http://edocket.access.gpo.gov/2008/pdf/E8-16500.pdf
SUMMARY: The Board is publishing final rules amending Regulation Z, which implements the Truth in Lending Act and Home Ownership and Equity Protection Act.
The goals of the amendments are to protect consumers in the mortgage market from unfair, abusive, or deceptive lending and servicing practices while preserving responsible lending and sustainable homeownership; ensure that advertisements for mortgage loans provide accurate and balanced information and do not contain misleading or deceptive representations; and provide consumers transactionspecific disclosures early enough to use while shopping for a mortgage.
The final rule applies four protections to a newlydefined category of higher-priced mortgage loans secured by a consumer’s principal dwelling, including a prohibition on lending based on the collateral without regard to consumers’ ability to repay their obligations from income, or from other sources besides the collateral. The revisions apply two new protections to mortgage loans secured by a consumer’s principal dwelling regardless of loan price, including a prohibition on abusive servicing practices.
The Board is also finalizing rules requiring that advertisements provide accurate and balanced information, in a clear and conspicuous manner, about rates, monthly payments, and other loan features. The advertising rules ban several deceptive or misleading advertising practices, including representations that a rate or payment is ‘‘fixed’’ when it can change. Finally, the revisions require creditors to provide consumers with transaction-specific mortgage loan disclosures within three business days after application and before they pay any fee except a reasonable fee for reviewing credit history.
DATES: This final rule is effective on October 1, 2009, except for § 226.35(b)(3)) which is effective on April 1, 2010. See part XIII, below, regarding mandatory compliance with § 226.35(b)(3) on mortgages secured by manufactured housing.
SUPPLEMENTARY INFORMATION:
I. Summary of Final Rules
A. Rules To Prevent Unfairness, Deception, and Abuse
B. Revisions To Improve Mortgage Advertising
C. Requirement To Give Consumers Disclosures Early
II. Consumer Protection Concerns in the Subprime Market
A. Recent Problems in the Mortgage Market
B. Market Imperfections That Can Facilitate Abusive and Unaffordable Loans
III. The Board’s HOEPA Hearings
A. Home Ownership and Equity Protection Act (HOEPA)
B. Summary of 2006 Hearings
C. Summary of June 2007 Hearing
D. Congressional Hearings
IV. Interagency Supervisory Guidance
V. Legal Authority
A. The Board’s Authority Under TILA Section 129(l)(2)
B. The Board’s Authority Under TILA Section 105(a)
VI. The Board’s Proposal
A. Proposals To Prevent Unfairness, Deception, and Abuse
B. Proposals To Improve Mortgage Advertising
C. Proposal To Give Consumers Disclosures Early
VII. Overview of Comments Received
VIII. Definition of ‘‘Higher-Priced Mortgage Loan’’—§ 226.35(a)
A. Overview
B. Public Comment on the Proposal
C. General Approach
D. Index for Higher-Priced Mortgage Loans
E. Threshold for Higher-Priced Mortgage Loans
F. The Timing of Setting the Threshold
G. Proposal To Conform Regulation C (HMDA)
H. Types of Loans Covered Under § 226.35
IX. Final Rules for Higher-Priced Mortgage Loans and HOEPA Loans
A. Overview
B. Disregard of Consumer’s Ability To Repay—§§ 226.34(a)(4) and 226.35(b)(1)
C. Prepayment Penalties—§ 226.32(d)(6) and (7); § 226.35(b)(2)
D. Escrows for Taxes and Insurance—§ 226.35(b)(3)
E. Evasion Through Spurious Open-End Credit—§ 226.35(b)(4)
X. Final Rules for Mortgage Loans—§ 226.36
A. Creditor Payments to Mortgage Brokers—§ 226.36(a)
B. Coercion of Appraisers—§ 226.36(b)
Wednesday, July 30, 2008
Wednesday, July 23, 2008
drivers license - refusal to take breath test - clear warning
Yourick v. DOT - Commonwealth Court- July 23, 21008
http://www.courts.state.pa.us/OpPosting/CWealth/out/2280CD07_7-23-08.pdf
Alas, poor Yourick!
She was arrested for DUI and asked to take a blood alcohol test, which she refused. DOT then proposed to suspend her license because of that refusal, and she appealed. And what ho! The warning that the police gave to her about the consequences of a refusal to submit to such testing was held to be ambiguous and not "legally sufficient" to make her refusal knowing and conscious.
The warning stated that "if you refuse to submit to the chemical test, your operating privilege will be suspended for at least 12 months, and up to 18 months, if you have prior refusals or have been previously sentenced for driving under the influence." (emphasis added) Claimant testified that she understood this to mean that her license would not be suspended if she refused chemical testing because she never had a prior refusal and had never before been sentenced for driving under the influence. She voiced her concern about this to the officer, who told her only that she didn't have a right to speak to anyone about this.
The trial and appellate courts found Licensee's understanding to be a "reasonable interpretation. Construing the ambiguous language against the Department as the drafter of the warnings, as we must, we hold that the warning given to Licensee was not sufficient to specifically warn her that a refusal to submit to chemical testing would result in the suspension of her operating privilege. As such, the Department failed to meet its burden of proof and the trial court did not err in sustaining Licensee’s appeal."
The Department reads the above-recited first “if clause” to apply to the entire provision, meaning that any refusal will result in a 12-month suspension and, further, that suspension could be increased to 18 months if the licensee has a history of prior refusals or convictions. However, the warning can be read another way. The qualifying language at the end of the sentence, i.e., “if you have prior refusals or have been previously sentenced…,” can be read to apply to the entire warning. Read that way, the suspension penalty applies only if the licensee has previously refused a test or previously been sentenced. The resulting suspension can range between 12 and 18 months. A passage that can be read two ways is ambiguous, and it is axiomatic that any ambiguity is to be construed against the drafter of the document if the other party’s interpretation is reasonable.
The trial court correctly found that the warning was "poorly drafted and vague, since a comma was placed randomly where perhaps a period might have been” and concluded that this vague language confused the Licensee and prevented her from making a knowing and conscious refusal to submit to chemical testing and that, therefore, a suspension was not warranted. N.B. Claimant's prior employment involved extensive work at a medical center, interpreting consent and waiver forms.
To sustain a license suspension under sec. 1547 of the Vehicle Code, DOT must prove that the driver (1) was placed under arrest for driving while under the influence of alcohol; (2) was asked to submit to a chemical test; (3) refused to do so; and (4) was specifically warned that a refusal would result in the revocation of his or her driver’s license. The last prong of the Department’s burden requires “a precisely enunciated warning that a driver’s license will be revoked.” If the Department meets its initial burden, the burden then shifts to the licensee to show that her refusal was not knowing or conscious or that she was physically unable to take the test. Where a licensee is not adequately informed of the consequences of a refusal, it is irrelevant whether the refusal to submit to chemical testing was knowing and conscious.
The "issue is whether the warning given to Licensee was legally sufficient The law required the Department to prove that Licensee was specifically warned that a refusal to submit to chemical testing would result in the suspension of her driving privilege. We conclude that the Department was not able to meet its burden in this regard."
http://www.courts.state.pa.us/OpPosting/CWealth/out/2280CD07_7-23-08.pdf
Alas, poor Yourick!
She was arrested for DUI and asked to take a blood alcohol test, which she refused. DOT then proposed to suspend her license because of that refusal, and she appealed. And what ho! The warning that the police gave to her about the consequences of a refusal to submit to such testing was held to be ambiguous and not "legally sufficient" to make her refusal knowing and conscious.
The warning stated that "if you refuse to submit to the chemical test, your operating privilege will be suspended for at least 12 months, and up to 18 months, if you have prior refusals or have been previously sentenced for driving under the influence." (emphasis added) Claimant testified that she understood this to mean that her license would not be suspended if she refused chemical testing because she never had a prior refusal and had never before been sentenced for driving under the influence. She voiced her concern about this to the officer, who told her only that she didn't have a right to speak to anyone about this.
The trial and appellate courts found Licensee's understanding to be a "reasonable interpretation. Construing the ambiguous language against the Department as the drafter of the warnings, as we must, we hold that the warning given to Licensee was not sufficient to specifically warn her that a refusal to submit to chemical testing would result in the suspension of her operating privilege. As such, the Department failed to meet its burden of proof and the trial court did not err in sustaining Licensee’s appeal."
The Department reads the above-recited first “if clause” to apply to the entire provision, meaning that any refusal will result in a 12-month suspension and, further, that suspension could be increased to 18 months if the licensee has a history of prior refusals or convictions. However, the warning can be read another way. The qualifying language at the end of the sentence, i.e., “if you have prior refusals or have been previously sentenced…,” can be read to apply to the entire warning. Read that way, the suspension penalty applies only if the licensee has previously refused a test or previously been sentenced. The resulting suspension can range between 12 and 18 months. A passage that can be read two ways is ambiguous, and it is axiomatic that any ambiguity is to be construed against the drafter of the document if the other party’s interpretation is reasonable.
