Briefs Authored by Public Good

Briefs Joined By Public Good

Are consumers who have been sold falsely labeled goods covered by California’s core consumer protection laws?

Kwikset Corp. v. Superior Court

California Supreme Court

The Issue: Consumers who purchased locks advertised as “Made in the USA” sued the manufacturer after they discovered that the locks contained foreign-made parts or were assembled abroad. The California Court of Appeal held that a cheated customer could not bring an action under California’s Unfair Competition Law and False Advertising Law, as amended by ballot initiative in 2004, unless she had lost money in the transaction, and that a customer did not lose money as long as she received a working product. It did not matter that the customer had bought the product precisely because it was advertised (falsely) as American-made.

Why It Matters: For close to a century, California’s Unfair Competition Law and False Advertising Law have provided broad protection to consumers and business competitors against unscrupulous business practices. The Court of Appeal’s interpretation of the 1994 amendments would severely curtail that protection by limiting actionable consumer complaints to price, quality, and function of the item purchased. In today’s market, however, many consumers also care about how a product was produced: that it was organically grown, not genetically modified, dolphin-safe, cage-free, not produced under sweatshop conditions, produced by union labor, produced in an environmentally responsible manner, or kosher or halal, to list just a few examples. The Court of Appeal’s decision would give advertisers carte blanche to make false claims about such matters without fear of legal consequence. Not only would such a legal regime leave victimized consumers without recourse, but it would also undermine socially responsible businesses like organic farms by making it more difficult for them to distinguish their products in the marketplace.

Public Good’s Contribution: Public Good filed a brief in the California Supreme Court in defense of customers’ right to sue when they purchase products that are falsely advertised. Public Good argued that a customer has lost money if he has paid for a product that differs from the advertised product in ways that matter to the customer, even if the product functions satisfactorily. The Court of Appeal’s unjustifiably narrow interpretation of the law ran contrary to the intent of the voters. The thrust of the amendments to the relevant laws was to ensure that a lawsuit could be brought only by a party actually injured by the misconduct, and not—as before—by any concerned citizen acting as “private attorney general.” The amendments were not intended to limit the remedies available to injured parties.

Amici joining Public Good: Public Good’s brief was filed on behalf of itself and a host of leading national and California consumer protection organizations: Public Citizen, National Association of Consumer Advocates, National Consumer Law Center, Consumer Action, Consumer Watchdog, Calpirg, Consumers for Auto Reliability and Safety, and Consumer Federation of California.

Outcome: A decision is pending.

171 Cal.App.4th 645 (2009), review granted, 211 P.3d 1060 (Cal. 2009).

Download our brief filed in the Kwikset Corp. v. Superior Court case.

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United States Supreme Court upholds government’s ability to require that businesses disclose factual information to consumers

Milavetz, Fallop & Milavetz, P.A. v. United States

U.S. Supreme Court

The Issue: A law firm challenged provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 that required “debt relief agencies,” including some law firms, to disclose certain facts in their advertising. The law firm argued that the Court should adopt a stringent standard for review of mandated factual disclosures.

Why It Matters: The standard of First Amendment review proposed by the law firm would jeopardize a host of federal, state and local laws that, in order to protect the public, require nutritional labeling, warnings concerning exposure to toxic substances or workplace hazards, corporate release of information before registering securities for public trade, and publication of gas mileage for automobiles, to name just a few examples.

Public Good’s Contribution: Recognizing the potential far-reaching and destructive consequences of the framework proposed by the law firm, Public Good stepped in to ensure that the Court was aware of the import of its treatment of what the parties considered a secondary issue. Public Good demonstrated that the law firm’s proposed standard of First Amendment review was not—and had never been—applicable to government-mandated factual disclosures in commercial contexts. Public Good’s was the only amicus brief to address the issue.

Amici joining Public Good: Public Good’s brief was filed on behalf of itself and prominent national public health organizations: the Center for Science in the Public Interest, the Environmental Law Foundation, and the Center for Environmental Health.

Outcome: The Supreme Court substantially accepted Public Good’s analysis, closely following the reasoning of our brief. Specifically, the Court held that the challenged disclosure requirements did not offend the First Amendment, and affirmed a quarter-century-old precedent (that the case had threatened) according more lenient First Amendment review to compelled commercial disclosures.

541 F.3d 785 (8th Cir. 2008), affirmed in part, reversed in part, and remanded, 130 S.Ct. 1324 (2010).

Download our brief filed in the Milavetz, Fallop & Milavetz, P.A. v. United States case.

