Public Citizen, the ACLU, and the NYCLU Comment on New York's Advertising Rules

by Greg Beck

As I've previously written, the New York courts are considering adopting new ethics rules restricting attorney advertising.  Today, Public Citizen, the ACLU, and the New York Civil Liberties Union submitted comments urging the courts to reject the proposed amendments in their entirety.  The comments, which you can read here, attack the constitutionality of the proposed amendments on three grounds:

1. The rules do not contain an exception for nonprofit attorneys, thereby restricting non-commercial and political speech at the core of the First Amendment.
2. The rules contain pointless restrictions on the content of attorney advertising that seem aimed more at limiting competition than helping consumers.  I wrote about these restrictions in more detail here.
3. The rules impose draconian burdens on Internet speech that would, for example, require us to print out a copy of this blog every time it is modified.  I covered this aspect of the rules here.

The proposed amendments have garnered a lot of negative publicity, especially in the blogosphere, and we hope that the courts will reconsider these blatantly unconstitutional rules.

Metro Ride to Capitol Hill: $1.35. Full-Page Ad in the Times: $250,000. Mass-Market Documentary on Credit Card Industry Abuses: Priceless.

by Deepak Gupta

One of the highlights of the Miami conference was an advance screening of Maxed Out, a new documentary on the credit card, credit reporting, and debt collection industries that hits theaters across the country next year.  The movie artfully combines heartbreaking stories of real consumers; segments with industry lobbyists, journalists, academics, and consumer advocates; shockingly honest interviews with a pair of frat boys who started a collection agency and a pawn shop owner who is himself in debt; Congressional testimony; politicians' speeches; and stock footage--all to create a fast-paced narrative that's equal parts humor and outrage, sometimes at the same time.  Members of the consumer law community such as Professor Elizabeth Warren, Bud Hibbs, David Szwack, and Ed Mierzwinski make appearances, as do President Bush, a Comptroller of the Currency official, and the stand-up comedian Louis C.K. (the creator of the hit HBO sitcom Luckie Louie).   

The film is made in the same vein as the fast food documentary Super Size Me--an entertaining and engaging documentary that sheds light on an important public policy problem.  In fact, in a panel discussion following the movie, director James Sculock revealed that he was planning to make a film about obesity in America until he found himself waiting in vain to see Super Size Me at the Sundance Film Festival; he realized immediately that it would be a big hit, and decided to switch gears.  He next planned to make a mostly comedic film about debt in America until his research revealed the gravity of the problem and the nefariousness of the industry's practices and convinced him to shift gears once again.  The result is a sober and responsible documentary that has the potential to shape the law for the better.   Given the change in Congress and the political mood of the nation, it couldn't come at a better time.

A single documentary film can't cover everything that's wrong with the financial services industry in America, of course, and decisions had to be made about what to include and what to leave out.  I could have done without the film's shallow and unexplained analogy between the growing national debt and the crisis of personal debt and might have at least mentioned student loans--but these are relatively minor criticisms.  Maxed Out manages to cover plenty, including the tactics of unscrupulous debt collectors, described in their own damning words; the complete indifference of credit reporting agencies to the overwhelming amount of false data in their reports; and the aggresive hawking of credit cards on university campuses, with kickbacks to university administrators.

The topic of campus credit card solicitation had perhaps the most emotional impact of anything in the film.  The movie profiles two mothers whose children committed suicide because they were so deep into credit card debt that they thought they had no way out--an alarmingly common occurrence.  One of the mothers featured in the film participated in the panel discussion in Miami, lending a very personal perspective on the issue.  (For more on this important topic, including stories of suicides and the complicity of college officials, see Creola Johnson's law review article, Maxed Out College Students: A Call to Limit Credit Card Solicitations on College Campuses, 8 N.Y.U Journal of Law and Public Policy 191 (2005).)

Suffice it to say, every consumer law professor should be screening this film in their classes and every legislator in America should see it.   The new coalition campaign on predatory lending issues, Americans for Fairness in Lending, plans to help roll out the film with selected screenings around the country, including a special Washington, DC, screening for members of Congress.  You may also want to visit AFFIL's website to see a sampling of their brilliant new advertisements on predatory lending issues. 

