Times Article on Paid Celebrity Endorsements on Twitter and the FTC

Here.  When consumers see celibrities endorse products on TV, they are likely to believe that the celebrities are being paid.  Do consumers have the same reaction to tweets endorsing things?  Should celebrities disclose that when they are paid for tweets? 

The revolving door starts spinning at the CFPB

The new Consumer Financial Protection Bureau, though only in its infancy, is already supplying lawyers to law firms that represent the financial services industry, as described in this article by Jenna Greene. Greene says that the law firm Buckley Sandler, whose home page describes itself as "Legal Counsel to the Financial Services Industry," "nabbed Benjamin Olson, who oversaw 40 lawyers in the bureau's Office of Regulations." Greene also notes that Ronald Rubin, "one of the agency's first enforcement lawyers," has gone to Hunton & Williams. The article quotes Rubin as saying that "[t]he CFPB's aggressive approach, unusual internal procedures and penchant for secrecy have terrified a lot of clients[.] They really want to understand what goes on inside the bureau and they need good advice on how to deal with it, and there are very few people who can provide that right now." Who better than someone who just left the CFPB to provide that understanding? [The article notes as well that current CL&P blogger Deepak Gupta left the CFPB to start a plaintiffs-side law firm.]

Supreme Court upholds aribtrator's decision allowing class arbitration

In Oxford Health Plans v. Sutter, the Supreme Court today upheld an arbitrator's decision that a particular arbitration clause authorized class arbitration. Justice Kagan wrote the main opinion, which was unanimous. The standard of review of arbitrators' decisions under the Federal Arbitration Act is highly deferential. So "the sole question for us," Justice Kagan explained, "is whether the arbitrator (even arguably) interpreted the parties’ contract, not whether he got its meaning right or wrong." The Court agreed that the arbitrator was interpreting the contract, and that was that. There's a concurring opinion written by Justice Alito in which Justice Thomas joined, suggesting that any eventual class arbitration judgment in the case would be susceptible to collateral attack.

Supreme Court Rules for Class Arbitration

In a rare win for a plaintiff in a Supreme Court case involving class actions and arbitration, the Court ruled today in Oxford Health Plans LLC v. Sutter that an arbitrator's decision to allow class rather than individual arbitration had to be accepted by the courts. What was decisive in the case was that the plaintiff was able to turn arguments of limited judicial review and deference to arbitrators--normally the stock-in-trade of arbitration advocates--in his favor. Justice Kagan wrote the opinion for a unanimous Court, holding that regardless of whether a court would agree with the arbitrator's decision that the arbitration agreement permitted class proceedings, the court had to defer to it as long as the arbitrator was "even arguably construing" the arbitration agreement.

The case arose from a lawsuit filed against a health insurance company by a class of New Jersey doctors, challenging the insurer's policies concerning amounts of Reimbursements for particular types of procedures. The insurer moved to compel arbitration, citing provisions in the lead plaintiff's contract with the company requiring arbitration of all disputes.

Once the case was before the arbitrator, the plaintiff sought to proceed on behalf of a class. After the Supreme Court decided Green Tree Financial Corp. v. Bazzle, a fractured decision upholding a state court's affirmance of a class arbitration, the arbitrator concluded that class proceedings were permissible. The insurer asked the arbitrator to reconsider when the Supreme Court later decided Stolt-Nielsen SA v. AnimalFeeds International Corp., holding that class arbitration is permissible only when the parties agreed to it in their arbitration clause. The arbitrator again held that the parties' agreement allowed class arbitration.

The insurer sought review of the decision in the federal courts, and the U.S. Court of Appeals for the Third Circuit upheld the arbitrator's decision. The insurer asked for Supreme Court review, claiming that there were differences in approach among the federal courts of appeals in evaluating claims that arbitrators erred in permitting class actions after Stolt-Nielsen.

The Supreme Court affirmed the Third Circuit's highly deferential approach to an arbitrator's decision to permit class arbitration. Critical to the decision was the insurer's concession that the arbitrator had authority to construe the contract and determine whether it allowed class proceedings. Given that the arbitrator was acting within the scope of his conceded authority, the Court held that judicial review was very limited, as arbitral awards can be vacated only in "very unusual circumstances." To show that an arbitrator acted outside his authority, the insurer would have to show that he was not "evenly arguably" interpreting the agreement, and here the decision was "through and through" an interpretation of the contract, even if not the best interpretation or even a correct one. Stolt-Nielsen, the Court held, allows overturning an arbitrator's decision to allow class proceedings only when the decision lacks "any contractual basis." An error--"even [a] grave error"--is not enough. That is "the price of agreeing to arbitration."

Justices Alito and Thomas added a short concurrence expressing concerns about the rights of class members, and whether they ever assented to the decision of the issue by the arbitrator, even though the insurer had. But because the insurer did not raise any such argument, they joined the opinion of the Court.

The decision is likely to mean that in those post-Stolt cases where arbitrators have allowed class arbitration under contracts that do not expressly prohibit it, the courts will have to allow those decisions to stand. The increasing prevalence of agreements expressly forbidding class arbitration in the wake of the Supreme Court's decision in AT&T Mobility LLC v. Concepcion may, however, limit the opinion's significance in the long term.