The trial court correctly found that the warning was "poorly drafted and vague, since a comma was placed randomly where perhaps a period might have been” and concluded that this vague language confused the Licensee and prevented her from making a knowing and conscious refusal to submit to chemical testing and that, therefore, a suspension was not warranted. N.B. Claimant's prior employment involved extensive work at a medical center, interpreting consent and waiver forms.
To sustain a license suspension under sec. 1547 of the Vehicle Code, DOT must prove that the driver (1) was placed under arrest for driving while under the influence of alcohol; (2) was asked to submit to a chemical test; (3) refused to do so; and (4) was specifically warned that a refusal would result in the revocation of his or her driver’s license. The last prong of the Department’s burden requires “a precisely enunciated warning that a driver’s license will be revoked.” If the Department meets its initial burden, the burden then shifts to the licensee to show that her refusal was not knowing or conscious or that she was physically unable to take the test. Where a licensee is not adequately informed of the consequences of a refusal, it is irrelevant whether the refusal to submit to chemical testing was knowing and conscious.
The "issue is whether the warning given to Licensee was legally sufficient The law required the Department to prove that Licensee was specifically warned that a refusal to submit to chemical testing would result in the suspension of her driving privilege. We conclude that the Department was not able to meet its burden in this regard."
Tuesday, July 22, 2008
real property - sales agreement - breach - consequential damages
Quinn v. Bupp - Superior Court - June 21, 2008
http://www.courts.state.pa.us/OpPosting/Superior/out/a09030_08.pdf
Seller breached sales agreement concerning commercial property. The trial court ordered specific performance, but both parties appealed concerning consequential damages. The appellate court held that
1) increased cost of borrowing - Buyer could not recover increased borrowing costs due to increase in mortgage interest. Following the rule in Rusiski v. Pribonic, 515 A.2d 507 (Pa. 1986), the court held that "under contract principles, damages must be such as would naturally and ordinarily follow from the breach, must have been reasonably foreseeable and within the contemplation of the parties at the time they made the contract and must be capable of being proved with reasonable certainty. Changes in interest rates, while foreseeable, are not capable of being proven with reasonable certainty. Drastic fluctuations in interest rates over the recent past render it speculative for a court to award interest as damages in specific performance decrees.
2) lost profits - Buyer could recover the profits he lost because of the breach, since they were foreseeable, ascertainable, and readily calculable. They would have been paid to the buyer if the seller had not wrongfully refused to comply with the sales agreement
http://www.courts.state.pa.us/OpPosting/Superior/out/a09030_08.pdf
Seller breached sales agreement concerning commercial property. The trial court ordered specific performance, but both parties appealed concerning consequential damages. The appellate court held that
1) increased cost of borrowing - Buyer could not recover increased borrowing costs due to increase in mortgage interest. Following the rule in Rusiski v. Pribonic, 515 A.2d 507 (Pa. 1986), the court held that "under contract principles, damages must be such as would naturally and ordinarily follow from the breach, must have been reasonably foreseeable and within the contemplation of the parties at the time they made the contract and must be capable of being proved with reasonable certainty. Changes in interest rates, while foreseeable, are not capable of being proven with reasonable certainty. Drastic fluctuations in interest rates over the recent past render it speculative for a court to award interest as damages in specific performance decrees.
2) lost profits - Buyer could recover the profits he lost because of the breach, since they were foreseeable, ascertainable, and readily calculable. They would have been paid to the buyer if the seller had not wrongfully refused to comply with the sales agreement
Monday, July 21, 2008
bankruptcy - exemption - objection - 30-day limit
In re Reilly - 3rd Circuit - July 21, 2008
http://www.ca3.uscourts.gov/opinarch/064290p.pdf
A Chapter 7 trustee who does not lodge a timely objection to a debtor’s claim of exemption of personal property may not move to sell the property if he later learns that the property value exceeds the amount of the claimed exemption.
Where, as here, the debtor indicates the intent to exempt her entire interest in a given property by claiming an exemption of its full value and the trustee does not object in a timely manner, the debtor is entitled to the property in its entirety.
Debtor is a cook with a one-person catering business. In her Schedule B and Schedule C, she listed "business equipment" as personal property with a value of $10,718 and claimed an exemption for the full value under 11 U.S.C. § 522(d)(6) and 11 U.S.C. § 522(d)(5).
The trustee did not object to the exemption within the 30-day period prescribed by Fed. R. Bank. P. 4003(b). He later sought an appraisal of the business equipment and determined it to have a value of approximately $17,200. He then filed a motion before the Bankruptcy Court to sell the business equipment in order to recoup the value, less the $10,718 exemption, for the bankruptcy estate. The Bankruptcy Court rejected this motion and agreed with the debtor that the property was fully exempt from the bankruptcy estate because the trustee had not filed a timely objection to the claim of exemption.
Under Fed. R. Bankr. P. 4003(b), the trustee, as a party in interest, has 30 days from the close of the creditors’ meeting under § 341(a) (or the date of filing any supplemental schedules or amendment to the exempt-property list, whichever is later) to object to any exemptions a debtor claimed on his or her Schedule C. If no objection is made, “the property claimed as exempt on [the Schedule C] is exempt.” 11 U.S.C. § 522(l).
Recognizing a split of authority of the issue, and relying primarily on Taylor v. Freeland & Kronz, 503 U.S. 638 (1992), the court rejected the trustee's argument that Rule 4003 and § 522(l) only place a 30-day limit on the trustee’s ability to object to an exemption on the ground that it was not properly taken—that there is no statutory basis for claiming the exemption—and does not control objections to property valuation.
The court said that its holding "accords with bankruptcy’s promise of a fresh start. Once the period for objection lapses, all parties involved know what property belongs to the bankruptcy estate and what remains with the debtor. The debtor can then use that property with the knowledge that it is her own and will not be subject to later liquidation for the benefit of creditors. This is not the case where the debtor claims an exemption in an amount less than the value listed on the schedules. In that circumstance, the trustee is entitled to claim for the bankruptcy estate the value of the property in excess of the exemption sought, without the need for a timely objection....But where the debtor lists a value for the property and claims an exemption in the same amount, the trustee is on notice of the debtor’s valuation and has ample time to seek confirmation that the debtor’s claimed value represents the true worth of the asset."
The trustee’s concern that the holding today will encourage gamesmanship among crafty debtors who may seek to undervalue their property with the hope of having it bypass the bankruptcy estate is answer by the fact that "there are significant protections in place for both the trustee and the bankruptcy estate....Moreover, on the facts here, there is no reason to suspect bad behavior on the part of the debtor. Indeed, it is quite to the contrary. If the trusteee discovered bad faith by the debtor, bankruptcy and criminal law allow recourse."
http://www.ca3.uscourts.gov/opinarch/064290p.pdf
A Chapter 7 trustee who does not lodge a timely objection to a debtor’s claim of exemption of personal property may not move to sell the property if he later learns that the property value exceeds the amount of the claimed exemption.
Where, as here, the debtor indicates the intent to exempt her entire interest in a given property by claiming an exemption of its full value and the trustee does not object in a timely manner, the debtor is entitled to the property in its entirety.
Debtor is a cook with a one-person catering business. In her Schedule B and Schedule C, she listed "business equipment" as personal property with a value of $10,718 and claimed an exemption for the full value under 11 U.S.C. § 522(d)(6) and 11 U.S.C. § 522(d)(5).
The trustee did not object to the exemption within the 30-day period prescribed by Fed. R. Bank. P. 4003(b). He later sought an appraisal of the business equipment and determined it to have a value of approximately $17,200. He then filed a motion before the Bankruptcy Court to sell the business equipment in order to recoup the value, less the $10,718 exemption, for the bankruptcy estate. The Bankruptcy Court rejected this motion and agreed with the debtor that the property was fully exempt from the bankruptcy estate because the trustee had not filed a timely objection to the claim of exemption.
Under Fed. R. Bankr. P. 4003(b), the trustee, as a party in interest, has 30 days from the close of the creditors’ meeting under § 341(a) (or the date of filing any supplemental schedules or amendment to the exempt-property list, whichever is later) to object to any exemptions a debtor claimed on his or her Schedule C. If no objection is made, “the property claimed as exempt on [the Schedule C] is exempt.” 11 U.S.C. § 522(l).
Recognizing a split of authority of the issue, and relying primarily on Taylor v. Freeland & Kronz, 503 U.S. 638 (1992), the court rejected the trustee's argument that Rule 4003 and § 522(l) only place a 30-day limit on the trustee’s ability to object to an exemption on the ground that it was not properly taken—that there is no statutory basis for claiming the exemption—and does not control objections to property valuation.
