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From the Commonwealth Fund
Can Germany’s Approach to Pricing New Drugs Work in the U.S.?
June 13, 2019
The German and U.S. health insurance systems are similar in many ways, but Germany has substantially lower drug prices. In a new To the Point post, James C. Robinson of the University of California, Berkeley, and colleagues look at how Germany prices drugs and consider whether its method could work here.
Prices for new drugs in Germany are negotiated between an umbrella organization representing insurers and the drug maker, and there is strong public and political pressure for the two parties to reach agreement.
For such a system to work in the U.S., the authors say assessments of new drugs’ incremental clinical benefits would be essential. That information would in turn be used to negotiate prices, with a “recognition by both buyers and sellers that the process is fair, financially sustainable, and supportive of continued investments in pharmaceutical innovation.”
Read the post https://www.commonwealthfund.org/blog/2019/how-drug-prices-are-negotiated-germany
Can Germany’s Approach to Pricing New Drugs Work in the U.S.?
June 13, 2019
The German and U.S. health insurance systems are similar in many ways, but Germany has substantially lower drug prices. In a new To the Point post, James C. Robinson of the University of California, Berkeley, and colleagues look at how Germany prices drugs and consider whether its method could work here.
Prices for new drugs in Germany are negotiated between an umbrella organization representing insurers and the drug maker, and there is strong public and political pressure for the two parties to reach agreement.
For such a system to work in the U.S., the authors say assessments of new drugs’ incremental clinical benefits would be essential. That information would in turn be used to negotiate prices, with a “recognition by both buyers and sellers that the process is fair, financially sustainable, and supportive of continued investments in pharmaceutical innovation.”
Read the post https://www.commonwealthfund.org/blog/2019/how-drug-prices-are-negotiated-germany
State AGs File to Block Merger of T-Mobile and Sprint
CA press release:
SACRAMENTO - California Attorney General Xavier Becerra, co-leading with New York a coalition of 10 attorneys general, today filed a lawsuit to block the proposed merger of telecommunications companies T-Mobile and Sprint. The companies – two of only four national wireless providers – offer wireless phone services to over 13 million California consumers. The lawsuit challenges the acquisition of Sprint by T-Mobile because it would lead to higher prices and fewer choices for consumers, particularly low-income subscribers of the companies’ services.
“Although T-Mobile and Sprint may be promising faster, better, and cheaper service with this merger, the evidence weighs against it,” said Attorney General Becerra. “This merger would hurt the most vulnerable Californians and result in a compressed market with fewer choices and higher prices. Today, along with New York and eight other partner states, we’ve filed a lawsuit to block this merger and protect the residents of our state.”
“When it comes to corporate power, bigger isn’t always better,” said Attorney General James. “The T-Mobile and Sprint merger would not only cause irreparable harm to mobile subscribers nationwide by cutting access to affordable, reliable wireless service for millions of Americans, but would particularly affect lower-income and minority communities here in New York and in urban areas across the country. That’s why we are going to court to stop this merger and protect our consumers, because this is exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were designed to prevent.”
The current market includes four national network providers: T-Mobile, Sprint, Verizon and AT&T. Sprint and T-Mobile’s proposed union would consolidate these four provider options into three, by combining T-Mobile and Sprint’s market shares. In certain areas of California, the market share of the merged firm would be over 50 percent. Moreover, Sprint and T-Mobile have high market shares among low-income populations.
They would become the dominant network provider for prepaid mobile services, which are available without a credit check. Any merger would significantly hurt these communities by diminishing competition and increasing costs to consumers.
This is T-Mobile’s third merger attempt. Each previous attempt has been blocked or abandoned due to opposition from the government based on the same concerns laid out in the lawsuit filed today. In this attempt, T-Mobile and Sprint argue that the merger would allow them to more quickly roll out a next-generation 5G network and more broadly increase service to rural customers. However the companies are already planning to roll out 5G networks, and T-Mobile is already planning increased rural coverage, even without the merger.
A copy of the complaint can be found here, https://oag.ca.gov/system/files/attachments/press-docs/t-mobile-sprint-complaint-redacted-case-19-cv-5434.pdf
CA press release:
SACRAMENTO - California Attorney General Xavier Becerra, co-leading with New York a coalition of 10 attorneys general, today filed a lawsuit to block the proposed merger of telecommunications companies T-Mobile and Sprint. The companies – two of only four national wireless providers – offer wireless phone services to over 13 million California consumers. The lawsuit challenges the acquisition of Sprint by T-Mobile because it would lead to higher prices and fewer choices for consumers, particularly low-income subscribers of the companies’ services.
“Although T-Mobile and Sprint may be promising faster, better, and cheaper service with this merger, the evidence weighs against it,” said Attorney General Becerra. “This merger would hurt the most vulnerable Californians and result in a compressed market with fewer choices and higher prices. Today, along with New York and eight other partner states, we’ve filed a lawsuit to block this merger and protect the residents of our state.”
“When it comes to corporate power, bigger isn’t always better,” said Attorney General James. “The T-Mobile and Sprint merger would not only cause irreparable harm to mobile subscribers nationwide by cutting access to affordable, reliable wireless service for millions of Americans, but would particularly affect lower-income and minority communities here in New York and in urban areas across the country. That’s why we are going to court to stop this merger and protect our consumers, because this is exactly the sort of consumer-harming, job-killing megamerger our antitrust laws were designed to prevent.”
The current market includes four national network providers: T-Mobile, Sprint, Verizon and AT&T. Sprint and T-Mobile’s proposed union would consolidate these four provider options into three, by combining T-Mobile and Sprint’s market shares. In certain areas of California, the market share of the merged firm would be over 50 percent. Moreover, Sprint and T-Mobile have high market shares among low-income populations.
They would become the dominant network provider for prepaid mobile services, which are available without a credit check. Any merger would significantly hurt these communities by diminishing competition and increasing costs to consumers.
This is T-Mobile’s third merger attempt. Each previous attempt has been blocked or abandoned due to opposition from the government based on the same concerns laid out in the lawsuit filed today. In this attempt, T-Mobile and Sprint argue that the merger would allow them to more quickly roll out a next-generation 5G network and more broadly increase service to rural customers. However the companies are already planning to roll out 5G networks, and T-Mobile is already planning increased rural coverage, even without the merger.
A copy of the complaint can be found here, https://oag.ca.gov/system/files/attachments/press-docs/t-mobile-sprint-complaint-redacted-case-19-cv-5434.pdf
Sprint and T-Mobile Merger Approval, Said to Be Near, Could Undercut Challenge by States
The Justice Department is pushing Sprint and T-Mobile to sell Boost Mobile and wireless frequencies, people familiar with a potential agreement said.CreditBrittainy Newman/The New York Times
By Cecilia Kang
If such an arrangement is approved, it could weaken an effort by attorneys general from nine states and the District of Columbia to halt the blockbuster deal with a suit that they filed this week.
From:https://www.nytimes.com/2019/06/14/technology/t-mobile-sprint-merger.html?searchResultPosition=3
The Justice Department is pushing Sprint and T-Mobile to sell Boost Mobile and wireless frequencies, people familiar with a potential agreement said.CreditBrittainy Newman/The New York Times
By Cecilia Kang
- June 14, 2019
If such an arrangement is approved, it could weaken an effort by attorneys general from nine states and the District of Columbia to halt the blockbuster deal with a suit that they filed this week.
From:https://www.nytimes.com/2019/06/14/technology/t-mobile-sprint-merger.html?searchResultPosition=3
Sports gambling raises possible antitrust issues concerning league control of sports data
Excerpt from Forbes:
Now, with the rapid advent of new U.S. markets for sports gambling, certain U.S. professional sports leagues may find themselves facing yet another antitrust challenge, this one related to the centralization of purported “game data rights” and efforts to foreclose non-league parties from competing to collect and resell game-related data.
There are two sections of antitrust law under which the U.S. professional sports leagues have historically faced challenges. Section 1 of the Sherman Act, in pertinent part, states that “every contract, combination … or conspiracy, in the restraint of trade … is declared to be illegal.” Meanwhile, Section 2 of the Sherman Act states that “every person who shall monopolize, or attempt to monopolize …. shall be deemed guilty of a felony.”
The recent practices of Major League Baseball and the National Basketball Association to centralize “ownership” of sports league data on the league (rather than team) level and then attempt to require their business partners to use only their data (and not data collected by any third party) raises novel legal questions under both sections of the Sherman Act.
Continue Reading…https://www.forbes.com/sites/marcedelman/2019/06/10/sports-data-policies-could-provide-next-big-antitrust-challenge-for-pro-sports-leagues/#526481d83284
Excerpt from Forbes:
Now, with the rapid advent of new U.S. markets for sports gambling, certain U.S. professional sports leagues may find themselves facing yet another antitrust challenge, this one related to the centralization of purported “game data rights” and efforts to foreclose non-league parties from competing to collect and resell game-related data.
There are two sections of antitrust law under which the U.S. professional sports leagues have historically faced challenges. Section 1 of the Sherman Act, in pertinent part, states that “every contract, combination … or conspiracy, in the restraint of trade … is declared to be illegal.” Meanwhile, Section 2 of the Sherman Act states that “every person who shall monopolize, or attempt to monopolize …. shall be deemed guilty of a felony.”
The recent practices of Major League Baseball and the National Basketball Association to centralize “ownership” of sports league data on the league (rather than team) level and then attempt to require their business partners to use only their data (and not data collected by any third party) raises novel legal questions under both sections of the Sherman Act.
Continue Reading…https://www.forbes.com/sites/marcedelman/2019/06/10/sports-data-policies-could-provide-next-big-antitrust-challenge-for-pro-sports-leagues/#526481d83284
A nearly decade-long legal battle over the harm inflicted on tens of thousands of women by surgically implanted pelvic mesh is moving away from manufacturers and toward the lawyers who helped the women bring their cases.
In recent weeks, women who received some of roughly $8 billion in settlements have sued their lawyers, accusing them of improperly enriching themselves with excessive fees or stretching themselves too thin to properly handle the pelvic mesh cases.
A potential class action lawsuit filed on Monday in state court in New Jersey contends that the 40 percent fee a group of law firms charged about 1,400 clients violated state law, which caps fees in personal injury lawsuits at about 33 percent. A separate suit filed in federal court in Houston on Thursday alleges that another group of firms took on so many cases that they missed filing deadlines for hundreds of women, potentially reducing the value of their claims against the mesh manufacturers to virtually nothing.
From: https://www.nytimes.com/2019/06/14/business/pelvic-mesh-surgery-litigation.html
In recent weeks, women who received some of roughly $8 billion in settlements have sued their lawyers, accusing them of improperly enriching themselves with excessive fees or stretching themselves too thin to properly handle the pelvic mesh cases.
A potential class action lawsuit filed on Monday in state court in New Jersey contends that the 40 percent fee a group of law firms charged about 1,400 clients violated state law, which caps fees in personal injury lawsuits at about 33 percent. A separate suit filed in federal court in Houston on Thursday alleges that another group of firms took on so many cases that they missed filing deadlines for hundreds of women, potentially reducing the value of their claims against the mesh manufacturers to virtually nothing.
From: https://www.nytimes.com/2019/06/14/business/pelvic-mesh-surgery-litigation.html
USDOJ's Jeff Wilder suggests possible use of monopolization law to challenge serial mergers. (The suggestion may be relevant to Facebook)
On March 19, 2019, House Antitrust Subcommittee Chairman David N. Cicilline (RI-01) wrote to the Federal Trade Commission asking that they open an investigation into whether Facebook has broken antitrust laws. He pointed out, among other things, that since its founding, Facebook has acquired over 75 companies. Two of the most significant purchases were Instagram, which Facebook bought in 2012 for $1 billion, and WhatsApp, which Facebook purchased in 2014 for $19 billion. Through these acquisitions, Facebook now owns three of the top four, and four of the top eight, social media apps.
It is a question whether usual Clayton Act Section 7 merger theories work well where there are a series of relatively small mergers.
In an on-the-record speech delivered on June 10, 2019, Jeffrey M. Wilder, USDOJ Acting Deputy Assistant Attorney General for Antitrust, suggested the possibility of enforcers using Sherman Act monopolization law where there is a series of mergers that, taken together, lead to great market power.
The history of the connection between Sherman Act monopolization law and Clayton Act merger law is an interesting one. See Anthony D. Schlesinger, Merger Litigation under the Sherman Act - Choice or Echo, 18 Sw L.J. 712 (1964) https://scholar.smu.edu/smulr/vol18/iss4/5
There is some historical basis for applying monopolization theories apply to vertical mergers that may greatly enhance a firms market power. See United States v. E.I. du Pont de Nemours & Co., 353 U.S. 586, 606-08 (1957)(condemned vertical merger on the theory that by acquiring a major purchaser of its fabrics and automobile finishes, Dupont would obtain unfair advantage over competing suppliers); see also Ford Motor Co. v. United States, 405 U.S. 562, 573-75 (1972) (condemning Ford’s acquisition of Autolite spark plug).
The history of using monopolization law in merger cases may be complex, but Wilder’s suggestion is intriguing: that Sherman Act monopolization law be considered as an enforcement tool where there is a series of mergers that lead to great market power. The suggestion seems relevant to the Ciliciline points about Facebook.
Comment by Don Allen Resnikoff, who takes full responsibility for the content
On March 19, 2019, House Antitrust Subcommittee Chairman David N. Cicilline (RI-01) wrote to the Federal Trade Commission asking that they open an investigation into whether Facebook has broken antitrust laws. He pointed out, among other things, that since its founding, Facebook has acquired over 75 companies. Two of the most significant purchases were Instagram, which Facebook bought in 2012 for $1 billion, and WhatsApp, which Facebook purchased in 2014 for $19 billion. Through these acquisitions, Facebook now owns three of the top four, and four of the top eight, social media apps.
It is a question whether usual Clayton Act Section 7 merger theories work well where there are a series of relatively small mergers.
In an on-the-record speech delivered on June 10, 2019, Jeffrey M. Wilder, USDOJ Acting Deputy Assistant Attorney General for Antitrust, suggested the possibility of enforcers using Sherman Act monopolization law where there is a series of mergers that, taken together, lead to great market power.
The history of the connection between Sherman Act monopolization law and Clayton Act merger law is an interesting one. See Anthony D. Schlesinger, Merger Litigation under the Sherman Act - Choice or Echo, 18 Sw L.J. 712 (1964) https://scholar.smu.edu/smulr/vol18/iss4/5
There is some historical basis for applying monopolization theories apply to vertical mergers that may greatly enhance a firms market power. See United States v. E.I. du Pont de Nemours & Co., 353 U.S. 586, 606-08 (1957)(condemned vertical merger on the theory that by acquiring a major purchaser of its fabrics and automobile finishes, Dupont would obtain unfair advantage over competing suppliers); see also Ford Motor Co. v. United States, 405 U.S. 562, 573-75 (1972) (condemning Ford’s acquisition of Autolite spark plug).
The history of using monopolization law in merger cases may be complex, but Wilder’s suggestion is intriguing: that Sherman Act monopolization law be considered as an enforcement tool where there is a series of mergers that lead to great market power. The suggestion seems relevant to the Ciliciline points about Facebook.
Comment by Don Allen Resnikoff, who takes full responsibility for the content
Excerpts from NYT article:
Save Our Food. Free the Seed.
Behemoth agrochemical companies are failing to deliver what farmers need to grow and what people want to eat.
By Dan Barber
Just 50 years ago, some 1,000 small and family-owned seed companies were producing and distributing seeds in the United States; by 2009, there were fewer than 100. Thanks to a series of mergers and acquisitions over the last few years, four multinational agrochemical firms — Corteva, ChemChina, Bayer and BASF — now control over 60 percent of global seed sales.
Big Seed keeps getting bigger, doubling down on a system of monocultures and mass distribution.
The problem is not that these seed corporations are too big to fail. It’s that they are failing to deliver what growers need to grow and what we want to eat.
The knockout punch for farmer-controlled seed was the utility patent. In a landmark (and utterly bananas) decision in 1980, the Supreme Court ruled in favor of allowing patents on living organisms. It wasn’t long before the same protections were extended to crops. New advances in genetic engineering supported the argument, with companies claiming seeds as proprietary inventions rather than part of our shared commons. Utility patents restricted farmers’ freedom to save and exchange seed and breeders’ right to use the germplasm for research.
The slow march of seed consolidation suddenly turned into a sprint. Chemical and pharmaceutical companies with no historical interest in seed bought small regional and family-owned seed companies. Targeting cash crops like corn and soy, these companies saw seeds as part of a profitable package: They made herbicides and pesticides, and then engineered the seeds to produce crops that could survive that drench of chemicals. The same seed companies that now control more than 60 percent of seed sales also sell more than 60 percent of the pesticides. Not a bad business.
More than 90 percent of the 178 million acres of corn and soybeans planted last year in the United States were sown with genetically engineered seeds. It’s a vision as dispiriting as it is unappetizing.
Vegetables have been spared some of this genetic tinkering but are increasingly victim to the same aggressive corporate seed environment. Last year the pharmaceutical company Bayer acquired the world’s largest vegetable seed company, Monsanto.
For these megacompanies, capturing a large share of the vegetable seed market means capturing patentable genetics.
Full article: https://www.nytimes.com/interactive/2019/06/07/opinion/sunday/dan-barber-seed-companies.html?searchResultPosition=1
From USPIRG consumer blog:
Will New York catch up to Mississippi in protecting consumers?
Posted: 07 Jun 2019 07:03 AM PDT
by Jeff Sovern
Many states allow their consumers to sue misbehaving companies for unfair practices, including red and purple states like Mississippi, Georgia, North Carolina, Tennessee and West Virginia, states that we normally don't think of as being in the vanguard of consumer protection. This power can be important in protecting consumers. For example, the CFPB used its own ability to stop unfair practices when it pursued Wells Fargo for opening unauthorized accounts, rather than its power to block deception. But New York has lagged behind these states, as well as its neighbors like Connecticut, Pennsylvania, and Massachusetts, in leaving unfairness out of its UDAP statute. Thus, New Yorkers could not have sued Wells Fargo for unfair conduct in opening unauthorized accounts.
But now that may change. The New York legislature is considering a bill to put the U in its UDAP statute. The bill would also eliminate New York's requirement that plaintiffs in UDAP cases demonstrate that the offending conduct is "consumer-oriented," a requirement that no other state has adopted and that does not even appear in New York's statute; instead it was added by a court that evidently eschewed textualism as a method of statutory interpretation.
Unfortunately, but predictably, the bill is encountering heavy industry opposition. One argument made against the bill is that it "will open the flood gates for litigation." But many other states permit consumers to sue for unfair conduct and don't require consumer-oriented conduct and have not experienced a flood of litigation (even assuming there is something wrong with a flood of litigation against bad actors). The items I have listed merely bring the statute into conformity with other states.
The statute currently provides for only $50 in statutory damages. As a number of studies have demonstrated, consumers almost never bring claims for $50. It just isn't worth it to them. So preserving $50 as the amount of statutory damages would be essentially the same as having no statutory damages. The bill addresses this problem by increasing the amount of statutory damages to $2,000, an amount which is more likely to be enough to cause consumers to enforce the statute, though still less than the red state of Kansas, which allows statutory damages of fives times as much, or 200 times what the New York statute currently provides. Of course, businesses object to this too: they prefer that the amount be so low as to render private enforcement virtually nonexistent in the absence of large actual damages.
New York has a chance to offer its consumers not just the protection they need, but that they deserve. It should leap at the opportunity.
From USPIRG consumer blog:
Senators ask CFPB to reconsider debt collection proposal
Posted: 07 Jun 2019 06:04 AM PDT
More than 20 U.S. senators are calling on the Consumer Financial Protection Bureau to reconsider a proposal to allow debt collectors to send unlimited texts and emails to consumers, and to call consumers seven times a week per debt, USA Today reports. “By allowing debt collectors to send consumers unlimited text messages and emails without first receiving affirmative consent for such a method of communication, the proposed rule permits collectors to overwhelm consumers with intrusive communications,” the senators wrote.
The full article (which quotes the full text of the letter) is here.
Will New York catch up to Mississippi in protecting consumers?
Posted: 07 Jun 2019 07:03 AM PDT
by Jeff Sovern
Many states allow their consumers to sue misbehaving companies for unfair practices, including red and purple states like Mississippi, Georgia, North Carolina, Tennessee and West Virginia, states that we normally don't think of as being in the vanguard of consumer protection. This power can be important in protecting consumers. For example, the CFPB used its own ability to stop unfair practices when it pursued Wells Fargo for opening unauthorized accounts, rather than its power to block deception. But New York has lagged behind these states, as well as its neighbors like Connecticut, Pennsylvania, and Massachusetts, in leaving unfairness out of its UDAP statute. Thus, New Yorkers could not have sued Wells Fargo for unfair conduct in opening unauthorized accounts.
But now that may change. The New York legislature is considering a bill to put the U in its UDAP statute. The bill would also eliminate New York's requirement that plaintiffs in UDAP cases demonstrate that the offending conduct is "consumer-oriented," a requirement that no other state has adopted and that does not even appear in New York's statute; instead it was added by a court that evidently eschewed textualism as a method of statutory interpretation.
Unfortunately, but predictably, the bill is encountering heavy industry opposition. One argument made against the bill is that it "will open the flood gates for litigation." But many other states permit consumers to sue for unfair conduct and don't require consumer-oriented conduct and have not experienced a flood of litigation (even assuming there is something wrong with a flood of litigation against bad actors). The items I have listed merely bring the statute into conformity with other states.
The statute currently provides for only $50 in statutory damages. As a number of studies have demonstrated, consumers almost never bring claims for $50. It just isn't worth it to them. So preserving $50 as the amount of statutory damages would be essentially the same as having no statutory damages. The bill addresses this problem by increasing the amount of statutory damages to $2,000, an amount which is more likely to be enough to cause consumers to enforce the statute, though still less than the red state of Kansas, which allows statutory damages of fives times as much, or 200 times what the New York statute currently provides. Of course, businesses object to this too: they prefer that the amount be so low as to render private enforcement virtually nonexistent in the absence of large actual damages.
New York has a chance to offer its consumers not just the protection they need, but that they deserve. It should leap at the opportunity.
From USPIRG consumer blog:
Senators ask CFPB to reconsider debt collection proposal
Posted: 07 Jun 2019 06:04 AM PDT
More than 20 U.S. senators are calling on the Consumer Financial Protection Bureau to reconsider a proposal to allow debt collectors to send unlimited texts and emails to consumers, and to call consumers seven times a week per debt, USA Today reports. “By allowing debt collectors to send consumers unlimited text messages and emails without first receiving affirmative consent for such a method of communication, the proposed rule permits collectors to overwhelm consumers with intrusive communications,” the senators wrote.
The full article (which quotes the full text of the letter) is here.
Open Markets fund raising letter -- antitrust actions looming for big tech
Dear Friends:
When the Open Markets Institute launched in September 2017, the thought that in less than two years, a bipartisan effort would be underway in the halls of Congress, among federal antitrust enforcers, and from state Attorneys General to take on some of the world’s most dangerous monopolies -- Facebook, Google, Amazon -- never crossed our minds.
But this week marked a major turning point.
In the Washington Post: Big Tech’s Antitrust Problems are Just Beginning
In the New York Times: Antitrust Troubles Snowball for Tech Giants as Lawmakers Join In
In the Washington Times: Big Tech Unites Democrats, Republicans Behind Antitrust Crackdown
We’re writing to thank all of you for being a part of this effort, back when it was much lonelier that it is today. The progress we’ve made together has been historic. And momentum is on our side.
But Big Tech is gearing up for an epic fight -- and so should we.
Last year, tech monopolies spent $55 million on lobbyists alone. So we’re asking our community to chip in $55 to make a point -- and make sure we can continue to make progress in the fight to free our country from monopoly power.
DAR comment: There is momentum for antitrust action against big tech, as Open Markets fund raising letter says. But there are countervailing forces in play, as reflected in the articles that follow. The current aggressive international economic policies of the US noted in the Economist article are based on ideas of international business rivalry that are inconsistent with currently traditional antitrust enforcement policies. The opinion piece by Angela Merkel focuses on the inconsistencies. Don Allen Resnikoff
Dear Friends:
When the Open Markets Institute launched in September 2017, the thought that in less than two years, a bipartisan effort would be underway in the halls of Congress, among federal antitrust enforcers, and from state Attorneys General to take on some of the world’s most dangerous monopolies -- Facebook, Google, Amazon -- never crossed our minds.
But this week marked a major turning point.
In the Washington Post: Big Tech’s Antitrust Problems are Just Beginning
In the New York Times: Antitrust Troubles Snowball for Tech Giants as Lawmakers Join In
In the Washington Times: Big Tech Unites Democrats, Republicans Behind Antitrust Crackdown
We’re writing to thank all of you for being a part of this effort, back when it was much lonelier that it is today. The progress we’ve made together has been historic. And momentum is on our side.
But Big Tech is gearing up for an epic fight -- and so should we.
Last year, tech monopolies spent $55 million on lobbyists alone. So we’re asking our community to chip in $55 to make a point -- and make sure we can continue to make progress in the fight to free our country from monopoly power.
DAR comment: There is momentum for antitrust action against big tech, as Open Markets fund raising letter says. But there are countervailing forces in play, as reflected in the articles that follow. The current aggressive international economic policies of the US noted in the Economist article are based on ideas of international business rivalry that are inconsistent with currently traditional antitrust enforcement policies. The opinion piece by Angela Merkel focuses on the inconsistencies. Don Allen Resnikoff
The Economist: America is deploying a new economic arsenal to assert its power
Excerpts from https://www.economist.com/leaders/2019/06/06/america-is-deploying-a-new-economic-arsenal-to-assert-its-power
Outright enemies such as Iran and Venezuela face tighter sanctions—last year 1,500 people, firms and vessels were added to the list, a record figure. The rest of the world faces a new regime for tech and finance. An executive order prohibits transactions in semiconductors and software made by foreign adversaries, and a law passed last year known as firrmapolices foreign investment into Silicon Valley. If a firm is blacklisted, banks usually refuse to deal with it, cutting it off from the dollar payments system. That is crippling—as two firms, zte and Rusal, discovered, briefly, last year.
Such tools used to be reserved for times of war: the legal techniques used for surveillance of the payments system were developed to hunt al-Qaeda. Now a “national emergency” has been declared in tech. Officials have discretion to define what is a threat. Though they often clobber specific firms, such as Huawei, others are running scared (see article). If you run a global company, are you sure your Chinese clients are not about to be blacklisted?
The damage to America’s economy so far has been deceptively small. Tariffs cause agony in export hubs such as northern Mexico, but even if Mr Trump imposes all his threatened tariffs, the tax on imports would be worth only about 1% of America’s gdp. His poll ratings at home have held up, even as they have slumped abroad. His officials believe the experiment in weaponising America’s economic network has only just begun.
In fact, the bill is mounting. America could have built a global coalition to press China to reform its economy, but it has now squandered precious goodwill. Allies looking for new trade deals with America, including post-Brexit Britain, will worry that a presidential tweet could scupper it after it has been signed. Retaliation in kind has begun. China has begun its own blacklist of foreign firms. And the risk of a clumsy mistake that triggers a financial panic is high. Imagine if America banned the $1trn of Chinese shares trading in New York, or cut off foreign banks.
In the long run the American-led network is under threat. There are hints of mutiny—of America’s 35 European and Asian military allies, only three have so far agreed to ban Huawei. Efforts to build a rival global infrastructure will accelerate. China is creating its own courts to adjudicate commercial disputes with foreigners (see Chaguan). Europe is experimenting with building a new payments system to get round the Iran sanctions, which could in time be used elsewhere. China, and eventually India, will be keen to end their dependence on semiconductors from Silicon Valley. Mr Trump is right that America’s network gives it vast power. It will take decades, and cost a fortune, to replace it. But if you abuse it, ultimately you will lose it.◼
Excerpts from https://www.economist.com/leaders/2019/06/06/america-is-deploying-a-new-economic-arsenal-to-assert-its-power
Outright enemies such as Iran and Venezuela face tighter sanctions—last year 1,500 people, firms and vessels were added to the list, a record figure. The rest of the world faces a new regime for tech and finance. An executive order prohibits transactions in semiconductors and software made by foreign adversaries, and a law passed last year known as firrmapolices foreign investment into Silicon Valley. If a firm is blacklisted, banks usually refuse to deal with it, cutting it off from the dollar payments system. That is crippling—as two firms, zte and Rusal, discovered, briefly, last year.
Such tools used to be reserved for times of war: the legal techniques used for surveillance of the payments system were developed to hunt al-Qaeda. Now a “national emergency” has been declared in tech. Officials have discretion to define what is a threat. Though they often clobber specific firms, such as Huawei, others are running scared (see article). If you run a global company, are you sure your Chinese clients are not about to be blacklisted?
The damage to America’s economy so far has been deceptively small. Tariffs cause agony in export hubs such as northern Mexico, but even if Mr Trump imposes all his threatened tariffs, the tax on imports would be worth only about 1% of America’s gdp. His poll ratings at home have held up, even as they have slumped abroad. His officials believe the experiment in weaponising America’s economic network has only just begun.
In fact, the bill is mounting. America could have built a global coalition to press China to reform its economy, but it has now squandered precious goodwill. Allies looking for new trade deals with America, including post-Brexit Britain, will worry that a presidential tweet could scupper it after it has been signed. Retaliation in kind has begun. China has begun its own blacklist of foreign firms. And the risk of a clumsy mistake that triggers a financial panic is high. Imagine if America banned the $1trn of Chinese shares trading in New York, or cut off foreign banks.
In the long run the American-led network is under threat. There are hints of mutiny—of America’s 35 European and Asian military allies, only three have so far agreed to ban Huawei. Efforts to build a rival global infrastructure will accelerate. China is creating its own courts to adjudicate commercial disputes with foreigners (see Chaguan). Europe is experimenting with building a new payments system to get round the Iran sanctions, which could in time be used elsewhere. China, and eventually India, will be keen to end their dependence on semiconductors from Silicon Valley. Mr Trump is right that America’s network gives it vast power. It will take decades, and cost a fortune, to replace it. But if you abuse it, ultimately you will lose it.◼
Merkel Says EU Antitrust Rules Are Naive About Threat of China
By
Patrick Donahue
and
Aoife White
June 4, 2019, 6:19 AM EDT
“How can you say that China won’t engage in Europe in the next five years? I think such a claim is rash,” Merkel said on Tuesday to the BDI industry group. She called again for the EU to alter the rules “in order to be truly competitive.”
Excerpt from: https://www.bloomberg.com/news/articles/2019-06-04/merkel-says-eu-antitrust-rules-are-naive-about-threat-of-china
By
Patrick Donahue
and
Aoife White
June 4, 2019, 6:19 AM EDT
- German Chancellor Angela Merkel blasted the European Union’s merger rules for failing to take into account growing Chinese dominance and hampering efforts to compete on the global stage.
“How can you say that China won’t engage in Europe in the next five years? I think such a claim is rash,” Merkel said on Tuesday to the BDI industry group. She called again for the EU to alter the rules “in order to be truly competitive.”
Excerpt from: https://www.bloomberg.com/news/articles/2019-06-04/merkel-says-eu-antitrust-rules-are-naive-about-threat-of-china
Pro-enforcement editorial in the New York Times on Sprint T-Mobile.
https://www.nytimes.com/2019/06/01/opinion/sunday/t-mobile-sprint-merger-antitrust.html
"Allowing the mobile phone company to merge with Sprint would hurt customers, workers and the broader economy."
https://www.nytimes.com/2019/06/01/opinion/sunday/t-mobile-sprint-merger-antitrust.html
"Allowing the mobile phone company to merge with Sprint would hurt customers, workers and the broader economy."
Commentary: Qualcomm and the debate about monopolization and antitrust law enforcement
-- by Don Allen Resnikoff*
In her opinion in the FTC action against Qualcomm, Judge Loh finds that Qualcomm has monopoly power in the “CDMA and premium LTE modem chip markets,” and has used that power to engage in a wide variety of anticompetitive acts against rivals. The opinion can be read at https://www.scribd.com/document/411066615/19-05-21-FTC-v-Qualcomm-Judicial-Findings?campaign=SkimbitLtd&ad_group=3947X638757X31f5148c5fdf2b8e9de2462cbed96a17&keyword=660149026&source=hp_affiliate&medium=affiliate
Qualcomm is not alone in complaining about Judge Loh’s findings of monopoly power and anticompetitive acts. As a loyal reader of this blog has pointed out, the Wall Street Journal has published opinion pieces critical of Judge Loh’s decision, including the editorial that appears below. The opening sentence of the WSJ opinion piece below says: “The biggest threat to America’s 5G leadership isn’t China or Huawei, federal Judge Lucy Koh revealed in her sweeping 233-page ruling against Qualcomm Tuesday in a Federal Trade Commission lawsuit. It’s regulators and judges who try to control markets.”
There are antitrust enforcement advocates who worry about the power of political opposition to antitrust enforcement generally, and monopolization enforcement in particular. Those worries are reinforced by the WSJ editorial focus on American leadership in 5G telecommunications technology and the competitive threat from China. The WSJ message is not just that Judge Loh is unfairly critical of Qualcomm conduct, and overstates Qualcomm’s market power. The further suggestion is that America’s 5G leadership would be better served if the Judge’s decision against Qualcomm were reversed on appeal, so that Qualcomm would be free to deal with licensing issues in an less constrained manner, and government agencies other than the FTC and the judiciary would be less constrained in dealing with competitive threats from China and Huawei.
I read the WSJ editorial as suggesting that the FTC antitrust action against monopolization by Qualcomm is flawed because of a blindness to political and market realities. The FTC prosecution is perceived as naïve and counterproductive. My guess is that such criticism will persist: A continuing controversy will be about whether there should be political and popular support for antitrust enforcement that presumes to be independent of political issues such as international trade controversies. Is there political and popular support for antitrust enforcement that is in conflict with U.S. government industrial policies concerning the fairness of competition in 5G from Huawei as a Chinese government connected company?
*The opinions expressed are entirely the responsibility of Don Allen Resnikoff
The dissenting view from the WSJ editorial board:
Judge Koh’s Qualcomm Coup--Her sweeping antitrust ruling kneecaps the firm and 5G competition.
By
The WSJ Editorial Board
May 22, 2019 6:47 p.m. ET
The biggest threat to America’s 5G leadership isn’t China or Huawei, federal Judge Lucy Koh revealed in her sweeping 233-page ruling against Qualcomm Tuesday in a Federal Trade Commission lawsuit. It’s regulators and judges who try to control markets.
Last month Qualcomm and Apple settled their world-wide feud over royalties that the San Diego chipmaker charges for licensing its standard essential patents. Apple had earlier solicited intervention by the FTC, which during the waning days of the Obama Administration sued Qualcomm under the Sherman Antitrust Act.
According to the FTC, Qualcomm’s alleged “no license, no chip” practice of pegging patent royalties to the price of a device—3.25% with a $400 cap on the selling price—is anti-competitive. If smartphone makers reject its terms, Qualcomm could cut off their chip supply. By leveraging its dominance in modems, Qualcomm could charge higher royalties that would reinforce its chip monopoly.
At least that was the FTC’s theory, which hasn't borne out in economic reality. Qualcomm’s pricing practice, pioneered byNokia , Motorola and Ericsson during the 1990s, is standard in the industry. As industry experts noted during trial, chip rivals likeBroadcom and Texas Instruments lagged Qualcomm because they invested less or late in research and development, and they exited the business.
Qualcomm’s market share has also slipped amid increased competition. Apple uses Intel modems in newer iPhones, but the Silicon Valley chipmaker struggled to develop 5G chips. Intel chip delays could have cost Apple market share, which probably prompted its settlement with Qualcomm. Intel bowed out after Apple said Qualcomm would supply its 5G chips.
These facts were irrelevant to Judge Koh, who ruled in favor of the FTC on all counts. Despite scant evidence that Qualcomm’s pricing directly harmed competitors or consumers, Judge Koh opined that “courts should infer ‘causation’ from the fact that a defendant has engaged in anticompetitive conduct that ‘reasonably appear[s] capable of making a significant contribution to . . . maintaining monopoly power.’”
What’s the point of a trial then? After the Apple settlement, the Justice Department urged Judge Koh not to impose an overly broad remedy that “ultimately may cause harm to competition and consumers” and “could reduce competition and innovation in markets for 5G technology and downstream applications that rely on that technology.”
Forget Justice. Judge Koh ordered Qualcomm to renegotiate its contracts with smartphone manufacturers worldwide and license patents based on the chip price. She also ruled that Qualcomm must license patents to rival chipmakers, which would severely reduce royalties it uses to fund research and development. Her diktat could help Huawei and Samsung, which have developed chips.
But it also creates significant market uncertainty. Judge Koh has effectively torn up hundreds of business contracts and rewritten industry standards. Her legal findings could apply to chipmakers for other devices, so Broadcom, MediaTek and others should pay close attention. Businesses that support government intervention sooner or later become targets too.
Interventions by foreign regulators to kneecap Qualcomm and help domestic competitors were far more modest. China’s National Development and Reform Commission in 2015 ordered Qualcomm to cut royalty rates on handsets made and sold in China and pay a $150 million fine, which
Judge Koh dismissed as a bribe to the Chinese government to avoid a stiffer penalty.
In 2018 Qualcomm settled antitrust complaints with Samsung for $100 million. But Judge Koh laments: “Qualcomm’s pursuit of this and similar releases to extinguish antitrust claims threatens to impede the government’s ability to enforce the antitrust laws, and could enable future unlawful Qualcomm conduct to go unreported.”
In essence Judge Koh has barred Qualcomm from settling complaints with companies out of court to avoid government litigation. That’s right—the judge has forbidden businesses from trying to work out disagreements on their own. Qualcomm must also submit to FTC monitoring for seven years, which puts bureaucrats in charge of the company.
Qualcomm plans to ask the Ninth Circuit Court of Appeals to stay Judge Koh’s ruling. FTC Chairman Joseph Simons has recused himself from the case because of an ostensible conflict of interest. But even liberals on the Ninth Circuit and the commission should recognize the lawsuit’s threat to competitive markets and ultimately consumers.
Appeared in the May 23, 2019, print edition.
-- by Don Allen Resnikoff*
In her opinion in the FTC action against Qualcomm, Judge Loh finds that Qualcomm has monopoly power in the “CDMA and premium LTE modem chip markets,” and has used that power to engage in a wide variety of anticompetitive acts against rivals. The opinion can be read at https://www.scribd.com/document/411066615/19-05-21-FTC-v-Qualcomm-Judicial-Findings?campaign=SkimbitLtd&ad_group=3947X638757X31f5148c5fdf2b8e9de2462cbed96a17&keyword=660149026&source=hp_affiliate&medium=affiliate
Qualcomm is not alone in complaining about Judge Loh’s findings of monopoly power and anticompetitive acts. As a loyal reader of this blog has pointed out, the Wall Street Journal has published opinion pieces critical of Judge Loh’s decision, including the editorial that appears below. The opening sentence of the WSJ opinion piece below says: “The biggest threat to America’s 5G leadership isn’t China or Huawei, federal Judge Lucy Koh revealed in her sweeping 233-page ruling against Qualcomm Tuesday in a Federal Trade Commission lawsuit. It’s regulators and judges who try to control markets.”
There are antitrust enforcement advocates who worry about the power of political opposition to antitrust enforcement generally, and monopolization enforcement in particular. Those worries are reinforced by the WSJ editorial focus on American leadership in 5G telecommunications technology and the competitive threat from China. The WSJ message is not just that Judge Loh is unfairly critical of Qualcomm conduct, and overstates Qualcomm’s market power. The further suggestion is that America’s 5G leadership would be better served if the Judge’s decision against Qualcomm were reversed on appeal, so that Qualcomm would be free to deal with licensing issues in an less constrained manner, and government agencies other than the FTC and the judiciary would be less constrained in dealing with competitive threats from China and Huawei.
I read the WSJ editorial as suggesting that the FTC antitrust action against monopolization by Qualcomm is flawed because of a blindness to political and market realities. The FTC prosecution is perceived as naïve and counterproductive. My guess is that such criticism will persist: A continuing controversy will be about whether there should be political and popular support for antitrust enforcement that presumes to be independent of political issues such as international trade controversies. Is there political and popular support for antitrust enforcement that is in conflict with U.S. government industrial policies concerning the fairness of competition in 5G from Huawei as a Chinese government connected company?
*The opinions expressed are entirely the responsibility of Don Allen Resnikoff
The dissenting view from the WSJ editorial board:
Judge Koh’s Qualcomm Coup--Her sweeping antitrust ruling kneecaps the firm and 5G competition.
By
The WSJ Editorial Board
May 22, 2019 6:47 p.m. ET
The biggest threat to America’s 5G leadership isn’t China or Huawei, federal Judge Lucy Koh revealed in her sweeping 233-page ruling against Qualcomm Tuesday in a Federal Trade Commission lawsuit. It’s regulators and judges who try to control markets.
Last month Qualcomm and Apple settled their world-wide feud over royalties that the San Diego chipmaker charges for licensing its standard essential patents. Apple had earlier solicited intervention by the FTC, which during the waning days of the Obama Administration sued Qualcomm under the Sherman Antitrust Act.
According to the FTC, Qualcomm’s alleged “no license, no chip” practice of pegging patent royalties to the price of a device—3.25% with a $400 cap on the selling price—is anti-competitive. If smartphone makers reject its terms, Qualcomm could cut off their chip supply. By leveraging its dominance in modems, Qualcomm could charge higher royalties that would reinforce its chip monopoly.
At least that was the FTC’s theory, which hasn't borne out in economic reality. Qualcomm’s pricing practice, pioneered byNokia , Motorola and Ericsson during the 1990s, is standard in the industry. As industry experts noted during trial, chip rivals likeBroadcom and Texas Instruments lagged Qualcomm because they invested less or late in research and development, and they exited the business.
Qualcomm’s market share has also slipped amid increased competition. Apple uses Intel modems in newer iPhones, but the Silicon Valley chipmaker struggled to develop 5G chips. Intel chip delays could have cost Apple market share, which probably prompted its settlement with Qualcomm. Intel bowed out after Apple said Qualcomm would supply its 5G chips.
These facts were irrelevant to Judge Koh, who ruled in favor of the FTC on all counts. Despite scant evidence that Qualcomm’s pricing directly harmed competitors or consumers, Judge Koh opined that “courts should infer ‘causation’ from the fact that a defendant has engaged in anticompetitive conduct that ‘reasonably appear[s] capable of making a significant contribution to . . . maintaining monopoly power.’”
What’s the point of a trial then? After the Apple settlement, the Justice Department urged Judge Koh not to impose an overly broad remedy that “ultimately may cause harm to competition and consumers” and “could reduce competition and innovation in markets for 5G technology and downstream applications that rely on that technology.”
Forget Justice. Judge Koh ordered Qualcomm to renegotiate its contracts with smartphone manufacturers worldwide and license patents based on the chip price. She also ruled that Qualcomm must license patents to rival chipmakers, which would severely reduce royalties it uses to fund research and development. Her diktat could help Huawei and Samsung, which have developed chips.
But it also creates significant market uncertainty. Judge Koh has effectively torn up hundreds of business contracts and rewritten industry standards. Her legal findings could apply to chipmakers for other devices, so Broadcom, MediaTek and others should pay close attention. Businesses that support government intervention sooner or later become targets too.
Interventions by foreign regulators to kneecap Qualcomm and help domestic competitors were far more modest. China’s National Development and Reform Commission in 2015 ordered Qualcomm to cut royalty rates on handsets made and sold in China and pay a $150 million fine, which
Judge Koh dismissed as a bribe to the Chinese government to avoid a stiffer penalty.
In 2018 Qualcomm settled antitrust complaints with Samsung for $100 million. But Judge Koh laments: “Qualcomm’s pursuit of this and similar releases to extinguish antitrust claims threatens to impede the government’s ability to enforce the antitrust laws, and could enable future unlawful Qualcomm conduct to go unreported.”
In essence Judge Koh has barred Qualcomm from settling complaints with companies out of court to avoid government litigation. That’s right—the judge has forbidden businesses from trying to work out disagreements on their own. Qualcomm must also submit to FTC monitoring for seven years, which puts bureaucrats in charge of the company.
Qualcomm plans to ask the Ninth Circuit Court of Appeals to stay Judge Koh’s ruling. FTC Chairman Joseph Simons has recused himself from the case because of an ostensible conflict of interest. But even liberals on the Ninth Circuit and the commission should recognize the lawsuit’s threat to competitive markets and ultimately consumers.
Appeared in the May 23, 2019, print edition.
Is the U.S. Justice Department preparing an investigation of Alphabet Inc.’s Google to determine whether the tech giant broke antitrust law?
