Consumer Law & Policy Blog

Briefing Schedule Set in Supreme Court Showdown over CFPB

The Supreme Court has established a briefing schedule in the Seila Law case, which presents the question whether limitations on presidential removal of the director of the CFPB render the agency's structure unconstitutional. The schedule was jointly proposed by the attorneys representing Seila Law (which challenged an agency enforcement action on the ground that limits on removal of the CFPB director violate separation of powers) and the CFPB (which now agrees with the Department of Justice that the removal provision is unconstitutional), and by Paul Clement (who is the Court-appointed amicus curiae tasked with defending the law).

Under the schedule, Seila Law and the CFPB will both file their briefs on December 9, 2019, and Clement will file on January 15, 2020. The schedule allows each side about one more week than it would have under the default time periods in the Court's rules.

Interestingly, although the Court added a second question to the case (whether the statutory provision regarding removal of the CFPB director can be severed from the rest of the Dodd-Frank law if it is unconstitutional), and the CFPB has continued to support severance in other pending cases on the issue while Seila Law will presumably oppose it, the schedule has their briefs due simultaneously. That means that if they do in fact disagree on severability, the only chance the briefs will have to address the other sides' arguments on that point will be in their replies, which will presumably be devoted mostly to replying to Clement's arguments in support of the statute's constitutionality.

Under the Court's rules, amicus briefs are generally due one week after the principal brief of the party they support.

 

 

23 senators call for investigation into student-loan forgiveness program

More than 20 Democratic senators called on the Consumer Financial Protection Bureau to investigate a loan servicer Pennsylvania Higher Education Assistance Agency’s handling of the Public Service Loan Forgiveness program for public service workers. According to recent reports, 99 percent of applicants have been denied loan forgiveness.

A 2017 report by the CFPB’s student loan ombudsman found that “flawed payment processing” and paperwork errors had contributed to loan forgiveness denials. A 2018 Government Accountability Office report blamed PHEAA’s failure to “properly account for qualifying payments and reliance on inaccurate information.”

The Hill has the story.

Clement to Argue for CFPB's Constitutionality

The Supreme Court has tapped Paul Clement of the law firm Kirkland & Ellis to support the constitutionality of the CFPB director's tenure protection in the Seila Law v. CFPB case in which the Court granted certiorari last week. Because the CFPB no longer defends its own constitutionality, Clement will be designated a court-appointed amicus curiae and will brief and argue the case as if he represented a party supporting the decision below upholding the CFPB's constitutionality. The CFPB and DOJ will argue for affirmance of the decision on a different ground: namely, that the tenure protection for the CFPB director should be invalidated but severed from the law, leaving the CFPB's exercise of its enforcement powers intact.

Clement is widely regarded as one of the leading advocates before the Supreme Court. He was Solicitor General in the George W. Bush administration and is generally associated with conservative positions. This will not, however, be the first major case in which he has argued a position that aligns with that taken by consumer advocates: In American Express v. Italian Colors Restaurant, he argued on the side of antitrust plaintiffs seeking to set aside an arbitration agreement that banned class proceedings. (The Court ruled in favor of the defendant, American Express.)  

Judge holds DeVos, Dep't of Education in contempt for violating order to stop collecting from former Corinthian students

A federal judge has held Education Secretary Betsy DeVos in contempt for violating an order to stop collecting loan payments from former Corinthian Colleges students.The judge imposed a $100,000 fine on the Education Department for violating a preliminary injunction; the money will be used to compensate the 16,000 people harmed by the federal agency’s actions. In violation of the court to stop collecting on the loans of the former Corinthian students, the Department had the paychecks of some former students college garnished and seized tax refunds of others. The Department says that it has since refunded most of the affected people and that it will refund the others this week.

The Washington Post has the story, here.

Appellate court rules that arbitrators must disclose conflicts of interest

The Ninth Circuit Court of Appeals ruled this week that arbitrators have an obligation to disclose their financial interests in the cases before them. In a 2-1 decision in Monster Energy v. City Beverages, the court vacated a $3 million JAMS arbitration award, holding the award cannot stand because a purportedly neutral JAMS arbitrator failed to disclose that he has an equity stake in the arbitration service, which, in turn, benefits from repeat business from Monster.

