Takata tells NHTSA to take a hike on its demand for a national air-bag recall

The National Highway Traffic Safety Administration recently told Takata Corp. to expand its regional defective-airbag recall (in states that have high "absolute" humidity) to vehicles in the entire country. Takata just said no. Most recalls are voluntary -- that is, the manufacturer agrees to do what the agency demands. Here, however, NHTSA will have to go after Takata legally if it wants a national recall.

For more details, read this AP story. Here's an excerpt:

Japan's Takata Corp. rejected federal regulators' demand Wednesday for an expanded, nationwide recall of millions of air bags, setting up a possible legal showdown and leaving some drivers to wonder about the safety of their cars. Amid the standoff, Honda Motor Co. decided to act on its own and recall cars with the potentially defective equipment in all 50 states. But other automakers have yet to make a decision. At issue are air bags whose inflators can explode with too much force, hurling shrapnel into the passenger compartment. At least five deaths and dozens of injuries have been linked to the problem worldwide.

Eleventh Circuit: Attempt to Pick Off a Class Representative Doesn't Moot the Class Action

by Deepak Gupta

The Eleventh Circuit issued issued a very comprehensive and well reasoned opinion this week on a hot issue in consumer class-action practice: Can a defendants' attempt to "pick off" a class representative moot the class action?  Or, as the opinion puts it: "This case presents the question whether a defendant may moot a class action through an unaccepted Federal Rule of Civil Procedure 68 offer of complete relief to the named plaintiffs—but not to class members—before the named plaintiffs move to certify the class. In the circumstances of this case, the answer is no." Here, the issue arose in a Telephone Consumer Protection Act case (Stein v. Buccaneers Ltd. P'ship.); it's a recurrent issue in cases under the Fair Debt Collection Practices Act and other consumer laws that authorize statutory damages.

1. Individual mootness. Here's the heart of the court's analysis on the threshold question of individual mootness:

Giving controlling effect to an unaccepted Rule 68 offer—dismissing a case based on an unaccepted offer as was done here—is flatly inconsistent with the rule. When the deadline for accepting these offers passed, they were “considered withdrawn” and were “not admissible.” See Fed. R. Civ. P. 68(b). The plaintiffs could no longer accept the offers or require the court to enter judgment. In short, the plaintiffs still had their claims, and [the defendant] still had its defenses. [The defendant] had not paid the plaintiffs, was not obligated to pay the plaintiffs, and had not been enjoined from sending out more faxes. The named plaintiffs’ individual claims were not moot.

That's the same common-sense approach sketched out by Justice Kagan's dissenting opinion in Genesis Healthcare Corp. v. Symczyk (joined by three other Justices and contradicted by none), which offered this "friendly suggestion" to the lower court that had found the case moot: "Rethink your mootness-by-unaccepted-offer theory. And a note to all other courts of appeals: Don’t try this at home." The defendant in the TCPA case, the Eleventh Circuit noted, "invites us to try this at home. We decline." On this point, the Eleventh Circuit joins the Ninth Circuit's opinion last year in Diaz v. First Am. Home Buyers Prot. Corp., 732 F.3d 948, 954-55 (9th Cir. 2013).

2. Class mootness. The Eleventh Circuit also went on to hold that, "[e]ven if the individual claims are somehow deemed moot, the class claims remain live, and the named plaintiffs retain the ability to pursue them." On this point, the court relied on a precedent of the Old Fifth Circuit, binding in the Eleventh, and a tour of the Supreme Court's class-action mootness jurisprudence going back to the '70s. Here's the upshot of that analsysis: "In the Third, Fifth, Ninth, and Tenth Circuits, as now in the Eleventh, a Rule 68 offer of full relief to the named plaintiff does not moot a class action, even if the offer precedes a class-certification motion, so long as the named plaintiff has not failed to diligently pursue class certification." Only the Seventh Circuit's decision in Damasco v. Clearwire stands apart, and the panel's opinion includes some nice criticism of the bizarre practical consequences of the Damasco regime.

