Consumer Law & Policy Blog

A plague of defense lawyers

by Steve Gardner

Well, I see that yet another law firm has announced its hope of attracting new food companies as clients. 

It tickles me to see how many large defense firms are getting into the business of offering to defend companies from deceptive marketing practices relating to food and nutrition.

Some food industry front groups like to whine about all the food lawsuits that are being brought by consumer lawyers. For example, there’s the [irony alert] “Center for Consumer Freedom,” a long-time advocate for smoking, drinking, and food fraud, which claims that its purpose is “promoting personal responsibility and protecting consumer choices.”

And how does the Center go about “promoting personal responsibility and protecting consumer choices”? By spending almost 80% of its income (check out its IRS filing) to hire the private PR firm Berman and Company, whose president Rick Berman is the same Rick Berman who is the Executive Director of the Center. 

One way the Berman money tree sought to fulfill its claimed purpose was by issuing a vitriolic screed against “a growing cabal of activists [which] include self-anointed “food police,” health campaigners, trial lawyers, personal-finance do-gooders, animal-rights misanthropes, and meddling bureaucrats.”

This extremely well-compensated Executive Director of an avowedly non-profit organization is not alone in shilling for food companies. Take, for example, the recent remarks by a law professor (and former white-shod defense lawyer) who commented that a California bill that would require companies to let consumers know if their products contained GMOs would be a “‘boondoggle’ for litigation attorneys, because it authorizes citizen lawsuits against alleged violators.”

Of course, this law professor avoids saying that the best way to avoid this speculated “boondoggle” is simple.

Companies could simply comply with the law.

It’s pretty easy for companies to comply with consumer protection laws. They don’t need lawyer to help them do that. What they do need lawyers for is to help them avoid responsibility for their illegal, deceptive, and abusive practices.

Lots of highly paid defense lawyers and, of course, people like the perhaps even-more highly paid Rick Berman. 

Now, it’s true that the number of lawsuits involving deceptive food marketing claims has grown significantly since I became Litigation Director for CSPI eight years ago (there were only a couple of them when I started) to the point that there are dozens of them today.

And it’s also true that an increasing number of plaintiff lawyers are turning their attention to this type of much-needed consumer protection litigation.

But it’s also true that if you counted the number of lawyers in the plaintiff firms involved in food marketing lawsuits, that number would be crushed by the number of lawyers in the defense firms who defend the food industry. Take, for example, my friend (frenemy?) Russell Jackson, who writes an honest (but pro-company) blog that covers food marketing litigation.

Russell’s firm Skadden Arps has over 1800 lawyers, which alone is perhaps 20 times as many as the combined number of lawyers who advocate for consumers in this area.

So I urge those on the side of the food companies to clean up their dialectic and instead focus on cleaning up their illegal practices.

The best way to avoid getting sued for violating consumer protection laws is simply not to violate them.

C’mon, Big Food, step up and put those plaintiff lawyers out of business!

I felt a twinge of disloyalty to other consumer protection lawyers when I typed that last sentence, until I realized that the chances of that happening are only slightly greater than the chances of my winning the Texas lottery.

Wait, let me retract that because there is a chance (albeit very slight) that I could win the Texas lottery.

 

 

Margaret Lemos on State Attorney General Representative Suits

Margaret H. Lemos of Duke has written Aggregate Litigation Goes Public: Representative Suits by State Attorneys General, 126 Harvard Law Review (2012).  Here's the abstract: 

State attorneys general represent their citizens in aggregate litigation that bears a striking resemblance to the much-maligned damages class action. Yet, while class actions are subject to a raft of procedural rules designed to protect absent class members, equivalent suits in the public sphere are largely free from constraint. The procedural disconnect between the two categories of aggregate litigation reflects a widespread assumption that attorneys general will adequately represent the interests of the state’s citizens, obviating any need for case-specific mechanisms for assuring the loyalty of lawyer to client.

