Satirist John Oliver on Dr. Oz's Endorsement of Magic Weight Loss Pills

Here.  A TV comic excursion into the law of supplements (HT: Charles Shafer).

Supreme Court rules in key securities case

The Supreme Court held this morning in Halliburton Co. v. Erica P. John Fund, No. 13-317 (June 23, 2014), that the presumption of shareholder reliance in private securities-fraud class actions established by the Court in Basic Inc. v. Levinson, 485 U.S. 224 (1985), should not be overruled. It agreed, however, with the defendant Haliburton that the presumption of reliance may be rebutted with evidence that the alleged misrepresentation did not affect the stock price at the class-certification stage (as well as at the merits stage, as Basic had held).

For more on what was at stake in Halliburton, read our earlier post on the case.

Sharkey on Agency Coordination in Consumer Protection

Catherine M. Sharkey of NYU has written Agency Coordination in Consumer Protection, 2013 University of Chicago Legal Forum 329. Here's the abstract:

The federalization of consumer protection has created thorny issues of agency coordination.  When multiple federal agencies interpret and enforce the same statute, should a single agency’s interpretation be accorded Chevron deference? Should it matter whether it is in synch, or at odds, with its fellow agencies?  This Article explores two agency coordination strategies that point in opposite directions. The first, a balkanization strategy, attempts to overcome the overlapping agency jurisdiction problem by urging agencies to create separate, non-overlapping spheres of authority to thereby regain Chevron deference due the agency that reigns supreme. We can expect “agency self-help measures” that stake out respective turfs to emerge from this strategy.  Courts have accepted the balkanization approach — carving out discrete fiefdoms from spheres of overlapping agency jurisdiction — and may accept it more readily as the jurisprudence after City of Arlington develops with regard to agency interpretations of jurisdiction. 

The second (and more novel) strategy, a model of judicial review as agency coordinator, exploits (rather than constrains) overlapping agency jurisdiction. Under this model, when faced with an interpretation by an agency that operates in shared regulatory space, courts would solicit input from the other relevant agencies. And, to the extent that there is agreement among the different agencies, Chevron deference would be especially warranted (regardless of whether all of those agencies were parties before the court), in sharp contrast to certain courts’ blanket stance that Chevron deference is inappropriate when multiple agencies interpret the same statute.

Supreme Court reinstates First Amendment claim of public employee fired for court testimony

In a unanimous opinion today in Lane v. Franks, the Court held that an employee who was fired by a public employer for giving subpoenaed judicial testimony about his state-funded program could maintain a claim for First Amendment retaliation. The key issue in the case was whether testifying was part of the employee's job responsibilities (and therefore not a viable basis for a First Amendment claim) or whether the employee, in testifying, was speaking "as a citizen" (and therefore entitled to First Amendment protection). Emphasizing the importance of truthful testimony to the judicial system, the Court held the latter:

Truthful testimony under oath by a public employee outside the scope of his ordinary job duties is speech as a citizen for First Amendment purposes. That is so even when the testimony relates to his public employment or concerns information learned during that employment. . . . Sworn testimony in judicial proceedings is a quintessential example of speech as a citizen for a simple reason: Anyone who testifies in court bears an obligation, to the court and society at large, to tell the truth.

This is an important victory for whistleblowers and a narrowing of a prior decision in the area of public employee speech claims, Garcetti v. Ceballos. Some courts had interpreted Garcetti to preclude First Amendment retaliation claims based on speech regarding one's employment. The Court made clear today that for a public employee's speech to be outside First Amendment protection, it must be uttered as part of the ordinary duties of the job, not merely pertaining to the job:

The mere fact that a citizen’s speech concerns information acquired by virtue of his public employment does not transform that speech into employee—rather than citizen—speech. . . . [S]peech by public employees on subject matter related to their employment holds special value precisely because those employees gain knowledge of matters of public concern through their employment.

