Consumer Law & Policy Blog

Class Action Fairness Act decision from the CA6

In a decision penned by circuit judge Jeffrey Sutton, Roberts v. Mars Petcare US, Inc., No. 17-6122 (6th Cir. Nov. 2, 2017), the Sixth Circuit has held that there's no federal jurisdiction under the Class Action Fairness Act when a plaintiff class comprised of citizens of state A sue a defendant who is a citizen of both state A and state B. (The decision was issued a startling 2 days after oral argument!)

Judge Sutton's opinion, joining the views of other circuits, is an interesting mix of text, context, purpose, and history, with a tiny splash of constitutional avoidance. The opinion's first paragraph contains the bottom line:

The Class Action Fairness Act of 2005 extends federal court jurisdiction to class actions on behalf of 100 or more people and in request of $5 million or more in damages so long as “any member of a class of plaintiffs is a citizen of a State different from any defendant.” 28 U.S.C. §§ 1332(d)(2)(A), (d)(5), (d)(6). At issue is the quoted phrase. Randy Roberts filed this class action on behalf of Tennessee citizens in Tennessee state court against Mars Petcare US, a citizen of Tennessee and Delaware. Mars removed the case to federal court, invoking its Delaware citizenship and claiming its Tennessee citizenship did not matter. Because § 1332(d)(2)(A) refers to all of a defendant’s citizenships, not the alternative that suits it, Mars cannot rely on its State of incorporation (Delaware) and ignore its principal place of business (Tennessee) to create diversity under the Act. We reverse the district court’s denial of the plaintiff’s motion to remand the case to state court.

 

Tax reform or tax deform?

Read Heading off a Cliff? by law prof Michael Gratz and then decide. It's concise and really worth reading. Here's the abstract:

The major tax policy challenge of the 21st century is the need to address the nation’s fiscal condition fairly and in a manner conducive to economic growth. But since California adopted Proposition 13 nearly forty years ago, antipathy to taxes has served as the glue that has held the Republican coalition together. Even though our taxes as a percentage of our economy are low by OECD standards and low by our own historical experience, anti-tax attitudes have become even more important for Republicans politically, since they now find it hard to agree on almost anything else. So revenue-positive, or even revenue-neutral, forms of tax reform—at least as long as the GOP maintains its legislative majority—are politically impossible. The sad truth, of course, is that the coming tax cuts cannot possibly be the great and simplifying tax reform that the President and Sixers claim and that our nation so badly needs.

Consumerist.com ends its run

Consumerist.com posted on Monday that the website has posted its last post:

This is our last post on Consumerist.com. We’re deeply proud of all the work we’ve done on behalf of consumers, from exposing shady practices by secretive cable companies to pushing for action against dodgy payday lenders.

We’ve had a tremendous run as a standalone site. Now you’ll be able to get the same great coverage of consumer issues as part of Consumer Reports, our parent organization.

 

Elizabeth Warren on why she thinks the Supreme Court justices should follow a binding ethics code

Here.

American Banker Story Reports Speculation About Who Will Chair the House Financial Services Committee and Hensarling's Future

by Jeff Sovern

The American Banker ran a story, Will Hensarling's next job be in Trump administration? on a variety of matters. As for Hensarling, the story reported speculation that he might be appointed to run the Federal Housing Finance Agency, which he might prefer to leading the CFPB:

"Running the CFPB is likely to be a giant headache for the first Republican director as Democrats have staffed up the agency and established its corporate culture," wrote [Cowen analyst Jaret] Seiberg.

The article also reported that "early front-runners" to chair the House Financial Services include "Chief Deputy Whip Patrick McHenry, R-N.C., Rep. Blaine Luetkemeyer, R-Mo., and Rep. Ed Royce, R-Calif." Luetkemeyer recently made headlines for chairing a hearing on reducing damages that consumers could win from credit bureaus the day the Equifax breach broke. Royce also had a bill considered at that hearing.  Of course, if Democrats recapture the House in 2018, the chair of the committee will come from their ranks.

Risky car loans

The Consumer Financial Protection Bureau today issued this report on risky auto loans. The report finds that there is a pronounced trend toward longer, riskier auto loans. And the long-term, more costly loans are -- not surprisingly -- being take out by consumers with lower credit scores who are less likely than other consumers to be able to pay them off. Read the agency's press release. Here's a key excerpt:

The Consumer Financial Protection Bureau (CFPB) today released a report on auto loan trends that found a sharp increase in riskier longer-term auto loans. According to the report, 42 percent of auto loans made in the last year carried a payback term of six years or more, compared to just 26 percent in 2009. The growth of these longer-term loans has largely come at the expense of five-year loans, which declined over the same period. The CFPB found that six-year auto loans are riskier—they cost more, are used by consumers with lower credit scores to finance larger amounts, and have higher rates of default.