COMPANY DOE Plaintiff-Appellee - AARP€¦ · Financial, AARP Global Network, and Focalyst. AARP...

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NO. 12-2209 UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT _______________ COMPANY DOE, Plaintiff-Appellee, v. PUBLIC CITIZEN; CONSUMER FEDERATION OF AMERICA; and CONSUMERS UNION, Intervenors-Appellants, and INEZ TENENBAUM, in her official capacity as Chairwoman of the Consumer Product Safety Commission; and CONSUMER PRODUCT SAFETY COMMISSION, Defendants. _______________ On appeal from the U.S. District Court for the District of Maryland (Hon. Alexander Williams, Jr., U.S. District Judge) _______________ BRIEF AMICUS CURIAE OF AARP JULIE NEPVEU (D.C. Bar #458305) AARP FOUNDATION LITIGATION MICHAEL SCHUSTER (D.C. Bar # 934133) AARP 601 E Street, NW Washington, DC 20049 (202) 434-2060 (telephone) (202) 434-6424 (facsimile) [email protected] December 20, 2012 Appeal: 12-2209 Doc: 42-1 Filed: 12/20/2012 Pg: 1 of 40

Transcript of COMPANY DOE Plaintiff-Appellee - AARP€¦ · Financial, AARP Global Network, and Focalyst. AARP...

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NO. 12-2209

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

_______________

COMPANY DOE,

Plaintiff-Appellee,

v.

PUBLIC CITIZEN; CONSUMER FEDERATION OF

AMERICA; and CONSUMERS UNION,

Intervenors-Appellants,

and

INEZ TENENBAUM, in her official capacity as Chairwoman of the

Consumer Product Safety Commission; and CONSUMER

PRODUCT SAFETY COMMISSION,

Defendants.

_______________

On appeal from the U.S. District Court for the District of Maryland

(Hon. Alexander Williams, Jr., U.S. District Judge)

_______________

BRIEF AMICUS CURIAE OF AARP

JULIE NEPVEU (D.C. Bar #458305)

AARP FOUNDATION LITIGATION

MICHAEL SCHUSTER (D.C. Bar # 934133)

AARP

601 E Street, NW

Washington, DC 20049

(202) 434-2060 (telephone)

(202) 434-6424 (facsimile)

[email protected]

December 20, 2012

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CORPORATE DISCLOSURE STATEMENT OF AARP

The Internal Revenue Service has determined that AARP is organized and

operated exclusively for the promotion of social welfare pursuant to Section

501(c)(4) (1993) of the Internal Revenue Code and is exempt from income tax.

AARP is also organized and operated as a non-profit corporation pursuant to Title

29 of Chapter 6 of the District of Columbia Code 1951.

Other legal entities related to AARP include AARP Foundation, AARP

Services, Inc., Legal Counsel for the Elderly, AARP Experience Corps, and AARP

Financial, AARP Global Network, and Focalyst.

AARP has no parent corporation, nor has it issued shares or securities.

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TABLE OF CONTENTS

CORPORATE DISCLOSURE STATEMENT OF AARP ........................................ i

TABLE OF AUTHORITIES ................................................................................... iii

STATEMENT OF INTEREST .................................................................................. 1

SUMMARY OF ARGUMENT ................................................................................. 2

ARGUMENT ............................................................................................................. 4

1. Public Consumer Complaint Databases Are Effective

Consumer Protection And Regulatory Tools .................................................. 4

A. Publicly Available Consumer Complaint Databases Are

Effective At Improving Marketplace Quality And Safety By

Increasing Transparency and Holding Businesses, Regulators,

And Lawmakers Accountable .................................................................... 6

1. Public Safety Reporting Incentivizes Manufacturers

To Build Safer Cars ....................................................................... 13

2. The FDA’s Consumer Complaint Databases Enhance Its

Ability To Protect Health And Safety ........................................... 14

3. Public Reporting on the Nursing Home Compare Website

Is Credited With Improving Nursing Home Quality ................... 17

4. Public Reporting Regarding Financial Services Has

Reformed Corporate Behavior and Empowered

Consumers ..................................................................................... 21

B. Consumers Embrace Internet Ratings To Improve Purchasing

Decisions And Drive Market Improvement But Social Media

Is Not An Adequate Substitute For Regulatory Agency Public

Consumer Complaint Databases .............................................................. 25

Conclusion .............................................................................................................. 30

Certificate of Compliance ....................................................................................... 31

Certificate of Service .............................................................................................. 31

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TABLE OF AUTHORITIES

Cases

Dendrite v. Doe, 342 N.J. Super. 134, 775 A.2d 756 (N.J. App. 2001) ..................29

Doe v. Cahill, 884 A.2d 451 (Del. 2005) .................................................................29

McMann v. Doe, 460 F. Supp.2d 259 (D. Mass. 2006) .......................................... 29

Highfields Capital Mgmt. v. Doe, 385 F.Supp.2d 969 (N.D. Cal. 2005). ...............29

Mobilisa v. Doe, 170 P.3d 712 (Ariz. App. Div. 1 2007) ........................................29

Statutes

15 U.S.C. § 2051 -2089 ............................................................................................. 4

15 U.S.C. § 2051 (b)(4).............................................................................................. 4

12 U.S.C. § 5493(b)(3).............................................................................................22

42 U.S.C. § 1395i-3(b)(4). .......................................................................................18

42 U.S.C. § 1396r(b)(4) ...........................................................................................18

42 U.S.C. § 1396r(h). ...............................................................................................18

42 U.S.C. § 18001 et seq. .........................................................................................19

Center for Medicaid, CHIP, and Survey & Certification/Survey &

Certification Group, Memorandum to State Agency Survey Directors,

April and July 2011 Changes to Nursing Home Compare (March 18,

2011) .....................................................................................................................20

Consumer Product Safety Improvement Act, Pub. Law 110-314

(Aug. 14, 2008) ...................................................................................................2, 4

Consumer Product Safety Information Act ............................................................... 2

Nursing Home Reform Act ......................................................................................17

Omnibus Budget Reconciliation Act .......................................................................17

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Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148,

124 Stat. 119 (2010) .............................................................................................19

PPACA, Section 6103 ..............................................................................................20

Other Authorities

Avi Dan, The Story Of Brands Is About To Change, Forbes.com (Nov. 26,

2012), http://www.forbes.com/sites/avidan/2012/11/26/the-story-of-

brands-is-about-to-change/. ..................................................................................26

Steve Cocheo, Fair lending foundation for UDAAP compliance, ABA

Banking Journal (June 2012) ................................................................................24

Steve Cocheo, Science of the Complaint, Handling Consumer Complaints in

the Age Of CFPB, UDAAP and Twitter, ABA Banking Journal, 30 (June

2012) .....................................................................................................................11

