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Class Action Lawsuit for Subway but Not for Equifax, Why?

In January 2013, an Australian teenager shared a Facebook picture of his Subway Footlong Sandwich alongside a measuring tape, showing that the advertised “Footlong Sandwich” was only 11 inches. Class-action lawsuits over false advertising of 11 inch sandwiches were filed by the dozens as lawyers all rushed to the courthouse to get a piece of the dough.

A Milwaukee federal judge approved a settlement that would have given the plaintiffs’ side $520,000 in attorneys fees, $500 for a couple of named plaintiffs, and a court order that Subway change its baking procedures. The catch: Subway had already changed its procedures before the first lawsuits were ever filed. The settlement did next to nothing to actually change Subway’s practices. One of the class members to the case, Theodore Frank, appealed the settlement. The Seventh Circuit overturned the deal.

According to Judge Sykes, the appeals court overturned the settlement because early discovery established that Subway’s baked rolls were almost uniformly within 12 inches. Rolls that were shorter were almost certainly due to minor statistic variance that was unavoidable. More importantly, the Court found that no customer was shorted any food, even if a sandwich roll fails to bake to a full 12 inches. Finally, subway sandwiches are made to order in front of the customer; any discrepancy can be immediately corrected at the counter.

Nevertheless, the class action lawyers who brought the case plan to challenge the appeal. They claim there were Subway memos that prove their case wasn’t a frivolous cash grab. The memos were not part of the public record because the documents were introduced during settlement discussions, where evidence is kept off the record.

class actionThe Value of Class Actions

Proponents of tort reform will certainly jump on this case and this ruling to justify reforming class action suits. Tort reform, at least in the early 2000s, mostly refers to reform of medical malpractice. However, those same reformers would be happy to remove or neuter class actions to the point of impotence.

The Subway case clearly highlights how class actions can be abused. The fact that a few sandwiches are off by an inch due to baking variances while the quality and quantity of the food received remains unchanged is hardly a serious injustice that warrants a court’s intervention. The case would merely be humorous if not for the idea that lawyers were profiting off the case while the consumers they claim to represent were given mere inches of the fees the lawyers received.

However, this Subway case should not bring the extinction of class action suits. In an era when corporations are allegedly neglect or even malicious, removing class action suits would only mean removing one potential tool in checking corporate power. The issue with the Subway case isn’t that the attorneys were paid ($520,000 is on the low end for a case like this), but that the alleged injury seems very trivial. An inch off a sandwich is hardly the end of anyone’s world.

Will Equifax Also Face a Class Action Lawsuit?

On the other hand, a company like Equifax is a more legitimate target for a class action. I’m not suggesting Equifax can be liable for being hacked; that would be like blaming a bank for getting robbed. However, the fact that Equifax knew for weeks that there was something wrong and failed to notify those affected is an egregious breach of public trust. If the hackers had obtained an individual’s information and Equifax had the opportunity to alert that individual to the theft of that person’s information, then Equifax can certainty be liable for that negligence.

Indeed, the use of class actions against Equifax would be solution that both sides of the political spectrum could support. Conservatives are divided on whether to use the heavy arm of the Justice Department to punish Equifax for its failure to report because conservatives prefer to minimize federal power and maximize the free market. The perfect midway point of that discussion would be class actions, private individuals coming together to sue a company instead of relying on the federal government to prosecute criminal indictments.

The only issue is that Equifax’s terms of service requires that individuals waive their right to a class action lawsuit. Class actions can be used against Subway to pay $520,000 in fees to protect a few hundred individuals from 11 inch sandwiches, but millions of Americans can have their private data stolen without ability to bring a class action. If people want to reform to class action, they should start with contracts that hamstring proper usage of these kinds of lawsuits.

Uber Pulls Rider Tracking Feature After Settling FTC Privacy Violations

Over the last couple years, Uber has become virtually synonymous with legal troubles. They’ve faced case after case on everything from employment law to trade secret issues to sexual harassment lawsuits to simple failure to comply with DMV registration requirements. However, their most recent legal hot water has dealt with privacy law, the Federal Trade Commission (FTC), and false representations. Just a few weeks ago, these issues culminated in an FTC settlement agreeing to-among other things-20 years of FTC oversight.

