Defamation claims and Article III standing

by Paul Alan Levy

I am dealing with a case in which a company has sued investors for defamation, alleging statements made about shenanigans of some of the individuals employed by the company.  The "of and concerning" requirement under state law was federalized as a First Amendment requirement in New York Times v. Sullivan, but it occurs to me to think that Article III standing requirements might also be implicated, when the case has been filed in federal court.  Any thoughts by others?

Is There a Gene for Unwise Credit Card Borrowing?

Jan-Emmanuel De Neve of the London School of Economics and James Fowler of the University of California at San Diego Law School say yes in this article. Here's the abstract:

Economists have long realized the importance of credit markets and borrowing behavior for household finance and economics more generally. More recently, twin studies have shown that genetic variation plays a significant role in financial decision making. However, these studies have not identified which genes might be involved. Here we present the first evidence of a specific gene that may influence borrowing behavior. Using a discovery and replication sample from a U.S. representative data set (Add Health), we show that a functional polymorphism on the MAOA gene is associated with credit card borrowing behavior. For the combined sample of approximately 10,000 individuals we find that having one or both MAOA alleles of the less transcriptionally efficient type raises the average likelihood of reporting credit card debt by about 8%. These results suggest that behavioral models benefit from integrating genetic variation and that economists should consider the welfare consequences of possible discrimination by lenders on the basis of genotype. (emphasis added)

 

Suits Against Consumers Who Review Products on the Internet

This major article in today's Washington Post concerns what the author claims is

a growing number of defamation lawsuits over online reviews on sites such as Yelp, Angie’s List and Trip­Advisor and over Internet postings in general. They say the freewheeling and acerbic world of Web speech is colliding with the ever-growing importance of online reputations for businesses, doctors, restaurants, even teachers.

The claim by the Post reporter that the number of these suits is "growing" struck me as odd because the author does not cite any statistics to back up his claim. Moreover, he immediately goes on to say that "[n]o one keeps track of how many suits are filed over online reviews, and lawyers say the numbers are still small but are getting larger." (emphasis added)

We have posted many times here on the provision of the Communications Decency Act -- section 230 -- that generally immunizes the host of a site on which others post from suits about the content of posts. We have also posted many times on the need to protect anonymous posters. (Many people who post on online rating services, such as Yelp, post anonymously.) The idea there is that someone suing an anonymous poster over the content of her speech should have to meet certain thresholds about the validity of the suit on its merits before she can be identified. After all, we wouldn't want someone who doesn't like to be criticized to be able to use a lawsuit just for the purpose of outing an anonymous online critic with whom she disagrees. And we don't want to encourage people to bring "outing" suits just for the purpose of discouraging future criticism. Paul Levy posted again on this topic yesterday.

I wonder whether the Post article has identified what is really a significant trend about which free-speech and consumer advocates should be worried, or whether there's not much here but some interesting anecdotes. The Post article says that most of these suits are unsuccessful. But one of the cases described in the Post article is cause for some concern. The plaintiff in that defamation case -- a contractor accused of damaging the poster's home, not doing promised work, etc. -- is asking a Virginia state court for an injunction "to keep [the poster] from writing similar reviews." That doesn't sound like a good idea.

UPDATE: I had posted this entry shortly before Paul Levy posted a short piece on the Post story. I am reposting this now and linking to Paul Levy's post because Paul's post stresses a point I raised only obliquely at the end of my post about the defamation plaintiff's effort to obtain a prior restraint. Paul raises the issue directly and helpfully links to the plaintiff's motion for preliminary injunction.