This Article challenges the presumption of adequate public representation. By conflating consent of the governed with consent of the client, the conventional wisdom ignores the important differences between political and adjudicative representation. Class-action scholars have produced mountains of commentary detailing the agency costs of aggregate litigation, including substantial conflicts between the interests of class counsel and the members of the plaintiff class. I show that the same risks are present in state suits. Attorneys general may not be driven by the pursuit of attorney’s fees, but their status as political representatives means that they must negotiate between the interests of the public at large and those of the individuals they purport to represent in an adjudicative capacity. The potential for conflicted representation would not be troubling if citizens could easily monitor and control the work of the attorney general, but, as in the class context, they cannot. If anything, the costs of monitoring and control are higher in the public sphere because the only way to “fire” the attorney general is to vote her out of office — hardly a viable solution when the attorney general’s political responsiveness is the source of the conflict. Thus, far from solving the problems that scholars have emphasized in the class-action context, the fact that the attorney general is an elected or appointed official should provide cause for heightened concern. That concern assumes a constitutional character when state litigation stands as a bar to subsequent private claims for damages or other monetary relief. In order to protect the due-process rights of the individuals whose interests are at stake in public aggregate litigation, courts must either ramp up the procedural requirements for state suits, or — better — hold that public suits cannot bind private claimants.

Eric Voigt on Voluntary Refund Policies as an Alternative to Class Actions

 

Eric Voigt

 of Faulkner University, Jones School of Law has written A Company's Voluntary Refund Program for Consumers Can Be a Fair and Efficient Alternative to a Class Action, 31 Review of Litigation 617 (University of Texas) 2012. Here's the abstract:

Consumer product companies are establishing internal programs where they are voluntarily compensating consumers for damages caused by their products. When a company implements a refund program in response to a threatened or pending class action, may federal courts rely solely on the voluntary refunds in denying class certification? The short answer is yes.

This Article analyzes Rule 23(b)(3) of the Federal Rules of Civil Procedure and the requirement that a class action be "superior to other available methods for fairly and efficiently adjudicating the controversy." The Article argues that courts must compare the superiority of a class action not only to judicial procedures but also to a company's voluntary refund program. This Article also contends that a court must deny class certification when a reimbursement policy is fair and efficient. These arguments are strongly supported by the Advisory Committee Notes to the 1966 amendment to Rule 23, commentary by two former members of the Committee, the original purpose of the superiority requirement, and courts' and commentators' initial interpretations of the 1966 amendment. Last, the Article discusses what features a refund program must have to be a fair and efficient alternative to a class action.

Surprisingly, no federal court or scholar has analyzed the history or purpose of Rule 23(b)(3) as it applies to voluntary refund programs. Further, the relevancy of a refund program to the denial of class certification has been addressed in only one article (which took an opposing view) and by only a few courts.

 

Eric Goldman on Privacy Class Actions

 

Eric Goldman

 of Santa Clara has written The Irony of Privacy Class Action Litigation, 10 Journal of Telecommunications and High Technology Law (2012).  Here is the abstract:

In the past few years, publicized privacy violations have regularly spawned class action lawsuits in the United States, even when the company made a good faith mistake and no victim suffered any quantifiable harm. Privacy advocates often cheer these lawsuits because they generally favor vigorous enforcement of privacy violations, but this essay encourages privacy advocates to reconsider their support for privacy class action litigation. By its nature, class action litigation uses tactics that privacy advocates disavow. Thus, using class action litigation to remediate privacy violations proves to be unintentionally ironic. 

Florida Supreme Court Hears Post-Concepcion Challenge to Class-Action Ban in Payday Contract

The Florida Supreme Court heard oral arguments on Wednesday in Betts v. McKenzie Check Advance of Florida, a challenge to a class-action ban in a payday loan contract. 

Public Justice attorney and CL&P co-blogger Paul Bland argued on behalf of plaintiff Wendy Betts, defending a lower-court decision holding that the class-action ban violated public policy by preventing consumers from obtaining competent counsel. The attorney for the lender, McKenzie Check Advance, contended that Bland's argument was foreclosed by AT&T v. Concepcion:

"At this point it's not an issue of whether arbitration's good or bad, but it's an issue of the supremacy clause," said Jamie Bianchi, a lawyer for McKenzie.

