Consumer Protection Law Commons^™

Race-Ing Antitrust, Bennett Capers, Gregory Day

Michigan Law Review

Antitrust law has a race problem. To spot an antitrust violation, courts inquire into whether an act has degraded consumer welfare. Since anticompetitive practices are often assumed to enhance consumer welfare, antitrust offenses are rarely found. Key to this framework is that antitrust treats all consumers monolithically; that consumers are differently situated, especially along lines of race, simply is ignored.

We argue that antitrust law must disaggregate the term “consumer” to include those who disproportionately suffer from anticompetitive practices via a community welfare standard. As a starting point, we demonstrate that anticompetitive conduct has specifically been used as a tool …

Eaters, Powerless By Design, Margot J. Pollans

Michigan Law Review

Food law, including traditional food safety regulation, antihunger programs, and food system worker protections, has received increased attention in recent years as a distinct field of study. Bringing together these disparate areas of law under a single lens provides an opportunity to understand the role of law in shaping what we eat (what food is produced and where it is distributed), how much we eat, and how we think about food. The food system is rife with problems— endemic hunger, worker exploitation, massive environmental externalities, and diet-related disease. Looked at in a piecemeal fashion, elements of food law appear responsive …

Digital Market Perfection, Rory Van Loo

Michigan Law Review

Google’s, Apple’s, and other companies’ automated assistants are increasingly serving as personal shoppers. These digital intermediaries will save us time by purchasing grocery items, transferring bank accounts, and subscribing to cable. The literature has only begun to hint at the paradigm shift needed to navigate the legal risks and rewards of this coming era of automated commerce. This Article begins to fill that gap by surveying legal battles related to contract exit, data access, and deception that will determine the extent to which automated assistants are able to help consumers to search and switch, potentially bringing tremendous societal benefits. Whereas …

A Post-Spokeo Taxonomy Of Intangible Harms, Jackson Erpenbach

Michigan Law Review

Article III standing is a central requirement in federal litigation. The Supreme Court’s Spokeo decision marked a significant development in the doctrine, dividing the concrete injury-in-fact requirement into two subsets: tangible and intangible harms. While tangible harms are easily cognizable, plaintiffs alleging intangible harms can face a perilous path to court. This raises particular concern for the system of federal consumer protection laws where enforcement relies on consumers vindicating their own rights by filing suit when companies violate federal law. These plaintiffs must often allege intangible harms arising out of their statutorily guaranteed rights. This Note demonstrates that Spokeo’s …

Regulating Electricity-Market Manipulation: A Proposal For A New Regulatory Regime To Proscribe All Forms Of Manipulation, Matthew Evans

Michigan Law Review

Congress broadly authorized the Federal Energy Regulatory Commission (“FERC”) to protect consumers of electricity from all forms of manipulation in the electricity markets, but the regulations that FERC passed are not nearly so expansive. As written, FERC’s Anti-Manipulation Rule covers only instances of manipulation involving fraud. This narrow scope is problematic, however, because electricity markets can also be manipulated by nonfraudulent activity. Thus, in order to reach all forms of manipulation, FERC is forced to interpret and apply its Anti-Manipulation Rule in ways that strain the plain language and accepted understanding of the rule and therefore constitute an improper extension …

Broker-Dealers And Investment Advisers: A Behaviorial-Economics Analysis Of Competing Suggestions For Reform, Polina Demina

Michigan Law Review

For the average investor trying to save for retirement or a child’s college fund, the world of investing has become increasingly complex. These retail investors must turn more frequently to financial intermediaries, such as broker-dealers and investment advisers, to get sound investment advice. Such intermediaries perform different duties for their clients, however. The investment adviser owes his client a fiduciary duty of care and therefore must provide financial advice that is in the client’s best interests, while the broker-dealer must merely provide advice that is suitable to the client’s interests—a lower standard than the fiduciary duty of care. And yet …

Protecting Whistleblower Protections In The Dodd-Frank Act, Samuel C. Leifer

Michigan Law Review

In 2008, the United States fell into its worst economic recession in over seventy years. In response, Congress enacted the near-comprehensive Dodd–Frank Wall Street Reform and Consumer Protection Act. Section 922 of Dodd–Frank, in particular, includes specific provisions designed to incentivize and protect corporate whistleblowers. These provisions demonstrated Congress’s belief that a comprehensive and robust whistleblower protection scheme was essential to preventing many of the abuses that caused the financial crisis. Unfortunately, this section’s inconsistent language has produced conflicting decisions within the federal judiciary. In accordance with the Securities and Exchange Commission (“SEC”)’s own reading of Section 922, several district …

A Disclosure-Focused Approach To Compelled Commercial Speech, Andrew C. Budzinski