To read reviews, watch clips, learn more about the film and its director, and find out about screenings in your area, you can visit the film's website, maxedoutmovie.com.   The website even includes a blog by the film's director.    And there's also a fan website, www.maxedoutbuzz.com. We'll be sure bring you more news about Maxed Out as it comes to our attention.

Programming Note & Miami Recap

by Deepak Gupta

With most of the blog's contributors at the National Consumer Law Center conference in Miami over the past few days, posting activity around here has been a little sparse.  The good news, though, is that the conference was abuzz with lots of fascinating ideas, tips, and insights and we plan to make up the deficit by expanding upon and sharing some of them here.  NCLC, along with the National Association of Consumer Advocates, deserves enormous credit for creating and sustaining the national community of private lawyers, public interest organizations, legal services lawyers, and activists who advocate on behalf of consumers, and NCLC's excellent annual conferences are a huge part of that effort.  It's hard to overstate their importance.

The blog's contributors alone discussed a wide array of topics, including teaching consumer law (Chris Peterson, Jeff Sovern, Richard Alderman); lobbying on consumer legislative policy in Washington (Ira Rheingold); a report on the arbitration wars and strategic thinking about arbitration (Paul Bland); "check diversion" debt collection schemes (Deepak Gupta); and litigating consumer cases in the U.S. Supreme Court (Brian Wolfman, Paul Bland).   As Chris has already mentioned, Paul Bland was honored with the NCLC's most prestigious award and gave a truly inspiring acceptance speech.  In addition, CL&P bloggers gave presentations at the class action symposium on Sunday.  Brian Wolfman delivered a lunch address on the due process right to opt out--discussing ideas described in this prior blog post--and there were panels on the arbitration of consumer class actions (Mike Quirk, Paul Bland), and the role of trial plans in class actions (Cary Flitter, Stephen Gardner), among others.   On the latter topic, apparently nobody really knows what a trial plan is, except that some courts have insisted on them as a precondition for class certification.  To make matters worse, some courts have rejected plans as too cursory while others have rejected plans that were too complex.  This leads one to wonder whether the requirement is nothing more than a pretext to deny certification where it would otherwise be justified. 

Finally, on a slightly random note, here are two very intriguing questions that came up this weekend:

• Can the consumer movement be expanded (and its legislative agenda strengthened) by bringing in evangelicals and the "religious right"--people who presumably believe that the law should reflect the Biblical prohibitions on usury, but who are not necessarily positively disposed to the language of consumer rights?  Perhaps the answer lies in shifting the focus from rights-talk to the language of morality, responsibility, and obligation.  See Paul B. Rasor, Biblical Roots of Modern Consumer Protection Law, 10 Journal of Law & Religion (1993).

• Can the evil of mandatory binding arbitration be attacked, indirectly, by bringing successful consumer class actions in arbitral fora?   Do arbitrators, because of the way they are compensated, actually have an incentive to certify consumer classes?  And if so, what are the due process implications of an arbitral award in a class arbitration?   How can an arbitral award bind absent class members and what about injunctive relief?  To what extent can court confirmation cure any problems that might arise?   (We hope to bring you a discussion of at least some of these questions in the coming days.)

Congratulations to Paul!

On Sunday the National Consumer Law Center awarded the annual Vern Countryman prize to our colleague and co-blogger Paul Bland. Paul is uniformly regarded as the nation's foremost advocate against mandatory, binding arbitration agreements in consumer and employment litigation. The  Vern Countryman Award is presented to a legal services or public interest attorney who has made special contributions to the protection of the rights of low-income Americans.

Paul's acceptance speech--which featured iterative praise for mentors and co-workers--was a study in grace, humility, integrity, and determination. Surely there is no person in the country more deserving of the prestigious award. Please join me in offering Paul our best congratulations.

