Consumer Law & Policy Blog

Dangerous Kitchen Stoves

By Brian Wolfman

Public Citizen, U.S. PIRG, and the Consumer Federation of America held a press conference on Thursday alerting the public to dangerous kitchen stoves that, because they are so light-weight, have a tendency to tip over and maim and kill consumers.  For more information, go to the "Killer Stoves" website.  Here's an excerpt from the beginning of the groups' joint press release:

Approximately 15 to 20 million kitchens in the United States are equipped with a range that can tip over and crush, scald or burn whoever is standing in front of it....  Public Citizen, U.S. PIRG and the Consumer Federation of America detailed the longstanding problem in most brands of electric and gas ranges that affect households throughout the country.

According to documents from the Consumer Product Safety Commission and the national retailer Sears, manufacturers and the government have known about this lurking danger for more than twenty years. Since the early 1980s, manufacturers of ranges began using lighter-gauge steel to reduce costs, even though they quickly learned that this resulted in a tendency for the lighter-weight appliances to tip over when weight was applied to the oven door.

The press release goes on to detail the number of deaths and serious injuries resulting from these stoves and the failure of regulators and manufacturers to insure that anti-tipping brackets are installed on the stoves.

Several Consumer Law Articles in the Times

by Jeff Sovern

The New York Times has had several interesting articles on consumer law issues today and yesterday.  First, yesterday's Times reported on a Senate Banking Committee hearing on subprime lending.  While criticizing regulators for failing to curb risky loans, senators also indicated that they were not inclined to push legislation on the issue.  A second article in yesterday's issue discussed the automated underwriting software subprime lenders use to identity those who are worth lending to: i.e., those who are less likely to default.  Though the article doesn't mention the Equal Credit Opportunity Act, it is likely that ECOA contributed to the development of such software, as well as credit scoring, by requiring that lenders provide specific reasons for denying loans, thereby making it more difficult to justify turning down applicants based on gut feelings, as those using judgmental systems formerly could.  Finally, in a particularly disturbing report, today's Times has an article about lawyers in a product liability case arising out of diet drugs who allegedly appropriated client settlement money and threatened to sue their clients and seek criminal charges against them if they ever revealed how much they received.  The settlement was for $200 million of which clients received $74 million; $20 million went to a charitable fund while the lawyers retained the remaining $106 million.  The lawyers themselves are said to be the target of a grand jury investigation.

FTC Goes After Corporate Privacy Violaters: Is It Enough?

    U.S. PIRG's Consumer blog has this interesting short post on the FTC's and state AGs' efforts to fine corporations that violate your privacy rights - - for instance, by selling information about you to identity thieves.  Be sure to read the linked article from forbes.com that discusses these enforcement efforts in some detail.  My question:  Are the regulators hitting hard enough and often enough to deter?

Another Week, Another Ninth Circuit CAFA Ruling

Brian Wolfman

It appears that the Ninth Circuit has a rule requiring it to issue at least one decision about the Class Action Fairness Act every week.  I recently blogged here and here on new Ninth Circuit CAFA decisions, the latter of which (Progressive West v. Preciado) addressed when a post-CAFA amendment to a pre-CAFA state-court complaint “relates back” to that complaint.  In its most recent decision, McAtee v. Capital One, No. 07-55065 (9th Cir. Mar. 16, 2007), the Ninth Circuit expounded on Preciado and held that any amendment to an original class action complaint filed in California state court, whether to add new causes of action, to add or replace plaintiffs, or to add or replace defendants, does not change the commencement date of the action for CAFA purposes, which is the date the original complaint was filed.  That holding arguably goes beyond the ordinary scope of the relation-back doctrine.  Cf. Fed. R. Civ. P. 15(c)(2) and (3).  The Ninth Circuit’s relation-back holding was based on California procedural  law, which the Ninth Circuit said it was required to apply under Erie.  Cf. Fed. R. Civ. P. 15(c)(1).

The “Check Float” Is On Its Way Out

By Brian Wolfman

You probably take advantage of the “check float” from time to time; I know I do.  That’s the idea that you can write a check when there are insufficient funds in your checking account and then deposit money in the account in the next few days, before the check clears, without worrying about bouncing your check.

You may not want to do that anymore.  I was surprised to read in Michele Singletary’s article in today's Washington Post that the “check float”  is on its way out.  Beginning tomorrow, banks can  use new technology that will clear the check -- that is, take the funds out of your account and make them available to the payee -- almost immediately and definitely by the next day.  Singletary explains that this change will not occur on an industry-wide basis overnight because the necessary technological systems and legal protections are not fully in place.

