Legal Reform

Consumers deserve ‘auto choice’ to bring down insurance costs

Washington, D.C. – The Consumer Choice Center today launched its policy primer offering simple reforms to provide for more competitive, reasonable, and accurate insurance rates to increase choice and lower costs for consumers.

The primer, Fixing What’s Broken: Practical Consumer-Friendly Insurance Reforms to Save Money, focuses on two pressing issues for American consumers. First, it analyzes how insurance providers can adapt to the emerging scientific reality of tobacco harm reduction and consumer trends toward less harmful nicotine alternatives to smoking. Second, this primer explains different models for structuring consumer auto insurance and suggests how costly legal battles can be minimized, in turn lowering costs and premiums.

Yaël Ossowski, Deputy Director at the Consumer Choice Center, commented on the auto insurance policy recommendations, saying, The legal nightmare that comes with every fender bender or more serious auto injury is known to every American, as they’re reminded by the slew of injury lawyer billboards on the interstate. Rather than subjecting every auto incident to a lawyer-led process that inevitably raises premiums, states and insurance firms should give consumers the right to choose whether they would prefer a tort or no-fault insurance model as is practiced in other countries and states.” 

Attempts at legislation to offer “auto choice” to consumers have been introduced in all levels of state and federal government over the years, but have consistently been opposed by well-funded injury lawyers who see a threat to their business.

For too long, we’ve allowed car insurance costs to balloon because of the adversarial nature of our highly litigious justice system, rather than understanding that most other countries do not force drivers into court after each accident. Giving auto insurance consumers the ability to choose between a no-fault and a tort system would allow flexibility, remove the adversarial declaration of liability that inflates lawsuits, and allows companies to compete for our business with the best policies and plans available. Best of all, good drivers with clean records would benefit from substantially lower premiums and simple plans,” added Ossowski.

Giving consumers the choice between a plan that requires legal negotiations between insurance companies to find blame and assign penalties, and a no-fault model that prioritizes quick and easy payouts without liability is a no-brainer that would bring immediate savings to consumers’ monthly premiums.

“Guided by state insurance commissioners, firms should offer alternatives to liability plans and allow consumers to choose the plan that works best for them as a perfect middle ground between enabling choice and reducing legal costs and headaches,” concluded Ossowski.

The policy primer can be read in full HERE.

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The Consumer Choice Center is an independent, nonpartisan consumer advocacy group championing the benefits of freedom of choice, innovation, and abundance in everyday life for consumers in over 100 countries. We closely monitor regulatory trends in Washington, Brussels, Ottawa, Brasilia, London, and Geneva. Find out more at www.consumerchoicecenter.org

Read this press release online.

Johnson & Johnson’s ‘Texas Two Step’ Needs a Conclusion

One of the most followed corporate trials of the decade is drawing nearer to a close. Johnson & Johnson’s Red River Talc subsidiary in Texas filed a third time for bankruptcy in the Southern District of Texas while a majority of affected plaintiffs have indicated they wish to settle. With more than 75 percent of plaintiffs on board, this case should be allowed to conclude instead of being held up by lawyers grasping for more cash.

In mid-August, a vote was held in another of the major baby powder cases where 83 percent of plaintiffs voiced their support for a whopping $6.5 billion settlement to be paid out over 25 years by LTL Management, J&J’s Texas-based subsidiary. About 61,000 lawsuits would be settled for 99.75 percent of the plaintiffs, leaving only a small amount of mesothelioma suits to be settled.

Now, it will be up to the judge to decide whether the settlement is appropriate and fair.

Though attorneys representing some of the victims in the case have supported the plan, others have decided to stick out the trial in the hopes of extracting a larger settlement. However, Johnson & Johnson’s recent commitments to increase the total amount of the settlement up to $9 billion may shore up more support for their proposal and boost the prospect of a final settlement among victims and their families.

Considering the tens of thousands of Americans involved in this case who claim injuries and cancer diagnoses, including many who’ve battled in the courts for years, the prospect of a resolution should bring relief and comfort. However, it is unclear whether that message will be pressed in court.

One lawyer in the case has warmed to the deal for his clients, but others are likely to seek an even larger payday that could come if they strike for a bigger deal and more delay. No surprise. It’s estimated that attorneys in this case could receive up to a third of the final settlement.

For years, Americans have seen hundreds of commercials related to baby powder cases used by attorneys to grow their roster of plaintiffs in the lawsuit.

This practice of mass tort advertising and recruitment is standard fare in today’s legal system and has been mainly responsible for delivering some of the largest settlements to date. However, many groups have warned that unchecked advertising could be creating more problems than solutions for vulnerable Americans.

The American Medical Association and the American Association of Retired Persons have made clear that “fear-mongering” legal ads are making elders reluctant to seek additional care. “Nothing could be more invidious than the exploitation of the aged. These pressures that plague older persons place their health in jeopardy and further deplete their reduced incomes,” said AARP’s founder, Ethel Percy Andrus.