The court explained that “clear disclosures by arbitrators aid parties in making informed decisions.” In this case, the court concluded, "given the Arbitrator’s failure to disclose his ownership interest in JAMS, coupled with the fact that JAMS has administered 97 arbitrations for Monster over the past five years, that vacatur of the Award is necessary on the ground of evident partiality." The arbitrator had ruled for Monster on the merits and ordered City Beverages to pay Monster's attorney fees. The opinion is here.

Alison Frankel for Reuters notes the majority's observation that "power is frequently not well-balanced between parties in arbitration, especially when companies that make frequent use of private dispute resolution services have imposed arbitration on consumers and employees." Her article is here.

Resigning Dep't of Education official calls for student-loan forgiveness

The Wall Street Journal reports that a “senior student-loan official in the Trump administration said he would resign Thursday and endorse canceling most of the nation’s outstanding student debt, calling the student-loan system ‘fundamentally broken.'”

“Wayne Johnson was appointed in 2017 by Education Secretary Betsy DeVos as chief operating officer of the Office of Federal Student Aid, overseeing the $1.5 trillion student-loan portfolio. After seven months, he moved into a different role as chief strategy and transformation officer, leading a revamp of how the agency deals with borrowers and the companies that service the debt.”

The full article is here. (Subscription required.)

Berkeley Center for Consumer Law & Economic Justice Hiring Staff Attorney/Research Fellow

We received the following announcement:

The Center for Consumer Law & Economic Justice at Berkeley Law is looking for a staff attorney/research fellow to spearhead its work for consumer and economic justice in courts and regulatory agencies. If you know anyone who might be interested in joining the fight – or if you are that person – click here for information on how to apply.

The Fellow will help to implement the Center’s advocacy efforts in appellate courts and regulatory agencies, collaborating and advising on appellate matters in the U.S. courts of appeals and Supreme Court, as well as state intermediate and high courts. The Fellow will also direct the Published Justice Project, a new initiative to identify important decisions in the areas of consumer law and economic justice and to bring greater attention to those cases in scholarly/professional circles as well as the general public. Additionally, in conjunction with Center personnel, the fellow will support the Center’s research goals by contributing to policy papers on an array of consumer protection and economic justice issues. Finally, the Fellow will be involved with the full range of the Center’s other activities, from arranging conferences to delivering presentations and testimony to spurring the development of consumer law programs at law schools across the country.

 

FTC takes action against developers of “stalking” apps

The Federal Trade Commission today charged the developer of three "stalking" apps with violating consumer's privacy and creating security vulnerabilities. The apps allowed purchasers to monitor a user's GPS location, text messages, and photos without the knowledge of the user. The FTC's complaint was announced concurrently with a consent order under which Retina X Studios and its founder James Johns Jr. will have to delete the data collected by the three apps and will not be able to sell new apps without taking steps to ensure they are used for legitimate purposes.

The FTC's press statement, with links to the complaint and consent order, are here.

Teaching Consumer Law Conference

Save the Date

Call for Papers and Speakers

Teaching Consumer Law Conference – Santa Fe, New Mexico, 29 & 30 May 2020

Teaching Consumer Law: Back to Basics?

The Center for Consumer Law at the University of Houston Law Center, in cooperation with the University of New Mexico School of Law, is organizing its twelfth biennial international teaching consumer law conference. The subject is “Teaching Consumer Law: Back to basics?” The Conference will be held at the Hilton Hotel in Santa Fe, New Mexico, the “City Different,” one of the oldest and most interesting cities in the United States.

For more information, click here, or contact Richard Alderman, alderman@uh.edu.

I look forward to seeing you in Santa Fe next May

Richard

FTC releases annual National Do Not Call Registry Data Book

The Federal Trade Commission has issued the National Do Not Call Registry Data Book for Fiscal Year 2019. The Data Book contains information about the DNC Registry from October 1, 2018, to September 30, 2019. It provides information on robocall complaints, the types of calls consumers reported to the FTC, and a complete state-by-state analysis.

The FTC data show that the number of active registrations on the DNC Registry increased over the past year. Although the total number of consumer complaints decreased slightly, the FTC attributed the decline to the fact that it could not accept complaints during government shutdown. Of the complaints received, 71 percent were about robocalls.