Over 800 Consumer Attys Attending DC Conference Nov. 8 - 11

by Jon Sheldon

This year's NCLC Consumer Rights Litigation Conference is the biggest yet--over 800 registrants so far.  This post is for those who are going and those who are thinking about it.  You can still register on-site at the Hyatt Regency Washington on Capitol Hill, 400 New Jersey Ave., NW, starting at 7:30 AM on Nov. 8,  or better yet go to www.consumerlaw.org and print out and fax in the registration form.  With limited exceptions, the conference is not open to those whose firm represents business or commercial entities or those engaged in any business other than representing consumers.

Thursday, November 8, choices include:

• an all day intensive on "Doing Well and Enjoying It, While Still Doing Good".
• Congressional visits coordinated by NACA state coordinators  (orientation Wed. evening)
• your choice of afternoon sessions on predatory lending, cars, class actions, mobile homes, legal services consumer practice, and the intersection of FDCPA and FCRA.

Friday, Nov. 9, there will be a "report from the Hill" by Congressmen Barney Frank and Keith Ellison, followed by your choice among 20 sessions dealing with predatory lending, cars, class actions, credit card collections, credit reports, TIL, and more, followed by a plenary session on working through the media and the NACA annual meeting. A cocktail reception at AARP in the evening.

Saturday, Nov. 10:  a plenary session on mandatory arbitration and tort reform with Paul Bland and Stephanie Mencimer, and 15 more break-out choices including FDCPA and collections, foreclosures, RESPA, arbitration, credit reports, predatory lending, cars, rights of domestic violence survivors, and more.  Includes an awards luncheon with Elizabeth Warren as one of the feature speakers.

Sunday, Nov. 11, you have a choice of four extra intensives (space is very limited for some of these):  the always popular "Class Action Symposium," the very timely ""Stopping Foreclosures: Workouts, Servicing Claims, and Bankruptcy Strategies," the probably closed-out due to capacity "Fighting Predatory Mortgage Lending Through Litigation," and the almost closed-out "Defending Debt Collection Suits".

NCLC's annual litigation conference is a MUST event for anyone doing consumer law--fabulous speakers, your chance to connect faces with email addresses, and meet your peers. This year is the biggest and hopefully the best yet.  If you cannot make this year, pencil in Portland, Oregon, October 24 - 27, 2008.

Industry's Free Rides for the Consumer Product Safety Commission (or, Capture and Deep Capture)

by David Arkush

The Washington Post reports today that the chief of the Consumer Product Safety Commission (CPSC) and her predecessor have taken dozens of trips, totaling nearly $60,000, paid by the manufacturers they regulate.  The article is detailed and worth reading.

In light of this most recent scandal in the CPSC, which must be vying for the title of most thoroughly captured regulatory agency, I want to take a moment to introduce you to another kind of capture.  Over at the Situationist---if you don't read it, you should!---Jon Hanson is discussing his theory of deep capture.  Hanson's work should be highly interesting to consumer lawyers, policy makers, and academics.

Supreme Court Grants Review in Exxon Valdez Case

We have on four prior occasions blogged about the Ninth Circuit's December 2006 decision halving the punitive damages award in the Exxon Valdez oil spill litigation to $2.5 billion and Exxon's effort to obtain en banc rehearing.  All of our prior posts can be accessed here.  The Supreme Court has now granted review in the case, limiting itself to several questions concerning whether federal maritime law permits an award of this nature and size.  The Court decided not to address the question presented in Exxon's petition on whether the Due Process Clause prohibits a punitive damages award of that size (claimed to be 123 times greater than the compensatory award).  The Court denied the plaintiffs' cross-petition asking for reinstatement of the original $5 billion award.

In its petition, Exxon claimed that the $2.5 billion punitive damages award was larger than the total of all punitive damages awards affirmed by all federal appellate courts in U.S. history.  Is that correct?