Michigan Law Review

In 2010, the Food and Drug Administration passed a rule revising compelled disclaimers on tobacco products pursuant to the Family Smoking Prevention and Tobacco Control Act. The rule required that tobacco warnings include something new: all tobacco products now had to bear one of nine graphic images to accompany the text. Tobacco companies filed suit contesting the constitutionality of the rule, arguing that the government violated their right to free commercial speech by compelling disclosure of the graphic content. Yet First Amendment jurisprudence lacks a doctrinally consistent standard for reviewing such compelled disclosures. Courts’ analyses typically depend on whether the …

Rationality's Reach, Adam B. Badawi

Michigan Law Review

Economic analysis and the rational actor model have dominated contracts scholarship for at least a generation. In the past fifteen years or so, however, a group of behaviorists has challenged the ability of the rational choice model to account for consumer behavior. These behaviorists are not trying to dismantle the entire enterprise. They generally accept the fundamentals of economic analysis but argue that the rational actor model can be improved by incorporating evidence of decisionmaking flaws that people exhibit. Oren Bar-Gill has been one of the foremost and influential proponents of a behaviorist take on contracts, and his recent book, …

House Swaps: A Strategic Bankruptcy Solution To The Foreclosure Crisis, Lynn M. Lopucki

Michigan Law Review

Since the price peak in 2006, home values have fallen more than 30 percent, leaving millions of Americans with negative equity in their homes. Until the Supreme Court’s 1993 decision in Nobelman v. American Savings Bank, the bankruptcy system would have provided many such homeowners with a remedy. They could have filed bankruptcy, discharged the negative equity, committed to pay the mortgage holders the full values of their homes, and retained those homes. In Nobelman, however, the Court misinterpreted reasonably clear statutory language and invented legislative history to resolve a three-to-one split of circuits in favor of the minority view …

Outsourcing Regulation: How Insurance Reduces Moral Hazard, Omri Ben-Shahar, Kyle D. Logue

Michigan Law Review

This Article explores the potential value of insurance as a substitute for government regulation of safety. Successful regulation of behavior requires information in setting standards, licensing conduct, verifying outcomes, and assessing remedies. In various areas, the private insurance sector has technological advantages in collecting and administering the information relevant to setting standards and could outperform the government in creating incentives for optimal behavior. We explore several areas that are regulated more by private insurance than by government. In those areas, the role of the law diminishes to the administration of simple rules of absolute liability or no liability, and affected …

Are Artificial Tans The New Cigarette? How Plaintiffs Can Use The Lessons Of Tobacco Litigation In Bringing Claims Against The Indoor Tanning Industry, Andrea Y. Loh

Michigan Law Review

Indoor tanning salons have grown significantly in popularity during recent years. Scientific research has revealed a strong link between skin cancer and ultraviolet light exposure from indoor tanning lamps. Despite such dangers, federal regulations place minimal restrictions on the labeling of indoor tanning lamps. Indoor tanning salons work vigorously to dispel notions of a link to skin cancer, often falsely promoting various health benefits of indoor tanning. The first lawsuit for injuries resulting from indoor tanning was recently filed against an indoor tanning salon, and other such litigation is poised to follow. This Note examines three potential tort claims against …

Torts And Innovation, Gideon Parchomovsky, Alex Stein

Michigan Law Review

This Essay exposes and analyzes a hitherto overlooked cost of tort law: its adverse effect on innovation. Tort liability for negligence, defective products, and medical malpractice is determined by reference to custom. We demonstrate that courts' reliance on custom and conventional technologies as the benchmark of liability chills innovation and distorts its path. Specifically, recourse to custom taxes innovators and subsidizes replicators of conventional technologies. We explore the causes and consequences of this phenomenon and propose two possible ways to modify tort law in order to make it more welcoming to innovation.

Patients As Consumers: Courts, Cotnracts, And The New Medical Marketplace, Mark A. Hall, Carl E. Schneider

Michigan Law Review

The persistent riddle of health-care policy is how to control the costs while improving the quality of care. The riddle's oncepromising answer-managed care-has been politically ravaged, and consumerist solutions are now winning favor This Article examines the legal condition of the patient-as-consumer in today's health-care market. It finds that insurers bargain with some success for rates for the people they insure. The uninsured, however, must contract to pay whatever a provider charges and then are regularly charged prices that are several times insurers'pricesa nd providers' actual costs. Perhaps because they do not understand the healthcare market, courts generally enforce these …

Illuminating Secrecy: A New Economic Analysis Of Confidential Settlements, Scott A. Moss

