More on Punitive Damages in Exxon Valdez Litigation

We previously blogged here about the Ninth Circuit's ruling cutting in half (to $2.5 billion) the punitive damages award in the Exxon Valdez oil spill litigation, and here about Exxon's petition for rehearing en banc.  We've recently been sent the plaintiffs' response.  Plaintiffs' counsel informs us that the Ninth Circuit has yet to rule on the petition.

More Google Privacy Fears

By Greg Beck

Google won at least partial praise from privacy advocates last month with its announcement that it plans to purge identifying information from its database of web searches after 18 to 24 months.  But recent news again raises concerns about Google's privacy policies.

First, Google announced that it plans to acquire DoubleClick, Inc., which distributes Internet-based ads and tracks which ads web browsers click.  The merger raises fears that Google could combine its existing massive databases of its users' search habits with Doubleclick's equally massive database on users' behavior to create a combined database of Web users and their browsing habits. 

Google and DoubleClick claim that they will not merge the data in this way, but critics are not mollified.  The merger prompted three consumer groups, the Electronic Privacy Information Center, PIRG, and the Center for Digital Democracy, to file a complaint with the Federal Trade Commission raising privacy and antitrust concerns.  Although Google's privacy policy discloses that it saves personally identifying information, the objecting consumer groups argue that Google's practices are nevertheless deceptive because the disclosure is difficult to find and because survey data shows that most Google users don't know that Google stores personally identifiable data along with a user's search history.

Second, Google has announced a new service to track every website that web browsers click on from its search results.  The service includes one critical feature that is worthy of praise:  it is completely voluntary.  Google's privacy policy, however, doesn't rule out saving this data even without a user's consent, and, in fact, specifically provides that "Google may present links in a format that enables us to keep track of whether these links have been followed."  Google does store information about which websites users visit in at least some circumstances.  Moreover, when a user clicks on a link from Google's search results, the user's browser is sent to Google's own server before being sent to the requested web page, in a way that would allow Google to track which sites users click.  Google's policy raises concerns that it can link data on which websites its users visit with personally identifying information and that, once again, consumers might not realize the amount of privacy they are sacrificing whenever they search the web.

Brief Filed In Critical California Supreme Court UDAP Case

By Brian Wolfman

    Way back on September 15, I blogged here about an effort by Public Citizen and the Center for Auto Safety to convince the California Supreme Court to review a ruling that, if allowed to stand, would gut California's consumer protection laws.  The California Court of Appeal had ruled that California's Proposition 64 requires consumers to show "reliance" to prevail under those laws.  (As you may recall, Proposition 64 got rid of the so-called private attorney general provisions of California's consumer protection laws.)  Then, here, I blogged again after the California Supreme Court granted review.

    With the able representation of California consumer lawyer Jeff Fazio, Public Citizen and the Center for Auto safety have now filed their amicus brief on the merits.  Because a fundamental premise of modern consumer protection law has been that the plaintiff need not prove reliance, the California Supreme Court's decision in this case is likely to be very important. 

Preventing Contamination Of Our Food Supply: Is FDA Up To The Task?

Today's Washington Post contains this article about the recent spate of serious food contamination incidents around the country and asks whether the FDA has the capacity to keep the food supply safe.  Here's the beginning of the article, which is worth reading in its entirety:

The Food and Drug Administration has known for years about contamination problems at a Georgia peanut butter plant and on California spinach farms that led to disease outbreaks that killed three people, sickened hundreds, and forced one of the biggest product recalls in U.S. history, documents and interviews show.

Overwhelmed by huge growth in the number of food processors and imports, however, the agency took only limited steps to address the problems and relied on producers to police themselves, according to agency documents.

Congressional critics and consumer advocates said both episodes show that the agency is incapable of adequately protecting the safety of the food supply.

Uncle Sam: Dangerously Careless With Our SSNs

Ed Mierzwinski over at U.S. PIRG's consumer blog has this informative piece about recent U.S. government disclosures of our social security numbers.  Ed links to stories in today's New York Times and Washington Post describing these disclosures in detail.  Worth a look.

Arbitration and Identity Theft

by Jeff Sovern

  I was inspired by my co-blogger Paul Bland to add a problem to the consumer law casebook I've been working on with Dee Pridgen, Andy Spanogle, and Ralph Rohner about what happens when an identity thief signs an agreement providing for arbitration.  Can the impersonated consumer be forced to arbitrate?   Who decides if the consumer's signature is genuine: an arbitrator or a court?   Unfortunately, one of the downsides of writing a casebook with problems is that you have to give answers to the problems in the teacher's manual.  So what is the answer?

It seems incredible that a consumer who never agreed to arbitration would be obliged to submit to arbitration anyway.  In fact, a federal district court decision, Maranto v. Citifinancial Retail Services, Inc., 2005 WL 3369948 (W.D.La. 2005), held that when an account is allegedly opened by an identity thief, the impersonated person is not bound to arbitrate even though the agreement contains an arbitration clause. The opinion reads as if the Magistrate Judge felt that the court decides whether the consumer signed the agreement (“There is no valid agreement to arbitrate between Plaintiff and Defendant. Defendant apparently issued a credit card and opened an account in Plaintiff's name, but there is no evidence before the court that Plaintiff applied for the card or consented to the opening of the account. In fact, the allegations are that the account was opened as a result of identity theft committed by an imposter.”).

