Austin Contrarian

The FTC goes after blogger endorsements

The Federal Trade Commission intends to make bloggers who endorse a product disclose freebies they receive from the product's seller.  Seriously.

The existing regulations require those endorsing a product for an advertisement to disclose a connection with the product's seller "that might materially affect the weight or credibility of the endorsement."  Being paid to endorse a product, the FTC believes, is a fact that "might materially affect" the endorsement's weight or credibility -- unless the endorser is a celebrity, whom everyone assumes is being compensated.   

But since "might materially affect the weight or credibility" is a mushy standard that could mean anything, the FTC has to use examples to show what it means.  And it intends to add paid blogger endorsements to its little menagerie of examples (FTC report pp. 84-85 (pdf)):    

Example 7.  A college student who has earned a reputation as a video game expert maintains a personal weblog or “blog” where he posts entries about his gaming experiences. Readers of his blog frequently seek his opinions about video game hardware and software. As it has done in the past, the manufacturer of a newly released video game system sends the student a free copy of the system and asks him to write about it on his blog. He tests the new gaming system and writes a favorable review. The readers of his blog are unlikely to expect that he has received the video game system free of charge in exchange for his review of the product, and given the value of the video game system, this fact would likely materially affect the credibility they attach to his endorsement. Accordingly, the blogger should clearly and conspicuously disclose that he received the gaming system free of charge.

I don't know who tipped off the FTC attorneys to the blogosphere's existence, or what impelled him to do it, but he should be ashamed of himself.  Who was raising the hue and cry over blogger endorsements?  Who thought it was a good idea to sic an agency obsessed with balding treatments and miracle vitamins on the internet? 

Anyway, the damage is done.  The FTC attorneys have concluded that readers of these quirky and newfangled "weblogs" are entitled to the same protection from undisclosed endorsements that it guarantees TV viewers exposed to weight-loss and vitamin-supplement ads.

This is a silly regulation for many reasons.  First, the FTC can't effectively enforce its rules now for MSM advertisers.  There are just too many outlets (TV, newspapers, magazines, radio) and too many advertisers creatively gaming the rules.  The FTC can't even control specific industries.  It has been battling weight-loss and vitamin-supplement advertisers for decades.  Everyone operates at the laws' fringes; the FTC makes a rule, the weight-loss people figure out a loophole, and so on.  And so late night TV is filled with ads for all kinds of flaky weight-loss treatments.

Because the FTC struggles to regulate a few thousand MSM outlets, it has no chance of enforcing its rules among millions of blogs.  No chance at all.  Bloggers will be able to do what they want, confident in the anonymity provided by numbers.

And, second, even if the FTC could be a credible enforcer, why should it be?  I seriously doubt it will improve the reliability of blog product endorsements.  That ought to be the goal -- to improve the quality of the information floating around out there.  An undisclosed "material connection" perhaps sometimes reduces the value of the endorsement to readers. But lots of other things impair the value of endorsements.  The blogger might be an idiot, for example.  Or the blogger, while not an idiot, has bizarre, undisclosed fetishes which might make his experience just a mite atypical.  The blogger might not have done his homework on the product because he was lazy.  Or he endorsed the product because all the cool people were doing so.  In each case, the reader is likeliest to get the best information from the blogger who got the freebie.  

Third, the few, good bloggers who do provide useful information don't need regulations like this.  These are widely-read bloggers who have been around long enough to build up credibility with their readers.  Few would want to risk that credibility by failing to disclose something their readers would expect them to disclose.  And their readers might expect them to disclose a free book, meal or video game system.  Or they might simply assume the freebies and shrug.  For example, I assume Matt Yglesias and Tyler Cowen get free review copies of the books they review.  I don't believe that either will take the edge off a bad review merely because they got the book for free.  

