Consumer Law & Policy Blog

More From Mullenix on Aggregate Litigation

On Monday, Brian posted a link to Linda Mullenix's article, Ending Class Actions as We Know Them.  But Professor Mullenix has more thoughts on aggregate litigation, appearing in Reflections of a Recovering Aggregationist, 15 U. Nev. L. Rev., (2014 Forthcoming).  Here's the abstract:

The past fifty years have experienced a radical reformation of civil litigation in American federal courts, with the judiciary and the rulemakers constantly attempting to conform civil procedure to the changing landscape of modern technological society. Beginning with the landmark rule revision package of 1966, which amended the entire array of joinder rules, federal civil procedure since then has been in a constant state of revision, amendment, and doctrinal elaboration. Many of the federal civil rules have been modified in some fashion; with some rules undergoing wholesale rewriting, while others have experienced tinkering at the edges. Moreover, throughout this period the courts have continued to amplify (or obfuscate) doctrines of personal and subject matter jurisdiction, pleading, and applicable law, with each new elaboration raising public policy debates surrounding access to justice.

Perhaps one of the most significant developments in the past fifty years has been the advent and domination of the litigation arena by large scale aggregate litigation. Spurred on by the 1966 amendment to the class action Rule 23 and the enactment of a multidistrict litigation statute in 1968, the litigation landscape in the 1970s experienced the first rush of public law and institutional reform litigation. This was followed swiftly by onslaught of mass tort litigation, which cases dominated public policy debates of the 1980s and 1990s. By the turn of the twenty-first century, the mass tort class action gave way to second and third generation aggregate litigation, with multidistrict litigation and aggregate settlement procedures prevailing as a preferred mechanism for resolving large-scale complex litigation.

Champions of the twenty-first century aggregate dispute resolution mechanisms largely base their policy arguments on rhetoric similar to that first advocated during the heyday of mass tort litigation in the 1980s. Advocates of current MDL procedures, settlement classes, non-class settlements, and the quasi-class action have imported rationales that were used to justify novel class action techniques during the 1980s. Ironically, however, proponents of the new aggregate litigation techniques point to the failure of the class action rule as a primary justification for the deployment of non-class aggregate techniques to resolve multiple claims.

This article questions the wisdom of engrafting the rhetoric and rationales that justified the mass tort litigation movement of the 1980s to support novel aggregate litigation mechanisms in 2015. It concludes that the current twenty-first century aggregation movement, with its roots in the 1980s mass tort litigation crisis, has devolved into problematic mass claims settlement mechanisms of dubious fairness and troubling process concerns.

Stark et al. Article on Reverse Mortgages

Debra Pogrund Stark of John Marshall, Jessica M. Choplin a DePaul psychologist, Joseph A. Mikels, also a DePaul psychologist, and Amber Schonbrun McDonnell have written Complex Decision-Making and Cognitive Aging Call for Enhanced Protection of Seniors Contemplating Reverse Mortgages, 46 Arizona State Law Journal (2014).  Here is the abstract:

This article explains what reverse mortgages are and how they work. It also analyzes who could potentially benefit from them, but why this type of loan is so problematic for many seniors. The article then considers steps that can be taken to improve the effectiveness of current federal rules and counseling protocols to enable seniors to make well-informed decisions keeping in mind cognitive barriers and the complicated nature of this loan product.

Because many seniors may not be noticing the high costs associated with federally insured reverse mortgages, many believe these loans are now the product of choice for “predatory lending.” 

De Armond on FCRA Preemption and State Regulation of Credit Reports

Elizabeth De Armond of Chicago-Kent has written Preventing Preemption: Finding Space for States to Regulate Consumers’ Credit Reports.  Here is the abstract:

The Great Recession awoke state legislators to the power of individuals’ credit reports to hinder economic opportunities.  Many legislators would like to assuage the effects of bad historical events on the futures of the citizens that they represent.  Among the topics they can address are employers’ use of credit reports, the presence of criminal record information in credit reports, and the toxic effects of identity theft and medical debt on credit reports. However, the federal Fair Credit Reporting Act’s preemptive effects must be acknowledged and negotiated.  This article evaluates potential state legislative efforts against the FCRA’s preemption provisions and current Supreme Court preemption doctrine to identify strategies for states that want to create effective legislation to protect their consumers’ credit reputations and expand their constituents’ opportunities going forward.

Michelle Boardman Reviews Margaret Radin's Boilerplate

Michelle Boardman of George Mason has written Consent and Sensibility: A Review of Margaret Jane Radin's Book, 'Boilerplate: The Fine Print, Vanishing Rights, and the Rule of Law,' 127 Harvard Law Review  1967 (2014).  Here is the abstract:

In this book, Professor Margaret Radin offers a fresh look at the fit between boilerplate contracts and our notions of consent.  She also builds a case against allowing certain contract terms to create a "rights deletion scheme" aimed at shrinking access to legal redress. 

This review explores both rich lines of analysis but concludes they need not intertwine.  Radin's argument is crafted in the language of consent; I argue that her proposed resolution concerns not consent but welfare.  To the extent the widespread use of redress clauses leads to a collective harm, the issue is not one of individual consent.  If the rights at hand are basically inalienable, as Radin holds, the problem is not that one does not consent but that one is permitted to do so; improving the quality of individual consent will not address the harm.

