Consumer Law & Policy Blog

Interesting environmental-law-oriented nuisance case from the Third Circuit

I thought our readers might want to look at an interesting new decision from the Third Circuit about common-law nuisance under Pennsylvania law. The decision is Baptiste v. Bethlehem Landfill Company. The first two paragraphs of the opinion offer a synopsis:

Robin and Dexter Baptiste brought an action against the Bethlehem Landfill Company on behalf of a class of homeowner-occupants and renters claiming interference with the use and enjoyment of their homes and loss in property value caused by noxious odors and other air contaminants emanating from the Bethlehem landfill. They brought these claims under three state-law tort theories: public nuisance, private nuisance, and negligence.

The U.S. District Court for the Eastern District of Pennsylvania granted the company’s motion to dismiss the complaint. The District Court held that too many residents were similarly affected to sustain a private claim for public nuisance, that the odors affected too many people and the landfill was too far away from them to constitute a private nuisance, and that the plaintiffs had failed to identify a duty of care to maintain a negligence claim. We disagree, and therefore, we will reverse and remand.

Critique of the ALI's draft Restatement of the Law of Consumer Contracts

Law prof Mark Budnitz has written The Restatement of the Law of Consumer Contracts: The American Law Institute's Impossible Dream. Here is the abstract:

The American Law Institute has been attempting to write a Restatement of the Law of Consumer Contracts since 2012. The proposed Restatement has gone through ten drafts and has generated considerable controversy among the ALI membership as well as opposition from both consumer advocacy organizations and business associations. The project is an impossible dream. Companies continually take advantage of advances in technology to make major changes in the consumer marketplace. Consequently, any Restatement will be seriously out-of-date as soon as it is approved by the ALI. Furthermore, there is a paucity of relevant cases and a lack of consensus among the courts that have issued opinions. Consequently, if approved, a Restatement will significantly influence the future development of case law. This would be unfortunate because there are other factors contributing to the inadequacy of the draft that is currently under review. The Reporters' drafts are based on an incomplete description of the consumer marketplace that fails to reflect the reality in which consumers and businesses engage in online transactions. Scholars have questioned their collection and analysis of case law. The Reporters ignore the insights of social science. They have an unduly constricted view of the factors the ALI should consider in drafting a Restatement. A major flaw is the insistence on "black letter" rules that embody a "blanket consumer assent" approach that creates a presumption that consumers engaging in online transactions are bound to standard contract terms. Alternatives to a Restatement should be considered.

Court Denies Injunction to Enforce the Trump Family Nondisclosure Agreement

by Paul Alan Levy

The New York state trial judge who initially granted a temporary restraining order against both Mary Trump and Simon & Schuster declined late today to extend that order into a preliminary injunction. Faced with a welter of arguments put forward by both the defendants in the case as well as by the Reporters Committee for Freedom of the Press and by Public Citizen as amici curiae, Justice Greenwald appears to have accepted almost all of the reasons argued on the defense side of the case in denying the injunction. 

At several points in the opinion, he rules that the non-disclosure clause in the agreement settling the family will contest is far narrower than plaintiff Robert Trump had argued; while at other points he appears to say that, if the clause is as broad as Robert Trump had contended, it would be too broad to be enforced consistent with sound public policy. We filed our amicus brief because NDA’s have been getting more and more out of control; short of a legislative solution, judicial skepticism toward broad nondisclosure agreements, and the refusal of equity courts to issue injunctions simply because the NDA contains language endorsing injunctive relief as a remedy, provides welcome support for free speech as well as, we may hope, discouraging parties who hope to use such contracts them to keep the truth about their misconduct forever suppressed.

Read FDA's warnings on dangerous hand sanitizers

Lots of folks are using hand sanitizer these days. Sometimes it is hard to find hand sanitizers on the shelves or on-line, and there might be an inclination to buy any brand you find. Because there are a bunch of dangerous brands on the market containing methanol (which can  be toxic, even life-threatening when ingested), I thought I'd post the FDA's warnings about methanol-containing hand sanitizers. 