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United States Supreme Court, in a close and controversial decision, strikes down restrictions on corporate “soft money” political campaign spending.

Citizens United v. Federal Elections Commission

U.S. Supreme Court

Issue: In a case likely to have severe repercussions, the United States Supreme Court has held that the First Amendment prevents limits on the amount of money a corporation can spend on political communication during an election campaign. In reaching its decision, the Court found that corporations have First Amendment rights comparable to those of individuals to participate in political campaigns. The case presented a stark contrast to the Court’s characteristic pronouncements on the value of judicial restraint. In order to reach and overturn precedent that stood in the way of this conclusion, the Court took the highly unusual step of broadening the questions raised by the parties and carrying over the case from one Term to the the next. As Justice Stevens wrote in dissent, “Essentially, five Justices were unhappy with the limited nature of the case before us, so they changed the case to give themselves an opportunity to change the law.”

Why It Matters: It has long been clear that, as the cost of campaigning continues to grow, American democracy is increasingly influenced by the power of private money. Elected officials’ dependence on donations by large businesses has already made it difficult to pass legislation and shape policy in ways that put the good of the public first. Removing limits on corporate “independent” expenditures will exacerbate the problem. Corporations have the financial resources to skew, if not totally overwhelm, political discourse by effectively drowning out other voices. The result will be the opposite of the robust public debate that the First Amendment was designed to foster.

Contribution of Public Good: Public Good filed a brief on the merits in the United States Supreme Court in favor of upholding long-established precedents that permit corporate political spending to be regulated more stringently than spending by individuals. Public Good’s distinctive contribution was to explain the basis for this distinction, even within the framework of the Court’s previous decisions finding that corporate speech is constitutionally protected. Crucially, corporate speech is protected principally to safeguard the interests of listeners in receiving communications, and it has long been implicit in Supreme Court jurisprudence that the rights of listeners call for less absolute protection than do the rights of individual speakers, which are not at stake in corporate campaign spending.

Outcome: In what the New York Times described as a “disastrous” ruling, “likely to be viewed [by history] as a shameful bookend to Bush v. Gore,” the Supreme Court voted 5-4 to find corporate political spending fully protected by the First Amendment, overturning its own precedents and “thrust[ing] politics back to the robber-baron era of the 19th century.”

530 F.Supp.2d 274 (D.D.C. 2008), affirmed in part, reversed in part, and remanded, 130 S.Ct. 876 (2010).

Download our brief filed in the Citizens United v. Federal Elections Commission case.

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High school student loses fight to refrain from reciting the Pledge of Allegiance without first getting his parents’ permission.

Frazier v. Winn

U.S. Supreme Court

The Issue: The Eleventh Circuit Court of Appeals upheld a Florida state law that requires public school students to recite the Pledge of Allegiance unless they are excused by a note from their parents. Public Good urged the United States Supreme Court to review and reverse the decision.

Why It Matters: The United States Supreme Court first recognized the right of students to refrain from reciting the Pledge during World War II. In West Virginia Board of Education v. Barnette, 319 U.S. 624 (1943), the Court established the principle that an individual’s freedom of speech is violated not only when he is forbidden to express his beliefs—including criticisms of the government—but equally when he is required to espouse beliefs he does not share. This principle applies especially to expressions of patriotism or religious orthodoxy, because compelling the Pledge “invades the sphere of intellect and spirit which it is the purpose of the First Amendment to our Constitution to reserve from all official control.” In subsequent decades, students’ right to refrain from reciting the Pledge has come to epitomize the general principle, set forth in Barnette, that “no official, high or petty, can prescribe what shall be orthodox in politics, nationalism, religion or other matters of opinion or force citizens to confess by word or act their faith therein.” The Eleventh Circuit’s decision to uphold Florida’s Pledge statute threatened to erode the clarity of this fundamental precedent.

Public Good’s Contribution: Public Good authored the only amicus brief in the case, urging the Supreme Court to grant certiorari and reverse the holding of the Eleventh Circuit. Public Good argued that the decision contradicted precedents applicable to Pledge recitation specifically and student speech generally. The Court of Appeals had accepted Florida’s argument that this case was different from countless precedents affirming student’s right to abstain from the Pledge, in that the Florida statute protected parents’ rights to direct the upbringing of their children—as if all the earlier cases concerned only students whose parents had no interest in their upbringing. Public Good’s brief argued that the parental rights argument was a red herring and that the Florida statute could not withstand First Amendment scrutiny: the law was not viewpoint-neutral because it did nothing to protect the rights of parents who might want their children not to recite the Pledge. The law also failed to meet First Amendment standards because it would likely be applied to older students, like Frazier himself, as to whom imposing a parental consent requirement on the exercise of fundamental rights of free expression is particularly indefensible.

