Article on Supreme Court's Decision in PLIVA v. Mensing

In PLIVA v. Mensing, 131 S. Ct. 2567 (2011), the Supreme Court held that FDA regulations governing the labeling of prescription drugs preempt state-law failure-to-warn claims against generic drug manufacturers -- meaning that people harmed by mislabled generic drugs cannot recover damages against their manfacturers under state law. Just a couple years earlier, in Wyeth v. Levine, 555 U.S. 555 (2008), the Supreme Court held that the same kind of suit against manufacturers of brand-name prescription drugs is not preempted by federal law. Along with Dena Feldman, I just wrote this article on PLIVA and its implications. The article is published at 39 Prod. Safety & Liab. Rptr. (BNA) 972 (Sept. 5, 2011), and 26 Toxics Law Rptr. (BNA) 1062 (Sept. 8, 2011).

Elizabeth Warren . . .

is running for the Senate.

The Constitutionality of Federally Imposed Medical Malpractice Caps

If enacted, H.R. 5, the HEALTH Act of 2011, would severely limit medical malpractice awards under state tort law. Bob Peck of the Center for Constitutional Litigation says H.R. 5's limits on state-law tort recoveries would violate the U.S. constitution. James Ho of the Gibson, Dunn & Crutcher disagrees.

On a related note, I testfied against H.R. 5 last April before the House Subcommittee on Health of the Committee on Energy and Commerce, focusing on how the legislation would subvert legitimate litigation brought by people injured and killed by defective or mislabled drugs and medical devices. I explained why the legislation is a bad idea, but I did not raise any constitutional defect.

Student Loan Default Rates Skyrocket

Read this article explaining that almost 9% of student loans whose first payments were due in 2009 are in default, almost double the rate for similar loans just four years ago. Why? Rising college tuition, lower graduation rates, and a poor job market.

Dan Snyder Drops Libel Suit Against City Paper

We previously commented at some length about D.C. Redskins' owner Dan Snyder's libel suit against the Washington City Paper. He's now dropped the suit. Perhaps he dropped the suit because he didn't want to test the District's new anti-SLAPP statute. Perhaps he gave up because he recognized that his case was weak. It sure couldn't have helped his case when he admitted in a recent N.Y. Times interview that he had never read the supposedly libelous City Paper article.

Maryland tightens rules on debt buyers

Under new rules approved by the Maryland Court of Appeals last week, an affidavit and a no-show defendant will no longer be enough to win a collections judgment in the state. The rules are aimed at reining in debt buyers, who buy records of delinquent debts along with the right to collect those debts. The purchased records can be shoddy, sometimes consisting of nothing more than a name and an a dollar amount allegedly owed. Without evidence documenting the debt, some debt buyers depend on default judgments to prevail. Unsurprisingly, alleged debtors are not always served with the complaint.  

Under the new rules, debt collectors will have to show proof of the debt, their ownership of it, and the debt's legality. The amendments were pushed by the Legal Aid Bureau and Public Justice Center in Baltimore, among others. They follow a report by the FTC last year, which recommended measures for state courts to discourage abusive practices by debt buyers.

CFPB Unveils New Honors Program

The CFPB has a brand-new attorney honors program. The first class of "Louis D. Brandeis Fellows" will start in fall 2012 and after two years will be converted to full-time positions. That should be a tempting proposition for future consumer advocates.

Capital Gains

As the Washington Post explains in this article:

Most Americans depend on wages and salaries for their income, which is subject to a graduated tax so the big earners pay higher percentages. The capital gains tax turns that idea on its head, capping the rate at 15 percent for long-term investments. As a result, anyone making more than $34,500 a year in wages and salary is taxed at a higher rate than a billionaire is taxed on untold millions in capital gains. While it’s true that many middle-class Americans own stocks or bonds, they tend to stash them in tax-sheltered retirement accounts, where the capital gains rate does not apply. By contrast, the richest Americans reap huge benefits. Over the past 20 years, more than 80 percent of the capital gains income realized in the United States has gone to 5 percent of the people; about half of all the capital gains have gone to the wealthiest 0.1 percent. (emphasis added)

As you might suspect, the defense of capital gains rates that are lower than ordinary tax rates is not that they will make rich people richer than they'd be if they were taxed at ordinary rates -- although they surely do that. Rather, the argument is that lower capital gains rates will spur investment and ecourage people to sell their current investments and move their money into more promising (perhaps more innovative) investments. Former Fed Chief Alan Greenspan is a big proponent of that theory. Newt Gingrich believes the capital gains tax rate should be zero. But as the Post article explains, the long-term benefits to the economy and to aggregate tax revenue to lower capital gains rates are at least questionable. Worth reading.