Legal firms defend the practice as an effective method of reaching potential victims who may not otherwise know that a case exists, for which there is a kernel of truth.

After many years of delay and legal maneuvering, observers of the Johnson & Johnson case should have learned a few lessons about balancing plaintiff recruitment efforts and restoring faith in an otherwise bloated court system.

The voting mechanism by plaintiffs has proven to be an effective method to achieve a comprehensive settlement that will aid victims. We can only hope that the presiding judge will allow this settlement vote to be realized and seen through to its end.

Originally published here

Consumers dudded by secret class action suits

We are no strangers to settling our problems in court. Indeed, it is a core function of citizens in free societies.

Staffed by esteemed judges and sometimes juries, people who believe they’ve been wronged can take their claims before a neutral tribunal to plead their case in hopes of a positive outcome and settlement, whether on behalf of a class of litigants or just themselves.

In Australia, these principles are at the heart of a “fair go”.

Increasingly, however, in countries like Australia and the United States, the explosion of both class actions and litigation financing has culminated in a dodgy funding arrangement for actions against companies and individuals that may involve unscrupulous foreign actors.

Influenced by innovative American investors, this new practice of third- party litigation funding involves out- siders not directly involved in lawsuits providing funding in exchange for a cut of the “winnings”, whether they are hedge funds, venture capitalists, or bankers.

Plaintiffs looking to mount a case will turn to these litigation funders to pay for attorneys in lengthy and ex- pensive cases, giving up portions of settlements in exchange for funding.

While one can easily praise the novel aspect of this funding, we should also be aware that existing law does not require the disclosure of these arrangements to courts and judges.

When foreign powers are using lawsuits to try to break up patents and intellectual property, as we’ve increasingly seen abroad, what’s to say this won’t happen in Australia?

A Chinese firm, Purplevine IP, has financed multiple patent lawsuits against Samsung and its US subsidiaries, hoping to unravel some of the proprietary technology found in Bluetooth earbuds.

There’s also evidence of Russian oligarchs – with close ties to Vladimir Putin – parking millions in litigation funds to evade Ukraine-related sanctions.

It is true that Australia’s $200m litigation funding industry is dwarfed by the nearly $13.5bn industry in the United States. But at the same time, Australia is now the class action law- suit capital of the world on a per capita basis, and at least a dozen of the country’s top 20 companies are currently mired in class action lawsuits.

Last week, The Daily Telegraph analysed two recent class action settlements: a $47m settlement against ANZ, and a $29m settlement against Westpac.

While those numbers look good on the surface, if every eligible victim was compensated, they would receive just $317 and $321, respectively, while lawyers and investors walk away with millions.

What these cases point to are a system of legal cases that are systematically proving to be very beneficial for certain legal firms and select litigation funders, while not providing true transparency about who is funding cases and how much are they winning in settlements.

Before the Albanese government changed the rules in 2022, litigation funders were subject to strict regulatory oversight, including a requirement to hold an Australian Financial Services Licence (AFSL). Critically, too, ASIC monitored their activities. By scrapping the rules, the problem has only got worse.

Rest and Hesta – two of Australia’s biggest superannuation funds, with a

combined three million members – hold tens of millions of dollars’ worth of stock in Omni Bridgeway, Australia’s biggest litigation funder. At the same time, Omni Bridgeway is funding class actions against at least six Australian companies Rest and Hesta are invested in.

In other words, Australian workers are funding an all-out assault on their own retirement savings.

There’s more pain on the way, with the arrival of foreign class action firms to Australia including British firm Pogust Goodhead, armed with a billion- dollar loan from an American hedge fund, with plans to launch 10 lawsuits against Australian companies over the next year.

In the US, politicians have rallied around the common-sense idea that litigation funders should be disclosed to courts in important cases. California Congressman Darrell Issa has joined forces with Democrats and Re- publicans to introduce the Litigation Transparency Act that would force disclosure of financing provided by third parties in civil lawsuits.

It’s high time Australian politicians do the same. At present, Australia has no laws requiring litigation funders to disclose the ultimate source of their funding.

This is not only about consumers in Australia, but it’s about the future legitimacy of the entire judicial system across the country, and attempts by foreign powers to exploit it.

Yaël Ossowski is deputy director of the global consumer advocacy group Consumer Choice Center.

This article was published in the Daily Telegraph in Australia (pdf copy here).

Third-Party Litigation Finance: Chinese Interference with the US Judicial System?

The commodification of lawsuit funding is a somewhat ingenious concept that may indeed help smaller companies win their day in court, but it also opens the door to even more bad faith participation in the justice system.

That’s why this industry needs a second look, and needs some guardrails to ensure consumers don’t end up facing higher prices because every company on the market is tied up in frivolous lawsuits. Americans deserve a legal system that is not only accountable and fair, but transparent.

Those gambling on the outcomes of our judicial system should be able to take the risk, but we deserve to know who they are.