Excessive Hold Times for Checks Challenged by Consumer Groups

Worth checking out:  U.S. PIRG's Consumer Blog has this interesting and informative post on the excessive amount of time banks are allowed to hold checks that consumers deposit to their own accounts, and what some consumer groups, including U.S. PIRG, Consumers Union, and the Consumer Federation of American, are trying to do about it.

See you in Miami...

  Many, if not most, of the contributors to this blog -- including myself, Brian Wolfman, Paul Bland, Jon Sheldon, Ira Rheingold, and Chris Peterson -- will be speaking at the National Consumer Law Center's 15th Annual Consumer Rights Litigation Conference in Miami this weekend.  The NCLC runs a fantastic and inspiring conference.   Among many other things, the agenda includes a smorgasbord of substantive panels; a sneak-peak of the new documentary on the credit card industry, Maxed Out; and a separate symposium on class actions.  We hope to see you there!

Consumer Protection and the New Congress

by Scott Nelson

In my last two posts, I've noted the paucity of state ballot measures addressing consumer protection issues in this year's election.  But what about the imminent Democratic takeover of both houses of Congress?  With Democrats in charge, will a consumer legislative agenda emerge?

Today's Washington Post business section has a series of stories focusing on what the new Congress will mean for business.  There aren't a lot of specifics, but in general they don't seem to herald a particularly aggressive emphasis on consumer protection. 

To me, the most intriguing tidbit in the series was the suggestion, in a short article on housing policy, that there may be a push for predatory lending legislation.  Why is that intriguing?  According to the Post, the principal impetus for such legislation is that the "lending industry has sought a national law to combat conflicting state rules."  In other words, the motivation for action may not be protecting consumers, but rather advancing industry's long-term project of preempting not only state consumer protection regulations, but also state tort actions aimed at giving remedies to consumers.

The Post reports that Representative Barney Frank has indicated he might back such legislation "if it includes consumer protections."  (One would sort of hope that anything that called itself predatory lending legislation would, but you never know.)  The question is, at what price would such protections come?  If federal regulation precludes more expansive state-law protections and thus sets a ceiling on consumer protection instead of a floor, is it worth it?

Obviously, the devil will be in the details.  Whether consumer advocates should welcome such legislation will depend not only on what protections it provides, but whether and to what extent it expressly preempts state regulations and causes of action, and whether it raises additional problems of implied preemption.  Obviously, one can't develop a firm opinion on possible legislation at such an abstract level.  Still, there's plenty of reason to be suspicious when industry is asking to be regulated in order to free itself from state-law consumer protection measures.

Beyond predatory lending, the Post reports that both John Dingell (expected to become chair of the House Energy and Commerce Committee) and Charles Rangel (heir apparent at House Ways and Means) intend to take on prescription drug prices.  And Dingell has a list of other targets, including regulation of dietary supplements, pushing the FDA to improve drug safety regulations, promoting electric cars, and looking into whether drug companies are colluding to keep generic drugs off the markets and pushing questionable uses of patented drugs.  All worthy issues.  It'll be interesting to see how vigorously they're pursued.

Oregon Voters Reject Ballot Measure on Insurance Industry Use of Credit Scores

by Scott Nelson

Yesterday I reported that the only consumer protection measure on any state ballot yesterday was Oregon's Ballot Measure 42, which would have prevented insurance companies from using credit scores in setting premiums.  Although Oregon's vote-by-mail system means that complete results are not yet available as of this writing, the ballot measure is on its way to a resounding defeat, by a margin of about 65-35.  Updated results are available here.

The lopsided vote suggests that Oregon voters thought this was kind of a crazy idea.  Indeed, the margin was almost identical to the margin by which Arizona voters rejected one of the truly crazy ideas I mentioned in yesterday's post - a proposal to pay a randomly selected voter in every general election $1 million, which lost by a 66-34 margin.  Meanwhile, Oregon voters approved, by 67% to 33%, a measure to prevent state and local governments from using their eminent domain powers to condemn property for private uses.

In other words, Oregon voters were up in arms about a governmental practice that very rarely occurs and would affect almost no voters, but were seemingly unconcerned by an insurance industry practice that affects thousands of consumers.  Why?

