A window on foreclosure process in Florida

This NPR story this morning takes a look at Florida's judicial foreclosure process, comparing it unfavorably with other states where foreclosures move faster. A banker blames the courts and defense attorneys; a judge blames the banks sloppy paperwork; a defense attorney chimes in for consumer protection. Worth a listen (or read), though the thrust of the story seemed to be that the process is too slow, with little discussion of the importance of safeguards, and no comments from struggling homeowners.

Is the Recess Appointment Case Justiciable?

by Brian Wolfman

We have covered the D.C. Circuit's recent ruling striking down President Obama's "recess" appointments to the NLRB here, here, here, and here. In defending the case, government lawyers did not argue that the case was not justiciable under the political question doctrine, and the D.C. Circuit did not raise and decide the issue on its own (which it should have if it thought there was a serious justiciability question). I don't know why the government did not raise the issue, but one reason may be that it thought the claim quite weak (as the D.C. Circuit panel apparently did). I'll note that, in recent years, the Supreme Court has rarely found constitutional challenges to be non-justiciable under the political question doctrine. See Hart & Wechsler's Federal Courts and the Federal System 247-48 (6th ed. 2009).

For another point of view, read this opinion piece by Catholic University law prof Victor Williams, which argues strenuously that the D.C. Circuit was presented with a political question. Williams filed an amicus brief in the D.C. Circuit case, but, as indicated, the panel ignored it.

Ninth Circuit: Class Action Plaintiffs Need Not Arbitrate Claims Against Toyota Over Faulty Brakes

by Brian Wolfman

Typically, consumers buy or lease new (and used) cars from car dealers, not car makers. When Toyota owners sued Toyota over faulty anti-lock brakes recently, Toyota sought to compel arbitration, invoking the arbitration clauses in purchase contracts that the individuals plaintiffs had with various Toyota dealers. Believe it or not, that gambit is not terribly unusual. There's a body of case law arising from attempts by defendants to enforce arbitration clauses against non-signatories and, as in the Toyota case, by non-signatories. The results are not uniform, and they depend on the facts (as most things do!), including the nexus, if any, between the contract and the underlying dispute and the type of relationship, if any, between the signatories and the non-signatories.

In any event, the Ninth Circuit's new decision in Kramer v. Toyota Motor Corporation -- which said no to Toyota's attempt to take advantage of the arbitration clauses in the consumer-dealer contracts -- is worth a look. Among other things, the Ninth Circuit rejected Toyota's argument that it should be able to invoke the arbitration clause because the plaintiffs' claims concerning the faulty brakes are "intertwined with" the subject matter of the plaintiffs' purchase agreements with the dealers.

This discussion leaves me wondering: Why don't car companies enter into some kind of "agreement" with buyers and lessors of their cars that purports to require arbitration of future tort claims, while retaining the dealer as the (principal) seller or lessor of the cars?

Should All Consumers Get Free Wi-Fi?

That's what the Federal Communications Commission would like to see, as explained in this front-page Washington Post article by Cecilia Kang. As you might imagine, some industries like this idea a tad better than others. Here's a short excerpt:

The federal government wants to create super WiFi networks across the nation, so powerful and broad in reach that consumers could use them to make calls or surf the Internet without paying a cellphone bill every month. The proposal from the Federal Communications Commission has rattled the $178 billion wireless industry, which has launched a fierce lobbying effort to persuade policymakers to reconsider the idea, analysts say. That has been countered by an equally intense campaign from Google, Microsoft and other tech giants who say a free-for-all WiFi service would spark an explosion of innovations and devices that would benefit most Americans, especially the poor.

The article goes on to say that some people think that the government-supplied network envisioned by the FCC won't be maintained adequately and/or won't be powerful enough to handle the expected traffic.

Feds Issue Final Rule Requiring Drug Companies to Submit Data on Perks They Give to Doctors and Hospitals

by Brian Wolfman

The federal Centers for Medicare and Medicaid Services (CMS) has issued this final rule that will require manufacturers of drugs, biologics, medical devices, and certain other medical products to report annually to the Secretary of HHS about the payments the manufacturers make to doctors and hospitals. The Secretary is then required to make the information available on a public website. The manufacturers must collect the data by August of this year and submit it to CMS by April 2014. The government website should be up and running by September 2014. A variety of perks must be reported, including speaking fees, consulting payments, research, gifts, food, entertainment, honoraria, research grants, royalties, and license fees.

In the meantime, ProPublica has been making some of this information public on its website, Dollars for Docs, with this explanation:

Drug companies have long kept secret details of the payments they make to doctors and other health professionals for promoting their drugs. But 12 companies have begun publicizing the information, some because of legal settlements. ProPublica pulled their disclosures into a database so patients can search for their doctor. Accepting payments isn’t necessarily wrong, but it can raise ethical issues.

The Affordable Care Act mandated the new CMS rule.

$15 for a 1-minute phone call!

Journalist and consumer advocate Christopher Elliott has this article in Sunday's Washington Post about the high cost of using a credit card to charge a call on a public pay phone. According to the article, the posted rate applies only to coin payment, and the rate for credit card calls is typically not posted at all. The result can be surprisingly high charges.

Jon Leibowitz Leaves the FTC

Jon Leibowitz announced his departure from the FTC today, the Blog of the Legal Times reports:

After a four-year tenure marked by an increased focus on privacy and aggressive consumer protection, Federal Trade Commission Chairman Jon Leibowitz announced today that he is stepping down on February 15.

