Instead of Liability Waivers, Reduce the Spread of Covid-19

by Jeff Sovern

My latest Bloomberg Law Insight piece. Excerpt:

No doubt the same people who want to free businesses of accountability for sickening people would oppose the outlawing of Covid-19 liability waivers as an infringement on liberty. But practically no one reads contracts—not even consumer law professors. And if consumers do read them, they probably can’t understand them. A study I co-authored found that few consumers grasped the meaning of a clause that took away their right to sue in court.

In short, the liberty involved is almost certainly only that of the companies, not the consumers.

Covid-19 cannot be blocked by a signature on a piece of paper. Congress should make sure that the same is true of responsibility for spreading it. Otherwise, we will have lots of legal documents but more people will die of the virus.

FDA warns companies to stop misleading consumers by promoting herbal products to treat Covid-19

The FDA has issued warning letters to two companies -- Griffo Botanicals and Prairie Dawn Herbs -- telling them to stop promoting non-FDA-approved herbal products "to mitigate, prevent, treat, diagnose, or cure COVID-19." 

These letters include this language:

FDA is advising consumers not to purchase or use certain products that have not been approved, cleared, or authorized by FDA and that are being misleadingly represented as safe and/or effective for the treatment or prevention of COVID-19. Your firm will be added to a published list on FDA’s website of firms and websites that have received warning letters from FDA concerning the sale or distribution of COVID-19 related products in violation of the FD&C Act. This list can be found at http://www.fda.gov/consumers/health-fraud-scams/fraudulent-coronavirus-disease-covid-19-products.

AC Transit Counsel Goes from Bad to Worse

by Paul  Alan Levy

Last week I explained the many fallacies in a contention by Jill Sprague, General Counsel of the Alameda-Contra Costa County Transit District, that Victoria Fierce, a candidate for election to the ACT Transit Board of Directors, has unlawfully posted photographs to her campaign web site that included busses and a route sign that included AC Transit’s official logo

In response, Sprague has backed off the claim that this was an improper use of the AC Transit logo. Desperate to save face, Sprague claimed in a letter lletter late last week  late last week that Fierce as making a deliberately deceptive use of the AC Transit seal, and hence committing a misdemeanor in violation of a provision in California’s Elections Code.

Well, no. Generally speaking, a seal is a round image containing pictorial elements see for example these compendiums of state seals and of city and county seals.  And until Sprague sent her letter, there is no reason to believe that AC Transit ever deemed its logo to be a “seal.” Thus, I have explained to Sprague in a letter today why she is wrong – not only is the logo not a seal, but there is no deception and the elections provision applies to mass mailings.

But Sprague also claimed in her letter to me that she has been telling other candidates that they had to stop using the logo . . . or is she threatening them with prosecution for using the seal? That's something I'd  like to find out.  It's bad enough that she had threatened Fierce, but if she is extending her reign of error to other candidates running against her employer’s incumbent leaders, serious action may be needed. I have demanded production of all the demand letters, and will report back.

UPDATE

AC Transit has dropped its demand, while suggesting that it has in mind to review the ordinance to be clearer about its intent.

Bay Area Transit District Attacks Candidate For Showing Its Logo

by Paul  Alan  Levy

Much like the case of Jeremy Whittaker a few years ago, a demand letter from the general counsel of an elective transit district in the East Bay seeks to interfere with the political campaign of a candidate seeking to replace the lawyer’s bosses. The Alameda-Contra Costa Transit District has threatened Victoria Fierce because her campaign web site violates an ordinance adopted by that municipal body because it contains photographs in which the AT Transit logo can be seen, and because the directors against whom she is running have not authorized her to carry such photos. The photos include two shots of an AC Transit bus and one shot of an AC Transit route sign (such as the image here, also displayed without authorization). 
So AC Transit demands that Fierce remove the photos and cease "any other unauthorized use.”

There is a twist on the silly demand letter that Whittaker received from Mesa's outside counsel – instead of expressly alleging trademark infringement, AC Transit relies on an ordinance that purports to make unauthorized use of the logo “unlawful.” Now, I am no expert on California municipal law, but I have not been able to identify any California statute that confers general police powers on a municipal transit district, so that it has any power to make it “unlawful” for a member of the public to display its logo. And even if the District had such powers, the First Amendment would not allow a government body to forbid truthful noncommercial speech that shows a municipal bus or route sign on which a logo is displayed.

Eleventh Circuit holds that class-action "service" or "incentive" awards for named plaintiffs are a no-no

Yesterday, in Johnson v. NPAS Solutions, the Eleventh Circuit held that so-called "incentive" or "service" awards to named class-action plaintiffs are unlawful. That is, in a class-action settlement, a named plaintiff may not be paid extra money (over and above money paid to all class members) as reimbursement/compensation for her efforts on behalf of the class or as an incentive to act as a representative plaintiff. Despite the near ubiquity of these awards in modern class-action practice, the court of appeals held that two Supreme Court decisions from the 1800's demanded this result. See Trustees v. Greenough, 105 U.S. 527 (1882), and Central Railroad & Banking Co. v. Pettus, 113 U.S. 116 (1885). The opinion addresses a couple other issues that arise frequently in class-action settlements. Worth reading.  