Justice Barbara Pariente acknowledged Bianchi had a strong argument.

"It would seem - and maybe this is sort of a friendly question for you - that Concepcion really takes the certified question and really obviates it," Pariente said. "Right or wrong, we're bound to follow the U.S. Supreme Court."

"We agree with that, your honor," Bianchi replied.

Pariente later added, "So much for state's rights, huh?"

F. Paul Bland, a lawyer representing Wendy Betts and other McKenzie customers, argued the Concepcion ruling does not prevent the state justices from affirming the 4th District's ruling.

Bland said the decision did not invalidate prior U.S. Supreme Court rulings saying consumers must be able to effectively vindicate their rights.

"A procedure that ends up gutting the rights effectively is enough to render the clause unenforceable," Bland said.

Pariente, though, asked how he could argue "with a straight face" that the U.S. Supreme Court would void the class action ban simply on the basis of testimony from three consumer advocate lawyers who said they wouldn't take the McKenzie cases.

Bland argued they included a legal aid lawyer who offered broader evidence of being unable to find lawyers willing to take a large number of cases, some involving military members.

Read more here: http://www.miamiherald.com/2012/05/09/2791094/fla-supreme-court-hears-class.html#storylink=cpy

[Miami Herald]

CL&P Blog Founder Deepak Gupta on the Future of Class Actions

Here. Deepak is perhaps better known for having argued Concepcion in the Supreme Court while he was with Public Citizen.  He has recently left the CFPB to concentrate on appellate litigation.  An excerpt:

Since wide-ranging legislation in unlikely, given corporations’ political influence, Gupta said, more targeted work by federal governmental agencies is needed to protect class actions.

 According to Gupta, an individual federal regulatory agency has the ability to interpret its own statutes and can take up the issues of arbitration and class action within its own jurisdiction.

The current case to watch, Gupta said, is a January decision in which the National Labor Relations Board ruled that a class-action ban in employment contracts is an unfair labor practice. D.R. Horton Inc. and Cuda, No. 12-CA-25764, 357 NLRB No. 184, 2012 WL 36274 (N.L.R.B. Jan. 3, 2012).

 

 

Sant'Ambrogio and Zimmerman Paper: The Agency Class Action

Michael D. Sant'Ambrogio

 of Michigan State and my colleague

Adam S. Zimmerman

 of St. John's have written The Agency Class Action, Columbia Law Review (forthcoming).  Here's the abstract:

The number of claims languishing on administrative dockets has become a new “crisis” — producing significant backlogs, arbitrary outcomes and new barriers to justice. Coal miners, disabled employees, and wounded soldiers sit on endless waitlists to appeal the same kinds of administrative decisions that frequently result in reversal. Refugees seeking asylum from the same country play a dangerous game of “roulette” before arbitrary decisionmakers. Defrauded consumers and investors miss out on fair compensation, as agencies settle the same claims with wrongdoers without victim participation or meaningful judicial oversight.

Reformers have called for new resources, more administrative law judges and improved attorney fee arrangements. But surprisingly, commentators have largely ignored tools long used by courts to resolve common claims raised by large groups of people: the class action and other complex litigation procedures. Almost no administrative law process allows groups to aggregate and resolve common claims for relief. As a result, in a wide variety adjudicatory proceedings, administrative agencies routinely (1) waste resources on repetitive cases, (2) reach inconsistent decisions for the same kinds of claims, and (3) deny individuals access to the affordable representation that aggregate procedures otherwise promise. Moreover, procedural and substantive hurdles — including exhaustion of administrative remedies and judicial deference to agency expertise — often prevent federal courts from providing class-wide relief to parties in agency adjudications.

