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Volume 115 - Issue 6


The Rise of “FringeTech”: Regulatory Risks in Earned-Wage Access

Nakita Q. Cuttino | April 18, 2021

By many accounts, the financial technology, or FinTech, sector appears to have developed an innovative solution to assist low-income workers with income shortfalls between standard paydays by displacing fringe financial service providers, namely payday lenders. Earned wage access programs facilitate early transfers of earned-but-unpaid wages to low- income workers through mobile platforms, algorithmic technology, and GPS tracking. To many, earned wage access programs represent a win-win for employees and employers. These programs are believed to be cheaper and safer alternatives to payday loans. Preliminary research also suggests these programs improve labor-retention rates for employers and help reduce financial distress for low-income employees. Consequently, a growing number of employers, including Walmart Inc. and, Inc., have partnered with earned wage access providers to offer these programs as an employee benefit. Employees may also use third-party providers that bypass employers to offer these programs directly through mobile-app stores. In less than a decade, this nascent market has impressively achieved national scale, hundreds of thousands of employer partnerships, millions of users, and billions of dollars in transactions. Yet, notwithstanding and perhaps because of these early successes, these programs also have downsides that have been much less emphasized. In particular, although the gatekeeping role that employers may play when partnering with earned wage access programs has the potential to facilitate improved pricing and service terms in the fringe financial market, such a role also masks significant costs that are not fully disclosed to employees. Additionally, the earned wage access market creates detrimental regulatory blind spots and enables regulatory arbitrage by blurring the lines between once-distinct financial services: money-transmission services and loan services. Earned wage access programs have largely operated with minimal legal constraints because they have generally been characterized as money- transmission services, rather than loan services like payday loans. Building on the FinTech literature, by analogy, this Article argues that this blanket characterization of earned wage access programs is a mistake. Earned wage access programs have varying effects. In the absence of regulatory guardrails, some programs can perpetuate, and in some instances exacerbate, the very risks providers claim to eliminate when displacing short-term creditors like payday lenders. This Article proposes a federal-level regulatory framework based on lending laws that addresses some of these unmitigated risks through the imposition of consumer-protection requirements such as uniform price disclosure, ability-to-repay rules, optional amortization mechanics, mandatory credit reporting, and a right-to-rescind assignment. In doing so, this Article aims to facilitate growth of the earned wage access market’s functional improvements and prevent a mere shift to fringe FinTech, or “FringeTech,” services.

The Probative Synergy of Plus Factors in Price-Fixing Litigation

Christopher R. Leslie | April 18, 2021

Private plaintiffs alleging that defendants conspired to fix prices in violation of antitrust law must usually prove their claims through circumstantial evidence, generally in the form of “plus factors”—evidence indicating that the defendants’ parallel conduct was caused by collusion, not by independent decision-making. Supreme Court precedent requires fact finders to examine antitrust plaintiffs’ evidence holistically. With increasing frequency, however, federal courts in price-fixing cases improperly isolate each piece of circumstantial evidence presented by the plaintiff and then deprive it of all probative value because that single piece of evidence is insufficient, standing alone, to prove a price-fixing conspiracy. As a result, federal courts routinely grant summary judgment to price-fixing defendants even when plaintiffs have proffered more than enough evidence to prove their case. This Article develops a typology of plus factors. Using antitrust case law, empirical research, and economic theory, this Article categorizes dozens of plus factors and explains the probative value of individual plus factors, as well as their interrelationships with each other. Plus factors may fall into one of several categories, such as Cartel Susceptibility, Cartel Formation, Cartel Management, Cartel Enforcement, and Cartel Markers. The Article then introduces and develops the concept of probative synergy, which describes how the probative value of each individual plus factor increases as additional plus factors are introduced into the equation. Despite the longstanding rule that courts should not compartmentalize an antitrust plaintiff’s evidence of conspiracy, courts often inappropriately isolate individual plus factors and incorrectly suggest that if a plus factor does not by itself prove collusion, then it is not a plus factor at all. This approach miscomprehends the entire structure of factor tests in legal analysis. Using a series of case studies, the Article examines the causes and consequences of judges improperly compartmentalizing circumstantial evidence in price-fixing litigation. The Article concludes by showing that the failure to appreciate the probative synergy of plus factors has led courts to make it effectively impossible to prove collusion through circumstantial evidence in price-fixing cases.

