Equifax, which knows more about you than your own mother, (1) failed to maintain its servers, (2) was hacked and lost sensitive personal data for 143 million people, (3) concealed that fact for months, (4) blamed another company for the problem, then (5) finally admitted it caused the problem. To make matters worse, after the hack but before disclosing it, three executives sold off nearly $2 million in Equifax stock.

“What should I do to protect myself?” is a difficult question to answer. The Federal Trade Commission put up a page recommending checking your credit reports, placing a credit freeze, placing a fraud alert, and filing your taxes early so that a scammer doesn’t file them for you and obtain your tax refund. Brian Krebs has a much more thorough FAQ over here.

To call this situation “frustrating” would be an understatement. Virtually everyone with a credit history now bears the burden of making sure their own identity is safe due to Equifax’s negligence. People have already filed class-action lawsuits, and rightly so.
Continue Reading Equifax And The Long Legal Road In Data Breach Class Actions

The science media has blown up recently over Sci-Hub, dubbed “the Pirate Bay of the science world.” Here’s a BigThink article, a ScienceAlert article, and an Atlantic article. Sci-Hub is, to put it mildly, the greatest open repository of scientific papers in the history of the world. There’s just a small problem: those papers are almost all copyrighted, and the whole purpose of Sci-Hub is to circumvent paying the copyright holder.

Unsurprisingly, Elsevier, the juggernaut scientific journal publisher, has sued the proprietor of Sci-Hub, neuroscientist Alexandra Elbakyan, for running the database. Elsevier says in their complaint that they host “almost one-quarter of the world’s peer-reviewed, full-text scientific, technical and medical content,” amounting to “over 10 million copyrighted publications.” As they brag, “[m]ore than 15 million researchers, health care professionals, teachers, students, and information professionals around the globe rely on ScienceDirect as a trusted source of nearly 2,500 journals and more than 26,000 book titles” — all of whom have to pay for access, typically $35 per article.

In case you’re wondering: the actual authors of the articles don’t receive a dime of that income. Elsevier owns the copyright to those articles. Elsevier thus doesn’t create anything, they’re just the middleman between those 15 million “researchers, health care professionals, teachers, students, and information professionals” and the accumulated knowledge they need to do their jobs. Even Harvard found it difficult to stomach the huge fees charged by Elsevier. Perhaps even more frustrating, many of those papers sitting behind a paywall were funded by U.S. taxpayers through National Institutes of Health grants, but the NIH’s public access policy doesn’t require public access until “no later than 12 months after the official date of publication.” That’s fine for the casual reader, but for researchers in the field, it means they’re paywalled off from the latest scientific information.
Continue Reading The Jurisdiction Problem In Elsevier’s Lawsuit Against Sci-Hub

Nearly a year ago, I praised an objection Judge Alex Kozinski filed — as a consumer, not a judge — to a proposed class action settlement that he was a part of, and so I was dismayed to see a recent article noting Judge Kozinski’s complaint that “There’s a tendency for lawyers to buy themselves off” in class actions.

He’s missing the forest for the trees: whatever the problems of class actions, the “tendency” we need to worry about isn’t that plaintiffs’ lawyers might be able to settle these cases too soon, but that the cases aren’t filed at all because they’re too hard to win, even in the face of blatantly illegal conduct.

If you’re from the Philadelphia area, you know that the tallest building in the City is the Comcast Center, begun in 2005 and completed in 2008 at a cost of $540 million. What you may not know is that Comcast’s customers paid for the whole thing (and more) by way of a glaring antitrust violation.

Between 1998 and 2002, Comcast’s share of the “Philadelphia designated marketing area” — i.e., the surrounding counties of Pennsylvania, New Jersey, and Delaware* — grew from 23.9 percent to a whopping 77.8 percent. (See this brief, page 2.) In four years, Comcast went from controlling less than a quarter of the market to controlling over three-quarters of it. By 2007, Comcast still held 69.5 percent of the market.

Comcast wasn’t competing on price, and it didn’t grow that way by dramatically improving its services (I can tell you that from my personal experience!). Instead, it was buying entire cable companies within the Philadelphia area and swapping customers with other cable systems, like Time Warner. As a statistician and econometrician later established by comparing prices in the Philadelphia area to prices in comparable areas, Comcast’s anticompetitive behavior cost Philadelphia consumers a whopping $875,576,662 in inflated prices.

In December 2003, five customers and eight law firms filed an antitrust complaint against Comcast. The antitrust damages for any one customer aren’t much — probably under $1,000 for most — so the case was filed as a class action on behalf of all the customers in the area. Thus, before the case could reach the issue of whether or not Comcast actually violated antitrust laws, the case has to decide whether and how customers could bring their case as a class action.