Identity Theft Red Flag Guidelines Issued

by Jeff Sovern

The 2003 FACTA Act directed federal regulators to issue identity theft guidelines on "red flags" and address discrepancies (identity thieves often use an address other than the consumer's because having credit cards, for example, sent to the consumer-victim will usually do the thief little good).  The guidelines have finally been issued.  Here's the OCC's summary:

The final rules require each financial institution and creditor that holds any consumer account, or other account for which there is a reasonably foreseeable risk of identity theft, to develop and implement an Identity Theft Prevention Program (Program) for combating identity theft in connection with new and existing accounts.  The Program must include reasonable policies and procedures for detecting, preventing, and mitigating identity theft and enable a financial institution or creditor to:

• Identify relevant patterns, practices, and specific forms of activity that are “red flags” signaling possible identity theft and incorporate those red flags into the Program;
• Detect red flags that have been incorporated into the Program;
• Respond appropriately to any red flags that are detected to prevent and mitigate identity theft; and
• Ensure the Program is updated periodically to reflect changes in risks from identity theft.

Reckless Disregard of What?

by David Arkush

Readers may recall that in Safeco Insurance Co. v. Burr, 127 S. Ct. 2201 (2007), previously discussed here and here, the Supreme Court held that the language "willfully fails to comply with any requirement imposed under this subchapter," 15 U.S.C. § 1681n(a), encompasses not just knowing, but also reckless violations of the Fair Credit Reporting Act (FCRA).

To my surprise, the September 28th issue of the Class Action Litigation Report (BNA) contains an attempt to read this as a pro-defense ruling that creates a consumer harm requirement. The "Analysis & Perspective" piece argues that, after Safeco, a defendant is not liable for statutory violations unless it "subjected the consumer to 'an unjustifiably high risk of harm that is either known or so obvious that it should be known.'" (emphasis added). This interpretation would allow defendants to escape liability for statutory violations in numerous cases. But it's dead wrong.

Consumer Product Safety Commission Reform Act Moves Ahead

Concerns over lead in toys, among other things, has prompted cries to increase the vigilance and expand the legal authority of the U.S. Consumer Product Safety Commission.  U.S. PIRG's Consumer Blog reports here that a legislative proposal to reform the Commission and pump up its authority has moved through the Senate Commerce Committee.  PIRG's blog includes links to useful material about the bill.  The same post discusses the recent call by House Speaker Nancy Pelosi and Senator Sherrod Brown for the resignation of Commission chair Nancy Nord (pictured to the right).  Plenty of good links there as well.

More on Lead in Toys and Other Consumer Products

Be a careful shopper this holiday season.  Testing by Consumers Union has found lead in a wide range of toys and other consumer products not on any government recall list.  The full results of the four-month testing project will be published in the December issue of CU's flagship publication, Consumer Reports.  Meanwhile, read about CU's findings here.

The Doctrine of Unintended Consequences Bites the Fast Food Industry

by Stephen Gardner

  In December of 2006, the New York City Board of Health passed a regulation requiring restaurants to list calories on menus and menu boards. But only restaurants that already made calories available voluntarily on brochures, web sites, or elsewhere were covered by the measure.

Recognizing that The Truth Hurts, the New York State Restaurant Association sued to enjoin the law, claiming that it was preempted by federal law (in this case, by federal inaction, since Congress and the FDA chose to do nothing on menu labeling) and that it violated the First Amendment.

Public Citizen filed a brief on behalf of a number of health advocates. In addition to Center for Science in the Public Interest, the brief was joined by a whole passel of luminaries and health honchos, such as Representative Henry Waxman, Former FDA Commissioner David Kessler, the American Medical Association, the American Diabetes Association, and the American Public Health Association.

