Valuable New Consumer Book: "Give Me Back My Credit"

by Paul Bland

There are not that many books available to a mass audience that explain what rights American consumers have when they encounter abusive or exploitative business practices. There have been a few exceptions, and my favorite two were written by America’s leading experts in their field: Evan Hendrick’s Credit Scores and Credit Reports, and Remar Sutton’s guide to car buying, Don’t Get Taken Every Time. But with these very notable exceptions, I have encountered surprisingly few readable books that would help most consumers understand a great deal about their legal rights and how to protect themselves against scams and corporate abuses.

There is a welcome new addition to the field, though, and it comes from a woman who learned much of what she has to tell from her own experiences as the victim of corporate abuse. Denise Richardson, a consumer who has become a prominent on-line consumer journalist and activist, has just published her first book: Give Me Back My Credit, and it’s a book that should be read by consumers, lawyers and policymakers alike.  The book is published by Infinity Publishing, and costs $16.95.  Ms. Richardson has also started a website, www.givemebackmycredit.com, with further information about her book, a blog, a petition for consumers, and other information.

A large part of Give Me Back My Credit consists of Ms. Richardson’s powerful telling of her own story, which started with a bank making arithmetic errors with her mortgage payments, and ended years later (after many more errors) with her credit record being all but destroyed. Ms. Richardson describes a series of mistakes that had ever widening ripples in her personal and financial life, and her lively and personal writing style makes it a book to which most Americans can relate. It’s easy to feel great empathy for this woman, as one reads about how her world was shaken and damaged by careless errors of big corporations.  Even more irritatingly, as she tells her story it becomes clear that the damage to her life was compounded by the corporation's stubborn refusal to acknowledge their errors and the efforts of their lawyers to deny and cover up the mistakes (and, of course, to try to blame her for them).  Ms. Richardson traces how she fought back against these abuses, refusing to knuckle under to the various financial, personal and legal pressures that were brought to bear on her.

More on FJC’s CAFA Data and the “September Surprise”

by guest contributor Tom Willging (Senior Researcher, Federal Judicial Center)

I could say that I am surprised that Brian Wolfman is surprised that I’m surprised by the data we reported (on behalf of the Federal Judicial Center) in September on the early returns from the Class Action Fairness Act, but that could get silly. I did not expect the impact of CAFA to be so immediate and dramatic.

One reason to expect some lag time came from the rumors and anecdotes that plaintiffs’ lawyers were rushing to file cases in state courts before the law was enacted. Granted, they didn’t have much warning and there was no delay in signing the bill, but reports of state court filings suggested that there would be a lull in new filings of class actions in the weeks or months after CAFA went into effect.  What we found instead was an unexpected number of filings and removals in the first four and a half months (the period covered by this interim report).  Before CAFA, some had predicted a modest effect, perhaps to persuade Congress that CAFA would not overburden the federal courts. For example, one estimate from a knowledgeable judge was that CAFA would bring about 300 new cases into the federal courts each year.  What we found is an estimated impact, based on the first four months, of a rate of 370 new filings in or removals to federal court annually. While 370 new cases per year is our best estimate, projecting that rate into the future is uncertain. Assuming that the first four and a half months were atypical, the rate could be far higher. The future rate might even be lower if, for example, some defendants decide that removing certain cases to federal courts constrains their settlement options or otherwise turns out to be not as friendly an environment as they expected. In any event, there is no need to speculate. We will have data in April 2007 that will give a fuller measure of the impact—and maybe more surprises.

Brian is absolutely right that a key question is "What’s happening in the state courts?"  We are up to our elbows and ears in gathering and trying to make sense of the federal data. It would certainly make a difference to know whether or not state court class actions are increasing, decreasing, or staying about the same. But we do not have the resources to study state courts.  No single researcher or entity is in a position to collect data on state court activity in all the states.  Data do not exist in many courts. We have some hope that researchers in individual states might examine any available data in their jurisdictions. Researchers with the California Judicial Council are in the early stage of looking at class action activity in a state that should provide fertile soil for class action research, given its historical level of class action activity.  We are working with those researchers and stand ready to provide them with data on class action activity in California’s federal courts. There are thorny problems of matching cases to avoid double-counting of, say, removed and remanded cases or duplicate filings of identical cases, but those should be surmountable. We ask that you encourage empirical researchers in your home state to undertake similar research. We will gladly cooperate and work with them so that we all end up with a complete picture of the class action landscape after CAFA.