More From Robert Hockett on Using Eminent Domain to Solve the Underwater Mortgage Debt Problem

Robert C. Hockett of Cornell has written Paying Paul and Robbing No One: An Eminent Domain Solution for Underwater Mortgage Debt that Can Benefit Literally Everyone. Here's the abstract:

This essay provides updated argumentation for and abbreviated specification of the municipal eminent domain plan for underwater mortgage loans that the author lays out in his earlier piece titled It Takes a Village. The nation's ungoing foreclosure crisis and economy-stifling mortgage debt deflation will not be arrested and reversed, the paper argues, until mortgage debt principal is written-down to post-bust home equity levels. Once that is done, however, literally everyone can benefit - from homeowners and bondholders to neighbors, communities, and local and regional economies.

Unfortunately, a host of classic collective action problems presently stand in the way of the 'win-win' solution here. Such problems require collective agents for their resolution, which is what private label securitization (PLS) trustees and even loan servicers are. But the pooling and servicing agreements (PSAs) pursuant to which many PLS trusts are formed, hurriedly drafted as they were during the bubble years when many pushed product and few apparently anticipated system-wide housing price crash, prohibit or effectively prevent even value-raising modifications or sales of sufficient numbers of underwater mortgage loans. This means that government alone - the sole entity able to sidestep dysfunctional contract rigidities, by use of the eminent domain authority - can serve as the requisite collective agent.

In theory, the essay continues, our federal government, through any number of instrumentalities, could play the appointed role. But political paralysis in Congress shows that it now faces collective action hurdles of its own. All that is left, then, is state and local government. But the latter, it happens, is happily best situated in any event to exercise the eminent domain authority to take underwater loans at fair value and modify them to benefit homeowners, bondholders, and third parties alike. For the nation's underwater mortgage loan problem is heavily localized in character, and municipalities in any event face the brunt of foreclosure-induced homelessness, tax base decline, and consequent blight wrought by ongoing defaults wrought by negative home equity - the makings of 'public use,' per our constitutional limits on eminent domain use, par excellence.

Libel suit over a Yelp review

My litigation plate is too full right now for a detailed analysis, but the Washington Post carries an interesting story today about a libel suit by a local contractor over a negative review of his business on Yelp.  The story says there is a preliminary injunction hearing today.  It will be interesting to see what testimony is adduced on truth versus falsity and whether the defendant's mental state can be shown to be below the applicable level of care, but we can also hope that the Court will raise an issue that is not mentioned in the plaintiff's preliminary injunction motion: how the request for an injunction before there has been a final trial on the merits about the allegedly actionable words can overcome the rule against prior restraints.

Did the Supreme Court's Decision in Citizens United Help Liberal/Progressive Causes in the 2012 Election Cycle?

That possibility is discussed in this article by Molly Ball. The idea is that the Supreme Court's decision in the Citizens United case unshackled the unions not only to spend, but to electioneer beyond its members to the public at large. (The article emphasizes that although unions did whatever they could to take advantage of Citizens United, political directors of key labor Super PACs dislike the decision and would love to see it overruled.)

Consumers Beware: Extended Consumer Product Warranties Generally Are a Waste of Your Money

Consumer Reports tells you why extended consumer product warranties generally are a waste of your money. Among the reasons: The warranties don't cover as much as you think; they are quite expensive; and sometimes the needed fix is easy and cheap. But the one I like best -- and something I reflect on frequently -- is that, these days, consumer products are pretty darn good and, so, generally last a long time (well beyond the term of the extended warranty).

Gang Rape by Football Stars in Steubenville, Ohio – Subpoenas to Identify Anonymous Commenters

by Paul Alan Levy

Several bloggers, including redoubtable free speech blogger Marc Randazza, have addressed a defamation case that is being pursued by Cody Saltsman, a high school student in Steubenville, Ohio, and his parents against a crime blogger and several anonymous commenters on her blog, over statements accusing him of involvement in the gang rape of a high school student by some of the plaintiff's fellow high school football players.   I have been involved at the margins of this case, but in the end I do not at all share Marc’s total disdain for the plaintiff and his decision to file suit.  Indeed, as I see it, there is reason to doubt the often-published assumption that the whole lawsuit is a meritless defamation action that is sure to be counterproductive.   At the end of the post, I also address misconduct by the ISP that was hosting the blog when the case began.

