Analysis will really have to wait until the settlement documents are filed in federal court.  For example, the press releases refer to $10 billion in principal reduction (on non-GSE mortgages) but HUD Secretary Donovan said at the press conference that banks will not get dollar-for-dollar credit to reduce principal that would be uncollectible.  For example, if a homeowner is 50% underwater and 24 months delinquent and the bank has already written off 50% of the $200,000 loan, the bank does not get full credit for reducing principal by $100,000.  He speculated that the $10 billion could actually produce $35 billion in loan balance reductions for borrowers, but we will need to see the settlement language to evaluate that assertion.

It is certainly a plus to have Joseph Smith, former chief bank regulator for North Carolina, acting as monitor.  Hopefully he will have an adequate staff for the job. 

From what I can see, the settlement does not completely eliminate the notorious "dual tracking" of foreclosures and workouts, which Fannie Mae and Freddie Mac will continue in any event given that they are not covered by this deal. 

More comments when we know what the actual terms are. 

This year’s Conference looks at topics relevant to teaching consumer law in the new and evolving economy. More than 25 presenters from around the world will discuss issues of interested to anyone with an interest in how consumer law is taught in law school.

For a look at schedule topics and presenters, and to receive a brochure and registration form as soon as it is available, click here. For more information, contact me at, alderman@uh.edu.

Rebuilding America: How States Can Save Millions of Homes Through Foreclosure Mediation calls on all states to adopt strong foreclosure mediation programs. The report reviews existing programs in 19 states and makes recommendations for best practices for all states to adopt, using foreclosure mediation data from the last three years to draw its conclusions. The report includes examples of programs that are more successful (Connecticut, Nevada, and New York) and those that are less so. Judicial enforcement of mediation program requirements in several states is also included.

The NCLC website also includes information regarding court decisions, pending mediation state legislation, model documents and a summary of all current state programs as well as a link to each program. 

Odometer fraud violates the Federal Motor Vehicle Information and Cost Savings Act, 49 U.S.C. § 32701 et seq., and gives rise to liability under the common law fraud tort and state UDAP statutes--but that doesn't mean it doesn't happen, as the story indicates.

In part because of the heart valve tragedy, in 1990, Congress passed a law authorizing the FDA to improve device tracking, but that effort was not very effective. As a result, as this Politico article explains:

Millions of Americans are walking around with artificial joints, pacemakers, stents and other implants. But federal regulators know more about where a pallet of dog food went than a batch of hip replacements. Unlike prescription drugs or, for that matter, food at the grocery store, medical devices have no uniform labeling system — like a bar code — that would allow a central, computerized database to keep track of them.

In 2007, Congress told the FDA to implement a system of unique electronic identifiers. Read the Politico article to learn why FDA rules implementing the 2007 law have been "stuck in the federal regulatory maze" for nearly five years.

The Consumer Financial Protection Bureau has yet to decide on a plan of action for rent-to-own retailers. "CFPB has reviewed the rent-to-own industry generally and is monitoring its impact on certain populations, such as military families," a spokeswoman wrote in an email. "We have not made any decision about what action, if any, would be appropriate."

Before the bureau can decide to investigate Rent-A-Center and its competitors, it must first prove that such businesses provide installment loans, not short-term leases, and therefore lie under its jurisdiction. In the past, Rent-A-Center has avoided regulation by shunning the label of "loan provider." The company has claimed that since customers pay on a weekly or monthly basis -- and can cancel contracts anytime by returning items -- its agreements aren't loans. Consumer advocates say that despite the flexibility offered by rent-to-own companies, people effectively use the service like an installment loan, paying small chunks over time toward a final purchase.

For the umpteenth time, President Obama has announced that his solution to the foreclosure crisis is to encourage "responsible" homeowners to refinance at lower interest rates.  Adopting the Tea Party rhetoric and blaming home buyers who got houses in 2006 for their inability to foresee what few economists foresaw, Obama has steadfastly refused to push for principal reductions and payment suspensions for homeowners behind in payments, lest their luckier neighbors who bought at lower prices become resentful.  As a result, he continues to offer help to homeowners who need it least.