"I don't have any regrets," Leibowitz said in a conference call with reporters. "I like to think we have made America in a small way a better place to live and helped ensure an even playing field for businesses."

Leibowitz's departure is a big loss for the agency and American consumers, particularly because it comes so close on the heels of David Vladeck's departure from his post as head of consumer protection. It also leaves the FTC with 2 Demoratic and 2 Republican commissioners, raising the very real prospect of 2-2 splits that could leave the agency deadlocked on important issues until a successor is confirmed by the Senate.

The Legal Times names current comissioners Julie Brill and Edith Ramirez as leading contenders:

Brill, formerly the senior deputy attorney general and chief of consumer protection and antitrust for the North Carolina Department of Justice, is known of her work in privacy protection and has a reputation for favoring vigorous enforcement.

Ramirez, a former partner with Quinn Emanuel Urquhart & Sullivan, is regarded as brilliant and somewhat reserved. She went to law school at Harvard with President Barack Obama and worked with him on the law review (fellow law review member Julius Genachowski has served as head of the Federal Communications Commission since June 2009).

Many in the consumer advocacy community know and trust Julie Brill and favor her for the job.

The FTC's Innovative Contest to Deal With Annoying Commerical Robocallers -- There's a Cash Prize Involved!

by Brian Wolfman

Back in October, the Federal Trade Commission challenged the public

to create an innovative solution that will block illegal commercial robocalls on landlines and mobile phones. As part of its ongoing campaign against these illegal, prerecorded telemarketing calls, the agency ... launch[ed] the FTC Robocall Challenge, and offer[ed] a $50,000 cash prize for the best technical solution.

I apologize if this is old news to some folks, but I'd never heard of it until today. And I don't remember any federal agency doing something like this: offering a cash prize to an innovator who wins a contest by coming up with what looks like the best solution to an intractable problem.

Yesterday, the FTC reported that it had received 744 eligible contest submissions before the January 17, 2013 contest deadline. Judging will begin next week and will look at the following criteria:

• Does it work? (50 percent)
• Is it easy to use? (25 percent)
• Can it be rolled out? (25 percent)

The FTC has also published a "challenge submission gallery", which provides a brief description of each submission. Some of the submissions have cute names and logos. Check out "Buzz Kill."

Even More on the FTC Report on the Debt Buying Industry (and the Industry's Effect on Real People)

We've already blogged twice on this subject today (here and here). But there's something else you may want to check out. Jen Lavellee, a senior lawyer at the D.C. Legal Aid Society, posted this piece on a client who experienced some of the serious problems discussed in the FTC Report on the debt buying industry and the need for systemic reform.

Today's Recess Appointment News

by Deepak Gupta

• The Arbitration Wars Meet the Recess Appointment Wars: Since its beginning, this blog has closely covered controversies over mandatory arbitration in consumer and employment contracts. More recently, we've been covering the constitutional controversy over the President's recess appointments to the CFPB and NLRB. On Tuesday, those two worlds officially collided when lawyers for the D.R. Horton company sent a letter to the Fifth Circuit invoking the D.C. Circuit's recent decision in Noel Canning. As observers of the arbitration wars know, D.R. Horton has been fighting the NLRB's year-old decision holding that federal labor law precludes employers from forcing their workers to waive collective-action rights through arbitration clauses. Now, D.R. Horton argues that the March 2010 recess appointment of NLRB member Craig Becker is invalid and therefore nullifies the board's decision. "Just like the situation in Noel Canning," the letter asserts, "the vacancy Mr. Becker filled did not arise during the Senate's recess, nor did the president appoint him during that recess. When the NLRB issued the D.R. Horton decision, it therefore had only two properly appointed members and no quorum to act."

• A New Court Challenge to the Cordray Appointment? Carter Dougherty of Bloomberg reports on the possibility that a CFPB enforcement action now pending before the U.S. District Court in Los Angeles could provide a new forum for a court challenge to Rich Cordray's status as the Bureau's director. The defendants in the action are a law firm and its principals that operated a network of mortgage loan modification businesses. On Tuesday, their lawyer sent the Bureau a letter "asking for a negotiated settlement of the six-month-old case in light of" the D.C. Circuit decision in Noel Canning. The lawyer appears to be trying to use the prospect of a recess appointment challenge to obtain leverage in settlement negotiations: “I want to give them an opportunity to resolve this without court intervention,” he says. (The case that's received the most attention -- C. Boyden Gray's Big Spring case filed in district court here in Washington -- is likely to be thrown out on standing grounds, so the big question is where and when a fresh court challenge will appear. My guess is that the Los Angeles case won't become the next vehicle.)

• Free Webinar on Monday: Our friends at Ballard Spahr, a law firm that represents banks in consumer finance matters, are convening a free webinar on Monday at noon entitled "The Impact of the D.C. Circuit Court NLRB Ruling on the CFPB." I won't be able to participate in Monday's webinar, but I recently co-hosted a webinar with Ballard Spahr and can attest to the quality of their programming. This is a good opportunity to hear some of the banking industry perspective on the recess appointment controversy. The banks -- despite what they may say -- are quite worried about the CFPB's fate. The webinar will discus the holding and reasoning of the court and the possibility of a further en banc review by the D.C. Circuit or review by the U.S. Supreme Court; the status of other cases dealing with the recess appointments; how the CFPB will react to the ruling; the impact on ongoing investigations and consent orders; the impact on supervision of non-banks; and the political impact of the ruling.