CFPB, 2011 Annual Report (March 2012) ................................................. 22, 23, 24

CFPB, Consumer Response: A Snapshot of Complaints Received (June 19,

2012) .............................................................................................................. 22, 23

CFPB, Notice of Final Policy Statement (June 14, 2012). ......................................23

Cheryl Lampkin, Insights And Spending Habits Of Modern Grandparents,

AARP Research and Strategy Analysis (2012). ..................................................... 2

CMS, 2012 Action Plan for Further Improvement of Nursing Home Quality

(2012) ....................................................................................................................17

CPSC, Supp. Stmt. of Comm. Robert Adler Regarding The Publicly

Available Consumer Product Safety Information Database Rule (Jan.14,

2011), http://www.cpsc.gov/pr/adler01142011.pdf .............................................11

Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010,

Public Law 111-203, July 21, 2010 ......................................................................22

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FDA News Release, FDA significantly restricts access to the diabetes drug

Avandia (Sept. 23, 2010), http://www.fda.gov/NewsEvents

/Newsroom/PressAnnouncements/2010/ucm226975.htm ...................................17

FDA, Compliance Program Guidance Manual, 7356.012 (Dec. 7, 2011) .............16

FDA, Consumer Products Complaints Systems (Jan. 12, 2009),

http://www.fda.gov/ICECI/Inspections/FieldManagement

Directives/ucm061481.htm. ................................................................................... 6

FDA, FDA 101: How to Use the Consumer Complaint System and

MedWatch, http://www.fda.gov/downloads/BiologicsBloodVaccines/

SafetyAvailability/ReportaProblem/UCM136123.pdf, last visited

Dec. 19. 2012 ............................................................................................. 8, 10, 11

FDA, Information on Adverse Event Reports and Heparin (June 18, 2009),

http://www.fda.gov/Drugs/DrugSafety/PostmarketDrugSafetyInformationf

orPatientsandProviders/ucm112669.htm ..............................................................16

FDA, Novartis Consumer Health Over-The-Counter Products: Recall -

Potential Presence of Foreign Tablets or Chipped or Broken Tablets or

Gelcaps including Excedrin, NoDoz, Bufferin, Gas-X Prevention (Jan. 9,

2012), http://www.fda.gov/Safety/MedWatch/SafetyInformation/

SafetyAlerts forHumanMedicalProducts/ucm286265.htm. .................................15

FDA, Press release, FDA Alerts Consumers to Unsafe, Misrepresented

Drugs Purchased Over the Internet (Feb. 16, 2007),

http://www.fda.gov/newsevents/newsroom/pressannouncements/2007/

ucm108846.htm ......................................................................................... 9, 14, 15

FDA, What Happens When a Problem is Reported?

http://www.fda.gov/Safety/ReportaProblem/QuestionsandAnswersProble

m Reporting/ucm056069.htm, last visited Dec. 19, 2012 ....................................15

Federal Trade Commission (FTC), Before you submit a complaint (Aug. 1,

2012), https://www.ftccomplaintassistant.gov/, last visited Dec. 19, 2012 ........... 7

Financial Crisis Inquiry Commission Report, xxii (Feb. 25, 2011). .......................21

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FTC, Consumer Sentinel Network,

http://www.ftc.gov/sentinel/factsheet.pdf, last accessed Dec. 19, 2012. ............... 7

Dan Frosch, Venting Online, Consumers Can Find Themselves in Court,

N.Y. Times, May 31, 2010, http://www.nytimes.com/2010/06/01/us/01

slapp.html?pagewanted= all&_r=0 ..................................................................... 28

Alyssa Gerace, CMS Redesigns Nursing Home Compare Website, Adds

More Facility Data, Senior Housing News (July 19, 2012) ...............................21

Intervenor Op. Br ....................................................................................................... 5

Justin Jouvenal, Virginia woman is sued over her Yelp review, Wash. Post,

Dec. 4, 2012, http://articles.washingtonpost.com/2012-1204/local/3562

5084_1_yelp-online-reviews-defamation .............................................................28

Jennifer Taggart, The CPSIA and Social Media Make Product Issues

Public, ABA Litigation News (May 17, 2010) ................................. 12, 25, 27, 28

Meskell, Darlene, Transparency in Government, Intergovernmental

Solutions Newsletter (Spring 2009) ....................................................................... 5

Michael Luca, Reviews, Reputation and Revenue: The Case of Yelp.com,

Harvard Business School Working Paper 12-016 (September 16, 2011). ...........26

NHTSA, Firestone Update. NHTSA.gov, Firestone Recalls (Oct. 4, 2001),

http://www.nhtsa.gov/nhtsa/announce/press/Firestone/Update.html ..................... 8

NHTSA, The New Car Assessment Program, Suggested Approaches for

Future Program Enhancements (Jan. 2007). Available at http://www.

safercar.gov/staticfiles/safercar/pdf/810698.pdf. ................................................14

NHTSA, Presentations and Speeches: 2011 Presentations, Office of Defects

Investigation, Gregory Magno, 2011 SAE Government Industry Meeting

Presentation (Jan. 27, 2011), http://www.nhtsa.gov/Speeches?

presentationYear=2011&presentationPage=1. ....................................................... 7

Pichler, Rufus, The Online-Marketplace: Shaking the Foundations of

Consumer Confidence, Stanford Law School 67 (May 2000), available at

http://law.stanford.edu/library/biblio/rufus.pdf ....................................................10

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Prepared Testimony of The FTC on Financial Literacy and Consumer

Education, Sen. Comm. on Banking, Housing and Urban Aff., (July 29,

2003) (Stmt. of Joel Winston), available at

http://www.ftc.gov/os/2003/07/financialliteracytest.htm ....................................... 9

Press Release: Global Consumers' Trust in 'Earned' Advertising Grows in

Importance, Nielsen (April 2012), http://www.nielsen.com/us/en/insights/

press-room/2012/nielsen-global-consumers-trust-in-earned-advertising-

grows.html. ...........................................................................................................25

Report, Comm. on Banking, Housing, and Urban Aff., S. Rep. 111–176, 1

(Ap. 30, 2010) .......................................................................................................22

Safercar.gov, Frequently Asked Questions,5 Star Safety Ratings,

http://wwwodi.nhtsa.dot.gov/cars/problems/complain/complaintsearch.

cfm, then follow “Frequently Asked Questions,” last visited Dec. 19, 2012 ......13

Safercar.gov, Vehicle Owners: News and Information to Help Keep You and

Your Vehicle Safe, 2012, http://www.safercar.gov/Vehicle+Owners, last

visited Dec. 19, 2012 ............................................................................................14

Testimony of CMS before the U.S. House of Reps. Comm. on Energy and

Commerce, Subcomm. on Oversight and Investigations (May 15, 2008)