The plaintiffs are not giving up. As explained on the Wal-Mart Class Website, some of the plaintiffs have filed regional class actions in California and Texas. Moreover, 500 women have filed individual charges of discrimination with the Equal Employment Opportunity Commission (all of which could end up in court), with more EEOC charges expected.

Legal privacy scholarship typically emphasizes the various ways that plaintiffs fail when bringing legal actions against entities when their personal information is lost or stolen. However this scholarship often considers only a small set of published judicial opinions from large-scale data breaches. And so, little is actually known about the characteristics and disposition of a representative set of data breach lawsuits. Using a unique sample of anually-collected data from Westlaw and PACER, we analyze the court dockets of over 200 federal data breach lawsuits from 1998 to 2011, making this, to our knowledge, the first empirical examination of data breach litigation. We use discrete outcome regression models to estimate the probability that a data breach will result in a lawsuit, and the probability that, once filed, the case will reach settlement. We find that breaches resulting from the unauthorized disclosure or disposal of personal information are 6.9% more likely to result in lawsuit, relative to breaches caused by lost or stolen hardware, whereas breaches caused by cyber-attack are only 2.9% more likely to result in lawsuit. These results suggest that plaintiffs respond more to the careless or negligent handling by a firm of their personal information, than to the firm’s inability to withstand a cyber-attack or misfortune of losing a laptop. However, while these properties may explain the probability of lawsuit, we find that breach characteristics (size, cause and types of information lost) do not significantly predict the outcome of a data breach lawsuit. Instead, the probability of settlement appears to be driven by the presence of actual financial loss, and class certification.

We take a fresh look at the concerns about credit card pricing and empirically investigate whether the Credit CARD Act of 2009 has been successful in addressing those concerns. The rational choice theory of credit card pricing, which posits that issuers use back-end fees to adjust the price of credit to reflect new information about borrowers’ credit risk, predicts that issuers will respond to the Act by using alternative ways to price risk. In contrast, the behavioral economics theory, which posits that issuers use back-end fees because they are not salient to consumers, predicts that issuers will respond by increasing unregulated non-salient prices. If the market is competitive, we argue that the CARD Act should also result in increases in some salient, up-front prices. But we show that if issuers have market power, reductions in non-salient fees may not result in concomitant increases in salient charges. We test these predictions using two datasets on credit card contract terms before and after the CARD Act rules went into effect. We find that the rules have substantially reduced the back-end fees directly regulated by the Act, including late fees and over-the-limit fees. However, unregulated contract terms, such as annual fees and purchase interest rates, have changed little. Post-CARD Act, consumers continue to face high long-term prices and low short-term prices, and imperfectly rational consumers still find it difficult to understand the cost of credit card borrowing. We thus consider potential improvements to the regulatory framework. We argue that improved disclosures that present to consumers the aggregate cost of credit under the contract, based on information about the borrower’s likely use of credit, would improve consumer outcomes. Furthermore, we suggest that regulators, rather than focusing on prices that are 'too high,' should consider limiting the ability of issuers to charge introductory teaser interest rates that are in a sense 'too low.'

Why did Peters opt out? According to the LA Times, "Peters sued Honda after learning that a proposed class-action lawsuit settlement that covered her 2006 vehicle would pay trial lawyers $8.5 million while Civic hybrid owners would get as little as $100 and rebate coupons for the purchase of a new car." That settlement, by the way, was rejected last year by a federal judge, who agreed with 26 state attorneys general and consumer groups that the settlement was terribly inadequate. In light of her victory, Peters, a former practicing lawyer, has decided to reactivite her license to help Honda owners sue Honda. She's established a website, Don't Settle With Honda, to educate consumers about her case and the small claims process.

We have previously discussed this controversy here, here, here, and here. And we have noted that Law School Transparency, an organization founded in 2009 by two recent Vanderbilt Law grads, advocates for reforms (some of which have been adopted by the ABA) and acts as a clearinghouse for available jobs data.

Today I received this email from Boston.com, the online site for the Boston Globe.  It is full of references to the “Big Game” – getting Globe readers engaged with the Globe in voting on the advertising during the Big Game, advertising photos and trivia about “the Big Game in Indy,” urging readers to log onto Boston.com for news and update “During the Big Game,” hosting a “Big Game party recipe” sweepstakes, and so forth.
 