Fourth, Google can fix any harm posed by a "tainted" endorsement in 200 milliseconds.  When deciding which video game system to buy, I can pull up my local bloggers' review,  but I can pull up a dozen others in just seconds, as well as discussion boards and professional product reviews.  There have been several widely-followed econ bloggers talking up the Kindle.  I suspect many of them got their Kindle gratis.  I don't know.  But when deciding whether to buy my kindle, I considered the possibility that their endorsements perhaps had an artificial glow.  But I also looked at the product review at Amazon (the 1* and 3* reviews are usually the most informative).  And I did other searches for blogs and  discussion boards devoted to the Kindle.  Acquiring information to counterbalance one compensated endorsement is virtually costless.  

These are four reasons why the regulations will either be impotent or pointless.  But here's the FTC's fundamental mistake:  it doesn't understand that readers' expectations depend on the background rules.  Under the current system, I don't know whether a given blogger is being compensated for an endorsement unless she discloses a connection.  If she doesn't disclose a connection, then I have to treat her endorsement with a bit of skepticism (although thorough, thoughtful reviews are good at dispelling this skepticism), and will continue to do so until I've developed trust in her blogging.  In an unregulated blogosphere, my default stance is skepticism.

Under the FTC regulation, if a blogger has an ironclad obligation to disclose freebies, then I'll expect him to disclose that he got a free copy of the product, and discount his endorsement appropriately.  If he does not disclose a connection, I'll assume that he's not being compensated.  Of course, he could be cheating, and we know the FTC will not have the resources to police this kind of misrepresentation.  In this case, the regulation's only consequence will have been too disarm me, to make me a little more gullible.

In a world without a credible threat of enforcement, we're better off in the first scenario than the second.  The FTC's existing rules for television have arguably made consumers more gullible.  They vaguely understand that the government requires commercials to be accurate.  But "accurate" is judged on a sliding scale; commercials make a lot of claims that are unlikely to be true but which "must" be true because the government is letting them appear on TV.  In the worst case, the FTC regulations increase the risk of deceptive and misleading blogposts by giving readers false assurances that they are not being misled.

One might argue that my concerns are overblown and that these regulations will be  harmless at worst.  But this is wrong.  They will cause blog clutter if nothing else.   Tyler's book reviews will come (I presume) with an asterisk and fine print at the bottom.  Food critics will have to run disclaimers at the bottom disclosing which meals were free and which weren't.  Clutter is irritating. 

And it will be particularly irritating to those of us who won't need to clutter our blogs because no one is sending us free stuff to endorse.  

H/t This Life in Austin

Equal protection for truckers

I've argued before that even if we don't congestion price I-35 for all drivers,  we should at least price the road for truckers, which will give them the incentive to take SH 130.   Some have suggested that we simply require through truckers to detour to SH 130.  Atlanta apparently does something like this.

Ben Wear put the notion of an outright ban to Carlos Lopez, the new district engineer for TxDOT's Austin division.  And I'm having trouble believing the answer.

Given all the big rigs clogging Interstate 35 through Austin and the really light traffic on the Texas 130/Texas 45 Southeast tollway loop, can't TxDOT just require trucks to use the tollways?

According to Lopez, there's no state or federal statute that says TxDOT can't do that. On the other hand, there's no state statute saying specifically that it can. Which would seem to leave the way open for something of that order to occur, assuming that the Legislature (over what would likely be fierce opposition from the trucking industry) decided to pass a law like that.

However, TxDOT lawyers say such a statute would probably run afoul of the equal protection clause of the 14th Amendment to the U.S. Constitution. That clause says that no state shall "deny to any person within its jurisdiction the equal protection of the laws."

Truckers could make the argument that making them pay to pass through the Austin area while letting everyone else drive free would violate that clause.