Comcast unsurprisingly fought a war of attrition, so that the District Court didn’t get to class certification until May 3, 2007. Thereafter, the Third Circuit decided In re Hydrogen Peroxide Antitrust Litigation, 552 F.3d 305 (3d Cir. 2008), prompting the District Court to go back around to re-certify the class again on January 7, 2010. Then the case was appealed, and the Third Circuit upheld the class certification on August 23, 2011 in Behrend v. Comcast Corp., 655 F.3d 182 (3d Cir. 2011). The Supreme Court granted certiorari, and issued its opinion on March 27, 2013.

That is, it took almost ten years to sort out whether 2 million current and former Comcast subscribers apparently bilked out of nearly a billion dollars could bring their claims as a class action. It reminds me of a case I argued earlier this year in front of the Third Circuit involving investors defrauded by a gigantic bank. The bank’s lawyer was trying to explain to the panel of judges why the bank had waited nearly two years after litigation was filed to bother arguing that it felt my client’s case had been filed in the wrong court, and in the course of that argument he claimed there was a difference between “calendar time” and “litigation time.” In “litigation time,” he argued, a big company could let issues sit unresolved for months, even years, without consequence. (Thankfully, I won, and the Third Circuit held the bank had engaged in an “unsavory tactical maneuver” by waiting so long.) 
Continue Reading Comcast, Kozinski, and The Decline Of Class Actions

Civil procedure in the federal courts has changed dramatically over the past few years, primarily through the Supreme Court’s manipulation of doctrine to encourage lower courts to dismiss tort, class action, antitrust, and civil rights cases. As I wrote a year ago in a guest post at TortsProf:

[A]s the courts become increasingly obsessed with deciding complicated cases by reference to procedural doctrines that ask the court to leave its expertise in the law and feign expertise in complex factual situations, courts run an increasing risk of becoming wholly unmoored from the facts of the disputes they are trying to decide. If a primary concern about tort litigation is that it is unpredictable — as is often stated by tort reformers — then everyone should be concerned when judges decide for themselves the dispositive facts of cases.

In early May of this year, Professor Suja Thomas had published an article in Judicature explaining how the summary judgment standard had “become a proxy for a judge’s own view of the evidence.” In one of her examples, she compared the majority and dissent opinions in Scott v. Harris, 127 S. Ct. 1769 (2007), a civil rights case involving a police chase, and just how far the majority had to leap to enter summary judgment for the defendant, preventing the plaintiff from ever presenting his case to a jury.

Then, on May 5, 2014, came Tolan v. Cotton, a civil rights case with depressingly common facts: with slim-to-none probable cause, a police officer instigated a confrontation with homeowners and ended up shooting a family member, permanently injuring him. There, all nine members of the Supreme Court agreed that the underlying court had dismissed the case based on their own view of the evidence, and so reversed the entry of summary judgment: 
Continue Reading The Supreme Court’s Results-Oriented Summary Judgment Precedent

It’s October, which means the Supreme Court is back in session, ready to continue its pro-big-business charge. It also means it’s time for me to get back to a recurring theme on my blog: if past sessions are any indication, then no matter what the Supreme Court decides this year, it’s likely that it won’t have a clue what it’s talking about, and its opinions will be littered with dubious factual conclusions.

This problem seems to be getting worse in the era of the Roberts Court, which has taken judicial activism to a new level. Back in 2009, I recommended the Supreme Court circulate draft opinions publicly — the same way that bills are proposed in Congress and regulatory changes are proposed in agencies — before making them the law of the land. In February 2012, Alli Orr Larsen wrote about “Confronting Supreme Court Fact Finding,” perhaps by way of an agency analogous to the Congressional Research Service, which I discussed here.

But it’s important we recognize that the problem of Supreme Court “fact finding” isn’t just a matter of the Court not understanding cable television markets or how plaintiff’s lawyers are compensated differently from defense lawyers. The Supreme Court’s factual misunderstandings intrude very deeply into some of the Court’s core doctrine.