Why all of these oblique references to the Superbowl?  Because the National Football League aggressively polices the use of its trademarks, including its trademark in the use of the name “Superbowl,” and sends threatening communications to anybody who dares to advertise products by encouraging their consumption during or in conjunction with the Superbowl.

Of course, the NFL’s position is nonsense – this is a nominative use that is just as permissible as, for example, referring to the "Chicago Bulls" instead of “the two-time world champions” or “the professional basketball team from Chicago” (Judge Kozinski’s example from a different era, when the Bulls were dominant mattered). 

Ron Coleman blogs about this issue regularly.  This year, he very properly calls down Consumers Union for a blog post that accepts at face value the NFL’s position that “retail ads and promotions can’t legally use the phrase ‘Super Bowl’—or even ‘Super Sunday’—unless the companies have paid big bucks (really big bucks) to the NFL.”  Consumers Union accepts the validity of the NFL’s extortionate assertions, even though it doesn't like it, praising one marketer for skating close to the edge by using "the words 'Super Sale' and the Roman numerals 'XLVI.'”  But Consumers Union says that its own web page offering members a Superbowl XLVI game plan is exempt from these threats because CU’s use of the mark is by a "news organization."

It would certainly better if Consumers Union noted that even a store marketing HDTV’s can legally urge that they be bought for the purpose of watching the "Superbowl," even if they have to defend that right in court.  Of course, Consumers Union has an ulterior motive for accepting the NFL's assertion, because it does some bullying of its own -- it falsely claims that it can prevent companies from bragging about their Consumers Union ratings.  And Coleman’s “super-duper exemption” put down of Consumers Union is also overstated – although non-profits do not get an automatic exemption from the trademark laws, non-commercial use is a statutory fair use exception to dilution liability, and many circuits hold explicitly that a non-commercial use of the mark is outside the “use in connection with the sale of goods and services” that is needed for infringement liability as well.    Consumers Union's use is plainly noncommercial.

Instead of praising retailers who skate close to the edge, we should take a page from David Bollier’s excellent Brand Name Bullies and call them Brand Name Weenies.   Indeed, it is disappointing that a major metropolitan newspaper that belongs to an 800 pound gorilla like the New York Times Company is unwilling to defy the NFL by using the term in in its advertising.  The Times and the Globe certainly advertise their coverage of the New York Giants and the New England Patriots, also trademarked names.  If big players like the Times don’t have the cojones to stand up for bullying from the NFL, they make it harder for everybody else.  
 
In their recent book Reclaiming Fair Use, Pat Aufderheide and Peter Jaszi warn that when we refrain from exercising our fair use rights, and act as if those rights do not exist, we help create a culture in which fair use loses ground to overly aggressive copyright enforcement.  The same is true in the trademark realm.  We can only hope that when the next Superbowl rolls around, the Times and its brethren, and even the HDTV sellers, will have shed their timidity.

Amid talk of a boycott by other Republicans on the committee, the panel's top GOP member, Richard Shelby (R-Ala.), said he would attend. He left it up to each senator to decide whether to attend, and four others did, typical attendance for such a hearing.

Most of the media coverage focuses on the recess appointment controversy, rather than on what the Bureau is doing to help consumers, which is perhaps less interesting, but ultimately more important.  So to make sure we don't fall into the same trap, and because it's worth reporting, here's an excerpt from the Semi-Annual Report's Executive Summary:

In its first six months, the CFPB has taken significant steps to make consumer financial markets work better for consumers and responsible companies by:

1. resolving consumer complaints about credit cards and mortgages;
2. launching a supervision program that will promote compliance with consumer protection laws in the Bureau’s jurisdiction by financial companies of all kinds;
3. evaluating and developing disclosures that make the costs and risks of financial products easier for consumers to understand;
4. working to implement statutory protections for consumers who rely on consumer financial products, such as mortgages;
5. launching the Bureau’s website – ConsumerFinance.gov – and using it to engage the public in a range of projects;
6. creating several ways in which individuals can alert the CFPB about potential violations of consumer protection laws in the Bureau’s jurisdiction; and
7. improving information about the structure of consumer financial markets and consumer behavior through practical market intelligence and independent research.