Supreme Court Asks for Solicitor General's Views in Important Preemption Case

    By Brian Wolfman

    In an order issued yesterday, November 6, the Supreme Court asked (read: required) the Solicitor General to express the views of the United States in an important preemption case from the Second Circuit, Riegel v. Medtronic.  The Court will consider the S.G.'s views before deciding whether to grant certiorari.  The question in Riegel is whether the Medical Device Amendments to the Food, Drug, and Cosmetic Act preempt state-law suits seeking damages for injuries from medical devices that have received FDA pre-market approval.  The circuits have been split on this question for seven years, and the state appellate courts are split as well.  My colleague, Allison Zieve, is the plaintiff's lead counsel.  Allison blogged about the case on October 19, and many of the key documents from the case are contained in that post.  In addition, SCOTUSblog reporter extraordinaire Lyle Denniston provided an excellent report yesterday on Riegel after the Supreme Court issued its "SG-advise" order.   If history is any guide, the S.G. will file his brief no earlier than May 2007.

Consumer Protection (Not) on the Ballot

by Scott Nelson

According to the Initiative and Referendum Institute, some 205 statewide ballot measures go before voters today in 37 states.  What's on the ballot?  Lots of measures addressing social issues (abortion, gay marriage), taxation, land use and governmental "takings" of property, smoking restrictions, minimum wage increases, election law and lobbying reform, education funding, marijuana legalization and a grab-bag of miscellaneous issues ranging from the important to the mundane to the absurd.  (Arizona voters, for example, will decide whether to award $1 million to a randomly selected voter after each general election and determine the minimum living space to be allowed for pregnant pigs, and Michiganders will vote on whether to prohibit the hunting of mourning doves.)

But what's not on the ballot, almost anywhere?  Consumer protection.  Of the 205 ballot measures summarized on the Initiative and Referendum Institute website, only one is what I would call a consumer protection measure.

That one is an Oregon initiative (Measure 42) that would prohibit insurance companies from using consumer credit scores in calculating insurance premiums.  It's a particularly interesting ballot measure in that the use of credit scores by insurance companies has just this fall become a high-profile legal issue because of the Supreme Court's grant of certiorari in two cases coming out of Oregon that address the applicability of the Fair Credit Reporting Act to adverse premium pricing decisions made by insurance companies based on credit scores.  (For a discussion of the cases, see this ealier post.)  Briefly, the issue in the Supreme Court cases relates to when an insurance company must give notice of such an adverse action, and the standard of willfulness applicable if the company is sued for a willful violation of the statute.  The Oregon ballot measure, by contrast, would prevent such adverse actions altogether.

Interesting as the Oregon ballot measure is, I think it's more interesting that it is the sole consumer protection measure on any state ballot.  Why is that?  It's not because right-wingers have a monopoly on the initiative and referendum process; they don't, as evidenced by the significant number of ballot measures that would increase the minimum wage and ban smoking in public places, to name just a couple of examples.  For whatever reason, however, consumer protection seems not to be a priority among ballot measure advocates - even though it seems likely that on some issues, voters might be more interested in consumer protection than legislators and courts.

I have to add that there aren't many measures that I would call specifically "anti-consumer," either.  Arguably, the measure to limit the right to jury trials in Maryland to cases where the amount in controversy exceeds $10,000 might fit into that category.  And South Dakota's infamous Jail4Judges measure (which would eliminate the immunity of judges and even JURORS against suits based on their decisions) doesn't seem likely to help consumers - or anyone, for that matter. 

There are also a few measures that might be considered "pro-consumer" though not really consumer protection (e.g., a Massachusetts measure allowing sales of wine in grocery stores, an Oregon measure allowing citizens without prescription drug insurance coverage to participate in a state-sponsored program).  But basically, consumer issues are just not on the ballot.

I'll follow up by letting our readers know whether Oregon's Measure 42 passes.  But covering the results of the consumer protection races on today's ballot will not exactly be an onerous chore given that there's only one to cover.