April 2008 Auto Safety Recalls

Go here to view the National Highway Traffic Safety Administrations recalls for April 2008.

A Lowest Common Denominator Approach to Insurance Regulation?

Check out this interesting and scary post by Elizabeth Warren over at Credit Slips.  Here are two key paragraphs to whet your appetite:

The effective repeal of usury laws in the US was accomplished in the quietest possible way:  In 1978, the Supreme Court interpreted an century-old banking law to determine that federally-chartered banks to lend to people in other states so long as they complied with their home state's usury rate.  It wasn't long until the Chairman of Citibank paid a call on the governor of South Dakota, who rammed through a new, high ceiling on interest rates.  Now Citibank was free to charge whatever it wanted--and states lost the right to protect their own citizens.

The usury story is old and famliar to commercial law types, but it is taking on a new importance.  It seems that John McCain wants to borrow the idea for use with insurance regulation.  According to a terrific piece by Robert Gordon in Slate, Senator McCain thinks federal law should be changed so that insurance companies in one state (say, South Dakota) could sell their products in all the other states, even if those insurance products don't meet the local standards for care.  In other words, just as exporting interest rates became a way to deregulate credit cards, exporting health insurance licensing can be a way to deregulate health insurance.

The effective repeal of usury laws in the US was accomplished in the quietest possible way:  In 1978, the Supreme Court interpreted an century-old banking law to determine that federally-chartered banks to lend to people in other states so long as they complied with their home state's usury rate.  It wasn't long until the Chairman of Citibank paid a call on the governor of South Dakota, who rammed through a new, high ceiling on interest rates.  Now Citibank was free to charge whatever it wanted--and states lost the right to protect their own citizens.

The usury story is old and famliar to commercial law types, but it is taking on a new importance.  It seems that John McCain wants to borrow the idea for use with insurance regulation.  According to a terrific piece by Robert Gordon in Slate, Senator McCain thinks federal law should be changed so that insurance companies in one state (say, South Dakota) could sell their products in all the other states, even if those insurance products don't meet the local standards for care.  In other words, just as exporting interest rates became a way to deregulate credit cards, exporting health insurance licensing can be a way to deregulate health insurance.

Supreme Court Rules in Favor of Plaintiffs in Two Key Employment Discrimination Cases

Although a bit off this blog's beaten path, I thought readers might want access here to the Supreme Court's important decisions issued yesterday in CBOCS West, Inc. v. Humphries, No. 06-1431, and Gomez-Perez v. Potter, No. 06-1321. CBOCS held by a 7 to 2 vote that 42 U.S.C. 1981 authorizes a plaintiff to claim that he was retaliated against for asserting a co-worker's right to be free from racial discrimination. Gomez-Perez held by a 6 to 3 vote that a federal employee may maintain a retaliation claim under the Age Discrimination in Employment Act -- specifically, the plaintiff claimed that her federal agency employer retaliated because she filed an administrative complaint alleging age discrimination. The decisions, taken together, seem to stand for the proposition that both private and federal employees have claims for retaliation even when the relevant anti-discrimination statute is silent on the question of retaliation. The majority in both cases rebuffed the defendants' arguments that the Court should narrow or effectively overrule the Court's earlier decisions in Sullivan v. Little Hunting Park (1968) and Jackson v. Birmingham Board of Education (2005), recognizing retaliation-based claims under 42 U.S.C. 1982 and Title IX, respectively.

Consumer Banktruptcies Soar Despite Restrictions Enacted by Congress in 2005

Check out this front page article in today's Washington Post discussing the significant increase in consumer bankruptcies, despite Congress's enactment in 2005 of legislation intended to tighten eligibility for bankruptcy.  As the article puts it:  "Despite the 2005 passage of a law that made it more difficult and expensive to file for personal bankruptcy, more Americans are choosing bankruptcy over destitution. Filings -- including Chapter 7, which wipes out debt, and Chapter 13, which reorganizes it -- totaled 822,590 last year, up 38 percent from 2006." The article discusses particular examples of working families so hard-pressed that bankruptcy was their only option.

Consumer advocate fights off trademark arbitration claim

by Greg Beck

Robert Arkow runs a website at the domain names metrolinkrider.com and metrolinksucks.com (no longer active) where riders and employees of Metrolink, the Southern California commuter rail system, share their gripes about services and fares. Metrolink filed a complaint under the Uniform Domain Name Dispute Resolution Policy (UDRP), an agreement imposed by ISPs that subjects domain-name owners to mandatory arbitration for challenges to their ownership of domain names. Metrolink claimed that the domain names were confusingly similar to its own and were registered in bad faith. Metrolink was particularly peeved about postings on the site "with such statements as 'Stupid Metrolink Tricks---Seen something really dumb on Metrolink?' and 'Are the Engineers that stupid?'"

The arbitration panel denied the complaint, siding with the pro se domain name owner. Noting a split in past decisions on the issue, the panel held that noncommercial use of a trademark in a domain name for purposes of comment or criticism did not violate the UDRP. It wrote: "[S]omething more than criticism is required to establish illegitimacy and bad-faith for purposes of the [UDRP]."