Now I admit I haven't done any legal research here.  But I'm pretty confident truckers won't have an equal protection claim.  Laws treat people differently all the time.  That's the essence of law.  The courts have understood this for a long, long time, and therefore have limited equal protection challenges to laws based on a suspect classification like race or a quasi-suspect classification like sex.  Hence a law that discriminates between whites and African Americans will violate African Americans' right to equal protection unless the law is narrowly tailored to serve a compelling government interest and there is no other way for the government to accomplish this compelling interest.  This is an essentially impossible standard to meet.  Off the top of my head, I can't name any instances approved by the courts.   Quasi-suspect classifications -- those based on sex, for example -- are not subject to quite as demanding an analsyis, but court treat these skeptically, too.

But if a law does not discriminate on the basis of a suspect classification, then  courts will uphold the law as long as it is "rationally related" to a legitimate government interest.  This is con-law speak for, "Congress [or state], do whatever you want to do."  

Truckers are not a suspect classification.  We impose all kinds of unique regulations on them.  The Texas Legislature or any other government can treat truckers differently than ordinary drivers as long as the rules have a rational basis.  

The basis for a ban here is obvious and sensible.  Trucks cause more congestion than cars.  They take up at least twice as much space, and they stop and start more slowly.  Moving the tractor-trailers to another road would ease congestion.  The state has a legitimate interest in clearing congesiton.  Truckers are the most logical place to start. 

The truckers' better objection is practical rather than legal.  As Lopez points out, many trucks are not passing through.  We want trucks making local deliveries to use  efficient routes, including I-35 when necessary.  But this means our ban would have to distinguish between local traffic and through traffic.  I'm not sure how the highway patrol could enforce that.  

The best solution, of course, is to charge truckers to drive on I-35.  Through trucks would have the incentive to switch to SH 130.  Locals would not.  We'd get the optimal result with minimal enforcement costs.  Funny how prices work.

No finish line

Most of the recent discussion of the outdoor music venue ordinances by me and others has focused on the obstacles they set for restaurants like Shady Grove.  But the ordinances' more long-lasting impact will be the change to the permitting process. 

Before the new ordinances were enacted, eligible venues were entitled to an outdoor music venue permit as a matter of right.  Outdoor music venues must now obtain the discretionary approval of a city functionary.  The ordinance directs the city official to consider factors such as neighbor complaints, proximity to other uses and noise mitigation efforts.  Neighbors and neighborhood associations are entitled to notice and the chance to voice their opinions.  Every existing outdoor music venue will have to run this gauntlet when it seeks its next permit renewal.

But, perhaps more importantly, every outdoor music venue will have to run this gauntlet every year.  The new ordinance does not grant venues an automatic renewal.  A venue will need a discretionary permit in year one, year two and year 20.  There is no finish line it can cross to declare victory. 

Theoretically, a music venue could obtain a permit renewal for five years straight but, thanks to continuing neighborhood pressure, be refused a permit in year six.  Nothing necessarily would have to change:  it might play the same kind of music, to the same crowds, during the same hours, with no violations of the decibel limits.

Now, I hope city staff will administer this thing consistently.  It should allow outdoor music venues that receive a permit in year one to receive a more or less automatic renewal in later years unless it violates the noise limits or there is some significant change in the neighborhood.  But no matter what city staff does, the permitting process is now an intrinsically political one.  Venues which draw opposition in year one will, more than likely, draw opposition in years two, three and four.

A likely (and perhaps intended) consequence of this ordinance will be to deter applications for new venues.  Making the up-front investment will be less attractive if the venue's right to operate will require annual, discretionary (and intrincially political) approval.

Update and clarification on the music ordinance

I think I got the basic analysis of the outdoor music venue ordinance right.  But a couple of issues deserve more discussion.

First, I pointed out that unless a property is zoned for cocktail lounge, a restaurant will have to apply to rezone the property to switch its classification to a cocktail lounge. Cocktail lounges are allowed (conditionally) in CS-1 districts, which are rare, but they are also allowed in the CBD and DMU districts. These include both downtown and most of Barton Springs (including Shady Grove). I didn't mention the CBD or DMU districts before.   Shady Grove will not have to seek a rezoning because it is zoned DMU.  Restaurants along South Lamar, South Congress and other streets not within these three districts will need to seek rezonings.