Officials from the Justice Department’s Antitrust Division and Federal Trade Commission, which both enforce antitrust law, met in recent weeks to give Justice jurisdiction over Google, said the sources, who sought anonymity because they were not authorized to speak on the record.
The potential investigation represents the latest attack on a tech company by the administration of U.S. President Donald Trump, who has accused social media companies and Google of suppressing conservative voices on their platforms online.
One source said the potential investigation, first reported by the Wall Street Journal, focused on accusations that Google gave preference to its own businesses in searches.
A spokesman for the Justice Department said he could not confirm or deny that an investigation was being considered.
Google declined comment.
FTC investigation
Early in 2013, the FTC closed a long-running investigation of Google, giving it a slap on the wrist. Under FTC pressure, Google agreed to end the practice of “scraping” reviews and other data from rivals’ websites for its own products, and to let advertisers export data to independently assess campaigns.
Google’s search, YouTube, reviews, maps and other businesses, which are largely free to consumers but financed through advertising, have catapulted it from a startup to one of the world’s richest companies in just two decades.
Along the way, it has made enemies in both the tech world, who have complained to law enforcers about its market dominance, and in Washington, where lawmakers have complained about issues from its alleged political bias to its plans for China.
Some welcome news
TripAdvisor chief executive and co-founder Stephen Kaufer welcomed news that Google could face Justice Department antitrust scrutiny.
“TripAdvisor remains concerned about Google’s practices in the United States, the EU and throughout the world,” Kaufer said in a statement. “For the good of consumers and competition on the internet, we welcome any renewed interest by U.S. regulators into Google’s anticompetitive behavior.”
Democratic presidential candidate Elizabeth Warren has pushed for action to break up Google, as well as other big tech companies. Senator Kamala Harris, who is also running for president on the Democratic ticket, has agreed.
“This is very big news, and overdue,” Sen. Josh Hawley, a Republican Google critic, said Twitter, regarding the investigation.
Excerpt from https://www.voanews.com/a/report-us-to-launch-google-antitrust-inquiry/4941585.html
Officials from the Justice Department’s Antitrust Division and Federal Trade Commission, which both enforce antitrust law, met in recent weeks to give Justice jurisdiction over Google, said the sources, who sought anonymity because they were not authorized to speak on the record.
The potential investigation represents the latest attack on a tech company by the administration of U.S. President Donald Trump, who has accused social media companies and Google of suppressing conservative voices on their platforms online.
One source said the potential investigation, first reported by the Wall Street Journal, focused on accusations that Google gave preference to its own businesses in searches.
A spokesman for the Justice Department said he could not confirm or deny that an investigation was being considered.
Google declined comment.
FTC investigation
Early in 2013, the FTC closed a long-running investigation of Google, giving it a slap on the wrist. Under FTC pressure, Google agreed to end the practice of “scraping” reviews and other data from rivals’ websites for its own products, and to let advertisers export data to independently assess campaigns.
Google’s search, YouTube, reviews, maps and other businesses, which are largely free to consumers but financed through advertising, have catapulted it from a startup to one of the world’s richest companies in just two decades.
Along the way, it has made enemies in both the tech world, who have complained to law enforcers about its market dominance, and in Washington, where lawmakers have complained about issues from its alleged political bias to its plans for China.
Some welcome news
TripAdvisor chief executive and co-founder Stephen Kaufer welcomed news that Google could face Justice Department antitrust scrutiny.
“TripAdvisor remains concerned about Google’s practices in the United States, the EU and throughout the world,” Kaufer said in a statement. “For the good of consumers and competition on the internet, we welcome any renewed interest by U.S. regulators into Google’s anticompetitive behavior.”
Democratic presidential candidate Elizabeth Warren has pushed for action to break up Google, as well as other big tech companies. Senator Kamala Harris, who is also running for president on the Democratic ticket, has agreed.
“This is very big news, and overdue,” Sen. Josh Hawley, a Republican Google critic, said Twitter, regarding the investigation.
Excerpt from https://www.voanews.com/a/report-us-to-launch-google-antitrust-inquiry/4941585.html
Kaspersky Lab reports 61% jump in mobile banking malware
May 30, 2019
Mobile banking Trojans are among the most rapidly developing, flexible and dangerous types of malware, according to Kaspersky Lab,
which found a 61% increase in the number of files (from 18,501 to 2,841) of this type of malware between Q4 2018 and Q1 2019.
Banking Trojans grew not only in terms of the number of different samples detected, but also in their share of the threat landscape, the company said in a press release. In Q4 2018, mobile banking Trojans accounted for 1.85% of all mobile malware; in Q1 2019, their share reached 3.24%.
The malware generally looks like a legitimate app, such as a banking application. When a victim tries to reach their genuine bank app, the attackers gain access to that too, the company said.
"The rapid rise of mobile financial malware is a troubling sign, especially since we see how criminals are perfecting their distribution mechanisms," Kaspersky Lab security research Victor Chebyshev said in the release.
Other online threat statistics from the Q1, 2019 report include:
Kaspersky Lab advised users to take a number of precautions to reduce the risk of infection with banking Trojans:
May 30, 2019
Mobile banking Trojans are among the most rapidly developing, flexible and dangerous types of malware, according to Kaspersky Lab,
which found a 61% increase in the number of files (from 18,501 to 2,841) of this type of malware between Q4 2018 and Q1 2019.
Banking Trojans grew not only in terms of the number of different samples detected, but also in their share of the threat landscape, the company said in a press release. In Q4 2018, mobile banking Trojans accounted for 1.85% of all mobile malware; in Q1 2019, their share reached 3.24%.
The malware generally looks like a legitimate app, such as a banking application. When a victim tries to reach their genuine bank app, the attackers gain access to that too, the company said.
"The rapid rise of mobile financial malware is a troubling sign, especially since we see how criminals are perfecting their distribution mechanisms," Kaspersky Lab security research Victor Chebyshev said in the release.
Other online threat statistics from the Q1, 2019 report include:
- Kaspersky Lab solutions detected and repelled 947,027,517 malicious attacks from online resources in 203 countries.
- Web antivirus components recognized 246,695,333 unique URLs as malicious.
- More than 305,000 user computers registered attempted infections by PC malware meant to steal money via online access to bank accounts.
Kaspersky Lab advised users to take a number of precautions to reduce the risk of infection with banking Trojans:
- Install applications only from trusted sources.
- Check permissions requested by the app — if they do not correspond with the app's task, this could be a sign of an unscrupulous app.
- Do not click on links in spam emails;
- Do not perform the rooting procedure on the device, which creates unlimited opportunities for cybercriminals.
From the NYT: This Boutique Bike Shop Shows How Tariffs Can Hit the Little Guy
By Jeanna Smialek
· May 29, 2019
WASHINGTON — Shane Cusick started his small business, Pello, in 2014 with the goal of making lightweight bikes for children. His experience over the past year is a case study in how a trade war can disrupt a fledgling enterprise.
Pello, in Richmond, Va., has met with early success, selling 400 to 500 bright orange two-wheelers a year. The company designs its bikes in the United States but imports them from China because domestic factories are not equipped to churn out tiny bike frames en masse.
“I love American-made products,” Mr. Cusick said. “There’s no other choice. It has to be done over there.”
But President Trump’s trade war with China has started to change the equation. Pello paid 10 percent in extra tariffs on its last batch of imports, a byproduct of Mr. Trump’s decision to impose a tax on $200 billion worth of Chinese goods. The president has now increased that to 25 percent, and Pello expects its next shipment will be hit with that heftier tariff.
Mr. Cusick and his business partner have so far been reluctant to charge more for their bikes, which cost $200 to $600, over worries that customers would opt for cheaper products. But the latest step-up in import taxes, combined with the prospect of an endless trade war, may leave Pello no choice. The factory that produces the bikes in China has razor-thin margins, so it cannot offer much of a discount.
Mr. Trump says his tariffs will hurt Chinese companies more than American firms, and he insists that they will either force Beijing to change its “unfair” trade practices or prompt companies to shift production away from China. But as the president considers imposing tariffs on another $300 billion worth of Chinese goods, companies like Pello highlight the toll Mr. Trump’s trade fight could have on small, young businesses that are reliant on China and unable to rapidly shift production to other, often more expensive, nations.
From https://www.nytimes.com/2019/05/29/business/pello-bikes-china-tariffs.html
brief comment: the tension in 2019 between industrial policy and antitrust law in telecommunications
—Don Allen Resnikoff*
In a article he wrote in 2015, antitrust scholar Daniel Sokol said that sound antitrust law and policy is in tension with industrial policy. Antitrust promotes consumer welfare whereas industrial policy promotes government intervention for particular groups or industries. He said, regretfully, that industrial policy seemed to be alive and well, affecting antitrust law and policy in the U.S. and worldwide.
In 2019, industrial policy is vigorously pressed by the Trump administration, including in telecommunications. A recent article by the American Enterprise Institute, generally viewed as "conservative," says, for example, that the Trump administration pressure on European governments to eliminate Huawei products from their 5G telecomminications rollout has led to resistance based on competitive concerns. Governments and telecom operators are resisting, in part because they want to retain Huawei as a competitor to Ericsson and Nokia. The GSMA, the international association of mobile operators, stated in a public letter: “Robust competition among network infrastructure suppliers is essential to European operators’ ability to deliver innovative services to European citizens.”
The AEI points out that T-Mobile and Sprint have made the 5G race and competition with China a central element of their defense of their proposed merger.
Qualcomm and the USDOJ have questioned remedies against Qualcomm pressed by the FTC, and adopted by a federal court, on the grounds that national security could be undermined by the FTC case if it hampers the company’s ability to compete with Huawei Technologies Co. as a supplier of 5G equipment.
Senator Rubio’s recently published study on meeting the challenges of Chinese competition endorses an industrial policy approach: “The fundamental issue for the U.S. and other western nations, and the IT sector is how to respond to a managed economy [in China] with a well-financed strategy to create a domestic industry intended to displace foreign suppliers.”
The tension between competition policy and industrial policy is not inconsistent with the ideas that national security concerns must be taken seriously, and that the success of U.S. companies is important to the U.S. economy. But the more weight that is given to national security and the need for successful U.S. companies, the more the pressure on antitrust advocates to justify the relevance and importance of antitrust policy, and the greater he difficulty of addressing the tensions between antitrust and industrial policy in a manner that will strike a broad spectrum of people as reasonable and persuasive.
Can antitrust retain a significant role in the discussion of national security and the need for strong American telecom? That remains to be seen.
*The views expressed are entirely the responsibility of Don Allen Resnikoff
—Don Allen Resnikoff*
In a article he wrote in 2015, antitrust scholar Daniel Sokol said that sound antitrust law and policy is in tension with industrial policy. Antitrust promotes consumer welfare whereas industrial policy promotes government intervention for particular groups or industries. He said, regretfully, that industrial policy seemed to be alive and well, affecting antitrust law and policy in the U.S. and worldwide.
In 2019, industrial policy is vigorously pressed by the Trump administration, including in telecommunications. A recent article by the American Enterprise Institute, generally viewed as "conservative," says, for example, that the Trump administration pressure on European governments to eliminate Huawei products from their 5G telecomminications rollout has led to resistance based on competitive concerns. Governments and telecom operators are resisting, in part because they want to retain Huawei as a competitor to Ericsson and Nokia. The GSMA, the international association of mobile operators, stated in a public letter: “Robust competition among network infrastructure suppliers is essential to European operators’ ability to deliver innovative services to European citizens.”
The AEI points out that T-Mobile and Sprint have made the 5G race and competition with China a central element of their defense of their proposed merger.
Qualcomm and the USDOJ have questioned remedies against Qualcomm pressed by the FTC, and adopted by a federal court, on the grounds that national security could be undermined by the FTC case if it hampers the company’s ability to compete with Huawei Technologies Co. as a supplier of 5G equipment.
Senator Rubio’s recently published study on meeting the challenges of Chinese competition endorses an industrial policy approach: “The fundamental issue for the U.S. and other western nations, and the IT sector is how to respond to a managed economy [in China] with a well-financed strategy to create a domestic industry intended to displace foreign suppliers.”
The tension between competition policy and industrial policy is not inconsistent with the ideas that national security concerns must be taken seriously, and that the success of U.S. companies is important to the U.S. economy. But the more weight that is given to national security and the need for successful U.S. companies, the more the pressure on antitrust advocates to justify the relevance and importance of antitrust policy, and the greater he difficulty of addressing the tensions between antitrust and industrial policy in a manner that will strike a broad spectrum of people as reasonable and persuasive.
Can antitrust retain a significant role in the discussion of national security and the need for strong American telecom? That remains to be seen.
*The views expressed are entirely the responsibility of Don Allen Resnikoff
Competition policy now vies with industrial and security policy/
From: http://www.aei.org/publication/in-the-5g-race-competition-policy-now-vies-with-industrial-and-security-policy/
As the Trump administration presses European governments to eliminate Huawei products from their 5G rollout, governments and telecoms operators are resisting, in part because they want to retain Huawei as a competitor to Ericsson and Nokia. In February, at the behest of the European operators, the GSMA, the international association of mobile operators, stated in a public letter: “Robust competition among network infrastructure suppliers is essential to European operators’ ability to deliver innovative services to European citizens.” In this case, national security warnings are being balanced against competitive imperatives.
Finally, closer to home, T-Mobile and Sprint have made the 5G race and competition with China a central element of their defense of a proposed merger. So far the Department of Justice is still skeptical, but in the end it will have to balance competitive pros and cons of reducing major US wireless operators from four to three, against Sprint’s dire (and contested) warning that it cannot achieve this goal on its own.
Welcome to the complex world of competition/industrial/security policy.
From: http://www.aei.org/publication/in-the-5g-race-competition-policy-now-vies-with-industrial-and-security-policy/
As the Trump administration presses European governments to eliminate Huawei products from their 5G rollout, governments and telecoms operators are resisting, in part because they want to retain Huawei as a competitor to Ericsson and Nokia. In February, at the behest of the European operators, the GSMA, the international association of mobile operators, stated in a public letter: “Robust competition among network infrastructure suppliers is essential to European operators’ ability to deliver innovative services to European citizens.” In this case, national security warnings are being balanced against competitive imperatives.
Finally, closer to home, T-Mobile and Sprint have made the 5G race and competition with China a central element of their defense of a proposed merger. So far the Department of Justice is still skeptical, but in the end it will have to balance competitive pros and cons of reducing major US wireless operators from four to three, against Sprint’s dire (and contested) warning that it cannot achieve this goal on its own.
Welcome to the complex world of competition/industrial/security policy.
Open Markets fellow Matthew Stoller published an op-ed on POLITICO Magazine encouraging Congressional Democrats to use their power to hold our federal regulators accountable with regard to Facebook.
DAR comment: Controversy over whether and how to regulate Facebook is heightened by Facebook's recent decision not to take down a doctored and distorted video of Nancy Pelosi which inaccurately suggests slowed and slurred speech.
Highlights from the article below. Read the article in full here.
If you are thinking about Facebook or questions of political economy, an important and telling hearing took place recently in the House Energy and Commerce Committee. Democratic leaders Frank Pallone and Jan Schakowsky did an oversight review of Facebook’s regulator, the Federal Trade Commission, with all five commissioners, including Chairman Joe Simons, advancing ideas on how to address privacy rules in America today. [...]
… The Democrats offered little criticism of the commission and actually called for the FTC to get more money and more authority. “Too often,” Pallone lamented, “the FTC can do little more than give a slap on the wrist to companies the first time they violate the law.” What Pallone ignored is that Facebook has broken the law, multiple times, and the FTC has authority to act. But the commission just won’t. Instead of acknowledging the unwillingness of regulators to do their jobs, Pallone is rewarding the agency for failure. [...]
The rationale for Pallone to avoid FTC failures is clear. For one thing, Democrats want to pass a federal privacy bill which would place rules on companies that handle personal data. They need new authorities and a regulator to implement such a bill, and the regulator on hand is the FTC. So they can’t very well acknowledge that the regulator is an institutional catastrophe, and at the same time call for more of it. (It brings to mind the old joke, “this restaurant’s terrible, and the portions are so small.”) The second reason Democrats have a problem pointing the finger at the FTC is because the failures at the agency largely happened under the Obama administration. [...]
The FTC is in charge of blocking anti-competitive mergers, and perhaps the most consequential failures had to do with the mergers that enabled Facebook to become a monopoly…. Joe Simons, when he was appointed to run the commission in May 2018 by President Donald Trump, pledged to look back at mergers, to see if the FTC’s merger policy made sense. So far, Simons hasn’t bothered to follow through on his promise, though the FTC does have economists who spend their time attacking critics who engage in merger retrospectives. [...]
The reason the FTC has done little is not because it lacks authority, but because its officials simply do not believe there is a problem to be solved… The FTC might kick a scam artist once in awhile, but when it comes to big companies, FTC officials don’t want to use the authority they have. They see themselves not as cops but as deal-makers. [...]
There’s a crisis right now, and Congress must step in.
… To address the problem the FTC won’t, Congress should break up Facebook through statute, or be detailed and explicit about what to do to the social networking space rather than deferring to failed regulators.
DAR comment: Controversy over whether and how to regulate Facebook is heightened by Facebook's recent decision not to take down a doctored and distorted video of Nancy Pelosi which inaccurately suggests slowed and slurred speech.
Highlights from the article below. Read the article in full here.
If you are thinking about Facebook or questions of political economy, an important and telling hearing took place recently in the House Energy and Commerce Committee. Democratic leaders Frank Pallone and Jan Schakowsky did an oversight review of Facebook’s regulator, the Federal Trade Commission, with all five commissioners, including Chairman Joe Simons, advancing ideas on how to address privacy rules in America today. [...]
… The Democrats offered little criticism of the commission and actually called for the FTC to get more money and more authority. “Too often,” Pallone lamented, “the FTC can do little more than give a slap on the wrist to companies the first time they violate the law.” What Pallone ignored is that Facebook has broken the law, multiple times, and the FTC has authority to act. But the commission just won’t. Instead of acknowledging the unwillingness of regulators to do their jobs, Pallone is rewarding the agency for failure. [...]
The rationale for Pallone to avoid FTC failures is clear. For one thing, Democrats want to pass a federal privacy bill which would place rules on companies that handle personal data. They need new authorities and a regulator to implement such a bill, and the regulator on hand is the FTC. So they can’t very well acknowledge that the regulator is an institutional catastrophe, and at the same time call for more of it. (It brings to mind the old joke, “this restaurant’s terrible, and the portions are so small.”) The second reason Democrats have a problem pointing the finger at the FTC is because the failures at the agency largely happened under the Obama administration. [...]
The FTC is in charge of blocking anti-competitive mergers, and perhaps the most consequential failures had to do with the mergers that enabled Facebook to become a monopoly…. Joe Simons, when he was appointed to run the commission in May 2018 by President Donald Trump, pledged to look back at mergers, to see if the FTC’s merger policy made sense. So far, Simons hasn’t bothered to follow through on his promise, though the FTC does have economists who spend their time attacking critics who engage in merger retrospectives. [...]
The reason the FTC has done little is not because it lacks authority, but because its officials simply do not believe there is a problem to be solved… The FTC might kick a scam artist once in awhile, but when it comes to big companies, FTC officials don’t want to use the authority they have. They see themselves not as cops but as deal-makers. [...]
There’s a crisis right now, and Congress must step in.
… To address the problem the FTC won’t, Congress should break up Facebook through statute, or be detailed and explicit about what to do to the social networking space rather than deferring to failed regulators.
EU's Vestager says breaking up Facebook would be a last resort
EU Competition Commissioner Margrethe Vestager said breaking up social media giant Facebook would be a last resort, according to a report by Reuters.
Vestager made her comments on Friday, May 17, at the VivaTech technology conference in Paris, after being asked about the subject following US politicians and a Facebook co-founder speaking out in favor of dismantling the company.
“Of course it would be a remedy of very last resort. I think it would keep us in court for maybe a decade. It is much more direct and maybe much more powerful to say we need access to data,” Vestager said.
Earlier in the week, Sen. Bernie Sanders, a 2020 presidential candidate, voiced his support for breaking up Facebook, according to reports, something fellow candidate Sen. Elizabeth Warren has called for as well.
Sanders shared his thoughts with Politico, and when asked if he supports Warren’s proposal for antitrust actions against Facebook, he responded, “The answer is yes of course.”
“We have a monopolistic — an increasingly monopolistic society where you have a handful of very large corporations having much too much power over consumers,” Sanders said.
His comments came on the heels of a much publicized New York Times op-ed piece by Facebook Co-Founder Chris Hughes (who no longer works for the social media giant) also calling for the breakup of Facebook.
“The government must hold Mark accountable. For too long, lawmakers have marveled at Facebook’s explosive growth and overlooked their responsibility to ensure that Americans are protected and markets are competitive. Any day now, the Federal Trade Commission is expected to impose a $5 billion fine on the company, but that is not enough; nor is Facebook’s offer to appoint some kind of privacy czar,” Hughes wrote.
“After Mark’s congressional testimony last year, there should have been calls for him to truly reckon with his mistakes. Instead the legislators who questioned him were derided as too old and out of touch to understand how tech works. That’s the impression Mark wanted Americans to have, because it means little will change.”
Full Content: PYMNTS
EU Competition Commissioner Margrethe Vestager said breaking up social media giant Facebook would be a last resort, according to a report by Reuters.
Vestager made her comments on Friday, May 17, at the VivaTech technology conference in Paris, after being asked about the subject following US politicians and a Facebook co-founder speaking out in favor of dismantling the company.
“Of course it would be a remedy of very last resort. I think it would keep us in court for maybe a decade. It is much more direct and maybe much more powerful to say we need access to data,” Vestager said.
Earlier in the week, Sen. Bernie Sanders, a 2020 presidential candidate, voiced his support for breaking up Facebook, according to reports, something fellow candidate Sen. Elizabeth Warren has called for as well.
Sanders shared his thoughts with Politico, and when asked if he supports Warren’s proposal for antitrust actions against Facebook, he responded, “The answer is yes of course.”
“We have a monopolistic — an increasingly monopolistic society where you have a handful of very large corporations having much too much power over consumers,” Sanders said.
His comments came on the heels of a much publicized New York Times op-ed piece by Facebook Co-Founder Chris Hughes (who no longer works for the social media giant) also calling for the breakup of Facebook.
“The government must hold Mark accountable. For too long, lawmakers have marveled at Facebook’s explosive growth and overlooked their responsibility to ensure that Americans are protected and markets are competitive. Any day now, the Federal Trade Commission is expected to impose a $5 billion fine on the company, but that is not enough; nor is Facebook’s offer to appoint some kind of privacy czar,” Hughes wrote.
“After Mark’s congressional testimony last year, there should have been calls for him to truly reckon with his mistakes. Instead the legislators who questioned him were derided as too old and out of touch to understand how tech works. That’s the impression Mark wanted Americans to have, because it means little will change.”
Full Content: PYMNTS
California SB 206 – Collegiate Athletics: Fair Pay to Play Act Moves Forward
Friday, May 24, 2019
The Fair Pay to Play Act, introduced by California State Senate Majority Whip Nancy Skinner, has passed an initial hurdle toward becoming law as the California State Senate passed the proposed legislation by a 31-4 vote total. The California Assembly will now consider the measure in the near future.
The proposed legislation (as discussed in our recent blog post on March 1, 2019) would prohibit a California public postsecondary educational institution, athletic association, conference, or any other organization with authority over intercollegiate athletics, from preventing student athletes from earning compensation in connection with the use of the student athlete’s name, image, or likeness. Specifically, any such compensation would no longer affect a student athlete’s scholarship eligibility. The proposed legislation would prohibit direct payments from schools to athletes and would become effective in 2023.
Excerpt from https://www.natlawreview.com/article/faces-and-names-modern-issues-athlete-publicity-licensing
Friday, May 24, 2019
The Fair Pay to Play Act, introduced by California State Senate Majority Whip Nancy Skinner, has passed an initial hurdle toward becoming law as the California State Senate passed the proposed legislation by a 31-4 vote total. The California Assembly will now consider the measure in the near future.
The proposed legislation (as discussed in our recent blog post on March 1, 2019) would prohibit a California public postsecondary educational institution, athletic association, conference, or any other organization with authority over intercollegiate athletics, from preventing student athletes from earning compensation in connection with the use of the student athlete’s name, image, or likeness. Specifically, any such compensation would no longer affect a student athlete’s scholarship eligibility. The proposed legislation would prohibit direct payments from schools to athletes and would become effective in 2023.
Excerpt from https://www.natlawreview.com/article/faces-and-names-modern-issues-athlete-publicity-licensing
Qualcomm, the world's largest maker of smartphone modems and microchips, illegally charges companies sky-high prices to license its technology, a federal judge ruled Tuesday.
In a case brought to court in 2017 by the US Federal Trade Commission, District Court Judge Lucy Koh said Qualcomm should not receive a percentage of sales of each phone a company sells; instead, it should receive a much smaller amount based on what Qualcomm technology exists inside the phone. It also must license its patents to rival chipmakers.
From https://www.cnn.com/2019/05/22/tech/qualcomm-antitrust/index.html
The full opinion is at https://www.scribd.com/document/411079122/FTC-v-Qualcomm-Findings-of-Fact-and-Conclusions-of-Law
FROM US Pirg Consumer Blog:
Opposition to CFPB's proposed rescission of protections for payday borrowers
Posted: 17 May 2019 10:34 AM PDT
Public Citizen, along with the Center for Responsible Lending and several other consumer-advocacy groups, submitted a lengthy comment objecting to the CFPB's proposal to rescind many aspects of the agency's own payday lending rule, issued in 2017 to protect consumers from harmful payday lending practices. The comment is here. If you are not up for reading the full 220-page document, the executive summary is available here.
Opposition to CFPB's proposed rescission of protections for payday borrowers
Posted: 17 May 2019 10:34 AM PDT
Public Citizen, along with the Center for Responsible Lending and several other consumer-advocacy groups, submitted a lengthy comment objecting to the CFPB's proposal to rescind many aspects of the agency's own payday lending rule, issued in 2017 to protect consumers from harmful payday lending practices. The comment is here. If you are not up for reading the full 220-page document, the executive summary is available here.
Nearly Seven in Ten Flunked California's February 2019 Bar Exam
By Cheryl Miller
Still, the success rate—31.4 percent—increased 4.1 percentage points from the historically low pass rate... Read More
By Cheryl Miller
Still, the success rate—31.4 percent—increased 4.1 percentage points from the historically low pass rate... Read More
From Rubio study on meeting the challenge of Chinese competition
As Chinese policymakers seek to draw level with the world in semiconductor production and dominate global telecommunications, it is also looking ahead to the next frontiers of technological innovation. The question for the U.S. is whether it can adequately respond not just to the immediate threats posed by individual Chinese technology companies, but to the long-term threats China’s policy poses to the American technology sector. To quote testimony from James Lewis of the Center for Strategic and International Studies to the U.S. Trade Representative:
“What is new is that unfair trade, security and industrial policies, tolerable in a smaller developing economy, are now combined with China’s immense, government-directed investment and regulatory policies to put foreign firms at a disadvantage…China now has the wealth, commercial sophistication and technical expertise to make its pursuit of technological leadership work. The fundamental issue for the U.S. and other western nations, and the IT sector is how to respond to a managed economy with a well-financed strategy to create a domestic industry intended to displace foreign suppliers.”
https://www.rubio.senate.gov/public/_cache/files/d1c6db46-1a68-481a-b96e-356c8100f1b7/3EDECA923DB439A8E884C6229A4C6003.02.12.19-final-sbc-project-mic2025-report.pdf
Comment by Don Allen Resnikoff: The recommendations for a U.S. industrial policy in the Rubio Report dovetail with Trump Administration policies with regard to Huawei discussed in the articles below. It seems plain that security concerns and a policy favoring rivals of Huawei are important to current U.S. policy. The role of traditional antitrust enforcement policy may be eclipsed by current US industrial policies affecting semiconductors and telecommunications, but it does not follow that traditional antitrust policy is irrelevant. From an antitrust policy perspective, the fewer the constraints on competitors the greater the benefits to consumers with regard to price and quality. For that reason, limitations on competitors based on security and broader industrial policy concerns need to be weighed carefully. DR
As Chinese policymakers seek to draw level with the world in semiconductor production and dominate global telecommunications, it is also looking ahead to the next frontiers of technological innovation. The question for the U.S. is whether it can adequately respond not just to the immediate threats posed by individual Chinese technology companies, but to the long-term threats China’s policy poses to the American technology sector. To quote testimony from James Lewis of the Center for Strategic and International Studies to the U.S. Trade Representative:
“What is new is that unfair trade, security and industrial policies, tolerable in a smaller developing economy, are now combined with China’s immense, government-directed investment and regulatory policies to put foreign firms at a disadvantage…China now has the wealth, commercial sophistication and technical expertise to make its pursuit of technological leadership work. The fundamental issue for the U.S. and other western nations, and the IT sector is how to respond to a managed economy with a well-financed strategy to create a domestic industry intended to displace foreign suppliers.”
https://www.rubio.senate.gov/public/_cache/files/d1c6db46-1a68-481a-b96e-356c8100f1b7/3EDECA923DB439A8E884C6229A4C6003.02.12.19-final-sbc-project-mic2025-report.pdf
Comment by Don Allen Resnikoff: The recommendations for a U.S. industrial policy in the Rubio Report dovetail with Trump Administration policies with regard to Huawei discussed in the articles below. It seems plain that security concerns and a policy favoring rivals of Huawei are important to current U.S. policy. The role of traditional antitrust enforcement policy may be eclipsed by current US industrial policies affecting semiconductors and telecommunications, but it does not follow that traditional antitrust policy is irrelevant. From an antitrust policy perspective, the fewer the constraints on competitors the greater the benefits to consumers with regard to price and quality. For that reason, limitations on competitors based on security and broader industrial policy concerns need to be weighed carefully. DR
From the South China Morning Post: Politics
Trump orders national emergency on information security; Commerce Department follows with Huawei restrictions
- Trump’s order bars the use of telecoms equipment made by companies deemed a threat to US national security, threatening Huawei
- Move would stymie Huawei’s efforts to expand into critical 5G market, giving US a chance to play catch-up
https://www.scmp.com/news/china/politics/article/3010396/donald-trump-signs-executive-order-laying-ground-us-ban-chinas
The Trump Administration war on Huawei 5G, as presented by the PBS Newshour
https://www.pbs.org/newshour/show/why-the-trump-administration-is-so-concerned-about-huawei
https://www.pbs.org/newshour/show/why-the-trump-administration-is-so-concerned-about-huawei
WSJ's take on USDOJ v. FTC on Qualcomm remedies
Excerpt from https://www.wsj.com/articles/justice-department-warns-against-broad-penalty-for-qualcomm-in-ftc-case-11556865004#
The move is the latest sign of the Trump administration’s concern about the fate of Qualcomm, the largest supplier of chips in smartphones and a leading developer of the next-generation 5G wireless technology that is beginning to roll out.
Qualcomm has told the government that American national security could be undermined by the FTC case if it hampers the company’s ability to compete with Huawei Technologies Co., a Chinese supplier of 5G equipment. That argument has received support in Washington, with representatives from the Defense and Energy departments meeting with FTC commissioners to encourage a settlement of the lawsuit, The Wall Street Journal reported in March.
Excerpt-- From http://www.fosspatents.com/2019/05/ftc-calls-doj-statement-in-qualcomm.html
FTC calls DOJ statement in Qualcomm antitrust case "untimely," says it "misconstrues applicable law and the record": this is an unusual inter-institutional quarrel
On Thursday, one week after the Department of Justice submitted its puzzling Statement of Interest in the FTC v. Qualcomm antitrust case awaiting Judge Lucy H. Koh's judgment in the Northern District of California, the Federal Trade Commission filed a response that is as concise as it is informative at different levels (this post continues below the document):
19-05-09 FTC Response to DO... by on Scribd
After the ninth word ("untimely" before "Statement of Interest") it's already clear that the FTC doesn't appreciate the DOJ's bewildering kind of intervention. The FTC doesn't talk about why the DOJ would make such a filing now (and not long before, if at all), but it's easy to see: after the Apple-Qualcomm settlement, Qualcomm's allies in the federal government such as DOJ antitrust chief Makan Delrahim (whose subordinates submitted the Statement of Interest) are now concerned that Judge Koh's impending decision might have an impact on the Apple-Qualcomm deal. The DOJ primarily expressed concerns over the FTC's request that the court order Qualcomm to renegotiate all patent license agreements, and who knows what clauses in the Apple-Qualcomm contract might provide for some adjustments based on the outcome of the FTC case. Within the universe of its own that is the FTC v. Qualcomm antitrust litigation, however, the separate and now-settled Apple-Qualcomm dispute is not an outcome-determinative or even just procedurally relevant factor.
What's funny is that the FTC clarifies it "did not participate in or request [the DOJ's] filing." It's a diplomatic way of saying that the filing is unwanted, unwarranted, and unhelpful.
FTC calls DOJ statement in Qualcomm antitrust case "untimely," says it "misconstrues applicable law and the record": this is an unusual inter-institutional quarrel
On Thursday, one week after the Department of Justice submitted its puzzling Statement of Interest in the FTC v. Qualcomm antitrust case awaiting Judge Lucy H. Koh's judgment in the Northern District of California, the Federal Trade Commission filed a response that is as concise as it is informative at different levels (this post continues below the document):
19-05-09 FTC Response to DO... by on Scribd
After the ninth word ("untimely" before "Statement of Interest") it's already clear that the FTC doesn't appreciate the DOJ's bewildering kind of intervention. The FTC doesn't talk about why the DOJ would make such a filing now (and not long before, if at all), but it's easy to see: after the Apple-Qualcomm settlement, Qualcomm's allies in the federal government such as DOJ antitrust chief Makan Delrahim (whose subordinates submitted the Statement of Interest) are now concerned that Judge Koh's impending decision might have an impact on the Apple-Qualcomm deal. The DOJ primarily expressed concerns over the FTC's request that the court order Qualcomm to renegotiate all patent license agreements, and who knows what clauses in the Apple-Qualcomm contract might provide for some adjustments based on the outcome of the FTC case. Within the universe of its own that is the FTC v. Qualcomm antitrust litigation, however, the separate and now-settled Apple-Qualcomm dispute is not an outcome-determinative or even just procedurally relevant factor.
What's funny is that the FTC clarifies it "did not participate in or request [the DOJ's] filing." It's a diplomatic way of saying that the filing is unwanted, unwarranted, and unhelpful.
FROM DMN: Canada Has a Solution for Growing Local Talent: Make Streaming Services Pay for It
Daniel Sanchez
May 16, 2019
The Standing Committee on Canadian Heritage has unveiled its report on the Copyright Act, and the local music industry is rejoicing.
The all-party committee of MPs (Member of Parliament) has recommended that the Canadian government set harsher rules for local content on foreign streaming services. This would force companies like Netflix, Amazon, and Apple, among others, to actively contribute to the creation of Canadian works.
According to the committee, Canada’s creative industries, broadcasters, digital services, commercial users and distributors have failed to “keep pace with technology and the digital marketplace for music.” The key recommendations would allegedly bolster a “functioning marketplace for creative works.”
Local MPs also recommended the government address Canada’s broad safe harbor laws, outright eliminating or narrowing Copyright Act exemptions to address the growing Value Gap in the country’s creative industries. This, the committee writes, would help creators receive fair compensation, combat modern forms of piracy (including stream-ripping), and strengthen the enforcement of Canadian copyright laws.
The committee noted that no policy currently exists forcing digital streaming services to fund the production of local content. Because of this, the system has “diverted wealth from creators to large digital intermediaries.” This has also led to the erosion of artists’ ability to earn a middle-class living.
In addition, the report – titled Shifting Paradigms – has pushed for a major government crackdown on internet piracy. Witnesses reportedly recommended higher punishments and fines. Should the Canadian government implement the recommendations, Canadian internet service providers would be held liable for the illegal distribution of content on their networks.
Hailing the report, Graham Henderson, Music Canada President and CEO, proclaimed,
“I applaud the Members of the Committee for listening to the voices of artists and the businesses who support music and for taking these critical first steps toward addressing the Value Gap in Canada.”
The report also calls for the end of artist and label payments to Canada’s largest broadcasters. The Radio Royalty Exemption should only apply to community and independent stations. In addition, the MPs recommended a clearer definition of “sound recording” in the Copyright Act. Recordings used in television programs and films must be eligible for public performance remuneration.
Speaking to the committee about the Radio Royalty Exemption and the redefinition of sound recording, Miranda Mulholland, Chair of Music Canada’s Advisory Council, explained,
“The changes recommended by the Heritage Committee in this report are the first step in ensuring artists receive fair remuneration for their work. The changes would end the unfair subsidies that artists have been paying large broadcasting corporations, and [would] mean more creators can earn a sustainable living from their music.”
Yet, not everyone remains excited about the recommendations.
Highlighting ‘inconsistencies’ in the report, MP Pierre Nantel lambasted the call for stricter regulation on digital streaming music services.
Daniel Sanchez
May 16, 2019
The Standing Committee on Canadian Heritage has unveiled its report on the Copyright Act, and the local music industry is rejoicing.
The all-party committee of MPs (Member of Parliament) has recommended that the Canadian government set harsher rules for local content on foreign streaming services. This would force companies like Netflix, Amazon, and Apple, among others, to actively contribute to the creation of Canadian works.
According to the committee, Canada’s creative industries, broadcasters, digital services, commercial users and distributors have failed to “keep pace with technology and the digital marketplace for music.” The key recommendations would allegedly bolster a “functioning marketplace for creative works.”
Local MPs also recommended the government address Canada’s broad safe harbor laws, outright eliminating or narrowing Copyright Act exemptions to address the growing Value Gap in the country’s creative industries. This, the committee writes, would help creators receive fair compensation, combat modern forms of piracy (including stream-ripping), and strengthen the enforcement of Canadian copyright laws.
The committee noted that no policy currently exists forcing digital streaming services to fund the production of local content. Because of this, the system has “diverted wealth from creators to large digital intermediaries.” This has also led to the erosion of artists’ ability to earn a middle-class living.
In addition, the report – titled Shifting Paradigms – has pushed for a major government crackdown on internet piracy. Witnesses reportedly recommended higher punishments and fines. Should the Canadian government implement the recommendations, Canadian internet service providers would be held liable for the illegal distribution of content on their networks.
Hailing the report, Graham Henderson, Music Canada President and CEO, proclaimed,
“I applaud the Members of the Committee for listening to the voices of artists and the businesses who support music and for taking these critical first steps toward addressing the Value Gap in Canada.”
The report also calls for the end of artist and label payments to Canada’s largest broadcasters. The Radio Royalty Exemption should only apply to community and independent stations. In addition, the MPs recommended a clearer definition of “sound recording” in the Copyright Act. Recordings used in television programs and films must be eligible for public performance remuneration.
Speaking to the committee about the Radio Royalty Exemption and the redefinition of sound recording, Miranda Mulholland, Chair of Music Canada’s Advisory Council, explained,
“The changes recommended by the Heritage Committee in this report are the first step in ensuring artists receive fair remuneration for their work. The changes would end the unfair subsidies that artists have been paying large broadcasting corporations, and [would] mean more creators can earn a sustainable living from their music.”
Yet, not everyone remains excited about the recommendations.
Highlighting ‘inconsistencies’ in the report, MP Pierre Nantel lambasted the call for stricter regulation on digital streaming music services.
Congress is considering privacy legislation – be afraid
Posted USPIRG Consumer Blog: 16 May 2019 01:19 PM PDT
by Jeff Sovern
That's the title of my latest essay for The Conversation, about how preemption of state privacy laws could harm consumers. Here's an excerpt:
[R]ather than circumventing state laws, a federal privacy law should work in partnership with them – just as federal laws regulating auto safety such as airbag requirements operate in tandem with state regulations that govern related issues such as how fast motorists can drive.
Industry advocates, however, don’t want federal and state laws to exist side by side because they say companies will have trouble following the rules of different states. Businesses had the same concerns about state data breach laws, and testimony from Marriott’s CEO suggests the company didn’t find it too troublesome to comply with them, however different.
It’s more likely, then, that companies realize that it will be easier for their lobbyists to win a victory in one legislature – Congress – than in 50 states.
Lobbyists have also argued consumers would be bewildered by such a patchwork of state privacy laws. They claimed, for example, that a consumer driving from Biloxi, Mississippi, to Bellevue, Washington, would be confused by the different privacy regimes she would encounter.
But that same person – during that same drive – copes with a wide variety of traffic laws. Drivers seem to be able to navigate those different laws just fine.
Dept of Education blocking CFPB oversight of student loan servicing
Posted USPIRG Consumer Blog: 16 May 2019 08:55 AM PDT
In a letter responding to an inquiry from Senator Warren, the director of the Consumer Financial Protection Bureau says that the Education Department is hampering the CFPB's efforts to protect borrowers by performing oversight of the student loan industry. The Senators' letter has asked whether the federal regulator had "abandoned its supervision and enforcement activities" related to more than $1 trillion in student loans.
The CFPB letter states that companies that student loan servicing companies are refusing to share information that the CFPB needs to perform oversight because the Department of Education has issued guidance telling them not to do so.
NPR has the story, here, along with a link to the CFPB's letter.
Posted USPIRG Consumer Blog: 16 May 2019 01:19 PM PDT
by Jeff Sovern
That's the title of my latest essay for The Conversation, about how preemption of state privacy laws could harm consumers. Here's an excerpt:
[R]ather than circumventing state laws, a federal privacy law should work in partnership with them – just as federal laws regulating auto safety such as airbag requirements operate in tandem with state regulations that govern related issues such as how fast motorists can drive.
Industry advocates, however, don’t want federal and state laws to exist side by side because they say companies will have trouble following the rules of different states. Businesses had the same concerns about state data breach laws, and testimony from Marriott’s CEO suggests the company didn’t find it too troublesome to comply with them, however different.
It’s more likely, then, that companies realize that it will be easier for their lobbyists to win a victory in one legislature – Congress – than in 50 states.
Lobbyists have also argued consumers would be bewildered by such a patchwork of state privacy laws. They claimed, for example, that a consumer driving from Biloxi, Mississippi, to Bellevue, Washington, would be confused by the different privacy regimes she would encounter.
But that same person – during that same drive – copes with a wide variety of traffic laws. Drivers seem to be able to navigate those different laws just fine.
Dept of Education blocking CFPB oversight of student loan servicing
Posted USPIRG Consumer Blog: 16 May 2019 08:55 AM PDT
In a letter responding to an inquiry from Senator Warren, the director of the Consumer Financial Protection Bureau says that the Education Department is hampering the CFPB's efforts to protect borrowers by performing oversight of the student loan industry. The Senators' letter has asked whether the federal regulator had "abandoned its supervision and enforcement activities" related to more than $1 trillion in student loans.
The CFPB letter states that companies that student loan servicing companies are refusing to share information that the CFPB needs to perform oversight because the Department of Education has issued guidance telling them not to do so.
NPR has the story, here, along with a link to the CFPB's letter.
San Diego approves new vehicle habitation restrictions
A San Diego ordinance that prohibits people from living in vehicles parked within 500 feet of a school or home has gained City Council approval. Disability Rights California attorney Ann Menasche, who challenged the city's prior restrictions on living in vehicles, said that "[i]f this issue comes before the court again, we can strike multiple holes into [the new] ordinance as unconstitutional and discriminatory."
From Courthouse News Service (5/15)
https://www2.smartbrief.com/uyd/editProfile.action;jsessionid=BB620E184F1F3485B618BA751495FA6A.web2.smartbrief.com?t1=63629357&t2=https%3A%2F%2Fwww.courthousenews.com%2Fsan-diego-revives-law-outlawing-living-in-vehicles%2F
Law enforcement authorities from dozens of states filed a federal complaint accusing 20 pharmaceutical companies – including Teva, Sandoz and Pfizer – of conspiring to hike generic drug prices, costing billions of dollars in overcharges and undermining government efforts to hold down medical costs.
The complaint (524 pages): https://assets.documentcloud.org/documents/5997931/TevComplaint.pdf
Excerpt:
I. SUMMARY OF THE CASE
1. For many years, the generic pharmaceutical industry has operated pursuant to an understanding among generic manufacturers not to compete with each other and to instead settle for what these competitors refer to as "fair share." This understanding has permeated every segment of the industry, and the purpose of the agreement was to avoid competition among generic manufacturers that would normally result in significant price erosion and great savings to the ultimate consumer. Rather than enter a particular generic drug market by competing on price in order to gain market share, competitors in the generic drug industry would systematically and routinely communicate with one another directly, divvy up customers to create an artificial equilibrium in the market, and then maintain anticompetitively high prices. This "fair share" understanding was not the result of independent decision making by individual companies to avoid competing with one another. Rather, it was a direct result of specific discussion, negotiation and collusion among industry participants over the course of many years.
