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    St. John's University School of Law
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    Public Citizen Litigation Group
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    Public Citizen Litigation Group
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    National Association of Consumer Advocates
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    National Consumer Law Center

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The contributors to the Consumer Law & Policy blog are lawyers and law professors who practice, teach, or write about consumer law and policy. The blog is hosted by Public Citizen Litigation Group, but the views expressed here are solely those of the individual contributors (and don't necessarily reflect the views of institutions with which they are affiliated). To view the blog's policies, please click here.

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« May 2020 | Main | July 2020 »

Monday, June 29, 2020

CFPB Directors Now Under President's Thumb

The Supreme Court issued its ruling in Seila Law v. CFPB today, holding by a 5-4 vote that the Congress violated the principle of separation of powers by placing the Consumer Financial Protection Bureau under a single director removable by the president only for cause. Chief Justice Roberts wrote the majority opinion, with Justice Kagan dissenting on behalf of herself and Justices Ginsburg, Breyer, and Sotomayor.

By a different majority (the Chief Justice and Justices Alito and Kavanaugh, together with the four dissenters on the separation-of-powers issue), the Court held that the for-cause-removal provision was severable from the remainder of the statutory provisions conferring authority on the CFPB. Thus, the agency may continue its operations going forward, but the president will now have the authority to fire the director at will.

Even so, the Court held that the specific issue giving rise to the case—whether a civil investigative demand must be set aside because it was issued while the tenure-protection provision was in place—requires a remand for the lower courts to determine whether the agency’s current leadership has validly “ratified” it. Justices Thomas and Gorsuch disagreed with the majority’s severability analysis and would have held that the civil investigative demand could not be enforced, period.

Chief Justice Roberts’s opinion was issued the same day he joined the Court’s more liberal judges in holding that adherence to precedent required the Court to strike down a Louisiana abortion restriction that was identical to a Texas law the Court held unconstitutional four years ago, before Justice Kennedy’s retirement from the Court and his replacement by Justice Kavanaugh. The Chief Justice disagreed with the earlier ruling in the Texas case but today ruled that the principle of treating “like cases alike” required him to vote to strike down the Louisiana law.

In Seila Law, Chief Justice Roberts also had a lot to say about precedents, but his effort was devoted to devising grounds to distinguish them rather than follow them. He reasoned that because prior precedents upholding limits on presidential removal power did not specifically address the constitutionality of an agency headed by a single, tenure-protected principal officer (as opposed to an agency headed by a tenure-protected multi-member commission, or an office headed by a single, tenure-protected “inferior” officer), those precedents did not “resolve[] whether the CFPB Director’s insulation from removal is constitutional.”

Instead, he found direction in long-discredited dicta in an older case, Myers v. United States, which he read to adopt the broad rule that the president must have power to remove executive officers at will. The Court’s later opinions, in Roberts’s revisionist reading, created only two narrow exceptions to this rule for agencies headed by multi-member commissions and for inferior officers. Although the Chief Justice declined to “revisit” those precedents, at least not “today,” he also declined to extend them.

Justice Kagan’s dissent, by contrast, offered a completely different reading of the Court’s precedents. In her view, the Court’s past opinions do not establish a “‘general rule’ of ‘unrestricted removal power’ with two grudgingly applied ‘exceptions.’” Instead, they “give Congress wide leeway to limit the President’s removal power in the interest of enhancing independence from politics in regulatory bodies like the CFPB.”

Justices Thomas and Gorsuch, on the other hand, would have done what Chief Justice Roberts was unwilling to do “today,” and would have overruled the precedents allowing “exceptions” to the principle of unfettered presidential removal power.

As far as the CFPB is concerned, one thing is settled, at least for now: The president can now remove the CFPB’s director for any reason, or no reason. That result, in the long term, is not a good one for an agency that requires the independence to stand up to powerful financial forces in the interest of consumers. Repeatedly over the last four years we have seen how officials who can be fired without cause by the president—such as the Attorney General—abandon principle and the rule of law when they get in the way of the president’s own interests, or those he favors.