Proposed Student Loan Legislation Would Deduct Loan Payments from Debtors' Paychecks

Student loan debt in this country is now north of $1 trillion. As we have reported many times (go, for instance, here and here), a lot of student loan debtors are behind on their payments. A large percentage of this debt -- and over 90% of new loans -- is owed to the federal government.

So, as explained here, Representative Tom Petri (R-Wis.) wants the Department of Education and the IRS to take loan repayments straight out of debtors' paychecks:

Congress will consider overhauling debt collection in the $100 billion-a-year U.S. student loan program, replacing it with automatic withdrawals from borrowers’ paychecks tied to their income -- a system used in the U.K. Legislation that Wisconsin Republican Representative Tom Petri plans to introduce as soon as this week would require employers to withhold payments from wages in the same way they do taxes. Payments would be capped at 15 percent of borrowers’ income after basic living expenses. * * * The plan would resemble those in the U.K., Australia, and New Zealand. Since the money would be withdrawn automatically and tied to income, borrowers would no longer have to negotiate with collectors and loan-servicing companies, which often offer a confusing array of deferral and forbearance options after a job loss or illness. The Education Department would manage the withdrawals, with help from the Internal Revenue Service.

 

Debt Collection Litigation Tidbits

by Jeff Sovern

I've been pulling together some materials for a section in the next edition of our casebook on debt collection litigation.  Here is some of what I've found:

1. From FTC, Reparing a Broken System: Protecting Consumers in Debt Collection Litigation and Arbitration i (2010): “The system for resolving disputes about consumer debts is broken.” 

2. From Centurion Capital Corp. v Guarino, 35 Misc.3d 1219(A), 951 N.Y.S.2d 85 (N.Y.City Civ.Ct. 2012):

[D]ue process requires that this judgment should be vacated and the case dismissed. The plaintiff filed more than 13,700 cases in New York City Civil Court and in all of them, as this one, lacked the legal capacity to bring and maintain any of those actions. The fact that the plaintiff corporation is neither an authorized domestic corporation nor an authorized foreign corporation makes this underlying action defective. * * *

Added to this is the problem that there is no copy of the actual assignment submitted, and no proof that the defendant's account was included in the assignment of debts if it was a bulk assignment.

* * *

The complaint fails to set forth what state law governed the underlying credit card agreement. There is no statement as to what is the applicable statute of limitations and whether this action was timely commenced. There is no indication as to when the agreement was entered into, when the credit card issued or the date of the last payment. There is no indication as to how that amount due was calculated. There is no indication that Wolpoff & Abramson was licensed as a debt collector as required by the New York City Administrative Code § 20–490.

In the interests of brevity, I have left out other problems reported in the opinion.

3. In LVNV Funding Llc v. Guest, 35 Misc.3d 1232(A), 2012 WL 1957715 (N.Y.City Ct. 2012), the court imposed a $10,000 sanction on attorneys for a bringing debt collection case without sufficient proof and considered, but ultimately decided against, holding them in contempt.  The court wrote: ‘The Court trusts that plaintiff's counsel shall commence actions on behalf of assignee creditors in the future only after having received sufficient documentary or verifiable proof of the alleged claim and that they will adhere to future directives issued by any court before which they appear. Any future failure by plaintiff's counsel to comply with an order of this Court will not be tolerated.” 

4. One debt collector, perhaps dissatisfied with judicial reactions (like those above) to his cases, created a fake courtroom in which he issued illegal judgments against debtors.  See Ed Palattella, Erie Judge Bans Ex-Unicredit Chief From Debt Collection, Erie Times-News (July 12, 2012).  The collector later defaulted in a suit brought against him by the Pennsylvania Attorney General, was barred from collecting debts in Pennsylvania, and filed for bankruptcy.