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07/29/2016

FTC Reverses Initial Decision in LabMD

Federal Trade Commission finds cancer detection lab in violation of data security statute, despite no evidence of consumer harm

 

Washington, D.C. – In an unfortunate but somewhat anticipated decision, the Federal Trade Commission (FTC) today issued a finding that LabMD violated a data security statute, reversing an earlier decision by the agency’s own chief in-house administrative law judge (ALJ).  In the Initial Decision on November 13, 2015, Chief ALJ D. Michael Chappell held that the FTC failed to prove the commercial activities of LabMD were unfair to consumers under Section 5(n) of the FTC Act. 

This decision sets a dangerous precedent for every small business in America that deals with sensitive personal information. The FTC appears to have overlooked a significant body of evidence that had been presented before the agency’s chief ALJ. The FTC has imposed liability on LabMD, despite there being no evidence that a single consumer was harmed.

In reversing the Initial Decision, the FTC Commissioners disavowed and disregarded the witness credibility findings of Chief ALJ Chappell, which were based on his first-hand observations of the witnesses.

About Cause of Action Institute:

Cause of Action Institute is a public interest law firm committed to limiting corruption and abuse in the federal government. For more information, visit www.causeofaction.org.

 

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07/27/2016

Cause of Action Institute Seeks Supreme Court Review in Chicago Transit Authority False Claims Act Suit

Today, Cause of Action Institute filed a petition for writ of certiorari with the United States Supreme Court, the first in the organization’s history, asking the high court to reverse a Seventh Circuit ruling that barred CoA Institute from suing the Chicago Transit Authority (CTA) under the False Claims Act.

In March 2012, CoA Institute provided the U.S. Department of Justice with evidence that CTA for years had intentionally over-billed the Federal Transportation Authority, defrauding taxpayers out of tens of millions of dollars. The Department of Justice declined to intervene in the case.  The U.S. District Court for the Northern District of Illinois granted CTA’s motion to dismiss, which the Seventh Circuit incorrectly upheld.

The cert petition identifies several areas of judicial confusion over the proper application of the public disclosure bar, which prevents qui tam plaintiffs from assisting the federal government in recovering money defendants fraudulently obtained from the government.

Qui tam plaintiffs play an important role in policing federal programs.  In the last fiscal year, eighty percent of the funds recovered for the government in False Claims Act cases derived from lawsuits filed under the qui tam provisions.  The Seven Circuit’s decision to bar CoA Institute from pursuing a case against CTA will chill other qui tam plaintiffs and hurt the federal government’s ability to root out fraudsters.

Read the petition for writ of certiorari here.

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07/15/2016

Banning Arbitration, A Boon for Class Action Lawyers, Not Consumers (Judge Lechner Opinion–Forbes)

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The Consumer Financial Protection Bureau (CFPB), created in the wake of the 2008 financial crisis, is typically portrayed as a federal agency that protects the little guy from powerful big banks. But reality looks much different. For example, in May the agency proposed new rules to prohibit the use of arbitration—the legal process in which individual consumers and financial institutions avoid costly litigation by working to solve disputes with the help of third parties.

These rules have long been in the works. The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which created the CFPB, directed the agency to conduct an objective study of arbitration and propose rules based on its findings. Nearly six years later, the agency’s conclusions are little more than a handout to class action lawyers, with no actual benefit to consumers.

The final rule bans financial institutions from including mandatory binding arbitration clauses in their contacts. This upends the legal system that has long governed the industry. It opens banks to countless class action lawsuits, with virtually no corresponding benefit to the consumer. And it will almost certainly drive up the cost of bank loans and other financial products that millions of Americans depend on.

So what data does the agency use to justify its claims? To paraphrase Mark Twain, there are lies, damn lies, and then there are the CFPB’s statistics.

The data the agency collected showed that arbitration in most cases was quicker and actually provided better outcomes for the consumer. Perhaps surprisingly, arbitration achieves these outcomes even though consumers normally do not have attorneys present…

The study the CFPB conducted to justify its arbitration guidelines is exactly what the Information Quality Act was supposed to prevent. The final rule is based on junk science rather than sound research. It will harm the economy and millions of Americans while enriching a lucky few at law firms. So much for protecting the little guy. Read More

 

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07/14/2016

CoA Institute Investigates Role of DHS, Shooter’s Motives in Dallas Shooting

Washington, DC – Cause of Action Institute (CoA Institute) today filed a Freedom of Information Act (FOIA) request to investigate the involvement of the Department of Homeland Security (DHS) in investigating and responding to the recent shooting of Dallas police officers. In light of seemingly contradictory statements by Secretary Johnson and President Obama regarding the shooter’s motives, CoA Institute seeks to better understand if information is being withheld from the American public.

CoA Institute President and CEO, and former federal judge, Alfred J. Lechner, Jr.: “Statements about the shootings by President Obama and DHS Secretary Jeh Johnson raise questions about the DHS role in responding to the Dallas shooting and whether there is information about the shooter being withheld from the public.  Because Secretary Johnson appears to be the first public official to confirm that only one shooter existed, it raises questions as to what extent DHS was involved during the aftermath of the shooting and why local authorities were not first in alerting the public. Additionally, discrepancies between statements by President Obama and the Dallas police chief raise concerns that there may be additional information about the motives of the gunman that are being withheld from the public by the Obama administration.”