As part of the settlement, Uber has agreed to overhaul their privacy policies and the implementation of those policies. One of the first of these changes has involved the removal of a much criticized rider tracking feature. For a while included a much criticized default feature that tracked user location for five to ten minutes after they got out of the car. You can already see how this might be abused. However, the feature was made even more of an issue by the fact that users had to jump through in-app hoops each time they looked for a ride if they wanted to not be tracked. The feature was apparently meant as a security measure for riders. However, the combination of Uber never really explaining the purpose of the feature to users and-as you’ll see as we discuss the settlement-Uber’s less than stellar track record when it comes to securing user data made pulling the rider tracking a near necessity.

This is likely the first step of many Uber will take in response to the FTC oversight it will face for the next couple decades. Let’s take a look at the problems that got them in this situation in the first place-the charges brought against them by the FTC, exactly what the settlement does, and how you can avoid Uber’s mistakes.

uberThe FTC Charges

The FTC is an agency, created by the Federal Trade Commission Act, with the goal of eliminating unfair competition and promoting consumer protection. They do this in a number of way but primarily by bringing charges against companies that either deceive or treat consumers unfairly. This includes things like false advertising, false business claims, breach of contract, scams, product defects, and more.

In Uber’s case, the charges brought by the FTC dealt with privacy issues. However, privacy at a federal level is a tricky concept. There’s no real guaranteed rights to privacy beyond the expectation of privacy which limits how the government may search and seize you and your property. When it comes to private companies, privacy protections exist but mainly as a web of federal statutes which apply piecemeal to specific situations such as credit reporting, finances, health information, etc. This being said, an enormous number of companies in this day and age have privacy policies which dictate their own stance on how they will behave regarding customers private information. This usually deals with the handling of personally identifiable information-things which can tell people who you are or where you are-rather than more general metadata. However, when a company represents that they will treat private information in a certain way then doesn’t follow its own privacy policies this creates a false representation situation. This was the gist of the FTC’s charges.

First, the FTC charged Uber with misrepresenting the extent to which it monitored its employees’ access to personal information about users and drivers. Second, they said that Uber represented the things they did to protect that information-no surprise given that Uber had an enormous 100,000 user data breach back in 2014.

Uber has said, both through its privacy policy and statements to the press, that they have a strict policy of prohibiting their employees from accessing rider or driver data. This general rule is subject to an exception of legitimate business purposes. However, despite having the policy in place, Uber didn’t take all the steps you would expect to follow through on this promise. They didn’t even have a system in place at all to see if employees viewed personal data until after the privacy policy was published. Even after the system was in place, it was nowhere near large enough or well-staffed enough to keep track of all the employees in such an enormous company. Then, in 2015, it stopped using the system altogether for months on end. This obviously wasn’t in line with what their policy represented, even if they had a system in place the FTC treated their policy promises as false because their infrastructure was nowhere near enough to reasonably follow through on their policy position.

Uber’s privacy policy also included statements about the security measures they provided to their users-encryption, firewalls, and the like. They promised that information would be stored safely and used only for authorized purposes. They promised the most up to date, industry standard, data security measures. They further promised that all personal information was kept secure to the “highest security standards available.” However, in the wake of the Uber data breach, their security measures came across a little lacking compared to their promises. They didn’t use all the security tools available, allowed engineers easy access to data with a single access code, didn’t store any information in an encrypted format until March 2015. Then there was the way the breach itself actually occurred-an Uber engineer posted the single code required for total access to all the information on Git Hub. The FTC felt that, while Uber did take some steps to protect information, they didn’t take reasonably priced security steps that could have prevented the breach-or simply allowed them to live up to their promises. Thus, the FTC brought this as another charge of false representation.

Avoiding Uber’s Mistakes

To make these charges go away, Uber agreed to a settlement with the FTC which forbids them from misrepresenting their privacy positions and security measures, implement a comprehensive privacy policy addressing the security risks they created, and submit to 20 years of FTC audits. If this sounds like a serious blow for a business to take, you’re quite correct. This is just one of the many shakeups Uber is facing, having just recently replaced its original CEO Travis Kalanick with Dara Khosrowshahi. However, they have publically stated a new commitment to improving their privacy policies. What’s more, their mistakes can be instructive for protecting your own business.