Amici joining Public Good: Public Good’s brief was filed on behalf of itself and the Center for Constitutional Rights, one of the nation’s most prominent advocacy organizations for civil liberties and human rights.

Outcome: The Supreme Court denied review.

535 F.3d 1279 (11th Cir. 2008), rehearing and rehearing en banc denied, 555 F.3d 1292 (11th Cir. 2009), and cert. denied, 130 S.Ct. 69 (2009).

Download our brief filed in the Frazier v. Winn case.

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Court of Appeals amends opinion that threatened to eliminate statute of limitations defense for debtors in credit card collection cases.

Avery v. First Resolution Management Corp.

U.S. Court of Appeals, Ninth Circuit

The Issue: The Ninth Circuit Court of Appeals held that that a bank’s lawsuit to collect on a credit card debt was not time-barred even though the applicable statute of limitations had run, because the cardholder had been absent from the state where the bank was headquartered. As originally published, the decision threatened to allow credit card companies and other issuers of debt to evade statutes of limitations in perpetuity.

Why It Matters: Indefinite tolling of the statute of limitations for debt collection could be devastating for many people facing economic hardship. Millions of alleged debtors are in fact victims of identity fraud. In such cases, statutes of limitations are often the final defense of such victims against endless harassment and threats. The absence of a limitations period is particularly toxic in the context of credit card debt collection where delay in debt collection can lead to piling on of finance charges and late fees, eventually totaling far more than the original debt. Finally, it would be patently unfair for the statute of limitations to run against credit card holders, but not against credit card issuers—precisely the sort of one-sided manipulation of the law that Public Good works to oppose.

Contribution of Public Good: Public Good filed a brief in support of en banc review, requesting in the alternative that the court modify or withdraw its opinion. Typically, state law (including that of New Hampshire, which was at issue here), allows the limitations period for debt collection (and various other civil claims) to be tolled when the defendant is absent from the state. The problem giving rise to this case is that credit card companies issue cards to customers in all states, but their contracts typically stipulate that any legal disputes are to be governed by the home state of the credit card provider. As a result, the vast majority of the holders of credit cards issued by companies located in small states such as New Hampshire, or Delaware, where most credit card companies are legally based, are always absent from the relevant state, because they have no ties to that state. Thus, according to the reasoning of the debt collectors in this action, the cardholders could be sued at any time, no matter how stale the debt, because the statute of limitations had not expired. However, a cardholder wishing to sue the credit card company could not bring an action after the three-year limitations period had passed, because the company is never absent from the state in which it legally “resides.” Public Good pointed out that the decision in Avery appeared to give rise to just this consequence, arguing that such an interpretation was contrary to the intent of the law.

Amici joining Public Good: Public Good’s brief was filed on behalf of itself and four of the Bay Area’s leading providers of legal services: East Bay Community Law Center, Lawyers’ Committee for Civil Rights of the San Francisco Bay Area, Bay Area Legal Aid, and Legal Assistance to the Elderly.

Outcome: In explicit response to Public Good’s brief, the court of appeals panel modified its decision to spell out that it was not endorsing an interpretation of the law allowing indefinite tolling of limitations periods for credit card debt collection, but was deciding the case on the narrow ground of rejecting the specific argument offered by the debtor in the case.

561 F.3d 998 (9th Cir. 2009), amended, 568 F.3d 1018 (9th Cir. 2009), and cert. denied, 130 S.Ct. 554 (2009).

Download our brief filed in the Avery v. First Resolution Management Corp. case.

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California Supreme Court “depublishes” opinion that would have prevented consumers from protecting themselves against credit reporting abuses.

Liceaga v. Debt Recovery Solutions, LLC

California Supreme Court

The Issue: The California Court of Appeal held that the federal Fair Credit Reporting Act preempted the right of California citizens to recover from those who knowingly or negligently furnish inaccurate information about them to credit reporting agencies.

Why It Matters: According to some studies, more than half of all consumers are victims of significant errors in credit reporting—for reasons such as identity theft, negligence by creditors or credit reporters, or deliberate misrepresentation. The resulting damage to credit ratings can make it impossible to purchase a home, and in some cases may lead to financial ruin. The Court of Appeal’s decision threatened to deprive victims of what may be their only recourse, while removing the incentive for furnishers of credit information to investigate disputes seriously.