In the medium term, however, the first CFPB director likely to be fired without cause may be the one installed by President Trump, Kathy Kraninger—if the president is not reelected. Consumer advocates may cheer that result. But even if that happens, it will not be the only fallout from today’s opinion.

To begin with, the remand to determine whether the civil investigative demand in the Seila Law case must be enforced is likely to be the first of many cases in which parties argue over whether today’s opinion requires some action taken by the agency to be set aside. Such litigation is likely to become its own cottage industry.

In addition, we have seen in other areas how the approach of limiting precedents to their particular circumstances, treating them as never-to-be-extended “exceptions” to other principles, may eventually lead the Court to treat them as doctrinal orphans ripe for overruling because subsequent developments in the case law have undermined their rationales. Advocates of expanded presidential power, and industries that would perceive a benefit in eliminating independent regulators, are likely to press on for overruling of the Court’s decisions allowing independent multi-member commissions.

Whether they ultimately succeed may depend on how the Court’s composition changes in the next few presidential terms. In the long run, it may be Seila Law that turns out to be the orphan, but surely there will be plenty of litigation in the meantime.

 

Posted by Scott Nelson on Monday, June 29, 2020 at 08:14 PM | Permalink | Comments (0)

A Shot Across the Bow for Copyright Trolls: Forcing Higbee Clients to Pay for Frivolous Demand Letters and Intimidation Tactics

by Paul Alan Levy

As I have discussed in several previous posts, Mathew Higbee has built up a significant copyright enforcement business that depends on the issuance of threatening demand letters that are followed up by a small army of “compliance resolution specialists” who nag and threaten large awards of damages, the issuance of judgment liens, imposing short deadlines before the matter will be “escalated” to “the litigation team.” In self-congratulatory interviews. Mathew Higbee brags about how successful these threats are, and based on a staff recruitment video, it appears that the Higbee staff operates under daily goals that may be as high as $100,000 per day (this image Video Image Goals
appears at the 51 second time mark on the video linked above). Because the Higbee interviews reveal that his earnings are split evenly with this clients, the clients, too, have a substantial incentive to engage his services. Some of the claims the Higbee firm pursues are valid ones, although, even then, the firm tends to take advantage of its pro se targets by demanding payments far higher than it is likely to gain in litigation.

Generally speaking, the targets of this demand letter practice don’t know their rights under copyright law, and would likely have to pay so much in lawyer fees just to assess their potential exposure, not to speak of defending themselves in court, that it makes financial sense for them to simply pay what is demanded, to make the problem go away, then to stand up for their rights. I have concluded that the Higbee firm deliberately, and cynically, preys on the high cost of copyright lawyers to extract undeserved payments for itself and its clients. When the tactic is employed to threaten liability on grounds too unreasonable to succeed in litigation, these tactics provide a sound basis for invoking the “considerations of compensation and deterrence”  that support awards of attorney fees in copyright cases.

Continue reading "A Shot Across the Bow for Copyright Trolls: Forcing Higbee Clients to Pay for Frivolous Demand Letters and Intimidation Tactics" »

Posted by Paul Levy on Monday, June 29, 2020 at 12:21 PM | Permalink | Comments (0)

Dep't of Education ordered to cancel student loans of all former Corinthian Colleges students in MA

"A federal judge has ordered the Department of Education to cancel the student loans of all 7,200 former Corinthian Colleges students in Massachusetts. This is the first time a federal court has ordered a borrower defense discharge of federal student loans.

"The victory in Vara v. DeVos comes nearly two years after the Department of Education was ordered to stop collecting on the borrowers’ loans because they were covered by a borrower defense application that was filed by the Massachusetts Attorney General. The lawsuit demanded that the Department grant the Attorney General’s borrower defense application and cancel the students’ fraudulent loans."

Read the full press release from Harvard's Project on Predatory Student Lending, here.