We argue that agencies themselves should adopt aggregation procedures, like those under Rule 23 of the Federal Rules of Civil Procedure, to adjudicate common claims raised by large groups of people. After surveying the current tools by which agencies could promote more efficiency, consistency and legal access — including rulemaking, stare decisis, attorneys fees and federal court class actions — we find agency class action rules more effectively resolve common disputes by: (1) efficiently creating ways to pool information about recurring problems and enjoin systemic harms; (2) achieving greater equality in outcomes than individual adjudication; and (3) securing legal and expert assistance at a critical stage in the process. In this way, The Agency Class Action represents a new kind of decision-making for administrative agencies — a blend of adjudication and rulemaking for large groups of people who similarly depend upon the administrative state for relief.

Suzanna Sherry on Advocacy in Last Term's Class Action Cases

Suzanna Sherry 

of Vanderbilt has written Hogs Get Slaughtered at the Supreme Court, Supreme Court Review (forthcoming).  Here's the abstract:

Class action plaintiffs lost two major five-to-four cases last Term, with potentially significant consequences for future class litigation: AT&T Mobility v. Concepcion and Wal-Mart v. Dukes. The tragedy is that the impact of each of these cases might have been avoided had the plaintiffs’ lawyers, the lower courts, and the dissenting Justices not overreached. In this Article, I argue that those on the losing side insisted on broad and untenable positions and thereby set themselves up for an equally broad defeat; they got greedy and suffered the inevitable consequences. Unfortunately, the consequences will redound to the detriment of many other potential litigants. And these two cases are not isolated tragedies; they provide a window into a larger problem of Rule 23. When plaintiffs’ lawyers chart a course for future litigants, they may be tempted to frame issues broadly for the “big win” – with disastrous consequences. I suggest that it is up to the courts, and especially to those judges most sympathetic to the interests of class-action plaintiffs, to avoid the costs of lawyers’ overreaching. That is exactly what the dissenting Justices (and the judges below) failed to do in these cases.

Adam Zimmerman on the "Privatized Attorney General" as Replacement for the Class Action

Here. I should note that Adam is a colleague of mine.

Arbitration Articles Abound!

Myriam E. Gilles

 of Cardozo and

Gary B. Friedman

 of the Friedman Law Group have written After Class: Aggregate Litigation in the Wake of AT&T Mobility v. Concepcion, 79 University of Chicago Law Review (2012).  Here's the abstract:

Class actions are on the ropes. Courts in recent years have ramped up the standards governing the certification of damages classes and created new standing requirements for consumer class actions. Most recently, in Wal-Mart v. Dukes, the Supreme Court articulated a new and highly restrictive interpretation of the commonality requirement of Rule 23(a). But all of this pales in comparison to the Court’s April 2011 decision in AT&T Mobility v. Concepcion, broadly validating arbitration provisions containing class action waivers. The precise reach of AT&T warrants close scrutiny. Our analysis suggests that following AT&T, some plaintiffs will be able to successfully challenge class waivers under certain circumstances. Also, the new Consumer Financial Protection Bureau - if it is not still-born at the hands of hostile congressional midwives - is likely to eliminate some class action waivers in the financial services field. But most class cases will not survive the impending tsunami of class action waivers. And as this great mass of consumer protection, antitrust, employment and other cases is swept out to sea, the question arises: what or who can fill the resulting enforcement gap?

And here, we believe the “private attorney general” role assumed by class action lawyers over the past several decades will inevitably give way to a world in which state attorneys general make unprecedented use of their parents repatriate authority. Insulated from the threats posed by class action waivers and restrictive class action standing doctrine, AGs are now uniquely positioned to represent the interests of their citizens in the very consumer, antitrust, wage-and-hour and other cases that have long provided the staple of private class action practice. And to tackle complex cases, underfunded AG offices will make use of the private class action lawyers who have acquired expertise in originating, investigating and prosecuting class cases. Of course, there are political risks here - given the model’s dependency on contingent fee arrangements - but there are also substantial political benefits, as AGs around the country begin to take leadership positions in the sort of complex, big-ticket cases that are likely to contribute meaningfully to state coffers - and redress the injuries of consumers and employees who would otherwise have no recourse in a post-AT&T world.