Background:

On July 7, 2016, a gunman killed five police officers in Dallas, Texas.  On July 8, Chief David Brown held a press conference and stated that multiple suspects may be involved. Three suspects were ultimately taken into custody. Later the same day, Secretary Johnson contradicted initial reports by announcing that the gunman apparently acted alone. According to media reports, Secretary Johnson was the first public official to announce that the gunman was a sole actor.

Additionally, at a press conference on July 9, President Obama said that it is “very hard to untangle the motives” of the Dallas shooter.   He further stated, “I’ll leave that to psychologists and people who study these kinds of incidents . . . I think the danger is that we somehow suggest the act of troubled individuals speaks to some larger political statement across the country.”   President Obama’s statement that the motives of the gunman appear uncertain directly contradicts Dallas Police Chief David Brown’s description of the incident.  According to Chief Brown, the gunman stated that he “was upset about the recent police shootings…and he wanted to kill white people, especially white officers.”

CoA Institute requests documents and communications to better understand the role of DHS in the aftermath of the Dallas Shooting. The full FOIA request is available HERE.

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07/13/2016

FOX News: East Coast fishermen spar with federal government over cost of at-sea monitors

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071416 FOX News

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07/13/2016

Cause of Action Institute Sues HUD to Disclose its Role in Controversial Mortgage Settlements

Banks required to provide “donations” to government-approved third parties

Washington D.C. – Cause of Action Institute (CoA Institute) today filed a complaint in the U.S. District Court for the District of Columbia against the United States Department of Housing and Urban Development (HUD) for failing to produce records about its role in the federal government’s multi-million dollar agreements with big banks over their allegedly faulty residential mortgage securities practices.  HUD has failed to produce relevant documents for more than a year after CoA Institute filed a Freedom of Information Act (FOIA) request for information.

Cause of Action Institute President & CEO, and former federal judge, Alfred J. Lechner, Jr.: “Taxpayers deserve to know why the money from these agreements is going to third parties and not being returned to the Treasury Department.  The Obama administration should be held accountable when agencies like HUD make decisions behind closed doors and fail to produce timely relevant documents in accordance with the law.”

Starting in 2013, the Department of Justice (DOJ) in collaboration with HUD and other agencies entered into a series of agreements with three large banks to resolve potential federal and state legal claims that these institutions knowingly sold billions of dollars in faulty residential mortgage-backed securities to investors prior to and during the 2008 financial crisis.  These agreements contain so-called consumer relief provisions requiring or permitting that banks provide “donations” to government-approved third parties in lieu of paying funds to settle the federal claims into the U.S. Treasury.

CoA Institute, a nonprofit legal watchdog organization, has led efforts to investigate these controversial agreements.  Last year, CoA Institute issued multiple public records requests aimed at exploring whether the federal government was authorized to encourage or force banks to steer funds to these third-party groups that support various initiatives backed by the Obama administration.  One of these requests was submitted to HUD on July 8, 2015.

HUD has failed to respond or produce any documents in response to CoA Institute’s request.  Recent evidence uncovered by the House Financial Services Oversight & Investigations Subcommittee, chaired by Congressman Sean Duffy, indicates that these agreements were structured, in a DOJ-HUD collaboration, with, in Chairman Duffy’s words, a “keen eye to make sure conservative groups could not access any money through these settlements.”

CoA institute is suing to force HUD to respond to its request and to get to the bottom of these issues.

  • Cause of Action Institute’s full complaint with exhibits is available HERE.
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07/7/2016

Did Federal Government Push Controversial Hawaii Gun Law?

Washington, DC – Cause of Action Institute (CoA Institute) today filed a Freedom of Information Act (FOIA) request to examine any potential involvement by the Department of Justice (DOJ) in preparing or advocating for Hawaii’s recently-passed law to restrict the exercise of constitutionally-protected gun rights.

CoA Institute President and CEO, and former federal judge, Alfred J. Lechner, Jr.: “While touted as an important public safety measure designed to encourage responsible gun ownership and assist law enforcement, in reality this legislation will place law-abiding American citizens into a database maintained by the federal government to monitor criminals. This measure has the potential to severely chill gun ownership in Hawaii and limit individuals from exercising their Second Amendment rights.”

On June 23, 2016, Hawaii Governor David Ige signed into law SB 2954, thereby authorizing “county police departments in Hawaii to enroll firearms applicants and individuals registering their firearms” into a federal database known as “Rap Back,” which is a centralized “criminal record monitoring service” maintained by the FBI.

The Hawaiian gun law is unprecedented.  It makes Hawaii the first state to submit information about its gun-owning citizens to the federal government. In light of current efforts by the Obama administration to create a national gun registry—which would be prohibited under current law —there is significant interest in examining the role, if any, played by the federal government in the development of this new law.

The full FOIA request is available HERE

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