2. By 2012, Teva and other co-conspirators decided to take this understanding to the next level. . . .
Are State's published statutes copyright protected?
But when Mr. Malamud’s group posted the Official Code of Georgia Annotated, the state sued for copyright infringement. Providing public access to the state’s laws and related legal materials, Georgia’s lawyers said, was part of a “strategy of terrorism.”
A federal appeals court ruled against the state, which has asked the Supreme Court to step in. On Friday, in an unusual move, Mr. Malamud’s group, Public.Resource.Org, also urged the court to hear the dispute, saying that the question of who owns the law is an urgent one, as about 20 other states have claimed that parts of similar annotated codes are copyrighted.
The issue, the group said, is whether citizens can have access to “the raw materials of our democracy.”
The case, Georgia v. Public.Resource.Org, No. 18-1150, concerns the 54 volumes of the Official Code of Georgia Annotated, which contain state statutes and related materials.
The state, through a legal publisher, makes the statutes themselves available online, and it has said it does not object to Mr. Malamud doing the same thing. But people who want to see other materials in the books, the state says, must pay the publisher.
This is part of a disturbing trend, according to a new law review article, “Who Owns the Law? Why We Must Restore Public Ownership of Legal Publishing,” by Leslie Street, a law professor and librarian at Mercer University in Macon, Ga., and David Hansen, a librarian at Duke. It will be published in The Journal of Intellectual Property Law.
States have struck deals with legal publishers, the article said, that have effectively privatized the law. “Publishers now use powerful legal tools to control who has access to the text of the law, how much they must pay and under what terms,” the article said.
Excerpt from https://www.nytimes.com/2019/05/13/us/politics/georgia-official-code-copyright.html?action=click&module=Top%20Stories&pgtype=Homepage
But when Mr. Malamud’s group posted the Official Code of Georgia Annotated, the state sued for copyright infringement. Providing public access to the state’s laws and related legal materials, Georgia’s lawyers said, was part of a “strategy of terrorism.”
A federal appeals court ruled against the state, which has asked the Supreme Court to step in. On Friday, in an unusual move, Mr. Malamud’s group, Public.Resource.Org, also urged the court to hear the dispute, saying that the question of who owns the law is an urgent one, as about 20 other states have claimed that parts of similar annotated codes are copyrighted.
The issue, the group said, is whether citizens can have access to “the raw materials of our democracy.”
The case, Georgia v. Public.Resource.Org, No. 18-1150, concerns the 54 volumes of the Official Code of Georgia Annotated, which contain state statutes and related materials.
The state, through a legal publisher, makes the statutes themselves available online, and it has said it does not object to Mr. Malamud doing the same thing. But people who want to see other materials in the books, the state says, must pay the publisher.
This is part of a disturbing trend, according to a new law review article, “Who Owns the Law? Why We Must Restore Public Ownership of Legal Publishing,” by Leslie Street, a law professor and librarian at Mercer University in Macon, Ga., and David Hansen, a librarian at Duke. It will be published in The Journal of Intellectual Property Law.
States have struck deals with legal publishers, the article said, that have effectively privatized the law. “Publishers now use powerful legal tools to control who has access to the text of the law, how much they must pay and under what terms,” the article said.
Excerpt from https://www.nytimes.com/2019/05/13/us/politics/georgia-official-code-copyright.html?action=click&module=Top%20Stories&pgtype=Homepage
Antitrust Issues Confronting Small Business and Professionals
Bar luncheon program:
Antitrust: it's not just for big business!
Presented by:
Antitrust Law Committee of the D.C. Bar Antitrust and Consumer Law Community
Thursday, May 16, 2019
12:00 p.m. to 2:00 p.m.
D.C. Bar
901 4th Street NW
IN-PERSON WEBCAST or in person
Antitrust: it's not just for big business! While your news feed is rife with chatter about the antitrust perils faced by the world's largest tech firms, it's important to know that antitrust risks confront a variety of professionals, corporate managers, and other regional/local businesses in many industries. And yet . . . these antitrust risks are often discounted or ignored altogether by those who think the law is concerned only with the market's largest, most dominant firms. In addition, small businesses and professionals need to be aware that they can be the victims of conduct that violates antitrust laws, and know what steps to take.
Learn more...
Presenters:SPEAKERS
Unsubsc
Bar luncheon program:
Antitrust: it's not just for big business!
Presented by:
Antitrust Law Committee of the D.C. Bar Antitrust and Consumer Law Community
Thursday, May 16, 2019
12:00 p.m. to 2:00 p.m.
D.C. Bar
901 4th Street NW
IN-PERSON WEBCAST or in person
Antitrust: it's not just for big business! While your news feed is rife with chatter about the antitrust perils faced by the world's largest tech firms, it's important to know that antitrust risks confront a variety of professionals, corporate managers, and other regional/local businesses in many industries. And yet . . . these antitrust risks are often discounted or ignored altogether by those who think the law is concerned only with the market's largest, most dominant firms. In addition, small businesses and professionals need to be aware that they can be the victims of conduct that violates antitrust laws, and know what steps to take.
Learn more...
Presenters:SPEAKERS
- Thomas Gilbertsen, The Gilbertsen Law Office
- Mark Woodward, Deputy Assistant Director, Federal Trade Commission
- Don Allen Resnikoff (Moderator)
Unsubsc
"The United States further submits that, in fashioning a remedy, the Court should take careful consideration of all relevant issues and effects of such a remedy. That includes the principle that, although a proper remedy must restore any competition lost due to actions found to have violated the antitrust laws, a remedy should work as little injury as possible to other public policies. The United States underscores, however, that it takes no position at this time on the underlying merits of the FTC’s claims or on any other issues related to the Court’s pending determination of liability. "
The USDOJ filing is here:https://essentialpatentblog.lexblogplatform.com/wp-content/uploads/sites/64/2019/05/2019-05-02-DOJ-Statement-dckt-1487_0.pdf
- USDOJ goes to Court to question remedies sought by FTC against Qualcomm
"The United States further submits that, in fashioning a remedy, the Court should take careful consideration of all relevant issues and effects of such a remedy. That includes the principle that, although a proper remedy must restore any competition lost due to actions found to have violated the antitrust laws, a remedy should work as little injury as possible to other public policies. The United States underscores, however, that it takes no position at this time on the underlying merits of the FTC’s claims or on any other issues related to the Court’s pending determination of liability. "
The USDOJ filing is here:https://essentialpatentblog.lexblogplatform.com/wp-content/uploads/sites/64/2019/05/2019-05-02-DOJ-Statement-dckt-1487_0.pdf
From USPIRG Blog: Opposition to the draft Restatement of the Law of Consumer Contracts
Posted: 02 May 2019 05:18 AM PDT
The members of the American Law Institute are poised to vote on May 21 on whether to adopt, for the first time, a Restatement of the Law of Consumer Contracts. That's right: A Restatement that would purport to state the law on, among other things, the take-or-leave-it contracts that we "agree to" every day and that seek to impose on us all manner of things that we know little or nothing about. [We've posted about this project several times before, including this warning posted nearly three years ago by law prof and consumer-law expert Dee Pridgen.]
The positions taken in Restatements are often highly influential with courts. For instance, most folks who litigate are aware of the influence Restatements have had on modern product-liability law.
Over at Credits Slips, Georgetown law prof Adam Levitin has posted this critique of the draft that the members will be voting on. I recommend reading Adam's post in full and taking a look at the links contained in it. In the meantime, check out these excerpts:
The draft Restatement of Consumer Contracts is founded on a set of six quantitative empirical studies about consumer contracts. This is a major and novel move for a Restatement; traditionally Restatements engaged in a qualitative distillation of the law. Professor Gregory Klass of Georgetown has [found] pervasive problems in the Reporters' coding. ... A draft version of Professor Klass's study inspired me and a number of other advisors to the Restatement project to attempt our own replication study of the empirical studies of contract modification and clickwrap enforcement. We found the same sort of pervasive problems as Professor Klass. While the ALI Council completely ignored our findings, we wrote them up into a companion article to Professor Klass's. * * *
For example, [the Restatement] would require findings of both procedural and substantive unconscionability for a contract to be unconscionable, while many states only require substantive unconscionability. Not surprisingly, I am unaware of any consumer law expert (other than the Reporters) who supports the project.
But the thing that should really be a wake up call that something is very, very off with this Restatement project is the presence of outside opposition, which is virtually unheard of in the ALI process. Every major consumer group (also here, here, and here), weighed in in opposition as well as 13 state attorneys general (and also here), and our former co-blogger (and also former ALI Vice-Chair), Senator Elizabeth Warren. Nor has the opposition been solely from consumer-minded groups. The US Chamber of Commerce and the major trade associations for banking, telecom, retailers, and insurers are also opposed (albeit with very different motivations). Simply put, it's hard to find anyone other than the Reporters (and the ALI Council, which has a strong tradition of deference to Reporters) who actually likes the draft Restatement.
From US PIRG Blog: The National Consumer Law Center on racial and ethnic disparities in buying and using cars
Posted: 01 May 2019 12:24 PM PDT
John Van Alst of the National Consumer Law Center has written this comprehensive report entitled Time to Stop Racing Cars: The Role of Race and Ethnicity in Buying and Using a Car.
Here is the executive summary:
For many in America, a car provides not only physical mobility but also economic mobility. Yet for years, studies have shown that the costs of buying, financing, and using a car can vary based on race or ethnicity. A consumer’s race or ethnicity can impact:
How much it costs to finance a car;
How much a consumer is charged for the car itself;
How much a consumer is charged for add-on products sold with the car;
The ability of consumers to successfully negotiate for better terms;
The rates paid to insure a car; and
The likelihood that civil fines or penalties will lead to suspensions of a driver’s license.
These disparities make cars more expensive for some races and ethnic groups and keep some families from getting a car at all. They contribute to the differences we see in the ability of families to get a car. For those at or below the poverty line, 13% of White households lack access to a car, compared to 31% of African American households and 20% of Hispanic households.
Many disparities arise because the market for cars is troublingly opaque and inconsistent. A more consistent and transparent marketplace would not only benefit consumers of color but all marketplace participants, including car dealers, finance entities, and insurers that want to
compete fairly and openly on price and quality on a level playing field.
Recommendations
To move toward this goal, federal and state policymakers should:
Ban dealer interest rate markups. Any compensation paid to the dealer as part of the financing process should not be based on the interest rate or other financing terms, and should be consistently applied to all transactions.
Amend the Equal Credit Opportunity Act (ECOA) regulations (Regulation B) to enable and require the collection and analysis of race and ethnicity data for auto financing transactions.
Prohibit discrimination in the pricing of goods and services.
Increase enforcement of the ECOA and state fair lending laws.
Increase enforcement against general abuses in the sale and financing of cars. Given the evidence of discrimination in the sale and finance of cars, it is likely that many other abuses, from yo-yo sales to failure to pay off existing liens, are more likely to affect people of color. Stepped-up enforcement against all abuses in the sale and finance of cars could help address disparities and level the playing field for everyone.
Take action on insurance rate setting to address disparities based upon race and ethnicity. End suspension of driver’s licenses for reasons beyond dangerous driving.
Posted: 02 May 2019 05:18 AM PDT
The members of the American Law Institute are poised to vote on May 21 on whether to adopt, for the first time, a Restatement of the Law of Consumer Contracts. That's right: A Restatement that would purport to state the law on, among other things, the take-or-leave-it contracts that we "agree to" every day and that seek to impose on us all manner of things that we know little or nothing about. [We've posted about this project several times before, including this warning posted nearly three years ago by law prof and consumer-law expert Dee Pridgen.]
The positions taken in Restatements are often highly influential with courts. For instance, most folks who litigate are aware of the influence Restatements have had on modern product-liability law.
Over at Credits Slips, Georgetown law prof Adam Levitin has posted this critique of the draft that the members will be voting on. I recommend reading Adam's post in full and taking a look at the links contained in it. In the meantime, check out these excerpts:
The draft Restatement of Consumer Contracts is founded on a set of six quantitative empirical studies about consumer contracts. This is a major and novel move for a Restatement; traditionally Restatements engaged in a qualitative distillation of the law. Professor Gregory Klass of Georgetown has [found] pervasive problems in the Reporters' coding. ... A draft version of Professor Klass's study inspired me and a number of other advisors to the Restatement project to attempt our own replication study of the empirical studies of contract modification and clickwrap enforcement. We found the same sort of pervasive problems as Professor Klass. While the ALI Council completely ignored our findings, we wrote them up into a companion article to Professor Klass's. * * *
For example, [the Restatement] would require findings of both procedural and substantive unconscionability for a contract to be unconscionable, while many states only require substantive unconscionability. Not surprisingly, I am unaware of any consumer law expert (other than the Reporters) who supports the project.
But the thing that should really be a wake up call that something is very, very off with this Restatement project is the presence of outside opposition, which is virtually unheard of in the ALI process. Every major consumer group (also here, here, and here), weighed in in opposition as well as 13 state attorneys general (and also here), and our former co-blogger (and also former ALI Vice-Chair), Senator Elizabeth Warren. Nor has the opposition been solely from consumer-minded groups. The US Chamber of Commerce and the major trade associations for banking, telecom, retailers, and insurers are also opposed (albeit with very different motivations). Simply put, it's hard to find anyone other than the Reporters (and the ALI Council, which has a strong tradition of deference to Reporters) who actually likes the draft Restatement.
From US PIRG Blog: The National Consumer Law Center on racial and ethnic disparities in buying and using cars
Posted: 01 May 2019 12:24 PM PDT
John Van Alst of the National Consumer Law Center has written this comprehensive report entitled Time to Stop Racing Cars: The Role of Race and Ethnicity in Buying and Using a Car.
Here is the executive summary:
For many in America, a car provides not only physical mobility but also economic mobility. Yet for years, studies have shown that the costs of buying, financing, and using a car can vary based on race or ethnicity. A consumer’s race or ethnicity can impact:
How much it costs to finance a car;
How much a consumer is charged for the car itself;
How much a consumer is charged for add-on products sold with the car;
The ability of consumers to successfully negotiate for better terms;
The rates paid to insure a car; and
The likelihood that civil fines or penalties will lead to suspensions of a driver’s license.
These disparities make cars more expensive for some races and ethnic groups and keep some families from getting a car at all. They contribute to the differences we see in the ability of families to get a car. For those at or below the poverty line, 13% of White households lack access to a car, compared to 31% of African American households and 20% of Hispanic households.
Many disparities arise because the market for cars is troublingly opaque and inconsistent. A more consistent and transparent marketplace would not only benefit consumers of color but all marketplace participants, including car dealers, finance entities, and insurers that want to
compete fairly and openly on price and quality on a level playing field.
Recommendations
To move toward this goal, federal and state policymakers should:
Ban dealer interest rate markups. Any compensation paid to the dealer as part of the financing process should not be based on the interest rate or other financing terms, and should be consistently applied to all transactions.
Amend the Equal Credit Opportunity Act (ECOA) regulations (Regulation B) to enable and require the collection and analysis of race and ethnicity data for auto financing transactions.
Prohibit discrimination in the pricing of goods and services.
Increase enforcement of the ECOA and state fair lending laws.
Increase enforcement against general abuses in the sale and financing of cars. Given the evidence of discrimination in the sale and finance of cars, it is likely that many other abuses, from yo-yo sales to failure to pay off existing liens, are more likely to affect people of color. Stepped-up enforcement against all abuses in the sale and finance of cars could help address disparities and level the playing field for everyone.
Take action on insurance rate setting to address disparities based upon race and ethnicity. End suspension of driver’s licenses for reasons beyond dangerous driving.
Peloton Fires Back At Music Publishers With Antitrust Allegations
Peloton Interactive Inc. isn’t going down without a fight in the face of an ongoing $150 million lawsuit. Only weeks after being accused of copyright infringement, the fitness and technology company has filed a countersuit against a group of music publishers and an industry trade organization.
In March, Peloton was hit with a massive copyright infringement lawsuit filed by the National Music Publishers’ Association (NMPA), which alleged that it has used thousands of songs in its workout videos without proper licensing. If found liable, Peloton could end up paying over $150 million in damages. According to the suit, “Peloton was fully aware that in order to lawfully embody copyrighted musical works in connection with visual images, copyright law required Peloton to obtain authorization from owners of the copyrighted works in the form of what is commonly referred to as a ‘synchronization’ or ‘sync’ license.”
In response, Peloton has claimed that it isn’t infringing at all. In today’s filing, the company states, “Peloton is not the bad actor the Plaintiffs portray it to be.” According to the countersuit, Peloton follows the law by paying all music publishers and PROs. “Peloton values the musical element of its service offering and respects – and pays – the music rightsholders associated with that offering,” the filing adds.
From: https://www.forbes.com/sites/legalentertainment/2019/04/30/peloton-fires-back-at-music-publishers-with-antitrust-allegations/#6a4e7d974aea
Peloton Interactive Inc. isn’t going down without a fight in the face of an ongoing $150 million lawsuit. Only weeks after being accused of copyright infringement, the fitness and technology company has filed a countersuit against a group of music publishers and an industry trade organization.
In March, Peloton was hit with a massive copyright infringement lawsuit filed by the National Music Publishers’ Association (NMPA), which alleged that it has used thousands of songs in its workout videos without proper licensing. If found liable, Peloton could end up paying over $150 million in damages. According to the suit, “Peloton was fully aware that in order to lawfully embody copyrighted musical works in connection with visual images, copyright law required Peloton to obtain authorization from owners of the copyrighted works in the form of what is commonly referred to as a ‘synchronization’ or ‘sync’ license.”
In response, Peloton has claimed that it isn’t infringing at all. In today’s filing, the company states, “Peloton is not the bad actor the Plaintiffs portray it to be.” According to the countersuit, Peloton follows the law by paying all music publishers and PROs. “Peloton values the musical element of its service offering and respects – and pays – the music rightsholders associated with that offering,” the filing adds.
From: https://www.forbes.com/sites/legalentertainment/2019/04/30/peloton-fires-back-at-music-publishers-with-antitrust-allegations/#6a4e7d974aea
From Bruce Johnson: 'We want our land back' | DC government wants Viacom to return land once leased by BET network
Viacom wants to lease land to Washington developer Douglas Jamaal and is taking the city to court.
Author: Bruce Johnson
Published: 2:33 PM EDT April 29, 2019
Updated: 9:08 PM EDT April 29, 2019WASHINGTON -- D.C. is locked in a court battle with entertainment cable channel BET over land the city practically gave away to help launch an African-American entertainment center in 1992.
The late Marion Barry was mayor at the time, and his friend Robert Johnson was co-founder of the Black Entertainment Television network. He started the company with a reported $15,000 personal loan.
Under Barry, the D.C. government agreed to lease nearly seven acres of commercial land it owned off New York Avenue in northeast to Johnson. BET would pay the city $100 per year and the city would kick in another $385,000 toward site development. The lease now calls for a payment of $300,000 a year. That's well under market value.
BET agreed to give city residents preference in hiring.The cable company created some notable national broadcasts over the years, including "Video Soul," "The BET Awards," "Video Gospel," "106 and Park" and more all originating from its studios in the D.C.
In 2002, Johnson and his wife at the time Sheila Johnson sold BET to Viacom for $2.3 billion. BET remained in D.C. But in 2017 Viacom closed the northeast campus and moved BET to New York. An estimated 500 jobs were lost in the move.
D.C.'s current Mayor Muriel Bowser wants the seven acres back. She said the deal with BET was contingent on the company remaining in D.C. as part of their economic development joint agreement.
She's refusing to sign off on Viacom's decision to assign the (BET) lease to Douglas Jamaal. He's one of Washington biggest developers.
Viacom is taking the city to court. The company is asking a superior court judge to issue a summary judgement requiring the city to abide by the original lease with BET.
https://www.wusa9.com/article/news/local/exclusive-we-want-our-land-back-dc-government-wants-viacom-to-return-land-once-leased-by-bet-network/65-0e76ee7e-b055-4f53-b89f-d46be3b267b0
Viacom wants to lease land to Washington developer Douglas Jamaal and is taking the city to court.
Author: Bruce Johnson
Published: 2:33 PM EDT April 29, 2019
Updated: 9:08 PM EDT April 29, 2019WASHINGTON -- D.C. is locked in a court battle with entertainment cable channel BET over land the city practically gave away to help launch an African-American entertainment center in 1992.
The late Marion Barry was mayor at the time, and his friend Robert Johnson was co-founder of the Black Entertainment Television network. He started the company with a reported $15,000 personal loan.
Under Barry, the D.C. government agreed to lease nearly seven acres of commercial land it owned off New York Avenue in northeast to Johnson. BET would pay the city $100 per year and the city would kick in another $385,000 toward site development. The lease now calls for a payment of $300,000 a year. That's well under market value.
BET agreed to give city residents preference in hiring.The cable company created some notable national broadcasts over the years, including "Video Soul," "The BET Awards," "Video Gospel," "106 and Park" and more all originating from its studios in the D.C.
In 2002, Johnson and his wife at the time Sheila Johnson sold BET to Viacom for $2.3 billion. BET remained in D.C. But in 2017 Viacom closed the northeast campus and moved BET to New York. An estimated 500 jobs were lost in the move.
D.C.'s current Mayor Muriel Bowser wants the seven acres back. She said the deal with BET was contingent on the company remaining in D.C. as part of their economic development joint agreement.
She's refusing to sign off on Viacom's decision to assign the (BET) lease to Douglas Jamaal. He's one of Washington biggest developers.
Viacom is taking the city to court. The company is asking a superior court judge to issue a summary judgement requiring the city to abide by the original lease with BET.
https://www.wusa9.com/article/news/local/exclusive-we-want-our-land-back-dc-government-wants-viacom-to-return-land-once-leased-by-bet-network/65-0e76ee7e-b055-4f53-b89f-d46be3b267b0
NY AG opens Facebook data probe
New York’s attorney general is launching an investigation into Facebook after it was reported last week that the company had scraped the email contacts of 1.5 million users without their consent, reported The Hill.
“It is time Facebook is held accountable for how it handles consumers’ personal information,” state Attorney General Letitia James said in a statement. “Facebook has repeatedly demonstrated a lack of respect for consumers’ information while at the same time profiting from mining that data.”
James added that the incident is the “latest demonstration that Facebook does not take seriously its role in protecting our personal information.”
A spokesperson for Facebook said it was “in touch with the New York State attorney general’s office” and that it would be “responding to their questions on this matter.”
The incident is just the latest in a series of crises for Facebook which is still facing regulatory blowback from its handling of the Cambridge Analytica scandal that was revealed a year ago.
On Wednesday, the company revealed that it had set aside $3 billion for a potential settlement with the Federal Trade Commission over the debacle, and that it anticipated a fine as high as $5 billion.
Full Content: The Hill https://thehill.com/policy/technology/440731-ny-ag-opens-investigation-into-facebook-for-harvesting-user-email-contacts
New York’s attorney general is launching an investigation into Facebook after it was reported last week that the company had scraped the email contacts of 1.5 million users without their consent, reported The Hill.
“It is time Facebook is held accountable for how it handles consumers’ personal information,” state Attorney General Letitia James said in a statement. “Facebook has repeatedly demonstrated a lack of respect for consumers’ information while at the same time profiting from mining that data.”
James added that the incident is the “latest demonstration that Facebook does not take seriously its role in protecting our personal information.”
A spokesperson for Facebook said it was “in touch with the New York State attorney general’s office” and that it would be “responding to their questions on this matter.”
The incident is just the latest in a series of crises for Facebook which is still facing regulatory blowback from its handling of the Cambridge Analytica scandal that was revealed a year ago.
On Wednesday, the company revealed that it had set aside $3 billion for a potential settlement with the Federal Trade Commission over the debacle, and that it anticipated a fine as high as $5 billion.
Full Content: The Hill https://thehill.com/policy/technology/440731-ny-ag-opens-investigation-into-facebook-for-harvesting-user-email-contacts
From DMN: Thousands of indie songwriters are now speaking out against major music publishers like Sony/ATV, Warner/Chappell, and Universal Music Publishing Group (UMPG) over a questionable ‘black box’ collection scheme.
As the U.S. Copyright Office mulls over competing bids to run the Mechanical Licensing Collective, indie songwriters and publishers are becoming increasingly vocal. Yesterday, the Copyright Office’s deadline for receiving comments on the selection of an MLC proposal lapsed, with hundreds of comments peppering the agency’s site.
Among the detailed commenters was the Nashville-based Songwriters Guild of America (SGA). The Guild is headed by songwriter and musician Rick Carnes and represents thousands of writers.
In a detailed filing submitted to the Copyright Office and Register of Copyrights, the SGA raised flags over plans by the major music publishers to claim hundreds of millions — if not billions — of dollars in unmatched and unclaimed royalties that likely belong to smaller songwriters.
The issue has been a serious sticking point since major publishers Warner/Chappell, Sony/ATV, and Universal Music Publishing Group (UMPG), among others, moved to control the Music Modernization Act’s Mechanical Licensing Collective, or MLC. Those publishers are represented by the National Music Publishers’ Association, or NMPA, which has remained silent on growing concerns about black box claiming processes.
The SGA emphatically underscored a serious conflict-of-interest problem. “As to the first criterion set forth in the prior section above, transparency and accountability, Congress had reasons for serious concern that certain inherent conflicts created by the MMA would require particularly intensive scrutiny of the Mechanical Collective at both the threshold of its designation, and over the later performance of its duties,” the SGA declared in its filing this week (full submission here).
Carnes is a board member of the AMLC, which opposes the NMPA-backed MLC submission. The group was largely formed to address perceived issues of unfair collusion among major music publishers.
Also chiming in: MusicAnswers, a group that has drawn more than 3,000 signatories for its ‘Declaration of Principles‘ surrounding fair music compensation and accounting transparency.
According to the group’s filing, major publishers are likely to claim more than a billion in unclaimed royalties, even though they have direct royalty-paying arrangements with major streaming companies like Spotify.
“A Board consisting largely of major music publishers, most of who have (or will have) direct licensing arrangements with digital music services, and whose royalties are therefore unlikely to flow through the MLC, strikes us as an inappropriate choice,” the group commented (full comment filing here).
“Moreover, because those same large publishers will receive the lion’s share of any distribution of unclaimed funds and would
have control over the distribution of those funds, it is a blatant conflict of interest for individuals representing those large publishers to occupy a significant number of the seats on the Board of Directors.”
Just yesterday, the highly-influential Recording Academy declined to endorse the NMPA-backed ‘consensus’ MLC, noting that the group needed time to vet through the competing proposals before making a decision.
From: https://www.digitalmusicnews.com/2019/04/23/indie-songwriters-nmpa-mlc/
From DMN:
In a Stunning Defeat, Madonna ‘Vogue’ Co-Writer Beats Warner Music Group in Court
Daniel Sanchez https://www.digitalmusicnews.com/2019/04/18/madonna-pettibone-v-warner-music-group/
April 18, 2019
A federal appeals court has found that Warner Music Group had wrongfully kept Madonna’s co-writer’s royalties – his livelihood – for years.
Two years ago, the co-writer behind Madonna’s ‘Vogue’ filed a lawsuit against a major music group.
Taking on Warner Music Group, Robert ‘Shep’ Pettibone claimed that the label group had withheld royalties from the 1990 hit.
He alleged both that WMG and publishing division Warner/Chappell “admittedly withheld and failed to pay Pettibone royalties owed to Plaintiff for its defense of the VMG Salsoul lawsuit, despite Plaintiff’s demand that they pay these royalties to him, and despite giving them notice of breach.”
VMG Salsoul had sued Madonna and Pettibone for allegedly infringing on a 1976 song, ‘Love Break.’ Siding with the pop singer and her songwriter, the 9th Circuit Court of Appeals upheld a lower court decision.
Yet, in overruling the lower court’s decision, the appeals court handed Pettibone some pretty bad news. He was no longer entitled to attorneys’ fees, which totaled over $500,000.
Now, Madonna’s co-writer has received a major victory in court.
How to take on a major label – and win.
When Pettibone challenged the ruling, WMG swiftly defended itself.
The major label group said it remained entitled to withhold royalties as part of “an indemnification agreement between the parties.” WMG had kept nearly $1 million in royalties.
Naturally, the songwriter disagreed. He stated that the indemnity clause doesn’t cover “a deductible under the errors-and-omissions policy.”
In another major setback for Pettibone, former Manhattan U.S. District Court Judge Richard J. Sullivan sided with WMG.
He ruled that the copyright administration contract granted the label group the right to withhold royalties.
“The agreement unambiguously requires Pettibone to indemnify Warner for the attorneys’ fees and costs it incurred.”
Following oral arguments late last month, Judge Sullivan’s now-fellow Circuit Judges Barrington D. Parker and Peter W. Hall disagreed.
Calling the contract language “tortured,” “garbled,” and “ambiguous,” both hinted that Judge Sullivan may have forced Pettibone to pay “enormous” legal fees just to defend his rights. After all, Warner Music Group had likely paid its own counsel, Alexander Kaplan, around $1 million for his services. So, why had he ruled WMG should keep Pettibone’s royalties?
Yesterday morning, the United States Court of Appeals for the Second Circuit in New York handed Warner Music Group a rare defeat.
In the summary order vacating the label’s previous win, the federal appeals court ordered Judge Sullivan to rule in favor of Pettibone.
The court found WMG’s agreement with Madonna’s songwriter was “pock-marked with ambiguity.” In fact, the agreement actually suggests each party would pay for their own legal fees.
“[T]o the extent Warner urges that it intended to bury…a highly unorthodox fee-shifting provision that is astonishing in its breadth, the contractual language undoubtedly ‘fails to disclose its purpose.’”
Thus, WMG had no right to withhold Pettibone’s royalties.
With Warner’s legal fees nearing $1 million, the federal appeals court ruled Pettibone shouldn’t have to pay the price.
“Warner would have us read the Agreement to shift attorneys’ fees of this magnitude to individual songwriters for any and all infringement claims brought against them, regardless of merit or frivolousness.
“Because the Agreement’s language does not come close to unambiguously requiring such an extraordinary result, we hold that Warner cannot enforce [the Agreement] against Pettibone.”
In a statement to Digital Music News, Richard Busch, Pettibone’s lawyer, hailed the ruling.
“I am thrilled for Shep. Warner literally wanted to apply the indemnification provision of their contract, even though Shep breached no warranty and we defeated the underlying claim of infringement.
“They have just kept his royalties that he relies on for years. This is a truly sweet victory, and will hopefully prevent others from trying to pull the same nonsense in the future.”
You can view the summary order here: https://www.scribd.com/document/406745256/Pettibone-v-WMG-Summary-Order#from_embed
In a Stunning Defeat, Madonna ‘Vogue’ Co-Writer Beats Warner Music Group in Court
Daniel Sanchez https://www.digitalmusicnews.com/2019/04/18/madonna-pettibone-v-warner-music-group/
April 18, 2019
A federal appeals court has found that Warner Music Group had wrongfully kept Madonna’s co-writer’s royalties – his livelihood – for years.
Two years ago, the co-writer behind Madonna’s ‘Vogue’ filed a lawsuit against a major music group.
Taking on Warner Music Group, Robert ‘Shep’ Pettibone claimed that the label group had withheld royalties from the 1990 hit.
He alleged both that WMG and publishing division Warner/Chappell “admittedly withheld and failed to pay Pettibone royalties owed to Plaintiff for its defense of the VMG Salsoul lawsuit, despite Plaintiff’s demand that they pay these royalties to him, and despite giving them notice of breach.”
VMG Salsoul had sued Madonna and Pettibone for allegedly infringing on a 1976 song, ‘Love Break.’ Siding with the pop singer and her songwriter, the 9th Circuit Court of Appeals upheld a lower court decision.
Yet, in overruling the lower court’s decision, the appeals court handed Pettibone some pretty bad news. He was no longer entitled to attorneys’ fees, which totaled over $500,000.
Now, Madonna’s co-writer has received a major victory in court.
How to take on a major label – and win.
When Pettibone challenged the ruling, WMG swiftly defended itself.
The major label group said it remained entitled to withhold royalties as part of “an indemnification agreement between the parties.” WMG had kept nearly $1 million in royalties.
Naturally, the songwriter disagreed. He stated that the indemnity clause doesn’t cover “a deductible under the errors-and-omissions policy.”
In another major setback for Pettibone, former Manhattan U.S. District Court Judge Richard J. Sullivan sided with WMG.
He ruled that the copyright administration contract granted the label group the right to withhold royalties.
“The agreement unambiguously requires Pettibone to indemnify Warner for the attorneys’ fees and costs it incurred.”
Following oral arguments late last month, Judge Sullivan’s now-fellow Circuit Judges Barrington D. Parker and Peter W. Hall disagreed.
Calling the contract language “tortured,” “garbled,” and “ambiguous,” both hinted that Judge Sullivan may have forced Pettibone to pay “enormous” legal fees just to defend his rights. After all, Warner Music Group had likely paid its own counsel, Alexander Kaplan, around $1 million for his services. So, why had he ruled WMG should keep Pettibone’s royalties?
Yesterday morning, the United States Court of Appeals for the Second Circuit in New York handed Warner Music Group a rare defeat.
In the summary order vacating the label’s previous win, the federal appeals court ordered Judge Sullivan to rule in favor of Pettibone.
The court found WMG’s agreement with Madonna’s songwriter was “pock-marked with ambiguity.” In fact, the agreement actually suggests each party would pay for their own legal fees.
“[T]o the extent Warner urges that it intended to bury…a highly unorthodox fee-shifting provision that is astonishing in its breadth, the contractual language undoubtedly ‘fails to disclose its purpose.’”
Thus, WMG had no right to withhold Pettibone’s royalties.
With Warner’s legal fees nearing $1 million, the federal appeals court ruled Pettibone shouldn’t have to pay the price.
“Warner would have us read the Agreement to shift attorneys’ fees of this magnitude to individual songwriters for any and all infringement claims brought against them, regardless of merit or frivolousness.
“Because the Agreement’s language does not come close to unambiguously requiring such an extraordinary result, we hold that Warner cannot enforce [the Agreement] against Pettibone.”
In a statement to Digital Music News, Richard Busch, Pettibone’s lawyer, hailed the ruling.
“I am thrilled for Shep. Warner literally wanted to apply the indemnification provision of their contract, even though Shep breached no warranty and we defeated the underlying claim of infringement.
“They have just kept his royalties that he relies on for years. This is a truly sweet victory, and will hopefully prevent others from trying to pull the same nonsense in the future.”
You can view the summary order here: https://www.scribd.com/document/406745256/Pettibone-v-WMG-Summary-Order#from_embed
Senator Elizabeth Warren of Massachusetts has offered legislation that would make it easier to prosecute corporate executives with the Corporate Executive Accountability Act.
The challenge with charging corporate executives is that they are often insulated from the decisions that violate the law. That can make it difficult, if not impossible, for prosecutors to prove they have the requisite intent. The former head of the Justice Department’s criminal division, Lanny A. Breuer, has defended the lack of prosecutions. In a PBS “Frontline” special, he said, “When we cannot prove beyond a reasonable doubt that there was criminal intent, then we have a constitutional duty not to bring those cases.” Former Attorney General Eric H. Holder Jr. told a Senate committee that some banks had become so big that prosecuting them would have negatively affected the economy. In other words, they had become “too big to jail.”
Ms. Warren’s bill would make it easier for federal prosecutors to pursue charges against individuals by holding executives liable if they “negligently permit or fail to prevent a violation of law.” The government often uses statutes like mail and wire fraud to pursue criminal cases. Those laws, however, require proving the defendant’s intent to defraud, which is unlikely when a senior executive has little to do with the actual misconduct. The new provision would allow punishment if the executive were merely negligent in overseeing the enterprise, which means the person acted in an objectively unreasonable manner.
The legislation has already drawn criticism. An article in Slate argued that “the proposal to put corporate executives in jail for acting negligently is a very bad idea.” The authors’ main objection is that negligence is a far lower standard, so executives with minimal culpability could end up in prison.
Holding business executives criminally responsible for violations by the company is not a new concept. In United States v. Park, decided in 1975, the Supreme Court upheld the conviction of the chief executive of Acme Markets for violating a provision of the Food, Drug and Cosmetic Act, which makes it a crime to ship adulterated or misbranded food. The court found that the statute imposed strict liability on the executive, which “reflected the view both that knowledge or intent were not required to be proved in prosecutions under its criminal provisions, and that responsible corporate agents could be subjected to the liability thereby imposed.”
In both the Clean Water Act and the Clean Air Act, Congress provided that a person who violates the law can include “any responsible corporate officer.” In United States v. Iverson, the federal appeals court in San Francisco held that a corporate officer can be held liable “only when the officer in fact exercises control over the activity causing the discharge or has an express corporate duty to oversee the activity.”
Ms. Warren’s proposal is much broader than the food and environmental laws, however. It would apply to any company with more than $1 billion in annual revenue, and the punishment for an executive would be up to one year in prison for a first violation, and as much as three years for a second offense. Those are much more severe penalties than typically imposed for crimes resulting from a lack of adequate oversight.
In addition, the proposal would apply if a company engaged in a civil violation of federal or state law that affected the “health, safety, finances or personal data” of 1 percent of the population of the United States or any individual state, including entering into a settlement agreement with regulators. That provision could encourage companies to fight regulatory claims rather than settling them, ratcheting up the cost of pursuing cases by civil regulators.
One potential limitation in the law is that it refers specifically to a Securities and Exchange Commission rule that defines an “executive officer” as the president of a company or any vice president in charge of a principal business unit or subsidiary. But that rule applies only to companies that have securities registered with the S.E.C., which means that privately held corporations could avoid the strictures of the new negligence standard by not selling securities to the general public. By using the S.E.C.’s definition of executive, the law would not apply to private companies. That may discourage companies from going public to avoid coming under the provision.
The proposal would add a powerful tool to the arsenal of federal prosecutors to pursue cases against corporate executives. But the key question is whether using negligence as the standard for criminal liability is the best means to police corporate leaders.
Proving negligence is a far lower bar than proving intent. If it is too low, then companies may do everything to fight any claims of a violation. Executives may even cover up violations rather than reporting them if they are more worried about personal exposure to a prison term than ensuring their companies are in compliance with the law.
And that would end up reducing compliance with the law.
Credit: https://www.nytimes.com/2019/04/22/business/dealbook/elizabeth-warren-finance-executives.html
The challenge with charging corporate executives is that they are often insulated from the decisions that violate the law. That can make it difficult, if not impossible, for prosecutors to prove they have the requisite intent. The former head of the Justice Department’s criminal division, Lanny A. Breuer, has defended the lack of prosecutions. In a PBS “Frontline” special, he said, “When we cannot prove beyond a reasonable doubt that there was criminal intent, then we have a constitutional duty not to bring those cases.” Former Attorney General Eric H. Holder Jr. told a Senate committee that some banks had become so big that prosecuting them would have negatively affected the economy. In other words, they had become “too big to jail.”
Ms. Warren’s bill would make it easier for federal prosecutors to pursue charges against individuals by holding executives liable if they “negligently permit or fail to prevent a violation of law.” The government often uses statutes like mail and wire fraud to pursue criminal cases. Those laws, however, require proving the defendant’s intent to defraud, which is unlikely when a senior executive has little to do with the actual misconduct. The new provision would allow punishment if the executive were merely negligent in overseeing the enterprise, which means the person acted in an objectively unreasonable manner.
The legislation has already drawn criticism. An article in Slate argued that “the proposal to put corporate executives in jail for acting negligently is a very bad idea.” The authors’ main objection is that negligence is a far lower standard, so executives with minimal culpability could end up in prison.
Holding business executives criminally responsible for violations by the company is not a new concept. In United States v. Park, decided in 1975, the Supreme Court upheld the conviction of the chief executive of Acme Markets for violating a provision of the Food, Drug and Cosmetic Act, which makes it a crime to ship adulterated or misbranded food. The court found that the statute imposed strict liability on the executive, which “reflected the view both that knowledge or intent were not required to be proved in prosecutions under its criminal provisions, and that responsible corporate agents could be subjected to the liability thereby imposed.”
In both the Clean Water Act and the Clean Air Act, Congress provided that a person who violates the law can include “any responsible corporate officer.” In United States v. Iverson, the federal appeals court in San Francisco held that a corporate officer can be held liable “only when the officer in fact exercises control over the activity causing the discharge or has an express corporate duty to oversee the activity.”
Ms. Warren’s proposal is much broader than the food and environmental laws, however. It would apply to any company with more than $1 billion in annual revenue, and the punishment for an executive would be up to one year in prison for a first violation, and as much as three years for a second offense. Those are much more severe penalties than typically imposed for crimes resulting from a lack of adequate oversight.
In addition, the proposal would apply if a company engaged in a civil violation of federal or state law that affected the “health, safety, finances or personal data” of 1 percent of the population of the United States or any individual state, including entering into a settlement agreement with regulators. That provision could encourage companies to fight regulatory claims rather than settling them, ratcheting up the cost of pursuing cases by civil regulators.
One potential limitation in the law is that it refers specifically to a Securities and Exchange Commission rule that defines an “executive officer” as the president of a company or any vice president in charge of a principal business unit or subsidiary. But that rule applies only to companies that have securities registered with the S.E.C., which means that privately held corporations could avoid the strictures of the new negligence standard by not selling securities to the general public. By using the S.E.C.’s definition of executive, the law would not apply to private companies. That may discourage companies from going public to avoid coming under the provision.
The proposal would add a powerful tool to the arsenal of federal prosecutors to pursue cases against corporate executives. But the key question is whether using negligence as the standard for criminal liability is the best means to police corporate leaders.
Proving negligence is a far lower bar than proving intent. If it is too low, then companies may do everything to fight any claims of a violation. Executives may even cover up violations rather than reporting them if they are more worried about personal exposure to a prison term than ensuring their companies are in compliance with the law.
And that would end up reducing compliance with the law.
Credit: https://www.nytimes.com/2019/04/22/business/dealbook/elizabeth-warren-finance-executives.html
New civil suits against opioid pharma distributors from the attorneys general in New York, Vermont and Washington State
The suits accuse distributors of devising systems to evade regulators. They allege that the companies warned many pharmacies at risk of being reported to the Drug Enforcement Administration, helped others to increase and circumvent limits on how many opioids they were allowed to buy, and often gave advance notice on the rare occasions they performed audits.
The complaints are here:
NY: https://www.documentcloud.org/documents/5817053-Unredacted-NYOAG-complaint.html
Vermont: https://www.documentcloud.org/documents/5793376-Vermont-vs-Opioid-Distributors.html
Washington State: https://www.documentcloud.org/documents/5793374-Wash-State-vs-Distributors.html
The suits accuse distributors of devising systems to evade regulators. They allege that the companies warned many pharmacies at risk of being reported to the Drug Enforcement Administration, helped others to increase and circumvent limits on how many opioids they were allowed to buy, and often gave advance notice on the rare occasions they performed audits.
The complaints are here:
NY: https://www.documentcloud.org/documents/5817053-Unredacted-NYOAG-complaint.html
Vermont: https://www.documentcloud.org/documents/5793376-Vermont-vs-Opioid-Distributors.html
Washington State: https://www.documentcloud.org/documents/5793374-Wash-State-vs-Distributors.html
NYT: Apple Inc. purges rivals from its store
Apple Cracks Down on Apps That Fight iPhone AddictionLast year, with much fanfare, the tech giant unveiled a screen-time tracker of its own. Then it quietly began purging competitors from its store.
By JACK NICAS
https://www.nytimes.com/2019/04/27/technology/apple-screen-time-trackers.html?rref=collection%2Ftimestopic%2FApple%20Inc
Apple Cracks Down on Apps That Fight iPhone AddictionLast year, with much fanfare, the tech giant unveiled a screen-time tracker of its own. Then it quietly began purging competitors from its store.
By JACK NICAS
https://www.nytimes.com/2019/04/27/technology/apple-screen-time-trackers.html?rref=collection%2Ftimestopic%2FApple%20Inc
NYT: The raisins mafia
Excerpt:
Mr. Overly [of Sun-Maid] attended a meeting of some raisin industry players in the back room of a restaurant in Fresno, Calif. This introduction left him shaken. “I’m not saying this lightly, because — you can read about this in different spots — people kind of think there’s this raisin mafia out there and that kind of stuff,” Mr. Overly said.
He said that he asked the group how they thought they could work together. “And the answer I got back was nothing short of collusion,” he said. While no one was proposing they take action, the anti-competitive tactics discussed in that back room, he said, were “completely illegal.”