(Stmt. of Kerry Weems, CMS Acting Admin.),

http://www.hhs.gov/asl/testify/2008/05/ t20080515a.html ........................... 18, 19

U.S. Food and Drug Administration. What Happens When A Problem is

Reported? http://www.fda.gov/Safety/ReportaProblem/

QuestionsandAnswersProblemReporting/ucm056069.htm, last visited

Dec. 19, 2012. .....................................................................................................6, 7

U.S. Government General Accounting Office, Consumer Product Safety

Commission, Better Data Needed to Help Identify and Analyze Potential

Hazards (Sept., 1997) ...........................................................................................12

U.S. Government Office of Management and Budget, Speeches,

OIRA Administrator Addresses “The Power of Open Government,”

(March 10, 2010), http://www.whitehouse.gov/omb/

oira_speech_03102010/ ........................................................................................12

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Vincent Mor, et al., Changes in the Quality of Nursing Homes in the US: A

review and data update (Aug. 15, 2009). .............................................................19

Werner R.M. et al., Do consumers respond to publicly reported quality

information? Evidence from nursing homes, J Health Econ. 50-61 (Jan. 31,

2012) .....................................................................................................................10

Werner, R.M. et al., Impact of Public Reporting on Quality of Postacute

Care,1170-71, Health Services Research 44:4 (Aug. 2009) ................................18

Rules

Federal Rule of Appellate Procedure 29(c)(5) ........................................................... 1

Regulations

Consumer Product Safety Commission, Publicly Available Consumer

Product Safety Information Database, Final Rule, 75 Fed. Reg. 76,832,

76,832 (Dec. 9, 2010) .......................................................................................4, 27

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STATEMENT OF INTEREST

AARP1 is a non-partisan, non-profit organization with a membership that

helps people 50+ have independence, choice and control in ways that are beneficial

and affordable to them and society as a whole. As the leading organization

representing the interests of people aged 50 and older, AARP advocates to protect

the health, safety and financial security of older people.

Poor quality and unsafe consumer products, financial services, and health

care products, providers, and facilities pose significant threats to the health, safety,

and financial security of older people. They are extremely vulnerable to such

threats because they tend to have low and fixed incomes as they age and they

consume a disproportionate share of health care products and services. As people

advance to older age, their financial decision-making capacity wanes, making older

people increasingly vulnerable to deceptive practices and fraud. Similarly,

advanced age heightens one’s susceptibility to physical injury and illness from

unsafe food and consumer and health care products and services.

Moreover, older people seek to protect their children and grandchildren

from unsafe products and services. AARP research indicates that approximately

1 Pursuant to Federal Rule of Appellate Procedure 29(c)(5), AARP states that this

brief was not authored in whole or in part by any party or its counsel, and that no

person other than AARP, its members, or its counsel contributed any money that

was intended to fund the preparation and submission of this brief.

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95 percent of older people with grandchildren purchase gifts and other items for

grandchildren. Approximately 34 percent of grandparents reported being interested

in obtaining information about gifts for their grandchildren. Cheryl Lampkin,

Insights And Spending Habits Of Modern Grandparents, 18, AARP Research and

Strategy Analysis (2012).

AARP is interested in the outcome of this case because public access to

consumer complaint databases is extremely valuable to protect the interests of

older people and their loved ones. AARP’s participation in the case will assist the

court in understanding the issues presented by this case.

SUMMARY OF ARGUMENT

Permitting secret court proceedings by an anonymous company regarding a

consumer complaint made to the Consumer Product Safety Commission (CPSC)

undermines the important consumer protection goals Congress sought to achieve in

enacting the Consumer Product Safety Improvement Act (CPSIA). The use of

publicly reported consumer complaints as a regulatory tool is powerful and

effective because it empowers knowledgeable, proactive consumers, encourages

business competition, and assists regulators to identify problems and trends in a

timely manner so as to prevent additional harm. Together, these efforts effectively

and efficiently improve the marketplace of goods and services.

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Publicly accessible consumer complaint databases are strongly associated

with improved safety and quality outcomes in a variety of regulatory contexts. The

National Highway Transportation Safety Administration (NHTSA), Food and Drug

Administration (FDA), Centers for Medicare and Medicaid Services (CMS), and

the Consumer Financial Protection Bureau (CFPB), each rely on public consumer

complaints to advance their respective missions.

The effectiveness of public disclosure of consumer complaint data at driving

businesses to compete for customers is further demonstrated by the business

response to consumers’ overwhelming, spontaneous embrace of consumer product

rating and complaint reporting on social networking and other websites. Even

though the social networking reviews do not deliver the same consumer protection

value as those operated by regulatory agencies, the ratings are influential.

Respectfully, AARP urges the court to disclose Company Doe’s real name

and to unseal the court proceedings.

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ARGUMENT

I. Public Consumer Complaint Databases Are Effective Consumer

Protection And Regulatory Tools

In the wake of public outcry after 20 million unsafe toys were recalled in

2008, Congress enacted the Consumer Product Safety Improvement Act (CPSIA),

Pub. Law 110-314 (Aug. 14, 2008), amending the Consumer Product Safety Act,

codified at 15 U.S.C. § 2051 - 2089. The regulatory process in place prior to 2008

limited CPSC’s ability to notify the public about known dangers, defects, or other

problems by requiring notice to the manufacturer and an opportunity for them to

respond prior to public disclosure. See Consumer Product Safety Commission,

Publicly Available Consumer Product Safety Information Database, Final Rule, 75

Fed. Reg. 76,832, 76,832 (Dec. 9, 2010). Consumers and legislators alike were

outraged that toys and other products that could seriously injure—and even kill—

them, their children, and grandchildren were permitted to remain on the market

even after their defects were known, without warning consumers of the possibility

of risk.

To resolve these concerns, Congress chose to serve the interests of

consumers, regulators, and businesses by mandating creation of a public consumer

complaint database. Such databases provide adequate, helpful information in a

timely manner to help prevent harm. See 15 U.S.C. 2051 (b)(4) (one purpose of

the CPSIA is “to promote research and investigation into the causes and prevention

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of product related deaths, illnesses, and injury.”). The CPSIA database is similar to

the public complaint databases maintained by the National Highway Traffic Safety

Administration (NHTSA), and the Food and Drug Administration (FDA). These

and other similar public complaint databases, such as “Nursing Home Compare”

maintained by the Centers for Medicare and Medicaid Services (CMS), and

“Consumer Response” maintained by the Consumer Financial Protection Bureau

(CFPB), efficiently and effectively serve multiple policy goals. In particular,

public databases empower consumers to educate and protect themselves, which

drives businesses to compete by improving quality and safety in the marketplace.