"Outsourced Justice"

by Deepak Gupta

This weekend's Los Angeles Times Magazine included a lengthy and critical look at arbitration in California.  The piece covers a wide spectrum, from the voluntary resolution of commercial and marital disputes to industry's use of binding mandatory binding arbitration as a means of stifling consumer grievances.  But perhaps the most telling--and certainly the most ironic--feature of the article is that the author couldn't even get it published in the Times without first submitting to the very evil at which his criticism is directed:

[B]ecause arbitration clauses are often buried in fine print, employee manuals or the junk that comes with credit card bills, "people are obviously entering into these agreements without any understanding of what rights they're giving up," [California Supreme Court Justice] Ronald George says.

I do know what I gave up. To write this story, The Times made me sign a contract in which I "waive and give up any right to a jury trial" if I wind up with a grievance against the newspaper.  Instead, I've got to use JAMS.  I'd rather have a jury than a JAMS judge decide such things.  But, practically speaking, I had no choice.

Burlington Northern and Santa Fe Railway: Don't Paint Our Trains

by Greg Beck

Jay Youngdahl's law firm represents injured railroad workers in claims against railroad companies, including Burlington Northern and Santa Fe Railway (BNSF), one of the biggest railroad networks in North America. Part of the firm’s website includes a gallery of images created by New Mexico artist Douglas Johnson.  Youngdahl commissioned the paintings from Johnson to show the challenges faced by railroad workers, a subject that he feels has historically been ignored in the art world.   

    BNSF, however, apparently did not appreciate one painting on the site that appears to include representations of BNSF trains.  Upon discovering the image, BNSF's attorney sent several cease-and-desist letter to Youngdahl, claiming that his use of the paintings infringes BNSF’s trademarks, “dilutes the distinctive quality of BNSF’s famous trade dress and famous marks,” and “tarnishes BNSF’s reputation by suggesting that all FELA [Federal Employer's Liability Act] claims are claims made against BNSF.”  BNSF’s position once again raises the question of how far companies can go to regulate consumers' use of their trademarks for the purpose of commentary and criticism. Here is one of the letters received by Youngdahl.

New Identity Theft Threat?

by Jeff Sovern

An article in today's New York Times reports on a conflict between researchers and credit card issuers over potential security problems in credit cards which need not be "swiped" through credit card readers.  Tens of millions of these credit cards--which can be read through radio waves--have been issued by American Express, J.P. Morgan Chase and others.  Though the issuers claim that the data in the cards is encrypted, the researchers found that some of the cards bear unencrypted information that can be read by devices "the size of a couple of paperback books, which they cobbled together from readily available computer and radio components for $150."  One researcher compared the situation to wearing your name and credit card information on a T-shirt.  Because the cards need not be swiped, a reader can obtain the credit card data from envelopes in mailboxes or while standing near a person in a crowd.  On the other hand, credit card issuers denied that the cards present a real threat to consumers.  They argued that the researchers' sample was too small to be reliable and that the transmitted information was useless.  I cannot help but wonder if the gain in convenience is worth it.

CAFA Junkies Take Note: Another CAFA Effective Date Ruling, With Some Dicta Thrown In

    By Brian Wolfman

    On October 19, 2006, the Seventh Circuit affirmed a decision remanding a class action to state court on the ground that the class action, which otherwise would have met the jurisdictional requirements of the Class Action Fairness Act (CAFA), was filed before CAFA's effective date and post-CAFA amendments to add a couple of named plaintiffs and some factual details "related back" to the original filing.  See Santamarina v. Sears, Roebuck & Co., No. 06-3054 (7th Cir.).  In the course of the opinion, Judge Posner noted, "for future reference" (how's that for an advisory opinion!), that an erroneous refusal to remand a case under CAFA is not "a jurisdictional error," that is, "it would not be so grave a mistake—so usurpative an assumption of federal jurisdiction withheld by Congress—that we would have an independent duty to correct it even if no party complained ...."  Some CAFA remands are discretionary, and some are mandatory because the district court lacks  jurisdiction to hear the case.  Judge Posner's opinion does not appear to distinguish among CAFA remands.

Consumer Debt, the Military, and Iraq

by Deepak Gupta

What could the increasing level of consumer indebtedness in the United States possibly have to do with the security situation in Iraq?

Well, according to a disturbing new Associated Press report, "Thousands of U.S. troops are being barred from overseas duty because they are so deep in debt they are considered security risks."

The number of troops held back has climbed dramatically in the past few years. And while they appear to represent a very small percentage of all U.S. military personnel, the increase is occurring at a time when the armed forces are stretched thin by the wars in Iraq and Afghanistan . . .

The Pentagon contends financial problems can distract personnel from their duties or make them vulnerable to bribery and treason. As a result, those who fall heavily into debt can be stripped of the security clearances they need to go overseas.

While the number of revoked clearances has surged since the beginning of the Iraq war, military officials say there is no evidence that service members are deliberately running up debts to stay out of harm's way . . .

