Garcia Opposes En Banc Rehearing But Ducks Issues of Prior Restraint and Copyright Misuse

by Paul Alan Levy

I blogged recently about several of the issues raised by Cindy Lee Garcia's copyright claims against Google, which we addressed in an amicus brief filed well before the amicus due date, specifically to give her the chance to address those issues.  I suppose that I should be flattered that Garcia mentions the Public Citizen amicus brief in footnote 6 (page 8) of her response, but she mischaracterizes our argument (we discussed the issue of the heckler's veto in explaining Public Citizen's interest in maintaining robust section 230 immunity, not in addressing the panel opinion), while not responding to the issues of prior restraint and copyright misuse that we did raise for the panel's consideration.

The government tests cars for crashworthiness -- why not child car seats too?

That's the question implicit in today's NYT report on tests of child car seats run by our friends at Consumer Reports. The Times explains:

A new testing procedure, said by the magazine to represent an investment of more than a half-million dollars and over two years of work, was developed to evaluate the crash protection provided by child seats. The results are intended to equip parents with the information needed to compare the safety level of seats, in this case those designed for infants. . . .

While ratings of crash safety are readily available for new cars and trucks through the government’s New Car Assessment Program on a five-star scale, there is no comparable ranking of children’s car seats conducted by the National Highway Traffic Safety Administration.

The obvious question: why not? Consumer Reports tested the seats under tougher (and more realistic) conditions than required to meet federal safety standards, and found significant differences in results. Read more here.

Which Law Schools Are Teaching Consumer Law This Year?

by Jeff Sovern

In preparation for remarks at the University of Houston's  Teaching Consumer Law Conference, to be held this year in Santa Fe in May, I asked my research assistant, Preston Postlethwaite, to review the web sites of the ABA-accredited schools to see which are teaching consumer law courses this school year.  According to Preston, 49 schools offer a consumer law course or a consumer law clinic or both this year.  Many more schools list a consumer law class among their courses but are not providing it this year.  Because the data are based on school web sites, and such web sites are sometimes not updated timely or may not be accessible, the information is probably not completely correct.  Accordingly, I've pasted in the data below the fold.  If you know of a law school's information that is not correctly reported below, please so state in the comments.  Preston's data also indicate who is teaching the various courses and whether they are full- or part-time where that information is available. Please indicate any errors or omissions in that information as well. I'm disappointed to see that three-quarters of the ABA-approved law schools don't offer the course, especially since Brian Leiter's poll found that consumer law was the top choice for subjects that receive less attention in law schools than is deserved.  Thanks!

 

Supreme Court Denies Frequent Flyer's Claim Against Airline

By Adina Rosenbaum, Public Citizen

This morning, the Supreme Court handed down its decision in Northwest v. Ginsberg, holding that the Airline Deregulation Act (ADA) preempts Rabbi S. Binyomin Ginsberg’s claim that Northwest breached the covenant of good faith and fair dealing when it terminated his frequent flyer program membership.

Rabbi Ginsberg was a long-standing member of Worldperks, Northwest’s frequent flyer program.  In 2008, Northwest abruptly terminated his membership in the program. Rabbi Ginsberg filed suit, alleging, among other things, that the airline’s termination of his membership was a breach of the implied covenant of good faith and fair dealing. The district court held that his claim was preempted by a provision of the ADA that preempts state laws, regulations, and other provisions relating to air carrier prices, routes, or services.  The Ninth Circuit reversed, allowing the claim to go forward, and the Supreme Court took the case.

The Supreme Court’s decision this morning reversed the Ninth Circuit.  The Court held that covenant-of-good-faith claims are preempted if they seek “to enlarge the contractual obligations that the parties voluntarily adopt.”  It determined that, under Minnesota law (the law at issue in the case), covenant-of-good-faith claims are state-imposed obligations, rather than voluntarily-adopted obligations, because the State does not allow parties to contract out of the covenant and because the State has created various exemptions to the covenant for policy reasons, thereby implying that its decision not to exempt certain contracts from the covenant is also based on policy.  “When the application of the implied covenant depends on state policy,” the Court stated, “a breach of implied covenant claim cannot be viewed as simply an attempt to vindicate the parties’ implicit understanding of the contract.”

In addition, the Court rejected the argument that common-law claims are not preempted by the ADA because they do not involve a “law, regulation, or other provision having the force and effect of law.”  It also rejected the argument that claims related solely to membership in a frequent flyer program (rather than to flights themselves) are not preempted because they are not related to airline prices, routes, or services.

[Guest blogger Adina was counsel for Ginsburg in the Supreme Court.]

Fifth Circuit revives Texas offshoot of Dukes v. Walmart class action

After the Supreme Court (in)famously reversed class certification in the nationwide Dukes v. Walmart employment discrimination class action in 2011, smaller class actions have gone forward in its place in various parts of the country. The case against Walmart in Texas was dismissed by the district court based on the statute of limitations. This week, the Fifth Circuit reversed, holding that the class members' claims were tolled in accordance with a California district court's order in the prior case.

