"Snake Oil Salesmen or Purveyors of Knowledge: Off-Label Promotions and the Commercial Speech Doctrine"

That's the title of this article by Constance Bagley, Joshua Mitts, and Richard Tinsley. The article deals with concerns about last year's Caronia decision, where the Second Circuit ditched the misdemeanor conviction of a drug company prescription drug representative, saying that his promotion of one of the company's products was protected by the First Amendment. (Go here for more info on Caronia.) Here's the abstract:

The Second Circuit's December 2012 decision in United States v. Caronia striking down the prohibition on off-label marketing of pharmaceutical drugs has profound implications for economic regulation in general, calling into question the constitutionality of restrictions on the offer and sale of securities under the Securities Act of 1933, the solicitation of shareholder proxies and periodic reporting under the Securities Exchange Act of 1934, mandatory labels on food, tobacco, and pesticides, and a wide range of privacy protections. In this Article we suggest that Caronia misconstrues the Court's holding in Sorrell v. IMS Health, which was motivated by concerns of favoring one industry participant over another rather than a desire to return to the anti-regulator fervor of the Lochner era. Reexamining the theoretical justification for limiting truthful commercial speech shows that a more nuanced approach to regulating off-label marketing with the purpose of promoting public health and safety would pass constitutional muster. We argue that as long as the government has a rational basis for subjecting a particular industry to limits on commercial speech intended to further a legitimate public interest rather than unfounded paternalism and does not discriminate against disfavored industry participants, those limits should be subject to intermediate scrutiny under the Central Hudson standard. Finally, we critique the FDA’s 2011 Draft Guidance for Responding to Unsolicited Requests for Off-Label Information and present a proposal for new rules for regulating the off-label marketing of pharmaceutical drugs based on transparency, the sophistication of the listener and the type of information offered, and the requirement that the pharmaceutical company comply with ongoing duties of training, monitoring, reporting, and auditing.

Using the corporate fine print of debit card contracts to zing public-transit riders (and, in turn, to generate non-fare revenue fees for cash-strapped government agencies)

by Theresa Amato (guest post)

Reporter Jon Hilkevitch’s March 20 front-page Chicago Tribune story (“CTA’s Ventra debit option rife with fees, Contract’s fine print shows good deal for agency, not users”) describes the multiple unexpected charges awaiting customers in the fine print should they sign up for a prepaid debit card account along with their new “Ventra” fare card that the Chicago Transit Authority (CTA) and Pace bus system plan to roll out this summer. 

The terms of this first-in-the-nation transit-plus-optional-debit-card payment system are detailed in a 1000-page plus contract. The contract allows the CTA to get from participating corporate vendors “nonfare revenue generated by the debit card fees” extracted from CTA's consumers who opt for the debit card. Undoubtedly, many of the consumers will be unaware of the fees. These debit card fees potentially include, in addition to an ATM fee, a $2 paper statement, if requested, a $2 fee for a call to an “operator-assisted” customer service center, and then $10 per hour for an “Account Research Fee,” a $5-a-month “dormancy fee” after 18 months of no purchases or transfers, a $2.95 Internet “reload fee,” a $6 “balance refund fee,” and much more.   

The CTA defends the card as “voluntary” and competitive (go here), claiming both that the fees are lower than some other similar debit card fees and that the new CTA card is a benefit to low-income riders who do not have a bank and “don’t own a credit or debit card.” 

Anyone else find disturbing this use of a government agency and public transportation system to issue fare cards marketed in conjunction with debit cards that have the potential to gouge consumers through corporate fine-print practices? 

Loyola Consumer Law Review Symposium on Debt Collection in the Modern Economy

The Symposium is in Chicago on Friday, April 5, 2013.  Looks to be very interesting.  More information here.

The FDA has given up the legal fight to defend its graphic cigargette labels

by Brian Wolfman

As explained in this article by Brady Dennis, the Department of Justice and the FDA have acquiesced in the D.C. Circuit's ruling striking down the FDA's new graphic cigarette labels on First Amendment grounds and announced that the government will not seek Supreme Court review of the D.C. Circuit's ruling. The Sixth Circuit had taken a different view, but it appears that the government thought its chances were slim before the Supreme Court.

 

Dennis explains:

Facing a deadline to appeal to the Supreme Court, the Justice Department declined, Attorney General Eric H. Holder Jr. said in a letter to House Speaker John A. Boehner (R-Ohio) dated March 15. “In these circumstances, the Solicitor General has determined, after consultation with [the Department of Health and Human Services] and FDA, not to seek Supreme Court review of the First Amendment issues at the present time,” the letter said. ... Dozens of countries already require graphic warning labels similar to those proposed by the FDA, and a survey by the World Health Organization found that they were more effective than text-only labels in deterring smoking.

One of the FDA's 9 graphic warnings appears above. Here are the other 8:

  

Automotive News Survey Finds Many Dealers Expect CFPB to Bar Use of Arbitration Clauses

Here.  An excerpt:

* * * Nearly 40 percent of dealers responding to a recent unscientific Automotive News survey also expressed concern that they soon will lose  the arbitration option.

"I think arbitration is on its last legs," said Tom Hudson, a partner in the  Hudson Cook law firm in Hanover, Md., who predicts the bureau could issue such a  ruling before year end.

Senate Banking Committee Approves Cordray Nomination 12-10

Now it goes to the floor, again, where Republicans are expected to prevent it from ever getting to a vote. The Washington Post has the story here. 