The impending eviction (and homelessness) crisis

This article by Renae Merle discusses in detail the impending eviction crisis as eviction moratoriums begin to expire. Something has to be done to help tenants in crisis, and it can't be extending the patchwork of moratoriums, which doesn't deal with the underlying problem: that people out of work can't afford the rent.

NCLC statement on CFPB's new rule rescinding payday loan protections

The Consumer Financial Protection Bureau today announced a final rule rescinding payday loans protections that had been issued in October 2017. Among the provisions rescinded are those limiting unaffordable loans that trap families in cycles of debt.

The CFPB also announced that it will implement the provisions of the payday loan rule that prevent lenders, including those offering high-cost longer term loans, from hitting people with repeated bounced payment fees.

The National Consumer Law Center's Lauren Saunders issued this statement:

“At this moment of health and economic crisis, the CFPB has callously embraced an industry that charges up to 400% annual interest and deliberately makes loans that put people in a debt trap. The CFPB has no basis for gutting the heart of common sense protections that merely required payday lenders to do what responsible lenders already do: ensure that the borrower has the ability to repay. The evidence to support the debt trap of payday loans is overwhelming and the CFPB’s flimsy excuses for repealing protections do not stand up.

“It is truly shocking that the CFPB, an agency created to protect families from financial abuses, is bending over backwards to side with the most scurrilous lenders over the consumers it is supposed to protect.

“The CFPB has not only repealed critical protections against dangerous payday loans, but its May template for no action letters for banks that make small dollar loans, together with bank regulator guidance that could open the door to single-payment bank loans, could be used to encourage banks to get back into the bank payday loan business. Bank payday loans were a debt trap, and banks should stay out of that business even with the CFPB inviting them back in.

“While the CFPB is allowing the payment provisions of the payday loan rule to go into effect – and the CFPB should immediately ask the Texas court to lift the stay of those provisions – that is cold comfort. The payment rules prevent predatory lenders from subjecting people to multiple fees when payments bounce. It is shocking that we even need rules to prevent that conduct, but curtailing just one dangerous impact of unaffordable loans over 100% APR does not make those loans safe.

“With the CFPB abandoning its role in protecting families, Congress must act now to extend to all families a national rate cap of 36% — which is broadly supported by Americans across the ideological spectrum. Congress should pass HR 5050/S.2833, the Veterans and Consumers Fair Credit Act, which would extend the Military Lending Act's 36% rate cap to veterans and all consumers.

“In the absence of reform by the federal government, states should adopt or strengthen their interest rate caps. States have had usury laws since the time of the American Revolution, and state interest rate caps are the strongest protection we have today against predatory lending.”

In light of the Supreme Court decision, CFPB ratifies earlier agency actions

As established by the Dodd-Frank Act in 2020, the Consumer Financial Protection Bureau was headed by a director who could the President could remove only for cause (inefficiency, neglect of duty, or malfeasance in office). The CFPB’s first director was appointed on January 4, 2012. On June 29, 2020, the Supreme Court held in Seila Law LLC v. CFPB that the Act’s removal provision violates the separation of powers but that it is severable from the rest of the statute. As a result, the Court ruled, “The agency may therefore continue to operate, but its Director, in light of our decision, must be removable by the President at will.” (See earlier blog post, here.)

The Court did not address whether a prior action taken by the CFPB could be invalidated on the basis that the agency, when the action was taken, was led by a director unconstitutionally protected from removal. The Court remanded the case for the lower courts to decide that issue in the Seila Law case; other cases raise the same issue. In an effort to avoid litigation and “to resolve any possible uncertainty,” the CFPB today issued a notice ratifying a number of actions from 2012 through the date of the Court’s decision. The agency cited case law holding that an agency, through ratification, may “purge[] any residual taint or prejudice left over from” a potential defect in an earlier action. The notice states that it is ratifying the earlier actions “out of an abundance of caution” and that the notice is not a concession that the actions would not be valid absent ratification.