More generally, the decision illustrates the perils of getting what you ask for. If companies want to arbitrate, they may find themselves stuck with what arbitrators decide. Many corporations seem to have decided that the benefits of arbitration to them are worth accepting that consequence, but the Oxford decision illustrates that when arbitration does not work out the way a company may have anticipated, the courts will not always bail the company out.

CFPB bans mandatory arbitration clauses in mortgage contracts

Although I am not able to find the announcement or the rule on the Bureau's website, Mondaq is reporting that the Consumer Financial Protection Bureau has issued a rule to implement Dodd-Frank's ban on mandatory arbitration clauses in mortgage contracts. The rule is available here. The rule implements changes required by Section 1414 of the Dodd-Frank Wall Street Reform Act.

(On a related note, the CFPB's website is surprisingly bad, particularly for a new agency.)

Sheldon Whitehouse on civil juries and mandatory arbitration

Read Senator Whitehouse's essay. Here's the intro:

In recent years corporations have racked up significant victories before the U.S. Supreme Court — a corporate windfall that has come at the expense of Americans who are unable to win redress for their injuries. These decisions have also worked an often overlooked harm: They have made it harder for the civil jury to play its constitutional function in our American system of government.

[HT Paul Bland]

CFPB plans a consumer awareness study on "dispute resolution" (that is, arbitration)

by Brian Wolfman

As many of our readers know, the Dodd-Frank financial reform law authorizes the Consumer Financial Protection Bureau to regulate consumer arbitration. Under that law, the CFPB must conduct a study of consumer arbitration and then issue a report to Congress before it does anything to regulate pre-dispute aribtration clauses in consumer finance contracts. See Pub. Law 111-203, section 1028. CFPB regulation may include a ban of pre-dispute mandatory arbitration in some or all consumer finance contracts within CFPB's purview. The ban or any other regulation must be "consistent with the study." See section 1028(b).

As part of the CFPB's study, the agency has now notified the public that it plans to do a survey of consumers "exploring consumer awareness of and perceptions regarding dispute resolution provisions in credit card agreements." It is calling for public comment on whether and how that survey should be conducted. Read the CFPB's notice. As explained here, comments are due by August 6. The agency wants comments on

(a) Whether the collection of information is necessary for the proper performance of the functions of the Bureau, including whether the information shall have practical utility; (b) The accuracy of the Bureau's estimate of the burden of the collection of information, including the validity of the methods and the assumptions used; (c) Ways to enhance the quality, utility, and clarity of the information to be collected; and (d) Ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Comments submitted in response to this notice will be summarized and/or included in the request for Office of Management and Budget (OMB) approval. All comments will become a matter of public record.

Privacy Documentary Due Out This Summer

 

Schwartz & Solove: Reconciling Personal Information in the United States and European Union

Paul M. Schwartz of Berkeley and Daniel J. Solove of George Washington have written Reconciling Personal Information in the United States and European Union. Herer's the abstract:

US and EU privacy law diverge greatly. At the foundational level, they diverge in their underlying philosophy: In the US, privacy law focuses on redressing consumer harm and balancing privacy with efficient commercial transactions. In the EU, privacy is hailed as a fundamental right that trumps other interests. Even at the threshold level - determining what information is covered by the regulation - the US and EU differ significantly. The existence of personal information - commonly referred to as “personally identifiable information” (PII) - is the trigger for when privacy laws apply. PII is defined quite differently in US and EU privacy law. The US approach involves multiple and inconsistent definitions of PII that are often quite narrow. The EU approach defines PII to encompass all information identifiable to a person, a definition that can be quite broad and vague. This divergence is so basic that it significantly impedes international data flow. A way to bridge the divergence remains elusive, and many commentators have generally viewed the differences between US and EU privacy law as impossible to reconcile.

In this essay, we argue that there is a way to bridge these differences at least with PII. We contend that a tiered approach to the concept of PII (which we call “PII 2.0”) represents a superior way of defining PII than the current approaches in the US and EU. We also argue that PII 2.0 is consistent with the different underlying philosophies of the US and EU privacy law regimes. Under PII 2.0, all of the Fair Information Practices (FIPs) should apply when data refers to an identified person or where these is a significant risk of the data being identified. Only some of the FIPs should apply when data is merely identifiable, and no FIPs should apply when there is a minimal risk that the data is identifiable. We demonstrate how PII 2.0 advances the goals of both US and EU privacy law and is consistent with their different underlying philosophies. PII 2.0 thus begins the process of bridging the current gap between US and EU privacy law.

Reports on FTC-CFPB Debt Collection Roundtable

On Thursday, the FTC and CFPB held a joint roundtable titled Life of a Debt: Data Integrity in Debt Collection.  Journalist Fred Williams has a report at the Taking Charge blog. An except:

At Thursday's  meeting, [debt buyer and industry association president Richard] Munroe and other debt buyers didn't repeat the argument the collection  industry has advanced in the past: That regulation will block collection of  legitimate debt and injure the credit system. Instead, industry representatives  pleaded that the new rules, whatever shape they eventually take, be consistent  and nationwide.

And Trevor Salter at Ballard Spahr's CFPB Monitor also had posts here and here.