Michigan Law Review

Even the most hotly contested lawsuits typically end in a confidential settlement forbidding the parties from disclosing their allegations, evidence, or settlement amount. Confidentiality draws fierce criticism for harming third parties by concealing serious misdeeds like discrimination, pollution, defective manufacturing, and sexual abuse. Others defend confidentiality as a mutually beneficial pay-for-silence bargain that facilitates settlement, serves judicial economy, and prevents frivolous copycat lawsuits. This debate is based in economic logic, yet most analyses have been surprisingly shallow as to how confidentiality affects incentives to settle. Depicting a more nuanced, complex reality of litigation and settlement, this Article reaches several conclusions …

Notification Of Data Security Breaches, Paul M. Schwartz, Edward J. Janger

Michigan Law Review

The law increasingly requires private companies to disclose information for the benefit of consumers. The latest examples of such regulation are state and federal laws that require companies to notify individuals of data security incidents involving their personal information. These laws, proposed in the wake of highly publicized data spills, seek to punish the breached entity and to protect consumers by requiring the entity to notify its customers about the security breach. There are competing approaches, however to how the law is to mandate release of information about data leaks. This Article finds that the current statutes' focus on reputational …

One-Sided Contracts In Competitive Consumer Markets, Lucian A. Bebchuk, Richard A. Posner

Michigan Law Review

The usual assumption in economic analysis of law is that in a competitive market without informational asymmetries, the terms of contracts between sellers and buyers will be optimal-that is, that any deviation from these terms would impose expected costs on one party that exceed benefits to the other. But could there be cases in which "one-sided" contracts containing terms that impose a greater expected cost on one side than benefit on the other-would be found in competitive markets even in the absence of fraud, prohibitive information costs, or other market imperfections? That is the possibility we explore in this Article.

Online Boilerplate: Would Mandatory Website Disclosure Of E-Standard Terms Backfire?, Robert A. Hillman

Michigan Law Review

A law backfires when it produces results opposite from those its drafters intended. Lots of laws may have backfired. For example, people opposed to hate crimes legislation think that the laws "inflame prejudice rather than eradicate it." The Endangered Species Act, according to some analysts, has helped destroy rather than preserve the creatures listed by the Act. Even consumer protection laws, some believe, increase prices and confuse consumers instead of protecting them. This Article analyzes whether mandatory website disclosure of standard terms, advocated by some as a potential solution to market failures when consumers contract over the Internet, is another …

The Return Of Bargain: An Economic Theory Of How Standard-Form Contracts Enable Cooperative Negotiation Between Businesses And Consumers, Jason Scott Johnston

Michigan Law Review

Among attorneys, judges, and legal academics, there is virtual consensus that the widespread use by business firms of standard-form contracts in their dealings with consumers has completely eliminated bargaining in consumer contracts. I believe that this perception is false, that rather than precluding bargaining and negotiation, standard-form contracts in fact facilitate bargaining and are a crucial instrument in the establishment and maintenance of cooperative relationships between firms and their customers. On this view, which I elaborate below, firms use clear and unconditional standard form contract terms not because they will insist upon those terms, but because they have given their …

"Contracting" For Credit, Ronald J. Mann

Michigan Law Review

On a recent day, I used my credit cards in connection with a number of minor transactions. I made eight purchases, and I paid two credit card bills. I also discarded (without opening) three solicitations for new cards, balance transfer programs, or other similar offers to extend credit via a credit card. Statistics suggest that I am not atypical. U.S. consumers last year used credit cards in about 100 purchasing transactions per capita, with an average value of about $70. At the end of the year, Americans owed nearly $500 billion dollars, in the range of $1,800 for every man, …

The Boilerplate Puzzle, Douglas G. Baird

Michigan Law Review

The warranty that comes with your laptop computer is one of its many product attributes. The laptop has a screen of a particular size. Its microprocessors work at a particular speed, and the battery lasts a given amount of time between recharging. The hard drive has a certain capacity and mean time to failure. There is an instruction manual, online technical support (or lack thereof), and software. Then there are the warranties that the seller makes (or does not make) that are also part of the bundle. Just as I know the size of the screen, but nothing about the …

Contra Proferentem: The Allure Of Ambiguous Boilerplate, Michelle E. Boardman

Michigan Law Review

Bad boilerplate can shake one' s faith in evolution; not only does it not die away, it multiplies. The puzzle is why. Much of boilerplate is ambiguous or incomprehensible. This alienates consumers and is i ncreasingly punished by courts construing the language against the drafter. There must, therefore, be some hidden allure to ambiguous boilerplate. The popular theory is trickery: drafters lure consumers in with promising language that comes to nothing in court. But this trick would require consumers to do three things they do not do-read the language, understand it, and take comfort in it. There is a hidden …