The court said that its holding "accords with bankruptcy’s promise of a fresh start. Once the period for objection lapses, all parties involved know what property belongs to the bankruptcy estate and what remains with the debtor. The debtor can then use that property with the knowledge that it is her own and will not be subject to later liquidation for the benefit of creditors. This is not the case where the debtor claims an exemption in an amount less than the value listed on the schedules. In that circumstance, the trustee is entitled to claim for the bankruptcy estate the value of the property in excess of the exemption sought, without the need for a timely objection....But where the debtor lists a value for the property and claims an exemption in the same amount, the trustee is on notice of the debtor’s valuation and has ample time to seek confirmation that the debtor’s claimed value represents the true worth of the asset."
The trustee’s concern that the holding today will encourage gamesmanship among crafty debtors who may seek to undervalue their property with the hope of having it bypass the bankruptcy estate is answer by the fact that "there are significant protections in place for both the trustee and the bankruptcy estate....Moreover, on the facts here, there is no reason to suspect bad behavior on the part of the debtor. Indeed, it is quite to the contrary. If the trusteee discovered bad faith by the debtor, bankruptcy and criminal law allow recourse."
consumer - used cars - proposed FTC reg
http://edocket.access.gpo.gov/2008/pdf/E8-16634.pdf
SUMMARY: The FTC requests public comments on its Used Motor Vehicle Trade Regulation Rule.
DATES: Written comments relating to the Used Car Rule must be received by September 19, 2008.
I. Background
The Commission promulgated the Used Car Rule in 1984 and the Rule became effective in 1985.2 The Used Car Rule is intended primarily to prevent oral misrepresentations and unfair omissions of material facts by used car dealers concerning warranty coverage. \
To accomplish that goal, the Rule provides a uniform method for disclosing warranty information on a window sticker called the ‘‘Buyers Guide’’ that dealers are required to display on used cars. The Rule requires used car dealers to disclose on the Buyers Guide whether they are offering a used car for sale with a dealer’s warranty and, if so, the basic terms, including the duration of coverage, the percentage of total repair costs to be paid by the dealer, and the exact systems covered by the warranty.
The Rule additionally provides that the Buyers Guide disclosures are to be incorporated by reference into the sales contract, and are to govern in the event of an inconsistency between the Buyers Guide and the sales contract. The Rule requires Spanish language versions of the Buyers Guide when dealers conduct sales in Spanish.
III. Issues for Comment
The Commission requests written comment on any or all of the following questions. The Commission requests that responses to its questions be as specific as possible, including a reference to the question being answered, and reference to empirical data or other evidence wherever available and appropriate.
A. General Issues
(1) Is there a continuing need for the Rule? Why or why not?
(2) What benefits has the Rule provided to consumers? What evidence supports the asserted benefits?
(3) What modifications, if any, should be made to the Rule to increase its benefits to consumers?
0 F(a) What evidence supports the proposed modifications?
(b) How would these modifications affect the costs the Rule imposes on businesses, and in particular on small businesses?
(c) How would these modifications affect the benefits to consumers?
(4) What impact has the Rule had on the flow of truthful information to consumers and on the flow of deceptive information to consumers?
(5) What significant costs has the Rule imposed on consumers? What evidence supports the asserted costs?
(6) What modifications, if any, should be made to the Rule to reduce the costs imposed on consumers?
(a) What evidence supports the proposed modifications?
(b) How would these modifications affect the benefits provided by the Rule?
(7) How have the 1995 amendments to the Rule affected purchasers of used motor vehicles? How have the 1995 amendments to the Rule affected used motor vehicle dealers? Please provide any evidence that has become available since 1995 concerning the costs, benefits, and effectiveness of the Rule. Does this new information indicate that the Rule should be modified? If so, why, and how? If not, why not?
(8) What benefits, if any, has the Rule provided to businesses, and in particular to small businesses? What evidence supports the asserted benefits?
(9) What modifications, if any, should be made to the Rule to increase its benefits to businesses, and in particular to small businesses?
(a) What evidence supports the proposed modifications?
(b) How would these modifications affect the costs the Rule impose on businesses, and in particular on small businesses?
(c) How would these modifications affect the benefits to consumers?
(10) What significant costs, including costs of compliance, has the Rule imposed on businesses, and in particular on small businesses? What evidence supports the asserted costs?
(11) What modifications, if any, should be made to the Rule to reduce the costs imposed on businesses, and in particular on small businesses?
(a) What evidence supports the proposed modifications?
(b) How would these modifications affect the benefits provided by the Rule?
(12) What evidence is available concerning the degree of industry compliance with the Rule? To what extent has there been a reduction in deceptive oral representations and unfair omissions made by used car dealers concerning warranty coverage since the Rule was issued? Please provide any supporting evidence. Does this evidence indicate that the Rule should be modified? If so, why, and how? If not, why not?
(13) What modifications, if any, should be made to the Rule to account for changes in relevant technology or economic conditions? What evidence supports the proposed modifications?
(14) Does the Rule overlap or conflict with other federal, state, or local laws or regulations? If so, how?
(a) What evidence supports the asserted conflicts?
(b) With reference to the asserted conflicts, should the Rule be modified? If so, why, and how? If not, why not?
SUMMARY: The FTC requests public comments on its Used Motor Vehicle Trade Regulation Rule.
DATES: Written comments relating to the Used Car Rule must be received by September 19, 2008.
I. Background
The Commission promulgated the Used Car Rule in 1984 and the Rule became effective in 1985.2 The Used Car Rule is intended primarily to prevent oral misrepresentations and unfair omissions of material facts by used car dealers concerning warranty coverage. \
To accomplish that goal, the Rule provides a uniform method for disclosing warranty information on a window sticker called the ‘‘Buyers Guide’’ that dealers are required to display on used cars. The Rule requires used car dealers to disclose on the Buyers Guide whether they are offering a used car for sale with a dealer’s warranty and, if so, the basic terms, including the duration of coverage, the percentage of total repair costs to be paid by the dealer, and the exact systems covered by the warranty.
The Rule additionally provides that the Buyers Guide disclosures are to be incorporated by reference into the sales contract, and are to govern in the event of an inconsistency between the Buyers Guide and the sales contract. The Rule requires Spanish language versions of the Buyers Guide when dealers conduct sales in Spanish.
III. Issues for Comment
The Commission requests written comment on any or all of the following questions. The Commission requests that responses to its questions be as specific as possible, including a reference to the question being answered, and reference to empirical data or other evidence wherever available and appropriate.
A. General Issues
(1) Is there a continuing need for the Rule? Why or why not?
(2) What benefits has the Rule provided to consumers? What evidence supports the asserted benefits?
(3) What modifications, if any, should be made to the Rule to increase its benefits to consumers?
0 F(a) What evidence supports the proposed modifications?
(b) How would these modifications affect the costs the Rule imposes on businesses, and in particular on small businesses?
(c) How would these modifications affect the benefits to consumers?
(4) What impact has the Rule had on the flow of truthful information to consumers and on the flow of deceptive information to consumers?
(5) What significant costs has the Rule imposed on consumers? What evidence supports the asserted costs?
(6) What modifications, if any, should be made to the Rule to reduce the costs imposed on consumers?
(a) What evidence supports the proposed modifications?
(b) How would these modifications affect the benefits provided by the Rule?
(7) How have the 1995 amendments to the Rule affected purchasers of used motor vehicles? How have the 1995 amendments to the Rule affected used motor vehicle dealers? Please provide any evidence that has become available since 1995 concerning the costs, benefits, and effectiveness of the Rule. Does this new information indicate that the Rule should be modified? If so, why, and how? If not, why not?
(8) What benefits, if any, has the Rule provided to businesses, and in particular to small businesses? What evidence supports the asserted benefits?
(9) What modifications, if any, should be made to the Rule to increase its benefits to businesses, and in particular to small businesses?
(a) What evidence supports the proposed modifications?
(b) How would these modifications affect the costs the Rule impose on businesses, and in particular on small businesses?
(c) How would these modifications affect the benefits to consumers?
(10) What significant costs, including costs of compliance, has the Rule imposed on businesses, and in particular on small businesses? What evidence supports the asserted costs?
(11) What modifications, if any, should be made to the Rule to reduce the costs imposed on businesses, and in particular on small businesses?
(a) What evidence supports the proposed modifications?
(b) How would these modifications affect the benefits provided by the Rule?
(12) What evidence is available concerning the degree of industry compliance with the Rule? To what extent has there been a reduction in deceptive oral representations and unfair omissions made by used car dealers concerning warranty coverage since the Rule was issued? Please provide any supporting evidence. Does this evidence indicate that the Rule should be modified? If so, why, and how? If not, why not?
(13) What modifications, if any, should be made to the Rule to account for changes in relevant technology or economic conditions? What evidence supports the proposed modifications?
(14) Does the Rule overlap or conflict with other federal, state, or local laws or regulations? If so, how?
(a) What evidence supports the asserted conflicts?
(b) With reference to the asserted conflicts, should the Rule be modified? If so, why, and how? If not, why not?
child support enforcement - medical support - federal regs
http://edocket.access.gpo.gov/2008/pdf/E8-15771.pdf
SUMMARY: This regulation revises Federal requirements for establishing and enforcing medical support obligations in Child Support Enforcement (CSE) program cases receiving services under title IV–D of the Social Security Act (the Act).
