American Banker: Supreme Court Case May Have Big Impact on CFPB

Here (but behind a paywall).  Among the points made in the article are that the recess appointment of current CFPB Director Richard Cordray is likely to expire before the Supreme Court rules and that banks could be hurt if Cordray's appointment is ruled unconstitutional because that would leave banks subject to the Bureau but not nonbank lenders. The article also offers speculation about what will happen when Cordray's appointment expired.  Alan Kaplinsky is quoted as saying that the president would be unlikely to make another recess appointment because that would be seen as thumbing his nose at the court (but is that an attempt by Alan to forestall such a recess appointment?). An alternative is for the Secretary of the Treasury to appoint an acting director, but such an acting director would not have the full range of powers accorded a director to protect consumers.

DC Circuit Affirms Dismissal of Anti-SLAPP Motion in Sherrod v. Breitbart

by Paul Alan Levy

In a relatively brief opinion issued this morning, the DC Circuit has affirmed the trial court's refusal to strike Shirley Sherrod's libel action against bloggers Breitbart nd O'Connor, but on the narrowest possible ground that should not have any adverse long-term impact on future anti-SLAPP motions. 

After canvassing the way in which various other courts of appeals have treated the appealability of antiSLAPP denials under the collateral order doctrine, the court punted that issue on the ground that the jurisdictonal issue was sufficiently difficult, and the merits were so easily decided, that the ruling below should be affirmed on that ground.  The court then held that the anti-SLAPP motion had been filed untimely, in that the DC anti-ASLAPP law sets a firm deadline for filing such motions and that, under D.C. Circuit precedent, statutory deadlines cannot be extended under Federal Rule 6(b) and therefore the district court's granting of a consent motion to extend the time to answer did not effectively defer the statutory deadline.  The court therefore did not have occasion to decide whether the DC Anti-SLAPP law applies in federal courts under the Erie doctrine.

Public Citizen had filed an amicus brief, authored by Julie Murray, arguing that the court had appellate jurisdiction under the collateral order doctrine, and that the anti-SLAPP law applies under Erie.

Will Banks Get Out of the Deposit Advance Loan Business? If So, Is That Desirable?

by Jeff Sovern

Deposit advance loans are banks' answer to payday loans.   Just like payday loans, they tend to be for short periods and high interest rates.  And just as with payday loans, consumer advocates fear that consumers get trapped in them, in the sense that many borrowers can't come up with the money to pay off the principal, and so just keep rolling them over and over--thereby paying the high interest rates for a succession of short-term loans, rather than paying a lower interest rate for a longer term loan.  Regulators have responded by proposing limits to such loans.  Last week, the Wall Street Journal reported that some banks issuing deposit advance loans are threatening to stop making the loans if the regulators carry through on their proposal. 

That raises the question of whether it would be a bad thing if the banks did so.  No doubt many consumer advocates would see it as a positive for banks to stop making the loans.  On the other hand, as CFPB director Richard Cordray has noted, there is a demand for these products.  What would the borrowers who are now taking out such loans do if they could no longer get them?  If they ended up with payday lenders, it's hard to see how that would be an improvement. If, on the other hand, they found a cheaper way to borrow (credit cards?  family member?) that would be a positive, but if they had access to such a source of funds, presumably they would already choose it over the high cost borrowing--though that assumes they recognize it as cheaper.  If they couldn't borrow from another source, and so did without the money, would that be better?  Does the answer depend on what they would have used the money for and whether they wouid have been ensnared by a debt trap?  And who should make that judgment?  The consumer or regulators? All this raises one of the most fundamental questions in consumer protection law: should consumers be able to make these judgments for themselves, or does the fact that so many consumers have made such judgments poorly mean that regulators should make the judgment for them? 

When Elizabeth Warren first proposed the CFPB, she often drew an analogy to a defective toaster.  She said you can't buy a defective toaster that can burn down your house, but you can take out a bad mortgage that will cost you your home.  Are these loans like the defective toaster, in that consumers can't see them for what they are?  I envy the certainty of those who believe they know the answer.

 

Another preemption loss in the Supreme Court for consumers injured by generic drugs

by Brian Wolfman

The Supreme Court today held in Mutual Pharmaceutical Co. v. Bartlett that FDA approval of a generic  prescription drug preempts a state-law damages claim premised on the drug's design defect. The 5-4 majority opinion is written by Justice Alito. Basically, Justice Alito says that a design-defect claim is, in effect, a claim that the drug's label should be changed to warn of the drug's design-induced hazards, and state law has no business premising a tort duty on a change in an FDA-approved generic drug label (which is what the Court held earlier in PLIVA v. Mensing). There's a dissent by Justice Breyer joined by Justice Kagan and a dissent by Justice Sotomayor joined by Justice Ginsburg. Another loss for injured consumers' access to the courts. So, after this loss, let's see where we are with access to the courts for people injured by prescription drugs and medical devices.