But, second, the cocktail lounge reclassification will itself be more onerous than I indicated.   The Chronicle (h/t M1EK), on April 24 and again today, points out the cocktail lounges are conditional uses in CS-1, DMU and CBD districts. This is a big deal, since restaurants will now have to go through the conditional-use permitting process, including a trip to the Planning Commission. Furthermore, I believe they will have to submit site plans and comply with all code requirements enacted since they obtained their initial use permits, including parking, compatibility, setbacks, etc.   This may be an insurmountable hurdle for venues that have been around for 20 or 30 years.  Rather than being a minor, administrative matter, a reclassification will be time-consuming, expensive and fraught with uncertainty.

Finally, as I pointed out, it is not at all clear that these restaurants even meet the definition of a cocktail lounge.  The sale of alcohol for on-premises consumption is an accessory use for a restaurant.  It is a principal use for cocktail lounges.  Can city staff reclassify alcohol sales from accessory to principal use without any change in the mix of food and alcohol sales?

When I posed this question to Jeff Jack on the ANC listserve, he replied, "I suspect that what we will see is, at least in this case, is the interpretation by staff allowing food sales, no matter how much of a percentage of the total sales, to be an accessory use to a cocktail lounge. this only makes since selling more food at a bar is a good thing from the perspective of limiting alcohol abuse and it's related problems for which the code distinction was created."

City staff may be pressured to adopt this interpretation.  If it does not, then restaurants will have an incentive to push alcohol sales and curb food sales -- which would certainly be an unintended and harmful consequence of the new ordinances.  I don't know have far staff can go with this, since it has to worry about the consistency of its treatment of "accessory use" with other uses.  In other words, if it treats food sales as an accessory use even though they comprise 80% of gross revenue, it might have to liberalize its definition of accessory use for other, unrelated uses.

As I said before, this last issue is a murky one.  We won't really know the answer until staff tells us. 

Restaurants and cocktail lounges and the noise ordinance

The new noise ordinance isn't really my issue.  I didn't follow it as it wended its way from task force to Council.  Others have (see here, here and here).

But the controversy over Shady Grove finally motivated me to read the ordinances myself.  I've put my thoughts below.

Let me stress that I've had no prior experience with these ordinances.  I don't know how city staff has interpreted the noise ordinance in the past or how they're interpreting the new ordinances.  And I could have missed some relevant code provisions.  In other words, I've strayed outside my area of expertise.  Proceed at your own risk.

If anyone spots a mistake below, please let me know and I will cheerfully correct my analysis.

My Alan Dershowitz moment

Tom Kirkendall and Scott Henson cover the DOJ report detailing the Harris County jail's deplorable conditions.

Reading their posts, I was reminded of my own experience with the jail's shoddy policies -- as an attorney, fortunately, rather than as an inmate.

Way back when I was a cub lawyer in Houston, a partner in my firm was appointed counsel for a Harris County jail inmate who had filed a pro se civil rights lawsuit.  The partner promptly appointed me. The client was a Muslim who wanted to observe Ramadan, which required him to fast during daylight.  The jail fed inmates during the day, though, and refused to bend the rules to accommodate this inmate.  It thus gave him a blunt choice:  forget about Ramadan, or starve yourself for a month.  The jail also refused to let his imam drop off a Koran; it required inmates to order all books straight from the publisher.

By the time we were appointed, the federal judge, Sim Lake, had already entered a temporary restraining order requiring the jail to feed our client before sunrise and after sundown.  Our job was to prepare for the permanent injunction hearing.

So I deposed Harris County Sheriff Johnny Klevenhagen.  This was only my third deposition, and I must not have done it right, because I pissed off Klevenhagen so badly that he walked out midway through the deposition.  And did not return.  The county attorney and I just stared blankly at one another.  He shrugged.  I left.

