Researchers Question Health Value of Organic Food

Read this AP story. Here's an excerpt:

Patient after patient asked: Is eating organic food, which costs more, really better for me? Unsure, Stanford University doctors dug through reams of research to find out — and concluded there’s little evidence that going organic is much healthier, citing only a few differences involving pesticides and antibiotics. Eating organic fruits and vegetables can lower exposure to pesticides, including for children — but the amount measured from conventionally grown produce was within safety limits, the researchers reported Monday. Nor did the organic foods prove more nutritious. “I was absolutely surprised,” said Dr. Dena Bravata, a senior research affiliate at Stanford and long-time internist who began the analysis because so many of her patients asked if they should switch.

The study was published in the Annals of Internal Medicine and can be found here.

President Obama Says He Could Support a Constitutional Amendment to Overrule Citizens United

As explained here, President Obama recently posted to the on-line community reddit that he could support a constitutional amendment to overrule the Supreme Court's controversial 2010 Citizens United ruling that unleased corporate campaign spending as never before. Here's what the President said:

Money has always been a factor in politics, but we are seeing something new in the no-holds barred flow of seven and eight figure checks, most undisclosed, into super-PACs; they fundamentally threaten to overwhelm the political process over the long run and drown out the voices of ordinary citizens. We need to start with passing the Disclose Act that is already written and been sponsored in Congress – to at least force disclosure of who is giving to who. We should also pass legislation prohibiting the bundling of campaign contributions from lobbyists. Over the longer term, I think we need to seriously consider mobilizing a constitutional amendment process to overturn Citizens United (assuming the Supreme Court doesn’t revisit it). Even if the amendment process falls short, it can shine a spotlight of the super-PAC phenomenon and help apply pressure for change.

Eminent Domain and the Fight to Save Underwater Homeowners

We have previously posted about the use of eminent domain as a tool for saving the homes of people whose mortages remain underwater as a result of the mortgage meltdown and the effects of the economic depression (go, for instance, here and here).

Now, read this article by Ben Hallman about the political (and possibly legal) battle brewing on that subject in San Bernadino, California. A couple excerpts give you a flavor:

Governments usually use this power, known as eminent domain, to acquire private land for public purposes, such as roads or utility lines. But th[e San Bernadino] plan, proposed by a San Francisco-based venture fund Mortgage Resolution Partners, calls for government authorities to seize the mortgages of underwater borrowers, paying the investors that own them a fraction of what they are owed, using money borrowed from the fund. Homeowners could then refinance with a federal loan at a much lower rate, based on what their home is actually worth instead of what they owe.  *  * *  "It is a disaster of epic proportions," said John Vlahoplus, chief strategy officer at Mortgage Resolution Partners, of the dramatic decline in home prices that in many areas has left homes worth less than half what the borrowers paid. "The crash has devastated the family wealth of these communities." [A] group from the East Coast, representatives of the mortgage finance industry, don't like this idea much at all. They have worn a path to Devereaux's office in recent months to tell him, and anyone else who would listen, that the proposal amounts to nothing less than a threat to the entire mortgage finance system, and an assault on free enterprise and the U.S. Constitution.

Hat tip to Bradley Girard.

Corporate Profits Up; Compensation Stagnant

As this article by Jared Bernstein explains, corporate profits as a percentage of gross domestic product has passed where it was prior to the economic recession, but compensation as a percentage of gross domestic product is far lower that pre-recession levels. See the graph below.

Republicans Wanted CFPB to Have a Single Director! Who Knew?

by Jeff Sovern

We have blogged many times about the Republican call for the CFPB to have a commission-structure, rather than a director (see, for example, here).  That call has been spearheaded by Senator Shelby.  So that makes it all the more surprising to note that during the Senate's consideration of what became the Dodd-Frank Act, Senator Shelby, along with other Republican senators, proposed that the Bureau be headed by--you guessed it--a single director!  Senator Shelby's proposed amendment appears in the Congressional Record of May 5, 2010, at page S3217 and following.  In fairness to the Senator, the amendment, which would have housed the Bureau (called a division in the amendment) in the FDIC, would have given the FDIC the power to vote down Bureau rulemakings (the Dodd-Frank Act provides that Bureau rules can be vetoed by a two-thirds vote of the Financial Stability Oversight Council).  I guess Senator Shelby was for a director before he was against it.