Still More in the Times on the Mortgage Meltdown and Lead in Toys

by Jeff Sovern

Three interesting recent pieces in the Times: Today's Times has an editorial, "Moving Ahead on Mortgages," that endorses the FDIC proposal to deal with the foreclosure crisis by freezing interest rates at the introductory teaser rate (I previously linked to the FDIC proposal here).  Friday's issue had a column by Paul Krugman, "A Catastrophe Foretold" about how the mortgage meltdown could have been avoided, in which he refers to the prophetic words of the late Edward A. Gramlich.  An excerpt:

In his final paper, Mr. Gramlich stressed the extent to which unregulated lending is prone to the “abusive lending practices” he mentioned in his 2004 warning. The fact is that many borrowers are ill-equipped to make judgments about “exotic” loans, like subprime loans that offer a low initial “teaser” rate that suddenly jumps after two years, and that include prepayment penalties preventing the borrowers from undoing their mistakes.

Yet such loans were primarily offered to those least able to evaluate them. “Why are the most risky loan products sold to the least sophisticated borrowers?” Mr. Gramlich asked. “The question answers itself — the least sophisticated borrowers are probably duped into taking these products.” And “the predictable result was carnage.”

Mr. Frank is now trying to push through legislation that extends moderate regulation to the subprime market. Despite the scale of the disaster, he’s facing an uphill fight: money still talks in Washington, and the mortgage industry is a huge source of campaign finance. * * *

Finally, on Wednesday, David Leonhardt's Economic Scene column, titled "Lessons Thomas Still Could Learn," reports on lead in toys.  The company which manufactures Thomas toys comes off pretty badly, having first asked customers to pay the cost of returning its dangerous toys to the company, and then having sent the customers who returned the toys a free gift--which was also contaminated with lead.  But there's also good news: the Times bought fifty toys at a Wal-Mart and other stores and had them tested for lead.  No toy exceeded the legal limit for lead and only five--none bought at Wal-Mart--had any lead at all.

Yesterday's Hearing on Arbitration

by Paul Bland

  Yesterday, Thursday, October 25, 2007, the House Judiciary Committee’s Subcommittee on Commercial and Administrative Law held its second hearing on H.R. 3010, Rep. Hank Johnson's Arbitration Fairness Act. (This Subcommittee has jurisdiction over the bill.) H.R. 3010 would ban the use of pre-dispute binding mandatory arbitration in consumer, employment, franchise and medical contracts. (The first hearing was held on June 12th. I testified at it, and my testimony and a transcript of the hearing can be found on the Public Justice website.)

Three members of the Subcommittee attended the hearing. The first is Subcommittee Chairwoman Linda T. Sanchez. Rep. Sanchez has not yet co-sponsored the bill, but she spoke very sympathetically towards the situation of consumers and employees who have been treated poorly in mandatory arbitration systems. It also can’t be understated that Rep. Sanchez showed that she has put a lot of time into understanding the details of the issue, and she (along with her staff) have obviously put a great deal of work into interviewing and locating witnesses and giving both sides an opportunity to develop an extensive record. The second is Rep. Johnson, the sponsor of the bill, who is a courtly freshman representative from Georgia and a powerful orator. The third member was Ranking Subcommittee member Chris Cannon, who is a huge and uncritical fan of mandatory arbitration. In the course of carrying the water of the Chamber of Commerce on the issue, Rep. Cannon’s duties apparently include trying to craft personal attacks on anyone who comes forward with an individual story of having been abused by mandatory arbitration.

There were two panels. On the first panel:

Laura MacCleery, Director of Public Citizen's Congress Watch Division, who spoke about Public Citizen's report summarizing more than 34,000 arbitrations handled by the National Arbitration Forum in California, and who also spoke in some detail about the problem of arbitration clauses that ban class actions. I have written in several forums that our law firm’s experience (interviewing hundreds of consumers, and dozens of consumer lawyers, strongly supports the conclusions of Public Citizen’s groundbreaking report). Laura spoke with fervor and energy, and was very articulate. Rep. Cannon tried to get her to admit that Public Citizen’s report is very limited in scope, but Laura pointed out (correctly) that it covered EVERY SINGLE case that the National Arbitration Forum reported handling in California over a period of several years.