To this day, I don't know why Klevenhagen got so mad.  (Really, I do.)  The line of questioning was innocuous enough:  "Q.  Don't you have inmates who spend all day at court?  A.  Yes.  Q.  Don't you have to feed them?  A.  Yes.  Q.  How do you do that?  A.  We prepare sack lunches for them.  Q.  You mean, sandwiches in plastic bags and such?  A.  Yes.  Q.  Well, why can't you set aside a couple for my guy to eat?"  And he walked out soon thereafter.

We had a status conference with the judge a few days later.  I told him about the deposition and the sheriff's answers (and sudden departure).  The judge listened patiently and then turned to the county attorney.  "You know, I'm not going to tell you how I will rule, but you need to settle."

And so the county promised to feed my guy before and after sunrise, let his imam give him a copy of the Koran, and kicked in $5,000 for his trouble.

I'd like to chalk this up to my Dershowitz-like skills but, really, this was a no-brainer.  The standard, if I recall, required the jail to balance its administrative convenience and security concerns with the inmate's legitimate religious interests.  Since feeding my client created no inconvenience or security concerns, the jail had no excuse.  It was not a close call.  The county attorney knew it, but had to put up a fight because that's what his client told him to do.

I wasn't really surprised, then, to see that the Harris County jail still can't get things right.

An unintended consequence of the Stop Domain Subsidies' Charter amendment?

Stop Domain Subsidies' proposed Charter amendment to ban retail subsidies is fraught with unintended consequences.

Here's one:  The Charter amendment likely will shunt low-income residents away from mixed-use developments and into stand-alone residential developments.  Why?  Because the proposed amendment bars subsidies to developments that merely include a retail use, even if the retail use itself receives no subsidy.  The City thus will be unable to "buy down" the affordability of units in mixed-use developments that include a retail use.

A concrete example:

Back in 2006, the City gave Ardent Residential a zoning change to redevelop the Stoneridge Apartments on South Lamar into a 300-unit mixed-use development.  The developer agreed to make 10% of the units affordable at 80% MFI.  But the units being replaced rented for a lot less.  To quell the furor over the rezoning, Betty Dunkerly proposed using some of the City's affordable housing bond money to "buy down" 10% of the units to 50% MFI, a genuinely affordable level.  The developer and the City are squabbling over the "buy down's" price tag, but the City appears ready to honor its pledge.  (It has to spend its $50 million in affordable housing bond money somehow.)

I don't know whether Ardent has filed a site plan yet, but it has talked all along about including retail as part of the mixed use.  That was part of the development's attraction. 

Assuming Ardent still intends to include a retail use, then, the Charter amendment will keep the City from honoring its pledge to buy "deep" affordability for these units.  The Charter amendment will keep the City from buying deep affordability in any mixed-use development that includes retail.  The City will be forced to spend its affordable housing dollars on stand-alone residential developments, or perhaps "live-work" developments.

I don't see how this protects local merchants.  The mixed-use development will still be built, and it will still have retail; the developer simply will rent the units at the market rate (or 80% or 60% of MFI if it takes advantage of the VMU incentives).

One could argue, perhaps, that purchasing affordability in mixed-use developments is an expensive, inefficient way to provide affordable housing.  (I'm ambivalent about it myself.)  But it doesn't seem wise to me to silence that debate by Charter amendment.

Every defense lawyer has wanted to file an answer like this.

From a real, live answer recently filed in a real, live case pending in a Texas state court (court, parties, and counsel redacted):

I.

Defendants assert a general denial under Rule 92 of the Texas Rules of Civil Procedure to the Plaintiff's Original Petition.

II.

Defendants assert that Plaintiff's damages were caused in whole or part by his own contributory negligence.  Specifically, the plaintiff is a dumbass who failed to unlock a twist lock causing his own injury -- fucking idiot.  Thus, a jury should also consider the negligence of the Plaintiff and defendants assert the dumbass defense.

III.