Take, for example, qualified immunity in civil rights lawsuits. It would make sense if people could sue State governments to recover damages when their constitutional rights are violated — like when police officers literally break someone’s face for back talking — but the Supreme Court has erected tall barriers against such relief. It’s not enough to prove constitutional rights were violated; the plaintiff also has to jump through a variety of hoops, such as suing the police officer individually, rather than the municipality or county, for the violation, and then they have to show that their right was “clearly established” and that the violation “shocks the judicial conscience,” which is so ambiguous that it’s really just code for giving federal judges a way to get rid of civil rights lawsuits they don’t think should succeed. 
Continue Reading The Depth Of The Supreme Court’s Factual Misunderstandings

Three years ago, Professor Richard Epstein of the University of Chicago was peddling falsehoods and misconceptions about malpractice law that wouldn’t pass a 1L Torts class. Via Walter Olson, I see he’s back with a piece titled, “The Myth of a Pro-Business SCOTUS,” claiming “Commentators inaccurately condemn the five conservative justices as corporate shills.” He specifically mentions articles by Erwin Chemerinsky, Adam Liptak, Arthur Miller (whose article I discussed previously) and the recent analysis by Lee Epstein, William Landes, and Richard Posner.

Epstein raises three complaints about attacks on the Roberts Court: “selection bias; misplaced significance; and failure to account for the importance of consistently taking the ex ante perspective.”

Before we go on, be sure to read my summary of the Supreme Court’s 2012–2013 Term as it affected consumers, employees, and patients. “Business” — at least big business — won over Middle America at every turn. It’s not just a matter of individuals losing the only tools they have to keep the dangers of corporate greed and recklessness in check. Small businesses, for example, were told in American Express Co. v. Italian Colors Restaurant that they can’t use antitrust laws anymore, because the Supreme Court thinks its better for big banks to reap unjust and illegal profits than it is for small businesses to have their day in court.

Unsurprisingly, when Epstein reviews several recent Supreme Court cases, he leaves AmEx out. Kind of says it all, doesn’t it? 
Continue Reading The Undeniable Fact Of A Pro-Big-Business Supreme Court

Back in January 2012, I posted a short item titled, Supreme Court Sets The Tone For 2012 Term: Might Makes Right, in which I recounted how the Supreme Court had begun the 2011-2012 term with two opinions that were great if you own a prison management company or fake credit repair company, but not so great if you were injured by a private prison’s malfeasance or defrauded by a consumer credit company.

The rest of that term went as expected, with opinions knocking our various discrimination plaintiffs (Hosanna-Tabor Church v. EEOC), mesothelioma victims (Kurns v. Railroad Friction Products) and workers wrongly denied overtime (Christopher v. SmithKline Beecham Corp.). There were certainly some blockbuster cases that term — like the surprise Affordable Care Act decision — but nothing earth-shattering relating to civil justice.

Now we’ve reached the end of the 2012-2013 term, at least as it comes to cases affecting civil litigation brought by or against consumers and patients — you know, the people — and it’s time to recount the worst cases, the ones that contorted all logic and sense to deny people they day in court. As The Atlantic reported, June 24, 2013 in particular was “good for corporations,” with the Vance, Barlett, and Nasser opinions all at once, each of which we’ll cover.
Continue Reading The Worst Supreme Court Cases Of 2013 For Consumers, Employees, And Patients

In 1974, spurned by the collapse of the Studebaker Corporation and the corresponding loss of pension benefits, Congress enacted the Earned Retirement Income Security Act (“ERISA”) nominally “to protect interstate commerce and the interests of participants in employee benefit plans and their beneficiaries” by ensuring the financial stability of employee benefit plans. 29 U.S.C. § 1001(b). Congress’ intentions were good — we’d all like to see pensions protected — but ERISA hasn’t accomplished much in practice.  Just ask the 5,000 people who used to work at Enron, all of whom watched their $2.1 billion in retirement savings go up in smoke, or the fine employees of Hostess, which diverted pension benefits to fund its own operations, only to go bankrupt anyway.

Another purpose of ERISA was to provide “appropriate remedies, sanctions, and ready access to the Federal courts.” 29 U.S.C. § 1001(b). That purpose has failed miserably, the victim of judicial interpretation. Notice in that second link above what the Chair of the American Bar Association’s ERISA and Pension Litigation Subcommittee called the Hostess sham: a “betrayal without remedy.”

The majority of ERISA litigation can be summed up in a single sentence: the plaintiff seeks to avoid ERISA while the defendant seeks to apply it. As Professor Andrew Stumpff described in his  law review article “Darkness at Noon,” since ERISA’s enactment, “the strength of an ERISA plaintiff’s legal position has steadily eroded, to the point where today it is routinely the case that a plan participant can prevail only if he is able to persuade the court that ERISA does not apply to his case.” If the cheated plaintiff — such as a beneficiary improperly denied health insurance coverage from an employer-sponsored plan — can avoid ERISA, they might recover compensation; if they cannot avoid ERISA, then they are typically “without remedy.”

So much for “income security.”