As he tried to make changes in the raisin industry and at his own company, Mr. Overly said he faced intimidation, harassing phone calls and multiple death threats.
https://www.nytimes.com/2019/04/27/style/sun-maid-raisin-industry.html?searchResultPosition=1
Excerpt:
Mr. Overly [of Sun-Maid] attended a meeting of some raisin industry players in the back room of a restaurant in Fresno, Calif. This introduction left him shaken. “I’m not saying this lightly, because — you can read about this in different spots — people kind of think there’s this raisin mafia out there and that kind of stuff,” Mr. Overly said.
He said that he asked the group how they thought they could work together. “And the answer I got back was nothing short of collusion,” he said. While no one was proposing they take action, the anti-competitive tactics discussed in that back room, he said, were “completely illegal.”
As he tried to make changes in the raisin industry and at his own company, Mr. Overly said he faced intimidation, harassing phone calls and multiple death threats.
https://www.nytimes.com/2019/04/27/style/sun-maid-raisin-industry.html?searchResultPosition=1
1911 USDOJ decree against Standard Oil was terminated earlier this month
Until just a few days ago, Standard Oil was still the subject of a Justice Department decree forcing it to split into dozens of smaller chunks. A decree that came out of former President Theodore Roosevelt's lawsuit [https://supreme.justia.com/cases/federal/us/221/1/] against Standard Oil, which his government won 108 years ago.
Yet as The Wall Street Journal reports, [https://www.wsj.com/articles/justice-department-closes-book-on-landmark-standard-oil-breakup-11555418344?tesla=y&ns=prod/accounts-wsj] the government recently asked a St. Louis federal court to end the 1911 decree, officially declaring it was finished breaking up Standard Oil.
After winning what historian Daniel Yergin calls "the most famous antitrust case" in U.S. history, the government only tried enforcing its resulting decree once, the Journal notes. Standard Oil still split up into 34 smaller companies over the years, including today's behemoths Exxon and Chevron. But since the decree only applied to Standard and not the entire industry, the Justice Department recently moved to end it and let newer, broader laws run their course.
Until just a few days ago, Standard Oil was still the subject of a Justice Department decree forcing it to split into dozens of smaller chunks. A decree that came out of former President Theodore Roosevelt's lawsuit [https://supreme.justia.com/cases/federal/us/221/1/] against Standard Oil, which his government won 108 years ago.
Yet as The Wall Street Journal reports, [https://www.wsj.com/articles/justice-department-closes-book-on-landmark-standard-oil-breakup-11555418344?tesla=y&ns=prod/accounts-wsj] the government recently asked a St. Louis federal court to end the 1911 decree, officially declaring it was finished breaking up Standard Oil.
After winning what historian Daniel Yergin calls "the most famous antitrust case" in U.S. history, the government only tried enforcing its resulting decree once, the Journal notes. Standard Oil still split up into 34 smaller companies over the years, including today's behemoths Exxon and Chevron. But since the decree only applied to Standard and not the entire industry, the Justice Department recently moved to end it and let newer, broader laws run their course.
Jamie McAndrews on anonymous internet payments
Expert economist McAndrews' observation is startlingly simple: private companies do not have the incentive to agree to anonymous internet payments. Here is part of the otline of a talk he gave in 2017:
Conjecture: anonymity of internet payments will be underprovided by the private sector. Providers of internet payment, such as Visa, Paypal, Square, etc. face two impediments in providing sufficient anonymity:
1. The inability to commit not to utilize information gained during a transaction.
2. The usefulness of the information revealed is dependent on a host of related investments made by the parties.
An additional impediment relates to the consumer: The information revealed by a consumer in a transaction may have “external value.” Combined with information about other transactions, it can assist in forecasting demand of other consumers or an individual’s future actions. In this environment, Coasean bargaining is unlikely to result in an optimal contract, and anonymity will be underprovided.
Conclusion: Currency offers anonymity. This can be valuable to society in a variety of environments, not only in criminal or illicit transactions. The internet is an information-rich environment because of the ability to collect information cheaply. The private sector has insufficient incentives to provide anonymity of transactions. Public authorities have a role in promoting greater anonymity and privacy in Internet payments and transactions.
https://www.interdependence.org/wp-content/uploads/2017/02/Jamie-McAndrews.pdf
Expert economist McAndrews' observation is startlingly simple: private companies do not have the incentive to agree to anonymous internet payments. Here is part of the otline of a talk he gave in 2017:
Conjecture: anonymity of internet payments will be underprovided by the private sector. Providers of internet payment, such as Visa, Paypal, Square, etc. face two impediments in providing sufficient anonymity:
1. The inability to commit not to utilize information gained during a transaction.
2. The usefulness of the information revealed is dependent on a host of related investments made by the parties.
An additional impediment relates to the consumer: The information revealed by a consumer in a transaction may have “external value.” Combined with information about other transactions, it can assist in forecasting demand of other consumers or an individual’s future actions. In this environment, Coasean bargaining is unlikely to result in an optimal contract, and anonymity will be underprovided.
Conclusion: Currency offers anonymity. This can be valuable to society in a variety of environments, not only in criminal or illicit transactions. The internet is an information-rich environment because of the ability to collect information cheaply. The private sector has insufficient incentives to provide anonymity of transactions. Public authorities have a role in promoting greater anonymity and privacy in Internet payments and transactions.
https://www.interdependence.org/wp-content/uploads/2017/02/Jamie-McAndrews.pdf
Decoding the Cost of College: The Case for Transparent Financial Aid Award Letters
POLICY PAPER
By
Stephen Burd,Rachel Fishman,Laura Keane,Julie Habbert.Ben Barrett,Kim Dancy,Sophie Nguyen, Brendan Williams
June 5, 2018Executive SummaryStudents and families confront a detrimental lack of information and transparency when making one of the biggest financial decisions of their lives: paying for college.
New America and uAspire, a nonprofit leader on college affordability, analyzed thousands of financial aid award letters and found not only that financial aid is insufficient to cover the cost of college for many students, but also that award letters lack consistency and transparency. As a result, it is exceedingly difficult for students and families to make a financially-informed college decision. While solutions for tackling the cost barrier may be complex, solutions to improve award letter terminology and formatting are well within reach.
Through a quantitative analysis of over 11,000 financial aid award letters, we found that students who receive a Pell Grant are still left to cover a significant gap—an average of nearly $12,000. The gap persisted even when students made cost-saving decisions about where to attend (public versus private colleges and universities) or where to live (at home versus on campus). Given that financial aid falls short, clear and consistent communication on award letters is critical.
After a thorough qualitative review using a subset of 515 award letters from unique institutions, we emerged with seven key findings:
To read the entire report, please download it here. https://newamerica.org/documents/2301/Decoding_the_Cost_of_College_Final_6218.pdf
POLICY PAPER
By
Stephen Burd,Rachel Fishman,Laura Keane,Julie Habbert.Ben Barrett,Kim Dancy,Sophie Nguyen, Brendan Williams
June 5, 2018Executive SummaryStudents and families confront a detrimental lack of information and transparency when making one of the biggest financial decisions of their lives: paying for college.
New America and uAspire, a nonprofit leader on college affordability, analyzed thousands of financial aid award letters and found not only that financial aid is insufficient to cover the cost of college for many students, but also that award letters lack consistency and transparency. As a result, it is exceedingly difficult for students and families to make a financially-informed college decision. While solutions for tackling the cost barrier may be complex, solutions to improve award letter terminology and formatting are well within reach.
Through a quantitative analysis of over 11,000 financial aid award letters, we found that students who receive a Pell Grant are still left to cover a significant gap—an average of nearly $12,000. The gap persisted even when students made cost-saving decisions about where to attend (public versus private colleges and universities) or where to live (at home versus on campus). Given that financial aid falls short, clear and consistent communication on award letters is critical.
After a thorough qualitative review using a subset of 515 award letters from unique institutions, we emerged with seven key findings:
- Confusing Jargon and Terminology: Of the 455 colleges that offered an unsubsidized student loan, we found 136 unique terms for that loan, including 24 that did not include the word “loan.”
- Omission of the Complete Cost: Of our 515 letters, more than one-third did not include any cost information with which to contextualize the financial aid offered.
- Failure to Differentiate Types of Aid: Seventy percent of letters grouped all aid together and provided no definitions to indicate to students how grants and scholarships, loans, and work-study all differ.
- Misleading Packaging of Parent PLUS Loans: Nearly 15 percent of letters included a PLUS loan as an “award,” making the financial aid package appear far more generous than it really was.
- Vague Definitions and Poor Placement of Work-Study: Of institutions that offered work-study, 70 percent provided no explanation of work-study and how it differs from other types of aid.
- Inconsistent Bottom Line Calculations: In our sample, only 40 percent calculated what students would need to pay, and those 194 institutions had 23 different ways of calculating remaining costs.
- No Clear Next Steps: Only about half of letters provided information about what to do to accept or decline awards, and those that did had inconsistent policies.
To read the entire report, please download it here. https://newamerica.org/documents/2301/Decoding_the_Cost_of_College_Final_6218.pdf
From Public Citizen Consumer Blog
Sandy Hook, gun-maker liability, and state consumer-protection law
Posted: 17 Apr 2019 04:37 AM PDT
Take a good look at this easy-to-read, informative essay by law prof Heidi Li Feldman in the Harvard Law Review blog. In Why the Latest Ruling in the Sandy Hook Shooting Litigation Matters, Feldman explains that, among other things, the Connecticut Supreme Court's recent decision in Soto v. Bushmaster Firearms (concerning the prospect of liability for gun manufacturers, distributors, and direct sellers in the Sandy Hook massacre) is potentially important as a matter of state UDAP law.
NYT on the CFPB: "Mick Mulvaney’s Master Class in Destroying the Government From Within"
Posted: 16 Apr 2019 06:21 AM PDT
The New York Times has a lengthy article on Mick Mulvaney's tenure as acting director of the Consumer Financial Protection Bureau.
This account of Mulvaney’s tenure is based on interviews with more than 60 current or former bureau employees, current and former Mulvaney aides, consumer advocates and financial-industry executives and lobbyists, as well as hundreds of pages of internal bureau documents obtained by The New York Times and others. When Mulvaney took over, the fledgling C.F.P.B. was perhaps Washington’s most feared financial regulator: It announced dozens of cases annually against abusive debt collectors, sloppy credit agencies and predatory lenders, and it was poised to force sweeping changes on the $30 billion payday-loan industry, one of the few corners of the financial world that operates free of federal regulation. What he left behind is an agency whose very mission is now a matter of bitter dispute. “The bureau was constructed really deliberately to protect ordinary people,” says Lisa Donner, the head of Americans for Financial Reform. “He’s taken it apart — dismantled it, piece by piece, brick by brick.”
Although Mulvaney has move don to serve as White House Chief of Staff, he had a notable on the work of the CFPB.
Over the last year, Mulvaney’s temporary hiring freeze has turned into an indefinite one, slowly shrinking the C.F.P.B.’s staff by attrition. Bureau news releases, once packed with colorful details about abusive lending practices, have been toned down to dry legalese. According to a report by Christopher Peterson, a senior fellow at the Consumer Federation of America, enforcement at the bureau appears to have dwindled radically. In 2018, the bureau announced just 11 lawsuits or settlements, less than a third of the number during Cordray’s last year. In the months since Mulvaney reorganized the Office of Fair Lending, the bureau has not brought a single case alleging illegal discrimination. While Mulvaney pledged data-driven enforcement, his bureau brought only one case against debt collectors, who account for more complaints to the C.F.P.B. than almost any other industry. Where Mulvaney or his successor have allowed cases to go forward, lenders have often settled with lowered fines or none at all. When the bureau settled a three-year prosecution of a group of payday lenders called NDG Enterprise — which found that the group had falsely threatened American customers with arrest and imprisonment if they failed to repay loans — NDG walked away without paying a cent.
The full article is here.
Recent legislation overhauled CFIUS, known as the Foreign Investment Risk Review Modernization Act.
The measure emphasized the development of methods for the ongoing monitoring of merger and acquisition agreements for security concerns, and imposing sanctions.
The modernization act, which was signed into law in August, stipulated that CFIUS "shall develop and agree upon methods for evaluating compliance with any agreement entered into or condition imposed with respect to a covered transaction that will allow the committee to adequately ensure compliance without unnecessarily diverting Committee resources from assessing any new covered transaction."
A rcently announced penalty is also just one recent crackdown from CFIUS to make headlines in recent weeks.
Cybersecurity firm Cofense said April 11 that one of its minority investors, Pamplona Capital Management, will sell its stake following a yearlong review of its investment.
Virginia-headquartered Cofense, formerly known as PhishMe, had announced in February 2018 that it would be bought by a private equity consortium in a deal that valued the cybersecurity firm at $400 million. The buyer group included Pamplona, Adam Street Partners and Telstra Ventures.
The following month, CFIUS began taking a closer look at the involvement of Pamplona, which is reported to be partially backed by a Russian oligarch.
After Pamplona agreed to give up its board seats and sever communications with Cofense, the private equity firm in October agreed to sell its stake in the cybersecurty firm in a transaction being overseen by a CFIUS-approved trustee.
Toshiba Corp. also confirmed on April 11 that China's ENN Ecological Holdings Co. Ltd. had backed out of a planned 91.3 billion yen ($815 million) deal for the Japanese conglomerate's flagging U.S. liquid natural gas business after the transaction failed to secure regulatory approvals in the U.S. and China.
Tokyo-based Toshiba said at the time that ENN's board moved to terminate the planned acquisition of Toshiba America LNG Corp. as the deal had yet to secure clearance from CFIUS and China's State Administration of Foreign Exchange.
The Cofense and Toshiba matters came on the heels of a March report by The Wall Street Journal indicating that China's Beijing Kunlun Tech Co. Ltd. had been ordered to sell the majority stake in acquired in gay dating app Grindr in 2016 due to concerns about the Chinese government's potential access to users' data.
Despite the recent headlines, however, civil penalties — and blocked deals, for that matter — are still few and far between.
Read more at (Pay wall) : https://www.law360.com/mergersacquisitions/articles/1150189/-1m-cfius-fine-is-rare-public-enforcement-flex?nl_pk=fb4cbe8b-4906-46d6-b8e5-a9b207ebe544&utm_source=newsletter&utm_medium=email&utm_campaign=mergersacquisitions&read_more=1?copied=1dit.
The measure emphasized the development of methods for the ongoing monitoring of merger and acquisition agreements for security concerns, and imposing sanctions.
The modernization act, which was signed into law in August, stipulated that CFIUS "shall develop and agree upon methods for evaluating compliance with any agreement entered into or condition imposed with respect to a covered transaction that will allow the committee to adequately ensure compliance without unnecessarily diverting Committee resources from assessing any new covered transaction."
A rcently announced penalty is also just one recent crackdown from CFIUS to make headlines in recent weeks.
Cybersecurity firm Cofense said April 11 that one of its minority investors, Pamplona Capital Management, will sell its stake following a yearlong review of its investment.
Virginia-headquartered Cofense, formerly known as PhishMe, had announced in February 2018 that it would be bought by a private equity consortium in a deal that valued the cybersecurity firm at $400 million. The buyer group included Pamplona, Adam Street Partners and Telstra Ventures.
The following month, CFIUS began taking a closer look at the involvement of Pamplona, which is reported to be partially backed by a Russian oligarch.
After Pamplona agreed to give up its board seats and sever communications with Cofense, the private equity firm in October agreed to sell its stake in the cybersecurty firm in a transaction being overseen by a CFIUS-approved trustee.
Toshiba Corp. also confirmed on April 11 that China's ENN Ecological Holdings Co. Ltd. had backed out of a planned 91.3 billion yen ($815 million) deal for the Japanese conglomerate's flagging U.S. liquid natural gas business after the transaction failed to secure regulatory approvals in the U.S. and China.
Tokyo-based Toshiba said at the time that ENN's board moved to terminate the planned acquisition of Toshiba America LNG Corp. as the deal had yet to secure clearance from CFIUS and China's State Administration of Foreign Exchange.
The Cofense and Toshiba matters came on the heels of a March report by The Wall Street Journal indicating that China's Beijing Kunlun Tech Co. Ltd. had been ordered to sell the majority stake in acquired in gay dating app Grindr in 2016 due to concerns about the Chinese government's potential access to users' data.
Despite the recent headlines, however, civil penalties — and blocked deals, for that matter — are still few and far between.
Read more at (Pay wall) : https://www.law360.com/mergersacquisitions/articles/1150189/-1m-cfius-fine-is-rare-public-enforcement-flex?nl_pk=fb4cbe8b-4906-46d6-b8e5-a9b207ebe544&utm_source=newsletter&utm_medium=email&utm_campaign=mergersacquisitions&read_more=1?copied=1dit.
The Airbus and Boeing Duopoly: Would More Aggressive Antitrust Enforcement Benefit the Commercial Aviation Industry?
By Grant Petrosyan, Esq. (Constantine Cannon)1
Click here for a PDF version of the article https://www.competitionpolicyinternational.com/wp-content/uploads/2019/04/North-America-Column-April-2019-4-Full.pdf
It is no secret that Airbus SE (“Airbus”) and The Boeing Company (“Boeing”) dominate the commercial aircraft manufacturing industry. According to the Teal Group, an aerospace market analysis company, Airbus and Boeing make up 99 percent of global large aircraft orders.2 And large airplane orders comprise more than 90 percent of the total airplane market. As the numbers indicate, Airbus and Boeing do not have much, if any, competition other than between themselves. Further, in recent years, Airbus and Boeing have merged with their smaller competitors, namely, Canada’s Bombardier and Brazil’s Embraer. These mergers have not faced much, if any, resistance from global antitrust enforcement agencies despite the evident consolidation in an already under-competitive industry.
Boeing, founded in Seattle, Washington in 1916, has been one of the largest aviation companies for more than a century.3 Airbus is a European aerospace manufacturing company founded in 1970, tracing its roots to an agreement entered among the French, German, and British governments. The governments agreed that their collaboration was necessary to create an aircraft manufacturing company that could rival Boeing. Today, these two companies dominate an industry which, fifty years ago, had a number of competitors. In the mid-twentieth century, global airlines could choose from companies including Douglas Aircraft Company, Lockheed, Sud-Aviation, and Boeing.4
Until recently, Bombardier and Embraer were growing rivals to Boeing and Airbus. However, Bombardier was unable to sustain its operations and its commercial division was essentially absorbed by Airbus through a joint-venture agreement in 2018.5 The primary reason for Bombardier’s decision to enter into this agreement was its inability to meet financial obligations as its costs soared to $2 billion above budget. “Bombardier of Canada had the best hope of getting in but they simply ran out of cash and this year their jetliner was basically absorbed by Airbus…” stated Richard Aboulafia, Vice President of Analysis, Teal Group, in a CNBC report regarding the Airbus and Boeing duopoly. As a result, Airbus and Bombardier made a deal that gave Airbus a slightly more than 50 percent stake in Bombardier’s C Series. Shortly after, Airbus announced it would discontinue production of its A319 — a competing aircraft to Bombardier’s C Series.
A year after the Airbus-Bombardier deal was announced, Boeing began negotiations to purchase Embraer’s commercial aviation business. The Brazilian government owns a large stake in Embraer and, despite initial reservations, Brazil’s President Jair Bolsonaro approved the deal in January 2019.6 On February 25, Embraer’s shareholders voted to sell 80 percent of the company’s commercial plane division to Boeing for $4.2 billion. Although the transaction must still be approved by regulators, it is expected that the deal will close by the end of 2019. Once finalized, Boeing will have total control of the new venture.
Other countries are trying to enter the aircraft manufacturing space, but so far have been unable to make a significant impact in the industry. The Commercial Aircraft Corporation of China (Comac), the leading Chinese aircraft manufacturer, was founded in 2008 and is sponsored by the government of China. In response to CNBC’s inquiry regarding competition in the industry, a spokesperson for Airbus stated, “The Airbus-Boeing duopoly isn’t likely to last forever. In general, we see China as the next major competitor though in some 10 to 20 years from now.”7 However, considering the immense investment and time required from the conception of a new plane model to delivery to a customer, competing with Airbus and Boeing will prove to be a great challenge for the Russian and Chinese manufacturers. As a result, it is more than likely that the Airbus and Boeing duopoly will continue, and even strengthen, in the near future.
Building airplanes is not cheap. A single airplane can cost millions of dollars in construction fees alone. Considering the additional costs of safety and regulatory compliance as well as maintenance, operations, etc., it is no surprise that competitors in this industry are few and far between. “The barriers to entry in this business are huge in terms of capital requirements, in terms of technology, experience, customer support, customer finance,” stated Aboulafia.8 Such enormous overhead expenses make economies of scale critical to an aircraft manufacturer’s viability.
Because of their economies of scale, Airbus and Boeing today have tremendous advantages over potential new entrants to the market — even Comac, which is sponsored by the world’s second largest economy. Furthermore, Airbus and Boeing both have completed extensive research and development over the years, and have established production capability and network support.
Indeed, Airbus and Boeing report growth year after year. Airbus delivered 800 planes in 2018, an 11 percent increase from 2017. Boeing set a record of 806 planes in 2018, a 5.6 percent growth from the previous year. The consequences and implications of Airbus and Boeing’s dominance are vast and impactful. As the commercial aviation industry affects everyone from airline companies to passengers, such consolidation and market power could have long lasting effects on prices, quality, innovation, and choice. Boeing has already announced an increase for their commercial list prices by nearly 4 percent in 2019 compared to the previous year.9
Notwithstanding the evident market concentration that has led to the Boeing and Airbus duopoly, there is debate whether increased competition will ultimately benefit or harm airlines and passengers. On the one hand, competition is integral to any successful, productive market as it ensures lower prices for consumers and enhances quality and innovation. On the other hand, critics of stronger enforcement argue that while competition is preferable in most cases, the aviation industry is unique and basic economic and competition principles do not apply in this space as they would not only harm competition, but also harm airlines and passengers as well as entire countries’ economies.
One of the leading arguments against strict antitrust enforcement in the aircraft manufacturing industry is that, because Airbus and other aircraft manufacturers are either government-subsidized or state-owned, it is very difficult for private companies like Boeing to compete with wealthy governments. For instance, Robert D. Atkinson, President of the Information Technology and Innovation Foundation, a public policy think tank, discussed why more competition in the aircraft industry would result in negative consequences.10 He argued that increased competition by foreign companies will harm U.S. aerospace companies, U.S. consumers, and, ultimately, the U.S. economy.
According to Atkinson, those who view the Airbus and Boeing duopoly, including their recent mergers with Embraer and Bombardier, as anticompetitive are essentially following a simplistic approach to antitrust enforcement. He wrote, “When it comes to aviation, Economics 101 is a children’s fairy tale.” He explained that the aviation industry is unique, and that Boeing’s competitors are “deep-pocketed rivals backed by governments.”11 It is true that Airbus was formed by the governments of France, England, and Germany, and has received many government subsidies since its inception. Additionally, many European airlines purchase most of their airplanes from Airbus. In fact, Atkinson points out that in the early 2010s, Air France operated a fleet that was 71 percent Airbus; Lufthansa’s fleet was 62 percent Airbus; Alitalia’s 71 percent; and Iberia’s 100 percent.12 In comparison, the percentage of Airbus airplanes purchased by various non-European airlines was much lower – ranging from 13-29 percent.13
Another government-subsidized aircraft manufacturer is China’s Comac. Comac is a state-sponsored company that started with $2.8 billion in capital from the central government of China. To date, the company has received various subsidies and other benefits from state and regional governments.14 Financial and other assistance from the Chinese government will contribute greatly to the strength and growth of Comac. In his article, Atkinson states, “[t]he free market would never ever have funded the creation of Comac.”15
Those who oppose more competition in the aircraft manufacturing industry argue that Boeing will no longer be competitive in a market where its rivals are all supported by their respective governments. They further argue that consumers will be worse off because, as demand and therefore production decreases for Boeing, its prices will increase to compensate for the loss of economies of scale.16
Other opponents of more aggressive antitrust enforcement in the commercial aircraft manufacturing industry argue that consolidation is just simple economics. They claim that, because it requires enormous capital to design, plan, and build an airplane, and enormous scale to compete, the aircraft manufacturing industry is unique and antitrust enforcement agencies should not apply the same principles as are applied to other industries.17
The question thus remains the same: should antitrust enforcement agencies exercise more vigor in blocking mergers and in prosecuting other potentially anticompetitive conduct in the commercial aircraft manufacturing industry? Or will doing so leave domestic companies, consumers, and the economy worse off? One thing is for sure: Airbus and Boeing have strongholds in the market, at least for the foreseeable future. As discussed above, their duopoly has only strengthened in recent years as a result of their mergers with Bombardier and Embraer. As Aboulafia stated, the commercial aviation industry is “one of the most efficient duopolies ever in the history of manufacturing.”18
1 Grant Petrosyan is an attorney at the New York office of Constantine Cannon LLP. The views expressed in this article are the author’s own and not those of Constantine Cannon LLP or its clients.
2 Sprague, Kate, Why Airbus and Boeing Are the Only Two Companies to Dominate 99% of the Large Plane Market, CNBC Business News, (January 26, 2019), https://www.cnbc.com/2019/01/25/why-the-airbus-boeing-companies-dominate-99percent-of-the-large-plane-market.html.
3 Id.
4 Winship, William. Boeing & Douglas: A History of Customer Service, https://www.boeing.com/commercial/aeromagazine/aero_01/textonly/ps01txt.html (last visited February 15, 2019); L-1011: Luxury Among the Clouds, https://www.lockheedmartin.com/en-us/news/features/history/l-1011.html (last visited February 15, 2019); Sud-Aviation History, http://sudaviation.com/?page_id=65 (last visited February 15, 2019).
5 Airbus’ Majority Stake in C Series Partnership with Bombardier and Investissement Quebec Comes Into Effect, Airbus Newsroom, (July 1, 2018), https://www.airbus.com/newsroom/press-releases/en/2018/07/airbus–majority-stake-in-c-series-partnership-with-bombardier-a.html.
6 Schipani, Andres, Brazil’s Bolsonaro Approves Embraer-Boeing Tie-up, Financial Times, (January 10, 2019), https://www.ft.com/content/bf0e473e-1525-11e9-a581-4ff78404524e.
7 Sprague, Kate, Why Airbus and Boeing Are the Only Two Companies to Dominate 99% of the Large Plane Market, CNBC Business News, (January 26, 2019), https://www.cnbc.com/2019/01/25/why-the-airbus-boeing-companies-dominate-99percent-of-the-large-plane-market.html.
8 Id.
9 McCoy, Daniel, Boeing Hikes Commercial List Prices by Nearly 4 Percent (2019), The Business Journals. https://www.bizjournals.com/wichita/news/2019/02/22/boeing-hikes-commercial-list-prices-by-nearly-4.html.
10 Atkinson, Robert D., Why More Aircraft Competition Is Bad for the U.S. Economy, Not Good for Customers, Information Technology & Innovation Foundation, (May 1, 2018), https://itif.org/publications/2018/05/01/why-more-aircraft-competition-bad-us-economy-not-good-consumers.
11 Id.
12 Atkinson, Robert D., Innovation Economics: The Race for Global Advantage (2012).
13 Id.
14 Atkinson, Robert D., Why More Aircraft Competition Is Bad for the U.S. Economy, Not Good for Customers, Information Technology & Innovation Foundation, (May 1, 2018),https://itif.org/publications/2018/05/01/why-more-aircraft-competition-bad-us-economy-not-good-consumers.
15 Id.
16 Id.
17 Boyd, Michael, Only Two Global Airliner Manufacturers Left, And Lots of Fallout Coming, Forbes, (November 26, 2018), https://www.forbes.com/sites/mikeboyd/2018/11/26/only-two-global-airliner-manufacturers-left-and-lots-of-fallout-coming/#22c24c9c5f83.
18 Sprague, Kate, Why Airbus and Boeing Are the Only Two Companies to Dominate 99% of the Large Plane Market, CNBC Business News, (January 26, 2019), https://www.cnbc.com/2019/01/25/why-the-airbus-boeing-companies-dominate-99percent-of-the-large-plane-market.html.
"Integrity fee" to pro sports for Missouri sports betting advances
Adam Candee, Legal Sports Report · April 16, 2019 at 5:16 pmSave
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The Missouri House General Laws Committee amended H 119 Monday to include an integrity fee of 0.25% of handle to pro sports leagues and state universities. The NFL, MLB and NHL have franchises located in St. Louis and Kansas City.
The amendment inserting the integrity fee also creates a fee of 0.6% to fund maintenance and upkeep of Missouri sports stadiums. That fee would be delivered only to leagues with a presence in the state.
Committee members also voted to weaponize official data in Missouri in advancing the bill on a 7-3 vote. The bill allows leagues to require operators to use official data in settling any bet unrelated to the final score of a game.
Continue Reading.... https://www.legalsportsreport.com/31256/missouri-sports-betting-integrity-fee-mobile/
See also « 4/16 Tennessee sports betting bill looks to clear another hurdle in committee https://www.cdcgamingreports.com/tennessee-sports-betting-bill-looks-to-clear-another-hurdle-in-committee/
The Consumer Federation of America report on the decline of the CFPB as a consumer interest enforcer
Executive summary:
In the aftermath of the 2008 financial crisis, Congress created the Consumer Financial Protection Bureau (“CFPB”), and charged it with enforcing federal consumer financial law. The CFPB has a number of tools with which to fulfill this mandate, including the authority to bring legal action against companies who violate the law. Congress also gave the CFPB the authority to collect, investigate, and respond to complaints from consumers. In recent years, complaints involving credit reporting, debt collection, mortgages and student lending have topped the CFPB’s list of most frequent complaints. Historically, these complaints have helped to inform and prioritize areas of focus for enforcement activity.
This study analyzes whether the CFPB, under the Trump Administration, is delivering on its statutory law enforcement objectives and stated commitments to take aggressive action in the area of consumer law enforcement, particularly where complaint volume is the largest. To accomplish this, this study identifies and classifies every public enforcement action since the inception of the CFPB through the first three months of Director Kathleen Kraninger’s term in office. Overall, this study finds that under the leadership of Acting Director Mick Mulvaney, and more recently, Director Kathy Kraninger, enforcement activity at the CFPB has declined to levels that are either nonexistent or significantly below that of the prior Administration, even in the areas where consumer complaint activity is the highest.
The Bureau has announced only two cases each under authorities specifically given to the Bureau to address issues with credit reporting and mortgage lending, one case related to debt collection, and no cases related to student lending. Troublingly, the Bureau has also failed to announce or resolve a single antidiscrimination case. Further, in addition to a decline in the overall volume of enforcement actions, this study shows significantly less monetary relief going to consumers. The CFPB returned about $43 million in restitution to consumers for each week of the Bureau’s first Director’s term in office. In the relatively few cases resolved since, this amount has plummeted to about $6.4 million per week under Acting Director Mulvaney and most recently dropped again to about $925,000 per week under Director Kraninger.
The Bureau has not announced a single dollar Executive Summary Dormant: The CFPB’s Law Enforcement Program in Decline | Consumer Federation of America 3 of monetary relief in any of the high-volume complaint areas of credit reporting, debt collection, or student lending. Overall, enforcement activity and relief to the consumer has declined since the appointment of Mick Mulvaney in 2017. And, despite being touted as one of Director Kraninger’s initial priorities for her term of leadership, law enforcement activity continues to remain significantly below earlier levels since her confirmation.
Key Findings
• The number of public enforcement cases announced in 2018 declined by 80% from the Bureau’s peak productivity in 2015. In 2015, the CFPB announced 55 public law enforcement actions. In 2018, this number had declined to 11. • The average amount of monetary relief per case awarded to victims of illegal consumer financial practices has declined by approximately 96%. Under Director Cordray, the CFPB awarded an average of $59.6 million in consumer restitution per case. Under Director Kraninger, average consumer relief has declined to $2.4 million per case.
• Law enforcement addressing illegal credit reporting practices has declined sharply under the Trump Administration’s leadership. The CFPB has announced only two cases enforcing the Fair Credit Reporting Act and settled both without providing a single dollar of restitution to victims of illegal practices.
• Law enforcement addressing illegal debt collection practices has declined sharply under the Trump Administration’s leadership. Under Acting Director Mulvaney and Director Kraninger, the CFPB has announced only one case enforcing the Fair Debt Collection Practices Act. The CFPB agreed to settle this case without ordering a single dollar of restitution to victims of illegal debt collection practices.
• Law enforcement policing the home mortgage market has declined sharply under the Trump Administration’s leadership. Under Director Cordray, the CFPB announced 61 mortgage lending cases that returned nearly $3 billion in restitution to consumers at a pace of over $10 million per week. Under Acting Director Mulvaney, consumer relief in mortgage lending declined by over 99% to less than $5,000 per week for the entire nation. Under Director Kraninger, the Bureau has not announced a single mortgage-related case, nor any restitution for consumers. Dormant: The CFPB’s Law Enforcement Program in Decline | Consumer Federation of America 4
• Law Enforcement policing the student loan market has declined sharply under the Trump Administration’s leadership. Under Director Cordray, the CFPB announced 15 student lending related cases with an average of $47.5 million in consumer relief per case. Under the Trump Administration’s leadership, the CFPB has not announced or resolved a single student lending enforcement case and has provided no restitution to any consumers.
• Under the Trump Administration’s leadership, the CFPB has failed to enforce consumer protection laws prohibiting discrimination. Under Director Cordray, the CFPB announced 11 cases enforcing the Equal Credit Opportunity Act producing average consumer relief over $56 million per case. Under the Trump Administration’s leadership, the CFPB has not announced or resolved a single case alleging unlawful discrimination and has provided no restitution to any consumers.
• Under the Trump Administration’s leadership, the CFPB has failed to provide adequate restitution to victims of deceptive practices. Under Director Cordray, the CFPB announced 116 enforcement cases against consumer finance companies that used in deceptive or misleading practices producing average consumer relief of over $94 million per case. Director Kraninger has announced 3 cases alleging deceptive practices but agreed to settle each case without ordering any monetary restitution for victims.
From https://consumerfed.org/wp-content/uploads/2019/03/CFPB-Enforcement-in-Decline.pdf
Executive summary:
In the aftermath of the 2008 financial crisis, Congress created the Consumer Financial Protection Bureau (“CFPB”), and charged it with enforcing federal consumer financial law. The CFPB has a number of tools with which to fulfill this mandate, including the authority to bring legal action against companies who violate the law. Congress also gave the CFPB the authority to collect, investigate, and respond to complaints from consumers. In recent years, complaints involving credit reporting, debt collection, mortgages and student lending have topped the CFPB’s list of most frequent complaints. Historically, these complaints have helped to inform and prioritize areas of focus for enforcement activity.
This study analyzes whether the CFPB, under the Trump Administration, is delivering on its statutory law enforcement objectives and stated commitments to take aggressive action in the area of consumer law enforcement, particularly where complaint volume is the largest. To accomplish this, this study identifies and classifies every public enforcement action since the inception of the CFPB through the first three months of Director Kathleen Kraninger’s term in office. Overall, this study finds that under the leadership of Acting Director Mick Mulvaney, and more recently, Director Kathy Kraninger, enforcement activity at the CFPB has declined to levels that are either nonexistent or significantly below that of the prior Administration, even in the areas where consumer complaint activity is the highest.
The Bureau has announced only two cases each under authorities specifically given to the Bureau to address issues with credit reporting and mortgage lending, one case related to debt collection, and no cases related to student lending. Troublingly, the Bureau has also failed to announce or resolve a single antidiscrimination case. Further, in addition to a decline in the overall volume of enforcement actions, this study shows significantly less monetary relief going to consumers. The CFPB returned about $43 million in restitution to consumers for each week of the Bureau’s first Director’s term in office. In the relatively few cases resolved since, this amount has plummeted to about $6.4 million per week under Acting Director Mulvaney and most recently dropped again to about $925,000 per week under Director Kraninger.
The Bureau has not announced a single dollar Executive Summary Dormant: The CFPB’s Law Enforcement Program in Decline | Consumer Federation of America 3 of monetary relief in any of the high-volume complaint areas of credit reporting, debt collection, or student lending. Overall, enforcement activity and relief to the consumer has declined since the appointment of Mick Mulvaney in 2017. And, despite being touted as one of Director Kraninger’s initial priorities for her term of leadership, law enforcement activity continues to remain significantly below earlier levels since her confirmation.
Key Findings
• The number of public enforcement cases announced in 2018 declined by 80% from the Bureau’s peak productivity in 2015. In 2015, the CFPB announced 55 public law enforcement actions. In 2018, this number had declined to 11. • The average amount of monetary relief per case awarded to victims of illegal consumer financial practices has declined by approximately 96%. Under Director Cordray, the CFPB awarded an average of $59.6 million in consumer restitution per case. Under Director Kraninger, average consumer relief has declined to $2.4 million per case.
• Law enforcement addressing illegal credit reporting practices has declined sharply under the Trump Administration’s leadership. The CFPB has announced only two cases enforcing the Fair Credit Reporting Act and settled both without providing a single dollar of restitution to victims of illegal practices.
• Law enforcement addressing illegal debt collection practices has declined sharply under the Trump Administration’s leadership. Under Acting Director Mulvaney and Director Kraninger, the CFPB has announced only one case enforcing the Fair Debt Collection Practices Act. The CFPB agreed to settle this case without ordering a single dollar of restitution to victims of illegal debt collection practices.
• Law enforcement policing the home mortgage market has declined sharply under the Trump Administration’s leadership. Under Director Cordray, the CFPB announced 61 mortgage lending cases that returned nearly $3 billion in restitution to consumers at a pace of over $10 million per week. Under Acting Director Mulvaney, consumer relief in mortgage lending declined by over 99% to less than $5,000 per week for the entire nation. Under Director Kraninger, the Bureau has not announced a single mortgage-related case, nor any restitution for consumers. Dormant: The CFPB’s Law Enforcement Program in Decline | Consumer Federation of America 4
• Law Enforcement policing the student loan market has declined sharply under the Trump Administration’s leadership. Under Director Cordray, the CFPB announced 15 student lending related cases with an average of $47.5 million in consumer relief per case. Under the Trump Administration’s leadership, the CFPB has not announced or resolved a single student lending enforcement case and has provided no restitution to any consumers.
• Under the Trump Administration’s leadership, the CFPB has failed to enforce consumer protection laws prohibiting discrimination. Under Director Cordray, the CFPB announced 11 cases enforcing the Equal Credit Opportunity Act producing average consumer relief over $56 million per case. Under the Trump Administration’s leadership, the CFPB has not announced or resolved a single case alleging unlawful discrimination and has provided no restitution to any consumers.
• Under the Trump Administration’s leadership, the CFPB has failed to provide adequate restitution to victims of deceptive practices. Under Director Cordray, the CFPB announced 116 enforcement cases against consumer finance companies that used in deceptive or misleading practices producing average consumer relief of over $94 million per case. Director Kraninger has announced 3 cases alleging deceptive practices but agreed to settle each case without ordering any monetary restitution for victims.
From https://consumerfed.org/wp-content/uploads/2019/03/CFPB-Enforcement-in-Decline.pdf
A contrarian view: “The NCAA, Which Is Tied to Education, May Be a Necessary Monopoly”
The article, with the captioned title, discusses a recent successful challenge made to the NCAA’s governing policies on antitrust grounds. That ruling, now on appeal, upheld the plaintiffs’ argument that the NCAA has a monopoly on the college athletic market and has misused it.
Authors Hittinger and Mariani discuss the potential inequities of permitting player compensation and some of the scenarios that could arise and conclude: “The verdict is still out as to whether a drastic change is necessary or even better, but if the status quo of at least the operation of [Division 1] sports is optimal, then it may be that the NCAA’s monopoly presence remains necessary.”
Read the article. https://www.bakerlaw.com/webfiles/Litigation/2019/Articles/04-01-2019-Hittinger-NCAA.pdf
The article, with the captioned title, discusses a recent successful challenge made to the NCAA’s governing policies on antitrust grounds. That ruling, now on appeal, upheld the plaintiffs’ argument that the NCAA has a monopoly on the college athletic market and has misused it.
Authors Hittinger and Mariani discuss the potential inequities of permitting player compensation and some of the scenarios that could arise and conclude: “The verdict is still out as to whether a drastic change is necessary or even better, but if the status quo of at least the operation of [Division 1] sports is optimal, then it may be that the NCAA’s monopoly presence remains necessary.”
Read the article. https://www.bakerlaw.com/webfiles/Litigation/2019/Articles/04-01-2019-Hittinger-NCAA.pdf
GW Center for Extremism uses PACER court records to find otherwise hidden information
The nation's federal court system produces thousands of pages of documents every single week. The indictments, detention memos and criminal complaints can reveal plenty of important information. But the problem is, almost no one reads them.
Seamus Hughes does. He has found "scoops" like the otherwise unrevealed indictment against Julian Assange, and a planned domestic terror attack.
Hughes finds these scoops through a buggy government website called PACER that charges 10 cents per search.
"It's godawful. You can't use it unless you know how to use it right," Hughes said. "It is absolutely a quirky system. You know, if you search a certain way you're gonna get zero results. You search a different way you'll get 10,000 results."
Most of what Hughes finds – even the Julian Assange thing – doesn't much matter to him. Hughes studies extremism and is supported by a staff of eight at George Washington's Center for Extremism. Court filings are his best research material and he says he reads about 1,000 pages a day.
"You have to go through all of the haystack to get the needle," Hughes said. "Because you're dealing with a lot of stuff that is not talked about or possibly classified and you've got to break through that."
Source #1: https://www.cbsnews.com/news/seamus-hughes-uncovered-news-about-assange-a-kickback-scheme-and-an-isis-commander/
Source #2: https://extremism.gwu.edu/cases
The nation's federal court system produces thousands of pages of documents every single week. The indictments, detention memos and criminal complaints can reveal plenty of important information. But the problem is, almost no one reads them.
Seamus Hughes does. He has found "scoops" like the otherwise unrevealed indictment against Julian Assange, and a planned domestic terror attack.
Hughes finds these scoops through a buggy government website called PACER that charges 10 cents per search.
"It's godawful. You can't use it unless you know how to use it right," Hughes said. "It is absolutely a quirky system. You know, if you search a certain way you're gonna get zero results. You search a different way you'll get 10,000 results."
Most of what Hughes finds – even the Julian Assange thing – doesn't much matter to him. Hughes studies extremism and is supported by a staff of eight at George Washington's Center for Extremism. Court filings are his best research material and he says he reads about 1,000 pages a day.
"You have to go through all of the haystack to get the needle," Hughes said. "Because you're dealing with a lot of stuff that is not talked about or possibly classified and you've got to break through that."
Source #1: https://www.cbsnews.com/news/seamus-hughes-uncovered-news-about-assange-a-kickback-scheme-and-an-isis-commander/
Source #2: https://extremism.gwu.edu/cases
Johns Hopkins, Bristol-Myers Want Sanctions In Syphilis Class Action Suit
By Cara Salvatore
Law360 (April 10, 2019, 5:30 PM EDT) -- Johns Hopkins University and Bristol-Myers Squibb want sanctions imposed in a $1 billion lawsuit against them over experiments in which Guatemalan citizens were allegedly infected with syphilis without consent, saying Tuesday the lawyers behind the suit have exhibited a "pattern of litigation abuse."
According to the three defendants, which also include the Rockefeller Foundation, lies and deceit have driven the gathering of plaintiffs and the finding of expert and fact witnesses in the suit, which was filed in 2015 in Maryland federal court.
The suit concerns experiments done in the 1940s and 1950s in Guatemala in which more than 1,300 prisoners, soldiers and psychiatric patients were allegedly deceived and exposed to syphilis and other diseases without their informed consent. JHU and the Rockefeller Foundation allegedly supervised and participated; Bristol-Myers Squibb allegedly supplied the penicillin for the experiments.
The three defendants — the same people allegedly responsible for the Tuskegee Study, a well-known episode in which African-American sharecroppers in Alabama were allowed to suffer untreated syphilis for decades — acknowledge the experiments were "reprehensible" but say they were carried out mainly by the governments of the U.S. and Guatemala. More to the point, they say, this suit has been conducted in an indefensible way.
"Recent discovery has revealed that plaintiffs' claims are based on manufactured evidence, false sworn statements, and unsupportable allegations that even a cursory investigation would have shown were unfounded," the three said. Immediate punishment is needed to "address plaintiffs' counsel's bad faith abuse of the judicial process," they said in their brief.
Excerpt from https://www.law360.com/classaction/articles/1148396/johns-hopkins-bristol-myers-want-sanctions-in-syphilis-suit?nl_pk=81b89ec7-c689-4100-9061-0cc06106b24a&utm_source=newsletter&utm_medium=email&utm_campaign=classaction (paywall)
The brief is at https://www.law360.com/articles/1148396/attachments/0 (paywall)
By Cara Salvatore
Law360 (April 10, 2019, 5:30 PM EDT) -- Johns Hopkins University and Bristol-Myers Squibb want sanctions imposed in a $1 billion lawsuit against them over experiments in which Guatemalan citizens were allegedly infected with syphilis without consent, saying Tuesday the lawyers behind the suit have exhibited a "pattern of litigation abuse."