Supreme Court strikes down federal aggregate campaign donation limits under First Amendment

That's what the Court did today, by a 5-4 vote, in McCutcheon v. Federal Election Commission. The main opinion was written by Chief Justice Roberts. Justice Thomas, concurring in the judgment, would have gone further and overruled Buckley v. Valeo, which, among other things, upheld certain individual limits on contributions to particular candidates. No surprise there. He has urged that Buckley be ditched before. The aggregate limits at issue in McCutcheon limit (or, I guess I should say now, used to limit) how much money a donor may contribute in total to all candidates or political committees in a particular election cycle. See 2 U.S.C. § 441a(a)(3). Justice Breyer wrote the dissenting opinion.

 

Ryan Budget Would Subject the CFPB to the Congressional Appropriation Process

No surprise, in view of past Republican attempts to cripple the CFPB by doing just that, but still an unfortunate proposal. The Hill has the story here.

A Comment on the Senate Banking Committee Hearing on Alternative Financial Products

by Jeff Sovern

Last week, the Senate Banking Committee held a hearing on Alternative Financial Products. The
American Banker account is here, albeit behind a paywall.   I found most interesting the payday lending discussion, and in particular the arguments made against regulation.  At one point, a Senator (I think Toomey, Republican of Pennsylvania), questioned a witness, Stephanie Klein, Director of NetCredit Consumer Lending, Enova International, about payday lending. The senator seemed to be trying to make the point that payday lending need not be regulated because payday lenders already verified borrowers' ability to repay loans and also face competition, therefore forcing them to charge low rates or else lose market share, and was trying to elicit answers from Klein to support that position.  The only problem was that the witness, Klein, while working for a payday lender, does not seem to have anything to do with payday lending!  Rather, she works with installment loans. Consequently, while she was able to testify that her company verifies borrowers' ability to repay installment loans and faces competition in offering such loans, she was not able to speak to payday loans.  The senator's attempt therefore was what my 11-year old son would call an epic fail.

Senator Toomey's opening statement included an argument against payday lending regulation.  According to the American Banker report:

"What about allowing free men and woman to decide what works for them?" said Sen. Pat Toomey, R-Penn., the top Republican on the Senate financial institutions subcommittee. "I've got to say there's a breathtaking underlying arrogance by the presumption of wealthy people who have never been in those circumstances that they know better than those people who make these 'foolish' decisions and borrow money from these institutions."

I think we all agree that people should be able to decide what they want to do, within limits. The question is what should those limits be. The law blocks people from doing certain things that are harmful to themselves or others. Thus, "free men and women" can't buy heroin even if they think it "works for them" because heroin is harmful to them.   Nor can they get antibiotics without a prescription just because they want them because overuse of antibiotics is harmful to all of us.  So it is with payday lending for some people. Payday lending is like alcohol: a positive for some but a disaster for others (according to the CFPB's latest report, about which Brian blogged here, it's a disaster for many more people than it helps).  The argument for restricting people's freedom with payday loans is that (1) payday loans harm some payday borrowers; and (2) just as bad borrowing and lending brought down the economy in the Great Recession, bad payday borrowing can harm others.  To paraphrase then-professor, now-Senator Elizabeth Warren, we wouldn't allow people to buy a toaster which would start a fire that would destroy lives, nor should we allow people to borrow in a way which would destroy their lives. This isn't to say that payday lending should be barred in all circumstances; the CFPB's goal is to craft rules which make payday lending available to those who benefit from it while keeping those who would be destroyed by it away. It will be interesting to see what mechanisms they come up with to do that. And if expressing those views means I am breathtakingly arrogant (not that I'm wealthy), then I guess that's something I share with those who banned the sale of heroin. 

FTC Stops Telemarketing Scam That Defrauded Seniors

“The Federal Trade Commission has moved to close down a multi-million dollar telemarketing fraud that targeted U.S. seniors across the nation, scamming tens of thousands of consumers,” according to an FTC press release.

The defendants used a telemarketing boiler room in Canada … to cold-call seniors claiming to sell fraud protection, legal protection, and pharmaceutical benefit services. The cost for the defendants’ alleged services ranged from $187 and $397.

In some instances, the telemarketers who carried out the fraud impersonated government and bank officials, and enticed consumers to disclose their confidential bank account information to facilitate the fraud. The defendants used that account information to create checks drawn on the consumers’ bank accounts. They then deposited these “remotely created checks” into corporate accounts they established in the United States. The U.S.-based defendants then transferred the money to accounts controlled by the Canadian defendants, according to an analysis of bank records.

After a hearing on March 27, three defendants agreed to court-issued preliminary injunctions, and the court imposed a preliminary injunction against a fourth defendant. The court found that funds “should be preserved so they can potentially be returned to the victims of the telemarketing fraud scheme.”

The scheme drew in more than $20 million between May 2011 and December 2013.

Does compliance with the FDCPA excuse violations of the TCPA?

No, explains the Eleventh Circuit, reversing summary judgment against a consumer who was hounded by State Farm with 327 autodialed calls over a span of six months in an attempt to collect somebody else's debt. The plaintiff told State Farm to stop calling. Even if the FDCPA required him to do so in writing, the TCPA did not, the court reasoned, so judgment for State Farm was inappropriate. Read more here (see pp. 21-26).