MDL in the States

Zachary D. Clopton & D. Theodore Rave | April 18, 2021

Multidistrict litigation (MDL) is exploding. MDL makes up a large and increasing portion of the federal civil docket. It has been used in recent years to manage and resolve some of our largest controversies: opioids, NFL concussions, Volkswagen “clean” diesel, and many more. And, given its growing importance, MDL has come to dominate the academic literature on complex litigation. At its base, MDL is a tool to coordinate related cases across different courts in service of justice, efficiency, and fairness. These goals are not unique to the federal courts. State courts handle far more cases than federal courts, including the kinds of complex disputes that could benefit from coordination. Yet state MDL procedures are virtually absent from the scholarly literature. This Article offers a systematic study of state MDLs. Surveying the laws of every state, we find that about half the states have developed their own MDL-like procedural devices. What makes MDL distinctive is that it allows some official or institution to consolidate cases and to assign them to a handpicked judge. Therefore, we develop in this Article the first taxonomy of state MDL mechanisms based on which officials or institutions are given this substantial power. Along the way, we explore the other ways that states have tailored their MDL rules. We also provide case studies of three state MDL systems and report previously unpublished data on how state MDLs work. Building on these findings, this Article offers an institutional analysis of state MDL. We find that state MDLs distribute important cases to courts and judges in ways that depart dramatically from the default rules of judicial administration. These choices have important consequences for litigant control, judicial power, and both inter- and intrastate relations, which can be amplified in states where judges are elected. In these ways, different types of state MDLs—sometimes unwittingly—may tilt the usual balance in favor of plaintiffs or defendants, local actors or statewide ones, and voters or government officials.

Notes and Comments

The Fourth Amendment Stripped Bare: Substantiating Prisoners’ Reasonable Right to Bodily Privacy

Meher Babbar | April 18, 2021

Prisoners’ rights to bodily privacy under the Fourth Amendment are limited, allowing detention officials to strip-search them for contraband. The extent to which the Fourth Amendment protects prisoners, however, is uncertain. Questions regarding whether strip searches require reasonable suspicion and the manner in which officials may conduct strip searches have troubled courts for decades. In the absence of clear guidance from the Supreme Court, courts have reached inconsistent conclusions, imperiling the human rights and dignity of prisoners. This Note argues that courts should define and apply prisoners’ rights to bodily privacy with reference to international human-rights law, specifically the United Nations Standard Minimum Rules for the Treatment of Prisoners. By looking to this standard, courts can define the right to bodily privacy under the Fourth Amendment in a manner that aligns with the informed and carefully debated consensus of nations, moving away from the inconsistent decision-making of the lower courts that has failed to produce any cognizable doctrine. Resolving this uncertainty will not only allow for greater doctrinal clarity in this area of law, but also bolster the human rights and basic dignity of prisoners as guaranteed to them by the Constitution.

Untested and Neglected: Clarifying the Comparator Requirement in Equal Protection Claims Based on Untested Rape Kits

Emily Jones | April 18, 2021

Rape kits are important tools used to store the evidence that is collected from a victim’s body and clothing following a sexual assault. Although the DNA evidence stored in rape kits is crucial to rape investigations, police departments throughout the country have routinely failed to test rape kits. This remains true despite the national funding allocated specifically for rape kit testing. This widespread neglect hinders justice and renders community members unprotected from sexual violence. The national rape kit backlog has sparked legal challenges; six lawsuits have been filed against police departments for systematically refusing to test rape kits, alleging equal protection violations based on gender under 42 U.S.C. § 1983. This Note discusses the two lawsuits that have reached the circuit court level. These two suits illustrate the difficulty in establishing discriminatory intent—a necessary component of an equal protection claim. Ultimately, this Note argues that courts should recognize police refusal to test rape kits as a violation of the Equal Protection Clause of the Fourteenth Amendment and should not require plaintiffs to plead a specific comparator to establish discriminatory intent.