Knowing their complaints will be viewable by other consumers encourages

consumer reporting, which provides regulators with unique insight into consumer

experiences with regulated products. See, e.g. Meskell, Darlene, Transparency in

Government, Intergovernmental Solutions Newsletter (Spring 2009) (discussing

public benefits including transparency, accountability, and citizen engagement that

flow from the “democratization of data”).2

As Intervenors have argued, the public reporting of complaints under the

CPSIA has been effective in providing safety information to consumers more

timely than under the previous regulatory scheme. See Intervenor Op. Br. at 4-5,

38-39 (noting CPSC is required to remove inaccurate information from complaints

2 Available at http://www.scribd.com/doc/36856677/Transparency-in-Government.

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then publish them within 20 business days, and that 11,500 complaints have been

filed since database launch). Positive outcomes resulting from similar public

consumer complaint databases further demonstrate the power and effectiveness of

disclosing consumer complaint data.

A. Publicly Available Consumer Complaint Databases Are Effective

At Improving Marketplace Quality And Safety By Increasing

Transparency and Holding Businesses, Regulators, And

Lawmaker Accountable

Public complaint databases, such as those maintained by NHTSA, FDA,

CMS, and the CFPB share certain features which make them invaluable regulatory

tools. First, public complaint databases provide a forum that encourages

consumers voluntarily to supply important feedback regarding their experiences

with products and services. This consumer feedback creates a unique data set

available to the regulators, businesses, and third-party researchers about how

products perform in the real world rather than merely in the laboratory. For

example, the FDA “collects information on the condition of FDA regulated

products … This information can be compiled and evaluated to highlight current

problems and long term trends.” FDA, Consumer Products Complaints Systems

(Jan. 12, 2009), http://www.fda.gov/ICECI/Inspections/FieldManagement

Directives/ucm061481.htm. Thus, “[c]onsumer product reports serve as an

important alert system.” See U.S. Food and Drug Administration. What Happens

When A Problem is Reported? http://www.fda.gov/Safety/ReportaProblem/

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QuestionsandAnswersProblemReporting/ucm056069.htm, last visited Dec. 19,

2012.

The breadth and timeliness of information collected through consumer

complaint databases helps agencies “to detect patterns of wrong-doing, and lead[s]

to investigations and prosecutions.” Federal Trade Commission (FTC), Before you

submit a complaint (Aug. 1, 2012), https://www.ftccomplaintassistant.gov/, last

visited Dec. 19, 2012. For example, complaints to FTC’s “Consumer Sentinel”

database are particularly crucial in assisting law enforcement agencies to detect

internet fraud schemes because data becomes available quickly enough to be useful

in combating transient fraud. See FTC, Consumer Sentinel Network,

http://www.ftc.gov/sentinel/factsheet.pdf, last accessed Dec. 19, 2012.3

Consumer complaints are described as NHTSA’s “most important field

data,” for prompting new defect investigations, assessing safety recall effectiveness

and targeting compliance testing.” NHTSA, Presentations and Speeches: 2011

Presentations, Office of Defects Investigation, Gregory Magno, 2011 SAE

Government Industry Meeting Presentation, 7 (Jan. 27, 2011), http://www.nhtsa.

gov/Speeches?presentationYear=2011&presentationPage=1. One notable example

is the 2000 Firestone Tire recall. Over 5,000 consumer complaints resulting in

over 800 injuries, including 271 deaths were critical in the discovery of problems

3 The FTC’s Consumer Sentinel Network is only available to law enforcement

agencies, not consumers.

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with the tires that ultimately led to the recall. See NHTSA, Firestone Update,

NHTSA.gov, Firestone Recalls (Oct. 4, 2001), http://www.nhtsa.gov

/nhtsa/announce/press/Firestone/Update.html. Public complaint databases

contribute significantly to regulatory effectiveness and consumer protection by

providing necessary data.

Active consumer participation in reporting feedback about products and

services is essential to the success of this regulatory model. Previously

unrecognized—or concealed—product defects and trends, as well as dangers that

stem from unanticipated consumer uses of products, may remain hidden or

unverifiable with a small data set. For example, “sometimes there are risks that

only come to light after a medical product gets on the market and is used in a larger

number of patients, for a longer period of time, and in patients whose health

characteristics are different from those of the patients studied before approval. So

continued monitoring of adverse events is essential and depends on reporting of

these events to FDA so they can be entered in MedWatch.” FDA, FDA 101: How

to Use the Consumer Complaint System and MedWatch, http://www.fda.gov/For

Consumers/ConsumerUpdates/ucm049087.htm, last visited Dec. 18. 2012,

(quotation omitted).

Providing the public with access to the data encourages consumers to be

proactive in protecting their own safety and financial interests. For example, FDA

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“continuously warns U.S. consumers of the possible dangers of buying prescription

drugs online and urges them to review the FDA Web site for additional

information prior to making purchases of medication over the Internet.” See FDA,

Press release, FDA Alerts Consumers to Unsafe, Misrepresented Drugs Purchased

Over the Internet (Feb. 16, 2007), http://www.fda.gov/newsevents/newsroom/

pressannouncements/2007/ucm108846.htm. Well-educated, financially literate

consumers make better purchasing decisions and are better able to protect

themselves. Knowledge about a product recall, for example, may prevent avoidable

injury or save the consumer unnecessary expense to replace or repair a product that

the manufacturer would cover. According to the Federal Trade Commission

(FTC), “consumer education is among our most important tools in the fight against

fraud and deception, because consumers are their own first line of defense.”

Prepared Testimony of The FTC on Financial Literacy and Consumer Education,

Sen. Comm. on Banking, Housing and Urban Aff., (July 29, 2003) (Stmt. of Joel

Winston), available at http://www.ftc.gov/os/2003/07/financialliteracytest.htm.

Consumers empowered with timely, useful information drive businesses to

produce safer, higher quality products and services by forcing them to compete

based on quality and value. For example, researchers have found that “[w]ithout

public reporting, consumers may have little information to help them differentiate

quality among providers, giving providers little incentive to compete on quality.

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Public reporting enables consumers to choose highly ranked providers [ ].” Werner

R.M. et al., Do consumers respond to publicly reported quality information?

Evidence from nursing homes, 1, J Health Econ. 50-61 (Jan. 31, 2012).4

The data and interactive process provided through consumer complaint

databases allows regulatory agencies to be more responsive to the needs of

consumers and to keep pace with rapidly changing conditions in the marketplace.