According to the three defendants, which also include the Rockefeller Foundation, lies and deceit have driven the gathering of plaintiffs and the finding of expert and fact witnesses in the suit, which was filed in 2015 in Maryland federal court.
The suit concerns experiments done in the 1940s and 1950s in Guatemala in which more than 1,300 prisoners, soldiers and psychiatric patients were allegedly deceived and exposed to syphilis and other diseases without their informed consent. JHU and the Rockefeller Foundation allegedly supervised and participated; Bristol-Myers Squibb allegedly supplied the penicillin for the experiments.
The three defendants — the same people allegedly responsible for the Tuskegee Study, a well-known episode in which African-American sharecroppers in Alabama were allowed to suffer untreated syphilis for decades — acknowledge the experiments were "reprehensible" but say they were carried out mainly by the governments of the U.S. and Guatemala. More to the point, they say, this suit has been conducted in an indefensible way.
"Recent discovery has revealed that plaintiffs' claims are based on manufactured evidence, false sworn statements, and unsupportable allegations that even a cursory investigation would have shown were unfounded," the three said. Immediate punishment is needed to "address plaintiffs' counsel's bad faith abuse of the judicial process," they said in their brief.
Excerpt from https://www.law360.com/classaction/articles/1148396/johns-hopkins-bristol-myers-want-sanctions-in-syphilis-suit?nl_pk=81b89ec7-c689-4100-9061-0cc06106b24a&utm_source=newsletter&utm_medium=email&utm_campaign=classaction (paywall)
The brief is at https://www.law360.com/articles/1148396/attachments/0 (paywall)
Citi Bike Pulls New Electric Bikes Off New York City Streets, Citing Safety Concerns (bad brakes)
https://www.nytimes.com/2019/04/15/nyregion/citi-bike-electric.html?action=click&module=Latest&pgtype=Homepage
https://www.nytimes.com/2019/04/15/nyregion/citi-bike-electric.html?action=click&module=Latest&pgtype=Homepage
DMN - “You Have Used Us” — Hit Songwriters Pen Open Letter Slamming Spotify’s CRB Appeal
Spotify is doing a great job of alienating the music industry right now.
The story continues here. https://www.digitalmusicnews.com/2019/04/10/songwriters-v-spotify-letter/
DMN - Apple Music Caught Taking Down Pro-Democracy Songs in China
The Chinese government may have forced Apple Music to take down songs celebrating democracy.
The story continues here. https://www.digitalmusicnews.com/2019/04/10/apple-music-democracy-takedown/
Spotify is doing a great job of alienating the music industry right now.
The story continues here. https://www.digitalmusicnews.com/2019/04/10/songwriters-v-spotify-letter/
DMN - Apple Music Caught Taking Down Pro-Democracy Songs in China
The Chinese government may have forced Apple Music to take down songs celebrating democracy.
The story continues here. https://www.digitalmusicnews.com/2019/04/10/apple-music-democracy-takedown/
No fee ATM cash access
Maryland CU partners with Allpoint to expand members' fee-free cash accessMarch 28, 2019State Employees Credit Union of Maryland, the state's largest credit union, serving more than 260,000 members, has expanded its relationship with Cardtronics PLC to provide fee-free cash access through thousands of retail ATMs on the company's Allpoint Network, according to a press release.
Cardtronics' Allpoint Network supplements the CU's current ATM options, which include its owned ATM fleet; participation in a credit union-shared ATM network; and existing SECU-branded retail ATMs with Cardtronics.
"Our focus throughout our 68-year history has been on continuing to improve and expand service to our members," Joseli Wright, SECU senior vice president of member and brand strategy, said in the release. "Members asked for expanded access beyond our existing footprint of SECU locations, a need that the Allpoint Network was uniquely able to satisfy. Joining Allpoint has maximized member convenience by giving members the cash they need in the stores they already visit in their neighborhoods and, now, when traveling out of state."
Topics: Bank / Credit Union, Branding, Networking / Connectivity, Retail / Off-Premises, Transaction Processing
Companies: Cardtronics
https://www.atmia.com/news/state-employees-cu-of-maryland-extends-members-fee-free-cash-access-with-allpoint/8324/
Maryland CU partners with Allpoint to expand members' fee-free cash accessMarch 28, 2019State Employees Credit Union of Maryland, the state's largest credit union, serving more than 260,000 members, has expanded its relationship with Cardtronics PLC to provide fee-free cash access through thousands of retail ATMs on the company's Allpoint Network, according to a press release.
Cardtronics' Allpoint Network supplements the CU's current ATM options, which include its owned ATM fleet; participation in a credit union-shared ATM network; and existing SECU-branded retail ATMs with Cardtronics.
"Our focus throughout our 68-year history has been on continuing to improve and expand service to our members," Joseli Wright, SECU senior vice president of member and brand strategy, said in the release. "Members asked for expanded access beyond our existing footprint of SECU locations, a need that the Allpoint Network was uniquely able to satisfy. Joining Allpoint has maximized member convenience by giving members the cash they need in the stores they already visit in their neighborhoods and, now, when traveling out of state."
Topics: Bank / Credit Union, Branding, Networking / Connectivity, Retail / Off-Premises, Transaction Processing
Companies: Cardtronics
https://www.atmia.com/news/state-employees-cu-of-maryland-extends-members-fee-free-cash-access-with-allpoint/8324/
Boeing as an antitrust issue
Some see Boeing as a corporate giant with too much political and economic muscle, allowing it to manipulate government policy and be lazy about safety issues. See https://www.thedailybeast.com/boeing-gets-300-tariff-on-competitor-after-cozying-up-to-trump?ref=scroll Others focus on Boeing’s market power, because Boeing shares with Airbus an international role as one of only two competitors in major commercial airplane markets.
Have antitrust enforcers done enough to control Boeing? A hard question about enforcement against Boeing is whether it should be broken up based on the sort of “no-fault” analysis offered by Elizabeth Warren with regard to Google, Amazon, and Facebook. She said that “my administration will make big, structural changes to the tech sector to promote more competition — including breaking up Amazon, Facebook, and Google.” See https://medium.com/@teamwarren/heres-how-we-can-break-up-big-tech-9ad9e0da324c
A short answer to the “no-fault” break up question is that U.S. enforcers do not have authority to break up large companies on a “no-fault” basis. U.S. enforcers must go to court and prove an antitrust violation before applying a remedy. New legislation of the kind proposed by Elizabeth Warren would change that, but even under a no-fault standard significant analysis of market facts would be required before imposing a remedy.
Merger enforcement is a different story. Whether antitrust enforcement agencies have taken sufficient action with regard to merger enforcement is a question that applies both to U.S. and European enforcers.
Respected Washington Post business analyst Steven Pearlstein pointed out some months ago that “Boeing and Airbus have done what desperate duopolists invariably try to do — buy up their potential competitors.” See https://www.washingtonpost.com/news/wonk/wp/2018/04/25/boeing-and-airbus-the-new-super-duopoly/?noredirect=on&utm_term=.3e773f3197c7
Pearlstein explains that there have been two duopolies in the commercial aircraft business. There is the market for large jets — roughly speaking, those with 140 to 400 seats and a range of 3,500 to 8,000 miles, dominated by Boeing and Airbus. And there is the market for smaller “regional” jets with 40 to 90 seats, used on shorter flights to secondary cities — a market dominated by Bombardier and Brazil’s Embraer: “Until recently, there was little or no overlap in the two markets and the duopolies had settled into a comfortable, at times cooperative, coexistence.
But when the world’s airlines started to show interest in buying planes with 100 to 150 seats, Bombardier and Embraer saw an opportunity to extend their product lines in ways that, for the first time, would put them in a position to steal business away from Boeing and Airbus, which had not fundamentally redesigned their smaller single-aisle planes in decades.”
Pearlstein says that Boeing wanted to prevent Bombardier from gaining a toehold in the American market, and Boeing did so by offering to sell the smallest version of its 737 for a very low price, edging out Bombardier and Embraer for some U.S. sales. Bombardier responded in kind with some very low prices, and snagged some U.S. orders.
After Boeing successfully brought to the U.S. Commerce Department a below-cost pricing complaint against Bombardier, Bombardier formed a joint venture with Airbus. As a result, “Not only could Bombardier now enter the U.S. market with a sleek new fuel-efficient plane against which Boeing could offer no alternative — at least not without undermining its pricing for its smallest 737s — but it also had unwittingly strengthened the market position of its archrival, Airbus.”
So Boeing responded in kind and began negotiations to buy the commercial aircraft division of Embraer. The deal creates a joint venture combining commercial jet operations in which Boeing would retain 80 percent control. Press reports indicate that in February, 2019, Embraer shareholders approved the deal. See https://www.upi.com/Embraer-shareholders-approve-sale-to-Boeing/4721551205060/
Pearlstein’s take is that what were once two duopolies in the global market for commercial jets will morph into one super duopoly. Pearlstein was not happy about the response of antitrust enforcers: “Antitrust laws, of course, are meant to prevent mergers that substantially reduce competition, particularly in industries such as this one where there are already only a few competitors and high barriers for any new players to enter. What’s missing in this case, as so many others, are regulators or judges willing to aggressively enforce those laws and adapt them to a globalized high-tech economy where winner-take-all competition is more the rule than the exception.”
Recent safety issues with Boeing aircraft bring Pearlstein’s questions about antitrust enforcement into sharper focus.
This posting is by Don Allen Resnikoff, who is responsible for its content
Some see Boeing as a corporate giant with too much political and economic muscle, allowing it to manipulate government policy and be lazy about safety issues. See https://www.thedailybeast.com/boeing-gets-300-tariff-on-competitor-after-cozying-up-to-trump?ref=scroll Others focus on Boeing’s market power, because Boeing shares with Airbus an international role as one of only two competitors in major commercial airplane markets.
Have antitrust enforcers done enough to control Boeing? A hard question about enforcement against Boeing is whether it should be broken up based on the sort of “no-fault” analysis offered by Elizabeth Warren with regard to Google, Amazon, and Facebook. She said that “my administration will make big, structural changes to the tech sector to promote more competition — including breaking up Amazon, Facebook, and Google.” See https://medium.com/@teamwarren/heres-how-we-can-break-up-big-tech-9ad9e0da324c
A short answer to the “no-fault” break up question is that U.S. enforcers do not have authority to break up large companies on a “no-fault” basis. U.S. enforcers must go to court and prove an antitrust violation before applying a remedy. New legislation of the kind proposed by Elizabeth Warren would change that, but even under a no-fault standard significant analysis of market facts would be required before imposing a remedy.
Merger enforcement is a different story. Whether antitrust enforcement agencies have taken sufficient action with regard to merger enforcement is a question that applies both to U.S. and European enforcers.
Respected Washington Post business analyst Steven Pearlstein pointed out some months ago that “Boeing and Airbus have done what desperate duopolists invariably try to do — buy up their potential competitors.” See https://www.washingtonpost.com/news/wonk/wp/2018/04/25/boeing-and-airbus-the-new-super-duopoly/?noredirect=on&utm_term=.3e773f3197c7
Pearlstein explains that there have been two duopolies in the commercial aircraft business. There is the market for large jets — roughly speaking, those with 140 to 400 seats and a range of 3,500 to 8,000 miles, dominated by Boeing and Airbus. And there is the market for smaller “regional” jets with 40 to 90 seats, used on shorter flights to secondary cities — a market dominated by Bombardier and Brazil’s Embraer: “Until recently, there was little or no overlap in the two markets and the duopolies had settled into a comfortable, at times cooperative, coexistence.
But when the world’s airlines started to show interest in buying planes with 100 to 150 seats, Bombardier and Embraer saw an opportunity to extend their product lines in ways that, for the first time, would put them in a position to steal business away from Boeing and Airbus, which had not fundamentally redesigned their smaller single-aisle planes in decades.”
Pearlstein says that Boeing wanted to prevent Bombardier from gaining a toehold in the American market, and Boeing did so by offering to sell the smallest version of its 737 for a very low price, edging out Bombardier and Embraer for some U.S. sales. Bombardier responded in kind with some very low prices, and snagged some U.S. orders.
After Boeing successfully brought to the U.S. Commerce Department a below-cost pricing complaint against Bombardier, Bombardier formed a joint venture with Airbus. As a result, “Not only could Bombardier now enter the U.S. market with a sleek new fuel-efficient plane against which Boeing could offer no alternative — at least not without undermining its pricing for its smallest 737s — but it also had unwittingly strengthened the market position of its archrival, Airbus.”
So Boeing responded in kind and began negotiations to buy the commercial aircraft division of Embraer. The deal creates a joint venture combining commercial jet operations in which Boeing would retain 80 percent control. Press reports indicate that in February, 2019, Embraer shareholders approved the deal. See https://www.upi.com/Embraer-shareholders-approve-sale-to-Boeing/4721551205060/
Pearlstein’s take is that what were once two duopolies in the global market for commercial jets will morph into one super duopoly. Pearlstein was not happy about the response of antitrust enforcers: “Antitrust laws, of course, are meant to prevent mergers that substantially reduce competition, particularly in industries such as this one where there are already only a few competitors and high barriers for any new players to enter. What’s missing in this case, as so many others, are regulators or judges willing to aggressively enforce those laws and adapt them to a globalized high-tech economy where winner-take-all competition is more the rule than the exception.”
Recent safety issues with Boeing aircraft bring Pearlstein’s questions about antitrust enforcement into sharper focus.
This posting is by Don Allen Resnikoff, who is responsible for its content
The 747-MAX problem as a design problem more than a software problem
Editor's note: A number of experts have commented publicly that the stability problem with the 747-max is primarily a design problem to which a problematical software patch was applied. Putting a larger and heavier (and more efficient) engine on the old 747 design was a problem because of lack of ground clearance if the engine was placed in the traditional position. The solution could have been a new design, as it was for the Airbus 320, but Boeing did not choose that solution. Instead it mounted the new bigger engine on the old design 747 further forward and higher to solve the ground clearance issue. The result was lowered stability, which was addressed with a software patch that has proved to be troublesome. Following is a published discussion that expresses that opinion in language that is relatively clear and free of engineering jargon. DAR
The new 737 MAX 8 and MAX 9 aircraft don’t fly quite like the old 737 Next Generation (737NG) series. Where the old planes were very stable in flight, the new 737 MAX is less so. This is the result of the placement of the new LEAP 1-B engines, which required an adjustment to the design of the plane to accommodate their increased physical size.
Simply put, the LEAP 1-B engines are larger, and they could not be simply swapped with the existing 737 engines. Boeing engineers had to move the point at which the engines attach to the wing, and this changes everything.
Moving the engine from its current position destabilizes the aircraft at in pitch (essentially the up and down movement of the nose). When the aircraft is in normal flight with a low pitch / angle of attack, it should fly basically just like the old 737s. However, when the pitch is increased, the engines themselves provide extra lift. The force of this lift is now applied forward of the center of gravity of the aircraft, due to the change in position of the engine, which in turn can cause the nose of the plane to pitch upward even more. This could cause the aircraft to swing into too high of an angle of attack and subsequently stall.
So it would appear that the 737 MAX 8 flies just fine in normal flight, but it is less stable in when flown at a high angle of attack, which is not good. This is a marked difference from its predecessor 737s.
The angle of attack (AOA) sensor and MCAS system in the 737 MAX is what Boeing designed to guard against a stall, kicking in an automatic “trim” if the aircraft begins to approach too high an AOA. But what if this sensor is faulty? This sensor failure is what contributed to the Lion Air crash back in October. Oddly, Boeing placed two sensors on the aircraft, one on each side of the nose, but the MCAS system only ever receives input from one at a time. If the one sensor fails, the whole system is in jeopardy.
Is Boeing using software to correct a flawed design?This is my biggest worry. As I mentioned, the old 737NG design is very stable, and the aircraft has proved to be incredibly safe over many, many years of operation and an insane number of operating cycles. It is no wonder that it is the most popular commercial jet aircraft ever manufactured.
But the new design isn’t as stable as the old design, with the previously mentioned change in the engine placement. My worry is that Boeing chose to bank on this design and a potential inherent flaw, providing a patch using a new software system rather than going back and changing the actual design of the aircraft itself. Banking on a software system that is unfamiliar to pilots (who are going to expect the new 737 flies just like the old one) was a very poor choice in my opinion. To top it off, the new MCAS system was not properly explained to pilots, and they received no training on it. Boeing provided little to no documentation on MCAS.
Taking a step back, I find that “fixing” an aircraft stability problem through the use of software is a dubious decision at best.
Excerpt from: https://www.pointswithacrew.com/can-boeing-fix-a-potentially-faulty-737-max-design-with-software/
The author is Dan Miller, who frequently writes on travel, and offers travel advice. His email: dan@pointswithacrew.com.
Editor's note: A number of experts have commented publicly that the stability problem with the 747-max is primarily a design problem to which a problematical software patch was applied. Putting a larger and heavier (and more efficient) engine on the old 747 design was a problem because of lack of ground clearance if the engine was placed in the traditional position. The solution could have been a new design, as it was for the Airbus 320, but Boeing did not choose that solution. Instead it mounted the new bigger engine on the old design 747 further forward and higher to solve the ground clearance issue. The result was lowered stability, which was addressed with a software patch that has proved to be troublesome. Following is a published discussion that expresses that opinion in language that is relatively clear and free of engineering jargon. DAR
The new 737 MAX 8 and MAX 9 aircraft don’t fly quite like the old 737 Next Generation (737NG) series. Where the old planes were very stable in flight, the new 737 MAX is less so. This is the result of the placement of the new LEAP 1-B engines, which required an adjustment to the design of the plane to accommodate their increased physical size.
Simply put, the LEAP 1-B engines are larger, and they could not be simply swapped with the existing 737 engines. Boeing engineers had to move the point at which the engines attach to the wing, and this changes everything.
Moving the engine from its current position destabilizes the aircraft at in pitch (essentially the up and down movement of the nose). When the aircraft is in normal flight with a low pitch / angle of attack, it should fly basically just like the old 737s. However, when the pitch is increased, the engines themselves provide extra lift. The force of this lift is now applied forward of the center of gravity of the aircraft, due to the change in position of the engine, which in turn can cause the nose of the plane to pitch upward even more. This could cause the aircraft to swing into too high of an angle of attack and subsequently stall.
So it would appear that the 737 MAX 8 flies just fine in normal flight, but it is less stable in when flown at a high angle of attack, which is not good. This is a marked difference from its predecessor 737s.
The angle of attack (AOA) sensor and MCAS system in the 737 MAX is what Boeing designed to guard against a stall, kicking in an automatic “trim” if the aircraft begins to approach too high an AOA. But what if this sensor is faulty? This sensor failure is what contributed to the Lion Air crash back in October. Oddly, Boeing placed two sensors on the aircraft, one on each side of the nose, but the MCAS system only ever receives input from one at a time. If the one sensor fails, the whole system is in jeopardy.
Is Boeing using software to correct a flawed design?This is my biggest worry. As I mentioned, the old 737NG design is very stable, and the aircraft has proved to be incredibly safe over many, many years of operation and an insane number of operating cycles. It is no wonder that it is the most popular commercial jet aircraft ever manufactured.
But the new design isn’t as stable as the old design, with the previously mentioned change in the engine placement. My worry is that Boeing chose to bank on this design and a potential inherent flaw, providing a patch using a new software system rather than going back and changing the actual design of the aircraft itself. Banking on a software system that is unfamiliar to pilots (who are going to expect the new 737 flies just like the old one) was a very poor choice in my opinion. To top it off, the new MCAS system was not properly explained to pilots, and they received no training on it. Boeing provided little to no documentation on MCAS.
Taking a step back, I find that “fixing” an aircraft stability problem through the use of software is a dubious decision at best.
Excerpt from: https://www.pointswithacrew.com/can-boeing-fix-a-potentially-faulty-737-max-design-with-software/
The author is Dan Miller, who frequently writes on travel, and offers travel advice. His email: dan@pointswithacrew.com.
Elizabeth Warren on antitrust for farmers
https://medium.com/@teamwarren/leveling-the-playing-field-for-americas-family-farmers-823d1994f067
Farmers are caught in a vise, but the squeeze on family farms isn’t inevitable. We can make better policy choices — and we can begin by leveling the playing field for America’s family farmers.
Tackling Consolidation
To start, we must address consolidation in the agriculture sector, which is leaving family farmers with fewer choices, thinner margins, and less independence.
Federal regulators have allowed multinational companies to crush competition and seize control over key markets. Over the last few decades, giant agribusinesses have grown bigger and bigger. They’ve merged horizontally, like Dow-Dupont and Syngenta-ChemChina. And they’ve expanded vertically.
Tyson, for example, controls just about every aspect of bringing chicken to market — feed, slaughter, trucking — everything except owning the farms themselves. Chicken farmers have gotten locked into a “contract farming” system in which they take on huge risks — loading up on debts to build and upgrade facilities — while remaining wholly dependent on Tyson for everything from receiving chicks to buying feed to selling the grown broilers.
The result of mergers and expansions is immense market power. The top four meat processing companies have 53% market share. The three big chicken companies have 90% market share. The two biggest seed companies, Monsanto and DuPont, had 71% of the corn seed market in 2015 — before Monsanto merged with Bayer and DuPont merged with Dow. According toconservative estimates, the newly merged Bayer-Monsanto by itself will control “more than 37 percent of the U.S. vegetable seed market” overall, and will control more than half of the market for some vegetables.
Mergers mean that farmers have fewer and fewer choices for buying and selling, while vertical integration has meant that big agribusinesses face less competition throughout the chain and thus capture more and more of the profits. The result is that farmers are getting a record-low amount of every dollar Americans spend on food, food prices aren’t going down, and agribusiness CEOs and other corporate executives are raking it in. The CEO of the Chinese group that owns Smithfield -- a massive meat processing company -- made $291 million in 2017 alone.
I will tackle consolidation in the agriculture and farming sector head on and break the stranglehold a handful of companies have over the market. Here’s how:
First, I will appoint trustbusters to review -- and reverse -- anti-competitive mergers, including the recent Bayer-Monsanto merger that should never have been approved. I opposed this merger from the start and was deeply disappointed to see the Trump Administration approve it earlier this year. l will appoint regulators at the Federal Trade Commission and the Department of Justice who are serious about using the tools they have to produce competitive markets and who are committed to reviewing recent mergers in the agriculture sector and breaking up companies where mergers have reduced competition.
Second, my team will be committed to breaking up big agribusinesses that have become vertically integrated and that control more and more of the market. The Department of Justice has not revised its guidelines on vertical mergers in 35 years. And in that time, we have seen merger after merger linking together every aspect of the chain in farming. We do not want to see other sectors come to resemble the chicken sector. My administration will bring vertical integration cases to break up integrated agribusinesses.
Consolidation in agriculture is just part of a broader trend of consolidation that has hurt family farmers. Consolidation in the transportation sector has made it harder for farmers to deliver their goods and harder for rural areas to compete economically. Consolidation in the banking sector has hurt community banks and made it more difficult for small businesses and farms to get loans. Consolidation in the healthcare sector has cut off many rural communities from high-quality and accessible care. My administration will prioritize competition and reverse these trends.
But it all starts with attacking consolidation in the agriculture sector head on. We must give family farmers more options and more bargaining power in the marketplace so they can build more economic security.
https://medium.com/@teamwarren/leveling-the-playing-field-for-americas-family-farmers-823d1994f067
Farmers are caught in a vise, but the squeeze on family farms isn’t inevitable. We can make better policy choices — and we can begin by leveling the playing field for America’s family farmers.
Tackling Consolidation
To start, we must address consolidation in the agriculture sector, which is leaving family farmers with fewer choices, thinner margins, and less independence.
Federal regulators have allowed multinational companies to crush competition and seize control over key markets. Over the last few decades, giant agribusinesses have grown bigger and bigger. They’ve merged horizontally, like Dow-Dupont and Syngenta-ChemChina. And they’ve expanded vertically.
Tyson, for example, controls just about every aspect of bringing chicken to market — feed, slaughter, trucking — everything except owning the farms themselves. Chicken farmers have gotten locked into a “contract farming” system in which they take on huge risks — loading up on debts to build and upgrade facilities — while remaining wholly dependent on Tyson for everything from receiving chicks to buying feed to selling the grown broilers.
The result of mergers and expansions is immense market power. The top four meat processing companies have 53% market share. The three big chicken companies have 90% market share. The two biggest seed companies, Monsanto and DuPont, had 71% of the corn seed market in 2015 — before Monsanto merged with Bayer and DuPont merged with Dow. According toconservative estimates, the newly merged Bayer-Monsanto by itself will control “more than 37 percent of the U.S. vegetable seed market” overall, and will control more than half of the market for some vegetables.
Mergers mean that farmers have fewer and fewer choices for buying and selling, while vertical integration has meant that big agribusinesses face less competition throughout the chain and thus capture more and more of the profits. The result is that farmers are getting a record-low amount of every dollar Americans spend on food, food prices aren’t going down, and agribusiness CEOs and other corporate executives are raking it in. The CEO of the Chinese group that owns Smithfield -- a massive meat processing company -- made $291 million in 2017 alone.
I will tackle consolidation in the agriculture and farming sector head on and break the stranglehold a handful of companies have over the market. Here’s how:
First, I will appoint trustbusters to review -- and reverse -- anti-competitive mergers, including the recent Bayer-Monsanto merger that should never have been approved. I opposed this merger from the start and was deeply disappointed to see the Trump Administration approve it earlier this year. l will appoint regulators at the Federal Trade Commission and the Department of Justice who are serious about using the tools they have to produce competitive markets and who are committed to reviewing recent mergers in the agriculture sector and breaking up companies where mergers have reduced competition.
Second, my team will be committed to breaking up big agribusinesses that have become vertically integrated and that control more and more of the market. The Department of Justice has not revised its guidelines on vertical mergers in 35 years. And in that time, we have seen merger after merger linking together every aspect of the chain in farming. We do not want to see other sectors come to resemble the chicken sector. My administration will bring vertical integration cases to break up integrated agribusinesses.
Consolidation in agriculture is just part of a broader trend of consolidation that has hurt family farmers. Consolidation in the transportation sector has made it harder for farmers to deliver their goods and harder for rural areas to compete economically. Consolidation in the banking sector has hurt community banks and made it more difficult for small businesses and farms to get loans. Consolidation in the healthcare sector has cut off many rural communities from high-quality and accessible care. My administration will prioritize competition and reverse these trends.
But it all starts with attacking consolidation in the agriculture sector head on. We must give family farmers more options and more bargaining power in the marketplace so they can build more economic security.
From DMN: AMLC Songwriters Blast Major Music Publishers Over Wrongful Royalty Claims — Here’s Their Statement
Once the MMA goes into effect, where will the $1.2 billion in ‘black box’ royalties go?
The story continues here. https://www.digitalmusicnews.com/2019/04/07/music-royalties-claims-publishers/
Once the MMA goes into effect, where will the $1.2 billion in ‘black box’ royalties go?
The story continues here. https://www.digitalmusicnews.com/2019/04/07/music-royalties-claims-publishers/
From DMN: Google/Alphabet Acquiring Spotify In $43.4 Billion Cash, Equity Deal
Google/Alphabet is announcing its acquisition of Spotify in a deal valued at $43.4 billion in cash and equity.
The story continues here. https://www.digitalmusicnews.com/2019/04/01/google-alphabet-spotify-acquisition/
Google/Alphabet is announcing its acquisition of Spotify in a deal valued at $43.4 billion in cash and equity.
The story continues here. https://www.digitalmusicnews.com/2019/04/01/google-alphabet-spotify-acquisition/
From DCRA: Understanding Tenant's Rights Workshop
Thursday, April 4, 2019
5:30 pm – 7:30 pm
Department of Consumer & Regulatory Affairs
1100 4th Street SW, 2nd Floor, Room E-200, Washington, DC 20024
Register: dcrasbrc.ecenterdirect.com/events/47232
Join us for a workshop on understanding tenant's rights. The following topics will be covered:
Thursday, April 4, 2019
5:30 pm – 7:30 pm
Department of Consumer & Regulatory Affairs
1100 4th Street SW, 2nd Floor, Room E-200, Washington, DC 20024
Register: dcrasbrc.ecenterdirect.com/events/47232
Join us for a workshop on understanding tenant's rights. The following topics will be covered:
- Overview of tenant rights
- Business licensing process
- Complaint/proactive based inspections
- Common Housing Code violations
- Scheduling an inspection process
- Enforcement process
- Rights when applying for an apartment
- Understanding Tenant Opportunity to Purchase Act (TOPA)
- Importance of tenants forming an association and rights under TOPA
- Landlord/Tenant Court - how and when to file
Aaron Judge, poster boy for MLB unfair control of young player's salaries
Aaron Judge may be the biggest star on the largest stage in baseball and the New York Yankees’ top box-office draw since Derek Jeter. He also happens to be one of the team's lowest-paid players. Judge will earn $684,300 this season, or about $300,000 less than Los Angeles Dodgers ace Clayton Kershaw will earn for each start.
The 26-year-old Judge has been in the big leagues for two full seasons. The Yankees have all the power the first three years he’s in the big leagues, an independent salary arbitrator takes care of the next three years, and then he hits free agency.
It’s why Tampa Bay Rays ace Blake Snell got a mere $15,500 raise – $10,000 of that built in with a league-wide increase in the minimum salary – to $573,700, even after winning last year’s Cy Young award. It’s why the New York Mets are paying closer Edwin Diaz just $607,425, after he led the majors in saves. It’s why the Milwaukee Brewers renewed reliever Josh Hader at $687,600, despite his setting a major-league strikeout record for left-handed relievers.
From: https://www.usatoday.com/story/sports/mlb/columnist/bob-nightengale/2019/03/11/aaron-judge-yankees-salary-mlb/3129226002/
Aaron Judge may be the biggest star on the largest stage in baseball and the New York Yankees’ top box-office draw since Derek Jeter. He also happens to be one of the team's lowest-paid players. Judge will earn $684,300 this season, or about $300,000 less than Los Angeles Dodgers ace Clayton Kershaw will earn for each start.
The 26-year-old Judge has been in the big leagues for two full seasons. The Yankees have all the power the first three years he’s in the big leagues, an independent salary arbitrator takes care of the next three years, and then he hits free agency.
It’s why Tampa Bay Rays ace Blake Snell got a mere $15,500 raise – $10,000 of that built in with a league-wide increase in the minimum salary – to $573,700, even after winning last year’s Cy Young award. It’s why the New York Mets are paying closer Edwin Diaz just $607,425, after he led the majors in saves. It’s why the Milwaukee Brewers renewed reliever Josh Hader at $687,600, despite his setting a major-league strikeout record for left-handed relievers.
From: https://www.usatoday.com/story/sports/mlb/columnist/bob-nightengale/2019/03/11/aaron-judge-yankees-salary-mlb/3129226002/
Raiders move from Oakland to Las Vegas as antitrust? Raiders ask judge to throw out Oakland antitrust suit
The Raiders and NFL are asking a judge to toss out a lawsuit filed by Oakland, arguing the city’s claims “turn antitrust on its head” and are a “striking perversion of antitrust law.”
Attorneys for the team, league and its 31 other franchises laid out their legal arguments for the first time in court papers filed March 1. Spero is expected to rule on June 7 whether to dismiss the lawsuit. Both sides met for the first time in San Francisco before U.S. District Judge Joseph C. Spero on Friday afternoon.
Oakland filed suit in December, alleging the NFL and Raiders violated antitrust laws by approving the move to Las Vegas, and said doing so amounted to a group boycott of Oakland. Outside attorneys have taken the city’s case on a contingency basis, meaning it comes at no cost to the city. The city also alleges in its suit that the Raiders violated the league’s relocation policy by not seriously negotiating with Oakland and Hall of Famer Ronnie Lott’s group, which proposed to help finance a new stadium at the Coliseum.
But attorneys for the Raiders and NFL wrote that the competition between Las Vegas and Oakland was not a violation of antitrust laws, which are designed to promote competition and prohibit monopolies. The city did not suffer antitrust injury, the attorneys said, but rather “the injury flows from an increase in competition” and “another community’s willingness to make an offer better than Oakland’s.”
Full Content: Sports Naut https://sportsnaut.com/2019/03/raiders-nfl-asks-judge-to-throw-out-oakland-antitrust-lawsuit/
The Raiders and NFL are asking a judge to toss out a lawsuit filed by Oakland, arguing the city’s claims “turn antitrust on its head” and are a “striking perversion of antitrust law.”
Attorneys for the team, league and its 31 other franchises laid out their legal arguments for the first time in court papers filed March 1. Spero is expected to rule on June 7 whether to dismiss the lawsuit. Both sides met for the first time in San Francisco before U.S. District Judge Joseph C. Spero on Friday afternoon.
Oakland filed suit in December, alleging the NFL and Raiders violated antitrust laws by approving the move to Las Vegas, and said doing so amounted to a group boycott of Oakland. Outside attorneys have taken the city’s case on a contingency basis, meaning it comes at no cost to the city. The city also alleges in its suit that the Raiders violated the league’s relocation policy by not seriously negotiating with Oakland and Hall of Famer Ronnie Lott’s group, which proposed to help finance a new stadium at the Coliseum.
But attorneys for the Raiders and NFL wrote that the competition between Las Vegas and Oakland was not a violation of antitrust laws, which are designed to promote competition and prohibit monopolies. The city did not suffer antitrust injury, the attorneys said, but rather “the injury flows from an increase in competition” and “another community’s willingness to make an offer better than Oakland’s.”
Full Content: Sports Naut https://sportsnaut.com/2019/03/raiders-nfl-asks-judge-to-throw-out-oakland-antitrust-lawsuit/
Opinion: The "new" Apple Card relies on old and expensive payment system technology, processing by MasterCard
Payments using the new Apple credit card, a cousin to phone-based ApplePay, will be processed by MasterCard. So, in an important sense it is just another credit card, reinforcing the payment system approach of MasterCard and the Visa. Visa and MasterCard are, of course, the dominant global payment players in payment systems.
There are payment systems alternatives to Visa and MasterCard that are less expensive to use, potentially saving money for consumers, but they have not gained broad market acceptance.
One alternative uses Quick Response codes, or QR, a bar code format comprised of patterns of black squares on white background, capable of holding 300 times more data than traditional bar codes.
QR is widely used in China and some other countries for payment systems that bypass intermediaries like Visa and MasterCard. It is on the phones of more than 700 million smartphone owners.
Another alternative is CurrentC.
CurrentC is a payment alternative that was developed by large U.S. retailers who wish to eliminate payment intermediary payment networks such as those owned by Visa and MasterCard.
CurrentC uses the technology of the paperless electronic check. It uses “ACH” payment system technology to move money directly from the consumer’s bank account to the merchant’s or other payee’s account. The ACH Network provides an electronic funds transfer network for direct account-to-account consumer, business, and government payments. The ACH Network is governed by the not-for-profit Electronic Payments Association (“NACHA’) Operating Rules. See https://www.nacha.org/ach-network
It would seem that ACH based payment systems or QR systems have the potential to undermine the considerable power to charge high prices for electronic transactions that Visa and MasterCard exercise through the use of their networks. But at present, there appears to be little evidence of this occurring.
The adoption by Apple of old MasterCard processing technology will not help move the new alternative technologies.
https://www.barrons.com/articles/apple-card-is-a-modest-win-for-mastercard-says-a-wedbush-analyst-51553620183
This posting is by Don Allen Resnikoff, who takes responsibility for its content
Payments using the new Apple credit card, a cousin to phone-based ApplePay, will be processed by MasterCard. So, in an important sense it is just another credit card, reinforcing the payment system approach of MasterCard and the Visa. Visa and MasterCard are, of course, the dominant global payment players in payment systems.
There are payment systems alternatives to Visa and MasterCard that are less expensive to use, potentially saving money for consumers, but they have not gained broad market acceptance.
One alternative uses Quick Response codes, or QR, a bar code format comprised of patterns of black squares on white background, capable of holding 300 times more data than traditional bar codes.
QR is widely used in China and some other countries for payment systems that bypass intermediaries like Visa and MasterCard. It is on the phones of more than 700 million smartphone owners.
Another alternative is CurrentC.
CurrentC is a payment alternative that was developed by large U.S. retailers who wish to eliminate payment intermediary payment networks such as those owned by Visa and MasterCard.
CurrentC uses the technology of the paperless electronic check. It uses “ACH” payment system technology to move money directly from the consumer’s bank account to the merchant’s or other payee’s account. The ACH Network provides an electronic funds transfer network for direct account-to-account consumer, business, and government payments. The ACH Network is governed by the not-for-profit Electronic Payments Association (“NACHA’) Operating Rules. See https://www.nacha.org/ach-network
It would seem that ACH based payment systems or QR systems have the potential to undermine the considerable power to charge high prices for electronic transactions that Visa and MasterCard exercise through the use of their networks. But at present, there appears to be little evidence of this occurring.
The adoption by Apple of old MasterCard processing technology will not help move the new alternative technologies.
https://www.barrons.com/articles/apple-card-is-a-modest-win-for-mastercard-says-a-wedbush-analyst-51553620183
This posting is by Don Allen Resnikoff, who takes responsibility for its content
Baltimore files antitrust suit against 10 major banks that allegedly inflated bond interest rates
Baltimore is suing 10 major banks, alleging they illegally inflated interest rates for particular bonds for public works, overcharging Baltimore and other municipalities by billions of dollars, reported Reuters.
The city is seeking class-action status for the federal antitrust lawsuit, claiming the banks inflated costs for the city and other local governments, which Baltimore seeks to represent. That takes money away that could be spent on schools, police, roads, sewer lines and the like.
Baltimore, which has issued more than US$260 million of the bonds, alleges the banks “conspired in a coordinated and confidential scheme” from at least August 2007 to June 2016 to collect billions in unearned fees from the city and others on the bonds, which are used to pay for major, long-term city infrastructure projects.
Full Content: Reuters https://www.reuters.com/article/usa-baltimore-banks/baltimore-alleges-big-banks-colluded-on-municipal-securities-rates-idUSL1N21D1WC
Baltimore is suing 10 major banks, alleging they illegally inflated interest rates for particular bonds for public works, overcharging Baltimore and other municipalities by billions of dollars, reported Reuters.
The city is seeking class-action status for the federal antitrust lawsuit, claiming the banks inflated costs for the city and other local governments, which Baltimore seeks to represent. That takes money away that could be spent on schools, police, roads, sewer lines and the like.
Baltimore, which has issued more than US$260 million of the bonds, alleges the banks “conspired in a coordinated and confidential scheme” from at least August 2007 to June 2016 to collect billions in unearned fees from the city and others on the bonds, which are used to pay for major, long-term city infrastructure projects.
Full Content: Reuters https://www.reuters.com/article/usa-baltimore-banks/baltimore-alleges-big-banks-colluded-on-municipal-securities-rates-idUSL1N21D1WC
Squire Patton Boggs on John Oliver rant on robocalls: laugh but verify
https://tcpaworld.com/2019/03/13/fact-checking-john-olivers-robocall-bit-it-was-hilarious-but-was-it-accurate-tcpaworld-com-breaks-it-down/
[If you disagree with the SPB critique, just give them a call, or many calls. DR]
https://tcpaworld.com/2019/03/13/fact-checking-john-olivers-robocall-bit-it-was-hilarious-but-was-it-accurate-tcpaworld-com-breaks-it-down/
[If you disagree with the SPB critique, just give them a call, or many calls. DR]
From Public Citizen
FTC and CFPB report on FDCPA activities
Posted: 26 Mar 2019 06:53 AM PDT
Last week, the Federal Trade Commission and the Consumer Financial Protection Bureau reported on their 2018 activities to administer the Fair Debt Collection Practices Act. The report highlights both agencies’ law enforcement, education and public outreach, and policy initiatives.
The report is here. https://files.consumerfinance.gov/f/documents/cfpb_fdcpa_annual-report-congress_03-2019.pdf
FTC and CFPB report on FDCPA activities
Posted: 26 Mar 2019 06:53 AM PDT
Last week, the Federal Trade Commission and the Consumer Financial Protection Bureau reported on their 2018 activities to administer the Fair Debt Collection Practices Act. The report highlights both agencies’ law enforcement, education and public outreach, and policy initiatives.
The report is here. https://files.consumerfinance.gov/f/documents/cfpb_fdcpa_annual-report-congress_03-2019.pdf
The Southern District Complaint against Michael Avenatti
https://www.documentcloud.org/documents/5780634-U-S-v-Michael-Avenatti-Complaint.html
https://www.documentcloud.org/documents/5780634-U-S-v-Michael-Avenatti-Complaint.html
West Virginia uses consumer law to sue Catholic Diocese
A copy of the Complaint is here:https://ago.wv.gov/Documents/Diocese%20complaint.PDF
An excerpt from the Complaint:
The State of West Virginia, by and through its duly elected Attorney General, Patrick Morrisey (hereinafter "the State"), brings this action pursuant to the provisions of the West Virginia Consumer Credit and Protection Act, West Virginia Code § 46A-1-101, et seq., to redress the above-named Defendants' violations of the Consumer Credit and Protection Act. PARTIES
1. The State, by and through the Attorney General, is authorized to bring this action pursuant to the Consumer Credit and Protection Act, W. Va. Code § 46A- 1-101, et seq.
2. Defendant Diocese of Wheeling-Charleston (hereinafter "Diocese") is a non-profit organization operating and doing business at 1322 Eoff Street, Wheeling, West Virginia. The entire state of West Virginia lies within the Diocese's territory. The Diocese is a subdivision of the Archdiocese of Baltimore, Maryland, and also of the Roman Catholic Church, which is headed worldwide by Pope Francis.
3. Defendant Michael J. Bransfield is an individual who was Bishop of the Diocese from early 2005 through September 2018, and is sued in his capacity as Bishop of the Diocese during this time period. Title to diocesan property is held in the name of the Bishop. JURISDICTION AND VENUE
4. This Court has jurisdiction to hear this matter pursuant to Article VIII, Section 6 of the West Virginia Constitution, W. Va. Code § 51-2-2, and W. Va. Code § 53-5-3.
5. Venue is proper in this Court pursuant to W. Va. Code § 46A-7-114 and W. Va. Code § 56-1 -1(a)(6).
I. FACTS COMMON TO ALL COUNTS A. Procedural Facts
6. A Statewide Grand Jury Report issued by the State of Pennsylvania on August 14, 2018 identified hundreds of Roman Catholic Church priests who had abused one thousand or more children in six dioceses in Pennsylvania. One or more of the identified priests had also been employed in the Diocese.
7. The State commenced an investigation in the fall of 2018 to determine if other Catholic priests who were active or had been employed in West Virginia had been accused of sexually abusing children. The preliminary investigation of the Attorney General disclosed that 2 priests other than the ones identified in the Pennsylvania Grand Jury Report had worked in West Virginia and had been accused of sexual abuse of children.
8. The Diocese currently operates six high schools and 19 elementary schools in West Virginia, but has operated more in the past. Some parishes also operate pre-kindergarten day care facilities.
9. Based upon the foregoing, the Attorney General issued two formal investigative subpoenas ("Subpoenas") to the Diocese on October 12, 2018, and February 14, 2019, as authorized by the West Virginia Consumer Credit and Protection Act, W. Va. Code § 46A-7- 104(1). The Diocese responded to the Subpoenas in part and withheld documents based upon objections.
10. Although the State has not fully completed its investigation, due, in part, to the lack of cooperation from the Diocese, the facts learned and the documents disclosed allege the Diocese has engaged in unfair or deceptive acts or practices by failing to disclose to consumers of its educational and recreational services that it employed priests and laity who have sexually abused children, including an admitted abuser who the Diocese nevertheless allowed to work in a Catholic elementary school, in violation of the West Virginia Consumer Credit and Protection Act. W. Va. Code § 46A-1-101 et seq. (the "WVCCPA").
A copy of the Complaint is here:https://ago.wv.gov/Documents/Diocese%20complaint.PDF
An excerpt from the Complaint:
The State of West Virginia, by and through its duly elected Attorney General, Patrick Morrisey (hereinafter "the State"), brings this action pursuant to the provisions of the West Virginia Consumer Credit and Protection Act, West Virginia Code § 46A-1-101, et seq., to redress the above-named Defendants' violations of the Consumer Credit and Protection Act. PARTIES
1. The State, by and through the Attorney General, is authorized to bring this action pursuant to the Consumer Credit and Protection Act, W. Va. Code § 46A- 1-101, et seq.