Debate On the CFPB's Constitutionality at Georgetown Law

For those of you in Washington: Tomorrow afternoon at Georgetown Law, I'll be at debating C. Boyden Gray on the constitutionality of the CFPB and Rich Cordray's recess appointment. Here's the announcement:

The Consumer Law Society, The Federalist Society, and The Georgetown Center for the Constitution present:

The Constitutional Challenge to the Consumer Financial Protection Bureau: A Debate

Thursday, March 21, 2013 at 3:30 p.m.

Gewirz Student Center, Twelfth Floor

Speakers:

C. Boyden Gray

Founding Partner, Boyden Gray & Associates LLP

Deepak Gupta, ‘02

Founding Principal, Gupta Beck PLLC

Moderated by:

John D. Ohlendorf

Fellow, Georgetown Center for the Constitution

Does the Consumer Financial Protection Bureau violate the Separation of Powers doctrine?  What are the implications of the D.C. Circuit’s recess appointments decision in Noel Canning for the actions already taken by the Consumer Financial Protection Bureau?

Please join us for a debate between C. Boyden Gray, former White House Counsel to George H.W. Bush, and counsel for the plaintiffs in National Bank of Big Spring v. Geithner – a constitutional challenge to several parts of Dodd-Frank, including the CFPB and the appointment of Richard Cordray as the CFPB’s director – and Deepak Gupta, prominent consumer law attorney, Supreme Court advocate, and Adjunct Professor at Georgetown Law.

JP Morgan says it will give customers rights against payday lenders

We have blogged recently (here and here) about the role some of the world's largest banks play in facilitating the payday loan industry. The latter article explained that JP Morgan was in the process of re-thinking its practices. Yesterday, JP Morgan announced its new policies, as explained in this article by Jessica Silver-Greenberg. Here's an excerpt:

JP Morgan Chase will make changes to protect consumers who have borrowed money from a rising power on the Internet — payday lenders offering short-term loans with interest rates that can exceed 500 percent. JPMorgan, the nation’s largest bank by assets, will give customers whose bank accounts are tapped by the online payday lenders more power to halt withdrawals and close their accounts. Under changes to be unveiled on Wednesday, JPMorgan will also limit the fees it charges customers when the withdrawals set off penalties for returned payments or insufficient funds. The policy shift is playing out as the nation’s biggest lenders face heightened scrutiny from federal and state regulators for enabling online payday lenders to thwart state law. With 15 states banning payday loans, a growing number of the lenders have set up online operations in more hospitable states or foreign locales like Belize, Malta and the West Indies to more nimbly dodge statewide caps on interest rates. Bank of America and Wells Fargo said that their policies on payday loans remained unchanged.

"The Economic Case Against Arizona's Immigration Laws"

That's the name of this article by Alex Nowrasteh of the Cato Institute. Here's the abstract:

Arizona’s immigration laws have hurt its economy. The 2007 Legal Arizona Workers Act (LAWA) attempts to force unauthorized immigrants out of the workplace with employee regulations and employer sanctions. The 2010 Support Our Law Enforcement and Safe Neighborhoods Act (SB 1070) complements LAWA by granting local police new legal tools to enforce Arizona’s immigration laws outside of the workplace. LAWA’s mandate of E-Verify, a federal electronic employee verification system, and the “business death penalty,” which revokes business licenses for businesses that repeatedly hire unauthorized workers, raise the costs of hiring all employees and create regulatory uncertainty for employers. As a result, employers scale back legal hiring, move out of Arizona, or turn to the informal economy to eliminate a paper trail. SB 1070’s enforcement policies outside of the workplace drove many unauthorized immigrants from the state, lowered the state’s population, hobbled the labor market, accelerated residential property price declines, and exacerbated the Great Recession in Arizona. LAWA, E-Verify, and the business death penalty are constitutional and are unlikely to be overturned; however the Supreme Court recently found that some sections of SB 1070 were preempted by federal power. States now considering Arizona-style immigration laws should realize that the laws also cause significant economic harm. States bear much of the cost of unauthorized immigration, but in Arizona’s rush to find a state solution, it damaged its own economy.

 

 

Supreme Court issues its first CAFA decision

by Brian Wolfman

The Supreme Court held this morning in Standard Fire Insurance v. Knowles that a named plaintiff's stipulation that the plaintiff class is seeking less than the Class Action Fairness Act's minumum jurisdictional amount does not preclude a federal district court from assuming jurisdiction under the Act. Justice Breyer's unanimous opinion is just seven pages. The opinion's first two paragraphs set the stage and sum up the ruling:

The Class Action Fairness Act of 2005 (CAFA) providesthat the federal “district courts shall have original jurisdiction” over a civil “class action” if, among other things,the “matter in controversy exceeds the sum or value of $5,000,000.” 28 U. S. C. §§1332(d)(2), (5). The statute adds that “to determine whether the matter in controversyexceeds the sum or value of $5,000,000,” the “claims of the individual class members shall be aggregated.” §1332(d)(6).

The question presented concerns a class-action plaintiff who stipulates, prior to certification of the class, that he, and the class he seeks to represent, will not seek damages that exceed $5 million in total. Does that stipulation remove the case from CAFA’s scope? In our view, it does not.

CAFA was enacted in 2005. Today's ruling is the Supreme Court's first CAFA decision, and it's a win for defendants. Plaintiffs love to choose the forum, and, with many exceptions, the law generally accords plaintiffs their choice of forum.  But CAFA sought to give defendants a substantial say over the forum in class actions, allowing them to litigate in many instances in their preferred forum: federal court. Today's decision eliminates a potential tool -- the "we-will-seek-no-more-than-$5-million" stipulation -- for a class plaintiff seeking a state-court forum.