Unfortunately, the Court also held that the employee in this case cannot recover damages because the First Amendment right was not clearly established (at least in his judicial circuit) before today's decision.

Still, a welcome interpretation of the First Amendment that will benefit both public employees and the judicial process.

Wilkinson-Ryan Article: A Psychological Account of Consent to Fine Print

Tess Wilkinson‐Ryan of Penn has written A Psychological Account of Consent to Fine Print, 99 Iowa Law Review 1745 (2014). Wilkinson-Ryan has a Ph.D in psychology as well as a law degree, and so brings to bear a different perspective in evaluating consumer reactions to fine print. I found this article useful in the research I'm doing this summer, and it seems likely that anyone looking into fine print would also find the piece valuable. Here's the abstract:

The moral and social norms that bear on contracts of adhesion suggest a deep ambivalence.  Contracts are perceived as serious moral obligations, and yet they must be taken lightly or everyday commerce would be impossible.  Most people see consent to boilerplate as less meaningful than consent to negotiated terms, but they nonetheless would hold consumers strictly liable for both.  This Essay aims to unpack the beliefs, preferences, assumptions, and biases that constitute our assessments of assent to boilerplate.  Research suggests that misgivings about procedural defects in consumer contracting weigh heavily on judgments of contract formation, but play almost no role in judgments of blame for transactional harms.  Using experimental methods from the psychology of judgment and decision-making, I test the psychological explanations for this disjunction, including motivated reasoning and reliance on availability heuristics.  Many commentators have argued that even though it is true that disclosures are probably ineffective, they “can’t hurt.”  I conclude with a challenge to that proposition — I argue that the can’t-hurt attitude may lead to overuse of disclosures that do not affect consumer decision-making, but have implicit effects on the moral calculus of transactional harms.

Unions and NCAA football

For those of you who haven't been following the fight to unionize NCAA football players, spearheaded by Northwestern players, this Daily Show piece is a great summary of the issue.

(Here is ESPN's summary of the state of affairs: players have voted on whether to unionize -- results not yet known. An NLRB regional office ruled that the players could unionize; Northwestern's appeal to the NLRB is pending.)

When tribes team up with payday lenders, who profits?

...is the subtitle of this Al Jazeera America piece on the use of tribal sovereign immunity to shield payday lenders from the reach of consumer protection laws (while, incidentally, providing little benefit to the tribes themselves).

As the article explains:

Tribal sovereignty allows the rancherias’ businesses to claim immunity from state usury laws, making them convenient shelters for lenders who want to evade regulators.

Yet little of the revenue that flows through these tribal businesses ends up in the rancheria or benefiting tribal members, as attested by the cluster of rundown houses nearby, where some members of the tribe live. They don’t look like villainous tycoons preying on low-income Americans. They look more like those cash-strapped loan customers themselves.

Trademark Bullying from a Merchant of Death

by Paul Alan Levy

Take a gander of this image:  do you think, or even suspect, that Philip Morris, the maker of world-renowned Marlboro cigarettes, might approve this image, or might indeed be offering it for sale?

If so, you might well be one of the morons in a hurry that Philip Morris and Roberta Horton, a lawyer at its long-time law firm Arnold and Porter, consider to be so likely to be confused about sponsorship or affiliation that sale of this Tshirt represents trademark infringement or dilution.  Or, at least, so she claimed in a cease and desist letter to SkyGraphX, the maker of the shirt.