Information Fiduciaries and Political Microtargeting: A Legal Framework for Regulating Political Advertising on Digital Platforms

Kimberly Rhum | April 18, 2021

Digital technologies have taken individualized advertising to an unprecedented level. But the convenience and efficiency of such highly tailored content comes at a high price: unbridled access to our personal data. The rise of sophisticated data-driven practices, otherwise known as “Big Data,” enables large datasets to be analyzed in ways that reveal useful patterns about human behavior. Thanks to these novel analytical techniques, businesses can cater to individual consumer needs better than ever before. Yet the opportunities presented by Big Data pose new ethical challenges. Significant scholarly research has examined algorithmic discrimination and consumer manipulation, as well as the ways that data-driven practices undermine our democratic system by dramatically altering the news ecosystem. Current scholarship has especially focused on the ways illegitimate foreign and domestic operatives exploit the advertising tools of digital platforms to spread fake and divisive messages to those most susceptible to influence. However, more scholarly attention should be devoted to how these digital technologies are exploited by legitimate political actors, such as politicians and campaigns, to win elections. By combining data-driven voter research with personalized advertising, political actors engage in political microtargeting, directing communications at niche audiences. Political microtargeting fits within a broader conversation about data-privacy regulation, as individuals lack sufficient control over how digital companies handle their personal data. The First Amendment currently limits data-privacy reform, so any meaningful changes must reconcile data privacy with the First Amendment. Professor Jack Balkin has argued that online service providers should be defined as “information fiduciaries,” or businesses that, because of their relationship with another, have taken on special duties with respect to the information they obtain in the course of the relationship. Because online service providers receive sensitive information from their end users, Professor Balkin argues they should be subject to additional regulation. Treating online service providers as information fiduciaries provides a viable means to reconcile the First Amendment with data-privacy regulation: the First Amendment has not prevented the state or federal government from regulating how certain professionals, such as doctors and lawyers, interact with their clients and use their personal information because these professionals share a fiduciary relationship with their clients. Therefore, consistent with the First Amendment, the government should also be able to subject online service providers to reasonable restrictions on their handling of end-user data. This Note expands Professor Balkin’s information-fiduciary framework by arguing that federal legislation should place fiduciary duties on online service providers. In doing so, it responds to scholarly critiques of Professor Balkin’s theory, particularly the criticism that he failed to show how information fiduciaries might function in practice. Using political microtargeting on Facebook as an example, this Note spells out the ways that fiduciary duties might be enforced. This Note argues that holding Facebook and other digital platforms that engage in political advertising to an information-fiduciary standard would ameliorate some of the adverse effects of political microtargeting and promote electoral integrity in the digital age.


Remote Court: Principles for Virtual Proceedings During the COVID-19 Pandemic and Beyond

Alicia L. Bannon & Douglas Keith | April 18, 2021

Across the country, courts at every level have relied on remote technology to adapt the justice system to a once-a-century global pandemic. This Essay describes and assesses this unprecedented journey into virtual justice, paying particular attention to eviction proceedings. While many judges have touted remote court as a revolutionary innovation, the reality is more complex. Remote court has brought substantial time savings and convenience to those who are able to access and use the required technology, but it has also posed hurdles to individuals on the other side of the digital divide, particularly self-represented litigants. The remote court experience has varied substantially depending on the nature of the proceedings, the rules and procedures courts put in place, and the relevant court users’ resources and tech savvy. Critically, the challenges posed by remote court have often been less visible to judges than the efficiency benefits. Drawing on these lessons, this Essay identifies a series of principles that should inform future uses of remote technology. Ultimately, new technology should be embraced when—and only when—it is consistent with fair proceedings and access to justice for all.

Online Essay

The Crypto Quandary: Is Bankruptcy Ready?

Megan McDermott | April 18, 2021

As the United States grapples with how best to manage a global pandemic, bankruptcy courts are bracing for the inevitable fallout from COVID-19. As we saw in the wake of the 2008 financial crisis, hard- hit businesses will need to reorganize to adjust to new conditions, while out- of-work consumers will need debt relief options. But there will be a new twist for this impending wave of bankruptcies: how should bankruptcy courts deal with crypto assets like Bitcoin? This Essay argues that the rise of cryptocurrency investments over the last decade poses serious complications for the next round of consumer and business bankruptcies. Although legislative solutions may be necessary to adequately address these complications, at the very least, greater awareness of these issues will help ensure that courts and stakeholders are better prepared to address this looming crisis.