The panel didn't deny that there may appear to be "tension" between its opinion and a bit of the Genesis majority's dicta -- particularly the Court's distinction between "inherently transitory" claims mooted by the passage of time and damages claims. But the panel explained that (1) Genesis doesn't conflict with the panel's analysis of individual mootness, (2) Genesis emphasized differences between Rule 23 class actions and the FLSA collective action at issue there, and (3) a contrary approach "would prove too much. It would mean that a named plaintiff could not represent a class if the defendant sufficiently proffered full relief at any time before the class was certified, not just before the plaintiff filed a motion to certify." Even the Seventh Circuit doesn't take that approach, and nobody is seriously suggesting it.

David Lazarus in the Los Angeles Times on Debt Collectors Renting Out Prosecutor Letterhead

by Deepak Gupta

In today's Los Angeles Times, consumer columnist David Lazarus takes a look at the practice of for-profit debt collectors renting out the seal and letterhead of local California prosecutors -- the target of a new class-action lawsuit that our firm filed yesterday in federal court in San Francisco. The practice was condemned in a scathing ethics opinion released by the American Bar Association a few weeks ago -- an opinion we blogged about here.

Here's Lazarus's take:

These programs are hinky from the get-go. Prosecutors are allowing private debt collectors to misrepresent themselves as official entities, and consumers are unfairly being threatened with bogus charges.

If these programs focused solely on making the legal system more efficient, fine. But they seem to exist primarily to do the dirty work for merchants who believe they're owed some cash.

These companies should do their own debt collecting. Prosecutors should concentrate on enforcing the law.

And if prosecutors can't tell the difference, they should, as the American Bar Assn. suggested, sign up for some remedial ethics training.

I admit, I had to look up the word "hinky" in the dictionary. But it seems quite apt.

American Banker Op-Ed on the St. John's Consumer Arbitration Study

Here.

Consumer Protection Branch at work

Yesterday, I received an email from the Consumer Protection Branch at the U.S. Department of Justice with links to recent announcements from that office. Here is what DOJ's consumer lawyers were up to in November:

November 21, 2014 - United States Files Enforcement Action Against Michigan Sandwich Company and Co-Owner to Stop Distribution of Adulterated Products

 November 19, 2014 - Justice Department Files Enforcement Actions to Shut Down "Psychic" Mail Fraud Schemes

 November 13, 2014 - District Court Enters Permanent Injunction Against California Dietary Supplement Company and Chief Executive Officer to Stop Distribution of Adulterated Products

November 13, 2014 - Vascular Solutions Inc. and its CEO Charged with Selling Unapproved Medical Devices and Conspiring to Defraud the United States

 November 7, 2014 - Virginia Resident Indicted in Connection with Fraudulent Lottery Scheme Based in Jamaica

 

Cleveland Plain Dealer's Sheryl Harris on the St. John's Arbitration Study

Here.  An excerpt:

Right now, the CFPB is finishing up the second phase of its study, which will hone in on consumers' understanding of arbitration clauses. At that point, it will decide whether it needs to act.

If the bureau's findings are anything like those of the law school study, it must. Being stripped of our rights shouldn't be a cost of doing business.

Jeremy Telman at ContractsProf Blog on the Debate Over "Whimsy Little Contracts"

Here.

NYT: Robo-signing, incredibly, isn't over

"Remember the robo-signers, those mortgage loan automatons who authenticated thousands of foreclosure documents over the years without verifying the information they were swearing to? Well, they’re back, in a manner of speaking," reports the Times.

Read on.

More fracking in D.C.'s backyard?

We mentioned last week that fracking will be permitted in a national forest in Virginia, near the Potomac's headwaters.

Now the outgoing governor of Maryland, Martin O'Malley, says that he will open up lands in the western portion of that state to fracking, although he touts the stringent regulations he intends to impose.

The Washington Post opines that this may be a saavy preemptive move before a new fracking-friendly administration takes over, but that's not a great comfort as compared with the status quo of preventing the practice entirely. Here's the Post's report.

Approval of a $500 million-plus class-action settlement entered on federal-court docket -- and then the court says "oops" and vacates

Here.