Justia Government & Administrative Law Opinion Summaries

In November 2013, Washington voters rejected Initiative 522 (I-522), which would have required labels on packaged foods containing genetically modified organisms (GMOs). The Grocery Manufacturers Association (GMA) opposed state-level GMO labeling laws, including I-522. Over the course of the 2013 election cycle, GMA solicited over $14 million in optional contributions from its member companies, $11 million of which went to support the “No on 522” political committee. The payments to No on 522 were attributed solely to GMA itself, with no indication of which companies had provided the funds. Prior to the initiation of this lawsuit, GMA was not registered as a political committee and did not make any reports to the Public Disclosure Commission (PDC). The State filed a complaint alleging that GMA intentionally violated the Fair Campaign Practices Act (FCPA)'s registration and disclosure requirements and the FCPA’s prohibition on concealing the sources of election-related spending. GMA countered that it cannot be subject to the FCPA’s registration and disclosure requirements because those requirements violate the First Amendment as applied. U.S. CONST. amend. I. The trial court agreed with the State, imposed a $6 million base penalty on GMA, and trebled the penalty to $18 million after determining GMA;s violations were intentional. The Court of Appeals largely affirmed, but revered the treble penalty, holding that one had to "subjectively intend to violate the law in order to be subject to treble damages." After review, the Washington Supreme Court affirmed the conclusion that the FCPA, and that the FCPA was constitutional as applied. The Court reversed the appellate court on the treble penalty, holding that the trial court applied the proper legal standard to determine GMA intentionally violated the FCPA. The matter was remanded to the Court of Appeals for consideration of GMA's claim that the penalty imposed violated the excessive fines clauses of the federal and Washington constitutions. View "Washington v. Grocery Mfrs. Ass'n" on Justia Law

In February 2018, a Pennsylvania Department of Corrections prison guard died after an inmate attacked him and kicked him in the head with Timberland boots. Later that month, the Department suspended commissary sales of such boots. Thereafter, prison officials issued a memorandum to all inmates stating that, effective immediately, Timberland and Rocky boots could no longer be purchased by prisoners. In this direct appeal, the issue presented for the Pennsylvania Supreme Court’s review centered on whether the Department of Corrections acted permissibly in mandating that certain types of boots possessed by inmates be surrendered or sent home. The appellant alleged he owned a pair of Timberland boots, previously purchased through the prison’s commissary for approximately $99.00, which was deducted from his inmate account. He averred that, per the Memorandum’s requirements, his boots, and those of approximately 50,000 other inmates, would effectively be confiscated without a refund. Appellant characterized the killing of the prison guard as an isolated incident to which the Department overreacted, describing the seizure of his boots as constitutionally “arbitrary and irrational.” The Commonwealth Court determined Appellant failed to allege that the Department had engaged in any conduct prohibited by law, such as deceptive representation or the breach of a warranty; and the Department and its employees are protected by sovereign immunity from claims based on alleged intentional torts. The Supreme Court concurred with the Commonwealth Court and affirmed its order. View "Sutton v. Dept. of Corr." on Justia Law

The Supreme Court affirmed in part and reversed in part an order of the district court granting a petition for judicial review of a decision of the administrative law judge (ALJ) and vacated the ALJ's order finding that the Grace Period Payment Deferment Agreement (GPPDA) marketed by TitleMax of Nevada, Inc. violated Nev. Rev. Stat. 604A.445 and Nev. Rev. Stat. 604A.210, holding that the GPPDA impermissibly extended the duration of the loan.In 2014, TitleMax began offering the GPPDA, marketed as an amendment and modification to its 210-day loan and under which TitleMax collected seven months of interest-only payments calculated based on a static principal balance and then collected seven months of payments amortizing principal. The Nevada Department of Business and Industry, Financial Institutions Division brought the underlying administrative disciplinary action alleging that TitleMax violated sections 604A.445(3) and 604A.210. The ALJ ordered TitleMax to cease and desist offering the GPPDA and sanctioned TitleMax for willfully violating the statutes. The district court vacated the ALJ's order. The Supreme Court reversed in part, holding (1) because the GPPDA required borrowers to make unamortized payments and consequently charged "additional interest" it violated the pertinent statutes; and (2) TitleMax's statutory violation was not "willful" and thus did not warrant statutory sanctions. View "State, Department of Business & Industry, Financial Institutions Division v. TitleMax of Nevada, Inc." on Justia Law