Pichler, Rufus, The Online-Marketplace: Shaking the Foundations of Consumer

Confidence, Stanford Law School 67 (May 2000), available at http://law.stanford

.edu/library/biblio/rufus.pdf. This responsiveness is essential to prevent avoidable

harm from products known to present a danger. “Just a few complaints can make a

difference,” says Joan Trankle, FDA’s National CCC. FDA, FDA 101: How to Use

the Consumer Complaint System and MedWatch, http://www.fda.gov/downloads/

BiologicsBloodVaccines/SafetyAvailability/ReportaProblem/UCM136123.pdf, last

visited Dec. 19. 2012. For example, product labels that fail to list known common

allergens may seriously endanger and even kill consumers. Three consumer

complaints about allergic reactions to undeclared milk protein in a type of soymilk

were sufficient to prompt an investigation and for the company to recall the

product. Id. Similarly, FDA began an investigation that resulted in a voluntary

product recall after receiving only two complaints about burns resulting from an

4 Available at http://www.ncbi.nlm.nih.gov/pubmed/22307033.

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adhesive patch that generates heat to relieve muscle and joint pain. Id. The speed at

which public consumer complaint databases can permit regulators to respond to

consumer complaints makes it possible to prevent other consumers from suffering

injury from dangerous products. Creation of the public database of consumer

complaints “puts critical knowledge about the safety of products in consumers’

hands in a timely fashion, and should save lives and reduce injuries.” CPSC, Supp.

Stmt. of Comm. Robert Adler Regarding The Publicly Available Consumer Product

Safety Information Database Rule 1 (Jan. 14, 2011), http://www.cpsc.gov/pr/adler0

1142011.pdf.

Consumer complaints also influence and even assist businesses to learn of

product defects or dangers. “Complaints can be a good early warning system”

which offers them a “huge competitive advantage if [a business] leverage[s] them.”

Steve Cocheo, Science of the Complaint, Handling Consumer Complaints in the

Age Of CFPB, UDAAP and Twitter, ABA Banking Journal, 30 (June 2012)

(quoting, respectively, Virginia O’Neill, senior counsel in ABA’s Center for

Regulatory Compliance and Craig Stone, Managing Director at Alvarez & Marsal

Financial Industry Advisory Services).5 In the soy milk example above, for

example, a company that takes action to remove the product after being alerted to

the problem is better to avoid potentially significant liability for its labeling

5 Available at http://www.nxtbook.com/nxtbooks/sb/ababj0612/index.php#/32.

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mistake. See Jennifer Taggart, The CPSIA and Social Media Make Product Issues

Public, ABA Litigation News (May 17, 2010) (explaining failure to monitor social

media for consumer complaints may expose business to “civil and criminal

penalties up to $15 million” for “knowingly violat[ing]” the relevant portions of

[CPSA and other product safety] laws.”).6

Publicly available consumer complaint data also provides consumers with a

means of measuring the effectiveness of agencies and laws governing the

marketplace and a way to hold lawmakers, regulators, and the regulated industries

accountable if they fail to serve adequately the public interest. See U.S.

Government Office of Management and Budget, Speeches, OIRA Administrator

Addresses “The Power of Open Government,” (March 10, 2010), http://www.

whitehouse.gov/omb/oira_speech_03102010/; U.S. Government General

Accounting Office, Consumer Product Safety Commission, Better Data Needed to

Help Identify and Analyze Potential Hazards (Sept., 1997) (criticizing that

“although CPSC has described itself as ‘data driven,’ its information on product-

related injuries and deaths is often sketchy. For example, because the agency’s

measure of injuries generally includes only hospital emergency room reports,

CPSC has an incomplete picture of injuries.”).

6 Available at http://apps.americanbar.org/litigation/litigation news/practice_

areas/051710-products-liability-consumer-product-safety-commission-social-

media.html.

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Positive outcomes from the NHTSA and FDA consumer complaint

databases on which CPSIA is modeled, and other publicly reported complaint

databases including CMS’s Nursing Home Compare and CFPB’s Consumer

Response, prove that they are effective and desirable regulatory tools specifically

because they encourage the timely and open flow of information that is necessary

to empower consumers, drive quality through competition, and alert regulators and

the public to problems.

1. Public Safety Reporting Incentivizes Manufacturers

To Build Safer Cars

NHTSA maintains a database that combines consumer ratings and

complaints about vehicles with its own safety testing results of new vehicles. Since

the original implementation of NHTSA’s New Car Assessment program in 1978

“to measure the level of increased safety for vehicle occupants in frontal crashes,”

NHTSA has expanded the information the database reports to include “side crash

rating results … with 1997 model year vehicles and rollover assessments with

2001 models.” Safercar.gov, Frequently Asked Questions, 5 Star Safety Ratings,

http://www-odi.nhtsa.dot.gov/cars/problems/complain/complaintsearch.cfm, then

follow “Frequently Asked Questions,” last visited Dec. 19, 2012. “This is a

program that encourages manufacturers to voluntarily design safer vehicles by

giving them safety ratings that can be used by consumers to compare vehicles

when shopping for a new car.” Id. NHTSA asserts that the program has strongly

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influenced manufacturers to build vehicles that consistently achieve high ratings,

thereby increasing the safety of vehicles.” NHTSA, The New Car Assessment

Program, Suggested Approaches for Future Program Enhancements (Jan. 2007).7

NHTSA credits consumer feedback with “saving lives and driving the

development of safer cars.” Safercar.gov, Vehicle Owners: News and Information

to Help Keep You and Your Vehicle Safe, 2012, http://www.safercar.gov/Vehicle+

Owners, last visited Dec. 19, 2012 (urging consumers to report feedback and

asserting that “[t]oday's cars are the safest in history thanks to owner feedback and

the development of advanced safety technologies”). To encourage robust

consumer participation and ensure that sufficient data is available, NHTSA

“improved the program by adding rating programs, providing information to

consumers in a more user friendly format, and substantially increasing accessibility

to the information via the website, www.safercar.gov.” Id.

2. The FDA’s Consumer Complaint Databases Enhance Its

Ability To Protect Health And Safety

FDA acknowledges it “cannot be everywhere at all times. Therefore,

consumer product reports are an important part of FDA's monitoring system and

help ensure that the products the agency regulates are safe, properly manufactured

and stored, and correctly labeled.” FDA, Press release, FDA Alerts Consumers to

Unsafe, Misrepresented Drugs Purchased Over the Internet (Feb. 16, 2007),

7 Available at http://www.safercar.gov/staticfiles/safercar/pdf/810698.pdf.

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http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/2007/ucm1088

46.htm. This is especially important because “[m]ore than 21 cents of every dollar

spent by consumers goes [toward] products [that the] FDA regulates. This amounts

to more than $1.4 trillion a year.” FDA, What Happens When a Problem is

Reported? http://www.fda.gov/Safety/ReportaProblem/QuestionsandAnswers-

ProblemReporting/ucm056069.htm, last visited Dec. 19, 2012. Reports of

unfortunate experiences of injured consumers help protect others from suffering

harm. For example, FDA initially learned about dangerous and mislabeled drugs

being sold over the internet through consumer complaints. FDA Alerts Consumers

to Unsafe, Misrepresented Drugs Purchased Over the Internet. Consumer

complaints about chipped and broken pills and inconsistent bottle packaging also

played an important role in influencing Novartis Consumer Health Inc., voluntarily

to recall several of its over-the-counter drug products in 2012. See FDA, Novartis

Consumer Health Over-The-Counter Products: Recall - Potential Presence of

Foreign Tablets or Chipped or Broken Tablets or Gelcaps including Excedrin,

NoDoz, Bufferin, Gas-X Prevention (Jan. 9, 2012), http://www.fda.gov/Safety

/MedWatch/SafetyInformation/SafetyAlertsforHumanMedicalProducts/ucm28626

5.htm.

