Category: Consumer Protection Law

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Privacy: For the Rich or for the Poor?

Some consider the right to privacy a fundamental right for the rich, or even the rich and famous. It may be no coincidence that the landmark privacy cases in Europe feature names like Naomi Campbell, Michael Douglas, and Princess Caroline of Monaco. After all, if you lived eight-to-a-room in a shantytown in India, you would have little privacy and a lot of other problems to worry about. When viewed this way, privacy seems to be a matter of luxury; a right of spoiled teenagers living in six bedroom houses (“Mom, don’t open the door without knocking”).

 

To refute this view, scholars typically point out that throughout history, totalitarian regimes targeted the right to privacy even before they did free speech. Without privacy, individuals are cowed by authority, conform to societal norms, and self-censor dissenting speech – or even thoughts. As Michel Foucault observed in his interpretation of Jeremy Bentham’s panopticon, the gaze has disciplinary power.

 

But I’d like to discuss an entirely different counter-argument to the privacy-for-the-rich approach. This view was recently presented at the Privacy Law Scholar Conference in a great paper by Laura Moy and Amanda Conley, both 2011 NYU law graduates. In their paper, Paying the Wealthy for Being Wealthy: The Hidden Costs of Behavioral Marketing (I love a good title!), which is not yet available online, Moy and Conley argue that retailers harvest personal information to make the poor subsidize luxury goods for the rich.

 

This might seem audacious at first, but think of it this way: through various loyalty schemes, retailers collect data about consumers’ shopping habits. Naturally, retailers are most interested in data about “high value shoppers.” This is intuitively clear, given that that’s where the big money, low price sensitivity and broad margins are. It’s also backed by empirical evidence, which Moy and Conley reference. Retailers prefer to tend to those who buy saffron and Kobe Beef rather than to those who purchase salt and turkey. To woo the high value shoppers, they offer attractive discounts and promotions – use your loyalty card to buy Beluga caviar; get a free bottle of Champagne. Yet obviously the retailers can’t take a loss for their marketing efforts. Who then pays the price of the rich shoppers’ luxury goods? You guessed it, the rest of us – with price hikes on products like bread and butter.

 

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Volume 59, Issue 5 (June 2012)

Volume 59, Issue 5 (June 2012)


Articles

Implicit Bias in the Courtroom Jerry Kang et al. 1124
The Supreme Court’s Regulation of Civil Procedure: Lessons From Administrative Law Lumen N. Mulligan & Glen Staszewski 1188


Comments

Techniques for Mitigating Cognitive Biases in Fingerprint Identification Elizabeth J. Reese 1252
Credit CARD Act II: Expanding Credit Card Reform by Targeting Behavioral Biases Jonathan Slowik 1292
Shocking the Conscience: What Police Tasers and Weapon Technology Reveal About Excessive Force Law Aaron Sussman 1342

Automated Arrangement of Information: Speech, Conduct, and Power

Tim Wu’s opinion piece on speech and computers has attracted a lot of attention. Wu’s position is a useful counterpoint to Eugene Volokh’s sweeping claims about 1st Amendment protection for automated arrangements of information. However, neither Wu nor Volokh can cut the Gordian knot of digital freedom of expression with maxims like “search is speech” or “computers can’t have free speech rights.” Any court that respects extant doctrine, and the normative complexity of the new speech environment, will need to take nuanced positions on a case-by-case basis.

Digital Opinions

Wu states that “The argument that machines speak was first made in the context of Internet search,” pointing to cases like Langdon v. Google, Kinderstart, and SearchKing. In each scenario, Google successfully argued to a federal district court that it could not be liable in tort for faulty or misleading results 1) because it “spoke” the offending arrangement of information and 2) the arrangement was Google’s “opinion,” and could not be proven factually wrong (a sine qua non for liability).
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15

Swindling/Selling, Bribing/Contributing, Extorting/Taxing

At the recent Security and Human Behavior conference, I got into a conversation that highlighted perhaps my favorite legal book ever, Arthur Leff’s “Swindling and Selling.”  Although it is out of print, one measure of its wonderfulness is that used copies sell now for $125.  Then, in my class this week on The Ethics of Washington Lawyering (yes, it’s a fun title), I realized that a key insight from Leff’s book applies to two other areas – what is allowed in campaign finance and what counts as extortion in political office.