This change will have some advantages to consumers, including when dealing with a payee who will not consummate a transaction until the consumer’s check has cleared.  It may reduce the need in some circumstances for certified checks or money orders.  And retailers will like the new regime, as they will have use of your money sooner.  In any event, beware: The “check float” will become a thing of the past.  Singletary’s article explains the technology that will make this happen.  Definitely worth reading.

Do Companies Ignore Consumer Complaints?

Over at U.S. PIRG's consumer blog, Ed Mierzwinski explains why he thinks companies ignore legitimate consumer complaints.  Two main reasons:  Consumers don't have effective redress in court because of mandatory arbitration, and the regulatory agencies are not doing their jobs policing improper corporate practices.  Ed suggests that someday consumers may harness the power of the Internet to fight back.

Another Ninth Circuit CAFA Decision

By Brian Wolfman

The day before yesterday, in Progressive West Insurance Company v. Preciado, No. 06-17367 (Mar. 6, 2007), the Ninth Circuit again ordered a class action remanded to state court on the ground that it did not meet the jurisdictional requirements of the Class Action Fairness Act. [I blogged yesterday about a March 2 Ninth Circuit ruling finding CAFA jurisdiction lacking.]

Here’s what happened in Progressive.  An insurance company sued one of its customers in state court for breach of contract, claiming reimbursement for medical expenses that it had paid on the customer’s behalf.  On February 17, 2005, the day before CAFA’s effective date, the customer filed a cross-claim (the equivalent of a federal counterclaim) on behalf of the “general public.”  The cross-claim alleged that the practice of seeking such reimbursements was an unfair business practice under California’s unfair competition law, Cal. Bus. & Prof. Code 17200 et seq.  The state court held that the customer had failed to make the class action allegations required to sustain an unfair competition claim on behalf of the general public.  See id. sec. 17203.  But the state court gave the customer leave to amend to add class action allegations.  The customer did so, but (obviously) after CAFA’s effective date.  The insurance company then removed the case to federal district court under CAFA.  The district court held that it lacked jurisdiction.

The Ninth Circuit affirmed for two independent reasons.  First, the court held that the case had been commenced before CAFA’s effective date and that the amended cross-claim related back to the original filing date as a matter of California law.  Therefore, CAFA did not apply.  Second, the court held that only a defendant, not a counterclaim defendant (that is, a plaintiff against whom a counterclaim is asserted), can remove a case under CAFA.  CAFA’s removal provision, the court explained, adopts the procedures of the general federal removal statute, 28 U.S.C. 1446(a), which applies only to “defendants.”

Senate Committee Investigates Credit Card Company Practices

The Permanent Subcommittee on Investigations of the U.S. Senate’s Committee on Homeland Security and Governmental Affairs today held a hearing on “Credit Card Practices: Fees, Interest Rates, and Grace Periods.”  The hearing was, the committee promised, ”the first of several Subcommittee hearings that will examine a variety of credit card practices that raise concerns.”  Yahoo news has this lively report on the hearing.  The Senate Committee's website contains all of the testimony at today’s hearing.

Ninth Circuit Issues New CAFA Holding

By Brian Wolfman

In Lowdermilk v. United States Bank National Assoc., No. 06-36085 (3/2/07),the Ninth Circuit has issued a new ruling under the Class Action Fairness Act.  The topic?  What a removing defendant must show to establish CAFA jurisdiction when the plaintiff's state-court complaint claims less than the $5 million jurisdictional amount.  Judge Bybee posed the question and answered it concisely in the first paragraph of his opinion:

In this case we are called upon to resolve a question of first impression: Under the Class Action Fairness Act of 2005 ("CAFA"), Pub. L. 109-2, 119 Stat. 4 (2005), when the plaintiff has pled damages less than the jurisdictional amount,what must the defendant prove in order to remove the case to federal court? We reserved this question in Abrego Abrego v. The Dow Chemical Co., 443 F.3d 676, 683 n.8 (9th Cir. 2006) (per curiam). We answer that the party seeking removal must prove with "legal certainty" that the amount in controversy is satisfied, notwithstanding the prayer for relief in the complaint. We conclude that the defendant in this case failed to meet this burden, and we affirm the judgment of the district court.

Judge Kleinfeld dissented.  In his view, the complaint was vague and self-contradictory and did not specify the amount in controversy.  When that occurs, he said, a preponderance-of-the-evidence standard -- and not the "legal certainty" test -- applies.  He would have remanded to the district court for a determination of the amount in controversy under the preponderance standard.

More Stringent Federal Guidelines on Sub-Prime Mortgage Lending?

Just a follow-up to Chris Peterson's Boston Globe op-ed concerning predatory mortage lending posted earlier today on this blog:  According to today's Washington Post, the Federal Reserve and four other federal agencies (presumably agencies involved in some fashion in mortgage lending) are proposing a new guidance that would impose stricter guidelines on sub-prime mortgage lending.