Monday, June 4, 2012
This article in the Huffington Post provides some tips on how to get out of a contract without paying fees. Tip #1? Read the fine print. Speaking of fees, it looks like it'll take less digging to uncover the fees that are chipping away at your hard earned savings in your 401K plan.
Council 31 of the American Federation of State, County and Municipal Employees, AFL-CIO (the Union) represents 40,000 employees in the state of Illinois. It agreed to certain cost-saving measures, including deferred wage increases, in order to help Illinois address significant budget pressures. When Illinois did not emerge from its financial woes, it instituted a wage freeze, repudiating the earlier deal.
The Union brought suit, citing inter alia the Contracts Clause, and seeking an injunction forcing the state to pay the wage increases as they came due. Illinois brought a motion to dismiss, which the District Court granted. In Council 31 v. Quinn, the Seventh Circuit affirmed.
The case is procedurally complex, especially since the parties proceeded with arbitration, in which the Union prevailed in part, and that ruling is subject to an on-going appeal in the state courts. Meanwhile, the 7th Circuit addressed only constitutional claims brought pursuant to the Contracts Cluase and the Equal Protection Clause against Illinois Governor Quinn and from the State's Department of Central Management Services Director Malcolm Weems, both in their offiical capacities.
Although the Union characterized its claims as seeking only injunctive and declaratory relief, the true aim was to get the state to make expenditures from its treasury. As such, not withstanding Ex parte Young, the Eleventh Amendment barred the Union's Contracts Clause claims against the defendants.
Even if there were no Eleventh Amendment bar to the suit, the Court also found that the Union could not state a claim under the Contracts Clause because it alleged only an ordinary breach of contract, which is insufficient to constitute an "impairment" of contractual relations for the purposes of the Contracts Clause. The reasons why this is so have to do with the state's defenses to the Union's claims in the arbitration proceedings and the state court appeals thereof. The basic argument is that appropriate legislative appropriations were a condition precedent to its duties to pay the wage increases. If that argument succeeds, there was no contractual impairment. If it fails, there is no need for a federal court injunction because the Union will have prevailed.
The Court dismissed the Union's Equal Protection claim because the challenged state rules withstand rational basis scrutiny.
Friday, June 1, 2012
Are bedbugs sucking your blood and selling them to black market blood banks while you sleep?!?
Is an alien convict about to escape from his prison on the moon and travel back in time to pave the way for his species to invade the earth?
TUNE IN AT 10 PM TO FIND OUT
But the answer to the local news questions is invariably a disappointed, "probably not, but still . . . think about it." And the answer to our question is: likely yes!
According to this report in the New York Times, and this report from the United States Public Interest Research Group Education Fund (US PIRG), about 900 colleges and universities have formed partnerships with financial institutions. The colleges and universities issue student IDs which also function as debit cards that bear the logos of the partner institutions. The banks thus effectively control the disbursement of student aid.
The partnerships vary in their terms. Some provide large payments to the universities in return for giving the banks exclusive access to students. So, for example, The Ohio State University has apparently brought in $25 million through its contract with Huntington Bank. The money helps, since state legislatures are cutting funding for higher education. In return, Huntington gets to open branches and A.T.M.’s on campus and gains exclusive access to more than 600,000 students, faculty, staff and alumni.
Others permit colleges to save money by hiring banks or other vendors to provide financial services to students. It's not entirely clear from the Times article, but this seems to mean that the universities save themselves administrative costs by having government loan money sent to financial instittuions rather than to the universities. The financial institutions then disburse the money, but until they do, it would seem, they have the benefit of having the money. In addition, according to the US PIRG report, banks and financial firms have “an unprecedented opportunity to market add-on products — bank accounts, A.T.M./debit cards and even loans and credit cards — to students with virtually no competition,” Students may also have to pay ATM fees when they withdraw their loan money. US PIRG characterizes the debits cards as wolves in sheep's clothing because the student do not realize that they are paying fees to a bank when they access their loan money.
The report highlights one financial institution, Higher One, which provides services on over 500 campuses. But the Times quotes one of Higher One's co-founders, who points out that the alternative to Higher One's services is not some magical free world in which there would somehow be no expenses involved in the disbursement of student loan funds.
Still, all of this seems to be a clever work-around to evade provisions of the CARD Act that were supposed to crack down on predatory lending practices that targeted students. None of this is illegal, but it replicates the tactics that the banks used to entice students to sign up for credit cards and which the CARD Act was supposed to prevent.