Swindling/selling.  The insight I always remember from Leff is to look at the definition of swindling: “Alice sells something to Bob that Bob thinks has value.”  Here is the definition of selling: “Alice sells something to Bob that Bob thinks has value.”  See?  The exchange is identical – Bob hands Alice money.  The difference is sociological (what society values) and economic (can Bob resell the item).  But the structure of the transaction is the same.

Bribing/contributing.  So here is a bribe: “Alice gives Senator Bob $10,000 and Bob later does things that benefit Alice, such as a tax break.”  Here is a campaign contribution: “Alice gives Senator Bob $10,000 and Bob later does things that benefit Alice, such as a tax break.”  Again, the structure of the transaction is identical.  There are two likely differences: (1) to prove the bribe, the prosecutor has to show that Bob did the later action because of the $10,000; and (2) Alice is probably careful enough to give the money to Bob’s campaign, and not to him personally.

 Extorting/taxing.  Here is the classic political extortion: “Alice hires Bob, and Bob has to hand back ten percent of his salary to Alice each year.”  Here is how it works when a federal or state government hires someone: “Alice hires Bob, and Bob has to hand back ten percent of his salary to Alice each year.”  The structure of the transaction is the same – Bob keeps 90% of the salary and gives 10% to Alice.  The difference here?  Like the previous example, the existence of bureaucracy turns the bad thing (bribing or extorting) into the acceptable thing (contributing/taxing).  In the modern government, Alice hires Bob, and Bob sends the payment to the IRS.  The 10% does not go to Alice’s personal use, but the payment on Bob’s side may feel much the same.

For each of these, drawing the legal distinction will be really hard because the structure of the transaction is identical for the lawful thing (selling, contributing, taxing) and for the criminal thing (swindling, bribing, extorting).  Skeptics can see every transaction as the latter, and there is no objective way to prove that the transaction is actually legitimate.

I am wondering, did people know this already?  Are there citations to previous works that explain all of this?  Or, perhaps, is this a simple framework for describing things that sheds some light and merits further discussion?

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Epic Fantasy and Plot Plumping

Let the Dragon Ride Again (and Again, and Again, and Again)

Jim Rigney, the real name of Robert Jordan (best-selling author of the high-fantasy Wheel of Time Series), died several years ago. Shortly after he did, one of his friends wrote:

“Subject: Re: Who Should Not Finish WoT for Robert Jordan
From: MikesMadhouse Listmanager <MikesMadhouse.listmana@bar.baen.com>
Date: Wed, 19 Sep 2007 06:36:49 -0400
To: (Recipients of ‘MikesMadhouse’ suppressed)

From: David Drake

Dear People,

What I said was that when Jim Rigney’s work became a significant part of not only the Tor but the Von Holzbrink bottom line, the plots for individual volumes were decided by very highly placed people in council with the author.

Business was expanded to a complete volume where it might originally have been one of several strands in a volume, and the action in minor theaters (so to speak) was followed when the author might have been willing to elide it.

I further said and will repeat: there were quite a lot of people who sneered at ‘Robert Jordan’ but whose own books wouldn’t have been published without the Wheel of Time to subsidize them. Since the onset of Jim’s (Jim Rigney’s) illness, he hadn’t been able to write–and a lot of those people are not being published any more.

Dave Drake”

 

Fantasy blogs have been debating whether Drake was telling the truth.  Obviously, if he were, it’d go a long ways to explaining why the quality of the series (which was a precursor to the Game of Thrones, and its rival in quality at least when it started) declined so precipitously.  It’s also quite irritating, and the kind of thing that makes me want to illegally download pirated e-books, or something.