We at Public Citizen have been tangling with Arnold & Porter about its proudest client's right to kill consumers through smoking products for as long as I can remember.  We don't always agree with the point of view of people whose online free speech rights we defend, but this is a situation in which we are especially pleased to be able to defend the rights of this parodist to convey his message through a Tshirt offered for sale.  In a letter today, I have explained to Ms. Horton why her client's claims lack merit

Indeed, when I tried to talk to Ms. Horton about her client's claims and why SkyGraphX was not going to truckle to her demands, she expressed impatience because, she said, she had been able to "resolve" hundreds of situations just like this one.  I confess that this piqued my curiosity about how much successful bullying she and her client have been able to do.  One of the natural issues that can arise in a trademark infringement action is the extent to which the trademark holder has been "policing its mark," so assuming that this case ever gets into discovery, we will look forward to finding out about past bullying of this sort.  It may well that there is a pattern of oppressing free speech that may warrant injunctive or declaratory relief.

Price Controls on Payment Card Interchange Fees: The U.S. Experience

That's the name of this article by Zywicki, Manne, and Morris. Here is the abstract: 

The Durbin Amendment to the Dodd-Frank financial reform legislation capped debit card interchange fees for banks with assets of $10 billion. Credit card and prepaid card interchange fees were not regulated. The cap, which took effect on October 11, 2011, cut the average interchange fee for covered banks from $0.50 to $0.24 per transaction.

The cap reduced annual revenues from interchange fees by between $6 billion and $8 billion. Covered banks have recouped these losses in indirect ways. In particular, they have:

- Reduced the availability of fee-free current accounts. The total number of banks offering free current accounts fell by 50% between 2009 and 2013. In comparison, fee-free banking actually increased at banks not subject to the Durbin Amendment.
- More than doubled the minimum monthly holding required on fee-free current accounts between 2009 and 2012, from around $250 to over $750.
- Doubled average monthly fees on (non-free) current accounts between 2009 and 2013, from around $6 to more than $12.
- These fee increases and loss of access to free checking contributed to an increase in the unbanked population of approximately 1 million people, mainly among low-income families.
- Consumers have shifted their payment usage from debit cards to credit and prepaid cards, which were not subjected to price controls.

Most large retailers have seen significant cost reductions as a result of the Durbin Amendment, yet to date there is no evidence that those cost savings have been passed-through to consumers. Interchange fees have increased for merchants that make small-ticket transactions, as networks have eliminated discounts that they previously received, and smaller merchants have not seen any reduction in their merchant discount rates. Thus, while consumers have seen large and immediate increases in the cost of bank accounts, to date there is no evidence of reduced prices at the pump or checkout. We estimate that as a result of the Durbin Amendment, there will be a transfer of $1 billion to $3 billion annually from low-income households to large retailers and their shareholders, which have been the primary beneficiaries of the Durbin Amendment to date.

The Research Integrity Council, the CFPB, and Transparency

by Jeff Sovern

Last March, the CFPB Monitor Blog, announced  that "a group of representatives from across a variety of industries met to discuss the formation of a Research Integrity Council (RIC), the purpose of which will be to make recommendations to improve the quality and veracity of the research being conducted by the CFPB to inform its rulemaking process." According to that blog post, one concern about CFPB research was "the lack of transparency into the activities of the [CFPB's] Academic Research Council."

Yesterday, the CFPB Monitor reported that the RIC had held a Research Academic Forum. The blog post summarized remarks by the speakers, who included Thomas Durkin, retired Senior Economist in the Federal Reserve Board’s Division of Research and Statistics; Howard Beales, Professor at George Washington University School of Business and former Director of the Federal Trade Commission (FTC) Bureau of Consumer Protection; and Todd Zywicki, Professor of Law at George Mason University School of Law, Senior Scholar of the Mercatus Center, and former Director of the FTC Office of Policy Planning. Mr. Durkin "expressed concerns with the overall lack of transparency in how the CFPB conducts its research . . . ."

I was curious to discover more about RIC.  I have learned a lot from the CFPB Monitor and the firm that produces it, Ballard Spahr, and so I hoped to learn more from the RIC web site, and maybe even be able to listen to the Research Academic Forum. I googled the Research Integrity Council and Research Academic Forum, but couldn't come up with anything beyond links to the CFPB Monitor blog postings.  How about some transparency, guys?