In 2016, class-action lawsuits alleging that a processed food product or its labeling violated state consumer-protection laws continued to clog the federal courts, especially in California. The number of new food-related consumer class actions filed last year nearly equaled the number filed in 2015, according to a report in Food Navigator USA. It’s unclear whether these trends will hold in 2017, but there is one set of blatantly frivolous claims that should disappear this year: those that seek judicial regulation of products that contain partially hydrogenated oil (PHO), the main source of trans fat. A December 13, 2016 Southern District of California decision should frustrate such claims in the short term, and a forthcoming US Court of Appeals for the Ninth Circuit decision in a pending case may (and should) end them permanently. Continue reading
On November 17, 2016, Washington Legal Foundation petitioned the US Supreme Court to review a US Court of Appeals for the Ninth Circuit decision, Gordon v. Consumer Financial Protection Bureau. CFPB had pursued a substantial fine against WLF’s client, Chance Gordon, in June 2013, a time during which the Bureau lacked a properly appointed Director. Mr. Gordon’s petition argues that the attempted corrective action Richard Cordray took once he lawfully became CFPB Director—a blanket, retroactive ratification of all actions taken during his unconstitutional recess appointment—runs afoul of the US Constitution’s Appointments Clause (contained in Article II). Mr. Gordon also argues that because Mr. Cordray had not been properly appointed, CFPB lacked standing to pursue a claim against him in federal court.
This week, three organizations filed amicus curiae briefs with the Supreme Court in support of Mr. Gordon’s writ of certiorari. The briefs positively reinforce WLF’s two major justifications for the Court’s review of Gordon v. CFPB. The petition first argues that the Ninth Circuit’s acceptance of Director Cordray’s blanket ratification severely undermines a fundamental check on Executive power: the requirement that Congress must first approve presidential nominees before they can be lawfully appointed. The Gordon decision is also contrary to Supreme Court precedent and furthers a split in the circuit courts over when ratification of ultra vires administrative action is permissible. Continue reading
As the beginning of a new administration nears, politicians and pundits have been floating many ideas for regulating the cost and availability of pharmaceuticals and other medical treatments. One of the worst ideas being discussed is the judicial creation of a common-law duty to manufacture. Thankfully, there are significant Constitutional and judicial hurdles preventing this duty from materializing.
In order to develop and produce innovative, life-saving drugs, pharmaceutical manufacturers must go through incredibly expensive and time-consuming clinical trials required by the rigid guidelines of the Food and Drug Administration (FDA). As an incentive to go through this process, these companies receive patents to help them recoup the costs of the clinical trials. In some instances, however, even with market exclusivity, manufacturers are unwilling to continue producing these drugs, often because production ceases to be economically feasible. Continue reading
Featured Expert Contributor — Antitrust & Competition, U.S. Department of Justice
Anthony W. Swisher, a Partner in the Washington, DC office of Squire Patton Boggs (US) LLP
In April of this year President Obama issued an executive order designed to “protect American consumers and workers and encourage competition in the U.S. economy … .” The order aimed to expand competition policy beyond just the Justice Department Antitrust Division (DOJ) and the Federal Trade Commission (FTC), and encouraged every federal agency to consider ways to enhance competition when drafting and enforcing each given agency’s regulations. A notable element of the President’s executive order was the promotion of competition in labor markets. The order asserted that the economic growth that flows from competitive markets “creates opportunity for American workers,” and that anticompetitive practices can reduce those opportunities. Continue reading
Tomorrow is “Small Business Saturday,” (November 26), so it’s a good time to reflect upon the especially challenging regulatory and legal environments such businesses have faced in recent years. Even though the federal government maintains an entire agency whose mission is purportedly to assist small businesses—the Small Business Administration—regulators seem ever oblivious to their impact on entrepreneurs. The National Labor Relations Board’s (NLRB) effort to redefine who is an “employer” and the NLRB’s and the Department of Labor’s (DOL) enmity toward independent contracting are two current examples. A third is DOL’s so-called Fiduciary Rule, which hits sole-practitioner and small-business investment and insurance advisors especially hard.
Small businesses are also at a particular disadvantage when disputes with the government end up in court. A recent US Court of Federal Claims decision, SUFI Network Services, Inc. v. US, exhibits government’s unfortunate willingness to exploit its power in disputes with a small business and the role courts can play in protecting entrepreneurs’ rights. Continue reading
When prohibiting or reducing “harmful” economic conduct proves either politically unpalatable or otherwise unachievable, governmental regulators often target speech about the conduct as a convenient alternative. Rather than ban the sale of tobacco or sugary drinks, for instance, federal, state, and local governments have imposed restrictions on advertising and other promotional speech. Unable to generate support for a second Prohibition, temperance proponents have attempted to chill alcohol consumption through speech limits, such as proscribing disclosure of alcohol-by-volume percentage on beer labels and even censoring ads for happy hours. In 2016, the so-called sharing economy became the government’s latest target regulating conduct by proxy. Thankfully, online short-term rental platforms like Airbnb are fighting back with First Amendment challenges. Continue reading
*Michelle Stilwell, the Mary G. Waterman Fellow at WLF, significantly contributed to this post.
In what is poised to become an extremely influential case, the US Court of Appeals for the Federal Circuit is currently deciding what to do after the federal government unlawfully took over the equity and leadership of one of America’s largest private insurance companies, American International Group, Inc. (AIG), during the 2008 financial crisis. The government, in order to prevent AIG from declaring bankruptcy, offered it the customary Federal Reserve Act § 13(3) loan in the extraordinary sum of $85 billion. However, in a virtually unprecedented move, the government conditioned this loan on receiving 80% of AIG’s equity via preferred stock. This was an offer AIG couldn’t refuse, and it effectively diluted AIG’s shares and all but eliminated the voting and equity rights of the existing shareholders. So what did AIG’s shareholders receive in return for the extreme devaluing of their shares? Nothing. Not yet anyway. The lower court below held, in a lawsuit brought by AIG’s largest shareholder at the time, that the government’s action was illegal, but that no damages would be awarded. It is now up to the Federal Circuit to provide justice for AIG’s shareholders—and to make sure that the government has an incentive to obey the law in future financial crises. Continue reading