HT Mike Kirkpatrick

Timothy D. Lytton's Op-ed in The Conversation: Business liability shield is holding up another coronavirus bailout – . . . why immunity is unnecessary and even harmful

Here. Excerpt:

As I document in my 2019 book, “Outbreak: Foodborne Illness and the Struggle for Food Safety,” a handful of high-profile lawsuits against food companies have encouraged businesses at every link along the supply chain to improve their safety practices. That’s what happened after lawsuits against Jack in the Box over contaminated hamburgers in 1993 and Dole over E. coli in baby spinach in 2006.

Similarly, the prospect of liability for COVID-19 transmission is likely to encourage business owners to invest in cost-effective precautions, follow the advice of public health authorities, adopt industry safety standards and use common sense.

Why is Ridgeback Biotherapeutics Trying to Suppress Adverse Opinions by Issuing Frivolous Defamation Threats?

Over the past several months, I have posted a number of articles about the campaign of intimidating copyright demand letters from Mathew Higbee, who tries to extract money from individuals, nonprofits and small businesses by threatening to file frivolous copyright lawsuits. This is the first in what I expect will be series of articles about a different sort of campaign of frivolous threats: companies that try to clean up their reputations by hiring lawyers to send frivolous threats of libel litigation.  I'm not sure which is worse.

Today’s story begins with an article that ran in the Washington Post back in June, 2020, focusing on the role played by a small Miami-based pharmaceutical corporation, run by hedge fund managers and called Ridgeback Biopharmaceutics. The Post noted that Ridgeback had invested in a potential antiviral therapy, developed at Emory University with public financing, but that, when it failed to secure federal financing to develop the drug further, it made a killing by selling its rights to Merck. These facts, the reporter suggested, illustrate “the perception that companies are profiteering during a global medical crisis — especially in cases where inventions were funded by taxpayers.” The article also tied the situation to the revelations from BARDA whistleblower Rick Bright, who cited this as one of the examples of political pressure being applied to secure federal financing for private profit.

Congress Should Outlaw Contract Clauses Waiving Liability for Negligently Exposing People to COVID

by Jeff Sovern

That's the title of my post over at the ContractsProf Blog virtual symposium on contracts and COVID. Here's an excerpt: 

The argument behind liability waivers as to normal risks is that people should be able to arrange their private affairs as they wish, but COVID liability waivers are not purely private.  Virus liability waivers are very different from, say, a ski resort’s form disclaiming liability for negligently causing a skier a broken leg. A skier on crutches will not cause others to break their bones. When a business fails to take adequate precautions against infecting its customers with COVID, it increases the likelihood that not only the consumer but also others with whom the consumer comes into contact will be afflicted by the virus. Even if the consumer knowingly signed a waiver form—a dubious proposition that I discuss below--those others did not. Liability disclaimers that protect people in private contractual relationships in which others do not have an interest are a far cry from COVID liability waivers.

I look forward to the forthcoming posts from other contributors to the virtual symposium.

Chris Odinet Article: Predatory Fintech and the Politics of Banking

Christopher K. Odinet of Iowa has written Predatory Fintech and the Politics of Banking, Iowa Law Review (2021 Forthcoming). Here is the abstract:

With American families living on the financial edge and seeking out high cost loans even before COVID-19, the term financial technology or “fintech” has been used like an incantation aimed at remedying everything that’s wrong with America’s financial system. Scholars and supporters from both the public and private sector proclaim that innovations in financial technology will “bank the unbanked” and open new channels to affordable credit. This exuberance for all things tech in finance has led to a quiet yet aggressive deregulatory agenda, including, as of late, a federal assault via rulemaking on the ability of states to police the cost and privilege of extending credit within their borders. This deregulation and the ethos behind it have made space for growth in high cost, predatory lending that reaches across state lines via websites and smart phones and that is aggressively targeting cash-strapped families. These loans are made using a business model whereby funds are funneled through a group of lightly regulated banks in a way designed to take advantage of federal preemption. Fintech companies rent out and profit from the special legal status of these bank partners, which in turn keeps the bank’s involvement in the shadows. Stripping down fintech’s predatory practices and showing them for what they really are, this Article situates fintech in the context of this country’s longstanding dual banking wars, both between states and the federal government and between consumer advocates and banking regulators. And it points the way forward for scholars and regulators willing to shake off fintech’s hypnotic effect. This means, in the short term, using existing regulatory tools to curtail the dangerous lending identified here, including by taking a more expansive view of what it means for a bank to operate safely and soundly under the law. In the long term, it means having a more comprehensive and national discussion about how we regulate household credit in the digital age, specifically through the convening of a Twenty-First Century Commission on Consumer Finance. The Article explains how and why the time is ripe to do both. As the current pandemic wipes out wages and decimates savings, leaving desperate families turning to predatory fintech finance ever more, the need for reform has never been greater.

Tragic News About Georgetown Consumer Law Professor Anne Fleming

Anne died Tuesday night of an embolism. Those of us who knew Anne know what a loss this is.  Those who weren't lucky enough to have met her may know her through her work or may have seen her activities described on this blog here, here, and here. More about her here. Anne's death is a painful blow to the community of consumer law professors.