But, it’s worth pointing out that despite the nastiness of this kind of publishing practice, I can’t imagine there is a thing about plot plumping which is legally actionable. That’s so even though 1) these books were extremely expensive; 2) Tor and Rigney allegedly made several million dollars per book in the series in hardcover sales alone; 3) consumers (like me!) would have been misled to think that the book was a substantial attempt to move the series forward, when actually it was just an exercise is cow-milking; 4) the purpose of this cow-milking was to profit Rigney and subsidize other authors in the firm’s booklist.  Or to put it another way, fraud isn’t the same as sharp business practice.

 

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The Memory Hole

On RocketLawyer’s Legally Easy podcast, I talk with Charley Moore and Eva Arevuo about the EU’s proposed “right to be forgotten” and privacy as censorship. I was inspired by Jeff Rosen and Jane Yakowitz‘s critiques of the approach, which actually appears to be a “right to lie effectively.” If you can disappear unflattering – and truthful – information, it lets you deceive others – in other words, you benefit and they are harmed. The EU’s approach is a blunderbuss where a scalpel is needed.

Cross-posted at Info/Law.

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The E.U. Data Protection Directive and Robot Chicken

The European Commission released a draft of its revised Data Protection Directive this morning, and Jane Yakowitz has a trenchant critique up at Forbes.com. In addition to the sharp legal analysis, her article has both a Star Wars and Robot Chicken reference, which makes it basically the perfect information law piece…

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Recommended Reading: The People’s Agents and the Battle to Protect the American Public

My colleague Rena Steinzor and Sidney Shapiro recently published The People’s Agents and the Battle to Protect the American Public: Special Interests, Government, and Threats to Health, Safety, and the Environment (University of Chicago Press).  The book analyzes the performance of five agencies they call the “protector agencies:”  the Consumer Product Safety Commission, Environmental Protection Agency, Food and Drug Administration, National Highway Traffic Safety Administration, and Occupational Safety and Health Administration.  Its findings are grim.  Using case studies, the book shows how the protector agencies are malfunctioning and explores the sources of the trouble.  It attributes the disappointing performance of the agencies to external pressures, including the President’s requirement that agencies engage in cost-benefit analysis before issuing a major rule and other forms of Presidential interference as well as the weakening of the civil service and inadequate funding and staffing of agencies.  The book offers thoughtful solutions that are carefully tailored to the problems that the authors identify.

Richard Pierce reviewed the book in the George Washington Law Review, and he writes that this “excellent book is compulsory reading for anyone who is interested in the performance of regulatory agencies.”  For Pierce, the “book is so well researched and well written that I learned a lot even from the chapters with which I disagree.”  He explains that, for instance, while he continues to believe in agency cost-benefit analysis for major rules, the authors “do such a good job of criticizing the cost-benefit analysis requirement and of documenting its bad effects that I am forced at least to acknowledge the need for major changes in the ways in which agencies and the White House implement” it.  The authors also “provide an accurate and persuasive account of the many adverse effects of the hard look doctrine,” that is, the judicial requirement that an agency must take a hard look at a problem and its potential solutions before issuing a rule, and prescribe a new approach that would be less intrusive and more determinate.  Pierce ends the review with this:

Justice Scalia once said that ‘Administrative law is not for sissies –so you should lean back, clutch the sides of your chairs, and steel yourselves for a pretty dull lecture’  I highly recommend that anyone who is interested in the future of administrative law and government regulation read Steinzor and Shapiro’s important book.  But to paraphrase Justice Scalia, you should not read the Steinzor and Shapiro book in conjunction with this review unless you are prepared to “lean back, clutch the sides of your chairs, and steel yourselves for” a serious encounter with depression.  Oh, and you should make sure there are no sharp objects in the vicinity if you take seriously both the points Steinzor and Shapiro make in their book and the points I make in this review.”

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SCOTUS AT&T Opinion Par for Rhetorical Course

Par for the Supreme Court course, its opinion in AT&T Mobility is rich with empty rhetoric about arbitration being a creature of contract while being more explicit than ever that what matters in these cases is the Court’s powerful national policy strongly favoring a particular form of arbitration over other ways to resolve disputes.