In addition to encouraging consumers to report complaints, FDA has also

operated a voluntary program since the 1970’s specifically to encourage health

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care professionals to “report observed or suspected defects and problems

associated with finished drug product in the pharmaceutical supply chain.” FDA,

Compliance Program Guidance Manual, 7356.012 (Dec. 7, 2011).8 From 1988 to

1993, the program was called the “Drug Quality Reporting System (DQRS).” Id.

In June 1993, the FDA introduced the MedWatch reporting program. Id.

According to the FDA, “[t]he MedWatch program plays a vital role in the post

marketing phase of regulating all pharmaceutical products. It has a twofold

purpose: 1) to rapidly identify significant health hazards associated with the

manufacturing and packaging of pharmaceuticals, and 2) to establish a central

reporting system for capturing and identifying drug quality problem areas or trends

that may require regulatory action.” Id.

The reporting has been critical in preventing harm from medication and

medical devices. For example, heparin was recalled in 2008 due to reports of 246

deaths related to heparin since January 2007. Of those reports, 238 occurred

between Jan. 1, 2008 and May 31, 2008. FDA, Information on Adverse Event

Reports and Heparin (June 18, 2009), http://www.fda.gov/Drugs/DrugSafety

/PostmarketDrug SafetyInformationforPatientsandProviders/ucm112669.htm. In

September, 2010, the FDA significantly restricted access to Avandia, prescribed to

treat Type 2 diabetes, due to reports of elevated risk of heart attack and stroke.

8 Available at http://www.fda.gov/downloads/Drugs/GuidanceCompliance

RegulatoryInformation/UCM282847.

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FDA News Release, FDA significantly restricts access to the diabetes drug

Avandia (Sept. 23, 2010), http://www.fda.gov/NewsEvents/Newsroom/Press

Announcements/2010/ucm226975.htm.

3. Public Reporting on the Nursing Home Compare Website Is

Credited With Improving Nursing Home Quality

Healthcare regulators, among others, understand that “[t]he availability of

relevant and timely information can significantly enable individuals to be active

and informed participants in their care.” CMS, 2012 Action Plan for Further

Improvement of Nursing Home Quality, iii (2012).9 “Additionally, this information

can enable individuals to hold the health care system accountable for the quality of

services and support that should be provided. To that end, CMS seeks to provide

an increasing array of understandable information that can be readily accessed by

the public.” Id.

Public reporting of consumer complaints and quality of care ratings has been

instrumental in alleviating the decades-long concerns over pervasive, poor quality-

of-care in nursing homes. Such concerns persisted even after Congress attempted

to resolve them, in the 1987 Nursing Home Reform Act and the Omnibus Budget

Reconciliation Act, by requiring each Medicare- and Medicaid-certified nursing

home to be regularly inspected and submit regular comprehensive assessments of

9 Available at http://www.cms.gov/Medicare/Provider-Enrollment-and

Certification/CertificationandComplianc/Downloads/2012-Nursing-Home-Action-

Plan.pdf.

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each resident, and by tying Medicare and Medicaid payments directly to provision

of services where a patient or resident can “attain and maintain the highest

practicable physical, mental, and psychosocial well-being.” 42 U.S.C. §

1396r(b)(4) & 42 U.S.C. § 1395i-3(b)(4). Congress further provided that payments

would be denied for non-compliance with applicable care standards. 42 U.S.C. §

1396r(h).

Researchers attributed the “persistent problems of inadequate quality [ ] to

the lack of information about quality with which to stimulate consumer choice of

care and provider competition for high-quality care.” Werner, R.M. et al., Impact

of Public Reporting on Quality of Postacute Care,1170-71, Health Services

Research 44:4 (Aug. 2009).10

Recognizing the importance of consumer access to

information and its significant role in driving quality improvements, CMS began in

2002 to report data about nursing home facilities’ staffing levels and inspection

results, including those triggered by consumer complaints on its “Nursing Home

Compare” website. “In addition to about 16,000 comprehensive surveys [in 2006],

CMS and States conducted more than 45,000 complaint investigations in nursing

homes.” Testimony of CMS before the U.S. House of Reps. Comm. on Energy and

Commerce, Subcomm. on Oversight and Investigations (May 15, 2008) (Stmt. of

10

Available at http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2739023

/pdf/hesr0044 -1169.pdf.

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Kerry Weems, CMS Acting Admin.), http://www.hhs.gov/asl/testify/2008/05/

t20080515a.html.

The public reporting of the data on Nursing Home Compare, where it is

readily available to consumers, has had at least two measurable impacts on nursing

home quality: it has “clearly stimulated many providers to institute quality

improvement efforts which appear to have resulted in greater improvements in

both measured and some unmeasured quality scores” and “[i]t has begun to ‘steer’

those seeking nursing home care to better performing facilities.” Id. at 3. While

some of the reported data had been available publicly for much longer, its

accessibility “is associated with independent improvements in outcomes, both

reported as well as unreported.” Vincent Mor, et al., Changes in the Quality of

Nursing Homes in the US: A review and data update, 8 (Aug. 15, 2009).11

Building on the success of Nursing Home Compare, the Patient Protection

and Affordable Care Act of 2010, Pub. L. No. 111-148, 124 Stat. 119 (2010)

(codified at 42 U.S.C. § 18001 et seq.) (PPACA) also advances various strategies

to engender better care through the dissemination of information to consumers.

The statute includes numerous provisions that encourage or require collection,

aggregation and public reporting of quality metrics, care coordination, improved

11

Available at http://www.aqnhc.org/pdfs/changes-in-quality.pdf.

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delivery of services for people with chronic conditions, wellness, prevention, and

health promotion. Id.

CMS recently made significant changes to Nursing Home Compare to

encourage greater consumer participation in improving nursing home quality,

pursuant to Section 6103 of the PPACA. The first change was “to add information

to allow consumers to more directly file complaints about nursing homes with

State Survey Agencies…. [i]nclud[ing] adding links from Nursing Home Compare

to State complaint websites, [ ] making State phone numbers and fax numbers

more prominent on Nursing Home Compare... [and] adding a standardized

complaint form.” Center for Medicaid, CHIP, and Survey & Certification/Survey

& Certification Group, Memorandum to State Agency Survey Directors, April and

July 2011 Changes to Nursing Home Compare (March 18, 2011).12

Next, CMS

began “display[ing] information for each nursing [home] about the number of

substantiated complaints received and about the number of enforcement actions

(specifically Civil Money Penalties and Denials of Payment for New Admissions)

that have been levied.” Id.