The changes: require that all support orders in the IV–D program address medical support; redefine reasonable-cost health insurance; require health insurance to be accessible, as defined by the State; and make conforming changes to the Federal interstate, substantialcompliance audit, and State selfassessment requirements.
DATES: Effective Date: This regulation is effective July 21, 2008.
SUMMARY: This regulation revises Federal requirements for establishing and enforcing medical support obligations in Child Support Enforcement (CSE) program cases receiving services under title IV–D of the Social Security Act (the Act).
The changes: require that all support orders in the IV–D program address medical support; redefine reasonable-cost health insurance; require health insurance to be accessible, as defined by the State; and make conforming changes to the Federal interstate, substantialcompliance audit, and State selfassessment requirements.
DATES: Effective Date: This regulation is effective July 21, 2008.
Friday, July 18, 2008
Pennsylvania Bulletin Highlights, July 19, 2008
Link: http://www.pabulletin.com/secure/data/vol38/38-29/index.html
Highlights of items of interest to the Poverty Law Community:
Recent Actions during the 2008 Regular Session of the General Assembly
http://www.pabulletin.com/secure/data/vol38/38-29/1316.html
DPW - child care - income limits - increase
http://www.pabulletin.com/secure/data/vol38/38-29/1339.html
DPW - MA - prior authorization (proposed) - radiology services
http://www.pabulletin.com/secure/data/vol38/38-29/1340.html
Sign language interpreters/transliterators - proposed final rules filed with IRRC
http://www.pabulletin.com/secure/data/vol38/38-29/1349.html
Highlights of items of interest to the Poverty Law Community:
Recent Actions during the 2008 Regular Session of the General Assembly
http://www.pabulletin.com/secure/data/vol38/38-29/1316.html
DPW - child care - income limits - increase
http://www.pabulletin.com/secure/data/vol38/38-29/1339.html
DPW - MA - prior authorization (proposed) - radiology services
http://www.pabulletin.com/secure/data/vol38/38-29/1340.html
Sign language interpreters/transliterators - proposed final rules filed with IRRC
http://www.pabulletin.com/secure/data/vol38/38-29/1349.html
UC - willful misconduct - drug testing - right to challenge drug test
Cinram Manufacturing, LLC v. UCBR - July 18, 2008 - Commonwealth Court - unreported memorandum decision
http://www.courts.state.pa.us/OpPosting/CWealth/out/2051CD07_7-18-08.pdf
The court upheld the Board decision that the employer had not proved willful misconduct, despite having produced drug test results - to which claimant did not object - showing a positive drug test.
Claimant produced countervailing evidence, including a letter from his doctor detailing how having taken cough medicine and eaten a poppy seed roll could have produced a false positive result. The referee and Board found that claimant's evidence was “credible and more compelling and logical” than that presented by employer and established that the test result was a false positive.
Under Section 402(e.1) of the Law, an employee is ineligible for unemployment compensation in any week in which (a) his unemployment is due to discharge or temporary suspension from work due to failure to submit and/or pass a drug test conducted pursuant to an employer’s established substance abuse policy, and (b) the drug test is not requested or implemented in violation of the law or of a collective bargaining agreement. 43 P.S. § 802(e.1). The employer introduced evidence which could have satisfied all requirements of Section 402(e.1) had it been accorded different weight and persuasive value.
However, proof of the elements of sec. 402(e.1) are not, per se, dispositive. Claimant has a right to dispute the accuracy of the drug test. The court rejected as "absurd" the employer's argument that, because it established the required elements listed in sec. 402(e.1), the referee and Board should not have examined the accuracy of the drug test.
The Board found credible Claimant’s evidence that lawful items he had consumed caused his drug test to produce a false positive result. While Employer interprets this as placing an additional burden on employers, it is merely the Board serving in its capacity as fact-finder. In unemployment compensation cases, the Board serves as final fact-finder and resolves any conflicts in evidence or credibility of witnesses.
The Board did not ignore the the drug test. Rather, it was given "probative value." UGI Utilities, Inc. v. UCBR, 851 A.2d 240, 252 (Pa. Cmwlth. 2004). The Board considered the positive test result, but accorded it no credibility, instead accepting substantial evidence which impugned its reliability. The Board clearly concluded that Claimant rebutted the positive test results with credible evidence that consumption of poppy seed roll and over-the-counter medicine resulted in a false positive test. Based on that, the Board concluded that he did not violate employer’s drug policy. "We are not in a position to question the Board’s finding. Thus, there is no reason for us to reverse this decision."
http://www.courts.state.pa.us/OpPosting/CWealth/out/2051CD07_7-18-08.pdf
The court upheld the Board decision that the employer had not proved willful misconduct, despite having produced drug test results - to which claimant did not object - showing a positive drug test.
Claimant produced countervailing evidence, including a letter from his doctor detailing how having taken cough medicine and eaten a poppy seed roll could have produced a false positive result. The referee and Board found that claimant's evidence was “credible and more compelling and logical” than that presented by employer and established that the test result was a false positive.
Under Section 402(e.1) of the Law, an employee is ineligible for unemployment compensation in any week in which (a) his unemployment is due to discharge or temporary suspension from work due to failure to submit and/or pass a drug test conducted pursuant to an employer’s established substance abuse policy, and (b) the drug test is not requested or implemented in violation of the law or of a collective bargaining agreement. 43 P.S. § 802(e.1). The employer introduced evidence which could have satisfied all requirements of Section 402(e.1) had it been accorded different weight and persuasive value.
However, proof of the elements of sec. 402(e.1) are not, per se, dispositive. Claimant has a right to dispute the accuracy of the drug test. The court rejected as "absurd" the employer's argument that, because it established the required elements listed in sec. 402(e.1), the referee and Board should not have examined the accuracy of the drug test.
The Board found credible Claimant’s evidence that lawful items he had consumed caused his drug test to produce a false positive result. While Employer interprets this as placing an additional burden on employers, it is merely the Board serving in its capacity as fact-finder. In unemployment compensation cases, the Board serves as final fact-finder and resolves any conflicts in evidence or credibility of witnesses.
The Board did not ignore the the drug test. Rather, it was given "probative value." UGI Utilities, Inc. v. UCBR, 851 A.2d 240, 252 (Pa. Cmwlth. 2004). The Board considered the positive test result, but accorded it no credibility, instead accepting substantial evidence which impugned its reliability. The Board clearly concluded that Claimant rebutted the positive test results with credible evidence that consumption of poppy seed roll and over-the-counter medicine resulted in a false positive test. Based on that, the Board concluded that he did not violate employer’s drug policy. "We are not in a position to question the Board’s finding. Thus, there is no reason for us to reverse this decision."
Wednesday, July 16, 2008
consumer - RESPA - insurance kickbacks
Alexander, et al. v. WAMU, et al. - ED Pa. - June 30, 2008
http://www.paed.uscourts.gov/documents/opinions/08d0740p.pdf
The court rejected defendants' 12(b)(6) motion to dismiss class action complaint against lender for alleged violations of RESPA, 12 USC 2601 et seq., by collecting illegal referral or kickback payments in the form of reinsurance premiums. Plaintiffs obtained loans with down payments of less than 20% and were required to pay for private mortgage insurance from an insurer with whom WAMU had alleged captive reinsurance arrangement.
filed rate doctrine does not prohibit a RESPA suit
The filed rate doctrine states that where regulated companies are required by federal or state law to file proposed rates or charges with a governing regulatory agency, then any rate approved by that agency “is per se reasonable and unassailable in judicial proceedings brought by ratepayers”....The filed rate doctrine has no fraud exception; rates that are approved are per se reasonable even if obtained by fraud....“[E]very court that has considered [the issue] has rejected the notion that there is a fraud exception to the filed rate doctrine.”
However, the court found that the filed rate doctrine "does not bar the plaintiffs’ claim that defendants violated RESPA through an alleged kickback or fee-splitting scheme through their mortgage lender’s captive reinsurance arrangement. While the doctrine bars direct challenges to the insurance rate structure set by a state, it does not prohibit plaintiffs from bringing suit under RESPA for a violation of fair business practices through the use of illegal kickback payments.
RESPA safe harbor provision
RESPA's safe harbor provision states that nothing shall prohibit “the payment to any person of a bona fide salary or compensation or other payment for goods or 8 facilities actually furnished or for services actually performed.” 12 U.S.C. § 2607(c)(2). HUD's two-prong test requires that the court evaluate: (1) “whether goods or facilities were actually furnished or services were actually performed for the compensation paid” and (2) “whether the payments are reasonably related to the value of the goods or facilities that were actually furnished or services that were actually performed.” Plaintiffs here "have sufficiently alleged that the payments in question are not covered by the safe harbor provision, since they say that some services were not actually performed.