First and foremost, if you have a privacy policy follow your own policies. This doesn’t mean just following the letter of your promises. You will be expected to take reasonable steps to implement programs to ensure the protection of private information. This will usually be enough to comply with the basic level of privacy requirements placed on a private business. However, in this age of tech and internet it’s often worth consulting with a privacy professional. What’s more, if you are in a privacy sensitive field such as banking, credit reporting, health care and several other fields, there may be more laws that apply to your business. Uber has been committing an enormous number of resources to ensuring that it doesn’t run afoul of privacy law or the FTC again. Ultimately, this sort of situation is one where an ounce of prevention can be worth more than a pound of cure–protect your company by ensuring you have well drafted policies that you carefully follow.

CA Supreme Court: Parents Can Lose Custody of Children Even If There is No Fault

What does it take to lose custody of your child to the state? Usually it is very difficult, as most states don’t want the burden of having to raise a child. However, that hasn’t stopped the California Supreme Court from removing a major factor in the transfer of parental custody to the juvenile courts. The astounding point about that case though is that was unnecessary to do so.

When R.T. was 14, she began running away from home and ditching school. She gave birth to a daughter next year and then had another child the next year. Both of R.T.’s children are wards of the state. R.T.’s mother has tried to supervise and protect R.T. with Los Angeles County Department of Children and Family Services (DCFS), but to no avail. R.T. had accused her mother of abusing her, though the accusations were considered false. Mother later arranged for R.T. to leave with her maternal grandfather. This was difficult for both parties as R.T. allegedly threw a chair at him.

In February 2014, DCFS asked the juvenile court to declare then 17 year old R.T. a dependent of the court. DCFS argued that there was a “substantial risk of serious physical harm or illness, as a result of the failure or inability of mother to adequately supervise or protecther.” The juvenile court agreed, because “the mother cannot control R.T. so she has given her off to grandparents and they can‘t control her either.” The mother appealed, but the ruling was sustained by both the appeals court and the state Supreme Court.

custodyEasily the most controversial issue of this case is that the California Supreme Court removed causation from the child dependency statute. In English, California has a series of laws that allows courts to remove custody from parents and give it to the state. One of those laws, section 300(b)(1),allows the state to assume custody of a child if there is “a risk or substantial risk that the child will suffer, serious physical harm or illness, as a result of the failure or inability of his or her parent or guardian to adequately supervise or protect the child.” The second half of that law, “as a result of failure or inability of his or her parent,” is normally a conditional clause.

That is, if a parent fails to supervise or protect the child and if there would be a substantial risk of harm to the child, then the state may assume custody of the child. It is important to understand the law this way because there are two events that must happen before the state can take a child away. First, the parent must fail to supervise or protect the child. Second, there must be substantial risk of harm to the child.

Linguistics Is the Cause of Mental Gymnastics  

This case is largely about whether the two factors must be connected. Must the parent’s failure to supervise cause substantial risk to the child or could they each arise independently? All evidence in the lower courts indicates that the mother did her best to supervise R.T. If anything, it was R.T.’s own behavior that lead to her being a teenage single mother of two. “The record also supports a theory suggesting that R.T.‘s disobedience was the reason mother was unable to protect or supervise R.T.” Indeed, the Court goes so far as to say that “we in no way pass judgment on mother‘s inability to control R.T.‘s incorrigible behavior.” If the law was read so that parental failure causes risk to the child, then the mother should win this case.

Instead, the state Supreme Court concluded that the legislature never intended causation as a factor when it wrote the law. The Court dove through the legislative history and compared the child dependency law to a similar law dealing with sex trafficking (section 300 (b) (2)). The problem with this analysis is that runaway children and sexual slavery are two different and distinct problems. There might be some overlap, but a teenager who refuses to live with her family is a different problem than a child who is kidnapped and sold. Just because causation is missing from the custody law dealing with sex trafficking does not mean that the legislature intended to remove causation from both.

We Know the Problem, So What’s the Solution?

The problem with reading legislative intent is that if the legislature actually intended the law to mean something, they would have simply written that into the law. In this case, the Court’s ruling directly contradicts the written law itself! The phrase “as a result” means that the first event is caused by the second event. If I say “I broke my leg as a result of falling down stairs”, I mean that my leg broke because of the fall. It makes no sense to assume that “as a result” means that “I broke my leg and fell down stairs, but the stairs had nothing to do with my leg.”

Freed from the burden of having to show that parental responsibility is a cause of harm to children, state services are now free to remove child custody if a parent is failing to “adequately” parent a child and if the child is perceived to be in danger. Although this case will not have much effect on a woman who was 17 and a half when the case was initially brought, it will matter to future parents. A father who is wheelchair bound whose toddler plays in a building with secondhand smoke from other tenants could potentially lose custody. Or a single mother who works two jobs late at night is often absent from home while her son experiments with drugs. Although the California Supreme Court probably didn’t intend for these possible cases, they will surely arise in the future.