Brown is the sole owner and operator of a credit-monitoring service. Brown’s websites used a “negative option feature” to attract customers, offering a “free credit report and score” while obscuring in much smaller text that applying for this “free” information automatically enrolled customers in a $29.94 monthly “membership” subscription for Brown’s credit-monitoring service. Customers learned this information only when he sent them a letter after they were automatically enrolled. Brown’s most successful contractor capitalized on the confusion by posting Craigslist advertisements for fake rental properties and telling applicants to get a “free” credit score from Brown’s websites. The FRC sued Brown under the Federal Trade Commission Act, 15 U.S.C. 53(b). The district judge found that Brown was a principal for his contractor’s fraudulent scheme and that the websites failed to meet certain disclosure requirements in the Restore Online Shopper Confidence Act (ROSCA), 15 U.S.C. 8403. The judge entered a permanent injunction and ordered Brown to pay more than $5 million in restitution to the Commission. The Seventh Circuit affirmed as to liability and the issuance of a permanent injunction but, overruling precedent, vacated the restitution award. Section 13(b) authorizes only restraining orders and injunctions. The FTCA has two detailed remedial provisions that expressly authorize restitution if the Commission follows certain procedures. Adherence yp stare decisis should not allow the Commission to circumvent these elaborate enforcement provisions. View "Federal Trade Commission v. Credit Bureau Center, LLC" on Justia Law

GL services repayment of Nelson's federally-insured student loans. On its website, GL tells borrowers struggling to make their loan payments: “Our trained experts work on your behalf,” and “You don’t have to pay for student loan services or advice,” because “Our expert representatives have access to your latest student loan information and understand all of your options.” Nelson alleged that when she and other members of the putative class struggled to make payments, GL steered borrowers into repayment plans that were to its advantage and to borrowers’ detriment. She alleged violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, constructive fraud, and negligent misrepresentation. The district court dismissed the claims as preempted by a federal Higher Education Act provision: “Loans made, insured, or guaranteed pursuant to a program authorized by ... the Higher Education Act ... shall not be subject to any disclosure requirements of any State Law,” 20 U.S.C. 1098g. The Seventh Circuit vacated. When a loan servicer holds itself out as having experts who work for borrowers, tells borrowers that they need not look elsewhere for advice, and tells them that its experts know what options are in their best interest, those statements, when untrue, are not mere failures to disclose information but are affirmative misrepresentations. A borrower who reasonably relied on them to her detriment is not barred from bringing state‐law consumer protection and tort claims. View "Nelson v. Great Lakes Educational Loan Services, Inc." on Justia Law

In two unrelated transactions, Front Line Motor Cars (Dealer), a used car dealer licensed by the California Department of Motor Vehicles (DMV), repossessed cars after the buyers failed to obtain financing. Dealer then refused to return the buyers’ down payments. The buyers complained to DMV. DMV instructed Dealer to refund the buyers’ down payments. Dealer refused, asserting its actions were proper under the Rees-Levering Motor Vehicles Sales and Finance Act and that DMV lacked the power to sanction Dealer. DMV then brought a disciplinary action against Dealer. DMV accused Dealer of violating Civil Code sections 2982.5, 2982.7, and 2982.9, which were the only sections of the Act which required a seller to refund a buyer’s down payment upon the buyer’s failure to obtain financing. After an administrative hearing, DMV adopted the administrative law judge’s proposed order that Dealer’s license be conditionally revoked for two years due to Dealer’s violation of the Act. Dealer petitioned the superior court for a writ of administrative mandate, which the superior court denied. On appeal Dealer repeated its earlier arguments. The Court of Appeal affirmed, finding the unique facts in this case (which revealed Dealer lacked a good faith intent to enter into bona fide credit sales with the buyers), revealed the transactions involved seller-assisted loans subject to section 2982.5 of the Act, which expressly required Dealer to return the buyers’ down payments. View "Front Line Motor Cars v. Webb" on Justia Law

