Federal workers' shutdown-based wage claims to proceed

A judge on the U.S. Court of Federal Claims has ruled that the government violated the Fair Labor Standards Act by waiting until after the fall 2013 government shutdown was over to pay federal workers. Plaintiffs' counsel estimates that up to 1.3 million workers could be affected, the Post reports. Read the opinion, largely denying the government's motion to dismiss, here.

Anne Fleming: The Rise and Fall of Unconscionability as the 'Law of the Poor'

Anne Fleming of Georgetown has written The Rise and Fall of Unconscionability as the 'Law of the Poor,' 102 Georgetown Law Journal No. 5 (2014). Here's the abstract:

What happened to unconscionability? Here’s one version of the story: The doctrine of unconscionability experienced a brief resurgence in the mid-1960s at the hands of naive, left-liberal, activist judges, who used it to rewrite private consumer contracts according to their own sense of justice. These folks meant well, no doubt, much like present-day consumer protection crusaders who seek to ensure the “fairness” of financial products and services. But courts’ refusal to enforce terms they deemed "unconscionable” served only to increase the cost of doing business with low-income households. Judges ended up hurting the very people they were trying to help. In the face of incisive criticism, judicial enthusiasm for the doctrine of unconscionability quickly faded. A new consensus emerged in favor of legislation requiring better disclosure of consumer contract terms ex ante, rather than ex post judicial review.

This Article presents a different narrative, one that is informed by extensive research in previously untapped archival sources. In this story, the wise legislature does not overrule the misguided courts. On the contrary, it reveals that lawmakers laid the groundwork for the judicial revival of unconscionability, and then rewrote statutory rules to codify the ensuing court decisions. In the District of Columbia, home to the famous Williams v. Walker-Thomas Furniture Co. litigation, the legislature revived unconscionability through the enactment of the Uniform Commercial Code (U.C.C.), which reintroduced the once-archaic doctrine into the legal vernacular. Just as the U.C.C. drafters intended, unconscionability review allowed courts to do openly what they had been doing covertly for years — refuse to enforce harsh, one-sided bargains as written. In 1965, the D.C. Circuit seized the opportunity unconscionability offered to prevent the loss of a poor woman’s furniture. But the Williams litigation also did something more. It drew public attention to the controversy before the court and alerted D.C. lawmakers to a recurring problem in need of a legislative fix. In response, local leaders set to work drafting consumer credit reform legislation. Lawmakers eventually adopted a firm set of rules to govern “installment” sales contracts in the District of Columbia, including a ban on the objectionable contract term at issue in Williams.

In this narrative, judges and legislators did not advance competing regulatory visions. They agreed on the need for substantive limits on installment sales to poor borrowers. Moreover, contrary to what some scholars might predict, litigation did not divert scarce resources down a dead-end path. Rather, it catalyzed the process of legislative change, raising public consciousness of problems in the low-income marketplace and fueling the drive for substantive reforms on the local level.

Appendix A provides the full text of the Walker Thomas Furniture Company contract.

Internet shames New York hotel into removing non-disparagement clause fining wedding couple for their guests' reviews

We all know weddings can get expensive, but here's something most couples do not budget for: fines charged by the hotel if a wedding guest leaves a negative review online. Astonishingly, that's what the website of the Union Street Guest House in Hudson, N.Y., promised guests the hotel would do, according to this story in Business Insider (and many, many other internet sources: Google this story and you'll get an eyeful). This would not be the first time a business has tried to silence critical customers with this type of nasty fine print (remember KlearGear? or the Accessories Store?), but punishing a customer for the actions of a different customer is a new one on me.

That a hotel would try such a thing is story enough.

Equally interesting is what appears to have happened next: the hotel, responding promptly to the wave of critical news stories in the past 24 hours, appears to have taken this clause out of its terms. (Compare the current version here with the one archived here courtesy of the Internet Archive; the old version, which was archived as of April of this year, has an extra paragraph -- search for the sentence that includes the word "Marriott" and read the paragraph that follows in the April version.) Smart move for the hotel. I haven't gone through the Internet Archive to see how long the non-disparagement clause was up on the hotel's site but it's impressive how fast it's come down. (ABC News reported on the story at around noon today, by which time, as the story noted, the hotel had already removed the noxious clause.) It's a testament to the power of the internet -- informed consumers and savvy bloggers communicating with each other actually can improve the marketplace.

I wonder if this is the end to the story, though. Will the hotel put that clause back in when no one is looking at it anymore? Worth checking their site in a month or two to see. (You'll recall that KlearGear felt no shame in reinstating its non-disparagement clause in spite of widespread criticism.)

By the way, if you have been subject to terms like this (even if you have not actually written a negative review for fear of being fined), we here at Public Citizen would love to hear about it -- write us at litigation@citizen.org.

 

How to design a mass-disaster compensation fund

Law prof Linda Mullenix addresses that issue in Designing Compensatory Funds: In Search of First Principles. Here is the abstract:

The World Trade Center Victims’ Compensation Fund of 2001 ushered in a new age of fund approaches to resolving claims for mass disasters in the United States. Since then, numerous funds have been created following several mass events injuring large numbers of claimants. The Gulf Coast Claims Facility, created in the immediate aftermath of the BP Deepwater Horizon oil platform explosion, represented a further expansion of fund design and operation. The funds that have been implemented since 2001, including the World Trade Center Fund, have been the object of both praise as well as criticism. Notably, all these funds have been designed and implemented after the events giving rise to a universe of mass claimants. This article suggests that the policy recommendations for future fund design largely fail to address antecedent threshold questions about the nature of the events giving rise to possible recourse to a fund for compensation of claims. Although such compensation funds have been intended to provide an alternative to the tort compensation system and to operate largely outside the purview of the judicial system, instead most fund designs have relied on tort notions of corrective justice that mimic the tort system. However, many funds have in practice entailed mixed theories of corrective and distributive justice, confusing the purpose, utility, and goals of such funds. This article asks fundamental questions about the goals of such funds and whether and to what extent disaster compensation funds comport with theories of justice. It suggests that certain types of mass disaster events ought not to be resolved through fund auspices at all, while only a limited universe of communitarian harms should give rise to such a response. Finally, a communitarian fund designed ex-ante might more fairly be based on theories of distributive justice based on an egalitarian social welfare norm.