Public Good’s Contribution: Public Good wrote to urge action by the California Supreme Court. Our letter called on the Supreme Court to resolve a split among different appellate courts that had considered whether the right to sue was preempted, and explained the importance of the issue to consumers and creditors alike.

Outcome: The Supreme Court ordered the Court of Appeal’s opinion decertified, depriving the decision of precedential status—an intervention made in only about twenty of the more than five thousand cases seeking Supreme Court review in a year. Because the Court left untouched the contemporaneous opinion of another California Court of Appeal that had reached an opposite conclusion, the decertification order effectively resolved the split in the courts of appeal in favor of consumers.

169 Cal.App.4th 901 (2008), review denied and ordered not published, 2009 Cal. LEXIS 4272 (April 29, 2009) (S170308).

Download our brief filed in the Liceaga v. Debt Recovery Solutions, LLC case.

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United States Supreme Court limits victims’ ability to band together against large companies that have violated the law

Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp.

U.S. Supreme Court

After being convicted of price fixing, four of the world's largest shipping companies argued that their victims could not bring an antitrust “class arbitration” against them, because the contract that governed the parties’ arbitration proceedings did not specify that victims could band together in a single action.

This case exemplifies a growing trend, in which large companies use their superior bargaining power to make it more difficult for consumers or employees (or, here, other companies) to obtain legal redress in court. Arbitration provisions in employment and consumer contracts (contracts that are almost invariably written by the company) regularly require parties with less bargaining power to waive their right of access to court in favor of private arbitration, with fewer safeguards for plaintiffs and with “private judges” likely to favor the large companies who provide them with repeat business. Although some courts, including the California Supreme Court, have placed significant safeguards on the arbitration process—including close review of the fairness of arbitration provisions in contracts—other courts, especially the United States Supreme Court, have interpreted the Federal Arbitration Act (FAA) more expansively and have greatly enhanced companies’ ability to shift cases out of courts and into private fora.

Meanwhile, large companies have succeeded in raising legal hurdles to bringing class actions in court – often the only effective way of achieving a remedy in situations where many individuals have been harmed but none has a large enough claim to make individual litigation feasible. The ability of consumers and employees to bring “class arbitrations” allowed individuals to band together in such circumstances, even when they were contractually required to litigate in a private forum.

The Court’s decision for defendants threatens to make it difficult for employees and consumers to seek redress for violations of their rights, even when the law is on their side. Public Good joined an amicus brief authored by Public Justice, defending the right of victims to band together in a “class” even when they are contractually required to resolve their dispute with a business in private arbitration.

The Supreme Court, in a 5-3 decision, sided with the shipping companies, holding that arbitration is a procedure created wholly by contract. Consequently, the Court reasoned, the fact that the contract between the parties did not affirmatively permit class arbitration meant that the victims could not use the procedure in this case.

130 S.Ct. 1758, (2010). 548 F. 3d 85 (2d Cir. 2008), reversed, remanded.

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Should companies that improperly charge sales tax be immune from lawsuits seeking to recover the charges?

Loeffler v. Target, Inc.

California Supreme Court

A California Court of Appeal ruled that when a retailer illegally charges consumers sales tax on non-taxable purchases, the consumers may not sue the retailer under California’s basic consumer protection statutes to recover the improper charges. If upheld, this decision would raise the very real prospect that illegally assessed sales tax charges could never be recovered, since the sales tax law only allows retailers to recover improperly assessed sales tax charges from the Board, and retailers have no incentive to bring such a case unless they are themselves liable for restitution to consumers.

The case raises important issues regarding the breadth and flexibility of California’s core consumer protection statutes—the Unfair Competition Law (UCL) (Business & Professions Code § 17200 et seq.) and the Consumer Legal Remedies Act (CLRA) (Civil Code § 1750 et seq.). Case law has generally found that the UCL and CLRA are available to consumers even when more subject-specific laws provide no private right of action. To establish an exception to this rule would be an unfortunate step toward limiting the applicability of these broad and vital laws.

Public Good joined an amicus letter successfully urging the California Supreme Court to grant review.

Once the case was accepted for review, Public Good joined an amicus brief authored by Consumer Watchdog, seeking reversal of the Court of Appeal’s decision. The amicus brief argues that the state’s fundamental consumer protection statutes are broad and flexible, and that there is no good reason to carve out an exception that would effectively shield businesses from having to refund any illegal or improper charges as long they call them “sales tax.”

Court of Appeal opinion: 173 Cal.App.4th 1229 (2009) review granted and ordered not published; depublished, 216 P. 3d 520 (2009).

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