2. Defendant Diocese of Wheeling-Charleston (hereinafter "Diocese") is a non-profit organization operating and doing business at 1322 Eoff Street, Wheeling, West Virginia. The entire state of West Virginia lies within the Diocese's territory. The Diocese is a subdivision of the Archdiocese of Baltimore, Maryland, and also of the Roman Catholic Church, which is headed worldwide by Pope Francis.
3. Defendant Michael J. Bransfield is an individual who was Bishop of the Diocese from early 2005 through September 2018, and is sued in his capacity as Bishop of the Diocese during this time period. Title to diocesan property is held in the name of the Bishop. JURISDICTION AND VENUE
4. This Court has jurisdiction to hear this matter pursuant to Article VIII, Section 6 of the West Virginia Constitution, W. Va. Code § 51-2-2, and W. Va. Code § 53-5-3.
5. Venue is proper in this Court pursuant to W. Va. Code § 46A-7-114 and W. Va. Code § 56-1 -1(a)(6).
I. FACTS COMMON TO ALL COUNTS A. Procedural Facts
6. A Statewide Grand Jury Report issued by the State of Pennsylvania on August 14, 2018 identified hundreds of Roman Catholic Church priests who had abused one thousand or more children in six dioceses in Pennsylvania. One or more of the identified priests had also been employed in the Diocese.
7. The State commenced an investigation in the fall of 2018 to determine if other Catholic priests who were active or had been employed in West Virginia had been accused of sexually abusing children. The preliminary investigation of the Attorney General disclosed that 2 priests other than the ones identified in the Pennsylvania Grand Jury Report had worked in West Virginia and had been accused of sexual abuse of children.
8. The Diocese currently operates six high schools and 19 elementary schools in West Virginia, but has operated more in the past. Some parishes also operate pre-kindergarten day care facilities.
9. Based upon the foregoing, the Attorney General issued two formal investigative subpoenas ("Subpoenas") to the Diocese on October 12, 2018, and February 14, 2019, as authorized by the West Virginia Consumer Credit and Protection Act, W. Va. Code § 46A-7- 104(1). The Diocese responded to the Subpoenas in part and withheld documents based upon objections.
10. Although the State has not fully completed its investigation, due, in part, to the lack of cooperation from the Diocese, the facts learned and the documents disclosed allege the Diocese has engaged in unfair or deceptive acts or practices by failing to disclose to consumers of its educational and recreational services that it employed priests and laity who have sexually abused children, including an admitted abuser who the Diocese nevertheless allowed to work in a Catholic elementary school, in violation of the West Virginia Consumer Credit and Protection Act. W. Va. Code § 46A-1-101 et seq. (the "WVCCPA").
Did D.C. Central Kitchen lose part of its DC contract to feed homeless to a higher bidder?
By Justin Wm. Moyer
March 18
A nonprofit that has provided meals for homeless people in the District for three decades has lost part of its government contract to another vendor and is questioning the award process.
D.C. Central Kitchen, founded in 1989, provides 3 million meals for homeless shelters, schools and nonprofits each year, according to its website. The organization lost part of its contract — funded by the D.C. Department of Human Services through the nonprofit Community Partnership for the Prevention of Homelessness — to Henry’s Soul Cafe, a caterer with locations on U Street and in Prince George’s County.
Washington City Paper first reported the contract changes.
In a statement, D.C. Central Kitchen chief executive Mike Curtin Jr. said the organization has worked for 30 years to provide healthy meals to residents of the city’s shelters.
“While the upheaval around our shelter food service contract is extremely challenging for our organization, we are far more concerned about how this contracting process failed to uphold our community’s values around transparency, health, sustainability, and creating good jobs for District residents,” the statement said. “We will persevere, as always, and hope this unfortunate outcome will inspire much-needed and long-overdue progress in our city’s approach to shelter nutrition programs.”
In a statement, D.C. Department of Human Services spokeswoman Dora Taylor-Lowe called the November selection of food vendors “an open, competitive process.” The agency didn’t respond to a request for comment Monday beyond the statement.
D.C. Council member Brianne K. Nadeau (D-Ward 1), who chairs the Committee on Human Services, declined to comment, as did Community Partnership.
D.C. Central Kitchen chief development officer Alexander Moore said the change meant the nonprofit’s contract shrank from about $1.8 million to $1 million a year. It had delivered up to 2,500 meals to 10 shelters each day under the contract but now delivers 800 meals to five shelters.
Moore said D.C. Central Kitchen underbid Henry’s — requesting reimbursement of $3.50 for a supper, for example, while Henry’s gets $5.18. Moore speculated that Henry’s may have won the contract because it is a certified business enterprise — a local business that receives preference in procurement.
“This was done in the least responsible, least transparent way possible,” he said. “There’s no reason to disadvantage us against a for-profit company. . . . We’ve created jobs and are keeping money right here.”
Henry’s Soul Cafe didn’t respond to requests for comment.
https://www.washingtonpost.com/local/dc-central-kitchen-loses-part-of-contract-to-feed-homeless/2019/03/18/3e81b0f8-473c-11e9-a14c-e5844465ff8a_story.html?utm_term=.180182304e11
The GAO on the Federal Aviation Administration's (FAA) process for certifying designs of transport aircraft to meet safety standards
A 1993 report focused on whether FAA staff are: (1) effectively involved in the certification process; and (2) competent in assessing the latest technologies. The GAO found that:
(1) FAA ability to evaluate and certify new aircraft technologies is questionable because, in response to an escalating workload, FAA has increasingly relied on manufacturers for safety certification;
(2) FAA has not clearly defined staff responsibilities or performance standards to ensure that staff are effectively involved in the certification process;
(3) aircraft manufacturers' technical expertise and commitment to safety have kept the number of design-related safety problems to a minimum;
(4) FAA efforts to increase its technical expertise and build an in-house team of experts to oversee the certification process may be flawed because FAA has not defined when these experts are to be involved in the certification process;
(5) although FAA has previously identified and attempted to address its certification staff training deficiencies, inadequacies remain because training programs do not develop staff members' competence in specific fields and the availability of technical courses remains limited; and (6) FAA plans to improve training and staff retention include new technical certification training programs and plans to create technical career paths for certification engineers; however, these programs may not be adequate to overcome current training and staff limitations.
- View Report (PDF) https://www.gao.gov/assets/160/153711.pdf
Subsequent GAO reports are ambiguous on the question of whether inadequacies noticed in 1993 have been fully addressed. It may be that the FAA has continued to rely on manufacturers for safety certification analysis. See the 2017 GAO report at https://www.gao.gov/assets/690/683649.pdf which talks about "continued progress" at the FAA.
A recent Wall Street Journal article referred to the " FAA’s longstanding reliance on using thousands of designated industry employees–rather than agency officials—to sign off on some safety-related regulatory matters." https://www.wsj.com/articles/steve-dickson-is-white-house-pick-as-permanent-faa-head-11553024733?mod=hp_major_pos7 That of course suggests that the problems of delegation of safety issues by the FAA to regulated companies has persisted.
Similarly, another recent WSJ article says: " The agency [FAA] for some time has been moving to delegate more responsibility to plane and equipment manufacturers for conducting detailed risk assessments on new or derivative products. Congress has been pushing FAA leaders in the same direction, partly to save federal dollars and partly to speed and streamline regulatory requirements for industry.
The NYT reports:
The 737 Max was one of the first commercial jets approved under new rules, which delegated more authority to Boeing than had been the case when most previous planes were certified. And the software system did not raise warnings during the approval process. Top F.A.A. officials, who are briefed on significant safety issues, were not aware of the software system, according to three people with knowledge of the process.
https://www.nytimes.com/2019/03/19/business/boeing-elaine-chao.html?module=inline
Posted by Don Allen Resnikoff
NYT Editorial:Avoid the mistakes of the past that led to bank failures
Excerpt:
Barely a decade has passed since the recklessness of major financial institutions helped to catalyze the largest economic crisis since the Great Depression. Many Americans have yet to recover their losses. Yet somehow, the lessons of the crisis already appear to be fading.
The government has loosened a number of the key strictures imposed on banks and other financial firms in the wake of the 2008 crisis, and more leniencies are in the pipeline. In particular, the government is allowing large banks to rely more on borrowed money as a source of funding, even as it has reduced scrutiny of their lending decisions.
https://www.nytimes.com/2019/03/20/opinion/trump-bank-regulation.html?action=click&module=Opinion&pgtype=Homepage
Excerpt:
Barely a decade has passed since the recklessness of major financial institutions helped to catalyze the largest economic crisis since the Great Depression. Many Americans have yet to recover their losses. Yet somehow, the lessons of the crisis already appear to be fading.
The government has loosened a number of the key strictures imposed on banks and other financial firms in the wake of the 2008 crisis, and more leniencies are in the pipeline. In particular, the government is allowing large banks to rely more on borrowed money as a source of funding, even as it has reduced scrutiny of their lending decisions.
https://www.nytimes.com/2019/03/20/opinion/trump-bank-regulation.html?action=click&module=Opinion&pgtype=Homepage
AAI Asks Antitrust Division to Reconsider Its Reversal on Standard-Essential Patents
In a letter to Assistant Attorney General Makan Delrahim, the American Antitrust Institute (AAI) asked the Antitrust Division to reconsider its withdrawal from its 2013 Joint Policy Statement with the Patent & Trademark Office (PTO) on Remedies for Standard Essential Patents (SEPs). The Policy Statement endorsed sensible limits on the International Trade Commission's issuance of exclusion orders, which ban imports of products into the United States if the products infringe a U.S. patent. It cautioned against such orders when the alleged infringer's products are compliant with industry standards and the patent holder has voluntarily committed to a standard-setting organization (SSO) to license the patent on reasonable and non-discriminatory (RAND) terms. The AAI letter also objects to the Division's heightened scrutiny of SSOs that clarify the meaning of RAND commitments in ways that supposedly favor product manufacturers but that are entirely consistent with patent law.
Read More https://www.antitrustinstitute.org/work-product/aai-asks-antitrust-division-to-reconsider-its-reversal-on-standard-essential-patents/
In a letter to Assistant Attorney General Makan Delrahim, the American Antitrust Institute (AAI) asked the Antitrust Division to reconsider its withdrawal from its 2013 Joint Policy Statement with the Patent & Trademark Office (PTO) on Remedies for Standard Essential Patents (SEPs). The Policy Statement endorsed sensible limits on the International Trade Commission's issuance of exclusion orders, which ban imports of products into the United States if the products infringe a U.S. patent. It cautioned against such orders when the alleged infringer's products are compliant with industry standards and the patent holder has voluntarily committed to a standard-setting organization (SSO) to license the patent on reasonable and non-discriminatory (RAND) terms. The AAI letter also objects to the Division's heightened scrutiny of SSOs that clarify the meaning of RAND commitments in ways that supposedly favor product manufacturers but that are entirely consistent with patent law.
Read More https://www.antitrustinstitute.org/work-product/aai-asks-antitrust-division-to-reconsider-its-reversal-on-standard-essential-patents/
Electrical engineer institute's new WiFi measures won’t get American national standard designation -- the sticking point seems to be concerns of large patent holders
11 March 2019. By Leah Nylen.
Two WiFi standards proposed by the Institute of Electrical and Electronics Engineers have failed to win the backing of a non-profit that accredits US standards. The American National Standards Institute didn’t offer any public reasoning for its rare disapproval, but the standards are the first it has reviewed since IEEE controversially changed it patent policy in 2015 over the objections of companies like Ericsson, Nokia and Qualcomm.
ANSI is a non-governmental body composed of businesses, trade associations and US agencies that accredits standards groups and coordinates US standards. The group describes itself as a “neutral forum” to promote standards policies and a “watchdog” for standards development.
In its March 1 newsletter, ANSI said it had disapproved two standards proposed by IEEE. Both of the proposed standards are amendments to IEEE’s primary WiFi standard, 802.11.
Susanah Doucet, an ANSI spokeswoman, confirmed the disapproval.
“It is not an everyday occurrence, but it does happen from time to time,” she said, adding that IEEE can seek to appeal within ANSI or modify the standard and submit it again.
The two IEEE standards — 802.11ah and 802.11ai — were the products of years of work and finalized within the standards group in 2017. The 802.11ah standard focuses on lower-energy consumption and connectivity for Internet of Things devices, while 802.11ai focuses on improving connectivity in dense environments such as stadiums and shopping malls.
The two standards were the first finalized under IEEE’s new patent policy, adopted in 2015. Under the new policy, IEEE agreed to place limits on the ability of patent holders to obtain injunctions embedded in its standards. The policy also required patent holders to make their technology available to component makers — as opposed to licensing only to end-device manufacturers — and stipulated that royalties should be based on the “smallest salable unit.”
Companies such as Cisco and Intel were staunch supporters of the change, while those with large patent portfolios such as Qualcomm and Ericsson were opposed. The US Department of Justice reviewed the change and declined to object on antitrust grounds.
After IEEE adopted the policy change, however, a number of companies declined to agree to license under the new terms, providing what is known as a negative letter of assurance. On the 802.11ah standard, Ericsson, Nokia and the Dutch telecommunication company KPN said they wouldn’t provide licenses under IEEE’s new patent policy. Ericsson and Nokia also declined for 802.11ai, according to IEEE documents.
Without ANSI’s approval, the two standards aren’t considered “American National Standards” and the group won’t promote their usage within international standards bodies, such as the International Standards Organization, or ISO.
IEEE spokesperson Monika Stickel said the group is reviewing the information ANSI provided and declined to comment on whether it would seek an appeal.
Source: https://mlexmarketinsight.com/insights-center/editors-picks/antitrust/cross-jurisdiction/electrical-engineer-institutes-new-wifi-measures-wont-get-american-national-standard-designation
11 March 2019. By Leah Nylen.
Two WiFi standards proposed by the Institute of Electrical and Electronics Engineers have failed to win the backing of a non-profit that accredits US standards. The American National Standards Institute didn’t offer any public reasoning for its rare disapproval, but the standards are the first it has reviewed since IEEE controversially changed it patent policy in 2015 over the objections of companies like Ericsson, Nokia and Qualcomm.
ANSI is a non-governmental body composed of businesses, trade associations and US agencies that accredits standards groups and coordinates US standards. The group describes itself as a “neutral forum” to promote standards policies and a “watchdog” for standards development.
In its March 1 newsletter, ANSI said it had disapproved two standards proposed by IEEE. Both of the proposed standards are amendments to IEEE’s primary WiFi standard, 802.11.
Susanah Doucet, an ANSI spokeswoman, confirmed the disapproval.
“It is not an everyday occurrence, but it does happen from time to time,” she said, adding that IEEE can seek to appeal within ANSI or modify the standard and submit it again.
The two IEEE standards — 802.11ah and 802.11ai — were the products of years of work and finalized within the standards group in 2017. The 802.11ah standard focuses on lower-energy consumption and connectivity for Internet of Things devices, while 802.11ai focuses on improving connectivity in dense environments such as stadiums and shopping malls.
The two standards were the first finalized under IEEE’s new patent policy, adopted in 2015. Under the new policy, IEEE agreed to place limits on the ability of patent holders to obtain injunctions embedded in its standards. The policy also required patent holders to make their technology available to component makers — as opposed to licensing only to end-device manufacturers — and stipulated that royalties should be based on the “smallest salable unit.”
Companies such as Cisco and Intel were staunch supporters of the change, while those with large patent portfolios such as Qualcomm and Ericsson were opposed. The US Department of Justice reviewed the change and declined to object on antitrust grounds.
After IEEE adopted the policy change, however, a number of companies declined to agree to license under the new terms, providing what is known as a negative letter of assurance. On the 802.11ah standard, Ericsson, Nokia and the Dutch telecommunication company KPN said they wouldn’t provide licenses under IEEE’s new patent policy. Ericsson and Nokia also declined for 802.11ai, according to IEEE documents.
Without ANSI’s approval, the two standards aren’t considered “American National Standards” and the group won’t promote their usage within international standards bodies, such as the International Standards Organization, or ISO.
IEEE spokesperson Monika Stickel said the group is reviewing the information ANSI provided and declined to comment on whether it would seek an appeal.
Source: https://mlexmarketinsight.com/insights-center/editors-picks/antitrust/cross-jurisdiction/electrical-engineer-institutes-new-wifi-measures-wont-get-american-national-standard-designation
FROM DMN
YouTube has come under fire for its vague requirements for Content ID claims. Critics says the system has been getting abused for years. This month, YouTube is making changes to its ContentID claims process.
YouTube wants everyone to rely on its all-encompassing ContentID, an automated system that can reference millions of songs, films, TV shows, audiobooks, and more to find matching content. ContentID trawls YouTube looking for instances in which a copyrighted work might have been used and notifies the original owner.
The copyright owner then has a few choices, including removing a video or simply monetizing it.
The new change will prevent content owners from filing a manual claim if ContentID has already discovered a claim on the same video.
YouTube revealed the new changes in a Help Center post for the site, noting that the changes were necessary for several reasons.
Manual flagging is not available to everyone on YouTube. It is typically reserved for multi-channel networks (MCNs) and other large entities. In a post informing these networks of the policies, YouTube says the change addresses dispute queue times.
“This change is intended, in part, to address feedback that you’d like to spend less time managing your dispute queue.”
Manual copyright claims will now require the copyright owner to provide timestamps to the copyrighted content.
Creators who have their videos flagged can remove the video and re-upload it, or dispute the content owner’s claim. YouTube will then decide who is right in the dispute.
'
If YouTube favors the YouTuber, then the content will be left alone. If YouTube finds the content owner has a legitimate claim, the YouTuber will receive a copyright strike.
YouTube says the changes will help uploaders better understand any copyright claims they do receive, while minimizing bogus demands.
Despite announcing the new feature through a Help Center post, YouTube has not given a timeframe for when the timestamps feature will be released.
https://www.digitalmusicnews.com/2019/03/21/youtube-contentid-changes/
YouTube has come under fire for its vague requirements for Content ID claims. Critics says the system has been getting abused for years. This month, YouTube is making changes to its ContentID claims process.
YouTube wants everyone to rely on its all-encompassing ContentID, an automated system that can reference millions of songs, films, TV shows, audiobooks, and more to find matching content. ContentID trawls YouTube looking for instances in which a copyrighted work might have been used and notifies the original owner.
The copyright owner then has a few choices, including removing a video or simply monetizing it.
The new change will prevent content owners from filing a manual claim if ContentID has already discovered a claim on the same video.
YouTube revealed the new changes in a Help Center post for the site, noting that the changes were necessary for several reasons.
Manual flagging is not available to everyone on YouTube. It is typically reserved for multi-channel networks (MCNs) and other large entities. In a post informing these networks of the policies, YouTube says the change addresses dispute queue times.
“This change is intended, in part, to address feedback that you’d like to spend less time managing your dispute queue.”
Manual copyright claims will now require the copyright owner to provide timestamps to the copyrighted content.
Creators who have their videos flagged can remove the video and re-upload it, or dispute the content owner’s claim. YouTube will then decide who is right in the dispute.
'
If YouTube favors the YouTuber, then the content will be left alone. If YouTube finds the content owner has a legitimate claim, the YouTuber will receive a copyright strike.
YouTube says the changes will help uploaders better understand any copyright claims they do receive, while minimizing bogus demands.
Despite announcing the new feature through a Help Center post, YouTube has not given a timeframe for when the timestamps feature will be released.
https://www.digitalmusicnews.com/2019/03/21/youtube-contentid-changes/
Challenging Monopolies in Court
Can there be encouraging points about the future of antitrust enforcement against monopolization? The expert panelists at a conference of the American Antitrust Institute held in the District of Columbia on March 14 were able to identify some. Inevitably there were conference themes that were less upbeat: there haven’t been a lot of big courtroom challenges to monopolization recently, and challenging monopolies in court is difficult. But there were also upbeat points.
First, antitrust enforcement against monopolies is not entirely dormant.
NY AG cases
Elinor Hoffman, a highly respected antitrust enforcer with the New York AG’s office, was able to point out that her office has pursued a series of successful monopolization cases, either independently or in coordination with others. Following are details of just one example, drawn from a New York AG press release:
A 2015 press release from the NY AG explains that the office resolved an antitrust lawsuit it brought in September 2014, and successfully prevented pharmaceutical manufacturer Allergan plc (previously named Actavis plc) from forcing Alzheimer’s patients to switch medications as part of an anticompetitive strategy designed to maintain high drug prices.
The background is that in February 2014, Allergan’s subsidiary Forest Laboratories announced a plan designed to impede competition from low cost generic drugs for its blockbuster Alzheimer’s drug Namenda IR. Forest’s plan was to withdraw Namenda IR from the market a few months before generic versions became available, in order to force Alzheimer’s patients to switch to a very similar drug manufactured by Forest that had a longer lasting patent – Namenda XR. Forest knew that once patients were forced to switch to the new drug, they would likely remain on that medication even after generics for Namenda IR entered the market, due to the practical difficulties of switching back. The tactic was expected to dramatically curtail the ability of generics to compete in the market, and to cost the public hundreds of millions – if not billions – of dollars in unnecessary drug costs.
In December 2014, a federal judge granted New York’s request for an injunction and prohibited Allergan from engaging in the controversial tactic – sometimes called a “forced switch” – which would have needlessly disrupted the treatment plans of these patients solely to protect corporate profits. The injunction protected competition and allowed low cost generic drugs to enter the market unimpeded.
The FTC case against Qualcomm
There was some suggestion at the conference that Europeans are more active than U.S. enforcers on matters of monopolization, and use “abuse of dominant position” standards for prosecution in Europe are more flexible that U.S. monopolization standards.
Panelist Maria Coppola of the U.S. Federal Trade Commission defended her agencies record. She pointed out, among other things, that the FTC’s action against Qualcomm is much broader than the European’s action.
The following detail is from a 2017 FTC press release about the FTC action:
The Federal Trade Commission filed a complaint in federal district court charging Qualcomm Inc. with using anticompetitive tactics to maintain its monopoly in the supply of a key semiconductor device used in cell phones and other consumer products. [https://www.ftc.gov/system/files/documents/cases/170117qualcomm_redacted_complaint.pdf]
Qualcomm is the world’s dominant supplier of baseband processors – devices that manage cellular communications in mobile products. The FTC alleges that Qualcomm has used its dominant position as a supplier of certain baseband processors to impose onerous and anticompetitive supply and licensing terms on cell phone manufacturers and to weaken competitors.
Qualcomm also holds patents that it has declared essential to industry standards that enable cellular connectivity. These standards were adopted by standard-setting organizations for the telecommunications industry, which include Qualcomm and many of its competitors. In exchange for having their patented technologies included in the standards, participants typically commit to license their patents on what are known as fair, reasonable, and non-discriminatory, or “FRAND,” terms.
When a patent holder that has made a FRAND commitment negotiates a license, ordinarily it is constrained by the fact that if the parties are unable to reach agreement, the patent holder may have to establish reasonable royalties in court.
According to the complaint, by threatening to disrupt cell phone manufacturers’ supply of baseband processors, Qualcomm obtains elevated royalties and other license terms for its standard-essential patents that manufacturers would otherwise reject. These royalties amount to a tax on the manufacturers’ use of baseband processors manufactured by Qualcomm’s competitors, a tax that excludes these competitors and harms competition. Increased costs imposed by this tax are passed on to consumers, the complaint alleges.
By excluding competitors, Qualcomm impedes innovation that would offer significant consumer benefits, including those that foster the increased interconnectivity of consumer products, vehicles, buildings, and other items commonly referred to as the Internet of Things.
The FTC has charged Qualcomm with violating the FTC Act. The complaint alleges that Qualcomm:
The Commission vote to file the complaint was 2-1. Commissioner Maureen K. Ohlhausen dissented and issued a statement. Both a public and sealed version of the complaint were filed in the U.S. District Court for the Northern District of California on January 17, 2017.
Private Class action
Panelist Kalpana Srinivasn of Susman and Godfrey LLP was able to speak about her firm’s private class action against Qualcomm. In September of this past year a federal District Court judge certified the case to move forward, explaining:
In sum, the Court finds that the proposed class members' interests weigh in favor of having this case litigated as a class action. In particular, the nature of Qualcomm's alleged overarching conduct and the desirability of concentrating the litigation in one proceeding weigh heavily in favor of finding that class treatment is superior to other methods of adjudication of the controversy. See Zinser, 253 F.3d at 1190-92. Nor do manageability concerns favor another form of adjudication. Therefore, Plaintiffs have satisfied the superiority requirement. Because Plaintiffs have also satisfied the predominance requirement, the Court GRANTS Plaintiffs' motion for class certification under Rule 23(b)(3).
See the full opinion at https://casetext.com/case/in-re-qualcomm-antitrust-litig-1
Antitrust in Court and the world outside of Court
Recently, the world outside of the courts included Elizabeth Warren discussing breaking up companies without use of courtroom litigation. Here is part of what she said in a recent article at https://medium.com/@teamwarren/heres-how-we-can-break-up-big-tech-9ad9e0da324c:
In this tradition, my administration would restore competition to the tech sector by taking two major steps:
First, by passing legislation that requires large tech platforms to be designated as “Platform Utilities” and broken apart from any participant on that platform.
**
Second, my administration would appoint regulators committed to reversing illegal and anti-competitive tech mergers.
Current antitrust laws empower federal regulators to break up mergers that reduce competition. I will appoint regulators who are committed to using existing tools to unwind anti-competitive mergers . . . .
Panelists at the AAI conference commented perceptively about alternatives to current courtroom efforts directed at monopolization, including proposals for “no-fault” break-up of monopolies following the Warren approach, proposals to adopt European abuse of dominant position standards, and others.
Among a number of interesting points made about alternatives was Richard Brunell’s point that proposals for “no-fault” enforcement from the 1970s were more nuanced than may now be commonly recognized.
Jon Liebowitz and others had interesting comments about potential for FTC Act Section 5, which broadly prohibits prohibits “unfair or deceptive acts or practices in or affecting commerce.”
Jon Baker, in a question from the floor, encouraged discussion comparing Elizabeth Warren’s proposals with courtroom litigation standards.
And, in an article discussing current antitrust reform proposals that was provided as part of the resource materials for the AAI conference, Harry First writes, in an open spirit purposefully and playfully evoking Woodstock (a large gathering of hippies that occurred some time ago):
Say what you will about Hipster antitrust, it has connected to broader political concerns, and that is for the good. A slogan of the Woodstock decade was “Power to the People.” It still works for antitrust, “Right On.”
Harry First’s article is at https://www.antitrustinstitute.org/wp-content/uploads/2018/12/Frist-Woodstock-Antitrust.pdf
Great credit for the excellent and interesting AAI program goes to organizers Randy Stutz and Richard Brunell
This posting is by Don Allen Resnikoff, who takes responsibility for its content.
Can there be encouraging points about the future of antitrust enforcement against monopolization? The expert panelists at a conference of the American Antitrust Institute held in the District of Columbia on March 14 were able to identify some. Inevitably there were conference themes that were less upbeat: there haven’t been a lot of big courtroom challenges to monopolization recently, and challenging monopolies in court is difficult. But there were also upbeat points.
First, antitrust enforcement against monopolies is not entirely dormant.
NY AG cases
Elinor Hoffman, a highly respected antitrust enforcer with the New York AG’s office, was able to point out that her office has pursued a series of successful monopolization cases, either independently or in coordination with others. Following are details of just one example, drawn from a New York AG press release:
A 2015 press release from the NY AG explains that the office resolved an antitrust lawsuit it brought in September 2014, and successfully prevented pharmaceutical manufacturer Allergan plc (previously named Actavis plc) from forcing Alzheimer’s patients to switch medications as part of an anticompetitive strategy designed to maintain high drug prices.
The background is that in February 2014, Allergan’s subsidiary Forest Laboratories announced a plan designed to impede competition from low cost generic drugs for its blockbuster Alzheimer’s drug Namenda IR. Forest’s plan was to withdraw Namenda IR from the market a few months before generic versions became available, in order to force Alzheimer’s patients to switch to a very similar drug manufactured by Forest that had a longer lasting patent – Namenda XR. Forest knew that once patients were forced to switch to the new drug, they would likely remain on that medication even after generics for Namenda IR entered the market, due to the practical difficulties of switching back. The tactic was expected to dramatically curtail the ability of generics to compete in the market, and to cost the public hundreds of millions – if not billions – of dollars in unnecessary drug costs.
In December 2014, a federal judge granted New York’s request for an injunction and prohibited Allergan from engaging in the controversial tactic – sometimes called a “forced switch” – which would have needlessly disrupted the treatment plans of these patients solely to protect corporate profits. The injunction protected competition and allowed low cost generic drugs to enter the market unimpeded.
The FTC case against Qualcomm
There was some suggestion at the conference that Europeans are more active than U.S. enforcers on matters of monopolization, and use “abuse of dominant position” standards for prosecution in Europe are more flexible that U.S. monopolization standards.
Panelist Maria Coppola of the U.S. Federal Trade Commission defended her agencies record. She pointed out, among other things, that the FTC’s action against Qualcomm is much broader than the European’s action.
The following detail is from a 2017 FTC press release about the FTC action:
The Federal Trade Commission filed a complaint in federal district court charging Qualcomm Inc. with using anticompetitive tactics to maintain its monopoly in the supply of a key semiconductor device used in cell phones and other consumer products. [https://www.ftc.gov/system/files/documents/cases/170117qualcomm_redacted_complaint.pdf]
Qualcomm is the world’s dominant supplier of baseband processors – devices that manage cellular communications in mobile products. The FTC alleges that Qualcomm has used its dominant position as a supplier of certain baseband processors to impose onerous and anticompetitive supply and licensing terms on cell phone manufacturers and to weaken competitors.
Qualcomm also holds patents that it has declared essential to industry standards that enable cellular connectivity. These standards were adopted by standard-setting organizations for the telecommunications industry, which include Qualcomm and many of its competitors. In exchange for having their patented technologies included in the standards, participants typically commit to license their patents on what are known as fair, reasonable, and non-discriminatory, or “FRAND,” terms.
When a patent holder that has made a FRAND commitment negotiates a license, ordinarily it is constrained by the fact that if the parties are unable to reach agreement, the patent holder may have to establish reasonable royalties in court.
According to the complaint, by threatening to disrupt cell phone manufacturers’ supply of baseband processors, Qualcomm obtains elevated royalties and other license terms for its standard-essential patents that manufacturers would otherwise reject. These royalties amount to a tax on the manufacturers’ use of baseband processors manufactured by Qualcomm’s competitors, a tax that excludes these competitors and harms competition. Increased costs imposed by this tax are passed on to consumers, the complaint alleges.
By excluding competitors, Qualcomm impedes innovation that would offer significant consumer benefits, including those that foster the increased interconnectivity of consumer products, vehicles, buildings, and other items commonly referred to as the Internet of Things.
The FTC has charged Qualcomm with violating the FTC Act. The complaint alleges that Qualcomm:
- Maintains a “no license, no chips” policy under which it will supply its baseband processors only on the condition that cell phone manufacturers agree to Qualcomm’s preferred license terms. The FTC alleges that this tactic forces cell phone manufacturers to pay elevated royalties to Qualcomm on products that use a competitor’s baseband processors. According to the Commission’s complaint, this is an anticompetitive tax on the use of rivals’ processors. “No license, no chips” is a condition that other suppliers of semiconductor devices do not impose. The risk of losing access to Qualcomm baseband processors is too great for a cell phone manufacturer to bear because it would preclude the manufacturer from selling phones for use on important cellular networks.
- Refuses to license standard-essential patents to competitors. Despite its commitment to license standard-essential patents on FRAND terms, Qualcomm has consistently refused to license those patents to competing suppliers of baseband processors.
- Extracted exclusivity from Apple in exchange for reduced patent royalties. Qualcomm precluded Apple from sourcing baseband processors from Qualcomm’s competitors from 2011 to 2016. Qualcomm recognized that any competitor that won Apple’s business would become stronger, and used exclusivity to prevent Apple from working with and improving the effectiveness of Qualcomm’s competitors.
The Commission vote to file the complaint was 2-1. Commissioner Maureen K. Ohlhausen dissented and issued a statement. Both a public and sealed version of the complaint were filed in the U.S. District Court for the Northern District of California on January 17, 2017.
Private Class action
Panelist Kalpana Srinivasn of Susman and Godfrey LLP was able to speak about her firm’s private class action against Qualcomm. In September of this past year a federal District Court judge certified the case to move forward, explaining:
In sum, the Court finds that the proposed class members' interests weigh in favor of having this case litigated as a class action. In particular, the nature of Qualcomm's alleged overarching conduct and the desirability of concentrating the litigation in one proceeding weigh heavily in favor of finding that class treatment is superior to other methods of adjudication of the controversy. See Zinser, 253 F.3d at 1190-92. Nor do manageability concerns favor another form of adjudication. Therefore, Plaintiffs have satisfied the superiority requirement. Because Plaintiffs have also satisfied the predominance requirement, the Court GRANTS Plaintiffs' motion for class certification under Rule 23(b)(3).
See the full opinion at https://casetext.com/case/in-re-qualcomm-antitrust-litig-1
Antitrust in Court and the world outside of Court
Recently, the world outside of the courts included Elizabeth Warren discussing breaking up companies without use of courtroom litigation. Here is part of what she said in a recent article at https://medium.com/@teamwarren/heres-how-we-can-break-up-big-tech-9ad9e0da324c:
In this tradition, my administration would restore competition to the tech sector by taking two major steps:
First, by passing legislation that requires large tech platforms to be designated as “Platform Utilities” and broken apart from any participant on that platform.
**
Second, my administration would appoint regulators committed to reversing illegal and anti-competitive tech mergers.
Current antitrust laws empower federal regulators to break up mergers that reduce competition. I will appoint regulators who are committed to using existing tools to unwind anti-competitive mergers . . . .
Panelists at the AAI conference commented perceptively about alternatives to current courtroom efforts directed at monopolization, including proposals for “no-fault” break-up of monopolies following the Warren approach, proposals to adopt European abuse of dominant position standards, and others.
Among a number of interesting points made about alternatives was Richard Brunell’s point that proposals for “no-fault” enforcement from the 1970s were more nuanced than may now be commonly recognized.
Jon Liebowitz and others had interesting comments about potential for FTC Act Section 5, which broadly prohibits prohibits “unfair or deceptive acts or practices in or affecting commerce.”
Jon Baker, in a question from the floor, encouraged discussion comparing Elizabeth Warren’s proposals with courtroom litigation standards.
And, in an article discussing current antitrust reform proposals that was provided as part of the resource materials for the AAI conference, Harry First writes, in an open spirit purposefully and playfully evoking Woodstock (a large gathering of hippies that occurred some time ago):
Say what you will about Hipster antitrust, it has connected to broader political concerns, and that is for the good. A slogan of the Woodstock decade was “Power to the People.” It still works for antitrust, “Right On.”
Harry First’s article is at https://www.antitrustinstitute.org/wp-content/uploads/2018/12/Frist-Woodstock-Antitrust.pdf
Great credit for the excellent and interesting AAI program goes to organizers Randy Stutz and Richard Brunell
This posting is by Don Allen Resnikoff, who takes responsibility for its content.
Tim Wu on Warren breakup proposals
Excerpt from Wired article:
LAST WEEK, PRESIDENTIAL candidate Senator Elizabeth Warren (D-Massachusetts) announced an ambitious plan to break up big tech companies like Google, Facebook, and Amazon and block them from selling their own products on their platforms.
Warren called out Facebook's acquisitions of Instagram and WhatsApp and Google's acquisition of online advertising giant DoubleClick as examples of the deals she'd like to see reversed.
**
WIRED spoke with Wu about how antitrust enforcement all but died in the US, and how leaders could bring it back. An edited transcript follows:
WIRED: What do you think of Senator Elizabeth Warren's proposal?
Tim Wu: Her proposal is aggressive but not crazy, I think. A good hard look at the mergers of the past decade is a big priority.
WIRED: The biggest impediment to antitrust enforcement now though is the courts. The Department of Justice sued to block AT&T’s acquisition of Time Warner and lost. Is this outside of elected officials' control at this point?
Wu: One problem is the priorities of not just the Republican Party but the Democratic Party. The Democrats get a turn now and then; the problem is that antitrust hasn't been given any weight. They need to screen for judges that care about economic justice. They need judges who are believers in robust enforcement of antitrust laws. I can't think of many judges like that who were appointed by Obama. Antitrust hasn't been a Democratic priority at all, and I think that has to change.
Warren's proposal strikes me as evidence that breakups, monopoly, and corporate concentration will be a 2020 issue.
I don't think it's crazy for Republicans to want some people like that too. It hasn't been their thing, they usually want people who are conservative all the way across the line. But the Republican Party has historically had more of a concern with promoting competition and preventing monopoly. The AT&T breakup started under Nixon and was completed under Reagan. People have almost forgotten that tradition.
Full interview article: https://www.wired.com/story/tim-wu-says-us-must-enforce-antitrust-laws/?CNDID=22877431&CNDID=22877431&bxid=MjM5Njc3NTA1Mzg2S0&hasha=63818d37ef32527bc50fd7b3eeb62882&hashb=a080f322dd48fe799a8c7787d567429bd9281dfb&mbid=nl_031119_daily_list1_p2&source=DAILY_NEWSLETTER&utm_brand=wired&utm_mailing=WIRED%20NL%20031119%20(1)&utm_medium=email&utm_source=nl
EU: Spotify files antitrust complaint against Apple
According to a reporte from Reuters, Spotify has filed a complaint with EU antitrust regulators against Apple, saying the iPhone maker unfairly limits rivals to its own Apple Music streaming service.
Spotify, which launched a year after the 2007 launch of the iPhone, said on Wednesday that Apple’s control of its App store deprived consumers of choice and rival providers of audio streaming services to the benefit of Apple Music, which began in 2015.
“Apple operates a platform that, for over a billion people around the world, is the gateway to the internet,” Spotify CEO Daniel Ek wrote in a blog post on Wednesday. “Apple is both the owner of the iOS platform and the App Store, and a competitor to services like Spotify. In theory, this is fine. But in Apple’s case, they continue to give themselves an unfair advantage at every turn.”
One of Spotify’s complaints is that it must choose between paying the 30 percent fee that Apple imposes on purchases made through its app store — which Ek says would “artificially inflate” the price of Spotify’s premium service so that it costs more than Apple Music — or accept technical limitations imposed by Apple restricting how it can improve its app or interact with customers.
Full Content: The Hill & Reuter
According to a reporte from Reuters, Spotify has filed a complaint with EU antitrust regulators against Apple, saying the iPhone maker unfairly limits rivals to its own Apple Music streaming service.
Spotify, which launched a year after the 2007 launch of the iPhone, said on Wednesday that Apple’s control of its App store deprived consumers of choice and rival providers of audio streaming services to the benefit of Apple Music, which began in 2015.
“Apple operates a platform that, for over a billion people around the world, is the gateway to the internet,” Spotify CEO Daniel Ek wrote in a blog post on Wednesday. “Apple is both the owner of the iOS platform and the App Store, and a competitor to services like Spotify. In theory, this is fine. But in Apple’s case, they continue to give themselves an unfair advantage at every turn.”
One of Spotify’s complaints is that it must choose between paying the 30 percent fee that Apple imposes on purchases made through its app store — which Ek says would “artificially inflate” the price of Spotify’s premium service so that it costs more than Apple Music — or accept technical limitations imposed by Apple restricting how it can improve its app or interact with customers.
Full Content: The Hill & Reuter
Buy American – musical instruments
I cherish my made-in-America upright tuba, made by the Olds company in California many years ago. I also cherish my euphonium (which is like a small tuba) made by the Conn company in Elkhart, Indiana many years ago. The Conn euphonium is very similar to the one I played in the Plainfield (N.J.) High School band. Olds, and Conn are among a number of revered American musical instrument companies that abandoned manufacturing in North America many years ago.
When I recently wanted a large tuba more suitable for amateur orchestras I now play in, the main practical choices were instruments made in China. They have prices I can afford. Beginning players and older amateurs like myself with budgets of three thousand dollars or less who want new tubas are as a practical matter limited to Chinese manufactured instruments. Of course, some used antique horns like my Olds and Conn can be purchased at low prices, especially if they have lots of dents in them, and are a partial alternative.
Musical instruments are a poster child for the observation that for many products a trade war with China that is based on tariffs will not bring manufacturing back to the U.S. It will just make Chinese imports more expensive for the U.S. consumer – effectively a tax. Take my large Chinese made tuba as an example. A Chinese made tuba is often a good but imperfect copy of a tuba made by a European company such as Miraphone. The German made Miraphone tuba copied by the maker of my Chinese made tuba has a selling price of more than $10,000. The difference in price between a European made tuba and the Chinese copy is so great that most students and adult amateurs will not switch from Chinese to European tubas even if tariffs push up prices 10% to 25% or more, perhaps from $2,500 to $3,500 for a particular instrument. A Chinese tuba selling for $3,500 does not compete with a similar if somewhat better European tuba that costs $11,000.
A tariff-driven price increase to a consumer for the Chinese tuba from, say, $2,500 to $3,500 is unlikely to be enough to encourage more American manufacturing of relatively low priced tubas that compete with the Chinese models. U.S. labor costs are likely to be too high to allow profitable manufacture in the U.S. of a tuba that sells at retail for $3,500. Manufacturing a tuba in the U.S. is likely to result in a product roughly as expensive as those made in Germany or the Czech Republic, because labor costs are comparable. (Actually, Czech made tubas are a little cheaper than German made.) Just as $11,000 tubas made in Europe do not compete with Chinese tubas costing $3,500, neither will $11,000 tubas made in the U.S. compete with $3,500 Chinese tubas. Students and penurious old amateurs will stay with the Chinese tubas even with the tariff driven price increase. A proof of the point is offered by an American company named Kanstul that has taken up manufacturing tubas in Los Angeles, California. It’s products remind players of products once made by the old York company in North America, but buying a Kanstul is expensive. Kanstuls compete in price in quality with expensive European tubas, not low end Chinese instruments.
Several U.S. companies make a business of importing low end Chinese musical instruments, selling to students and penurious old amateurs, adding value and boosting price somewhat by providing some quality control. They do a brisk business. Examples are Musicians Friend, Jim Laabs Music, and Mack Brass. A UK company called Wessex has a similar business, and has an interesting industry story of moving from a role as small importer of Chinese instruments to a big importer and then taking on some limited manufacturing.
The Wessex story is similar to the story of several American importers, and is told in an interesting if sometimes wandering blog by Founder and CEO Jonathan Hodgetts that is on the company website -- https://wessex-tubas.com/blogs/news/a-message-from-our-founder Mr. Hodgetts’ story reinforces the observation that tariffs will not bring manufacturing of low priced musical instruments back to the U.S. in any significant way.
Posting by Don Resnikoff, who takes responsibility for the content
I cherish my made-in-America upright tuba, made by the Olds company in California many years ago. I also cherish my euphonium (which is like a small tuba) made by the Conn company in Elkhart, Indiana many years ago. The Conn euphonium is very similar to the one I played in the Plainfield (N.J.) High School band. Olds, and Conn are among a number of revered American musical instrument companies that abandoned manufacturing in North America many years ago.
When I recently wanted a large tuba more suitable for amateur orchestras I now play in, the main practical choices were instruments made in China. They have prices I can afford. Beginning players and older amateurs like myself with budgets of three thousand dollars or less who want new tubas are as a practical matter limited to Chinese manufactured instruments. Of course, some used antique horns like my Olds and Conn can be purchased at low prices, especially if they have lots of dents in them, and are a partial alternative.
Musical instruments are a poster child for the observation that for many products a trade war with China that is based on tariffs will not bring manufacturing back to the U.S. It will just make Chinese imports more expensive for the U.S. consumer – effectively a tax. Take my large Chinese made tuba as an example. A Chinese made tuba is often a good but imperfect copy of a tuba made by a European company such as Miraphone. The German made Miraphone tuba copied by the maker of my Chinese made tuba has a selling price of more than $10,000. The difference in price between a European made tuba and the Chinese copy is so great that most students and adult amateurs will not switch from Chinese to European tubas even if tariffs push up prices 10% to 25% or more, perhaps from $2,500 to $3,500 for a particular instrument. A Chinese tuba selling for $3,500 does not compete with a similar if somewhat better European tuba that costs $11,000.