Taking Radinian consent on its own merits, the review also explores how Radin confronts the challenge of presenting a conception of consent that delegitimizes boilerplate without delegitimizing "ordinary" contractual consent. I compare Radin's approach with other conceptions of consumer consent and offer the possibility of consenting to a continuum of options, where the consumer agrees to a deal ignorant of a specific term but aware of the possible range of terms.

Drahozal Chapter on AAA Consumer Arbitration

Christopher R. Drahozal of Kansas has written AAA Consumer Arbitration, forthcoming in Beyond Elite Law: Access to Civil Justice for Americans of Average Means (Samuel Estreicher & Joy Radice eds. Cambridge University Press).  Here's the abstract:

This chapter has provided an overview of consumer arbitrations administered by the American Arbitration Association, the largest administrator of consumer arbitrations.  It does not, of course, purport to resolve the ongoing debate over arbitration and access to justice.  A consumer’s incentive to bring a claim (and an attorneys’ incentive to take a case) depend on the costs of the process and the expected outcome in the forum.  With the recent amendments to its consumer arbitration rules, the AAA reduced the cost to consumers of bringing claims in arbitration, both by lowering the upfront fees and by largely precluding reallocation of fees to consumers in the award.  The expected outcome in arbitration (in particular, relative to the expected outcome in court) presents a much more difficult question because limits to available data preclude comparison of similarly-situated complainants.  More research remains to be done. 

Drahozal on FAA Preemption After Concepcion

Christopher R. Drahozal of Kansas has written FAA Preemption after Concepcion, 35 Berkeley Journal of Employment and Labor Law 153 (2014, Forthcoming). Here is the abstract:

AT&T Mobility LLC v. Concepcion is an important case for its holding that the FAA preempts application of state unconscionability doctrine to invalidate an arbitration clause with a class arbitration waiver. But in a number of respects, the effect of Concepcion has been overstated, including its effect on application of state unconscionability doctrine to arbitration clauses. Concepcion does not preempt all or even most state unconscionability doctrine as applied to arbitration agreements. Properly construed, Concepcion preempts state unconscionability doctrine only when that doctrine conditions enforcement of arbitration agreements on procedures inconsistent with “fundamental attributes of arbitration” of the sort illustrated in Concepcion itself ― such as the use of juries, court-monitored discovery, evidentiary rules, and, of course, class arbitration. If, however, the Supreme Court were to construe Concepcion more broadly (or eliminate application of unconscionability to invalidate arbitration clauses altogether), courts would retain some residual authority to police the fairness of arbitration clauses, but only by finding a dispute resolution process not to be arbitration at all.

Sharkey on Agency Coordination in Consumer Protection

Catherine M. Sharkey of NYU has written Agency Coordination in Consumer Protection, 2013 University of Chicago Legal Forum 329. Here's the abstract:

The federalization of consumer protection has created thorny issues of agency coordination.  When multiple federal agencies interpret and enforce the same statute, should a single agency’s interpretation be accorded Chevron deference? Should it matter whether it is in synch, or at odds, with its fellow agencies?  This Article explores two agency coordination strategies that point in opposite directions. The first, a balkanization strategy, attempts to overcome the overlapping agency jurisdiction problem by urging agencies to create separate, non-overlapping spheres of authority to thereby regain Chevron deference due the agency that reigns supreme. We can expect “agency self-help measures” that stake out respective turfs to emerge from this strategy.  Courts have accepted the balkanization approach — carving out discrete fiefdoms from spheres of overlapping agency jurisdiction — and may accept it more readily as the jurisprudence after City of Arlington develops with regard to agency interpretations of jurisdiction. 

The second (and more novel) strategy, a model of judicial review as agency coordinator, exploits (rather than constrains) overlapping agency jurisdiction. Under this model, when faced with an interpretation by an agency that operates in shared regulatory space, courts would solicit input from the other relevant agencies. And, to the extent that there is agreement among the different agencies, Chevron deference would be especially warranted (regardless of whether all of those agencies were parties before the court), in sharp contrast to certain courts’ blanket stance that Chevron deference is inappropriate when multiple agencies interpret the same statute.

Wilkinson-Ryan Article: A Psychological Account of Consent to Fine Print

Tess Wilkinson‐Ryan of Penn has written A Psychological Account of Consent to Fine Print, 99 Iowa Law Review 1745 (2014). Wilkinson-Ryan has a Ph.D in psychology as well as a law degree, and so brings to bear a different perspective in evaluating consumer reactions to fine print. I found this article useful in the research I'm doing this summer, and it seems likely that anyone looking into fine print would also find the piece valuable. Here's the abstract:

The moral and social norms that bear on contracts of adhesion suggest a deep ambivalence.  Contracts are perceived as serious moral obligations, and yet they must be taken lightly or everyday commerce would be impossible.  Most people see consent to boilerplate as less meaningful than consent to negotiated terms, but they nonetheless would hold consumers strictly liable for both.  This Essay aims to unpack the beliefs, preferences, assumptions, and biases that constitute our assessments of assent to boilerplate.  Research suggests that misgivings about procedural defects in consumer contracting weigh heavily on judgments of contract formation, but play almost no role in judgments of blame for transactional harms.  Using experimental methods from the psychology of judgment and decision-making, I test the psychological explanations for this disjunction, including motivated reasoning and reliance on availability heuristics.  Many commentators have argued that even though it is true that disclosures are probably ineffective, they “can’t hurt.”  I conclude with a challenge to that proposition — I argue that the can’t-hurt attitude may lead to overuse of disclosures that do not affect consumer decision-making, but have implicit effects on the moral calculus of transactional harms.