Plaintiffs have Article III standing
The court followed the reasoning of Kahrer v. Ameriquest Mort. Co., 418 F. Supp. 2d 748 (W.D. Pa. 2006) rather than Morales v. Attorneys’ Title Ins. Fund, Inc., 983 F. Supp. 1418 (S.D. Fla. 1997) and concluded that under the plain language of the statute and its legislative history a plaintiff who is entitled to damages under § 8(d)(2) can seek three times the full amount he paid for any settlement services. Under the Kahrer line of cases, RESPA provides that plaintiffs have a right to purchase settlements services from providers who do not participate in an illegal kickback scheme. Therefore, plaintiffs’ failure to allege an overcharge for settlement services does not preclude a finding of injury in fact for the purposes of Article III standing.
Burford abstention does not apply
In Burford v. Sun Oil Co. the Supreme Court concluded that where complex issues of state administrative law are presented a federal court may in its discretion “stay its hand” and abstain from hearing the case. 319 U.S. 315, 334 (1943). The Court of Appeals has explained: Where timely and adequate state-court review is available, a federal court sitting in equity must decline to interfere with the proceedings or orders of state administrative agencies: (1) when there are “difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result in the case at bar;” or (2) where the “exercise of federal review of the question in a case and in similar cases would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial public concern.”
“While Burford is concerned with protecting complex state administrative processes from undue federal interferences, it does not require abstention whenever there is such a process”....Burford abstention does not apply to this case, where plaintiffs are claiming that defendants through their captive reinsurance program violated the anti-kickback provision of RESPA. Plaintiffs are not pursuing a state insurance code claim or challenging a state administrative decision, so their remedies are not limited to state administrative or court proceedings, and the mere existence of a state administrative procedures for insurance claims does not require abstention. Additionally, there are no prior or ongoing state proceedings with which the present action interferes.
Further, the second prong of the Burford doctrine – whether there are difficult questions of state law impacting public policy or exercise of federal review of the question in a case and in similar cases would be disruptive of state efforts to establish a coherent policy – is not implicated in this case. Plaintiffs are not challenging the filed rate or any other state policies in this matter. They allege that defendants’ alleged kickback scheme – not defendants’ charged rate – violates RESPA, a federal statute. Therefore adjudication of this matter will not interfere with Pennsylvania’s efforts to maintain a comprehensive and coherent regulatory regime.
http://www.paed.uscourts.gov/documents/opinions/08d0740p.pdf
The court rejected defendants' 12(b)(6) motion to dismiss class action complaint against lender for alleged violations of RESPA, 12 USC 2601 et seq., by collecting illegal referral or kickback payments in the form of reinsurance premiums. Plaintiffs obtained loans with down payments of less than 20% and were required to pay for private mortgage insurance from an insurer with whom WAMU had alleged captive reinsurance arrangement.
filed rate doctrine does not prohibit a RESPA suit
The filed rate doctrine states that where regulated companies are required by federal or state law to file proposed rates or charges with a governing regulatory agency, then any rate approved by that agency “is per se reasonable and unassailable in judicial proceedings brought by ratepayers”....The filed rate doctrine has no fraud exception; rates that are approved are per se reasonable even if obtained by fraud....“[E]very court that has considered [the issue] has rejected the notion that there is a fraud exception to the filed rate doctrine.”
However, the court found that the filed rate doctrine "does not bar the plaintiffs’ claim that defendants violated RESPA through an alleged kickback or fee-splitting scheme through their mortgage lender’s captive reinsurance arrangement. While the doctrine bars direct challenges to the insurance rate structure set by a state, it does not prohibit plaintiffs from bringing suit under RESPA for a violation of fair business practices through the use of illegal kickback payments.
RESPA safe harbor provision
RESPA's safe harbor provision states that nothing shall prohibit “the payment to any person of a bona fide salary or compensation or other payment for goods or 8 facilities actually furnished or for services actually performed.” 12 U.S.C. § 2607(c)(2). HUD's two-prong test requires that the court evaluate: (1) “whether goods or facilities were actually furnished or services were actually performed for the compensation paid” and (2) “whether the payments are reasonably related to the value of the goods or facilities that were actually furnished or services that were actually performed.” Plaintiffs here "have sufficiently alleged that the payments in question are not covered by the safe harbor provision, since they say that some services were not actually performed.
Plaintiffs have Article III standing
The court followed the reasoning of Kahrer v. Ameriquest Mort. Co., 418 F. Supp. 2d 748 (W.D. Pa. 2006) rather than Morales v. Attorneys’ Title Ins. Fund, Inc., 983 F. Supp. 1418 (S.D. Fla. 1997) and concluded that under the plain language of the statute and its legislative history a plaintiff who is entitled to damages under § 8(d)(2) can seek three times the full amount he paid for any settlement services. Under the Kahrer line of cases, RESPA provides that plaintiffs have a right to purchase settlements services from providers who do not participate in an illegal kickback scheme. Therefore, plaintiffs’ failure to allege an overcharge for settlement services does not preclude a finding of injury in fact for the purposes of Article III standing.
Burford abstention does not apply
In Burford v. Sun Oil Co. the Supreme Court concluded that where complex issues of state administrative law are presented a federal court may in its discretion “stay its hand” and abstain from hearing the case. 319 U.S. 315, 334 (1943). The Court of Appeals has explained: Where timely and adequate state-court review is available, a federal court sitting in equity must decline to interfere with the proceedings or orders of state administrative agencies: (1) when there are “difficult questions of state law bearing on policy problems of substantial public import whose importance transcends the result in the case at bar;” or (2) where the “exercise of federal review of the question in a case and in similar cases would be disruptive of state efforts to establish a coherent policy with respect to a matter of substantial public concern.”
“While Burford is concerned with protecting complex state administrative processes from undue federal interferences, it does not require abstention whenever there is such a process”....Burford abstention does not apply to this case, where plaintiffs are claiming that defendants through their captive reinsurance program violated the anti-kickback provision of RESPA. Plaintiffs are not pursuing a state insurance code claim or challenging a state administrative decision, so their remedies are not limited to state administrative or court proceedings, and the mere existence of a state administrative procedures for insurance claims does not require abstention. Additionally, there are no prior or ongoing state proceedings with which the present action interferes.
Further, the second prong of the Burford doctrine – whether there are difficult questions of state law impacting public policy or exercise of federal review of the question in a case and in similar cases would be disruptive of state efforts to establish a coherent policy – is not implicated in this case. Plaintiffs are not challenging the filed rate or any other state policies in this matter. They allege that defendants’ alleged kickback scheme – not defendants’ charged rate – violates RESPA, a federal statute. Therefore adjudication of this matter will not interfere with Pennsylvania’s efforts to maintain a comprehensive and coherent regulatory regime.
child abuse - expungement - discretionary authority of DPW
G.M. v. DPW - Commonwealth Court - July 16, 2008
http://www.courts.state.pa.us/OpPosting/CWealth/out/300CD08_7-16-08.pdf
DPW did not act in bad faith, fraudulently, capriciously or otherwise abuse its power in rejecting petitioner's 2007 petition alleging that there was good cause to expunge a founded report of child abuse which took place in 1987. A court order was entered at that time, finding that petitioner had sexually abused his daughter. There was no appeal from that finding.
Petitioner alleged that there was good cause for his record to be expunged because he was rehabilitated. He said that (1) he had undergone medical and psychiatric treatment and therapy; (2) he deeply regretted his actions; (3) at the time of the abuse, he was going through a divorce, but he now is in a stable relationship; (4) he has rebuilt his relationship with his daughter; (5) he currently is enrolled in nursing school; and (6) the founded child abuse report harmed his chances of obtaining gainful employment
The Law provides that the DPW Secretary may amend or expunge any record at any time upon good cause shown and notice to the appropriate subjects of the report. 23 Pa. C.S. §6341(a)(1). This section grants the Secretary the discretionary authority to amend any record upon good cause shown. J.C. v. Department of Public Welfare, 720 A.2d 193 (Pa. Cmwlth. 1998). Our courts will not review the actions of government bodies or administrative tribunals involving the exercise of discretion in the absence of bad faith, fraud, capricious action or abuse of power, which did not exist here.
The trial court’s orders were presumptive evidence that the child abuse report was accurate, and petitioner did not dispute the finding of abuse.
http://www.courts.state.pa.us/OpPosting/CWealth/out/300CD08_7-16-08.pdf
DPW did not act in bad faith, fraudulently, capriciously or otherwise abuse its power in rejecting petitioner's 2007 petition alleging that there was good cause to expunge a founded report of child abuse which took place in 1987. A court order was entered at that time, finding that petitioner had sexually abused his daughter. There was no appeal from that finding.