Nursing home trade groups acknowledge that greater public access to data is

essential to improve health care quality. “Any time you can share information that

allows our centers to adapt, innovate and improve, those are important steps

12

Available at http://www.cms.gov/Medicare/Provider-Enrollment-and-

Certification/SurveyCertificationGenInfo/downloads/SCLetter11_17.pdf.

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forward,” he says. “After all, without information and feedback, we can’t improve

at a level we all need and want.” Alyssa Gerace, CMS Redesigns Nursing Home

Compare Website, Adds More Facility Data, Senior Housing News (July 19, 2012)

(quoting Greg Crist, vice president of public policy for American Health Care

Association).13

The CMS website enhancements are working to improve consumer

access: “[t]he first half of 2012 brought about 500,000 visitors to Nursing Home

Compare, says CMS, adding that the tool is “highly popular” with patients, their

families, and caregivers.” Id.

4. Public Reporting Regarding Financial Services Has Reformed

Corporate Behavior and Empowered Consumers

The value of the role of transparency and accountability in protecting

consumers in the financial services marketplace is clear. Following the recent

financial crisis, for example, an investigation into the root causes concluded:

The integrity of our financial markets and the public’s trust in those

markets are essential to the economic well-being of our nation. The

soundness and the sustained prosperity of the financial system and our

economy rely on the notions of fair dealing, responsibility, and

transparency. In our economy, we expect businesses and individuals

to pursue profits, at the same time that they produce products and

services of quality and conduct themselves well.

Financial Crisis Inquiry Commission Report, xxii (Feb. 25, 2011).14

13Available at http://seniorhousingnews.com/2012/07/19/cms-redesigns-nursing-

home-compare-website-adds-more-facility-data/. 14

Available at http://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf.

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In response to the devastating economic losses caused by widespread

unsound banking and investment practices, which banking regulators failed to

prevent, Congress established the CFPB to increase transparency and

accountability. Dodd-Frank Wall Street Reform and Consumer Protection Act of

2010, Public Law 111-203, July 21, 2010 (Dodd-Frank); see Report, Comm. on

Banking, Housing, and Urban Aff., S. Rep. 111–176, 1 (Ap. 30, 2010) (Stmt. of

Sen. Dodd) (asserting “investment banks and other types of nonbank financial

firms operated with inadequate government oversight” during the financial

crisis).15

Among other mandates, Congress required the CFPB to establish a unit to

collect, monitor, and respond to complaints regarding consumer financial products

and services. 12 U.S.C. § 5493(b)(3).

Pursuant to this mandate, the CFPB created a “Consumer Response Team”

which began taking complaints about credit cards, mortgages, bank products and

services, and other types of consumer financial services. See CFPB, Consumer

Response: A Snapshot of Complaints Received, 2 (June 19, 2012).16

The CFPB

“uses consumer complaints to inform its work in making prices and risks clearer,

protecting consumers of financial products and services, and encouraging financial

markets to operate fairly and competitively.” CFPB, 2011 Annual Report, 10

15

Available at http://www.gpo.gov/fdsys/pkg/CRPT-111srpt176/pdf/CRPT-

111srpt176.pdf. 16

Available at http://files.consumerfinance.gov/f/201210_cfpb_consumer_

response_september-30-snapshot.pdf.

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(March 2012).17

Over time, the type of complaints and the degree of public access

it grants to the database has increased. Consumer Response, at 2. The CFPB also

created a “Tell Your Story” feature on its website that gives consumers the

opportunity to share their experiences—positive or negative—with consumer

financial products and services. These submissions, like formal complaints, are

reviewed by CFPB staff to help the Bureau understand current issues in the

financial marketplace. See CFPB Annual Report, at 4. The purpose of public

disclosure of the consumer complaints is “to provide consumers with timely and

understandable information about credit cards and to improve the functioning of

the credit card market. By enabling more informed decisions about credit card use,

the [CFPB] intends for its complaint data disclosures to improve the transparency

and efficiency of the credit card market.” CFPB, Notice of Final Policy Statement,

36 (June 14, 2012).18

Collecting and making complaint data public is producing significant results.

Between July 21 and December 31, 2011, 13,210 consumers complained about

credit cards and mortgages. CFPB Annual Report, at 10. The CFPB sent

approximately 75 percent of the complaints to companies, which responded to

approximately 88 percent of those complaints. Id. at 8. The companies closed over

17

Available at available at http://files.consumerfinance.gov/f/201204_cfpb_

ConsumerResponseAnnualReport.pdf. 18

Available at http://files.consumerfinance.gov/f/201206_cfpb_notice-of-final-

policy-statement_disclosure-of-credit-card-complaint-data.pdf.

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55 percent of these complaints with relief and approximately 31 percent without

relief. Id. at 8.

CFPB’s public complaint data process enhances its efficiency and

effectiveness because it frees the Consumer Response team to “primarily focus[ ]

its review and investigation efforts on those complaints where the consumer

disputed the response or where the company failed to provide a timely response.”

Id. at 10. “Consumer Response also periodically investigates groups of

complaints to survey product- and issue-specific trends.” Id. at 10.

The public availability of consumer complaints about financial products and

services is also clearly having its intended effect of driving improvements in

financial institutions. Bankers consider the information contained in the agency’s

consumer complaints databases as integral to their compliance, allowing them to

learn about and address issues that could lead to compliance violations. See Steve

Cocheo, Fair lending foundation for UDAAP compliance, ABA Banking Journal

(June 2012).19

“Compliance has graduated from the traditional ‘checking of the

boxes.’ Now there must be a cradle to grave view of our products. Regulators [ ]

are increasingly looking at the entire customer experience and how everything—

marketing, disclosure, pricing, and more—impacts that experience.” Id. (quoting

Nancy Sjogren of Bancorp).

19

Available at http://www.ababj.com/briefing/fair-lending-foundation-for-udaap-

compliance-3139.html.

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B. Consumers Embrace Internet Ratings To Improve Purchasing

Decisions And Drive Market Improvement But Social Media Is

Not An Adequate Substitute For Regulatory Agency Public

Consumer Complaint Databases

Internet complaint and rating databases are proliferating spontaneously

because Americans value transparency, accountability, and their collective ability

to use the free flow of information to influence business practices. Consumers have

wholeheartedly embraced their increasing access to information through public

forums, which allow them to share information and opinions about products and

services. See Taggart, The CPSIA and Social Media Make Product Issues Public.