A tariff-driven price increase to a consumer for the Chinese tuba from, say, $2,500 to $3,500 is unlikely to be enough to encourage more American manufacturing of relatively low priced tubas that compete with the Chinese models. U.S. labor costs are likely to be too high to allow profitable manufacture in the U.S. of a tuba that sells at retail for $3,500. Manufacturing a tuba in the U.S. is likely to result in a product roughly as expensive as those made in Germany or the Czech Republic, because labor costs are comparable. (Actually, Czech made tubas are a little cheaper than German made.) Just as $11,000 tubas made in Europe do not compete with Chinese tubas costing $3,500, neither will $11,000 tubas made in the U.S. compete with $3,500 Chinese tubas. Students and penurious old amateurs will stay with the Chinese tubas even with the tariff driven price increase. A proof of the point is offered by an American company named Kanstul that has taken up manufacturing tubas in Los Angeles, California. It’s products remind players of products once made by the old York company in North America, but buying a Kanstul is expensive. Kanstuls compete in price in quality with expensive European tubas, not low end Chinese instruments.
Several U.S. companies make a business of importing low end Chinese musical instruments, selling to students and penurious old amateurs, adding value and boosting price somewhat by providing some quality control. They do a brisk business. Examples are Musicians Friend, Jim Laabs Music, and Mack Brass. A UK company called Wessex has a similar business, and has an interesting industry story of moving from a role as small importer of Chinese instruments to a big importer and then taking on some limited manufacturing.
The Wessex story is similar to the story of several American importers, and is told in an interesting if sometimes wandering blog by Founder and CEO Jonathan Hodgetts that is on the company website -- https://wessex-tubas.com/blogs/news/a-message-from-our-founder Mr. Hodgetts’ story reinforces the observation that tariffs will not bring manufacturing of low priced musical instruments back to the U.S. in any significant way.
Posting by Don Resnikoff, who takes responsibility for the content
Judge orders CVS/Aetna merger hearing
Judge Richard Leon of the US District Court for the District of Columbia, who has been asked to sign off on a government agreement that allowed CVS Health to buy health insurer Aetna, has ordered a hearing for April 5 on the matter.
The Judge issued the order on Thursday, March 14, saying that he wanted the hearing to discuss which witnesses—if any—should testify before he decides whether to approve the government’s deal with the companies.
The Justice Department approved the merger of CVS, a US pharmacy chain and benefits manager, and Aetna in October on condition that Aetna sell its Medicare prescription drug plan business to WellCare Health Plans.
Judges usually approve merger agreements that the government strikes with companies with little fanfare, but Leon has balked. In December, he said he was “less convinced” than the government that the asset sale to WellCare would resolve antitrust concerns.
Full Content: Reuters
Judge Richard Leon of the US District Court for the District of Columbia, who has been asked to sign off on a government agreement that allowed CVS Health to buy health insurer Aetna, has ordered a hearing for April 5 on the matter.
The Judge issued the order on Thursday, March 14, saying that he wanted the hearing to discuss which witnesses—if any—should testify before he decides whether to approve the government’s deal with the companies.
The Justice Department approved the merger of CVS, a US pharmacy chain and benefits manager, and Aetna in October on condition that Aetna sell its Medicare prescription drug plan business to WellCare Health Plans.
Judges usually approve merger agreements that the government strikes with companies with little fanfare, but Leon has balked. In December, he said he was “less convinced” than the government that the asset sale to WellCare would resolve antitrust concerns.
Full Content: Reuters
Jon Baker on Restoring a Competitive Economy
At a moment when political progressives like Bernie Sanders, Elizabeth Warren, Amy Klobuchar, and Tim Wu are addressing the general public on the politics of antitrust and competition policy, respected American University Law Professor Jonathan Baker has authored a book coming out in May: “The Antitrust Paradigm; Restoring a Competitive Economy.” As the book’s title suggests, Baker shares the interest expressed by the politicians in making the American economy more competitive, but his focus includes a lot of attention to improving antitrust litigation. Baker brings authority to the discussion as a respected economist with substantial real life experience at the Federal Trade Commission and the Federal Communications Commission.
Recently Baker presided over an American University Law School panel of experts who were invited to react to an advance copy of his book. Baker previewed his book’s contents. Part 1 of the book will talk about antitrust enforcement history, including political disputes and arguments pressed in opposition to antitrust enforcement. Part 2 is about antitrust issues and standards in our time. Part 3 is about the future and the challenge of restoring a competitive economy.
Panelist William Kovacic offered a cynical context for the discussion, even as he joined the call for enhanced enforcement. He pointed out that antitrust enforcement has never actually had a “golden age.” Generally speaking the forces of industry concentration have checked the efforts of enforcers, so that enforcement efforts have often been more symbolic than effective. Kovacic’s cautionary comments seem particularly relevant given the often conservative attitudes toward antitrust enforcement of the current federal judiciary.
The closing speaker on the program, Joseph Simons, the FTC’s current Chair, argued that antitrust enforcement must focus on close knowledge of the economics of particular industries, rather than vague ideological or political thinking. He explained that good economics might point us toward more or less enforcement, depending on the facts. He said the alternative of basing enforcement decisions on an ideological viewpoint or political considerations, either from the left or the right, is a mistake. Simons would rather make policy and enforcement decisions based on the best evidence and analysis –including in particular, empirically grounded economic analyses that weighs the costs and benefits of enforcement.
The impression I took away from the recent forum is that Professor Baker agrees that antitrust enforcement, at least as pursued through litigation, should be focused and empirically grounded on economic analysis relevant to understanding market power as exercised in particular product markets. That is mainly consistent with Chairman Simons’ thinking. Where Professor Baker and Chairman Simons may differ is on whether the data supports litigation reforms Baker proposes, such as modifying particular presumptions and burdens of proof in courtroom enforcement proceedings.
Baker has long supported the utility of suitably crafted presumptions in court proceedings, because strong evidence is required to overcome presumptions. With regard to mergers, for example, he has pointed out that unless the government enforcement agencies have some simple and sensible way of establishing a presumption of harm to competition, which the merging parties must then overcome to persuade a court to permit the transaction, few proposed mergers will be subject to effective challenge. Baker emphasizes that litigation presumptions must have sound economic grounding. Presumptions must be based on observable features of market structure that economic understanding suggests correlate well with harm to competition.
It will be interesting to compare Jonathan Baker’s antitrust reform proposals in his new book with the proposals of progressive political activist Tim Wu with regard to the nuts and bolts of antitrust litigation. In his book “The Curse of Bigness: Antitrust in the New Gilded Age” Wu said that he would like to jettison the government prosecutor’s reliance in litigation on the “consumer welfare” standard for antitrust enforcement. Wu believes that the consumer welfare standard suffers from a preoccupation with avoiding high consumer prices. Instead, he believes prosecutors and courts should focus on finding antitrust violations based on whether the targeted conduct “promotes competition or whether it is such as may suppress or even destroy competition."
Wu’s revised litigation standard is not, however, necessarily inconsistent with the idea that in antitrust litigation case presumptions, burdens of proof, and outcomes should be consistent with empirical data concerning exercise of market power in particular markets.
Of course, there are difficult competition policy issues that are outside of questions about what standards and rules should apply in antitrust litigation. Debates about antitrust litigation reform occur in the context of broader political debates about competition policy among people who consider themselves progressives or conservatives, Democrats or Republicans. Topics for political debate include identifying and pursuing policies concerning firm size and conduct that promote and protect a political economy perceived as desirable from one point of view or another.
It would seem that politically oriented reformers who identify as progressives, like the people named at the outset of this note, can address broader political issues without conflict with advocates like Jonathan Baker, whose goals include promoting practical and effective proposals for antitrust litigation reform. But that is a topic for another occasion.
This posting is by Don Allen Resnikoff, who takes responsibility for its content
At a moment when political progressives like Bernie Sanders, Elizabeth Warren, Amy Klobuchar, and Tim Wu are addressing the general public on the politics of antitrust and competition policy, respected American University Law Professor Jonathan Baker has authored a book coming out in May: “The Antitrust Paradigm; Restoring a Competitive Economy.” As the book’s title suggests, Baker shares the interest expressed by the politicians in making the American economy more competitive, but his focus includes a lot of attention to improving antitrust litigation. Baker brings authority to the discussion as a respected economist with substantial real life experience at the Federal Trade Commission and the Federal Communications Commission.
Recently Baker presided over an American University Law School panel of experts who were invited to react to an advance copy of his book. Baker previewed his book’s contents. Part 1 of the book will talk about antitrust enforcement history, including political disputes and arguments pressed in opposition to antitrust enforcement. Part 2 is about antitrust issues and standards in our time. Part 3 is about the future and the challenge of restoring a competitive economy.
Panelist William Kovacic offered a cynical context for the discussion, even as he joined the call for enhanced enforcement. He pointed out that antitrust enforcement has never actually had a “golden age.” Generally speaking the forces of industry concentration have checked the efforts of enforcers, so that enforcement efforts have often been more symbolic than effective. Kovacic’s cautionary comments seem particularly relevant given the often conservative attitudes toward antitrust enforcement of the current federal judiciary.
The closing speaker on the program, Joseph Simons, the FTC’s current Chair, argued that antitrust enforcement must focus on close knowledge of the economics of particular industries, rather than vague ideological or political thinking. He explained that good economics might point us toward more or less enforcement, depending on the facts. He said the alternative of basing enforcement decisions on an ideological viewpoint or political considerations, either from the left or the right, is a mistake. Simons would rather make policy and enforcement decisions based on the best evidence and analysis –including in particular, empirically grounded economic analyses that weighs the costs and benefits of enforcement.
The impression I took away from the recent forum is that Professor Baker agrees that antitrust enforcement, at least as pursued through litigation, should be focused and empirically grounded on economic analysis relevant to understanding market power as exercised in particular product markets. That is mainly consistent with Chairman Simons’ thinking. Where Professor Baker and Chairman Simons may differ is on whether the data supports litigation reforms Baker proposes, such as modifying particular presumptions and burdens of proof in courtroom enforcement proceedings.
Baker has long supported the utility of suitably crafted presumptions in court proceedings, because strong evidence is required to overcome presumptions. With regard to mergers, for example, he has pointed out that unless the government enforcement agencies have some simple and sensible way of establishing a presumption of harm to competition, which the merging parties must then overcome to persuade a court to permit the transaction, few proposed mergers will be subject to effective challenge. Baker emphasizes that litigation presumptions must have sound economic grounding. Presumptions must be based on observable features of market structure that economic understanding suggests correlate well with harm to competition.
It will be interesting to compare Jonathan Baker’s antitrust reform proposals in his new book with the proposals of progressive political activist Tim Wu with regard to the nuts and bolts of antitrust litigation. In his book “The Curse of Bigness: Antitrust in the New Gilded Age” Wu said that he would like to jettison the government prosecutor’s reliance in litigation on the “consumer welfare” standard for antitrust enforcement. Wu believes that the consumer welfare standard suffers from a preoccupation with avoiding high consumer prices. Instead, he believes prosecutors and courts should focus on finding antitrust violations based on whether the targeted conduct “promotes competition or whether it is such as may suppress or even destroy competition."
Wu’s revised litigation standard is not, however, necessarily inconsistent with the idea that in antitrust litigation case presumptions, burdens of proof, and outcomes should be consistent with empirical data concerning exercise of market power in particular markets.
Of course, there are difficult competition policy issues that are outside of questions about what standards and rules should apply in antitrust litigation. Debates about antitrust litigation reform occur in the context of broader political debates about competition policy among people who consider themselves progressives or conservatives, Democrats or Republicans. Topics for political debate include identifying and pursuing policies concerning firm size and conduct that promote and protect a political economy perceived as desirable from one point of view or another.
It would seem that politically oriented reformers who identify as progressives, like the people named at the outset of this note, can address broader political issues without conflict with advocates like Jonathan Baker, whose goals include promoting practical and effective proposals for antitrust litigation reform. But that is a topic for another occasion.
This posting is by Don Allen Resnikoff, who takes responsibility for its content
Judge narrows NCAA cap on athlete compensation
A judge has ruled against the NCAA in a federal antitrust case, opening door for players to receive more compensation, but limited to education purposes. US District Judge Claudia Wilken said that the NCAA cannot “limit compensation or benefits related to education” for athletes playing Division I men’s or women’s basketball or Bowl Subdivision football.
Wilken said these athletes may receive are scholarships to complete undergraduate or graduate degrees at any school. The judge also appeared to open the possibility of athletes being able to receive cash or cash-equivalent awards based on academics or graduation, albeit under some constraints.
At the same time, however, her 104-page ruling prevents athletes from receiving unlimited benefits, as the plaintiffs had hoped.
The NCAA “may continue … to limit compensation and benefits that are unrelated to education,” Wilken ruled.
The New York Times article emphasized the shortfall for Plaintiffs:
So why doesn’t it feel as if the group of athletes who pursued the litigation to end the N.C.A.A.’s rule won the case? Why did they and their star sports labor lawyer Jeffrey Kessler not get the outcome they most fervently sought?
Despite finding that the N.C.A.A. was violating federal law, Wilken turned away the plaintiffs’ main proposed remedy, which was also the logical one: to lift the supposedly lawbreaking cap on compensation. That means the continuation of a status quo where so many players feel they are working basically for free. How’s that?
“When you apply a uniquely muddled set of laws to a unique industry, this is the kind of ruling you get,” said Gabe Feldman, who directs Tulane’s sports law program and teaches antitrust law (the unique muddle to which he was referring).
The upshot of Friday’s ruling, pending a likely appeal, is that the N.C.A.A. may continue to cap payments to athletes after all — with the limited exception of expenses that are educational in nature. Think computers, or costs related to internships, or postgraduate scholarships.
https://www.nytimes.com/2019/03/11/sports/ncaa-court-ruling-antitrust.html
A copy of the NCAA Court Opinion is here (paywall) https://www.law360.com/articles/1113787/attachments/0
A judge has ruled against the NCAA in a federal antitrust case, opening door for players to receive more compensation, but limited to education purposes. US District Judge Claudia Wilken said that the NCAA cannot “limit compensation or benefits related to education” for athletes playing Division I men’s or women’s basketball or Bowl Subdivision football.
Wilken said these athletes may receive are scholarships to complete undergraduate or graduate degrees at any school. The judge also appeared to open the possibility of athletes being able to receive cash or cash-equivalent awards based on academics or graduation, albeit under some constraints.
At the same time, however, her 104-page ruling prevents athletes from receiving unlimited benefits, as the plaintiffs had hoped.
The NCAA “may continue … to limit compensation and benefits that are unrelated to education,” Wilken ruled.
The New York Times article emphasized the shortfall for Plaintiffs:
So why doesn’t it feel as if the group of athletes who pursued the litigation to end the N.C.A.A.’s rule won the case? Why did they and their star sports labor lawyer Jeffrey Kessler not get the outcome they most fervently sought?
Despite finding that the N.C.A.A. was violating federal law, Wilken turned away the plaintiffs’ main proposed remedy, which was also the logical one: to lift the supposedly lawbreaking cap on compensation. That means the continuation of a status quo where so many players feel they are working basically for free. How’s that?
“When you apply a uniquely muddled set of laws to a unique industry, this is the kind of ruling you get,” said Gabe Feldman, who directs Tulane’s sports law program and teaches antitrust law (the unique muddle to which he was referring).
The upshot of Friday’s ruling, pending a likely appeal, is that the N.C.A.A. may continue to cap payments to athletes after all — with the limited exception of expenses that are educational in nature. Think computers, or costs related to internships, or postgraduate scholarships.
https://www.nytimes.com/2019/03/11/sports/ncaa-court-ruling-antitrust.html
A copy of the NCAA Court Opinion is here (paywall) https://www.law360.com/articles/1113787/attachments/0
More on Huawei as 5G industry leader and US security threat:
Excerpt from an article by By Tom Wheeler, Robert D. Williams
Wednesday, February 20, 2019, 4:18 PM https://www.lawfareblog.com/keeping-huawei-hardware-out-us-not-enough-secure-5g
American leadership on 5G must also be part of a comprehensive U.S. strategy for technology competition.
One element of such a strategy is pushing back on Chinese trade and investment practices that benefit companies such as Huawei but undermine fair competition for U.S. firms whose market share and innovation edge are eroded in the face of distortive Chinese industrial policies. This is both an economic and a national-security priority, given the importance of 5G-enabled technologies to the operation of the military and critical infrastructure. U.S. trade negotiators are pressing China to commit to structural reforms on everything from government subsidies to state-sponsored cyber espionage for exactly those reasons (among others).
There is, of course, the possibility that the crackdown on Huawei and related efforts to protect U.S. technology could reinforce views within China that Trump’s trade war merely serves a broader effort by Washington to thwart China’s rise. That reactioncould stimulate China to double down on aggressive state policies to reduce its dependence on American semiconductors and other technology. For this reason, as with the cybersecurity challenge, it’s crucial that the United States enlist the supportof like-minded allies who broadly share U.S. concerns about discriminatory and distortive Chinese trade practices. At the same time, it is also important for the U.S. to seek cooperation with China in areas where leveraging the two countries’ technological strengths can yield mutual benefits without undermining their legitimate security interests.
U.S. technology and trade policy cannot be merely reactionary. It must include aggressive leadership to both protect U.S. networks and promote U.S. technology. This includes redoubled government investments in basic research and regulatory expectations that the security of 5G will not be decided unilaterally by those who build the network. Any national effort must prioritize not only STEM skills but also cybersecurity skills, in particular through university and workforce-education programs.
Even as the United States takes legitimate steps to protect national security in 5G infrastructure and operations, it should not succumb to the impulse to close off the U.S. economy to the innovation-driving investment, capital and talent that have made the United States a technology leader. America’s open economic model—not China’s state-directed approach—offers the best chance to realize the enormous opportunities of 5G while mitigating its manifold risks.
Huawei lawsuit complaint against US is here:
https://www.wsj.com/public/resources/documents/huawei.pdf?mod=article_inline
Excerpt:
PRELIMINARY STATEMENT
1. The Framers of the United States Constitution were deeply concerned about the potential abuse of legislative power. They believed that “[t]he legislative department is everywhere extending the sphere of its activity, and drawing all power into its impetuous vortex,” and that as a result, “[i]t is against the enterprising ambition of this department that the people ought to indulge all their jealousy and exhaust all their precautions.” The Federalist No. 48 (James Madison). The Framers accordingly granted Congress only limited and enumerated legislative powers; divided these powers between a House of Representatives and a Senate; subjected the exercise of these powers to strict procedures; and vested the executive and judicial powers in separate, independent branches of the government.
2. One of the Framers’ particular concerns was that the legislature would use its power to target specific individuals for adverse treatment. The Framers believed that, if the legislature could itself sanction specific persons “without hearing or trial” conducted by the Executive or the courts, “no man can be safe, nor know when he may be the innocent victim of a prevailing faction.” The Papers of Alexander Hamilton, at 485–86 (Harold C. Syrett ed. 1961– - 3 - 1979). Thus, even where the Framers otherwise granted Congress enumerated legislative powers, they prohibited it from using those powers to enact bills of attainder that impose punishment on specific individuals identified by the legislature. Further, through the Due Process Clause, they prohibited legislation that would single out particular persons for deprivations of liberty. Finally, through the Vesting Clauses and the resulting separation of powers, the Framers prohibited legislation that, rather than simply enacting a general rule, applied a rule to an individual case or person.
3. Provisions of section 889 of the 2019 NDAA violate these constitutional limitations. In particular, section 889 specifically targets Plaintiff Huawei Technologies Co., Ltd., and its subsidiaries and affiliates, such as Plaintiff Huawei Technologies USA, Inc. Section 889 calls out Huawei by name, legislatively adjudicates it to be connected to the Government of the People’s Republic of China, and precludes U.S. government agencies not only from purchasing specified Huawei equipment and services, but also from contracting with or awarding grants or loans to third parties who purchase or use such equipment or services—regardless of whether the equipment or services have any impact on or connection to the government of the United States. The actual and intended effect of these prohibitions is to bar Huawei from significant segments of the U.S. market for telecommunications equipment and services, thereby inflicting immediate and ongoing economic, competitive, and reputational harms on Huawei.
4. Section 889 permanently imposes these burdens and sanctions on Huawei without giving it a fair hearing or the opportunity to rebut the allegations against it, and without opportunity for escape. The statute specifically and expressly applies these broad prohibitions and sanctions only to Huawei and one other named entity. In contrast, the statute gives the Secretary of Defense, in consultation with the FBI Director or the Director of National Intelligence, authority to determine whether other entities are owned or controlled by, or otherwise connected to, the Chinese government—determinations that are then subject to judicial review under the Administrative Procedure Act. The statute affords those Officers of the United States the discretion to change their determinations if they find, for example, that the facts about a particular entity have changed. But those Officers have no such discretion with respect to Huawei: even if those Officers definitively find that Huawei has no connection to the Chinese government, the prohibitions targeting, and sanctions imposed on, Huawei will remain in place. In short, section 889 blacklists Huawei and bars it from significant sectors of the U.S. telecommunications market, all without giving Huawei a fair hearing at which it could be informed of and confront the accusations made against it.
5. In so doing, section 889 violates at least three constitutional provisions: It violates the Bill of Attainder Clause by singling out Huawei for punishment—blacklisting it, impugning both its general reputation and its specific commitment to honoring the laws of the United States, and denying it any procedure through which it can clear its name and escape sanction. Section 889 also violates the Due Process Clause by selectively depriving Huawei of its liberty— severely curtailing its freedom to do business, stigmatizing it by effectively branding it a tool of the Chinese government and a risk to U.S. security, and denying it any pre-deprivation legal process to confront the congressional charges against it. And section 889 violates the Vesting Clauses and the resulting separation of powers by legislatively adjudicating Huawei to be “guilty” of an alleged connection to the Chinese government, and by implication a threat to U.S. security, rather than leaving it to the Executive and the courts to make and adjudicate any such charges.
6. Moreover, as a practical matter, section 889’s focus on Huawei (and one other company), apparently based on Huawei Technologies Co., Ltd.’s national origin, makes no sense. Section 889 permits manufacturers with extensive operations in China and joint venture agreements with the Chinese government to continue to sell equipment to the U.S. Government and its contractors and grant and loan recipients, while legislatively singling out Huawei—a private, non-government-owned company controlled by a private Board of Directors—and just one other entity for sweeping adverse treatment. Further, the government itself has recognized that virtually all manufacturers of telecommunications equipment in the world face cybersecurity risks as a result of vulnerabilities in the global supply chain. Yet section 889 does nothing to address these global supply chain risks. Thus, if the central purpose of section 889 is to prevent Chinese-origin equipment from being used, directly or indirectly, by the U.S. Government, the provision is ineffective on its face. Moreover, it is overbroad, because it bars use (by government contractors) or purchase (by government grant and loan recipients) of Huawei equipment and services even where Huawei equipment or services are not being used to support a governmentrelated function.
7. In short, Section 889 is not only contrary to the economic interests of the United States and its citizens, and ineffective at advancing U.S. security interests, it is also contrary to the Constitution of the United States. Huawei is a world-leading provider of information and communications technology products and services, offering more advanced equipment at lower costs than any other such company, and doing so in areas of the world and of the United States that other providers serve less effectively or not at all. Without Huawei equipment and services, consumers in the United States (particularly in rural and poor areas) will be deprived of access to the most advanced technologies, and will face higher prices and a significantly less competitive market. In the area of 5G mobile service in particular, American consumers will have reduced access to state-of-the art networks and suffer from inferior service. At the same time, Huawei equipment and services are subject to advanced security procedures, and no backdoors, implants, or other intentional security vulnerabilities have been documented in any of the more than 170 countries in the world where Huawei equipment and services are used. Moreover, while there are real risks in the global supply chain that can and should be addressed by comprehensive supply chain strategies and rules, those risks are not rationally or effectively addressed by singling out and blacklisting equipment of specific companies such as Huawei. Indeed, as noted, Huawei is a privately-owned company controlled by a private Board of Directors. While courts do not have the authority to protect the people from all the ill-advised aspects of the NDAA, they do have the duty to protect Huawei and others from its unconstitutional aspects—including its specific targeting of Huawei for punishment, its deprivation of Huawei’s liberty without a fair and impartial hearing, and its usurpation of the charging and adjudicative powers reserved by the Constitution to the executive and judicial branches. Plaintiffs respectfully request that the Court declare unconstitutional and enjoin enforcement of those discrete aspects of section 889 that violate the Constitution, while leaving all other aspects of the NDAA, and the remainder of section 889 itself, intact.
Excerpt from an article by By Tom Wheeler, Robert D. Williams
Wednesday, February 20, 2019, 4:18 PM https://www.lawfareblog.com/keeping-huawei-hardware-out-us-not-enough-secure-5g
American leadership on 5G must also be part of a comprehensive U.S. strategy for technology competition.
One element of such a strategy is pushing back on Chinese trade and investment practices that benefit companies such as Huawei but undermine fair competition for U.S. firms whose market share and innovation edge are eroded in the face of distortive Chinese industrial policies. This is both an economic and a national-security priority, given the importance of 5G-enabled technologies to the operation of the military and critical infrastructure. U.S. trade negotiators are pressing China to commit to structural reforms on everything from government subsidies to state-sponsored cyber espionage for exactly those reasons (among others).
There is, of course, the possibility that the crackdown on Huawei and related efforts to protect U.S. technology could reinforce views within China that Trump’s trade war merely serves a broader effort by Washington to thwart China’s rise. That reactioncould stimulate China to double down on aggressive state policies to reduce its dependence on American semiconductors and other technology. For this reason, as with the cybersecurity challenge, it’s crucial that the United States enlist the supportof like-minded allies who broadly share U.S. concerns about discriminatory and distortive Chinese trade practices. At the same time, it is also important for the U.S. to seek cooperation with China in areas where leveraging the two countries’ technological strengths can yield mutual benefits without undermining their legitimate security interests.
U.S. technology and trade policy cannot be merely reactionary. It must include aggressive leadership to both protect U.S. networks and promote U.S. technology. This includes redoubled government investments in basic research and regulatory expectations that the security of 5G will not be decided unilaterally by those who build the network. Any national effort must prioritize not only STEM skills but also cybersecurity skills, in particular through university and workforce-education programs.
Even as the United States takes legitimate steps to protect national security in 5G infrastructure and operations, it should not succumb to the impulse to close off the U.S. economy to the innovation-driving investment, capital and talent that have made the United States a technology leader. America’s open economic model—not China’s state-directed approach—offers the best chance to realize the enormous opportunities of 5G while mitigating its manifold risks.
Huawei lawsuit complaint against US is here:
https://www.wsj.com/public/resources/documents/huawei.pdf?mod=article_inline
Excerpt:
PRELIMINARY STATEMENT
1. The Framers of the United States Constitution were deeply concerned about the potential abuse of legislative power. They believed that “[t]he legislative department is everywhere extending the sphere of its activity, and drawing all power into its impetuous vortex,” and that as a result, “[i]t is against the enterprising ambition of this department that the people ought to indulge all their jealousy and exhaust all their precautions.” The Federalist No. 48 (James Madison). The Framers accordingly granted Congress only limited and enumerated legislative powers; divided these powers between a House of Representatives and a Senate; subjected the exercise of these powers to strict procedures; and vested the executive and judicial powers in separate, independent branches of the government.
2. One of the Framers’ particular concerns was that the legislature would use its power to target specific individuals for adverse treatment. The Framers believed that, if the legislature could itself sanction specific persons “without hearing or trial” conducted by the Executive or the courts, “no man can be safe, nor know when he may be the innocent victim of a prevailing faction.” The Papers of Alexander Hamilton, at 485–86 (Harold C. Syrett ed. 1961– - 3 - 1979). Thus, even where the Framers otherwise granted Congress enumerated legislative powers, they prohibited it from using those powers to enact bills of attainder that impose punishment on specific individuals identified by the legislature. Further, through the Due Process Clause, they prohibited legislation that would single out particular persons for deprivations of liberty. Finally, through the Vesting Clauses and the resulting separation of powers, the Framers prohibited legislation that, rather than simply enacting a general rule, applied a rule to an individual case or person.
3. Provisions of section 889 of the 2019 NDAA violate these constitutional limitations. In particular, section 889 specifically targets Plaintiff Huawei Technologies Co., Ltd., and its subsidiaries and affiliates, such as Plaintiff Huawei Technologies USA, Inc. Section 889 calls out Huawei by name, legislatively adjudicates it to be connected to the Government of the People’s Republic of China, and precludes U.S. government agencies not only from purchasing specified Huawei equipment and services, but also from contracting with or awarding grants or loans to third parties who purchase or use such equipment or services—regardless of whether the equipment or services have any impact on or connection to the government of the United States. The actual and intended effect of these prohibitions is to bar Huawei from significant segments of the U.S. market for telecommunications equipment and services, thereby inflicting immediate and ongoing economic, competitive, and reputational harms on Huawei.
4. Section 889 permanently imposes these burdens and sanctions on Huawei without giving it a fair hearing or the opportunity to rebut the allegations against it, and without opportunity for escape. The statute specifically and expressly applies these broad prohibitions and sanctions only to Huawei and one other named entity. In contrast, the statute gives the Secretary of Defense, in consultation with the FBI Director or the Director of National Intelligence, authority to determine whether other entities are owned or controlled by, or otherwise connected to, the Chinese government—determinations that are then subject to judicial review under the Administrative Procedure Act. The statute affords those Officers of the United States the discretion to change their determinations if they find, for example, that the facts about a particular entity have changed. But those Officers have no such discretion with respect to Huawei: even if those Officers definitively find that Huawei has no connection to the Chinese government, the prohibitions targeting, and sanctions imposed on, Huawei will remain in place. In short, section 889 blacklists Huawei and bars it from significant sectors of the U.S. telecommunications market, all without giving Huawei a fair hearing at which it could be informed of and confront the accusations made against it.
5. In so doing, section 889 violates at least three constitutional provisions: It violates the Bill of Attainder Clause by singling out Huawei for punishment—blacklisting it, impugning both its general reputation and its specific commitment to honoring the laws of the United States, and denying it any procedure through which it can clear its name and escape sanction. Section 889 also violates the Due Process Clause by selectively depriving Huawei of its liberty— severely curtailing its freedom to do business, stigmatizing it by effectively branding it a tool of the Chinese government and a risk to U.S. security, and denying it any pre-deprivation legal process to confront the congressional charges against it. And section 889 violates the Vesting Clauses and the resulting separation of powers by legislatively adjudicating Huawei to be “guilty” of an alleged connection to the Chinese government, and by implication a threat to U.S. security, rather than leaving it to the Executive and the courts to make and adjudicate any such charges.
6. Moreover, as a practical matter, section 889’s focus on Huawei (and one other company), apparently based on Huawei Technologies Co., Ltd.’s national origin, makes no sense. Section 889 permits manufacturers with extensive operations in China and joint venture agreements with the Chinese government to continue to sell equipment to the U.S. Government and its contractors and grant and loan recipients, while legislatively singling out Huawei—a private, non-government-owned company controlled by a private Board of Directors—and just one other entity for sweeping adverse treatment. Further, the government itself has recognized that virtually all manufacturers of telecommunications equipment in the world face cybersecurity risks as a result of vulnerabilities in the global supply chain. Yet section 889 does nothing to address these global supply chain risks. Thus, if the central purpose of section 889 is to prevent Chinese-origin equipment from being used, directly or indirectly, by the U.S. Government, the provision is ineffective on its face. Moreover, it is overbroad, because it bars use (by government contractors) or purchase (by government grant and loan recipients) of Huawei equipment and services even where Huawei equipment or services are not being used to support a governmentrelated function.
7. In short, Section 889 is not only contrary to the economic interests of the United States and its citizens, and ineffective at advancing U.S. security interests, it is also contrary to the Constitution of the United States. Huawei is a world-leading provider of information and communications technology products and services, offering more advanced equipment at lower costs than any other such company, and doing so in areas of the world and of the United States that other providers serve less effectively or not at all. Without Huawei equipment and services, consumers in the United States (particularly in rural and poor areas) will be deprived of access to the most advanced technologies, and will face higher prices and a significantly less competitive market. In the area of 5G mobile service in particular, American consumers will have reduced access to state-of-the art networks and suffer from inferior service. At the same time, Huawei equipment and services are subject to advanced security procedures, and no backdoors, implants, or other intentional security vulnerabilities have been documented in any of the more than 170 countries in the world where Huawei equipment and services are used. Moreover, while there are real risks in the global supply chain that can and should be addressed by comprehensive supply chain strategies and rules, those risks are not rationally or effectively addressed by singling out and blacklisting equipment of specific companies such as Huawei. Indeed, as noted, Huawei is a privately-owned company controlled by a private Board of Directors. While courts do not have the authority to protect the people from all the ill-advised aspects of the NDAA, they do have the duty to protect Huawei and others from its unconstitutional aspects—including its specific targeting of Huawei for punishment, its deprivation of Huawei’s liberty without a fair and impartial hearing, and its usurpation of the charging and adjudicative powers reserved by the Constitution to the executive and judicial branches. Plaintiffs respectfully request that the Court declare unconstitutional and enjoin enforcement of those discrete aspects of section 889 that violate the Constitution, while leaving all other aspects of the NDAA, and the remainder of section 889 itself, intact.
Reports that Trump asked Gary Cohn to block ATT merger with Time-Warner
https://www.competitionpolicyinternational.com/us-trump-reportedly-asked-gary-cohn-to-block-att-time-warner-merger/
From CPI: A new report about the close relationship between Fox News and President Donald Trump states the President personally asked a top White House aide to make sure the Justice Department (DOJ) stopped AT&T from purchasing Time Warner.
Ever since the DOJ sued in 2017 to block AT&T’s acquisition of Time Warner, theories and accusations of political animus has swirled around the antitrust case.
At the heart of the theories is Trump’s public dislike of CNN, which was a division of Time Warner. The company that has since been renamed WarnerMedia, which also includes networks such TNT and HBO, in addition to CNN.
In a new piece for the New Yorker, investigative journalist Jane Mayer reports that a few months before the DOJ filed its lawsuit, Trump pressured Gary Cohn, the former director of the National Economic Council, to tell the DOJ to block AT&T’s Time Warner deal.
According to Mayer’s source, Trump called Cohn and then Chief-of-Staff John Kelly into his office and said to Kelly, “I’ve been telling Cohn to get this lawsuit filed and nothing’s happened! I’ve mentioned it fifty times. And nothing’s happened. I want to make sure it’s filed. I want that deal blocked.”
After the two men walked out of the Oval Office meeting, Cohn told Kelly not to follow through with the president’s request, according to Mayer’s report.
Full Content: New Yorker -https://www.newyorker.com/magazine/2019/03/11/the-making-of-the-fox-news-white-house
https://www.competitionpolicyinternational.com/us-trump-reportedly-asked-gary-cohn-to-block-att-time-warner-merger/
From CPI: A new report about the close relationship between Fox News and President Donald Trump states the President personally asked a top White House aide to make sure the Justice Department (DOJ) stopped AT&T from purchasing Time Warner.
Ever since the DOJ sued in 2017 to block AT&T’s acquisition of Time Warner, theories and accusations of political animus has swirled around the antitrust case.
At the heart of the theories is Trump’s public dislike of CNN, which was a division of Time Warner. The company that has since been renamed WarnerMedia, which also includes networks such TNT and HBO, in addition to CNN.
In a new piece for the New Yorker, investigative journalist Jane Mayer reports that a few months before the DOJ filed its lawsuit, Trump pressured Gary Cohn, the former director of the National Economic Council, to tell the DOJ to block AT&T’s Time Warner deal.
According to Mayer’s source, Trump called Cohn and then Chief-of-Staff John Kelly into his office and said to Kelly, “I’ve been telling Cohn to get this lawsuit filed and nothing’s happened! I’ve mentioned it fifty times. And nothing’s happened. I want to make sure it’s filed. I want that deal blocked.”
After the two men walked out of the Oval Office meeting, Cohn told Kelly not to follow through with the president’s request, according to Mayer’s report.
Full Content: New Yorker -https://www.newyorker.com/magazine/2019/03/11/the-making-of-the-fox-news-white-house
Maryland car dealers fight minimum advertised price (“MAP”) restrictions
Unhappy car dealers in Maryland are pressing the Maryland legislature to pass a bill, MD HB610, that would limit minimum advertised price (“MAP”) restrictions. The proposed legislation would stop car manufacturers or distributors from forbidding dealers from advertising a vehicle for sale or lease below a specified price. Dealers say the advertising restrictions are designed to keep car prices higher, and should be stopped.
See: http://mgaleg.maryland.gov/webmga/frmMain.aspx?id=hb0610&stab=01&pid=billpage&tab=subject3&ys=2019rs
To understand the proposed bill, a little background is helpful. Retail price maintenance or “RPM” has been used by manufacturers and distributors to set a minimum retail price for products. For particular products, like cars, RPM keeps retail prices higher than they otherwise would be.
For many years retail price maintenance was found by the courts to violate the antitrust laws on its face – it was ruled “per se” illegal. But in Leegin Creative Leather Products, Inc., 551 U.S. 887 (2007), the U.S. Supreme Court overturned earlier case law saying that any agreement setting retail prices is illegal without any need to prove competitive harm. In Leegin the U.S. Supreme Court held that minimum resale price maintenance agreements are no longer per se illegal under federal law. Instead, the Court held that federal law requires that such agreements must be evaluated under a reasonableness standard. That is, if a price restriction has a reasonable business justification, perhaps guaranteeing the consumer great dealer service, then a restriction on retail price might be viewed by courts as reasonable.
In Maryland and some other states, particularly California, Illinois, Michigan, and New York, the legislature rejected the U.S. Supreme Court’s Leegin holding. In 2009, in response to the Leegin case, the Maryland General Assembly enacted Chapter 43 of the 2009 Laws of Maryland, which amended the Maryland Antitrust Act to provide that an agreement establishing a minimum retail price is an unreasonable restraint of trade and, thus, per se illegal in Maryland. Md. Code Ann., Com' Law $ 11-204(b). Such agreements, although no longer per se illegal under federal law, once again became per se illegal in Maryland. So, such a practice was much more likely to run afoul of Maryland antitrust law than it was to violate federal antitrust law. See http://www.marylandattorneygeneral.gov/News%20Documents/JJVC_COMPLAINT.pdf
Complaining Maryland car dealers believe that the use of MAP advertising restrictions provides manufacturers with a way to evade Retail Price Maintenance restrictions. While it is true that with MAP restrictions there is no agreement setting retail price, so the dealer can sell at any price, the concern is that prices actually paid by consumers will be higher where there is a restriction on how low a price the dealer can advertise. Some manufacturers encourage dealer cooperation on MAP advertising limits by offering dealers co-op advertising funds as an incentive. Some manufacturers go further, applying MAP policies to all resellers, and refusing to sell inventory to any dealer that refuses to comply.
Dealers believe that even though a MAP policy focuses on setting the price that resellers may advertise for their cars, and allows resellers to complete sales at prices determined by the resellers, MAP is a loophole for manufacturers that wish to limit retail price competition. The problem is that MAP advertising restrictions make an advertising “price war” much less likely, diminishing price competition.
The proposed legislation would plug this perceived loophole.
A question suggested by the dealer action is whether MAP policies for car dealers might be found to violate the antitrust laws, even in the absence of the proposed new Maryland State statute. Although there has not yet been a court case considering this issue, the answer appears to be “maybe,” depending on the facts of particular situations.
As a general matter, dealers can point out to a Court, persuasively, that consumers are likely to be harmed by MAP limitations, because actual retail prices paid will be higher. Also, muzzling dealers by preventing them from advertising low prices seems wrong in principle.
But these are tough times for antitrust enforcement. These days a MAP policy may be subject to the same sort of antitrust “rule of reason” that is applied by courts to RPM under federal law, perhaps applied with a bias toward the manufacturer. The conventional wisdom that may apply is that unless there is accompanying anti-competitive conduct or circumstances, the courts are likely to conclude that anti-competitive aspects of a MAP agreement won’t exceed the pro-competitive benefits, and there won’t be an antitrust problem.
But it is quite possible that if a court were to look into particular MAP arrangements, it might discover accompanying anti-competitive conduct or circumstances that could change its assessment of the legality of the practice. The agreement between manufacturer and dealer by its terms or as applied may in reality discourage a dealer from actually selling below a minimum price. Empirical investigation may reinforce the common-sense point that in the auto sales context (big ticket, relatively few brands) the limitations on ability of dealers to advertise low prices can cause prices to be higher than they would otherwise be. In reality the MAP arrangement between manufacturer and dealer may look and perform like an RPM agreement. In that case, the courts could take a closer look to see if consumers are actually being harmed. That is particular important in those state courts where resale price maintenance is per se illegal.
The FTC offers a relevant Guide at https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/dealings-supply-chain/manufacturer-imposed
The FTC Guide offers a Q and A section, copied below. The Q and A focuses on manufacturer inducements of promotional money to encourage dealer agreement to MAP restrictions. Promotional money was important in the FTC’s cited music industry case. The unreasonable use of manufacturer inducements in the FTC’s music industry case is an instance where a MAP policy is transformed by manufacturer conduct into something more like a RPM program, causing more aggressive antitrust scrutiny. The FTC music industry case supports the thought that manufacturers should not limit dealers from advertising to consumers about discounts. But the mention at the end of the FTC Q and A of "new standards that allow more direct influence of retail prices" by manufacturers reflects the current shrinking antitrust enforcement environment.
The FTC Q and A
Q: My supplier offers a cooperative advertising program, but I can't participate if I advertise a price that is below the supplier's minimum advertised price. I think that's unfair.
A: The law allows a manufacturer considerable leeway in setting the terms for advertising that it helps to pay for. The manufacturer offers these promotional programs to better compete against the products of the other manufacturers. There are limited situations when these programs can have an unreasonable effect on price levels. For instance, the FTC challenged the Minimum Advertised Price (MAP) policies of five large distributors of pre-recorded music [Universal Music & Video Distribution Corp.and UMG Recordings, Inc. url https://www.ftc.gov/enforcement/cases-proceedings/9710070/universal-music-video-distribution-corpand-umg-recordings-inc] because the policies were unreasonable in their reach: they prohibited ads with discounted prices, even if the retailer paid for the ads with its own money; they applied to in-store advertising; and a single violation required the retailer to forfeit funds for all of its stores for up to 90 days. The FTC found that these policies, in effect for more than 85 percent of market sales, were unreasonable and prevented retailers from telling consumers about discounts on records and CDs. Issues involving advertising allowances may become of less practical concern as manufacturers adjust to new standards that allow more direct influence on retail prices.
Posting by Don Allen Resnikoff – thanks to KMJ and others for helping
Unhappy car dealers in Maryland are pressing the Maryland legislature to pass a bill, MD HB610, that would limit minimum advertised price (“MAP”) restrictions. The proposed legislation would stop car manufacturers or distributors from forbidding dealers from advertising a vehicle for sale or lease below a specified price. Dealers say the advertising restrictions are designed to keep car prices higher, and should be stopped.
See: http://mgaleg.maryland.gov/webmga/frmMain.aspx?id=hb0610&stab=01&pid=billpage&tab=subject3&ys=2019rs
To understand the proposed bill, a little background is helpful. Retail price maintenance or “RPM” has been used by manufacturers and distributors to set a minimum retail price for products. For particular products, like cars, RPM keeps retail prices higher than they otherwise would be.
For many years retail price maintenance was found by the courts to violate the antitrust laws on its face – it was ruled “per se” illegal. But in Leegin Creative Leather Products, Inc., 551 U.S. 887 (2007), the U.S. Supreme Court overturned earlier case law saying that any agreement setting retail prices is illegal without any need to prove competitive harm. In Leegin the U.S. Supreme Court held that minimum resale price maintenance agreements are no longer per se illegal under federal law. Instead, the Court held that federal law requires that such agreements must be evaluated under a reasonableness standard. That is, if a price restriction has a reasonable business justification, perhaps guaranteeing the consumer great dealer service, then a restriction on retail price might be viewed by courts as reasonable.
In Maryland and some other states, particularly California, Illinois, Michigan, and New York, the legislature rejected the U.S. Supreme Court’s Leegin holding. In 2009, in response to the Leegin case, the Maryland General Assembly enacted Chapter 43 of the 2009 Laws of Maryland, which amended the Maryland Antitrust Act to provide that an agreement establishing a minimum retail price is an unreasonable restraint of trade and, thus, per se illegal in Maryland. Md. Code Ann., Com' Law $ 11-204(b). Such agreements, although no longer per se illegal under federal law, once again became per se illegal in Maryland. So, such a practice was much more likely to run afoul of Maryland antitrust law than it was to violate federal antitrust law. See http://www.marylandattorneygeneral.gov/News%20Documents/JJVC_COMPLAINT.pdf
Complaining Maryland car dealers believe that the use of MAP advertising restrictions provides manufacturers with a way to evade Retail Price Maintenance restrictions. While it is true that with MAP restrictions there is no agreement setting retail price, so the dealer can sell at any price, the concern is that prices actually paid by consumers will be higher where there is a restriction on how low a price the dealer can advertise. Some manufacturers encourage dealer cooperation on MAP advertising limits by offering dealers co-op advertising funds as an incentive. Some manufacturers go further, applying MAP policies to all resellers, and refusing to sell inventory to any dealer that refuses to comply.