Petitioner alleged that there was good cause for his record to be expunged because he was rehabilitated. He said that (1) he had undergone medical and psychiatric treatment and therapy; (2) he deeply regretted his actions; (3) at the time of the abuse, he was going through a divorce, but he now is in a stable relationship; (4) he has rebuilt his relationship with his daughter; (5) he currently is enrolled in nursing school; and (6) the founded child abuse report harmed his chances of obtaining gainful employment
The Law provides that the DPW Secretary may amend or expunge any record at any time upon good cause shown and notice to the appropriate subjects of the report. 23 Pa. C.S. §6341(a)(1). This section grants the Secretary the discretionary authority to amend any record upon good cause shown. J.C. v. Department of Public Welfare, 720 A.2d 193 (Pa. Cmwlth. 1998). Our courts will not review the actions of government bodies or administrative tribunals involving the exercise of discretion in the absence of bad faith, fraud, capricious action or abuse of power, which did not exist here.
The trial court’s orders were presumptive evidence that the child abuse report was accurate, and petitioner did not dispute the finding of abuse.
Tuesday, July 15, 2008
consumer - arbitration clause - duress, unconscionability - discovery
Hopkins v. Newday Financial, LLC - ED Pa. - June 30, 2008
http://www.paed.uscourts.gov/documents/opinions/08D0759P.pdf
This memorandum order is meant to clarify a previous "limited discovery" order concerning "whether the arbitration agreements at issue are valid."
stay of legal actions if arbitration agreement is valid and binding
Under the Federal Arbitration Act, 9 U.S.C. § 3, federal courts are instructed to stay any suit in which an issue in dispute is properly referable to an arbitrator under a valid written arbitration agreement.
Before doing so, however, the court is obliged to satisfy itself that the arbitration agreement is valid and binding. Great W. Mortgage Corp. v. Peacock, 110 F.3d 222, 228 (3d Cir. 1997) (“Under the FAA the district court must be satisfied that the parties entered into a valid arbitration agreement.”). In making that determination, “generally applicable contract defenses, such as fraud, duress, or unconscionability, may be applied to invalidate arbitration agreements.” Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996).
challenge to validity based on allegations of duress and unconscionability
In this case, plaintiffs seek to invalidate the arbitrations agreements on the grounds of duress and unconscionability. To consider these defenses, the court looks primarily to the law of Pennsylvania, because it is the forum state and appears to have a strong relationship with the agreements at issue. Gay v. CreditInform, 511 F.3d 369, 388 n.13 (3d Cir. 2007)
a) duress - Under Pennsylvania law, “[d]uress is defined as ‘that degree of restraint or danger, either actually inflicted or threatened and impending, which is sufficient in severity or apprehension to overcome the mind of a person of ordinary firmness’”....
When the nature of the threat is economic, rather than physical, the doctrine of economic duress applies. “The important elements in the applicability of the doctrine of economic duress or business compulsion are that (1) there exists such pressure of circumstances which compels the injured party to involuntarily or against his will execute an agreement which results in economic loss, and (2) the injured party does not have an immediate legal remedy”....Duress will not lie where the aggrieved party had the opportunity to consult with counsel before entering into the allegedly coercive contract.
According to the named plaintiffs, they were forced to sign arbitration agreements in a compressed span of time under threat that their employment would terminate if they did not agree....[T]hey attest that, because the time for signing was so short, they were accorded no opportunity to seek the review of counsel. Id. Plaintiffs’ affidavits appear to present a set of circumstances that are at least arguably coercive enough to constitute duress under Pennsylvania law.
b) unconscionability - In Pennsylvania, “a contract or term is unconscionable, and therefore avoidable, where there was a lack of meaningful choice in the acceptance of the challenged provision and the provision unreasonably favors the party asserting it.” Salley v. Option One Mortgage Corp., 925 A.2d 115, 119 (Pa. 2007). Unconscion- ability, then, has procedural and substantive aspects.
As to procedural unconscionability, the touchstone is whether the party challenging the agreement had any meaningful choice regarding acceptance of its provisions. Thibodeau v. Comcast Corp., 912 A.2d 874, 886 (Pa. Super. Ct. 2006). Here, the plaintiffs have averred that they were presented with a contract of adhesion, and were given no opportunity to negotiate. An agreement is substantively unconscionable if it is “unreasonably favorable to the drafter”....
Plaintiffs argue that the arbitration agreement is unreasonably favorable to [defendant] NewDay, inter alia, because the arbitral forum’s rule prohibiting plaintiffs from proceeding as a class action, and forcing them instead to proceed individually. A series of Pennsylvania cases have held that limiting the use of the class-action vehicle, if it raises costs to the point of effectively preventing individual redress, is substantively unconscionable. See, e.g., Thibodeau, 912 A.2d at 883-84. The open question here is whether the forum’s rules raise costs to that level.
In addition, plaintiffs allege systemic bias on the part of the arbitral forum. If proved, such bias could potentially render the arbitration agreement fundamentally unfair to plaintiffs. But, as plaintiffs admit, they cannot prove that claim without discovery.
c) discovery - It is the court’s view that plaintiffs’ submissions, at the very least, highlight several questions of fact relevant to the validity of the arbitration agreements. When faced with a fact-intensive question regarding the arbitrability of a dispute, it is within the court’s discretion to allow for limited discovery into whether the arbitration agreements at issue are valid....That was the intent of this court’s order....It was not the court’s intent to limit discovery only to the question of the arbitral forum’s alleged bias, but to allow discovery more broadly into all of the defenses to arbitration raised by plaintiffs, as all appear to call for the resolution of factual questions.
http://www.paed.uscourts.gov/documents/opinions/08D0759P.pdf
This memorandum order is meant to clarify a previous "limited discovery" order concerning "whether the arbitration agreements at issue are valid."
stay of legal actions if arbitration agreement is valid and binding
Under the Federal Arbitration Act, 9 U.S.C. § 3, federal courts are instructed to stay any suit in which an issue in dispute is properly referable to an arbitrator under a valid written arbitration agreement.
Before doing so, however, the court is obliged to satisfy itself that the arbitration agreement is valid and binding. Great W. Mortgage Corp. v. Peacock, 110 F.3d 222, 228 (3d Cir. 1997) (“Under the FAA the district court must be satisfied that the parties entered into a valid arbitration agreement.”). In making that determination, “generally applicable contract defenses, such as fraud, duress, or unconscionability, may be applied to invalidate arbitration agreements.” Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996).
challenge to validity based on allegations of duress and unconscionability
In this case, plaintiffs seek to invalidate the arbitrations agreements on the grounds of duress and unconscionability. To consider these defenses, the court looks primarily to the law of Pennsylvania, because it is the forum state and appears to have a strong relationship with the agreements at issue. Gay v. CreditInform, 511 F.3d 369, 388 n.13 (3d Cir. 2007)
a) duress - Under Pennsylvania law, “[d]uress is defined as ‘that degree of restraint or danger, either actually inflicted or threatened and impending, which is sufficient in severity or apprehension to overcome the mind of a person of ordinary firmness’”....
When the nature of the threat is economic, rather than physical, the doctrine of economic duress applies. “The important elements in the applicability of the doctrine of economic duress or business compulsion are that (1) there exists such pressure of circumstances which compels the injured party to involuntarily or against his will execute an agreement which results in economic loss, and (2) the injured party does not have an immediate legal remedy”....Duress will not lie where the aggrieved party had the opportunity to consult with counsel before entering into the allegedly coercive contract.
According to the named plaintiffs, they were forced to sign arbitration agreements in a compressed span of time under threat that their employment would terminate if they did not agree....[T]hey attest that, because the time for signing was so short, they were accorded no opportunity to seek the review of counsel. Id. Plaintiffs’ affidavits appear to present a set of circumstances that are at least arguably coercive enough to constitute duress under Pennsylvania law.
b) unconscionability - In Pennsylvania, “a contract or term is unconscionable, and therefore avoidable, where there was a lack of meaningful choice in the acceptance of the challenged provision and the provision unreasonably favors the party asserting it.” Salley v. Option One Mortgage Corp., 925 A.2d 115, 119 (Pa. 2007). Unconscion- ability, then, has procedural and substantive aspects.
As to procedural unconscionability, the touchstone is whether the party challenging the agreement had any meaningful choice regarding acceptance of its provisions. Thibodeau v. Comcast Corp., 912 A.2d 874, 886 (Pa. Super. Ct. 2006). Here, the plaintiffs have averred that they were presented with a contract of adhesion, and were given no opportunity to negotiate. An agreement is substantively unconscionable if it is “unreasonably favorable to the drafter”....
Plaintiffs argue that the arbitration agreement is unreasonably favorable to [defendant] NewDay, inter alia, because the arbitral forum’s rule prohibiting plaintiffs from proceeding as a class action, and forcing them instead to proceed individually. A series of Pennsylvania cases have held that limiting the use of the class-action vehicle, if it raises costs to the point of effectively preventing individual redress, is substantively unconscionable. See, e.g., Thibodeau, 912 A.2d at 883-84. The open question here is whether the forum’s rules raise costs to that level.