The biggest problem is, just like in pharmaceutical and medical device lawsuits, federal preemption. It’s a one-two punch. First, ERISA “preempts” state laws (like the bad faith claims that insurance beneficiaries can typically bring against insurers who improperly deny coverage, or the breach of fiduciary duty claims investors can typically bring against financial advisors who mismanage investments), so that beneficiaries can’t bring any of the normal claims against employer-sponsored pension and health care plans. Second, ERISA’s built-in remedies are nearly worthless, and everything from investment decisions to health care benefit decisions is reviewed merely for an abuse of discretion, with the ERISA plans allowed to grant themselves the discretion to interpret their own contract language. Metropolitan Life Ins. Co. v. Glenn, 128 S. Ct. 2343 (2008). Under ERISA’s built-in remedies, for example, even when a benefit plan run by the company invests most of the plan’s money in the company’s own stock — which would normally be considered a blatant conflict of interest — the benefit plan is presumed to have acted appropriately.

How did a law intended to protect employees and their families end up shutting the courthouse doors to them?
Continue Reading ERISA: The Enemy Of Working Families

As Judge Posner remarked, “only a lunatic or a fanatic sues for $30,” Carnegie v. Household Int’l, Inc., 376 F.3d 656 (7th Cir. 2004), and that’s because it costs money to seek civil justice. For all the complaints by corporate defendants about the “rising costs of litigation,” those costs are just as frequently — perhaps more frequently — borne by plaintiffs. I’ve had individual wrongful death cases that required hundreds of thousands of dollars in litigation expenses alone, not including attorney and paralegal time.

Here in Philadelphia, the tallest building by far is the Comcast Center, built in part by the enormous profits reaped by way of Comcast’s monopoly power over cable-television services in the area, causing Philadelphia-area consumers to be overcharged by over $875 million from 1998 to 2007, as alleged by the Behrend lawsuit. I was a Comcast customer in that timeframe, and you know how much my individual antitrust claim is worth? Zero. I was personally overcharged no more than $500; the $350 filing fee for my complaint will eat up most of what I could recover, and certainly the remaining $150 in potential damages won’t justify the millions of dollars in litigation expenses and tens of thousands of hours of attorney time I’ll need to invest in the case.

This problem was solved nearly fifty years ago, when Federal Rule of Civil Procedure 23 was amended to create a streamlined procedure for these types of cases. “The policy at the very core of the class action mechanism is to overcome the problem that small recoveries do not provide the incentive for any individual to bring a solo action prosecuting his or her rights.” Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 617 (1997)(internal quotation omitted).

The actual requirements of Fed.R.Civ.P. 23 are not particularly strict.
Continue Reading Cleaning Up The Supreme Court’s Newest Class Action Mess, Comcast v. Behrend

Yesterday, the Supreme Court unanimously held in Millbrook v. United States that 28 U.S.C. § 2680(h) — the statute that permits lawsuits against “investigative or law enforcement officers of the United States Government” for claims arising “out of assault, battery, false imprisonment, false arrest, abuse of process, or malicious prosecution” — means just what it says, reversing nearly thirty years of law in the Third Circuit. So why did the Supreme Court have to tell us that a statute meant what it obviously meant?

The case arose from a prisoner in the United States Penitentiary in Lewisburg, Pennsylvania, who alleged “that he was taken to the basement of the SMU and forced to perform oral sex on Correctional Officer Pealer while Correctional Officer Edinger held his neck and Correctional Officer Gimberling stood watch by the door.” “SMU” stands for “Special Management Unit”; if you’ve ever watched a movie or TV with a prison in it, you know SMU as “the hole.”

Millbrook alleged he was assaulted, battered, and falsely imprisoned by three law enforcement officers of the United States. Under § 2680(h), there’s not much more to ask about the case: his claim was exactly the sort of claim Congress sought to permit when it amended the Federal Tort Claims Act in 1974 in response to a disturbing rise in “no knock” raids that destroyed homes and even killed people — without even probable cause or a warrant, as required by the Fourth Amendment. (It’s a couple years old now, but this long report from Radley Balko on the rise of paramilitary raids by domestic law enforcement is essential reading — sadly, the problem has gotten much worse in the past 40 years.) The law means, quite simply, that the United States is liable when investigative or law enforcement officers of the United States Government commit those specific intentional torts in the scope of their employment.

In the years since the Act’s passage, the courts have been busy eviscerating it by granting the government and its employees an increasing amount of immunity. In 1986, the Third Circuit decided in Pooler v. United States, 787 F.2d 868, 872 that  § 2680(h) was limited to claims where the “investigative or law enforcement officers” were “executing a search, seizing evidence, or making an arrest.” The Third Circuit reasoned: 
Continue Reading Allegedly Abused Prisoner Wins Unanimous Supreme Court Tort Case (Was It All Justice Alito’s Doing?)