Posted by Allison Zieve on Monday, June 29, 2020 at 08:49 AM | Permalink | Comments (0)

Saturday, June 27, 2020

States use consumer protection laws to fight climate change

The D.C. attorney general sued four of the world’s largest oil and gas companies -- BP, Chevron, ExxonMobil, and Shell -- Thursday, asserting that they have engaged in a decades-long campaign to deceive District consumers about the effects of fossil fuels on climate change. The lawsuit, based on the DC Consumer Protection Procedures Act and filed in D.C. Superior Court, alleges that the companies have known about the adverse environmental effects of their products since the 1950s. It seeks a court order for the companies to pay civil penalties, provide financial relief for consumers in DC, and stop the allegedly deceptive campaigns.

The Washington Post has the story, here.

Minnesota filed a similar suit two days earlier. Read about it here.

Posted by Allison Zieve on Saturday, June 27, 2020 at 10:00 AM | Permalink | Comments (0)

Thursday, June 25, 2020

Op-ed concerning the propriety of colleges demanding Covid-19 liability waivers

The Trump campaign infamously demanded a liability waiver from people attending Trump's rally in Tulsa last weekend. Now, law prof Heidi Li Feldman has penned an op-ed for the LA Times entitled Your college may ask you to sign a waiver for harm inflicted by COVID-19. Don’t do it.

Posted by Brian Wolfman on Thursday, June 25, 2020 at 03:09 PM | Permalink | Comments (0)

How can businesses demand laws preventing liability for negligently infecting consumers with COVID when so many carelessly don't require employees to wear masks?

by Jeff Sovern

Businesses are lobbying to overturn laws that impose liability for negligently infecting customers with the coronavirus, claiming that they fear frivolous law suits and that they will observe heath guidelines to prevent the spread of the virus. But in fact, plenty of businesses are not even requiring employees to wear masks--and that's with laws the impose liability for negligently infecting customers. If businesses are so afraid of being sued for carelessly infecting customers, why aren't they simply being more careful? We can expect businesses to take even fewer precautions if they face no consequences for negligently getting consumers sick. Before businesses ask legislators to protect them from their own misconduct, they should first get their houses in order.Mask

Posted by Jeff Sovern on Thursday, June 25, 2020 at 01:07 PM in Consumer Legislative Policy | Permalink | Comments (1)

Wednesday, June 24, 2020

Do restaurants and similar public-facing businesses have a duty to tell consumers when their employees have COVID?

by Jeff Sovern

This article in the Houston Chronicle says that Texas health laws don't require restaurants to tell diners whether employees have COVID, though some restaurants have voluntarily disclosed that employees have been infected. Health laws around the nation should be amended to prevent employees with COVID from knowingly or negligently working at restaurants, if they don't already so provide, and to require disclosures when an employee has tested positive recently. But in the meantime, common law fraud rules may protect diners.  In most states, contracting parties must disclose latent material defects that are unknown to the buyer. Our casebook has a couple of cases on this point, Johnson v. Davis, 480 So.2d 625 (Fl. 1985) and Layman v. Binns, 519 N.E.2d 642 (Oh. 1988). I think that means that if a restaurant doesn't disclose to diners that their server has COVID, the consumers would have a pretty good claim against the restaurant, assuming that the restaurant knew about the condition and that it wasn't obvious.  

Posted by Jeff Sovern on Wednesday, June 24, 2020 at 06:12 PM | Permalink | Comments (1)

Tuesday, June 23, 2020

AALS Call for Papers for Works-in-Progress Session for Junior Consumer Law Scholars During Jan. 2021 Meeting in SF

We've received the following Call for Papers:

Call for Papers
Junior Consumer Law Scholars WIP session

AALS Section on Commercial & Consumer Law

January 5-9, 2021, AALS Annual Meeting

The AALS Section on Commercial & Consumer Law is pleased to announce a “Works-in-Progress Session for Junior Consumer Law Scholars” program during the 2021 AALS Annual Meeting in San Francisco, California. This works-in-progress program will bring together junior and senior consumer law scholars for the purpose of providing junior scholars with feedback and guidance on their draft articles.

FORMAT: Scholars whose papers are selected will provide a brief overview of their paper, and participants will then break into simultaneous roundtables dedicated to the individual papers. Two senior scholars will provide commentary and lead the discussion about each paper.