In 2011, the Court held 5-4 in PLIVA v. Mensing that FDA approval of a generic prescription drug and its labeling generally preempts a state-law damages claim premised on a failure to warn of the drug's hazards. In 2009, the Supreme Court held 6-3 in Wyeth v. Levine that, in general, FDA approval of a brand-name prescription drug and its labeling does not preempt a state-law damages claim premised on the drug manufacturer's failure to warn of the drug's hazards. Taking today's decision along with PLIVA and Wyeth, we have a nonsensical scheme of access to the civil justice system for people harmed by prescription drugs. If you (the patient) happen to have been prescribed a brand-name drug and that drug injures you, your suit against the manufacturer can go forward; but if you were prescribed the brand-name drug's generic copy -- which public policy has favored for three decades -- your suit against the generic manufacturer is kaput. Got that?

The situation is hardly more rational with respect to medical devices. In 1996, the Supreme Court held, 5-4 in some respects and 9-0 in others, in Medtronic v. Lohr that the federal Medical Device Amendments (MDA) generally do not preempt state-law injury claims against  manufacturers of devices approved on the basis of their "substantial equivalence" to already-marketed devices (so-called 510(k) devices). 510(k) devices comprise the vast majority of devices. But 12 years later, in 2008, the Court held 8-1 in Riegel v. Medtronic that state-law claims alleging injuries from devices that go through the more thorough "pre-market approval" process -- which applies to devices most likely to cause injury and death when they fail -- are preempted by the MDA, unless the state-law claims "parallel" federal device requirements.

More later.

Supreme Court grants review in Noel Canning recess-appointment case

Here's the Supreme Court's order:

12-1281

NLRB V. NOEL CANNING, ET AL.

The petition for a writ of certiorari is granted. In addition to the questions presented by the petition, the parties are directed to brief and argue the following question: Whether the President's recess-appointment power may be exercised when the Senate is convening every three days in pro forma sessions.

Read the cert petition filed by the Solicitor General, which contains the two other questions presented:

The Recess Appointments Clause of the Constitution provides that “[t]he President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session.” Art. II, § 2, Cl. 3. The questions presented are as follows:

1. Whether the President’s recess-appointment power may be exercised during a recess that occurs within a session of the Senate, or is instead limited to recesses that occur between enumerated sessions of the Senate.

2. Whether the President’s recess-appointment power may be exercised to fill vacancies that exist during a recess, or is instead limited to vacancies that first arose during that recess.

 

Is First Amendment protection of commercial speech undermining consumer protection and public health?

That's the question addressed in "The First Amendment and Public Health, At Odds," American Journal of Law & Medicine, 39 (2013): 298-307, by Ted Mermin and Samantha Graff. Here's the article's first couple paragraphs (with the footnotes omitted):

At the turn of the last century, allies of industry on the Supreme Court deployed a novel constitutional doctrine to thwart government regulations aimed at improving public health and safety. During the Lochner v. New York era, the Supreme Court discovered a right to “freedom of contract” in the Due Process Clause of the Fourteenth Amendment that advanced the “economic liberty” of businesses to conduct their affairs without government oversight. The newfound freedom of contract forbade, for example, public policies aimed at improving factory conditions by setting maximum working hours, forbidding child labor, or setting a minimum wage. The Court later somewhat abashedly changed course, finding that government in fact had great leeway to implement economic regulations protecting and promoting general welfare.

Today, seventy-five years after the Supreme Court repudiated the doctrine of economic substantive due process, the Court has backtracked to the notion that the Constitution significantly impedes the government’s ability to safeguard public health and safety by regulating commercial activities.The old result has been achieved, however, with a new instrument. Rather than the Fourteenth Amendment and freedom of contract, the Supreme Court has now turned to the First Amendment and freedom of speech.

Watch Ralph Nader on TV talking about his new book

Some of our readers may want to watch Ralph Nader on C-SPAN tomorrow, Saturday June 22, at 7:45 pm
EDT. He'll be talking about his latest book, Told You So: The Big Book of Weekly Columns. He'll discuss his decades of writing on topics ranging from auto safety to the Freedom of Information Act.  

 

 

"Regulatory Approaches to Ending Cigarette-Caused Death and Disease in the United States"

That's the name of this article by law professor Dick Daynard. Here is the abstract:

Cigarettes result in over 400,000 preventable American deaths each year. In 2011, fewer than twenty percent of adults smoked. Since the publication of the first U.S. Surgeon General’s Report on Smoking and Health nearly fifty years ago, when smoking prevalence was around forty percent, policies such as smoke-free laws, large tax increases, and litigation have collectively contributed to cut smoking prevalence in half. Unfortunately, no one expects the mix of policies currently proposed, which includes further tax increases, spatial smoking restrictions, somewhat higher minimum age restrictions, adverse publicity, and quitting assistance, to reduce U.S. smoking prevalence below fifteen percent in the foreseeable future. So is there a legally viable endgame strategy that could work in the United States? There are several endgame strategies that will be discussed and two that appear to have particular promise in the United States.

Is American Express v. Italian Colors the "Worst Supreme Court Arbitration Case Ever"?

So says Paul Bland in a persuasive blog post.

To sum up the Roberts Court's class-action jurisprudence...

To a hammer, everything looks like a nail. And to a Court bent on diminishing the usefulness of Rule 23, everything looks like a class action, ready to be dismantled.

-Justice Kagan, dissenting today in Amex v. Italian Colors.

She doesn't cite Walmart v. Dukes, Comcast v. Behrend, Genesis Healthcare v. Symczyk, or AT&T v. Concepcion, but I think she had more than today's decision in mind when she wrote that.