Has the Stanford Law Review Forgotten About Consumer Protection?

by Jeff Sovern

A lot has happened in consumer law in the last half-dozen years:  To name only some of the highlights. consumer protection failures contributed to the Great Recession; Congress passed the Credit CARD Act in 2009 and the Dodd-Frank Act in 2010; Congress created the Consumer Financial Protection Bureau, which has in turn promulgated plenty of regulations and brought enforcement actions; words like robo-signing and foreclosure crisis entered the language; and alternative credit scores seem poised to take off, if they have not already done so. Consumer law has often been on the front pages of the newspapers in recent years.  But not, it seems, in the Stanford Law Review, one of the elite law reviews in this country.

Consumer law professors have long bemoaned the failure of elite law reviews to give our subject the attention we think it merits. We are not unique in this; law professors in many disciplines complain that elite law reviews devote disproportionate attention to subjects like constitutional and criminal law, with the result that professors in those areas have more impressive resumes than we do. So I decided to test that proposition. I asked a research assistant, Eric Levine, to look at the issues of two elite journals published from 2007-2013 to count up the number of pieces that are predominantly consumer law pieces. One was the Stanford Law Review   He came up with only three consumer law pieces, all professional articles: one by Nora Freeman Engstrom on attorney advertising; another by Omri Ben-Shahar on unfair contracts; and the last by Kenneth Bamberger & Deirdre Mulligan on privacy, collectively representing about 2% of all the Stanford law Review's professional pieces during that period (I should note that Eric's list may not be complete; I haven't had time to check the Stanford Law Review myself. But he would have to have omitted many consumer law pieces to make the number of consumer law articles as high as it should be given what has happened in the field. In any event, I hope that readers who know of other Stanford consumer law pieces will so note in the comments below)

Why so few in a time of such turmoil in the subject?  It's hard to know. But here is a possible factor: regular readers of the blog will recall that I had another research assistant, Preston Postlethwaite, check law school web sites to see which schools are offering a consumer law course during the 2013-2014 school year. I later posted the list on the blog twice and solicited the names of additional schools teaching consumer law. As best I have been able to tell, Stanford did not offer the course this year. It's possible that is incorrect; if the course was offered at Stanford but no one wrote in to tell us, Stanford could have been wrongly omitted from the list. And just because Stanford didn't teach the course this year doesn't mean it didn't during the period Eric looked at.  But if Stanford didn't, it is possbile that the failure of Stanford Law to offer a consumer protection course has led law review editors to conclude that articles on consumer law didn't warrant publication.  It is interesting also to see that Stanford seemingly did not publish any student consumer law pieces during the years Eric looked at.

This contrasts with the Harvard Law Review, the other law review Eric checked.  Harvard teaches both a basic course in consumer law and a clinic. From 2007-2013, the Harvard Law Review published 16 pieces on consumer law.The nine professional pieces it published during that period represented 8% of the professional articles it printed. 

So, assuming Eric's research is correct, we have major changes in an important field of law apparently overlooked by a leading journal in the field.  

Austin's Empirical Study of Student Loan Debt in Bankruptcy

Daniel A. Austin of Northeastern has written Student Loan Debt in Bankruptcy: An Empirical Assessment, forthcoming in the Suffolk Law Review. Here's the abstract:

Education loan debt in the U.S. recently reached $1.2 trillion. Thirty-nine million Americans -- nearly 20% of U.S. households -- owe student loans, and student loans are by far the fastest growing component of non-housing consumer debt. For example, in fourth quarter 2013, U.S. households incurred $82 billion in debt (exclusive of housing debt), a 3.3% increase from the previous quarter. Of this amount, $53 billion (65%) was student loan debt. In contrast, auto loans and credit card debt accounted for only $29 billion. 

Student loan debt is also a rapidly increasing element in consumer bankruptcy. This study examines the growth of student loan debt in consumer bankruptcy cases filed each year from 2005 to 2013. In this study I obtain data from 500 randomly-selected cases per year to calculate values such as annual percentage of filers with student loan debt, average annual amount of student loan debt, and student loan debt as a percentage of debtor income and percentage of total unsecured debt. Among the findings of this study, the percentage of debtors with student loan debt increased from 15.7% in 2005 to 22.3% in 2013, while the average student loan debt load for such debtors more than doubled from $15,350 to $32,096 during the same period. As these and other numbers reported in this study show, student loan debt is a rapidly increasing component of consumer bankruptcy.