SUBMISSION PROCEDURE: Junior scholars who are interested in participating in the program should send a draft or summary of at least five pages to Professor Christopher Bradley at cgbradley@uky.edu on or before Friday, August 21, 2020. The cover email should state the junior scholar’s institution, tenure status, number of years in their current position, whether the paper has been accepted for publication, and, if not, when the scholar anticipates submitting the article to law reviews. The subject line of the email should read: “Submission—Consumer Law WIP Program.”

Junior scholars whose papers are selected for the program will need to submit a draft to the senior scholar commentators by Friday, December 4, 2020.

ELIGIBILITY: Junior scholars at AALS member law schools are eligible to submit papers. “Junior scholars” includes untenured faculty who have been teaching full-time at a law school for ten or fewer years. The Committee will give priority to papers that have not yet been accepted for publication.

Pursuant to AALS rules, faculty at fee-paid non-member law schools, foreign faculty, adjunct and visiting faculty (without a full-time position at an AALS member law school), graduate students, fellows, and non-law school faculty are not eligible to submit. Please note that all presenters at the program are responsible for paying their own annual meeting registration fees and travel expenses.

 

Posted by Jeff Sovern on Tuesday, June 23, 2020 at 06:53 PM in Conferences, Consumer Law Scholarship | Permalink | Comments (0)

Monday, June 22, 2020

The Trump Administration’s Attacks on Regulatory Benefits

Read The Trump Administration’s Attacks on Regulatory Benefits by law prof RIchard Revesz. Here's the abstract:

For the last four decades, benefit-cost analysis has been a mainstay of the U.S. federal regulatory process and, under Executive Orders in effect since 1981, such analysis must generally be used to justify significant federal regulations. While administrations of different parties have occasionally differed on the methodologies used to assess costs or benefits, these disagreements operated within the bounds of approaches that are supported by the economic and scientific literatures. In contrast, the Trump administration has been operating outside such bounds. In particular, as I discuss in this article, it has sought to justify important deregulatory measures by focusing on cost savings, but ignoring the resulting foregone benefits; placing substantial roadblocks in the way of regulatory agencies’ ability to rely on epidemiological studies; promoting discredited threshold models, under which significant air pollutants are assumed to have no adverse effects below a certain level; calling co-benefits into question; downplaying climate change damages; and counting transfer payments in inappropriate ways. I argue that these moves significantly threaten the health and safety of Americans.

 

 

Posted by Brian Wolfman on Monday, June 22, 2020 at 06:14 PM | Permalink | Comments (0)

The copyrighted demand letter, redux

by Paul Alan Levy

It’s been many years since John Dozier and his associates suffered the humiliation (and subjected their clients to the Streisand Effect) that followed from their habit of appending a threat of copyright infringement litigation to their defamation demand letters, but a newly minted “defamation attorney” from Houston named Paul Sternberg seems determined to follow in their path. The story began when one of his clients, a fellow named Christopher J Nanda, proclaimed on social media that his office window put him in a perfect position to aim his well-oiled automatic rifle at Black Lives Matter protesters in Wisconsin. Jana Hall took issue with this post, and used Twitter to call it to the attention of Nanda’s employer, which promptly sacked him.

Sternberg then wrote a letter to both Hall and her husband (referring to his client alternately as “Mr. Nanda” and “Mr. Nance”), warning that he was going to sue both of them, potentially ruining her husband’s business, if she did not take down the tweets, “de-index” the tweets (that is, prevent Google from linking to them, part of the defamation services that his web site promises, circumventing what he claims is protection that web sites enjoy under the Freedom of Information Act), and promise never to speak online about Nanda ever again. When she posted his demand letter on Twitter, both to call him to task for his threats and to crowd-source her quest for advice on how to respond to them, he angrily threatened her by claiming she had infringed his copyright in the letter, demanding that she remove it, as well, from her Twitter feed.

Continue reading "The copyrighted demand letter, redux" »

Posted by Paul Levy on Monday, June 22, 2020 at 04:56 PM | Permalink | Comments (0)

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