In addition, plaintiffs allege systemic bias on the part of the arbitral forum. If proved, such bias could potentially render the arbitration agreement fundamentally unfair to plaintiffs. But, as plaintiffs admit, they cannot prove that claim without discovery.
c) discovery - It is the court’s view that plaintiffs’ submissions, at the very least, highlight several questions of fact relevant to the validity of the arbitration agreements. When faced with a fact-intensive question regarding the arbitrability of a dispute, it is within the court’s discretion to allow for limited discovery into whether the arbitration agreements at issue are valid....That was the intent of this court’s order....It was not the court’s intent to limit discovery only to the question of the arbitral forum’s alleged bias, but to allow discovery more broadly into all of the defenses to arbitration raised by plaintiffs, as all appear to call for the resolution of factual questions.
Monday, July 14, 2008
custody - in camera interview of child - presence of counsel - expert evaluation - admission into record
Ottolini v. Barrett - Superior Court - July 14, 2008
http://www.courts.state.pa.us/OpPosting/Superior/out/s39012_08.pdf
Pa. RCP 1915.11(b) mandates that counsel be present during in camera interview of child in custody case in which trial court relied at least in part on such interview. Sandra L.H. v. Joseph L.H., 444 A.2d 12241 (Pa. Super. 1982) is overruled to the extent that it may be inconsistent with the rule.
Remand is also required since a) the court relied on a psychological evaluation that was never entered into evidence, and b) the psychologist was not called as a witness or subject to cross-examination. Pa. CRP 1915.8(a).
http://www.courts.state.pa.us/OpPosting/Superior/out/s39012_08.pdf
Pa. RCP 1915.11(b) mandates that counsel be present during in camera interview of child in custody case in which trial court relied at least in part on such interview. Sandra L.H. v. Joseph L.H., 444 A.2d 12241 (Pa. Super. 1982) is overruled to the extent that it may be inconsistent with the rule.
Remand is also required since a) the court relied on a psychological evaluation that was never entered into evidence, and b) the psychologist was not called as a witness or subject to cross-examination. Pa. CRP 1915.8(a).
consumer - artibration - standard to vacate award
Gateway Funding Diversified Mortgage Services v. Field - ED Pa. - July 10, 20008
http://www.paed.uscourts.gov/documents/opinions/08D0790P.pdf
There was no basis in this case to overcome the "exceedingly deferential standard necessary to vacate, modify or amended an arbitration award which was sought to be confirmed under 9 USC sec. 9."
Section 9 of the Federal Arbitration Act (FAA) states that the court must grant an order confirming an arbitration award unless the award is vacated, modified, or corrected as prescribed in Sections 10 and 11 of this title. 9 U.S.C.A. § 9.
The review of an arbitration award is “extremely deferential” and vacatur is appropriate only in “exceedingly narrow” circumstances....An arbitration award may be set aside where there is an adequate showing of fraud, partiality, misconduct, violation of a specific command of law, or showing that enforcement would be contrary to public policy....The court’s ability to vacate an arbitration award is almost exclusively limited to these grounds, although an award found to be in manifest disregard of the law can also be vacated by the court.
In addition, procedural irregularities may result in such fundamental unfairness as to warrant the vacation of an arbitral award. For example, a court can vacate an arbitration award where an arbitrator received ex parte informati on to the prejudice of one of the parties; or where the arbitrator refused to admit certain evidence in rebuttal without giving parties warning about the application of evidentiary rules); or because the neutral arbitrator rendered decision without obtaining the signatures of the partisan arbitrators, so that there was a lack of evidence of any significant decision-making process by the majority of the board.
The net result of a court’s application of this standard is generally to affirm easily the arbitration award under this extremely deferential standard - a result that is squarely in line with the purpose behind the FAA where courts are tasked with reviewing an arbitration decision. When an arbitrator resolves disputes regarding the application of a contract, and no dishonesty is alleged, the arbitrator's “improvident, even silly, fact-finding” does not provide a basis for a reviewing court to refuse to enforce the award.
In discussing the courts' limited role in reviewing the merits of arbitration awards, we have stated that “‘courts ... have no business weighing the merits of the grievance [or] considering whether there is equity in a particular claim.’ ”.../When the judiciary does so, “it usurps a function which ... is entrusted to the arbitration tribunal.”
http://www.paed.uscourts.gov/documents/opinions/08D0790P.pdf
There was no basis in this case to overcome the "exceedingly deferential standard necessary to vacate, modify or amended an arbitration award which was sought to be confirmed under 9 USC sec. 9."
Section 9 of the Federal Arbitration Act (FAA) states that the court must grant an order confirming an arbitration award unless the award is vacated, modified, or corrected as prescribed in Sections 10 and 11 of this title. 9 U.S.C.A. § 9.
The review of an arbitration award is “extremely deferential” and vacatur is appropriate only in “exceedingly narrow” circumstances....An arbitration award may be set aside where there is an adequate showing of fraud, partiality, misconduct, violation of a specific command of law, or showing that enforcement would be contrary to public policy....The court’s ability to vacate an arbitration award is almost exclusively limited to these grounds, although an award found to be in manifest disregard of the law can also be vacated by the court.
In addition, procedural irregularities may result in such fundamental unfairness as to warrant the vacation of an arbitral award. For example, a court can vacate an arbitration award where an arbitrator received ex parte informati on to the prejudice of one of the parties; or where the arbitrator refused to admit certain evidence in rebuttal without giving parties warning about the application of evidentiary rules); or because the neutral arbitrator rendered decision without obtaining the signatures of the partisan arbitrators, so that there was a lack of evidence of any significant decision-making process by the majority of the board.
The net result of a court’s application of this standard is generally to affirm easily the arbitration award under this extremely deferential standard - a result that is squarely in line with the purpose behind the FAA where courts are tasked with reviewing an arbitration decision. When an arbitrator resolves disputes regarding the application of a contract, and no dishonesty is alleged, the arbitrator's “improvident, even silly, fact-finding” does not provide a basis for a reviewing court to refuse to enforce the award.
In discussing the courts' limited role in reviewing the merits of arbitration awards, we have stated that “‘courts ... have no business weighing the merits of the grievance [or] considering whether there is equity in a particular claim.’ ”.../When the judiciary does so, “it usurps a function which ... is entrusted to the arbitration tribunal.”
consumer - FTC Do-Not-Call registry - indefinite registration
http://edocket.access.gpo.gov/2008/pdf/E8-15994.pdf
SUMMARY: In this document, the FTC amends its rules under the Telephone Consumer Protection Act (TCPA) to require telemarketers to honor registrations with the National Do-Not-Call Registry indefinitely.
This action is consistent with Congress’s mandate in the Do-Not-Call Improvement Act of 2007, which prohibits the removal of numbers from the Registry unless the consumer cancels the registration or the number has been disconnected and reassigned or is otherwise invalid. The Commission also will continue to coordinate with the FTC on additional ways to improve the Registry’s accuracy.
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47 CFR § 64.1200 Delivery restrictions.
(c) (2) A residential telephone subscriber who has registered his or her telephone number on the national do-not-call registry of persons who do not wish to receive telephone solicitations that is maintained by the Federal Government. Such do-not-call registrations must be honored indefinitely, or until the registration is cancelled by the consumer or the telephone number is removed by the database administrator.
SUMMARY: In this document, the FTC amends its rules under the Telephone Consumer Protection Act (TCPA) to require telemarketers to honor registrations with the National Do-Not-Call Registry indefinitely.
This action is consistent with Congress’s mandate in the Do-Not-Call Improvement Act of 2007, which prohibits the removal of numbers from the Registry unless the consumer cancels the registration or the number has been disconnected and reassigned or is otherwise invalid. The Commission also will continue to coordinate with the FTC on additional ways to improve the Registry’s accuracy.
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47 CFR § 64.1200 Delivery restrictions.
(c) (2) A residential telephone subscriber who has registered his or her telephone number on the national do-not-call registry of persons who do not wish to receive telephone solicitations that is maintained by the Federal Government. Such do-not-call registrations must be honored indefinitely, or until the registration is cancelled by the consumer or the telephone number is removed by the database administrator.
Thursday, July 10, 2008
child abuse - expungement - founded report - PFA case
Philadelphia DHS v. DPW - Commonwealth Court - July 10, 2008
http://www.courts.state.pa.us/OpPosting/CWealth/out/1813CD07_7-10-08.pdf
A PFA order in collateral case finding father sexually abused his child provided a sufficient basis for a "founded report" of abuse, 23 P.S. 6303(a), under the Child Protective Services Law.
"Where only one defendant is charged with abuse in a PFA action, only one person defends those charges, an adjudication finds that such abuse occurred and prohibits further contact between the victim child and that defendant, the PFA order is an adjudication containing a sufficient definitive finding upon which DHS based the Founded Report."
These facts were held to distinguish this case from J.G. v. DPW, 795 A.2d 1089 (Pa. Cmwlth. 2002), where the court held that a generalized finding in a dependency case - with no definitive finding that a particular individiual was responsible for the abuse - did not preclude an appeal in a related expungement case.