Texas Voter Discrimination Ruling Stayed By Justice Alito

It hasn’t been a good year in the courts for the integrity of Texas voting. They’ve had their voter ID laws ruled to be made with the purpose of discriminating against minorities and two separate courts have ruled that they’ve gerrymandered their districts to intentionally “pack and dilute” minority votes. One of these gerrymandering cases was upheld as intentionally discriminatory on appeal a few weeks back–placing Texas on a short deadline to fix the districts before next year’s voting took place. The Voter Rights Act (VRA) and a Supreme Court ruling known as Shelby mean that any of these rulings-if they stick-could leave Texas asking for federal pre-clearance for any voting laws they seek to enact. This is important because the VRA was amended a few years back to remove its enforcement provisions-rendering it essentially toothless unless a case like the ones against Texas succeeds. In the wake of these changes, Texas and states passed voting laws that have faced constitutional challenges across the nation.

However, another wrinkle has been thrown into the equation for the most recent court ruling on the gerrymandering cases against Texas. Justice Alito, acting on his sole authority as a Justice of the Supreme Court of the United States, has issued a one sentence order stalling the ruling requiring Texas to change the make-up of some of its districts. This isn’t a ruling of the Supreme Court, but it does indicate that the Supreme Court will be taking a look at the case once they all reconvene.

In order to understand the implications of Justice Alito’s actions, it’s necessary to take a look at the ruling underlying Justice Alito’s actions.

votingThe Underlying Ruling

Gerrymandering in the law operates on a fairly simple principle, creating voting districts with race as the primary consideration, or even just creates a result of diminishing the voting rights of a particular race, is a violation of the Constitution. It is worth noting that, as counter-intuitive as it may sound, there is such a thing as legal gerrymandering. Gerrymandering by political party does not face much of anything in the way of legal repercussions. However, that was not the case here. The court’s three-person panel ruled that the districting was done with the intent and purpose of depriving Latino voters of the ability to elect candidates of their choice.

Texas argued that this could not possibly be the case. After all, the maps were redrawn in 2011-right back when the VRA required Texas to submit voting laws for preclearance due to a history of discrimination-and immediately challenged in court. They lost in court, ruled to be discriminatory, and the court itself redrew the maps. How, asked Texas, could maps drawn by a court be discriminatory?

The answer, according to the court, was that the court in 2011 was essentially forced to do a rush job-and said as much in their ruling. After the original maps were found unconstitutional, both parties offered many compromise plans between them-usually based to some degree on the original maps. Faced with time pressures and an upcoming election that couldn’t proceed without the maps, the court accepted one of these compromises but acknowledged that it only was making a preliminary decision as it had very little time to evaluate the incredibly complicated question of whether a district was drawn in a way that limited the rights of a particular race. Then, in 2013-after the VRA was neutered-a new districting scheme very close to the original scheme-although it implemented parts of the altered version the Court made-was implemented by Texas.

This meant, according to the recent court ruling, that while one district got a pass for following the court’s provisions, most of the districts carried over the discriminatory intent of the original 2011 districts. With this in mind, the ruling required Texas to swiftly change their districts into ones that were not racially discriminatory.

The Effect of Justice Alito’s Order

The stay throws a monkey wrench in the proceedings. However, despite some worrying that the order is an indication that the Supreme Court will overrule the lower court ruling, this is unlikely to be the case. Not only is the order Justice Alito acting on his own, likely to allow the other Supreme Court Justices time to look over the case, the order is also very temporary-only lasting until September 5th after the Supreme Court receives filings from civil rights groups.

What the order does imply is that the Supreme Court will hear this case and decide one way or another. At a minimum, this means that any action on these districts will be delayed for a few months minimum-perhaps even allowing the districts to remain in effect for the 2018 elections. This has the unfortunate side effect of potentially leaving minority voters underrepresented for another full year-an incredible injustice. This stay is early stages for the Supreme Court’s approach here. We won’t know the full extent of what they will do for some time. At this point we can only wait and see if Justice Alito’s order is a temporary roadblock or the end of the line.