Gambling on Lawsuits: New Industry or Threat to the Fairness of Our Courts?

As the 2024 election grinds on, you’ll hear a lot more about the online betting markets which have become all the rage amongst politicos and statisticians. These days, you can bet on election outcomes and even the weather. But should you be able to gamble on courtroom verdicts? That is essentially what’s happening within a new trend of litigation finance by third parties, where outsiders not directly involved in lawsuits are providing funding in exchange for a cut of the “winnings.” This could fundamentally change the nature of justice in the United States. 

As shown in a 2022 report by the US Government Accountability Office, the third-party litigation finance industry has quickly grown to an estimated $13.5 billion business in a few short years. Litigation finance is becoming an attractive way to attract and accumulate capital for firms. 

One notable case involves a medical tech startup leveraging litigation finance to sue a Fortune 500 company they claim stole trade secrets. Another features a food distributor beefing up its lawsuit against meat packers for price-fixing with the help of a Saudi-backed venture fund. 

Certain cases are fertile ground for any hedge fund, venture capitalist, or banker who can stomach some risk in exchange for the chance of a big payday, amounting to gambling on lawsuits.

And while the money continues to pour in, there’s a growing recognitionthat litigants who benefit from outside financing should be forced to disclose that to the bench. Not least because it could have severe implications on cases, but also because of the downstream effect on workers and consumers who rely on firms for goods and services they love.

America already is a highly litigious country, perhaps it was inevitable that courts would become proxy battlegrounds for high-stakes finance and informal betting. This trend is picking up steam because trials in the United States are expensive. Retaining high-quality lawyers to pursue civil litigation can easily rack up hundreds of thousands of dollars in fees, and way more if cases go to trial. 

For plaintiffs who want their day in court but can’t afford a roster of celebrity lawyers, it may be necessary to tap outside funding. Class action lawsuits help disperse these costs among multiple clients, but trials with a limited scope and impact may rely on litigation funders to get their cases over the finish line.

This matters greatly because the justice system is still perceived as a neutral ground for resolving disputes in business and among individuals. If parties can secure a judgment in an American courtroom, this can help settle broader debates and stave off any future claims and bad behavior, likely saving millions of dollars that would be spent in legal battles. 

Unchecked billions flowing into our courts should be a real concern for the integrity of our judicial system. As put by Stephanie Leslie of the California Deposition Reporters Association, “These third parties even enter into contracts and arrangements with court reporting agencies, something happening regularly here in California. It certainly appears improper and as introducing bias into a position that requires the neutrality of an official record keeper.  Any business arrangement involving the shorthand reporters should have to be disclosed to all parties involved in that matter.” 

At present, this is no legal requirement that litigants disclose to the court whether a third-party stands to gain from a financial settlement. Judges may require this, but it is based solely on their discretion.

That many specialized companies offer money to potential litigants to bank on a positive outcome is undoubtedly a product of the ingenuity of American capitalism. 

But what happens when hostile actors begin to do the same to tip the scales of justice?

As researchers and court watchers are now discovering, several foreign-owned firms tied to shady regimes abroad are also aware of this power, and using it to antagonize innovative American companies and bring patents into question. House Oversight Committee Chairman James Comer (R-KY) acknowledged this in a recent letter to Supreme Court Chief Justice John Roberts.

One such example is PurpleVine IP, a China-based firm financingmultiple patent lawsuits against Samsung and its US subsidiaries, hoping to unravel some of the proprietary technology found in Bluetooth earbuds.

If that intellectual property is successfully challenged, it could open the floodgates for products once deemed counterfeit to enter the United States and undercut domestic firms.

Many American innovators fear that the same fate could befall those working in the biotech and defense industries, especially as third-party funding has become a mainstay in the Chinese legal system, serving as a new national security concern between the two global superpowers.

To this end, Rep. Darrell Issa (R-Calif.) has joined some of his colleagues to introduce the Litigation Transparency Act to force disclosure of financing provided by third parties in civil lawsuits. Though there have been similar attempts that focused on funding from abroad, this bill simply requires all third-party funding to be disclosed in court. This is a good first step for transparency.

The commodification of lawsuit funding is a somewhat ingenious concept that may indeed help smaller companies win their day in court, but it also opens the door to even more bad-faith participation in the justice system.

Americans deserve a legal system that is not only accountable and fair, but transparent. Those gambling on the outcomes of our judicial system should be able to take the risk, but we deserve to know who they are.

Originally published here

Give Lawsuit Plaintiffs the Final Say, Not Lawyers Hungry for More Cash

In a protracted eight-year-long legal battle, lawsuits against pharmaceutical and beauty giant Johnson & Johnson seem to be finally coming to a resolution. These cases have been some of the largest and most expensive in recent history and are providing memorable lessons for companies, consumers, and legal firms as to how massive claims can be best adjudicated to render justice.