The CFPB’s notice, including the list of ratified actions, is here.

Effort to Suppress Trump Niece's Book Shows the Need to Construe NDA's Narrowly

by Paul Alan Levy

The lawsuit filed by Robert Trump against his niece, Mary Trump, seeking to block her from publishing a book that apparently has several damning facts to disclose about Robert’s brother, and Mary Trump’s uncle, our Dear Leader Donald J. Trump, is based on a non-disclosure clause that was part of the global settlement of the Trump family's litigation over the estate of Fred Trump twenty years ago. Robert Trump obtained a TRO against Mary Trump and her publisher, Simon & Schuster; the latter part of the TRO was overturned on appeal the very day that it was entered; but the preliminary injunction hearing is set for Friday.  Simon & Schuster has moved up the publication date to Bastille Day.

 Simon & Schuster opposed the TRO, supported by amici from book publishing and media industries, which stressed the breadth of the NDA and argued that it is against public policy, not to speak of the doctrine against prior restraints, to issue injunctions enforcing such broad NDA’s. But looking at the settlement agreement itself, I was struck by how narrow the NDA really was. Consequently, Public Citizen has submitted our own amicus brief in the case, urging the Court to apply the general rule that waivers of constitutional rights should be construed narrowly, and that, so far as we can see, none of the disclosures of which the lawsuit complains appear to run afoul of the NDA as properly construed. We also argue that, because the plaintiff has proclaimed that he needs an injunction against Simon & Schuster to get effective relief (considering that Mary Trump has already fully disclosed her accusations to the publisher), the propriety of Robert’s proposed interpretation of the NDA turns on whether it can support a prior restraint against the publisher. (Mary Trump's brief is here).

"Severability" to the Rescue Again: A Further Note on Today's Supreme Court Robocalling Decision

Steve Gardner has given a great and succinct summary of todays decision in Barr v. AAPC. The Telephone Consumer Protection Act lives, minus its obnoxious exception for government debt collection robocalls. What's not to like about that bottom line?

I want to make an additional point about the significance of the decision. For the second time in a week, it is the Supreme Court's application of "severability" doctrine—the practice of invalidating only the specific part of a statute that creates a constitutional problem, rather than the whole statute—that has turned a potentially bad ruling into one that has an upside for consumers.

Last week’s example was the Seila Law decision, which held that the statutory provision protecting the CFPB director from being fired at will by the President was unconstitutional, but severed that provision from the rest of the laws giving authority to the CFPB. The result is that the agency remains intact, but the director can now be terminated by the President at any time.

In the long run, consumers would probably be better off with an independent CFPB, and consumer interests would be best served if Congress had the authority to structure regulatory agencies in ways that limit political interference with the agencies’ conscientious performance of their duties. But at least the decision may allow a pro-consumer President to unceremoniously rid the CFPB of a director who lacks commitment to the agency’s consumer-protection role—a scenario that could possibly play out next January.

This week, the Barr decision adopts a rigid view of the First Amendment that is likely to be less accommodating to legitimate, pro-consumer regulations of commercial speech and activity than the approach Justice Breyer advocates in his partial dissent. (Thankfully, however, Justice Kavanaugh’s opinion goes out of its way to emphasize that the Court’s approach does not condemn laws like the Fair Debt Collection Practices Act, which, as part of regulation of commercial activity, incidentally regulate the communications that are an inseparable part of that activity.)

But regardless of what one thinks about the debate between Kavanaugh and Breyer over the best reading of the First Amendment, the Court’s severability analysis has the effect of improving the protections offered by the TCPA by eliminating the loophole Congress ill-advisedly opened when it exempted government-debt-collection robocalls from the Act.