Civil Asset Forfeiture Must be Done by the Book

Americans on both sides of the political aisle have worked to limit the usage of civil asset forfeiture.  For those who don’t watch John Oliver or read the Federalist, civil asset forfeiture is the legal process where police can seize assets suspected of aiding criminals. Law enforcement have seized assets even when there is no criminal conviction and those assets are given to the agency that seized the property. The agencies use the money for both legitimate and illegitimate reasons, such as bulletproof vests and slush machines.

Liberal and Conservative groups alike have worked hard to limit the abuse of asset forfeitures, the cabinet appointment of Jefferson Beauregard Sessions III notwithstanding. Most Federal asset forfeitures now require a conviction before property can be seized. However, a new case before the Supreme Court threatens to undo what little progress has been made towards asset forfeiture. This time though, the threat comes from the courts rather than an overzealous Attorney General.

In 2014, Henry Lo was indicted for wire fraud, mail fraud, device access fraud, and embezzlement of funds from a former employer and former girlfriend. The indictment included a potential asset forfeiture of Lo’s residence and six bank accounts if convicted. Lo plead guilty to wire and mail fraud, including a scheme where he enriched himself by $1,700,000. However, prosecutors neglected to include any mention of asset forfeiture in its plea agreement and the judge did not make any mention of it at the sentencing hearing. The government only asserted forfeiture when the U.S. Probation Office requested $2,244,384.39 in forfeiture. Instead of tracing the stolen property, as required by statute, the government only asserted that property seizure was “appropriate.”

civil asset forfeitureOn April 9, 2015, Mr. Lo was sentenced to a term of 70 months imprisonment, three years of supervised release, and restitution for $2,232,894.39. On appeal, the government conceded that federal law does “not expressly authorize personal money judgments as a form of forfeiture,” but that “nothing suggests that money judgments are forbidden.” Nevertheless, the Ninth Circuit affirmed the ruling, finding that since civil forfeiture furthers the cause of combating illegal drug trade, it was appropriate to seize the defendant’s money.

Civil Asset Forfeiture Should Only Be Used In a Manner Prescribed by Congress

 To summarize everything above, the defense is arguing that Congress only permits asset forfeiture in wire and mail fraud cases when the prosecution can trace the property or funds back to the crime. Any deviation by the judiciary from this procedure is a violation of the separate of powers, as judges have no power to create criminal punishments.

The legal requirement that the prosecution trace the property back to the crime is an important procedure. If the prosecutor cannot show how a property was used to commit a crime or how a defendant benefited from the crime, then law enforcement would not be seizing the property; they would be stealing the property. In this case, Lo plead guilty to gaining $1,700,000 by fraud. That money does not belong to him and the government has a right to reverse all of Lo’s gains. If Lo used the money to purchase a house in Florida, then the government has the right to seize that house. However, the prosecution must prove that Lo actually used a portion of the illegally obtained money to purchase the home in Florida. If Lo would have owned the house regardless of whether he committed the crime, then the government has no right to the house.

Civil liberty groups have largely succeeded in reforming forfeiture so that the defendant actually has to be guilty for his property to be taken. However, it is still not legal or morally right to take property from a convicted criminal merely because he owns the property. Without the tracing requirement, police could take property unrelated to the crime. They could also take any property from the defendant without limit. Just because a criminal defendant steals from a victim does not give the government to steal from the defendant.

The Importance of Judicial Restraint to Liberal Values

So far, I’ve only talked about the Lo case in relation to asset forfeiture. However, this case should show liberal voters and politicians the importance of judicial restraint. The defense for Lo is a textbook of judicial conservative talking points, with emphasis on separation of powers and the limited role of federal judges.

However, these talking points are now being used in service of important civil liberties, such as the limitation of asset forfeiture. Although limiting forfeiture is a bipartisan goal, liberals should realize that stopping judicial activism might be more beneficial in the near future. With a political conservative majority on the Supreme Court and with Mr. Trump appointing more political conservatives to the federal bench, liberals might not be able to rely on the third branch as they have in the past.

With America and its parties slowly realigning itself, liberals should be prepared to argue that the courts should be restrained and checked. If the federal government is dominated by Attorney Generals and judges who want to expand the executive branch’s power, then the only way to protect the civil liberties of Americans will be to adopt former conservative arguments regarding judicial activism. Strict adherence to the constitution, including the limitation of all three branches of the federal government, will be the best line of defense against entrenched conservatives like Jeff Sessions. With the political atmosphere as it is today, a strict reading of the constitution may be the only defense the nation has against the destruction of civil liberties.