 

Court Awards Sanctions Against Lawyer For Improper Subpoenas to Identify Alleged Downloaders

by Paul Alan Levy

I blogged earlier this year about the sudden end of a mass downloading lawsuit that was brought by Texas lawyer Evan Stone against hundreds of individuals who allegedly downloaded his client's "adult" movie.  I pointed out then that, after the trial judge appointed me and two EFF lawyers as counsel ad litem for the Doe defendants, and we caught Stone red-handed in a serious violation of the discovery rules, Stone dismissed the lawsuit with prejudice (without getting his client's permission, I have been told) in an apparent effort to avoid judicial scrutiny of his conduct.

Judge David Godbey has now found that Stone "grossly abused his subpoena power" and imposed severe sanctions on Stone, requiring to make him to disclose additional information to the Court, to send Judge Godbey's order to other judges (and we understand that Stone has continued to file mass downloading actions before other judges), to pay a $10,000 fine to the court, and finally to pay our reasonable attorney fees.  Rather than elaborating on the content of the order, I suggest reading it here.

Arbitration Articles

Shauhin A. Talesh

 of Irvine has writen The Privatization of Public Legal Rights: How Manufacturers Construct the Meaning of Consumer Law, 43 Law & Society Review 527 (2009).  Here's the abstract:

This article demonstrates how the content and meaning of California’s consumer protection laws were shaped by automobile manufacturers, the very group these laws were designed to regulate. My analysis draws on and links two literatures that examine the relationship between law and organizations but often overlook one another: political science studies of how businesses influence public legal institutions, and neo-institutional sociology studies of how organizations shape law within their organizational field. By integrating these literatures, I develop an “institutional-political” theory that demonstrates how organizations’ construction of law and compliance within an organizational field shapes the meaning of law among legislators and judges. This study examines case law and more than 35 years of California legislative history concerning its consumer warranty laws. Using institutional and political analysis, I show how auto manufacturers, who were initially subject to powerful consumer protection laws, weakened the impact of these laws by creating dispute resolution venues. The legislature and courts subsequently incorporated private dispute resolution venues into statutes and court decisions and made consumer rights and remedies largely contingent on consumers first using manufacturer-sponsored venues. Organizational venue creation resulted in public legal rights being redefined and controlled by private organizations.

Meanwhile Christopher R. Drahozal of Kansas and Samantha Zyontz of the Searle Civil Justice Institute have authored Private Regulation of Consumer Arbitration.  Here's their abstract:

Arbitration providers, such as the American Arbitration Association (“AAA”) and JAMS, have promulgated due process protocols to regulate the fairness of consumer and employment arbitration agreements. A common criticism of these due process protocols, however, has been that they lack an enforcement mechanism. While arbitration providers state that they enforce the protocols by refusing to administer cases in which the arbitration agreement materially fails to comply with the relevant protocol, the private nature of arbitral dispute resolution makes it difficult to verify whether providers in fact refuse to administer such cases.

This article reports the results of the first empirical study of the AAA’s enforcement of its Consumer Due Process Protocol. We find that the AAA’s review of arbitration clauses for protocol compliance appears to be effective at identifying and responding to those clauses with protocol violations. During the time period studied, the AAA refused to administer a substantial number of cases (almost 10% of its total consumer caseload) that involved a protocol violation. Moreover, in response to AAA protocol compliance review, over 150 businesses have either waived problematic provisions or revised arbitration clauses to remove provisions that violated the Consumer Due Process Protocol.

Our findings support the proposition that private regulation by the AAA complements existing public regulation of the fairness of consumer arbitration clauses. Any consideration of the need for future legislative action should take into account the effectiveness of this private regulation. That said, we do not assert that private regulation alone - with no public regulatory backstop, such as through court oversight - suffices to ensure the fairness of consumer arbitration proceedings. Rather, we suggest ways that courts and policy makers could reinforce the AAA’s enforcement of the Consumer Due Process Protocol as well as ways the AAA could improve its own review process.