More on Whether the Federal Government is a "Consumer Reporting Agency" Under the FCRA

by Jeff Sovern

On Wednesday I blogged about whether lenders who trolled for potential borrowers through a federal database containing the financial records of millions of student aid applicants might have violated the Fair Credit Reporting Act.  The answer depends in part on whether a government agency qualifies as a consumer reporting agency within the meaning of the FCRA.  Notwithstanding the statutory language which I referred to on Wednesday, some authority states that it does not.  In Ollestad v. Kelley, 573 F.2d 1109, 1110 (9th Cir. 1978), the Court wrote:

The district court concluded that the FCRA does not apply to records held by federal agencies and granted defendants' motion for summary judgment. That conclusion was proper in light of the plain language of the statute, the absence of evidence of Congressional intent to include federal agencies within the statutory definition of “consumer reporting agency,” and the Federal Trade Commission's interpretation of the statute.

But the case is easily distinguishable and the statements appear to be overbroad dicta.  The plaintiff in Ollestad had sought an injunction under the FCRA to obtain corrections in his FBI records.  After quoting the definition of a consumer reporting agency, the court wrote: "It cannot be contended seriously that agencies such as the F.B.I. compile information on persons, particularly on former employees as is the appellant, for the purpose of furnishing consumer reports to third parties."  In addition, in commenting on the legislative history, the Court explained that "Although the FCRA's legislative history is less than explicit, the tenor of remarks of members of Congress indicates that the statute is concerned with regulating practices in the credit reporting industry rather than with regulating the record-keeping functions of federal agencies."  The student loan database, by contrast, has to do with the credit industry.

Bush Administration Antitrust Policy

    You may be interested in this recent Washington Post article by Steven Pearlstein about the laxity of the Bush Administration's antitrust policy.  The article discusses a number of recent mergers on which the Bush Administration took a pass and a new academic paper reporting on a study in which 100 leading antitrust lawyers were asked to compare the current legal environment to a decade ago on a scale of 1 to 5, where 1 was tough antitrust enforcement and 5 was lax enforcement.  The score: 4.9.

Are Lenders Trolling a Federal Student Loan Database to Solicit Borrowers Violating the FCRA?

by Jeff Sovern

The Washington Post had a story on Sunday about fears that lenders are trolling for potential borrowers through a federal database that contains the financial records of millions of student aid applicants.  Today's New York Times reports that because of the concerns, the Education Department has temporarily cut off outside access to the database.  Federal rules reportedly prevent the use of the database for that purpose and the Department of Education has in the past revoked some IDs that grant access to the database.  I'm not familiar with the federal rules in question and I hadn't even heard of the database until these reports surfaced, but I can't help wondering if this practice would give rise to a claim under the Fair Credit Reporting Act. 

The FCRA limits access to consumer reports to certain permissible purposes as stated in 15 U.S.C. § 1681b.  Lenders are permitted to send solicitations if they comply with the prescreening rules but if those rules were not complied with, the lenders may have a problem.  It's hard to believe that the FCRA applies to a database maintained by the government, but on a quick look I can't find anything that says it doesn't.  The FCRA applies to "consumer reports" assembled by "consumer reporting agencies," as defined in § 1681a. The database reportedly was maintained at least in part to determine student eligibility for financial aid, which would seem to qualify its reports as consumer reports ("any written . . . or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit capacity . . . .").  "Consumer reporting agency" is defined in part as "any person which for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information . . .."  It seems likely that that describes the federal database.  The word "person" is specifically defined as including any "government or governmental subdivision or agency, or other entity." 

Does anybody out there see something I'm missing?  Incidentally, obtaining information from a consumer reporting agency under false pretenses is a federal crime under § 1681q; gives rise to a private claim by consumers with $1,000 in statutory damages under § 1681n; and gives rise to a claim by the credit reporting agency.

More On The Federal Judicial Center's New Report On CAFA From The Lead Author

by Tom Willging

[Ed. note:  Tom Willging is a Senior Researcher at the Federal Judicial Center and an expert on class actions.  Among other things, he helped write the Manual on Complex Litigation.  Note the request for assistance at the end of Tom's post]

    You probably haven't heard enough about CAFA lately. As the Federal Judicial Center's long-term study of the impact of CAFA on the federal courts plays out, we have delivered our third--that's right third, time flies--report on the Judicial Conference's Advisory Committee on Civil Rules. We blogged earlier, here and here, about whether our results were surprising. Now, with 16 months of data after CAFA went into effect, there's no surprise in the number of case brought into the federal courts: at least 300 and perhaps as many as 364 appear attributable to CAFA. More newsy, though, is a shift in the type of cases. The initial wave consisted mostly of cases filed in state courts and removed to federal courts. Most of the more recent increase, though, comes in the form of diversity cases filed originally in federal courts. Figure 4 in the report tells this story in graphic format. Diversity cases before CAFA typically came into federal court by removal. Now they more often arrive as original actions. We also present data on the courts where the increased cases were filed. Though dispersed across the district courts in all circuits, Figure 5 shows that the 9th seems to have had a special impact, particularly focused in Central (L.A.) and Northern (SF) California.  We're still looking for a partner to work with us in studying activity in one or more state courts. Anyone interested?