LTL Management, J&J’s Texas-based subsidiary, is being pursued for J&J’s baby powder product and whether certain bottles contained trace elements of talc tainted with asbestos over the years. Most commonly associated with glass wool used for attic insulation, asbestos is also found near talc mine deposits, and the company has been fighting close to 61,000 claims that those trace elements caused various illnesses in consumers.

The subsidiary based in Texas was created as a holding vehicle for the various claims against the company, a practice favored in state bankruptcy law.

The merits of the scientific findings in the case itself have been hotly debated for some time and will continue to be. What’s at stake in our justice system, however, is the ultimate role of those consumers who felt wronged and how their voices will be heard as these cases meet their end.

The tens of thousands of disparate cases have ranged in the level of harm consumers say they endured as a result of using the product, and have been split up into several class action lawsuits and multi-district litigation cases heard by different judges, juries, and courts.

This is standard fare for large tort law cases but is exacerbated as additional injury law firms seek class participants for these big suits through direct recruiting or spending millions on advertising.

It is no secret that an entire industry of plaintiff attorneys active in tort law depend on high-profile cases such as these to seek massive rewards as a cut. Whether or not claims are legitimate, publicly traded companies with reputations and stock prices to maintain would often rather cut a deal than risk a lengthy trial process that will balloon their legal budget and drag their brands through the mud of media coverage.

When final awards or settlements are made, attorney fees usually come out as high as a third of the entire payout, or more. The lawyers that halted Elon Musk’s controversial payment plan, for example, are seeking nearly $7 billion in fees from Tesla as a result of their case, which would be one of the largest legal payouts in American history. Musk recently announced the company would move its headquarters to Texas after how Tesla has been treated in other jurisdictions.

In the case of Johnson & Johnson, the company has offered multiple options to claimants looking to settle out of court rather than continue costly legal battles that could result in fewer rewards for those harmed. The latest settlement would be a combined $6.5 billion paid out over 25 years to those who were diagnosed with ovarian cancer.

For consumers who believe they’ve faced real harm and are involved in these cases, whether or not they can prove it, they deserve a chance to end the expensive ordeal and reach a settlement, as they should in any case.

But considering that some of the country’s largest tort law firms have an ongoing interest in drawing out these legal fights, either because of the ongoing legal fees or the promise of a healthier payout, it is not clear whether those settlements announced will be favorably presented to their clients.

Consumers who were affected deserve to be heard and to have their cases justly administered. If they are offered a deal, they should not have their rights limited simply because a larger payday could hypothetically be on the horizon.

When the people filing the lawsuit are kept from making a settlement by their lawyers, as reports frequently indicate, we should ask hard questions about the incentives of the lawyers and legal firms that bring these types of cases.

We cannot know the machinations of what injury law firms are telling their clients about current settlements or future prospects, but we would hope these are ethical, truthful, and represent their clients’ interests.

What’s at stake in the broader context is the future of our judicial system and the faith of everyday people that they can get a fair shake in court, without losing out on what they’ve been promised.

Consumers harmed by-products should have the ability to not only be heard in court but to participate in a fair, transparent process where they can seek redress.

Allowing the multi-year litigation process to continue without giving clients and consumers affected the option to settle now not only risks leaving thousands without proper justice, it also undermines the rule of law which is meant to protect Americans when we need it most.

We hope this remains true, and that no bad precedents are set for future claimants.

Originally published here

Trial Lawyer Marketing Machine Needs a Reboot

If you ask most Americans when it’s time to call a lawyer, the answer is no mystery: after a law has been broken, you’re forced to do so.

Just as we don’t ask doctors to prescribe medicine before we’re sick, most people don’t pay for lawyers and then go commit crimes. Trial lawyers, however, might be the exception. Where there is no injury, one must be invented.

Legal marketing is a multi-billion-dollar industry to generate claims for mass tort settlements. The business model at play is deceitful, wasteful and highly lucrative. In conjunction with deep-pocketed Wall Street and Madison Avenue backers, trial lawyers galvanize hundreds, if not thousands, of meritless claims through slick advertisements. Claims are directed at specific companies or industries and then bundled into mass tort litigation, leveraging the defendant for all they’re worth.

This rigmarole is very costly for consumers, as companies are forced to beef up legal departments and pass their higher costs to customers.

The peculiar world of law advertising for tort cases is so ubiquitous that most of us likely don’t even recognize it anymore. Car accident? Lawn care products? You may be entitled to compensation!

A recent report estimated that trial lawyers spent more than $971.6 million on 15 million local TV ads targeted toward potential plaintiffs in 2021.

A 1977 Supreme Court case ruling declared restrictions on legal service advertisements a violation of free speech, leading to a surge in mass tort litigation. Whatever we think of this opinion, spending on trial lawyer ads on television hit $1.2 billion by November of that year.

Of course, one might argue that in America, businesses are free to market as they wish, and most would agree. But we’d be negligent if we didn’t recognize the pernicious nature of these class-action lawsuit recruiting ads.