Use of trademark law to squelch criticism is an ongoing problem, and is of particular concern when claims are brought in international tribunals that aren't bound by the First Amendment. Here, it looks like the panel reached the right result. Public Citizen successfully defended another web critic against a similar UDRP claim by a homebuilder earlier this year.

The Citizen Media Law Project drew my attention to this case, and has lots more background on the UDRP.

Settlement opens access to multiple listings service

For years, the National Association of Realtors (NAR) blocked access to its multiple listing service, preventing online real estate agents from access to home listings. No longer. The Department of Justice's Antitrust Division settled today a 2005 lawsuit claiming that the NAR's practice was anticompetitive. DOJ says the settlement will lead to more competition and lower commissions. NAR admits no liability and calls the settlement a "win-win."

As a side note, NAR claims a trademark in the word "Realtor," so online competitors will still have to call themselves something else.

[via New York Times]

Why the NAF Wants Courts to Lower the Burden of Proof on Debt Collectors

by Paul Bland

  Several of the principals of the for-profit National Arbitration Forum, a Minnesota-based company that aggressively advertises offers a more corporate-friendly system of private judging than other private arbitration firms, have been writing and publishing articles arguing in essence that courts should not ask any questions – and particularly not demand any evidence or proof – in cases where debt collectors are trying to turn arbitration awards against consumers into court judgments. For example, see Susan Wiens & Roger Haydock, Confirming Arbitration Awards: Taking the Mystery out of a Summary Proceeding, 33 Wm. Mitchell L. Rev. 1293 (2007). Similar articles by NAF authors have also appeared in several state bar journals and the like. Where is this push coming from? Have courts been unreasonably refusing to turn arbitrators’ awards into judgments, or is something else afoot. The answer, which is obvious to any consumer lawyer, is the latter.

The NAF’s interest in making it easier for debt collectors to make money in arbitration is pretty easy to figure out. Last fall, Public Citizen issued a statistical analysis of EVERY SINGLE consumer case that the NAF has decided in California in the last several years. (California is the only state in the country to require arbitration companies to disclose information about the consumer arbitration cases it handles.) It turns out that out of about 34,000 consumer cases decided by the NAF in California, only 118 were brought by consumers. The other 99.6% of the cases handled by NAF were debt collection cases brought by creditors against consumers. In other words, NAF’s financial success depends overwhelmingly on debt collection. Put another way, the NAF’s financial success depends upon whether it can make debt collectors choose the NAF’s system over either the court system or other arbitration companies.

A surprisingly large number of debt collectors have a problem, though: they cannot even prove that a given consumer owes them any money (much less the often-padded sums that the debt collectors claim that they are owed). Sometimes this problem arises because the consumer actually does not owe the debt collector anything (the number of identity theft victims in the United States is high and rising rapidly), and sometimes it arises because of lousy record-keeping by credit card companies. In literally hundreds of thousands of cases, however, the debt collector cannot prove its case because it does not have (and never has had) any evidence.

Supreme Court Refuses to Hear Class-Action Ban Issue

by Deepak Gupta

  A cutting-edge issue in the world of consumer law--and one that this blog has discussed many times before (see, e.g., here, here, and here)--is the extent to which corporations can enforce class-action bans placed in consumer adhesion contracts. Class-action bans are clauses that purport to strip consumers of the right to seek any classwide relief, whether through class-action litigation or classwide arbitration. 

The question matters because class actions are often the only thing stopping companies like cell phone or cable providers from getting away with practices that cheat large numbers of consumers out of small amounts of money. As Judge Posner has put it, "[t]he realistic alternative to a class action is not 17 million individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30." 

This morning, the U.S. Supreme Court rebuffed an attempt by one of corporate America's leading Supreme Court litigators, Carter Phillips, to get the Court to weigh in on the battle over class-action bans. Public Citizen filed the brief in opposition, and we're thrilled at the result.  The Court's decision not to hear the issue is a good sign that, at least as far as class-action bans are concerned, the Supreme Court is going to allow the law to continue to develop in a way that vindicates the rights of consumers and employees to access the courts.  (You can read an Associated Press story about the case here.)

Survey on Content of Consumer Law Classes

Last Friday, at Richard Alderman's excellent Teaching Consumer Law Conference, under the auspices of the University of Houston Law Center--the conference where, two years ago, this Blog was born--I distributed a survey inquiring about what topics professors teach in their consumer law classes.  I announced some of the results at the conference and I have since received other survey responses.  The responses are interesting and potentially useful to at least those teaching the subject, but they would be even more useful if we had more of them.  Accordingly, before I post anything about the results, I wanted to urge anyone who has not already given me their response and who teaches consumer law to email me their survey response, at sovernj@stjohns.edu.  The survey is pasted in below.  If you like, you can copy and paste it into an email, indicating your responses.  It takes only a moment to complete.

Customer Disservice

Sick of having to push 10 phone buttons to get to the customer service representative -- you know, the person who can't really help you anyway? Check out this article from Saturday's New York Times about the decline in customer service. One thing I did not know is that there are two websites dedicated to evading the companies' automated phone trees and getting you to a live person as quickly as possible.  And, here's another interesting tidbit: only about 10% of all call centers are located outside the U.S.