Myriam Gilles on Arbitration Clauses After Concepcion

Myriam E. Gilles of Cardozo has written Killing Them with Kindness: 'Consumer-Friendly' Arbitration Clauses after AT&T Mobility v. Concepcion, forthcoming in Notre Dame Law Review.  Herer's the abstract: 

In AT&T v. Concepcion, the Supreme Court struck California’s so-called “Discover Bank rule” – a judge-made rule providing that arbitration agreements attended by class action waivers are unenforceable, if those agreements are contained in standard form consumer contracts. But, arguably, Concepcion leaves open and unresolved the viability of a state law challenge to a bilateral arbitration clause which is shown, in a particular case, to impose a forfeiture of the claimant’s ability to vindicate his state law rights. Meanwhile, in the context of federal claims, the Second Circuit in American Express III reaffirmed in light of Concepcion its earlier holdings that a class action waiver contained in an arbitration agreement is unenforceable if it is proven in the individual case that the arbitration clause at issue would force the claimant to shoulder such costs as would prevent the claimant from effectively vindicating its federal statutory rights. On both the state and federal levels, then, cost-based vindication of rights challenges remain a significant concern to corporate defendants looking to exculpate themselves from exposure to aggregate litigation.

All of this begs a question this paper seeks to answer: will the robust recognition of cost-based, evidence-backed vindication of rights challenges swallow up the basic ruling of Concepcion, rendering unenforceable arbitration agreements and class action waivers that the Supreme Court has held are otherwise to be enforced?

Articles in Today's Times on Dischargeability of Student Loan Debt.

Here is a report on the pain involved in satisfying the "undue hardship" standard for discharging student loans in bankruptcy and here is a story about the case Scott Michelman blogged about earlier this week addressing debt collector liability for misleading borrowers about the dischargeability of student loans.

Daniel Schwarcz on the Lack of Transparency in Insurance Consumer Protection

Daniel Schwarcz of Minnesota has written Transparently Opaque: Understanding the Lack of Transparency in Insurance Consumer Protection.  Here's the abstract:

Consumer protection in most domains of financial regulation centers on transparency. Broadly construed, transparency involves making relevant information available to consumers as well as others who might act on their behalf, such as academics, journalists, newspapers, consumer organizations or other market watchdogs. By contrast, command and control regulation that affirmatively limits financial firms’ products or pricing is relatively uncommon in financial regulation. This article describes a remarkable inversion of this pattern: while state insurance regulation frequently employs aggressive command and control consumer protection regulation, it typically does little or nothing to promote transparent markets. Rather, state lawmakers routinely either completely ignore transparency-oriented reforms or implement them in a self-evidently flawed manner. This pattern represents a deep and unappreciated flaw in state insurance regulation. Although substantive rules may be necessary in many insurance markets, such regulation must be coupled with strong transparency-oriented strategies in order to promote consumer choice, harness market discipline, and ensure regulatory accountability.

Distributor of Magic Machine That Melts Away Your Fat Threatens Libel Claims

by Paul Alan Levy

Many groups at Public Citizen issue hard-hitting reports, but we are scrupulous about reviewing reports about particular companies and individuals to ensure their accuracy, not to speak of avoiding the prospect of libel litigation.  This was certainly true with respect to letters to the FDA back in July, asking why it had not completed a criminal inquiry into RevecoMed, and asking it to force the removal from the market of the “LipoTron” machine that supposedly uses radio waves to melt away fat, a liposuction without surgery that can be marketed to credulous patients desperate to lose weight.  In a second letter to the FDA, we also urged pursuit of “Advanced Aesthetic Concepts," a firm that offers a “comprehensive cash flow program” for doctors who can’t make enough of a living from honest work, through the sale of the Lipotron for prices ranging from $35,000 to $95,000.

So when we received a threat of libel litigation from a law firm representing Advanced, we prepared a detailed response and assumed that would be the end of it.

Supreme Court grants defendant's petition about federal jurisdiction over state class actions

Today, the Supreme Court granted a petition that asks whether the named plaintiff in a class action filed in state court can prevent removal of the case to federal court under the Class Action Fairness Act of 2005 (CAFA) by filing with the complaint a “stipulation” that states that the class will not damages of less than $5 million—the threshold for federal jurisdiction under CAFA.

In the case before the Court, Standard Fire Insurance Co. v. Knowles, the plaintiff filed in state court and alleges only state-law claims. As described by the federal district court, the plaintiff then filed a stipulation stating “he will not at any time during the pendency of the case ‘seek damages for myself or any other individual class member in excess of $75,000 (inclusive of costs and attorneys’ fees) or seek damages for the class as alleged in the complaint to which this stipulation is attached in excess of $5,000,000 in the aggregate (inclusive of costs and attorneys'’fees).” The defendant/petitioner argues that the actual amount in controversy, absent the stipulation, exceeds $5 million. The defendant’s calculation, which includes actual damages, a statutory penalty, pre-judgment interest, and attorneys’ fees, comes to $5,024,150.

It seems to me that the defendant’s calculation of damages in the case raises its own issues. But putting that aside and assuming that the value of the claims for the class as a whole would exceed $5 million, can a named plaintiff, prior to class certification, promise to limit the class recovery for the purpose of staying out of federal court? The case will be argued in December or January, and we will find out the answer when the Court rules next year.