The American Medical Association and the American Association of Retired Persons warn that trial lawyers’ fearmongering is causing patients, especially the elderly, to halt medical care. Perception is a reality for many people, so when actors in a TV ad sternly suggest an illness may be the result of faulty medication, they listen. Evidence is not required.

Much of this marketing is built on dubious claims and questionable science and leaks into courtrooms yearly. Courtrooms are clogged with so many baseless cases that it undermines claimants’ credibility with more legitimate claims.

The tort claim tsunami is designed to stress our already burdened court system, and defendants often settle rather than endure what can be years-long legal battles. In doing so, they avoid costly battles that will sink their company’s stock price and reputation, even if they’ve done nothing wrong.

On top of all this, it’s well-known that tort legal firms often are the biggest beneficiaries of larger settlements. It gives them ample motive for exaggerating claims while getting as many people into class action lawsuits as possible. And that’s no matter how silly the case.

The Federal Trade Commission was established to police deceptive and unfair business practices and has been unusually visible under Chair Lina Khan, whose tenure has been defined by suing almost every major American tech company based on questionable legal theories. Instead, the FTC should focus on a slam-dunk case examining the junk science that marketing firms push to the media as “evidence” in their litigation.

If federal action is not forthcoming, a defense should be mounted by capable state regulators.

A few states — including Tennessee, Kansas, Texas and West Virginia — have taken the necessary steps toward better tort enforcement. With the mass tort litigation machine playbook fully exposed, there is no reason legislators everywhere should not follow their good example.

We live in a digital age where it is increasingly difficult to parse through the deluge of information coming our way. But it is not impossible, no matter how much the tort lawyers wish it were so.

Originally published here

Good Riddance, Chevron Doctrine

Washington, D.C. – The Consumer Choice Center (CCC) celebrates today’s Supreme Court decision overturning the 1984 ‘Chevron‘ doctrine, an outdated ruling that exploded the power of the federal government to use the administrative state to craft rules in the absence of clear legislation from Congress.

Chevron enabled unelected federal bureaucrats to interpret and implement regulations on business, public health, consumers, and much more, drastically increasing the cost of compliance and leading to higher prices for consumers.

Yaël Ossowski, Deputy Director of the Consumer Choice Center, commented on the ruling, stating, “This is a monumental win for consumers and rule of law. The Chevron doctrine had allowed federal agencies to overstep their bounds, creating an unbalanced regulatory environment that often worked against the interests of consumers. The Supreme Court’s decision restores a much-needed check on regulatory power.

The ruling arose from cases brought by Atlantic herring fishermen in New Jersey and Rhode Island, who challenged a 2020 National Marine Fisheries Service rule requiring them to pay for government-mandated “observers”. Lower courts had upheld this requirement based on the Chevron precedent. The fishermen appealed, and today in the highest court in the land, they won. 

“Whether it’s the haphazard rule making from the Securities and Exchange Commission (SEC) on cryptocurrencies or ESG disclosure requirements, expansive EPA rules on emissions that practically no vehicles can match, or the overzealous FDA’s regulatory denials on nicotine alternative products, overturn of Chevron puts power back into the hands of the people through Congress, rather than the administrative state. No longer will agency “experts” have broad authority not explicitly granted by law. This is a great day for the rule of law and a more humble, restrained, and focused Executive Branch, which will benefits consumers who want the freedom to choose,” added Ossowski.

The Consumer Choice Center firmly believes that this decision will lead to a more transparent and accountable regulatory process, which benefits consumers by preventing the kind of overreach that reduces choices, raises prices, and squashes innovation.


About the Consumer Choice Center:

The Consumer Choice Center is a non-profit organization dedicated to defending the rights of consumers around the world. Our mission is to promote freedom of choice, healthy competition, and evidence-based policies that benefit consumers. We work to ensure that consumers have access to a variety of quality products and services and can make informed decisions about their lifestyle and consumption. 

Find out more at www.consumerchoicecenter.org

The Consumer Financial Protection Bureau May Be Legal, but It’s Past Its Prime

The Supreme Court recently delivered a decision on the constitutionality of one of the federal government’s most peculiar and least understood agencies, the Consumer Financial Protection Bureau.

Unlike the Fifth Circuit Court, which earlier ruled that the agency’s unique funding model violates the Constitution, Justice Clarence Thomas argued in the majority opinion the government’s funding of the CFPB “satisfies the Appropriations Clause”.

The CFPB is a federal agency unlike any other. For one, it has no direct funding. Its funds come from the Federal Reserve, our opaque central bank. 

In perpetuity, the CFPB can claim up to 12 percent of the Fed’s “surplus,” which are profits it makes through various liquidity and asset schemes that come from buying and selling government bonds. They also charge interest on loans to financial institutions with zero congressional oversight. 

While the funding structure has passed legal scrutiny for the time being, questions remain on the agency’s actions and whether the CFPB may be harming, rather than helping, consumers.

