from poor ones.

Businesses recognize the importance of consumer reviews, and many businesses take numerous steps to manage how consumer reviews affect their public image. Unfortunately, in a misguided effort to control consumer reviews, some businesses have deployed contract provisions that ban or inhibit their consumers from reviewing them. I call those provisions “anti-review clauses.”

Anti-review clauses distort the marketplace benefits society gets from consumer reviews by suppressing peer feedback from prospective consumers, which in turn helps poor vendors stay in business and diminishes the returns that good vendors get from investments in quality (thus degrading their willingness to make those investments).

Recognizing the threats posed by anti-review clauses, Congress banned them in the Consumer Review Fairness Act of 2016 (the CRFA). As the House Report explains, the law seeks “to preserve the credibility and value of online consumer reviews by prohibiting non-disparagement clauses restricting negative, yet truthful, reviews of products and services by consumers.” By doing so, the CRFA helps advance the effective functioning of marketplaces.

This essay helps readers understand the CRFA. Part I provides some background about anti-review clauses. Part II describes the new law and how it relates to existing law. Part III considers if the law goes far enough to protect consumer reviews. The article then has a short conclusion.

Colin Marks Study of the Prevalence of Disclaimers in Online Sales

Colin P. Marks of St. Mary's has written Online and As Is.  Here is the abstract:

Online retail is a multi-billion-dollar industry in the United States. Consumers enjoy the ease with which they can browse, click, and order goods from the comfort of their own homes. Though it may come as no surprise to most lawyers, retailers are taking advantage of online transactions by attaching additional terms and conditions that one would not normally find in-store. Some of these conditions are logical limitations on the use of the retailers’ websites, but others go much further, limiting consumers’ rights in a way that would surprise many shoppers. In particular, many online retailers are using these terms to limit implied warranties, selling the goods “as is,” and limiting remedies, as well as adding a host of other limitations. This article does not discuss the effects of online terms and conditions, but rather starts with exploring a very basic question: How prevalent are certain terms and conditions? While these terms and conditions may seem to be ever-present in online transactions, there have been few attempts thus far to empirically record the frequency of their use in retail transactions involving goods. This article remedies the situation by exploring the mode by which consumers assent, the prevalence of warranty and liability limitation clauses, and the prevalence of other common clauses used by the largest retailers in the United States.

Bloomberg: Dismantling Dodd-Frank May Have to Wait

Here.  Excerpt:

Hensarling does already have a bill in the House, the Financial Choice Act, that’s being given long odds. “We think the chances that the bill becomes law are less than 20 percent—maybe as low as 10 percent,” Brian Gardner, Washington analyst at the investment bank Keefe, Bruyette & Woods, wrote to clients on Feb. 16.

* * *

With Obamacare, taxes, and the budget consuming all the oxygen in Washington, Congress may not get around to Dodd-Frank until 2018 or beyond. Even then the changes could be limited, such as regulatory relief for smaller banks that don’t pose systemic risks, says KBW’s Gardner.

Will Obamacare Survive?

by Jeff Sovern

I was talking to someone yesterday who pointed out that even if Obamacare can be repealed through the reconciliation process--meaning a simple majority is enough to get it through the Senate--the Republicans may not have enough votes.  If they don't pick up any Democratic votes, they can afford to lose only two Republican senators on a vote to repeal.  But some Republicans may balk at repealing the Affordable Care Act without a replacement as it will mean some of their constituents will lose healthcare.  Consequently, they may vote against repeal without a simultaneous replacement. But the Republicans are split on what to replace Obamacare with, meaning that they may not be able to repeal and simultaneously replace it without Democratic votes--which they are unlikely to get for a repeal.  In addition, replacement could not be done through reconciliation, as I understand it, meaning that it could be stymied by a filibuster unless the rules change (though whether Democrats would filibuster a replacement remains to be seen). The result would be Obamacare stays.  I don't see how senators who vowed to repeal Obamacare could return home and say they voted to keep it, but stranger things have happened. See "Read my lips."