Consumer Law & Policy Blog

Two new decisions support the right to speak anonymously

by Paul Alan Levy

Two decisions were issued late yesterday in cases involving the procedures for adjudicating subpoenas seeking to identify anonymous Internet speakers who are accused of actionable speech. An appeals court in California embraced most elements of the Dendrite / Cahill test for deciding whether the plaintiff in such a case should be able to enforce a subpoena for the speaker’s identity. A federal district judge in the District of Columbia, meanwhile, held that state law claims cannot be filed in federal court against anonymous defendants simply because the plaintiff believes that the defendants have diverse citizenship and hopes to be able to confirm that belief through discovery.

White House drops hundreds of proposed rules

The White House has withdrawn or removed from active consideration more than 800 regulations proposed during the Obama administration. Among the regulations are auto safety protections, environmental protections, worker protections, and a range of others.

A New York Times article is here. Public Citizen's reaction is here. The list of remaining rules under consideration and those moved from active to to "long-term" can be accessed here.

Members of House and Senate Reported to Have Introduced CRA Resolutions to Block CFPB Arbitration Rule

Here, for example, is a press release from the Senate Banking Committee. And here is one from the House Financial Services Committee 

David Dayen: MORE TRUMP POPULISM: HIRING A BANK LAWYER TO ATTACK CFPB BANK RULES

Here, in The Intercept. Excerpt:

Trump has sent out his lead attack dog to overturn the arbitration rule — a former bank lawyer who has used the very tactic the CFPB wants to prevent. [Dayen describes how Wells Fargo attempted to use arbitration to deflect a class action in  Gutierrez v. Wells Fargo.]

* * *

Banks have a lot riding on the CFPB rule. Luckily for Wells Fargo, a former senior attorney of theirs is now a top federal regulator. In fact, Keith Noreika worked on that class-action defense in Gutierrez v. Wells Fargo before becoming the acting chair of the Office of the Comptroller of the Currency. [As we have reported, Norieka has expressed concerns about the arbitration rule]

* * *

On Tuesday, Sherrod Brown, ranking Democrat on the Senate Banking Committee, wrote to Noreika about his objections. Brown noted that the CFPB made its rule and the research behind it publicly available for two years, and collaborated with safety and soundness regulators throughout the rule-making process. OCC never raised any objections in that time, even after Noreika was named acting chair. * * *

Brown also cited a case study in the CFPB’s 2015 arbitration report, * * * The CFPB found that consumers benefited from class actions in the overdraft case, while those barred saw little restitution.

“It is especially surprising that you are not familiar with these outcomes,” Brown wrote. “Previously, as an attorney in private practice, you represented Wells Fargo in just such a case, and attempted to quash a class action brought by consumers harmed in exactly the same way by invoking Wells Fargo’s forced arbitration clause.”

Very good news for consumers

Peter Lurie -- the current FDA associate commissioner for public health strategy and analysis and former deputy director of Public Citizen's Health Research Group -- will become the President of the Center for Science in the Public Interest in September. Peter will succeed Mike Jacobson, who co-founded CSPI in 1971. Peter is terrific.

In case you want to read the actual CBO report on the repeal-only version of Trumpcare . . .

No doubt our readers have heard about the Congressional Budget Office's report on the repeal-only version of Trumpcare (sometimes pushed by Trump and often times pushed by ACA-hater purists). But if you want to actually read it, go here. The two key take-aways on number of people covered and premiums:

• The number of people who are uninsured would increase by 17 million in 2018, compared with the number under current law. That number would increase to 27 million in 2020, after the elimination of the ACA’s expansion of eligibility for Medicaid and the elimination of subsidies for insurance purchased through the marketplaces established by the ACA, and then to 32 million in 2026.

• Average premiums in the nongroup market (for individual policies purchased through the marketplaces or directly from insurers) would increase by roughly 25 percent—relative to projections under current law—in 2018. The increase would reach about 50 percent in 2020, and premiums would about double by 2026.

 And here's the report's findings on budget effects:

 

CFPB's Arbitration Rule Published at 82 FR 33210 (2017)

Here. It will appear in 12 CFR 1040. The rule formally takes effect September 18, 2017, and covered entities have until March 19, 2018 to comply.  