The CFPB is the brainchild of now-Sen. Elizabeth Warren and was created with the intention of policing “unfair and deceptive practices” in the financial sector. It is a more consumer-facing version of the Federal Trade Commission but more specialized in consumer financial services. 

Since then, it has become an agency of scorn for financial product providers and their customers, restraining credit availability and making it more difficult for consumers to get access to capital such as business loans. 

For one, the CFPB does not have a traditional rulemaking process that invites and accepts comments from citizens. It disseminates rules without democratic input, as any other agency is required by law to follow. This would not be a dealbreaker for agencies overseeing highly specialized industries with limited scope, but it’s different if we’re talking about rules that impact every bank and financial customer in the country.

Second, many of the CFPB’s rulings have been targeted at credit programs offered by specific financial firms, revealing selective enforcement based more on political factors than actual deceptive practices. Former employees have gone on the record detailing how they were directed to concentrate on individual companies rather than specific behavior. 

Whether this be payday loans, credit card rewards, or even auto financing, Americans have turned to these programs for credit and to improve their standard of living. The vast majority appear satisfied with their offerings. 

And all of this, despite the agency’s own lax security that has already put consumers at risk.

Last year, it was revealed that a CFPB staffer forwarded the confidential financial information of nearly a quarter million Americans to their personal email, an unprecedented breach from within a federal agency.

One of the more controversial rules from the agency was the fulfillment of a campaign promise by President Biden to cap credit card fees at just $8 per month. In the wake of the Fifth Circuit ruling calling into question the agency’s funding, that rule has been halted by a federal judge in Texas. 

Capping fees may satisfy political concerns, but for Americans who rely on credit to pay their bills or make ends meet in tough times, making credit less available only hurts those most in need of tools to get by. That includes minority and poorer households and businesses, who feel the direct impact when credit is artificially constrained.

The power and reach of the CFPB will face another hurdle when the Supreme Court revisits not just the agency’s rulemaking, but federal agencies as a whole with the case of Relentless, Inc. v. the U.S. Department of Commerce.

In the much heralded Fisheries case, the Court will rule on the fate of the Chevron Doctrine, the ability for agencies to promulgate rules beyond the remit of Congress. This would have a sweeping impact on the ability of the CFPB to issue its rules and regulations without authority from the legislative branch of the federal government.

Consumers deserve both protection and the freedom of choice when it comes to goods and services, especially when dealing with the financial sector.

The unique financial products offered in the United States give us an advantage in boosting our standard of living. Access to credit is seen as a chief measure of financial inclusion and success.

But when rules are burdensome, and reduce the availability of credit, this is worth another look. And competing branches of government should work overtime to keep the CFPB in check.

At best, the Consumer Financial Protection Bureau is an agency without watchers. At its worst, it’s an unaccountable bureaucracy halting innovation and entrepreneurship. Reforms will have to come at some point for consumers to both prosper and be protected. 

Originally published here

Litigation Finance Exposes Our Judicial System to Foreign Exploitation

Now that Congress has come to its senses about a forced divestiture plan to uncouple TikTok from the Chinese Communist Party, we’d be remiss not to explore other examples of how powers such as China influence American institutions. Let’s look at our justice system.

In a handful of local court cases around the country, a Shenzhen-based firm has been clandestinely funding intellectual property lawsuits to help upend a major consumer brand.

That company, Purplevine IP, is a Chinese patency consulting firm that provided the money for the Florida tech company Staton Techiya in its lawsuits against Samsung. The company claims the South Korean electronics firm used its intellectual property in its popular audio products.

How do we know this? Because the Delaware judge in this case demanded information on third-party financial arrangements affecting the litigants. In November 2022, Chief Judge Connelly issued a standing order requiring that cases brought to him would need all outside funding disclosed in full before he heard a claim.

This arrangement, known as third-party litigation finance, is a booming trend in U.S. civil courts and is estimated to be a $13.5 billion industry.

Litigation funders are hedge funds, credit lenders, and venture capitalists who front legal costs in exchange for a percentage of any monetary reward. They offer financing to legal firms and plaintiffs fighting major class action lawsuits and tort cases they normally couldn’t afford.

Proponents and industry leaders claim these funding arrangements help empower smaller litigants against massive corporations that wronged them and that may have some merit. But it is also pushing the tools of justice into unknown territory that could be vulnerable to exploitation.

In popular culture, an infamous example of third-party litigation financing is the case of Terry Bodea, the wrestler known as Hulk Hogan, against the embattled online tabloid Gawker. 

After a sex tape of Hogan leaked to the media outlet, a lawsuit was filed by Hogan against Gawker, claiming invasion of privacy. The moneyman backing this lawsuit, we later learned, was billionaire financier Peter Thiel, who had an axe to grind with the gossip site. 

The $115 million judgment against Gawker has proven to be a major cultural turning point on free speech, media malice, and how far public interest can peek into private celebrities’ lives.