Amy Schmitz

 of Colorado contributes Arbitration Ambush in a Policy Polemic, 3 Penn State Yearbook on Arbitration and Mediation 52, (2011).  Here's her abstract:

Arbitration has been demonized in the media and consumer protection debates, often without empirical support or consideration of its attributes. This has led to renewed efforts to pass the Arbitration Fairness Action, which would bar enforcement of pre-dispute arbitration clauses in consumer, employment, and civil rights contexts. It also inspired Dodd-Frank’s preclusion of arbitration clauses in mortgage contracts, along with the Consumer Financial Protection Bureau’s charge to prohibit or limit enforcement of pre-dispute arbitration agreements in consumer financial products and services contracts. Some of this negativity toward arbitration is warranted, especially in the wake of the United Supreme Court’s recent holdings highlighting a pro-business stance enforcement of arbitration agreements. Nonetheless, this does not necessarily justify abolishment of consumer arbitration. Accordingly, this Article suggest a more reasoned approach, and offers suggestions for carefully considered reforms that protect consumers without overly impeding beneficial use of arbitration. Litigation is not always the answer. Instead, it is time to rescue and revive arbitration from ambush.

Stephen E. Friedman

 of Widener adds A Pro-Congress Approach to Arbitration and Unconscionability, 105 Northwestern University Law Review Colloquy 53 (2011).  Here's that abstract::

This Essay endeavors to resolve a current controversy involving the application of the unconscionability doctrine to arbitration agreements. The pro-arbitration policies of the Federal Arbitration Act (FAA) and the anti-arbitration instincts of the unconscionability doctrine are difficult to reconcile. Instead of clarity in this area of law, we have a series of hints and clues, often contradictory, from the Supreme Court. Although Professor David Horton and I share a desire to clarify this area of the law, we have nearly opposite views about how this should be accomplished. This Essay sets forth my position and also responds to Unconscionability Wars, Professor Horton's latest thoughtful effort on the subject.

Finally, we have Texas's A

lan Scott Rau

 who has authored Arbitral Power and the Limits of Contract: The New Trilogy, American Review of International Arbitration, Forthcoming.  The abstract reads as follows:

 The American law of arbitration has for some reason been replete with what we have become accustomed to call “trilogies” – and the last two terms of the U.S. Supreme Court have curiously continued that pattern. Once again the Court has handed us three leading cases on closely-related themes – and these decisions have turned out in fact to be in many ways the most interesting of the lot. (I am referring of course to Stolt-Nielsen, Rent-A-Center, and Concepcion.)

All three amount to extended riffs on the Question of Questions – the scope of arbitral power: And so the Court has continued to dip its finger into this rich mixture – compounded of notions of judicial review, “arbitrability,” “separability,” compétence/compétence, and the preemption of state law – all of our hard-earned lore and learning is there. Apparently it is now well beyond the power of arbitrators to hold that “classwide proceedings are permitted,” at least without some pretty special authorization (Stolt-Nielsen) – while it is well beyond the power of courts to hold that they must be – certainly not when the parties have agreed to an arbitral determination (Rent-A-Center), and even when they haven’t (Concepcion).

It seems reasonably clear that these cases will continue to generate endless discussion. Undoubtedly for the moment the greatest salience will be with respect to arbitration clauses in contracts of adhesion entered into by consumers and employees – although this recent jurisprudence has the potential of sweeping far more broadly. Things now seem curiously muddled: If our law of arbitration no longer seems to have any clear unifying theme, this suggests that private adjudication – rather than presenting us as it once did us with a coherent and self-contained body of doctrine – has become a hostage to a game played out on a larger stage, a pawn of wider, systemic “political” concerns. Throughout the “trilogy” we have seen much familiar learning yoked to the service of a market-driven political agenda, in the process inevitably becoming warped and almost unrecognizable. And so – yet another untoward result – these cases will require the reevaluation of what seemed, for a while, to constitute comfortably settled certainties. Here is at least one step in that direction.