The Hidden Roles Of Boilerplate And Standard-Form Contracts: Strategic Imposition Of Transaction Costs, Segmentation Of Consumers, And Anticompetitive Effects, David Gilo, Ariel Porat

Michigan Law Review

Standard-form contracts offered to consumers contain numerous terms and clauses, most of which are ancillary to the main terms of the transaction. We call these ancillary terms "boilerplate provisions." Since most consumers do not read boilerplate provisions or, if they do, find them hard to understand, courts are suspicious of boilerplate provisions and sometimes find them unenforceable under the doctrine of unconscionability. At times, courts conclude that harsh terms have not been accepted by consumers in the first place and therefore are not included in the contract, and on other occasions courts interpret boilerplate provisions in favor of consumers, applying …

The Strategy Of Boilerplate, Robert B. Ahdieh

Michigan Law Review

That boilerplate is pervasive is hardly surprising. In a variety of ways, standardized terms in day-to-day contracts serve an essential cost-saving function. By this measure, one might expect less frequent reliance on boilerplate in high-value contracts among sophisticated parties. Yet standard terms would appear to be no less widespread in contracts among the sophisticated. Notwithstanding their representation by able counsel, charged to craft comprehensive and detailed, but also particularized, contracts, such parties will commonly conclude agreements comprised heavily of traditional terms--contracting norms of a sort-rather than terms tailored to the distinct features of their particular bargain. Examples of seemingly suboptimal …

Uncertainty And Informed Choice: Unmasking Daubert, Margaret A. Berger, Aaron D. Twerski

Michigan Law Review

This Article will first examine why it is that plaintiffs have been unable to prove causation under the Daubert guidelines in toxic tort litigation. Second, it will look at the two existing models for informed choice litigation medical malpractice and products liability-and demonstrate why neither of these models gives toxic tort plaintiffs a fair opportunity to recover for the deprivation of patient autonomy against drug manufacturers who have breached their duty to warn of known or knowable risks. Finally, this Article will explore the elements of a causation-free informed choice cause of action. It will suggest the appropriate standard for …

Search And Persuasion In Trademark Law, Barton Beebe

Michigan Law Review

The consumer, we are led to believe, is the measure of all things in trademark law. Trademarks exist only to the extent that consumers perceive them as designations of source. Infringement occurs only to the extent that consumers perceive one trademark as referring to the source of another. The most "intellectual" of the intellectual properties, trademarks are a property purely of consumers' minds. The simple idealist ontology underlying trademark law is largely responsible for the law's characteristic instability. Since 1992, the Supreme Court has considered - and in some cases, reconsidered - seven trademark cases. The Court's copyright cases garner …

The First Amendment Status Of Commercial Speech: Why The Fcc Regulations Implementing The Telephone Consumer Protection Act Of 1991 Are Unconstitutional, Deborah L. Hamilton

Michigan Law Review

This Note considers the constitutionality of the FCC's regulations implementing the no-recorded-message provision of the 1991 TCPA and concludes that they violate the First Amendment because they impermissibly distinguish between commercial and noncommercial speech. Part I explains the structure of the FCC's recorded-message regulations and demonstrates that the regulations explicitly distinguish commercial recorded messages from other recorded messages. Part II examines First Amendment protection for commercial speech in light of three 1993 Supreme Court decisions that restructured commercial speech doctrine by holding that the government can single out commercial speech for regulation only in response to a distinct harm arising …

Rescuing The Revolution: The Revived Case For Enterprise Liability, Steven P. Croley, Jon D. Hanson

Michigan Law Review

The article proceeds as follows. Part I defines important terms and introduces the two-by-four Products Liability Matrix by explaining the eight possible positions that might be taken with respect to the mutability and liability-standard dimensions of products liability. Part II provides a backdrop for the current products liability debate, first by setting out a capsule history of the evolution of the modem products liability regime, and then by explaining the arguments offered by the "first generation" of products liability scholars to justify expanded manufacturer liability. Part II also illustrates the utility of the Products Liability Matrix by locating many of …

Reforming Products Liability, Suzanne M. Lambert

Michigan Law Review

A Review of Reforming Products Liability by W. Kip Viscusi

The Distinction Between The Scope Of Section 2(A) And Sections 2(D) And 2€ Of The Robinson-Patman Act, Michigan Law Review

Michigan Law Review

This Note argues that sections 2(d) and 2(e) were meant to cover only disguised discriminations not within the scope of section 2(a). If the seller's conduct falls within the scope of section 2(a), that section must be applied regardless of whether or not the conduct also falls within the language of section 2(d) or 2(e). Only when section 2(a) does not apply is recourse available under sections 2(d) and 2(e). Part I of this Note looks at general antitrust policy, the limitations of the Clayton Act that led to the enactment of the Robinson-Patman Act, and the legislative history of …