Yet, it also revealed how quickly the fast-growing third-party litigation finance industry shifts the balance of justice in civil cases, whether good or bad. Even more so once foreign companies begin using these same tactics to file suits against U.S. firms.

That worries at least a few on Capitol Hill, including Speaker of the House Mike Johnson (R-LA), who last year filed a bill to force disclosure of any and all foreign third-party litigation funders in court. The bill would also outlaw litigation finance—direct or indirect—by any foreign government or sovereign wealth fund.

A Senate bill introduced by Senators John Kennedy (R-LA) and Joe Manchin (D-WV) turned an eye to foreign-funded lawsuits “undermining our economic and national security.”

Beyond national security implications, litigation finance is a creative and unique way to gamify legal proceedings, transforming justice into a game of chance mirroring prop bets and sports wagers.

But more than betting on stocks based on company earnings or games according to player stats, litigation funders have the sway to advise lawyers on witnesses, frame arguments, or even advertise cases to draw more participants in large class actions. Unless judges and courts make direct demands for transparency, there is a chance that much of this could be happening unabated. Is this what we want for the future of civil justice?

Lawsuits are not Monday Night Football or Wall Street. They are tools available to citizens and aggrieved parties in a liberal democracy to deliver justice.

As Business Insider writes, litigation finance has gone from a humble part of the economy to now a top-tier “asset class,” overshadowing the principal aim of our civil courts.

The United States offers a free market and the rule of law for global innovators. This is a great advantage for consumers who benefit from a more bountiful supply of goods and services.

However, as we have seen recently with TikTok’s abuses of privacy and security and the growing intellectual property cases from well-financed firms in China, openness can also be abused to consumers’ detriment.

Disclosure of third-party litigation funding is both necessary and achievable. Many states have already passed laws around this issue, while many judges require it in their courts. The bills introduced in the House and Senate would be reasonable and adequate calls for transparency that would help safeguard our judicial system.

If we want to uphold true justice in America and keep our system fair and accessible, we must turn a spotlight on third-party litigation funding. We all have a stake in it. 

Originally published here

Climate lawyers could control the future of American energy, not consumers

When we think of American energy, we conjure up images of oil drillers, refineries, pipelines, and end products we put into our cars or the plastic products we use daily. There are millions of jobs and billions of products sourced from energy production that make our society abundant and wealthy. That’s especially true today under President Joe Biden, as production of both oil and gas for domestic use and exports has soared to record levels, making the US the premier global energy powerhouse. And that’s despite Biden’s recent temporary pause on exports of liquefied natural gas (LNG).

Those who invest in, supply, and direct that industry are the hundreds of oil and gas firms, independent refineries, plastic manufacturers, and transportation companies. American consumers are in on it as well, supporting the industry either by providing their labor, investing their retirement funds, or being frequent customers. It is how we power the American economy, and increasingly, the world.

All of that is being put to the test in the wake of a growing legal movement to sever consumers’ connections to energy firms for their alleged role in advancing anthropogenic climate change.

In left-leaning cities like Honolulu, San Francisco, and Minneapolis, judges are being asked to litigate massive lawsuits brought by top-tier climate lawyers against oil and gas companies like Exxon, Chevron, Shell, and others, with claims that energy firms used “deceptive marketing” to advertise their oil and gas products without significant warnings about the climate impact.

The looming question that has so far slowed these claims is whether local courts are the appropriate venue to decide whether the energy industry will be saddled with the blame for climate change, or if the issue is consequential enough that it deserves a fair trial in federal court.

The Supreme Court has thus far booted similar cases back to district courts and denied any from reaching its docket, but one recent filing may change the game.

In the case filed by the city of Honolulu against Sunoco and other firms, the Supreme Court last month was asked for the first time to assess the merits of whether the case should even proceed, rather than just its court jurisdiction. If and when the Supreme Court issues an opinion, it would also either boost or sink the other major case brought by California’s Attorney General Rob Bonta last fall, currently awaiting further action in San Francisco.

How courts in San Francisco and Hawaii would decide on climate change litigation is predictable, but the Supreme Court’s evaluation would be a toss-up. The ramifications for American energy, especially for the consumers who depend on it, can’t be overstated.

While most American people are optimistic about renewable energy from solar and wind, over 68% of them still believe that progress should happen in tandem with fossil fuels, according to a recent Pew Research Center poll. And these cases could determine whether that status quo continues.

As such, the future of the American energy industry is not in the hands of shareholders, consumers, or even politicians, but rather a tiny group of well-funded and overstaffed legal firms supporting environmental groups that manifest these lawsuits across the country in friendly jurisdictions.

Many of the legal theories underpinning these cases are being shepherded through law schools, such as the Sabin Center for Climate Change Law at Columbia or the Environment and Energy State Impact Center at NYU. Each of these programs train law students in how to advance climate change litigation and generate briefs for state attorneys general. No surprise, the effort has been buoyed by philanthropist support from billionaire Michael Bloomberg.