Meanwhile, the Baltimore Sun reports that the number of suits brought by debt buyers in the Maryland courts may have dropped because of the tough new Maryland rules on collection suits.

Although handicapping political battles is above my pay grade, I'm always surprised at GOP willingness to openly block basic rules and enforcement - a perspective shared by Travis Plunkett of the Consumer Federation of America.

"On the one hand, they say, 'Oh, we support consumer protection.' On the other, they've done everything except throw their bodies in front of the agency's headquarters to stop it," he says. "These members of Congress have lined up with Wall Street banks and others in the finance industry who never wanted consumers to have a full-time cop on the beat to watch over them."

The Brief’s Unusual Procedural Context

It took a bit longer than I had expected to finalize the brief, while taking into account comments from our fellow amici (Digital Media Law Project, Electronic Frontier Foundation and ACLU) not to speak of various voices within Public Citizen.  Hours before we were set to file our brief, I got a call from a lawyer from Paul’s campaign (who consent to a motion for leave to file the amicus brief had been requested) telling me that I didn’t have to file the brief anyway because, within the week after the ex parte motion was filed, the magistrate judge had denied the motion. 

But after I read the judge’s order, which told the Paul campaign what it needed to show to justify early discovery, I was more determined than ever to file the brief, because the judge’s order actually exemplified one of the problems that our brief was intended to address.  The judge had apparently addressed early discovery in the Internet context before, and had issued a ruling that, when a copyright holder sues to identify one of many anonymous users who downloads a copyrighted movie, the plaintiff has to show that its complaint could withstand a motion to dismiss.  So she knew that it isn’t enough just to have filed a complaint, and her order in the Ron Paul case denied discovery – the result our amicus brief was about to advocate – but also told the Paul campaign that it could get what it wanted so long as it gave her reason to believe that its complaint could meet a motion to dismiss standard.

This sort of equation of free speech cases with copyright downloading cases was just what another magistrate judge in San Francisco said was the standard in all cases involving copyright.  In the Art of Living case, our amicus group succeeded in persuading the district judge in the case that, when the reason for filing the copyright claim is to get back at a critic, the more common Dendrite standard should apply. I suspect would like to think that the judge never looked further than her own earlier decision in deciding to demand a lower level of showing, but the big danger is that her ruling, even though issued without any opposition, will influence other judges because she is the chief magistrate judge for the Northern District of California.  And even more important, other lawyers will be emboldened to file ex parte motions to identify anonymous bloggers based on nothing more than a motion to dismiss standard, and they will be able to cite Judge James’ decision as precedent. 

In the years before we first created the Dendrite standard to hold plaintiffs seeking to identify their critics to a higher standard, there was a wealth of unquestioned, ex parte precedent establishing a lower standard of proof, and I am not anxious to go back to those days.  So, our amicus brief argues not only that the low standard recited by the judge in her opinion is wrong, but that the judge should take steps to ensure that judges in future cases are not misled by deceptive ex parte motion papers into misstating the applicable standard.  Invoking a lawyer’s special ethical obligation to be candid about the facts and the law when the lawyer knows that the judge will not have an opposing lawyer to point out the flaws in an ex parte motion, we urge the judge to remind the Paul Campaign’s lawyers -- and by proxy all lawyers seeking ex parte early discovery in future cases  -- that they have to cite the applicable cases, even if the lawyers don’t want them followed, so that the judge can decide whether to do so.

Story here.  Senator Wicker objects to Cordray's recess appointment, explaining:

"It is an affront to the democratic checks and balances as established by our Founders, and it constitutes a gross violation of precedent set by those who have come before us."

But because Senator Wicker joined the Republican letter refusing to confirm any nominee to the directorship of the Consumer Financial Protection Bureau unless structural changes were made in the Bureau, we can infer that he doesn't think it's an affront to the democratic checks and balances established by our Founders for senators to refuse to confirm a nominee for a position that Congress has created because of reasons that have nothing to do with the nominee.  Never mind that that letter was unprecedented. 

Incidentally, Senator Wicker is up for re-election this year, and commercial banks are the eleventh largest contributor to his campaign (measured by industry), according to the Center for Responsive Politics. Miscellaneous Finance is right behind at number twelve.