"A Founded Report may be based upon any judicial adjudication finding that the child who is the subject of the report has been abused, including, but not limited to, criminal charges. The ALJ erred as a matter of law in relying upon J.G. to conclude that the PFA hearing in this case was not, on its own, able to support a Founded Report of abuse. Thus, the DPW did also err in adopting the recommendation of the ALJ and directing that the Founded Report of child abuse against R.G.S. be expunged."
http://www.courts.state.pa.us/OpPosting/CWealth/out/1813CD07_7-10-08.pdf
A PFA order in collateral case finding father sexually abused his child provided a sufficient basis for a "founded report" of abuse, 23 P.S. 6303(a), under the Child Protective Services Law.
"Where only one defendant is charged with abuse in a PFA action, only one person defends those charges, an adjudication finds that such abuse occurred and prohibits further contact between the victim child and that defendant, the PFA order is an adjudication containing a sufficient definitive finding upon which DHS based the Founded Report."
These facts were held to distinguish this case from J.G. v. DPW, 795 A.2d 1089 (Pa. Cmwlth. 2002), where the court held that a generalized finding in a dependency case - with no definitive finding that a particular individiual was responsible for the abuse - did not preclude an appeal in a related expungement case.
"A Founded Report may be based upon any judicial adjudication finding that the child who is the subject of the report has been abused, including, but not limited to, criminal charges. The ALJ erred as a matter of law in relying upon J.G. to conclude that the PFA hearing in this case was not, on its own, able to support a Founded Report of abuse. Thus, the DPW did also err in adopting the recommendation of the ALJ and directing that the Founded Report of child abuse against R.G.S. be expunged."
False Claims Act - charging excess rent in HCV program - OIG alert
http://edocket.access.gpo.gov/2008/pdf/E8-15663.pdf
SUMMARY: This notice provides important information recently issued by HUD’s Office of the Inspector General (OIG) on a recurring problem in the Housing Choice Voucher program. The problem which this notice addresses is landlords submitting false claims for periodic payments under housing assistance payment (HAP) contracts.
Fraud Information Bulletin: Excess Rent
Purpose
This Bulletin highlights a recurring problem in the Housing Choice Voucher (HCV) program. Specifically, this Bulletin discusses the submission by landlords of false claims for periodic payments under Housing Assistance Payment (HAP) contracts, where such landlords have violated their continuing obligations to not charge tenants rents in excess of what is authorized by the HAP contracts.
The Problem
Improperly requiring tenants to pay rent in excess of what is authorized by the applicable HAP contract represents both an actionable offense under the False Claims Act and deplorable behavior directed towards the very persons whom the HCV program was designed to serve. (Additionally, depending on the intent, such an action may qualify as a criminal offense under 18 U.S.C. 287, 1343, etc.) OIG will not tolerate such conduct, and rather will cooperate with efforts to bring offending landlords to justice and to remedy their wrongs.
Background
HUD administers Federal aid to local housing agencies (HAs) that is intended to implement housing assistance programs for low-income residents. With respect to the HCV program, HUD funds HAs via annual contributions contracts. The HAs, in turn, enter into HAP contracts with individual landlords. These HAP contracts provide for periodic housing assistance payments on behalf of eligible lowincome tenants. The HAP contracts also may require eligible tenants to make supplemental rent payments; however, the contracts expressly prohibit landlords from requiring tenants to pay rent in excess of what is authorized by the HAP contracts.
Pursuant to qui tam complaints and citizen complaints filed throughout the nation and subsequent activities, OIG has become aware of a number of landlords who have improperly required tenants to pay rent in excess of what is authorized by the HAP contracts, and thereby submitted or caused to be submitted false claims for HAP contract periodic rent payments.
Example
On July 29, 2005, a Connecticut tenant filed a qui tam complaint, under 31 U.S.C. 3730, against her former landlord. See Coleman v. Hernandez, 490 F. Supp.2d 278 (D. Conn. 2007). The tenant complained that pursuant to a HAP contract the landlord had agreed to accept $1,550 per month for the rental of an apartment in Stamford. Of this $1,550, the tenant was personally responsible for $20, and HUD via the HA paid the complementary $1,530. In spite of the explicit prohibition in the HAP contract, however, the landlord required the tenant to pay an ‘‘additional rent payment’’ of $60 on six separate occasions. In other words, the landlord inappropriately extracted an additional $360 from the helpless tenant. OIG is aware of numerous similar examples of this sort of egregious conduct nationwide.
Penalty
Pursuant to the False Claims Act, 31 U.S.C. 3729 et seq., persons who submit to HUD or a HUD intermediary claims that are false, fictitious or fraudulent are liable for an assessment equal to three times the amount of the claim, plus a penalty of between $5,500 and $11,000 per claim. The United States may take the position that the entire amount of its HAP payment, not merely the amount of the excess payment by the tenant, is the claim that should be trebled where landlords make false certifications concerning excess rent charged.
Additionally, each periodic rent payment constitutes a separate claim; thus, in the Coleman case the court levied a $33,000 (6 × $5,500) penalty against the landlord for her $360 victimization of the tenant.
Pertinent Information
If you have pertinent information regarding this bulletin, please contact: Office of Legal Counsel, Office of the Inspector General, Department of Housing and Urban Development, 451 Seventh St., SW., Room 8260, Washington, DC 20410. Dated: July 1, 2008.
Kenneth M. Donohue, Inspector General.
SUMMARY: This notice provides important information recently issued by HUD’s Office of the Inspector General (OIG) on a recurring problem in the Housing Choice Voucher program. The problem which this notice addresses is landlords submitting false claims for periodic payments under housing assistance payment (HAP) contracts.
Fraud Information Bulletin: Excess Rent
Purpose
This Bulletin highlights a recurring problem in the Housing Choice Voucher (HCV) program. Specifically, this Bulletin discusses the submission by landlords of false claims for periodic payments under Housing Assistance Payment (HAP) contracts, where such landlords have violated their continuing obligations to not charge tenants rents in excess of what is authorized by the HAP contracts.
The Problem
Improperly requiring tenants to pay rent in excess of what is authorized by the applicable HAP contract represents both an actionable offense under the False Claims Act and deplorable behavior directed towards the very persons whom the HCV program was designed to serve. (Additionally, depending on the intent, such an action may qualify as a criminal offense under 18 U.S.C. 287, 1343, etc.) OIG will not tolerate such conduct, and rather will cooperate with efforts to bring offending landlords to justice and to remedy their wrongs.
Background
HUD administers Federal aid to local housing agencies (HAs) that is intended to implement housing assistance programs for low-income residents. With respect to the HCV program, HUD funds HAs via annual contributions contracts. The HAs, in turn, enter into HAP contracts with individual landlords. These HAP contracts provide for periodic housing assistance payments on behalf of eligible lowincome tenants. The HAP contracts also may require eligible tenants to make supplemental rent payments; however, the contracts expressly prohibit landlords from requiring tenants to pay rent in excess of what is authorized by the HAP contracts.
Pursuant to qui tam complaints and citizen complaints filed throughout the nation and subsequent activities, OIG has become aware of a number of landlords who have improperly required tenants to pay rent in excess of what is authorized by the HAP contracts, and thereby submitted or caused to be submitted false claims for HAP contract periodic rent payments.
Example
On July 29, 2005, a Connecticut tenant filed a qui tam complaint, under 31 U.S.C. 3730, against her former landlord. See Coleman v. Hernandez, 490 F. Supp.2d 278 (D. Conn. 2007). The tenant complained that pursuant to a HAP contract the landlord had agreed to accept $1,550 per month for the rental of an apartment in Stamford. Of this $1,550, the tenant was personally responsible for $20, and HUD via the HA paid the complementary $1,530. In spite of the explicit prohibition in the HAP contract, however, the landlord required the tenant to pay an ‘‘additional rent payment’’ of $60 on six separate occasions. In other words, the landlord inappropriately extracted an additional $360 from the helpless tenant. OIG is aware of numerous similar examples of this sort of egregious conduct nationwide.
Penalty
Pursuant to the False Claims Act, 31 U.S.C. 3729 et seq., persons who submit to HUD or a HUD intermediary claims that are false, fictitious or fraudulent are liable for an assessment equal to three times the amount of the claim, plus a penalty of between $5,500 and $11,000 per claim. The United States may take the position that the entire amount of its HAP payment, not merely the amount of the excess payment by the tenant, is the claim that should be trebled where landlords make false certifications concerning excess rent charged.
Additionally, each periodic rent payment constitutes a separate claim; thus, in the Coleman case the court levied a $33,000 (6 × $5,500) penalty against the landlord for her $360 victimization of the tenant.
Pertinent Information
If you have pertinent information regarding this bulletin, please contact: Office of Legal Counsel, Office of the Inspector General, Department of Housing and Urban Development, 451 Seventh St., SW., Room 8260, Washington, DC 20410. Dated: July 1, 2008.
Kenneth M. Donohue, Inspector General.
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