Consumer Law & Policy Blog

New Second Circuit Decision Protects Homeowners

by Brian Wolfman

    The Second Circuit today issued a major decision regarding the rights of homeowners whose homes are seized by local authorities for failure to pay taxes without giving the homeowners constitutionally adequate notice.

    In Lussenhop v. Clinton County, the Second Circuit did two important things.  First, the court held that the Tax Injunction Act, 28 U.S.C. 1341, does not bar a plaintiff from challenging in federal court  notice procedures employed by state and local governments prior to seizing tax delinquent property.  Second, in remanding the three cases before it to the district court, the court indicated that it would vigorously protect the notice rights established in Jones v. Flowers, 126 S. Ct. 1708 (2005).  Jones held that when the government knows that its initial notice that it plans to seize a home has not reached the homeowner, due process requires the government to take reasonable additional steps to notify the owner prior to the taking.  As the first major post-Jones ruling, the Lussenhop decision is definitely worth a read.

    [Disclosures: Michael Kirkpatrick and Deepak Gupta of my office, Public Citizen Litigation Group, filed an amicus brief in Lussenhop.  The Litigation Group also represented the homeowner in Jones v. Flowers.]

CL&P Roundup

by Deepak Gupta

• Congress to Limit Predatory Lending to the Military:  The groundbreaking Talent-Nelson amendment--which imposes limits on predatory lending to the military--is now part of the must-pass defense authorization bill.   Paul Bland and Elizabeth Warren make similar observations about different aspects of this legislation.  Paul, discussing the bill's precedent-setting ban on arbitration clauses, asks:

"If Congress recognizes that binding mandatory arbitration provisions are unfair as applied to all members of the military who deal with lenders, how does that jibe with the assertion often made that binding arbitration is fairer, cheaper, and better for other consumers who deal with lenders?" 

And Professor Warren, discussing the bill's 36% usury cap for interest rates on loans to servicemembers, asks:

"Soon it will be OK to roll an elderly person with a 400% interest rate, or a Hispanic worker, or a college student, but not someone in the military.  How long will that last?"

• Most Identity Thieves Are Unknown:  The other day, Jeff Sovern observed that Judge Posner, in his discussion of identity theft, seemed to operate on the mistaken belief that "much, maybe most" identity theft is the work of "friends or relatives" and is easily prevented by potential victims.  Similar claims have been made repeatedly in the media in recent weeks, particularly by industry representatives.  Now privacy expert Chris Hoofnagle of Berkeley has demonstrated, using FTC data, the problem with those claims.  He even includes a colorful pie-chart.  (via Ed Mierzwinski)

• More on Consumer Cases in the Supreme Court:  Over at the Credit Slips blog, Katie Porter of Iowa has some thoughts on the recently-granted Fair Credit Reporting Act cases and so-called "off-label" uses of credit reports; we discussed the cases here on Tuesday.   And Bob Lawless speculates about the practical implications of Watters v. Wachovia, the OCC preemption case.  We'll surely have a lot to say about the Watters case here in the coming months, including its administrative law implications.  (Disclosure:  Public Citizen joined an amicus brief in Watters and we'll be providing assistance to petitioner's counsel.  We're counsel for the respondents in the FCRA cases.)

• Emerging Issues in Class Actions:  The UCLA Law Review has published an interesting batch of papers from its symposium on emerging issues in class actions.  The papers include an empirical study on incentive awards to class action plaintiffs by Theodore Eisenberg and Geoffrey Miller; an article on Backdoor Federalization by Samuel Issacharoff and Catherine Sharkey; an article considering various proposals to enhance fairness hearings by William Rubenstein; and a piece by Richard Nagareda discussing the implications of Eisenberg & Miller's empirical research.

• An Ideological Flip-Flop?:  It used to be the case, back in the 1960's, that the conservatives were the ones who supported tort law and the liberals/progressives were the ones that thought it needed to be "reformed" (with statutory consumer protection regimes).  Now it's just the opposite, and the reasons are complex and worth pondering.  So says Stephen Sugarman of Berkeley in a draft paper posted at SSRN, Ideological Flip-Flop: American Liberals are Now the Primary Supporters of Tort Law.  (via Point of Law)

Consumer Cases at the Supreme Court's First Conference

by Deepak Gupta

Next Monday, September 25, the Supreme Court will decide which petitions it will grant from the so-called "long conference," the first conference of October Term 2006.  The Justices, returning from vacation, will discuss and vote on a long list of cases that have accumulated over the summer.  The orders list from that conference should be released at 10am on Tuesday. This post offers a selected list of petitions raising issues affecting consumers' rights.  Where available, the petitions and briefs in opposition are attached.

Preserving a Judicial Safety Valve for Arbitration

by Deepak Gupta

One of the things I plan to do with this blog is offer regular updates on litigation in the U.S. Supreme Court affecting consumers’ rights. My office, Public Citizen Litigation Group, litigates frequently in the Court--both in our own cases and through our Supreme Court Assistance Project--and we closely monitor the Court’s docket. I’ll start with an arbitration case in which my colleague Scott Nelson and I filed a brief in opposition this past Friday.

When you purchase pretty much any consumer good or service these days (a new car, cable TV, phone service), the chances are good that there's a mandatory binding arbitration clause hiding somewhere in the fine print. Mandatory arbitration's proponents sell it as a cheap, efficient, and fair means of resolving disputes outside the courts, while consumer advocates point out that it’s actually a costly private legal system with a systemic bias in favor of corporate defendants and that the mere presence of an arbitration clause is enough to deter most consumers from even attempting to pursue their disputes. Set that debate aside for a moment. Regardless of which view you take, should there be a remedy for the inevitable extreme case in which an arbitrator completely disregards the law?