Looking ahead, both Barr and Seila Law give good reason for optimism about the result in the next major showdown over severability: California v. Texas, in which the Court will decide next Term whether the entire Affordable Care Act must fall if Texas, and the Trump Administration, are correct in arguing that its individual mandate became unconstitutional when Congress zeroed out the tax consequences for noncompliance.

Justice Kavanaugh’s emphasis in Barr on the strong presumption in favor of severability, and the Chief Justice’s focus in Seila Law on whether Congress would have preferred no law at all to one with an unconstitutional provision severed, both make it highly unlikely that the Court will toss out the entire ACA even if it concludes the individual mandate has become unconstitutional. If the ACA survives, consumers will again benefit enormously from the Court’s approach to severability.

As Justice Kavanaugh put it today: “[T]he tail (one unconstitutional provision) does not wag the dog (the rest of the codified statute or the Act as passed by Congress). Constitutional litigation is not a game of gotcha against Congress, where litigants can ride a discrete constitutional flaw in a statute to take down the whole, otherwise constitutional statute.” If that approach holds, the ACA should be safe.

So three cheers for severability! The government-debt-collection exception is dead; long live the TCPA!

Supreme Court bans debt collection robocalling to cellphones

by Stephen Gardner

Today, the Supreme Court held that collecting government debt by robocalling cellphones didn’t deserve special First Amendment treatment. In Barr v. American Assn. of Political Consultants, Inc., the Court held that a 2015 amendment to the Telephone Consumer Protection Act, which allowed cellphone robocalls to collect federal debts (such as student loans and mortgages), gave unconstitutionally favorable treatment to federal debt collection over other types of speech.

The provision was dead from the first sentence of Justice Kavanaugh’s opinion: “Americans passionately disagree about many things. But they are largely united in their disdain for robocalls. The Federal Government receives a staggering number of complaints about robocalls—3.7 million complaints in 2019 alone. The States likewise field a constant barrage of complaints.”

Justice Kavanaugh proceeded to answer two questions. First, was allowing debt collectors to make robocalls, but prohibiting all other types of robocalls, allowed by the First Amendment? Second, if not, could the debt collection provision be severed?

Answering the first question, Justice Kavanaugh found that the restriction on speech was content-based and thus subject to strict scrutiny. “The Government’s stated justification for the government-debt exception is collecting government debt. Although collecting government debt is no doubt a worthy goal, the Government concedes that it has not sufficiently justified the differentiation between government-debt collection speech and other important categories of robocall speech, such as political speech, charitable fundraising, issue advocacy, commercial advertising, and the like.”

Answering the second question, Justice Kavanaugh determined that the debt collection provision was easily severed. “With the government-debt exception severed, the remainder of the law is capable of functioning independently and thus would be fully operative as a law. Indeed, the remainder of the robocall restriction did function independently and fully operate as a law for 20-plus years before the government-debt exception was added in 2015.”

So good news for debtors, especially those in the throes of the COVID-45 pandemic.

AUTHOR’S NOTE:

In this summary, I say “Justice Kavanaugh” instead of “the Court” because this case resulted in four separate opinions, dissenting and concurring, with the ultimate result being that six justices (the CJ, the conservative four, and Justice Sotomayor) agreed that favoritism given federal debt collection was bad and that it could be severed.

For those keeping score, here’s the breakdown of the four opinions, from the Syllabus:

Kavanaugh, J., announced the judgment of the Court and delivered an opinion, in whichRoberts, C. J., and Alito, J., joined, and in which Thomas, J., joined as to Parts I and II.Sotomayor, J., filed an opinion concurring in the judgment. Breyer, J., filed an opinion concurring in the judgment with respect to severability and dissenting in part, in which Ginsburgand Kagan, JJ., joined. Gorsuch, J., filed an opinion concurring in the judgment in part and dissenting in part, in which Thomas, J., joined as to Part II.