Allied environmental nonprofits  take that work even further, lobbying state attorneys general and even providing high-dollar grants and awards to those offices that embark on climate change litigation.

As Americans, we’re very familiar with lawsuits, lawyers, and cases we’re all supposed to care about. What makes the latest spat of climate change lawsuits so consequential, however, is that any ruling would have an immediate effect on how we power and fuel our lives.

Without affordable or ready climate solutions, many of us would be left shouldering extra costs based on the whims of a few judges and activist lawyers in small, left-leaning districts. That price is too high.

We desperately need technological innovation to solve climate change, and that won’t be found in a California or Hawaii courtroom. We can only hope that some sharp judicial minds will feel the same way.

Originally published here

Legal attacks on fossil fuels will only make us poorer

Nearly half of all US states have pledged to go totally carbon-free by at least 2050.

While many states and the federal government are pushing and subsidizing entrepreneurs to scale up carbon-free alternatives to fossil fuels such as nuclear energy, wind, and solar – other states are hoping to reach their goals by seemingly suing oil and gas companies into extinction.

Though American consumers have been the primary customers for fossil fuel companies, several Democratic state attorneys generals have staged elaborate lawsuits hoping to legally pin climate change on a handful of companies.

Minnesota Attorney General Keith Ellison has been at the forefront, but he’s had plenty of support and funding along the way, including from key law firms across the country and the billionaire former New York mayor, Michael Bloomberg.

Though our judicial system is supposed to be immune from political agendas, these third-parties target certain industries and corporations for litigation, hoping to tip the balance in prominent cases being heard across the country.

This trend is so troubling that the House Committee on Oversight and Accountability held ahearing in September to evaluate this threat. But missing from that congressional discussion about deep-pocketed, heavily coordinated movements to influence legal action was the subject of climate litigation.

In September, the largest climate change lawsuit was filed by the state of California against five major oil companies and associates, alleging public deception about climate risks associated with fossil fuels.

With an economy twice that of Russia, California becomes not just the biggest U.S. state to sue energy companies, but the largest economy to do so. California has thrown its weight around before, suing auto manufacturers over greenhouse emissions and legally banning the sale of new combustion-powered vehicles by 2035.

California’s vendetta against oil and gas may seem impractical, but the fact that 17 states followed their lead on the eventual gas-powered car ban shows that “as California goes, so goes the nation” is more than just a saying.

Nonetheless, California faces the same uphill battle as its unsuccessful auto industry lawsuit. One environmental law professor at Yale University told the Wall Street Journal, “the entire modern economy relies on the oil industry, and it could be hard to pin liability solely on companies.”

The lawsuit itself, however, will do nothing to promote climate progress. In fact, it will only add to consumer burdens, should they be successful. Gas prices are already disproportionately high in California, at 55 percent higher than the national average. But worse yet is the protracted, multi-million-dollar campaign waged by third parties to pressure energy producers and persuade the public they’ve been deceived.

Deep-pocketed private donors have persuaded organizations and attorneys to take up climate litigation, pouring millions into institutions like the Center for Climate Integrity (CCI) who aggressively encourage state and local governments to sue energy producers. Allies like the Rockefeller Family Fund not only help funnel money to CCI – about $10 million, in fact – but also host legal forums and initiate climate ligation support among elected officials.

Senator Ted Cruz and U.S. Representative James Comer raised these concerns, pointing out the chief law firm litigating climate lawsuits, Sher Edling, is essentially paid to target energy companies. Rather than implementing contingency fees, “the lawsuits are being funded, tax-free, by wealthy liberals via dark money pass-through funds.”

Beyond that, billionaire Michael Bloomberg has put legal muscle behind the movement, seeding the NYU School of Law’s Environment and Energy State Impact Center with $6 million to offer lawyers as “Special Assistant Attorneys General.” These attorneys, embedded at the state level, provide more legal horsepower to pursue climate suits.

Most recently, a congressional ethics probe was opened on Ann Carlson, unconfirmed acting administrator of the National Highway Traffic Safety Administration (NHTSA), for her extreme agenda and prior partnership with Sher Edling. The members allege she was involved in coordinating the law firm’s efforts to pursue climate litigation and worked to raise money through dark money funds to support that work.

This public campaign to vilify energy producers ignores the reality that we rely on fossil fuels and need them to lead America’s energy transition, as they have for years now.

Data from 2022 shows oil and gas represented nearly 70 percent of American energy consumption, and the U.S. Energy Information Administration reports global consumption of liquid fuels (gasoline and diesel) will remain high for the next decade.

Despite this, these lawsuits target energy producers in hopes of shrinking the role of American oil and gas development and starving consumers of affordable energy sources, even if there are no ready replacements.

The public relations and legal war against energy producers is the wrong path for real change –  a mistake only amplified by dark money and partisan networks to encourage more climate lawsuits. It’s time we pursue common sense solutions, rather than misleading the public with disingenuous lawsuits that won’t combat climate change, and won’t make our lives any better.

Originally published here

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