Judge Preska Declares Consumer Finance Protection Bureau Unconstitutional

By Michael Keough on Posted in SDNY Blog

In an opinion today, Judge Preska dismissed the Consumer Finance Protection Bureau (“CFPB”) from an action after finding that, because the CFPB’s structure was unconstitutional, it lacked the authority to bring claims under the Consumer Finance Protection Act (“CFPA”).

The CFPB and the New York Attorney General had originally brought claims against companies that offered cash advances to consumers waiting on payouts from settlement agreements, which were allegedly usurious loans under New York law.  Judge Preska challenged whether the CFPB could bring these claims in the first place, adopting the dissenting opinion of Judge Brett Kavanaugh from a recent D.C. Circuit decision.  The majority in that case found that the CFPB was constitutional (a finding that did not bind Judge Preska).  Judge Kavanaugh had argued that the CFPB was unconstitutional because its head, a single director, could not be removed by the President without cause and was not beholden to any other commissioners or board members at the CFPB.  According to Judge Kavanaugh, this violated the principle of separation of powers by divesting executive authority from the President in violation of Article II’s command that “The executive Power shall be vested in a President of the United States of America.”

Judge Preska did find, however, that the New York Attorney General separately had the authority to bring claims under the CFPA and thus allowed the claims to proceed.

Judge Oetken Enforces “Faustian Bargain” of Free Software In Exchange for User Data

By Charles Michael on Posted in SDNY Blog

In an opinion Wednesday, Judge Oetken ruled that it was not unconscionable for UnrollMe, a provider of free software to help unsubscribe consumers from unwanted email, to enforce the users’ agreement to allow the company to use or sell their data, at least on an anonymized basis — notwithstanding that people may not like this sort of arrangement: Continue Reading

Citing Virtues of “Inter-Court Dialogue,” Judge Oetken Refuses to Transfer EPA Case to Texas Court Considering Similar Issues

By Charles Michael on Posted in SDNY Blog

In an opinion yesterday, Judge Oetken refused to transfer to the Southern District of Texas a challenge to the EPA’s decision to suspend a rule from the previous administration, concerning the definition of “navigable waters.”  The Southern District of Texas is considering similar issues in a related case, but Judge Oetken found that the desire for uniformity was not enough to justify the transfer: Continue Reading

Judge Buchwald: Trump Can’t Block Twitter Users Under First Amendment

By Michael Keough on Posted in SDNY Blog

In an opinion yesterday, Judge Buchwald found that President Trump’s practice of blocking users on Twitter (typically after they post a comment critical of the President) violates the First Amendment. The plaintiffs (who included individual users as well as the Knight First Amendment Institute) claimed that preventing them from viewing comments, replying to tweets, and participating in comment threads denies access to an important public forum in the 21st century (see our initial coverage here).

After finding that the plaintiffs had standing, Judge Buchwald determined that the President’s Twitter account was appropriately analyzed as a public forum.  Judge Buchwald reasoned that the account is subject to government control for First Amendment purposes in part because President Trump has used the account “to take actions that can be taken only by the President as President.”  Judge Buchwald then determined that the President may not block users on Twitter based on their political views.  In doing so, she emphasized that blocking users goes further than merely “muting” them, insofar as blocking actually limits the blocked user’s “right to speak”: Continue Reading

Judge Engelmayer Rejects Claim That “Diet” Label on Soda Implies Weight Loss

By Charles Michael on Posted in SDNY Blog

In an opinion Thursday, Judge Engelmayer dismissed claims by plaintiffs who alleged that they were defrauded into buying Diet Pepsi because they thought that the word “Diet” implied it would help with weight loss.  He found that, in context, the plaintiffs’ alleged inference was not a reasonable one, since the term “Diet” refers to the beverage’s attributes as compared to regular Pepsi:

“Diet” immediately precedes “Pepsi,” and thereby connotes a relative health claim—that Diet Pepsi assists in weight management relative to regular Pepsi. While neither the [complaint] nor plaintiffs’ brief in opposition so much as mentions regular Pepsi, reading “Diet Pepsi” without reference to Pepsi deprives the term “Diet” of its essential referent.  The [complaint] does not dispute that Diet Pepsi assists in weight management relative to regular Pepsi. On this basis alone, plaintiffs cannot maintain a claim that reasonable consumers have been deceived by the term “Diet Pepsi.”

Second, even if the word “diet” may sometimes identify weight-loss products (as in “diet pills” or other products available in a pharmaceutical aisle), in the context of soft drinks, the term unambiguously signals reduced calorie content relative to the non-diet version of the drink in question.  Dictionary definitions specifically defining “diet” in the context of soft drinks confirms this.

Judge Sweet Rejects Shareholder Derivative Settlement With Hollow Governance Reforms

By Charles Michael on Posted in SDNY Blog

In an opinion Thursday, Judge Sweet rejected a proposed settlement of a shareholder derivative case because the consideration for the settlement consisted of three corporate governance reforms that were all but meaningless, such as a commitment to vague and unspecified “training” and a commitment to maintain the same ethics code that existed all along and that apparently didn’t help prevent the underlying wrongdoing: Continue Reading

Magistrate Judge Aaron: Producers of “To Kill a Mockingbird” Have Two Weeks to Put on a Show

By Michael Keough on Posted in SDNY Blog

On Monday, Magistrate Judge Aaron ordered that the producers of To Kill a Mockingbird must film a performance of their play no later than May 15 as part of expedited discovery in their dispute with the estate of novelist Harper Lee.  The producers are seeking a judicial declaration that the play (with a script written by Aaron Sorkin) is consistent with a written agreement to the rights to the play for just these purposes (see our previous coverage here).

Judge Torres has set a June 4 trial date – less than two months after the complaint was filed.

Judge Oetken: Genderqueer Plaintiff Cannot Sue Under Pseudonym

By Charles Michael on Posted in SDNY Blog

In an opinion last week, Judge Oetken denied a motion by a plaintiff, who identifies as genderqueer and who accuses the defendants of employment discrimination, to sue under a pseudonym.  The decision was largely based on the fact that the plaintiff had already been identified in a news article, but Judge Oetken also noted the “imbalance” that occurs when only one side to a lawsuit is named:

At bottom, Plaintiff wants what most employment-discrimination plaintiffs would like: to sue their former employer without future employers knowing about it. But while that desire is understandable, our system of dispute resolution does not allow it. Defendants—including two individuals—stand publicly accused of discrimination and harassment, including detailed allegations of misconduct. Defendants do not have the option of proceeding pseudonymously. Allowing Plaintiff to proceed anonymously would put Defendants at a genuine disadvantage, particularly when it comes to settlement leverage. Courts allow such an imbalance only in unique circumstances, and Plaintiff has not shown that this is one of those special cases.

The case is also notable because, as Alison Frankel points out here, Judge Oetken referred to the plaintiff via the plural pronoun “they,” as the plaintiff preferred.

LexBlog