Consumer’s ubiquitous use of mobile information devices allows them to

access product information and consumer ratings at the time they are making

purchasing decisions. A poll conducted by Nielsen in 2012 reported that 70

percent of global consumers trust online consumer reviews, the second most

trusted form of advertising behind word-of-mouth and family

recommendations. See Press Release: Global Consumers' Trust in 'Earned'

Advertising Grows in Importance, Nielsen (April 2012),

http://www.nielsen.com/us/en/insights/press-room/2012/nielsen-global-consumers-

trust-in-earned-advertising-grows.html. Increasing consumer demand for

information to assist them in making informed purchasing decisions has led to the

development of numerous online consumer review systems and improved tools to

sort data to make it more meaningful to consumers. See Mark S. Nadel, The

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Consumer Product Selection Process in an Internet Age: Obstacles to Maximum

Effectiveness and Policy Options, 14 Harv. J. Law & Tec 183, 185-86 (Fall

2000).

Such consumer-directed rating systems, which are analogous in some

respects to the CPSIA, NHTSA, FDA, and CMS complaint databases, have proven

to be influential over businesses. A study conducted on the impact of restaurant

reviews on Yelp.com, for example, found that a one-star increase in consumer-

reported ratings positively affected the revenue of a restaurant by 5-9 percent.

Michael Luca, Reviews, Reputation and Revenue: The Case of Yelp.com, Harvard

Business School Working Paper 12-016, 2 (September 16, 2011).20

In fact, as one

commentator describes it,

the emergence of consumers as the most powerful force in

marketing…is a revolution. It’s the first time in history that people,

rather than governments, or religious institutions, or companies,

control the media. It means a dramatic shift in the context in which

brands will connect with consumers in the near future. Consumers

will have the power to change the enterprise business model. They are

demanding and will continue to demand more transparency and

unimpeded access to information, such as the safety of ingredients, or

the labor practices in a company’s factories.

Avi Dan, The Story Of Brands Is About To Change, Forbes.com (Nov. 26, 2012),

http://www.forbes.com/sites/avidan/2012/11/26/the-story-of-brands-is-about-to-

change/.

20

Available at http://hbswk.hbs.edu/item/6833.html.

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27

Social media ratings are influential and useful, but they are no substitute

for the public consumer complaint databases operated by regulatory agencies

because they are not focused on reporting about regulated products and services

and they don’t necessarily include the minimum amount and type of information

required by the agency. This makes the information they provide more difficult for

agencies and researchers to interpret for purposes of identifying trends.

Moreover, the social media complaints may be less accurate because they

are not submitted with verification that the information is “true and accurate to the

best of the person’s knowledge” under penalty of the agency pursuing legal

remedies for false reporting, as they are in agency databases. See Publicly

Available Consumer Product Safety Information Database, Final Rule, 75 Fed.

Reg. at 76,832. Also, considering that the goal of social media is to alert as many

people as possible though wide proliferation of such complaints, social media

reports may be difficult to quantify accurately. Agencies, in comparison, seek to

ensure that unique complaints are included in the data set only once so as not to

overstate the incidence of harm. See id. 75 Fed. Reg. at 76,832. As a result,

compared to the complaints in the regulatory databases, social media complaints

may be wildly inaccurate and overblown. See Taggart, The CPSIA and Social

Media Make Product Issues Public (describing use of social media role in widely

perpetuating inaccurate report that “Mr. Squiggles” toy was toxic, the

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unprecedented speed at which CPSC was able to evaluate and confirm that it

violated no U.S. safety standard and was, in fact, safe, and CPSC’s use of social

media to dispel the inaccurate reports). Although businesses may monitor and

respond to consumer’s social media complaints, neither the complaints nor the

business responses have the same indicia of reliability as in the regulatory

database, as illustrated by the example of the CPSC finding clearing Mr. Squiggles.

Id.

In order to maintain control over the information publicly available about

them, some businesses have filed lawsuits against consumers for posting negative

comments on public websites. See Justin Jouvenal, Virginia woman is sued over

her Yelp review, Wash. Post, Dec. 4, 2012, http://articles.washingtonpost.com/

2012-12-04/local/35625084_1_yelp-online-reviews-defamation; Dan Frosch,

Venting Online, Consumers Can Find Themselves in Court, N.Y. Times, May 31,

2010,http://www.nytimes.com/2010/06/01/us/01slapp.html?pagewanted=all&_r=0.

The consumer is better protected, under first amendment principles, for reporting a complaint to

the regulatory database. “Companies have been willing to promote their brands

through social media in a one-sided conversation, but the vast majority have been

reluctant to participate fully in social media because they cannot control the

conversation” as they can with inherently biased paid advertising. See Taggart,

The CPSIA and Social Media Make Product Issues Public.

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Ironically, some businesses have also sued social media sites seeking to

force identification of anonymous complainants. See, e.g. Mobilisa v. Doe, 170

P.3d 712 (Ariz. App. Div. 1 2007); Doe v. Cahill, 884 A.2d 451 (Del. 2005);

Dendrite v. Doe, 342 N.J. Super. 134, 775 A.2d 756 (N.J. App. 2001); McMann v.

Doe, 460 F. Supp.2d 259 (D. Mass. 2006); Highfields Capital Mgmt. v. Doe, 385

F.Supp.2d 969 (N.D. Cal. 2005). The risk of being sued may silence some

consumers on social media rating websites. Availability of agency consumer

complaint databases guarantee that consumers who are able to verify sufficient

information will nevertheless be able to make a publicly available report to help

warn other consumers and assist in preventing injuries.

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Conclusion

Anonymity and secrecy interfere with the invaluable interactive exchange

between consumers, businesses, and regulators that is driven by public access to

consumer feedback. Respectfully, this Court should order disclosure of the name

of Company Doe and unseal the court proceedings.

Respectfully submitted

/s/ Julie Nepveu

JULIE NEPVEU (D.C. Bar #458305)

AARP FOUNDATION LITIGATION

MICHAEL SCHUSTER (D.C. Bar # 934133)

AARP

601 E Street, NW

Washington, DC 20049

(202) 434-2060 (telephone)

(202) 434-6424 (facsimile)

[email protected]

December 20, 2012

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CERTIFICATION OF COMPLAINCE

This brief complies with the type-volume limitation of 32(a)(7)(B) because

this brief contains 5730 words, excluding the parts of the brief exempted by FED.

R. App. P. 32(a)(7)(B)(iii).

This brief complies with the typeface requirements of Fed. R. App. P.

32(a)(5) and the type style requirements of Fed. R. App. P. 32(a)(6) because this

brief has been prepared in a proportionally spaced typeface using Microsoft Word

in 14-point Times New Roman. Footnotes are in 14-point Times New Roman.

/s/Julie Nepveu

CERTIFICATION OF SERVICE

I certify that on December 20, 2012, I served this brief by ECF on all

registered counsel for appellees.

/s/Julie Nepveu

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