In finding preempted California contract law holding unconscionable clauses in consumer adhesion contracts mandating bilateral arbitration, the Court’s 5-4 opinion by Justice Scalia breaks only that little bit of new ground. 

The opinion’s principal notable points are (1) to stress more intensively than ever that a primary purpose of federal arbitration law is to promote bilateral arbitration, to streamline dispute resolution, and celebrate the informality of bilateral arbitration against class arbitration and (2) to elaborate the differences between bilateral and class arbitration that the Court assumed everyone knew in last term’s Stolt-Neilsen opinion.  And the Court continues to say that all of this is a matter of contract!

The Court stresses that its jurisprudence treats the federal arbitration statute as expressing both a liberal federal policy favoring arbitration and that arbitration is a matter of contract. Without showing awareness of the inherent conflict in this paired purpose, and parading its rhetorical feathers, the Court said the upshot is to put arbitration agreements on an equal footing with other contracts, including as to defenses.

The Court could not accept the validity of the California unconscionability defense, however, because it did not advance the national policy. Justice Scalia gave a new definition of that national policy, again combining two ideas that are in conflict while pretending they are in harmony: “to ensure enforcement of arbitration agreements according to their terms, so as to facilitate streamlined proceedings” (emphasis added).

The opinion fights tirelessly but unsuccessfully to prove that it has not made up this new version of the national policy. It struggles strenuously but unsuccessfully to persuade us that there is no conflict between its devotion to arbitration and basic principles of Anglo-American contract law. Read More

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Supreme Court Arbitration Rhetoric v. Reality and AT&T

Lawyers keep telling clients that arbitration is a matter of contract, not coercion. That follows Supreme Court rhetoric that’s belied by Supreme Court practice.  The Court’s pending case in AT&T Mobility v. Concepcion gives the Court a final chance to resolve the gap between its talk and action concerning arbitration. 

 I doubt, however, the Court will seize the opportunity.  Instead, the Court likely will continue to tell us that its arbitration jurisprudence is merely applied contract law, while its applications will continue to coerce people into arbitration because the Court has established a national policy favoring arbitration. 

That is the lamentable assessment provided in my new article on the subjectRhetoric versus Reality in Arbitration Jurisprudence: How the Supreme Court Flaunts and Flunks Contracts (and Why Contracts Teachers Need Not Teach the Cases).

As with practicing lawyers, legal scholars have generally ignored this rhetoric-reality gap too, many routinely repeating that arbitration is all about contract (a notable  exception is David Horton).  As a teacher of Contracts for 20 years, I began to hear this rhetoric last summer, beginning with my receipt of a reprint of an Illinois Law Review article by noted arbitration scholar Thomas Stipanowich

In a comprehensive review of the state of arbitration law and practice, the piece criticized editors of Contracts casebooks for paying too little attention to arbitration and especially to how the attention given was often extremely negative. With modest exceptions, including in Ian Ayres’ casebook, Contract law books and courses have not generally treated arbitration much and the treatment often is in the context of illustrating doctrines like unconscionability or lopsided terms not comporting with reasonable expectations of a community. 

I began following pending Supreme Court cases on the subject and scrutinizing those handed down in preceding terms. I found the talk about contracts and contract law intriguing because it made it sound as if arbitration was at the center of contract law and that contract law was at the center of arbitration law. That made it seem irresponsible for me, Contracts casebook editors, and other teachers, to leave arbitration at the margins of the Contracts course or outside it altogether.

Alas, the truth is that contract and contract law have so little to do with what happens in arbitration jurisprudence, particularly compared to Court rhetoric, that it would confuse or mislead students taking Contracts to provide it as an illustration. To that extent, arbitration warrants the glancing treatment in the Contracts course it gets, followed by an optional upper-level course.  

Among the many costs of the Court’s rhetoric-reality gap are those manifest in the AT&T case, on which the Court is now struggling to write an opinion.

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