The district court found that Spectrum violated the Consumer Product Safety Act, 15 U.S.C. 2064(b)(3), when its subsidiary failed to timely report to the government a potentially hazardous defect in its Black & Decker SpaceMaker coffeemaker. In 2009, there were multiple complaints that the plastic handle on the coffeemaker’s carafe had broken. In one instance, the handle's failure caused a consumer to suffer a burn from the hot coffee in the carafe. Spectrum ordered design changes, but continued to sell the product and did not file a section 15(b) report with the Commission until April 2012. The court entered a permanent injunction, requiring Spectrum to adhere to its newly-implemented CPSA compliance practices and to retain an independent consultant to recommend additional modifications to those practices. The Seventh Circuit affirmed, rejecting Spectrum’s argument that the late-reporting claim was barred by the statute of limitations and that the court abused its discretion in awarding permanent injunctive relief, including the requirement that it engage the expert. Spectrum’s failure to report constituted a continuing violation that did not end until Spectrum finally submitted a report; the statute of limitations did not begin to run until 2012. Given the gravity of its failures and the delay in compliance, the district court justifiably concluded that there was a reasonable likelihood that Spectrum might again commit similar violations in the future. View "United States v. Spectrum Brands, Inc." on Justia Law

The Ninth Circuit affirmed the district court's order granting the Board's petition to enforce the law firm's compliance with the Board's civil investigative demand (CID) to respond to interrogatories and requests for documents. The panel held that the Board's structure was constitutionally permissible in light of Humphrey's Executor v. United States, 295 U.S. 602 (1935), and Morrison v. Olson, 487 U.S. 654 (1988). These cases indicate that the for-cause removal restriction protecting the Board's Director did not impede the President's ability to perform his constitutional duty to ensure that the laws are faithfully executed.The panel rejected the law firm's contention that the CID violated the Board's practice-of-law exclusion and held that one of the exceptions to the practice-of-law exclusion applied: 12 U.S.C. 5517(e)(3). Section 5517(e)(3) empowered the Board to investigate whether the law firm was violating the Telemarketing Sales Rule. Finally, the panel held that the CID complied with section 5562(c)(2). View "Consumer Financial Protection Bureau v. Seila Law LLC" on Justia Law

Plaintiff appealed the district court's dismissal of his action against the Department of Education for violations of the Fair Credit Reporting Act (FCRA). Plaintiff's action stemmed from defendants' treatment of an allegedly fraudulent student loan in plaintiff's name. The Fourth Circuit affirmed the district court's dismissal of the action based on lack of jurisdiction because Congress had not waived sovereign immunity for suits under the FCRA. The court held that the purported FCRA waiver in this case fell short of being unambiguous and unequivocal. View "Robinson v. US Department of Education" on Justia Law

The Ninth Circuit affirmed the district court's grant of summary judgment for the FTC, as well as a relief order, in an action alleging that a defendant's business practices violated section 5 of the Federal Trade Commission Act. Defendant offered high interest, short term payday loans through various websites that each included a Loan Note with the essential terms of the loan under the Truth in Lending Act (TILA).The panel held that the Loan Note was deceptive because it did not accurately disclose the loan's terms. Under the circumstances, the Loan Note was likely to deceive a consumer acting reasonably. The panel also held that the district court did not abuse its its discretion when calculating the amount it ordered defendant to pay. Finally, the district court did not err by entering a permanent injunction enjoining defendant from engaging in consumer lending. View "FTC V. AMG Capital Management, LLC" on Justia Law