The problem is attributed to a lack of financial smarts among recruits; reckless spending among those exhilarated to make it home alive from a tour of duty; and the profusion of "payday lenders" — businesses that allow military personnel to borrow against their next paycheck at extremely high interest rates.

CAFA Appeals: Third Circuit Agrees That Less Is More

  by Scott Nelson

The U.S. Court of Appeals for the Third Circuit ruled on Monday that petitions for interlocutory appeals of remand orders under the Class Action Fairness Act must be filed not more than seven days after the district court's remand order, even though the statute (28 U.S.C. 1453(c)(1)) says they may be filed not less than seven days after the challenged order.  Morgan v. Gay, No. 06-8045 (Oct. 16, 2006).

In so holding, the Third Circuit joined the 10th, 9th, and 11th Circuits in holding that the language of the statute must be read to mean the opposite of what it says.  See Pritchett v. Office Depot, 420 F.3d 1090 (10th Cir. 2005); Amalgamated Transit Union Local 1309, AFL-CIO v. Laidlaw Transit Services, 435 F.3d 1140 (9th Cir.), opinions on denial of reh'g en banc, 448 F.3d 1092 (9th Cir. 2006); and Miedema v. Maytag Corp., 450 F.3d 1322 (11th Cir. 2006).  In other words, although the statutory language appears to impose a seven-day waiting period before an appeal may be filed, the courts so far agree that it actually imposes a seven-day time limit.

More on Unaccountable Arbitrators

  by Scott Nelson

Paul Bland concludes his post on the extraordinary leeway that courts give arbitrators to botch legal and factual issues by saying, "If that is a system of judicial review that is 'sufficient,' I’d REALLY hate to see what an insufficient judicial review system would look like."

Paul might've gotten his chance to see an insufficient system if the petitioners in John Hancock Life Insurance Co. v. Patten, No. 06-49, had convinced the Supreme Court to hear their claim that even the extremely limited review now available for arbitration awards that are issued in "manifest disregard of law" is too much -- even though, by the petitioners' own count, challengers to arbitration awards have prevailed under that standard in only six reported federal cases over the past fifty years!  As Deepak Gupta reported a couple of days back, the Court denied certiorari in Patten, but I expect that industries that seek to channel consumer claims into arbitration will continue to look for opportunities to get the Supreme Court to kill the manifest disregard standard.  Their chances to attack the standard, however, are limited by the fact that they almost never lose under it.  One might think they'd be content to leave well enough alone.

Meanwhile, one of the other cases Paul mentions -- the Wise v. Wachovia Securities case, where Judge Posner stood up for the right of arbitrators to issue "wacky" decisions in contract cases -- is also the subject of a petition for certiorari filed by the plaintiffs who lost in the court of appeals.  The petition, No. 06-331, was filed September 5, and will probably be up for consideration at the Court's November 9 Conference.  Although I haven't yet seen the petition, I doubt if it directly challenges Posner's "wacky" comment because the comment appears to be dictum.  (It referred to the standard applicable in a case involving contract interpretation, which, as he noted, was not the issue in Wise.)  The principal issue the plaintiffs raised in the Seventh Circuit was the absence of any evidence to support the arbitration award, a claim that Judge Posner also found to be an insufficient basis for a judicial challenge.  In any event, we'll keep tabs on the petition and report on the Court's disposition of it.

Should FDA Premarket Approval Be a Liability Shield?

by Allison Zieve

Does the FDA's premarket approval of a medical device effectively immunize the manufacturer from liability for injuries caused by the device?  The courts are deeply divded over this question of federal preemption.  The pending cert petition in Riegel v. Medtronic, a case in which I represent the petitioners, offers the Supreme Court a chance to resolve that division and answer the question once and for all.  We filed our reply brief earlier this week and expect to find out on November 6 whether the Court will take the case.

Since the early 1990's, defendants have been arguing, and the federal courts have often held, that damages actions brought by consumers against medical device manufacturers are preempted by the 1976 Medical Device Amendments (MDA) to the Food, Drug, and Cosmetic Act.  Without getting into its complexities, the MDA's preemption provision, 21 U.S.C. 360k(a), provides that certain federal requirements applicable to medical devices preempt certain state-law medical device requirements.

We've been fighting these arguments for years.  In Medtronic v. Lohr, 518 U.S. 470 (1996), a case argued by my colleague Brian Wolfman, the Supreme Court rejected an attempt by a medical device manufacturer to immunize itself from tort liability by pointing to this preemption provision.  The Court held that, for the MDA to preempt a common-law claim, that claim must be developed "with respect to" devices and must correspond to a device-specific federal requirement.