Complaints to the CFPB About Payday Lending

by Jeff Sovern

An American Banker article this week (behind paywall) noted that payday lending has been the subject of only one percent of the complaints to the CFPB complaint database.  According to the article:

"The 1% figure for payday is very low... I think the CFPB is probably surprised, or at least disappointed," said Alan Kaplinsky, who heads the consumer financial services group at Ballard Spahr. "I think the CFPB would like to see a much higher percentage to support their upcoming payday loan rulemaking."

But I'm not sure how signicant the percentage of complaints is.  I'm out of the office at the moment and so can't confirm this, but my recollection is that research into consumer complaints has shown that less-educated and lower-income consumers are less likely to complain than others.  Thus, what we may be seeing is merely a function of that effect, as payday borrowers are more likely to have lower incomes, and, I suspect, have less education.  It would be interesting to know what percentage of the complaints from low-income consumers concern payday lending. It would also be useful to know whether the types of transactions garnering more complaints are engaged in by more consumers. If it is true, for example, that many more consumers have credit cards than borrow from payday lenders, we would expect to see more complaints about credit cards. 

One-Third of Americans Had Debts in Collection Last Year

Here.

CFP By International Journal on Consumer Law and Practice

The "INTERNATIONAL JOURNAL ON CONSUMER LAW AND PRACTICE, published by the  National Law School of India University (NLSIU), Bangalore, has issued a call for papers.  The deadline is September 1.  More information below the fold.

The relationship between the concept of the lawyer as economic parasite and access to justice

Teresa Schmid has written The Lawyer-Rent Seeker Myth and Public Policy. Here is the abstract:

Two enduring fallacies in public policy are that lawyers are rent seekers who impair rather than stimulate the economy, and that there are too many of them. While lawyers may disagree with the first premise, they tacitly accept the second. These two fallacies have led leaders in both the political and professional arenas to adopt policies that impair access to justice. This study documents the negative effects of those policies and recommends courses of action to reverse those effects.

Brett Kimberlin’s Dilemma

by Paul Alan Levy

Readers of this blog may recall that Brett Kimberlin has filed a defamation action against two dozen bloggers and other defendants; Public Citizen is in the case for the limited purpose of defending the anonymity of one of the bloggers.  Since that blog post, there have been a number of developments, including a decision by the trial judge to follow the time-honored tradition of dumping his most burdensome and least attractive case onto the docket of a newly-appointed judge.

Last week, Kimberlin served on the defense lawyers (but not the pro se defendants) a letter, which he said he was attempting to file under seal, asking Judge George Hazel to allow him to file a motion for a preliminary injunction compelling the defendants to remove from their various web sites the various statements over which he is suing, and barring four pro se defendants from making future negative statements about him.  (The previous judge in the case, trying to cope with a large number of filing from pro se parties who plainly detest each other, imposed a pre-motion letter requirement reminiscent of the SDNY and EDNY).  Judge Hazel denied the request and granted it in part – he refused to allow Kimberlin to seek a preliminary injunction over the repetition of statements alleged in the Second Amended Complaint, saying that preliminary relief could only be sought about statements post-dating the complaint.  And even then the motion would have to be limited to four defendants identified in the letter-request (not including the anonymous blogger).

Kimberlin’s filing, and the judge’s response, raise a host of interesting issues.  For one, the judge’s approach to the pre-Amended Complaint and post-Amended Complaint dichotomy strikes me as odd, because the purpose of a preliminary injunction is to protect against irreparable injury pending a decision on the merits.  If post-complaint statements are not the subject of the litigation on the merits (Kimberlin having been instructed that his Second Amended Complaint would be the last permissible amendment), why is the judge in this case the right one to consider a preliminary injunction about those statements?  Indeed, a defamation lawsuit over the statements could not be filed in the District of Maryland as a related case because there is no diversity—two of the pro se defendants live in Maryland.

Kimberlin’s Failed Expectations About the Impact of Suing

Kimberlin’s letter request explains that he expected the suit to induce the defendants to “remove . . . the defamatory content outlined in the complaint,” but that the defendants have uniformly refused any removal while the litigation continued.  He goes on to explain the impact he had hoped his lawsuit would have: “I filed this suit because Defendants would not stop their attacks on my family and me.  I hoped that the filing of the suit would cause Defendants to [rein] in their reprehensible conduct.”  Kimberlin goes on to assert that not only have the criticisms continued, but that his children have been adversely affected by what their friends, and their friends’ parents, have learned about him as a result of the attacks, and he puts this forward as a basis for a preliminary injunction.  He indicates that, for example, that other parents won’t let their children have sleepovers with his daughter.

More on the President's executive order on forced arbitration

Allison recently posted on the Obama Administration's excecutive order prohibiting government contractors from using forced arbitration in contracts with their employees in some circumstances. To watch a news story on the order, go here or click on the embedded video below. HT to Paul Bland.