Ninth Circuit poised to resolve major free speech issue in secret proceeding

by Paul Alan Levy

The United States Court of Appeals for the Ninth Circuit has issued an order signed only by the Clerk declaring that a significant free speech issue bearing on the rights of anonymous Internet users will be decided in a totally secret proceeding, involving sealed briefs, a sealed record, and without any help from would-be amici (including Public Citizen) seeking to explain the dangers posed by the proceeding.

Proceedings in the Trial Court

The case arises from a subpoena served by the United States on the employer-rating site Glassdoor, originally demanding identifying information about the owners of more than one hundred pseudonymous accounts that had, it appears, been used to post reviews of a particular employer whose contracting practices were subject to a federal criminal investigation. Over the past few years, Glassdoor has been one of the most aggressive companies demanding strong justification for civil subpoenas seeking to identify its users (considering how expensive legal services are, this company commitment earns it much credit in my book). Extending this approach to the criminal law context, Glassdoor refused to produce the information demanded by the grand jury subpoena, citing the First Amendment right of its users to speak anonymously.

In an effort to compromise, the government limited its production demand to eight specified reviewers. Glassdoor responded to that offer by proposing that it notify the users of the subpoena and provide identifying information for such of its users who were willing to be identified to the prosecutors. After the government rejected this offer, Glassdoor moved to quash the subpoena, invoking its users’ First Amendment right to speak anonymously which, Glassdoor contended, created a privilege against production of the information. At the same time, it notified its users of the subpoena, thus meeting one of the conditions of the Dendrite line of cases that it cited in its motion. Those cases rely on the First Amendment right to speak anonymously as a basis for posing procedural and substantive obstacles to civil subpoenas seeking to identify online speakers so that they can be served with process and sued for wrongful speech. Eventually, Glassdoor also invoked Bursey v. United States, a decision in which the Ninth Circuit quashed in part a grand jury subpoena directed at the process of publishing the newspaper of the Black Panther Party.

Lawsuit against Gerber for deceptive and unlawful claims narrowed a bit by Ninth Circuit

By Stephen Gardner

On July 17, a panel of the Ninth Circuit issued a revised opinion in Bruton v. Gerber Products. (I’ve attached the withdrawn opinion here and the new opinion here.) In her lawsuit, Natalia Bruton alleged that “labels on certain Gerber baby food products included claims about nutrient and sugar content that were impermissible under Food and Drug Administration (FDA) regulations incorporated into California law.” Among other claims, Bruton alleged that for Gerber to make a claim that its competitors did not make was likely to trick consumers into believing that Gerber’s products were better than its competitors.

The July 17 opinion held to most of the holdings in the April 19 opinion, but did change on this one claim. The panel held that Bruton had failed to meet her summary judgment burden as to this one claim.

The withdrawn opinion commented that the claim was ”unusual.” I’ve got to agree.  I’ve not seen it used in other cases. But that doesn’t mean that it’s not a valid claim.

As the new opinion noted, “Bruton's theory of deception may be viable. The California courts have held that even technically correct labels can be misleading.” Here, the panel determined that Bruton had failed to meet her burden of demonstrating a genuine issue of material fact. Without studying the entire record of the summary judgment at the district court, it’s impossible to comment on this point.

However, what matters more for consumers is that the new opinion repeats three broad holdings in the withdrawn opinion: (1) affirming (contrary to courts in other circuits) that a claim of unjust enrichment can be a standalone claim, (2) refusing to follow the Third Circuit’s creation of a new ascertainability standard in Bayer v. Carrera (the subject of many posts, including this one), and (3) reminding companies that the unlawful prong of the California UCL does not require proof that consumers are likely to be deceived. 

None of these three holdings creates new law, but each is important jurisprudence. The first two holdings address (and reject) defense claims that regularly arise in California consumer cases generally, and food cases in particular. The third holding echoes an earlier decision of the Ninth Circuit that “the legislature’s decision to prohibit a particular misleading advertising practice is evidence that the legislature has deemed that the practice constitutes a ‘material’ misrepresentation, and courts must defer to that determination.” Hinojos v. Kohl's Corp., 718 F.3d 1098, 1107 (9th Cir. 2013).

Overall, a good day for consumers and a pretty good day even for Bruton.

A Trump Hat I Would Love to See

by Jeff Sovern