Defendants further assert that Plaintiff's injuries and damages, all of which he is faking, were caused in whole or in part by pre-existing conditions.  Thus, a jury should also consider the pre-existing conditions of the malingering Plaintiff.

WHEREFORE, PREMISES CONSIDERED, Defendants [redacted] therefore, prays for a take-nothing judgment and that the case be dismissed because the plaintiff is a malingering dipshit, for all costs, and for all other just relief.

Respectfully submitted,

etc.      

Moral:  When you dictate an answer over the phone to your secretary on your way back to the airport after a particularly crappy deposition, do not assume that you'll remember to edit it before filing.

Why I'm not a law professor.

Via Legal Theory Blog, the abstract for Professor Penelope Pether's (Villanova University School of Law) new paper:  Militant Judgment?: Judicial Ontology, Constitutional Poetics, and 'The Long War' (pdf):

This Article, a contribution to the Cardozo Law Review symposium in honor of Alain Badiou's Being and Event, uses Badiou's theorizing of the event and of the militant in Being and Event as a basis for an exploration of problems of judicial ontology and constitutional hermeneutics raised in recent decisions by common law courts dealing with the legislative and executive confinement of Islamic asylum seekers, enemy combatants and terrorism suspects, and certain classes of criminal offenders in spaces beyond the doctrines, paradigms and institutions of the criminal law. The Article proposes an ontology and a poetics of judging equal to the demands of the long war, or of post-9/11 constitutionalism on subjects serving on Western Anglophone common law constitutional courts.

Drawing in particular on the anti-terrorism control order jurisprudence of Justice Sullivan of the English High Court and the Chapter III judicial power jurisprudence of the Australian High Court, in particular as the latter deals with what is in the U.S.A. euphemistically called the preventive detention of sexually violent predators, and the indefinite detention of Islamic asylum seekers in the aftermath of 9/11, the article concludes that Australian High Court Justice Michael Kirby's recent jurisprudence of dissent instantiates a militant procedure of common law constitutional judging of others.

The Article suggests that the transformative praxiological potential of Being and Event lies in the radical uncertainty that this philosophy both implies and depends on, its anxiety, obsession and desire, and that the necessary uncertainty of the subject as to the occurrence of an event is at the heart of what might be the virtues of Badiou's account of being and event for a theory of post-9/11 constitutional judicial ontology. Militant judging recognizes both the constitutional judge's - and constitutionalism's - other, and in judging his equals those others on whom he passes judgment, the militant judge inscribes equality, becomes equal to the event.

It's not that this flavor of philosophy (anti-postmodernist, apparently), or this style of prose, exemplifies legal scholarship today.  Most legal scholarship isn't technically philosophy.  Rather, this, like most of the articles I skim every week, is just . . . irrelevant.  Immaterial.  Not in the sense of, "Yeah, right, I'll never use that in my practice," but in the sense of, "This isn't really knowledge." 

From my view outside the citadel, the problem with legal scholarship is that there are too many theorists and not enough empiricists.  There appears to be more empirical work being done today than even 16 years ago when I graduated from law school, but too much legal scholarship can still be boiled down to, "Here is what I think we should do; now let me construct a theory to rationalize it."  It needs more data discipline. 

Some of those theories are pretty wacky, too.  Legal scholars unfortunately can't agree on what's whacky and what's not, and therefore end up letting the modern equivalent of alchemists, astrologers and faith-healers share the bench with people doing useful work.

 

My "amicus brief of sorts"

While at the clerk's office pulling the trial briefs in the RG4N case, I came across this reply brief (pdf) filed by Casey Dobson on Allandale's garden-center claim.  I laughed out loud when I saw it, which I'm sure annoyed the little old lady sitting two terminals over.  Dobson quoted at length from my post last July, calling it an "amicus brief of sorts."

Dobson's point was that the legal issues had to be obvious if even some random armchair blogger could figure them out.  Still, this was the first time I've been quoted as a blogger in a brief (and apparently a first for Dobson as well).