Dealers believe that even though a MAP policy focuses on setting the price that resellers may advertise for their cars, and allows resellers to complete sales at prices determined by the resellers, MAP is a loophole for manufacturers that wish to limit retail price competition. The problem is that MAP advertising restrictions make an advertising “price war” much less likely, diminishing price competition.
The proposed legislation would plug this perceived loophole.
A question suggested by the dealer action is whether MAP policies for car dealers might be found to violate the antitrust laws, even in the absence of the proposed new Maryland State statute. Although there has not yet been a court case considering this issue, the answer appears to be “maybe,” depending on the facts of particular situations.
As a general matter, dealers can point out to a Court, persuasively, that consumers are likely to be harmed by MAP limitations, because actual retail prices paid will be higher. Also, muzzling dealers by preventing them from advertising low prices seems wrong in principle.
But these are tough times for antitrust enforcement. These days a MAP policy may be subject to the same sort of antitrust “rule of reason” that is applied by courts to RPM under federal law, perhaps applied with a bias toward the manufacturer. The conventional wisdom that may apply is that unless there is accompanying anti-competitive conduct or circumstances, the courts are likely to conclude that anti-competitive aspects of a MAP agreement won’t exceed the pro-competitive benefits, and there won’t be an antitrust problem.
But it is quite possible that if a court were to look into particular MAP arrangements, it might discover accompanying anti-competitive conduct or circumstances that could change its assessment of the legality of the practice. The agreement between manufacturer and dealer by its terms or as applied may in reality discourage a dealer from actually selling below a minimum price. Empirical investigation may reinforce the common-sense point that in the auto sales context (big ticket, relatively few brands) the limitations on ability of dealers to advertise low prices can cause prices to be higher than they would otherwise be. In reality the MAP arrangement between manufacturer and dealer may look and perform like an RPM agreement. In that case, the courts could take a closer look to see if consumers are actually being harmed. That is particular important in those state courts where resale price maintenance is per se illegal.
The FTC offers a relevant Guide at https://www.ftc.gov/tips-advice/competition-guidance/guide-antitrust-laws/dealings-supply-chain/manufacturer-imposed
The FTC Guide offers a Q and A section, copied below. The Q and A focuses on manufacturer inducements of promotional money to encourage dealer agreement to MAP restrictions. Promotional money was important in the FTC’s cited music industry case. The unreasonable use of manufacturer inducements in the FTC’s music industry case is an instance where a MAP policy is transformed by manufacturer conduct into something more like a RPM program, causing more aggressive antitrust scrutiny. The FTC music industry case supports the thought that manufacturers should not limit dealers from advertising to consumers about discounts. But the mention at the end of the FTC Q and A of "new standards that allow more direct influence of retail prices" by manufacturers reflects the current shrinking antitrust enforcement environment.
The FTC Q and A
Q: My supplier offers a cooperative advertising program, but I can't participate if I advertise a price that is below the supplier's minimum advertised price. I think that's unfair.
A: The law allows a manufacturer considerable leeway in setting the terms for advertising that it helps to pay for. The manufacturer offers these promotional programs to better compete against the products of the other manufacturers. There are limited situations when these programs can have an unreasonable effect on price levels. For instance, the FTC challenged the Minimum Advertised Price (MAP) policies of five large distributors of pre-recorded music [Universal Music & Video Distribution Corp.and UMG Recordings, Inc. url https://www.ftc.gov/enforcement/cases-proceedings/9710070/universal-music-video-distribution-corpand-umg-recordings-inc] because the policies were unreasonable in their reach: they prohibited ads with discounted prices, even if the retailer paid for the ads with its own money; they applied to in-store advertising; and a single violation required the retailer to forfeit funds for all of its stores for up to 90 days. The FTC found that these policies, in effect for more than 85 percent of market sales, were unreasonable and prevented retailers from telling consumers about discounts on records and CDs. Issues involving advertising allowances may become of less practical concern as manufacturers adjust to new standards that allow more direct influence on retail prices.
Posting by Don Allen Resnikoff – thanks to KMJ and others for helping
NYT on The TV Station Run by China’s Communist Party
In an environment where media consumers are frequently said to be beset by biased news, it is interesting to notice the more or less open efforts of foreign governments in US media. The NYT article focuses on a Chinese government sponsored US media effort.
The NYT explains that CGTN America, which is based in Washington and available in 30 million United States households, insists it does not do Beijing’s bidding. Some people are skeptical. The article suggests that while the goal of Russian propaganda is to divide people in the US, the focus of Chinese propaganda is to paint a cheery picture of Chinese life and politics.
The article is at https://www.nytimes.com/2019/02/28/business/cctv-china-usa-propaganda.html
The USDOJ letter requesting foreign agent registration for the station is at https://int.nyt.com/data/documenthelper/638-doj-letter-cgtn/b852f4eae0647820f27e/optimized/full.pdf#page=1
Posting by Don Allen Resnikoff
Illegal message businesses as a law enforcement issue
Illicit message businesses selling sexual services have been in the news recently. Polaris one of a number of organizations focused on eradication of illicit message businesses and human trafficking networks. Polaris points out that women who are trafficked and work at the illicit businesses are robbed of their lives and their freedom. Polaris "puts victims at the center of what we do — helping survivors restore their freedom, preventing more victims, and leveraging data and technology to pursue traffickers wherever they operate."
A Report from Polaris is at https://polarisproject.org/sites/default/files/Full_Report_Human_Trafficking_in_Illicit_Massage_Businesses.pdf
A significant focus of the report is on law enforcement needed to stop illicit message businesses (IMBs) and human trafficking. Recommendations include local, regional, and national law enforcement activities. Following is a brief excerpt:
Characteristics of a strong law will vary by location. Here are a few elements that many strong laws have in common:
• Regulating hours of operation. San Francisco city has used, among other things, a provision on hours of operation to successfully close more than 100 IMBs in two years.119
• Prohibiting structures like buzzercontrolled front doors and back-door entrances that obscure buyer behavior. Santa Clara County’s law, which includes provisions around entrances, was used to close down all IMBs in its unincorporated areas within one year.120
• Regulating massage businesses with other commercial licensed businesses. Within the past 10 years, Delaware has gone from regulating massage establishments as “sexually-oriented businesses” to having a robust, statewide law categorizing massage businesses as health businesses.
• Working with local massage therapists. North Carolina passed a new statewide law on massage establishments in July 2017. This law was passed with collaboration by Polaris, North Carolina’s American Massage Therapy Association chapter, and members of the Human Trafficking Task Force to ensure strong provisions against traffickers while protecting massage therapists. This kind of collaboration, both in the original passage of the law and in the aftermath to monitor and make changes accordingly, is the baseline for ensuring laws are written to succeed and amended as necessary as traffickers adapt to changing conditions.
Posting by Don Allen Resnikoff
Illicit message businesses selling sexual services have been in the news recently. Polaris one of a number of organizations focused on eradication of illicit message businesses and human trafficking networks. Polaris points out that women who are trafficked and work at the illicit businesses are robbed of their lives and their freedom. Polaris "puts victims at the center of what we do — helping survivors restore their freedom, preventing more victims, and leveraging data and technology to pursue traffickers wherever they operate."
A Report from Polaris is at https://polarisproject.org/sites/default/files/Full_Report_Human_Trafficking_in_Illicit_Massage_Businesses.pdf
A significant focus of the report is on law enforcement needed to stop illicit message businesses (IMBs) and human trafficking. Recommendations include local, regional, and national law enforcement activities. Following is a brief excerpt:
Characteristics of a strong law will vary by location. Here are a few elements that many strong laws have in common:
• Regulating hours of operation. San Francisco city has used, among other things, a provision on hours of operation to successfully close more than 100 IMBs in two years.119
• Prohibiting structures like buzzercontrolled front doors and back-door entrances that obscure buyer behavior. Santa Clara County’s law, which includes provisions around entrances, was used to close down all IMBs in its unincorporated areas within one year.120
• Regulating massage businesses with other commercial licensed businesses. Within the past 10 years, Delaware has gone from regulating massage establishments as “sexually-oriented businesses” to having a robust, statewide law categorizing massage businesses as health businesses.
• Working with local massage therapists. North Carolina passed a new statewide law on massage establishments in July 2017. This law was passed with collaboration by Polaris, North Carolina’s American Massage Therapy Association chapter, and members of the Human Trafficking Task Force to ensure strong provisions against traffickers while protecting massage therapists. This kind of collaboration, both in the original passage of the law and in the aftermath to monitor and make changes accordingly, is the baseline for ensuring laws are written to succeed and amended as necessary as traffickers adapt to changing conditions.
Posting by Don Allen Resnikoff
The US Justice Department has called for public input about reform or termination of the long-standing consent decrees that govern performing rights organizations ASCAP and BMI, but not their competitors, SESAC and Global Music Rights.
In an open letter, ASCAP CEO Elizabeth Matthews and BMI CEO Mike O’Neill outline the two organization’s position on the DOJ’s review and make initial recommendations for how the industry might transition to a world without the decrees. “The DOJ’s attention to this matter represents a clear opportunity to do what BMI and ASCAP have been trying to do for years – modernize music licensing to better reflect the transformative changes in the industry,” they write. “It’s why when we first heard about the possibility of the DOJ sunsetting the consent decrees, it came as welcome news.”
See https://www.digitalmusicnews.com/2019/02/28/consent-decree-ascap-bmi/
Democrats have introduced a bill that would block companies from forcing workers to sign mandatory arbitration clauses that take away their right to take employers to court
The Forced Arbitration Injustice Repeal Act, sponsored in the Senate by Sen. Richard Blumenthal, D-Conn., and in the House of Representatives by Rep. Hank Johnson, D-Ga., would bar mandatory arbitration agreements not only in employment disputes, but also for consumer, antitrust and civil rights claims. Additionally, it would block agreements that stop individuals, workers and businesses from joining or filing class actions.
A copy of the bill is here:https://www.congress.gov/bill/115th-congress/senate-bill/2591/text
The Forced Arbitration Injustice Repeal Act, sponsored in the Senate by Sen. Richard Blumenthal, D-Conn., and in the House of Representatives by Rep. Hank Johnson, D-Ga., would bar mandatory arbitration agreements not only in employment disputes, but also for consumer, antitrust and civil rights claims. Additionally, it would block agreements that stop individuals, workers and businesses from joining or filing class actions.
A copy of the bill is here:https://www.congress.gov/bill/115th-congress/senate-bill/2591/text
NYT on 5G and the continuing Huawei quandary
Huawei’s fate will hang over the wireless industry’s largest annual trade conference, MWC Barcelona, previously called Mobile World Congress, which starts on Monday. Typically a celebration of new handsets from Samsung, LG, Sony and other brands, this year’s conference in Spain is being overshadowed by less glamorous policy questions about how to safeguard the behind-the-scenes infrastructure that keeps those devices connected to the internet.
“Many operators are now delaying their 5G investments because there is so much uncertainty related to whether they can work with Huawei or not,” said Mikael Rautanen, an industry analyst with Inderes Oy, a research firm. “That affects the whole telecommunications sector.”
5G networks are considered critical to the future global economy, increasing mobile phone speeds by up to 20 times from the current 4G system, while also creating new applications in medicine, augmented reality and manufacturing. Telecom companies are starting to roll out the new systems this year, with wider adoption coming in 2020.
Huawei makes the antennas, base stations, switches and other gear that make the technology work.
The debate over Huawei is particularly intense in Europe, where network operators that have long relied on the company’s equipment are facing potential new regulations. Britain, Germany, France, Poland and the Czech Republic are among those considering new restrictions against Huawei.
British and German authorities have indicated that a complete ban is unlikely, but the United States-led campaign threatens to slow down construction of the new technology in Europe that governments and businesses believe is needed to stay competitive in a digitized economy. The head of T-Mobile in Poland warned this week that new restrictions could disrupt the introduction of 5G technology.
For a year, Trump administration officials have been working on an executive order that would effectively ban Chinese telecom companies, including Huawei, from American 5G networks. The order would block American companies from purchasing equipment from China and other “adversarial powers,” but would not stop purchases of European-made equipment.
The wireless industry’s global trade group, GSM Association, said a ban of Huawei equipment in Europe would disrupt the overall market and increase costs for consumers.
“The effects would be delay the roll out, delay the technology and very probably higher pricing,” said Boris Nemsic, chairman of Delta Partners, an advisory and investment firm focused on the telecommunications market.
Huawei has become a lightning rod in the broader trade war between the United States and China. The Trump administration argues that Huawei is beholden to the Chinese government, and that allowing its equipment into 5G networks will create a grave national security risk — a charge Huawei has vehemently denied.
The increased scrutiny of Huawei would appear to present an opportunity for rivals such as Ericsson and Nokia, but executives at the companies have said it risks creating a broader slowdown.
“All our customers are trying to work out what this means, and that is causing uncertainty,” Borje Ekholm, the chief executive of Ericsson, told The Financial Times this month.
Ericsson and Nokia, which declined to comment, have fallen behind Huawei in market share over the past decade, struggling to match its rival’s lower prices and large investments in 5G and other emerging technology. Many carriers say the Chinese company’s 5G technology is more advanced than that of its Western rivals.
Despite being blocked by the United States, Huawei is the largest seller of telecommunications equipment, accounting for about 28 percent of the global market, according to the Dell’Oro Group, a market research firm. Companies such as Cisco Systems provide equipment like routers used by carriers in other parts of their networks.
The new 5G networks represent a once-in-a-decade opportunity. In Europe, mobile carriers are expected to spend at least $340 billion by 2025 constructing the networks, according to GSMA.
Ericsson and Nokia have been careful not to appear to take advantage of Huawei’s misfortune, perhaps out of concern that China would retaliate against the European companies if new bans against Huawei were introduced.
The two companies each earn around $1.5 billion in revenue each year in China, according to an estimate by Pierre Ferragu, an analyst at New Street Research in New York. By contrast, Huawei earns $3.5 billion a year in Europe, Mr. Ferragu estimates.
Any company forced to replace Huawei equipment will have to shoulder heavy costs. “It would take time for the existing vendors to scale R&D, operations, sales, services and partner agreements to fill the void,” the Dell’Oro Group said in a recent report.
It may be for that reason wireless carriers that have long depended on Huawei are coming to its defense. Mr. Read of Vodafone urged governments to act carefully before imposing new restrictions, because much of the present debate was not “fact based.”
Source: https://www.nytimes.com/2019/02/22/technology/huawei-europe-mwc.html
Huawei’s fate will hang over the wireless industry’s largest annual trade conference, MWC Barcelona, previously called Mobile World Congress, which starts on Monday. Typically a celebration of new handsets from Samsung, LG, Sony and other brands, this year’s conference in Spain is being overshadowed by less glamorous policy questions about how to safeguard the behind-the-scenes infrastructure that keeps those devices connected to the internet.
“Many operators are now delaying their 5G investments because there is so much uncertainty related to whether they can work with Huawei or not,” said Mikael Rautanen, an industry analyst with Inderes Oy, a research firm. “That affects the whole telecommunications sector.”
5G networks are considered critical to the future global economy, increasing mobile phone speeds by up to 20 times from the current 4G system, while also creating new applications in medicine, augmented reality and manufacturing. Telecom companies are starting to roll out the new systems this year, with wider adoption coming in 2020.
Huawei makes the antennas, base stations, switches and other gear that make the technology work.
The debate over Huawei is particularly intense in Europe, where network operators that have long relied on the company’s equipment are facing potential new regulations. Britain, Germany, France, Poland and the Czech Republic are among those considering new restrictions against Huawei.
British and German authorities have indicated that a complete ban is unlikely, but the United States-led campaign threatens to slow down construction of the new technology in Europe that governments and businesses believe is needed to stay competitive in a digitized economy. The head of T-Mobile in Poland warned this week that new restrictions could disrupt the introduction of 5G technology.
For a year, Trump administration officials have been working on an executive order that would effectively ban Chinese telecom companies, including Huawei, from American 5G networks. The order would block American companies from purchasing equipment from China and other “adversarial powers,” but would not stop purchases of European-made equipment.
The wireless industry’s global trade group, GSM Association, said a ban of Huawei equipment in Europe would disrupt the overall market and increase costs for consumers.
“The effects would be delay the roll out, delay the technology and very probably higher pricing,” said Boris Nemsic, chairman of Delta Partners, an advisory and investment firm focused on the telecommunications market.
Huawei has become a lightning rod in the broader trade war between the United States and China. The Trump administration argues that Huawei is beholden to the Chinese government, and that allowing its equipment into 5G networks will create a grave national security risk — a charge Huawei has vehemently denied.
The increased scrutiny of Huawei would appear to present an opportunity for rivals such as Ericsson and Nokia, but executives at the companies have said it risks creating a broader slowdown.
“All our customers are trying to work out what this means, and that is causing uncertainty,” Borje Ekholm, the chief executive of Ericsson, told The Financial Times this month.
Ericsson and Nokia, which declined to comment, have fallen behind Huawei in market share over the past decade, struggling to match its rival’s lower prices and large investments in 5G and other emerging technology. Many carriers say the Chinese company’s 5G technology is more advanced than that of its Western rivals.
Despite being blocked by the United States, Huawei is the largest seller of telecommunications equipment, accounting for about 28 percent of the global market, according to the Dell’Oro Group, a market research firm. Companies such as Cisco Systems provide equipment like routers used by carriers in other parts of their networks.
The new 5G networks represent a once-in-a-decade opportunity. In Europe, mobile carriers are expected to spend at least $340 billion by 2025 constructing the networks, according to GSMA.
Ericsson and Nokia have been careful not to appear to take advantage of Huawei’s misfortune, perhaps out of concern that China would retaliate against the European companies if new bans against Huawei were introduced.
The two companies each earn around $1.5 billion in revenue each year in China, according to an estimate by Pierre Ferragu, an analyst at New Street Research in New York. By contrast, Huawei earns $3.5 billion a year in Europe, Mr. Ferragu estimates.
Any company forced to replace Huawei equipment will have to shoulder heavy costs. “It would take time for the existing vendors to scale R&D, operations, sales, services and partner agreements to fill the void,” the Dell’Oro Group said in a recent report.
It may be for that reason wireless carriers that have long depended on Huawei are coming to its defense. Mr. Read of Vodafone urged governments to act carefully before imposing new restrictions, because much of the present debate was not “fact based.”
Source: https://www.nytimes.com/2019/02/22/technology/huawei-europe-mwc.html
From Digital Music News
The American Mechanical Licensing Collective (AMLC) Wants Competition And Isn’t Going Away — Here’s Their Full Statement to the Music Industry
Paul Resnikoff
February 21, 2019
2https://www.digitalmusicnews.com/2019/02/21/amlc-american-mechanical-licensing-collective/#comments
The American Mechanical Licensing Collective (AMLC) says they represent the interests of independent songwriters and rights owners. In fact, they feel they’re addressing a bigger group than the major publisher-backed ‘MLC’.
Back in November, we first reported on a new mechanical licensing agency: the American Mechanical Licensing Collective, or AMLC. The group tossed their hat in the ring to administer mechanical licenses for the government-created Mechanical Licensing Collective, or MLC, as outlined by the now-passed Music Modernization Act.
In response, major publishers and other industry heavyweights assembled a broad consortium of industry players to back its own mechanical licensing contender. David Israelite, head of the National Music Publishers’ Association (NMPA), argued that the role of the MLC should not be filled by a competitive process, especially since his group already enjoyed an overwhelming consensus among industry players.
In fact, the NMPA-backed group has already called themselves the ‘MLC’, while also naming themselves the ‘consensus’ mechanical licensing organization. Additionally, Israelite has argued that his group was most responsible for passing the MMA, therefore, they should be the ones implementing its core function.
The AMLC, along with a long list of independent songwriters and producers, have sharply questioned that approach. They say this shouldn’t be a no-bid contract. And more importantly, they feel that they represent the real majority of rights owners, most of whom would be marginalized by the mainline MLC group.
Here’s the AMLC’s official statement on their position.
The Mechanical Licensing Collective will be a non-profit organization charged with the payment of songwriter and music publisher “mechanical” royalties to the rightful songwriter and music publishers. In addition, it must maintain a musical works database, providing blanket licenses to U.S. digital streaming services; hold onto earned but unpaid money; resolve conflicts; and more.
The Register of Copyrights will designate the MLC from submitted applications based on an entity proving itself able to achieve the goals of the MLC, as well as meeting all the legal requirements as stipulated in the MMA.
Last week it was reported in the press that an organization planning to apply to be designated as the MLC prematurely suggested that the competition among entities to become the MLC is all but over.
This suggestion was made despite the Register of Copyright making no such statement and still awaiting receipt of complete applications, which are not due until mid-March. If the suggestion is true, the selection process would at best not have been made — and, at worst, been compromised.
It is possible that the reported public press statement indicating their application is “the only one that meets the statutory definition” is inaccurate or perhaps rests on the role the traditional industry played in the passage of the Music Modernization Act. Although we recognize the role and importance those organizations played in getting the bill drafted and passed, we agree with the Copyright Office’s statement that “[s]ervice on the Board or its committees is not a reward for past actions, but is instead a serious responsibility that must not be underestimated.”
The suggestion that only one entity gets to compete — which, by default, is not a competition — counters the MMA and the Copyright Office’s intentions and requirements.
The suggestion that only one entity gets to compete — which, by default, is not a competition — counters the MMA and the Copyright Office’s intentions and requirements. In fact, to help encourage the needed competition, the Copyright Office publicly stated that “the Office does not read this clause as prohibiting a musical work copyright owner from endorsing multiple prospective MLCs.” The intent of the law is to clearly allow copyright owners to recognize and endorse multiple groups.
As the MLC will work for independent and major music publishers as well as all global music copyright owners, this ties into the MMA provision that clearly states, and logically requires, that the MLC have “substantial support” from “musical copyright owners” who together represent “the greatest percentage of the Licensor Market for uses.”
About 90 percent of the millions of global music copyright creators own and control their own copyrights. Each month alone in the U.S. there are over 500,000 new recordings of new songs from tens of thousands of DIY, self-owning copyright owners being delivered to U.S. music services and made available to stream. In just the last year, hundreds of thousands of DIY copyright owners have created and distributed at least 6 million works. In the past 10 years, estimates place that number closer to millions of copyright owners distributing over 20 million songs to streaming services. The majority of works being written, recorded, distributed and made available to stream overwhelmingly come from this constituency.
It is this constituency of millions of hard-working individuals, with a rising market share, that represents the majority of musical works copyright owners. These global copyright owners, combined with the legacy industry, make up the entire Licensor Market eligible to be streamed in the U.S. Surely the intent of the law is not to make them irrelevant in the process of establishing the MLC, particularly when there is a further important distinction between the two market segments: some of the biggest publishers in the traditional music industry are expected to bypass and not use the MLC due to their direct licensing deals with the digital streaming services, as compared to the millions of global copyright owners whom will rely on the MLC for licensing and payments.
This point further exacerbates the yet-to-be-resolved conflict of interest; that is, board members of the MLC can recommend other copyright owners’ money be liquidated and given to themselves through market share disbursements, all without actually having to use the MLC for their own copyrights. This outcome is most certainly not the intended application of the law.
This speaks as to why competition is needed.
The AMLC (American Mechanical License Collective) is competing to become the MLC. The AMLC’s board members are independent songwriters, technologists, entrepreneurs, music publishers and administrators, legal scholars, and business people who have profound and extensive knowledge in the areas of administration, technology, and identification of royalties without the same conflict of interest as the other.
The AMLC believes it serves all copyright owners including the independent writers and publishers as well as the major music publishers. It believes the companies and individuals of the board members of the MLC should use the MLC whenever possible. In addition, the AMLC directly addresses the importance of serving both the traditional industry as well as the independent writers and publisher, as it is their songs which will generate the vast majority of licenses and royalties flowing through the MLC.
In further contrast, the experience and credentials of the AMLC in the relatively new world of digital streaming are impressive and profound. This can be seen not just by examining the creation of the technology, innovation and success of its board members but also by the fact that many of the AMLC board members were hired by the traditional industry to build the systems
they needed to fix their data, resolve conflicts, audit statements, confirm splits, locate recordings and more (the very same needs of the MLC).
The AMLC has been forthright and has highlighted that its primary goals are to get all copyright owners and songwriters paid what they earned and reducing black box money by ensuring those funds go to its rightful owners and are not liquidated without intense due diligence. Finally, the AMLC is focused on keeping any perceived or actual conflict of interest to the lowest possible minimum and avoiding any activities that might give one group of copyright owners advantages over other groups of owners.
To that end, as we further expand our board, round out our committees and put forth an efficient one of a kind cutting edge technology solution we encourage the spirit and goal of the MMA to create competition, allowing the best entity possible to emerge and serve the world’s songwriters, publishers, and copyright owners under the requirements of the law.
The AMLC
The American Mechanical Licensing Collective (AMLC) Wants Competition And Isn’t Going Away — Here’s Their Full Statement to the Music Industry
Paul Resnikoff
February 21, 2019
2https://www.digitalmusicnews.com/2019/02/21/amlc-american-mechanical-licensing-collective/#comments
The American Mechanical Licensing Collective (AMLC) says they represent the interests of independent songwriters and rights owners. In fact, they feel they’re addressing a bigger group than the major publisher-backed ‘MLC’.
Back in November, we first reported on a new mechanical licensing agency: the American Mechanical Licensing Collective, or AMLC. The group tossed their hat in the ring to administer mechanical licenses for the government-created Mechanical Licensing Collective, or MLC, as outlined by the now-passed Music Modernization Act.
In response, major publishers and other industry heavyweights assembled a broad consortium of industry players to back its own mechanical licensing contender. David Israelite, head of the National Music Publishers’ Association (NMPA), argued that the role of the MLC should not be filled by a competitive process, especially since his group already enjoyed an overwhelming consensus among industry players.
In fact, the NMPA-backed group has already called themselves the ‘MLC’, while also naming themselves the ‘consensus’ mechanical licensing organization. Additionally, Israelite has argued that his group was most responsible for passing the MMA, therefore, they should be the ones implementing its core function.
The AMLC, along with a long list of independent songwriters and producers, have sharply questioned that approach. They say this shouldn’t be a no-bid contract. And more importantly, they feel that they represent the real majority of rights owners, most of whom would be marginalized by the mainline MLC group.
Here’s the AMLC’s official statement on their position.
The Mechanical Licensing Collective will be a non-profit organization charged with the payment of songwriter and music publisher “mechanical” royalties to the rightful songwriter and music publishers. In addition, it must maintain a musical works database, providing blanket licenses to U.S. digital streaming services; hold onto earned but unpaid money; resolve conflicts; and more.
The Register of Copyrights will designate the MLC from submitted applications based on an entity proving itself able to achieve the goals of the MLC, as well as meeting all the legal requirements as stipulated in the MMA.
Last week it was reported in the press that an organization planning to apply to be designated as the MLC prematurely suggested that the competition among entities to become the MLC is all but over.
This suggestion was made despite the Register of Copyright making no such statement and still awaiting receipt of complete applications, which are not due until mid-March. If the suggestion is true, the selection process would at best not have been made — and, at worst, been compromised.
It is possible that the reported public press statement indicating their application is “the only one that meets the statutory definition” is inaccurate or perhaps rests on the role the traditional industry played in the passage of the Music Modernization Act. Although we recognize the role and importance those organizations played in getting the bill drafted and passed, we agree with the Copyright Office’s statement that “[s]ervice on the Board or its committees is not a reward for past actions, but is instead a serious responsibility that must not be underestimated.”
The suggestion that only one entity gets to compete — which, by default, is not a competition — counters the MMA and the Copyright Office’s intentions and requirements.
The suggestion that only one entity gets to compete — which, by default, is not a competition — counters the MMA and the Copyright Office’s intentions and requirements. In fact, to help encourage the needed competition, the Copyright Office publicly stated that “the Office does not read this clause as prohibiting a musical work copyright owner from endorsing multiple prospective MLCs.” The intent of the law is to clearly allow copyright owners to recognize and endorse multiple groups.
As the MLC will work for independent and major music publishers as well as all global music copyright owners, this ties into the MMA provision that clearly states, and logically requires, that the MLC have “substantial support” from “musical copyright owners” who together represent “the greatest percentage of the Licensor Market for uses.”
About 90 percent of the millions of global music copyright creators own and control their own copyrights. Each month alone in the U.S. there are over 500,000 new recordings of new songs from tens of thousands of DIY, self-owning copyright owners being delivered to U.S. music services and made available to stream. In just the last year, hundreds of thousands of DIY copyright owners have created and distributed at least 6 million works. In the past 10 years, estimates place that number closer to millions of copyright owners distributing over 20 million songs to streaming services. The majority of works being written, recorded, distributed and made available to stream overwhelmingly come from this constituency.
It is this constituency of millions of hard-working individuals, with a rising market share, that represents the majority of musical works copyright owners. These global copyright owners, combined with the legacy industry, make up the entire Licensor Market eligible to be streamed in the U.S. Surely the intent of the law is not to make them irrelevant in the process of establishing the MLC, particularly when there is a further important distinction between the two market segments: some of the biggest publishers in the traditional music industry are expected to bypass and not use the MLC due to their direct licensing deals with the digital streaming services, as compared to the millions of global copyright owners whom will rely on the MLC for licensing and payments.
This point further exacerbates the yet-to-be-resolved conflict of interest; that is, board members of the MLC can recommend other copyright owners’ money be liquidated and given to themselves through market share disbursements, all without actually having to use the MLC for their own copyrights. This outcome is most certainly not the intended application of the law.
This speaks as to why competition is needed.
The AMLC (American Mechanical License Collective) is competing to become the MLC. The AMLC’s board members are independent songwriters, technologists, entrepreneurs, music publishers and administrators, legal scholars, and business people who have profound and extensive knowledge in the areas of administration, technology, and identification of royalties without the same conflict of interest as the other.
The AMLC believes it serves all copyright owners including the independent writers and publishers as well as the major music publishers. It believes the companies and individuals of the board members of the MLC should use the MLC whenever possible. In addition, the AMLC directly addresses the importance of serving both the traditional industry as well as the independent writers and publisher, as it is their songs which will generate the vast majority of licenses and royalties flowing through the MLC.
In further contrast, the experience and credentials of the AMLC in the relatively new world of digital streaming are impressive and profound. This can be seen not just by examining the creation of the technology, innovation and success of its board members but also by the fact that many of the AMLC board members were hired by the traditional industry to build the systems
they needed to fix their data, resolve conflicts, audit statements, confirm splits, locate recordings and more (the very same needs of the MLC).
The AMLC has been forthright and has highlighted that its primary goals are to get all copyright owners and songwriters paid what they earned and reducing black box money by ensuring those funds go to its rightful owners and are not liquidated without intense due diligence. Finally, the AMLC is focused on keeping any perceived or actual conflict of interest to the lowest possible minimum and avoiding any activities that might give one group of copyright owners advantages over other groups of owners.
To that end, as we further expand our board, round out our committees and put forth an efficient one of a kind cutting edge technology solution we encourage the spirit and goal of the MMA to create competition, allowing the best entity possible to emerge and serve the world’s songwriters, publishers, and copyright owners under the requirements of the law.
The AMLC
From the Complaint in
THE CITY OF PHILADELPHIA, Plaintiff,
vs.
BANK OF AMERICA CORPORATION, BANK OF AMERICA, N.A., BANC OF AMERICA SECURITIES LLC, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, BARCLAYS BANK PLC, BARCLAYS CAPITAL INC., CITIGROUP, INC., CITIBANK N.A., CITIGROUP GLOBAL MARKETS INC., CITIGROUP GLOBAL MARKETS LIMITED, THE GOLDMAN SACHS GROUP, INC., GOLDMAN SACHS & CO. LLC, JPMORGAN CHASE & CO., JPMORGAN CHASE BANK, N.A., J.P. MORGAN SECURITIES LLC, THE ROYAL BANK OF CANADA, RBC CAPITAL MARKETS LLC, WELLS FARGO & CO., WELLS FARGO BANK, N.A., WACHOVIA BANK, N.A., WELLS FARGO FUNDS MANAGEMENT, LLC, WELLS FARGO SECURITIES LLC, Defendants.
Case No.: 1:19-cv-01608, Southern District of New York
Plaintiff The City of Philadelphia, individually and on behalf of all persons and entities similarly situated, brings this class action under Section 1 of the Sherman Antitrust Act, Sections 4 and 16 of the Clayton Antitrust Act, and certain state laws, for actual damages, treble damages, punitive damages, declaratory and injunctive relief, costs of suit, pre- and post-judgment interest, and other relief, and alleges as follows:
NATURE OF THE ACTION
1. This is an antitrust class action charging the Defendant banks with conspiring to inflate the interest rates for a type of bonds often called “Variable Rate Demand Obligations” or “VRDOs.” 1 The City of Philadelphia (“Philadelphia” or “Plaintiff”) brings this action on behalf of itself and a proposed Class of VRDO issuers—mainly state and local public entities such as municipalities, agencies, public universities, and hospitals—to redress the harm inflicted by Defendants, which likely amounts to billions of dollars class-wide.
2. VRDOs are tax-exempt bonds with interest rates that are reset on a periodic basis, typically weekly. VDROs are issued by public entities to raise money to fund their operations, as well as critically important infrastructure and public services, such as neighborhood schools, water and wastewater systems, public power utilities, and transportation services. VRDOs are also issued by public entities on behalf of tax-exempt 501(c)(3) organizations—including schools, community organizations, and charities—which use the VRDOs to fund their operations and projects.
3. VRDOs allow issuers to borrow money for long periods of time while paying short-term interest rates. Investors find VRDOs attractive because the bonds include a built-in “put” feature that allows investors to redeem the bond at any periodic reset date, thus making VRDOs a low-risk and high-liquidity investment.
4. To manage the bond, VRDO issuers contract with banks—like Defendants here— to act as re-marketing agents (“RMAs”). RMAs have two primary jobs under the remarketing agreements. First, on each reset date, RMAs are required to reset the interest rate of the VRDO at the lowest possible rate that would permit the bonds to trade at par. For the vast majority of VRDOs, the reset date occurs on a weekly basis, typically every Tuesday or Wednesday. Second, when an existing investor exercises the “put” on the bonds and tenders the bond to RMAs, RMAs are required to “remarket” the VRDO to other investors at the lowest possible rate. For these ongoing services, issuers pay RMAs remarketing fees.
5. VRDO issuers are motivated to obtain the lowest interest rates for their debt. The higher the rates that VRDO issuers pay, the more costly it is for them to finance their operations and fund infrastructure projects. If an RMA cannot deliver low rates, issuers have the right to replace that RMA with another one who can. Thus, in a properly functioning market, RMAs would compete against each other for issuers’ business by actively working to set the best (i.e., the lowest) possible rate for their customers.
6. Defendants—which, collectively, served as RMAs for approximately 70% of all VRDOs in the United States from 2008 through 2016—did not work to set the lowest possible VRDO rates for Plaintiff and the Class, however.
7. Since about late 2015, various government authorities have been investigating Defendants’ practices in the market for VRDO remarketing services, based on facts that were first brought to their attention by a whistleblower. Among other things, the whistleblower alleges that RMAs (including Defendants here) were not actively and individually marketing and pricing VRDOs at the lowest possible interest rates, but instead were setting artificially high rates without regard to the individual characteristics of VRDOs, market conditions, or investor demand. The whistleblower also alleges that RMAs (including Defendants here) were improperly coordinating the rates they set for VRDOs. These allegations were based on the whistleblower’s extensive analysis of data available to the whistleblower due to that person’s role in the marketplace.
8. Starting in or about late 2015 and 2016, the whistleblower began to meet and share data and the whistleblower’s analysis of data with federal authorities, including the Antitrust Division of the U.S. Department of Justice (the “DOJ”). The DOJ subsequently opened a preliminary criminal investigation into Defendants’ remarketing practices in connection with VRDOs. That preliminary criminal investigation is ongoing.
9. Plaintiff counsel’s investigation of this matter has confirmed that there exists evidence of direct communications between competing banks concerning VRDO rate-setting. In these communications, senior personnel sitting within Defendants’ Municipal Securities Groups, which housed the Short-Term Products desks on which Defendants ran their VRDO operations, shared competitively sensitive information that was material to the setting and resetting of VRDO rates.
10. As a result of Plaintiff counsel’s investigation, Plaintiff has further learned that, as early as February 2008, Defendants were agreeing among themselves not to compete against each other in the market for remarketing services, and instead to keep VRDO rates artificially high, to the detriment of their customers, including Plaintiff here. Defendants conspired by communicating with each other in person, via telephone, and through electronic communications. In these inter-Defendant communications, they repeatedly shared highly sensitive information about the “base rates” that Defendants used to make initial determinations of the interest rates they set for VRDOs as well as the levels of VRDO inventory Defendants held on their books.
11. Defendants’ overarching objective was to ensure that the cartel members would keep VRDO rates artificially high in order to prevent investors from “putting” the bonds back to Defendants. When investors tender VRDOs back to RMAs, it triggers the RMAs’ obligation to remarket the VRDOs while also forcing the RMAs to carry the bonds in their inventory. By keeping rates high, Defendants ensured that investors would not exercise their put options on the bonds on a widespread basis. This allowed Defendants to continue to collect remarketing fees for doing, essentially, nothing.
12. Economic analysis provides strong support for the existence of this conspiracy. As detailed below, Plaintiff’s preliminary economic analysis demonstrates that VRDO interest rates were artificially inflated for several years starting as early as 2008 and continuing until late 2015 to early 2016. This economic analysis also demonstrates the existence of several historical patterns in VRDO rates that are each indicative of an agreement among Defendants not to compete in the market for VRDO remarketing services that began to break up in late 2015 to early 2016, around the same time that government authorities began investigating Defendants’ practices in the market for VRDO remarketing services.
13. Defendants’ conspiracy restrained competition in the market for VRDO remarketing services and inflicted significant financial harm on Plaintiff and the Class. Plaintiff and the Class paid billions of dollars in inflated interest rates during the Class Period due to Defendants’ conspiracy. By artificially increasing the rates paid by Plaintiff and the Class, Defendants’ conduct necessarily decreased the amount of funding available for critical public projects and services, as well as the operations of 501(c)(3) organizations. At the same time, Defendants banked hundreds of millions of dollars in the form of remarketing fees charged for services that Defendants never provided.
14. Free-market competition is, and has long been, the fundamental economic policy of the United States. As the Supreme Court has explained, this policy is enshrined in the Sherman Act,2 which makes it per se illegal for competitors (like Defendants here) to conspire and coordinate with each other to limit competition. Defendants’ conspiracy offends the very core of the antitrust laws. Defendants were supposed to be aggressively competing with each other for the business of their customers, but they secretly conspired not to compete against each other and instead to work together to keep rates high. Accordingly, Plaintiff brings this class action to hold Defendants accountable for the injuries they have caused.
Full Complaint at https://images.law.com/contrib/content/uploads/documents/402/36507/2019.02.20-Philly-VRDO-complaint.pdf
THE CITY OF PHILADELPHIA, Plaintiff,
vs.
BANK OF AMERICA CORPORATION, BANK OF AMERICA, N.A., BANC OF AMERICA SECURITIES LLC, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED, BARCLAYS BANK PLC, BARCLAYS CAPITAL INC., CITIGROUP, INC., CITIBANK N.A., CITIGROUP GLOBAL MARKETS INC., CITIGROUP GLOBAL MARKETS LIMITED, THE GOLDMAN SACHS GROUP, INC., GOLDMAN SACHS & CO. LLC, JPMORGAN CHASE & CO., JPMORGAN CHASE BANK, N.A., J.P. MORGAN SECURITIES LLC, THE ROYAL BANK OF CANADA, RBC CAPITAL MARKETS LLC, WELLS FARGO & CO., WELLS FARGO BANK, N.A., WACHOVIA BANK, N.A., WELLS FARGO FUNDS MANAGEMENT, LLC, WELLS FARGO SECURITIES LLC, Defendants.
Case No.: 1:19-cv-01608, Southern District of New York
Plaintiff The City of Philadelphia, individually and on behalf of all persons and entities similarly situated, brings this class action under Section 1 of the Sherman Antitrust Act, Sections 4 and 16 of the Clayton Antitrust Act, and certain state laws, for actual damages, treble damages, punitive damages, declaratory and injunctive relief, costs of suit, pre- and post-judgment interest, and other relief, and alleges as follows:
NATURE OF THE ACTION
1. This is an antitrust class action charging the Defendant banks with conspiring to inflate the interest rates for a type of bonds often called “Variable Rate Demand Obligations” or “VRDOs.” 1 The City of Philadelphia (“Philadelphia” or “Plaintiff”) brings this action on behalf of itself and a proposed Class of VRDO issuers—mainly state and local public entities such as municipalities, agencies, public universities, and hospitals—to redress the harm inflicted by Defendants, which likely amounts to billions of dollars class-wide.
2. VRDOs are tax-exempt bonds with interest rates that are reset on a periodic basis, typically weekly. VDROs are issued by public entities to raise money to fund their operations, as well as critically important infrastructure and public services, such as neighborhood schools, water and wastewater systems, public power utilities, and transportation services. VRDOs are also issued by public entities on behalf of tax-exempt 501(c)(3) organizations—including schools, community organizations, and charities—which use the VRDOs to fund their operations and projects.
3. VRDOs allow issuers to borrow money for long periods of time while paying short-term interest rates. Investors find VRDOs attractive because the bonds include a built-in “put” feature that allows investors to redeem the bond at any periodic reset date, thus making VRDOs a low-risk and high-liquidity investment.
4. To manage the bond, VRDO issuers contract with banks—like Defendants here— to act as re-marketing agents (“RMAs”). RMAs have two primary jobs under the remarketing agreements. First, on each reset date, RMAs are required to reset the interest rate of the VRDO at the lowest possible rate that would permit the bonds to trade at par. For the vast majority of VRDOs, the reset date occurs on a weekly basis, typically every Tuesday or Wednesday. Second, when an existing investor exercises the “put” on the bonds and tenders the bond to RMAs, RMAs are required to “remarket” the VRDO to other investors at the lowest possible rate. For these ongoing services, issuers pay RMAs remarketing fees.
5. VRDO issuers are motivated to obtain the lowest interest rates for their debt. The higher the rates that VRDO issuers pay, the more costly it is for them to finance their operations and fund infrastructure projects. If an RMA cannot deliver low rates, issuers have the right to replace that RMA with another one who can. Thus, in a properly functioning market, RMAs would compete against each other for issuers’ business by actively working to set the best (i.e., the lowest) possible rate for their customers.
6. Defendants—which, collectively, served as RMAs for approximately 70% of all VRDOs in the United States from 2008 through 2016—did not work to set the lowest possible VRDO rates for Plaintiff and the Class, however.
7. Since about late 2015, various government authorities have been investigating Defendants’ practices in the market for VRDO remarketing services, based on facts that were first brought to their attention by a whistleblower. Among other things, the whistleblower alleges that RMAs (including Defendants here) were not actively and individually marketing and pricing VRDOs at the lowest possible interest rates, but instead were setting artificially high rates without regard to the individual characteristics of VRDOs, market conditions, or investor demand. The whistleblower also alleges that RMAs (including Defendants here) were improperly coordinating the rates they set for VRDOs. These allegations were based on the whistleblower’s extensive analysis of data available to the whistleblower due to that person’s role in the marketplace.
8. Starting in or about late 2015 and 2016, the whistleblower began to meet and share data and the whistleblower’s analysis of data with federal authorities, including the Antitrust Division of the U.S. Department of Justice (the “DOJ”). The DOJ subsequently opened a preliminary criminal investigation into Defendants’ remarketing practices in connection with VRDOs. That preliminary criminal investigation is ongoing.
9. Plaintiff counsel’s investigation of this matter has confirmed that there exists evidence of direct communications between competing banks concerning VRDO rate-setting. In these communications, senior personnel sitting within Defendants’ Municipal Securities Groups, which housed the Short-Term Products desks on which Defendants ran their VRDO operations, shared competitively sensitive information that was material to the setting and resetting of VRDO rates.
10. As a result of Plaintiff counsel’s investigation, Plaintiff has further learned that, as early as February 2008, Defendants were agreeing among themselves not to compete against each other in the market for remarketing services, and instead to keep VRDO rates artificially high, to the detriment of their customers, including Plaintiff here. Defendants conspired by communicating with each other in person, via telephone, and through electronic communications. In these inter-Defendant communications, they repeatedly shared highly sensitive information about the “base rates” that Defendants used to make initial determinations of the interest rates they set for VRDOs as well as the levels of VRDO inventory Defendants held on their books.
11. Defendants’ overarching objective was to ensure that the cartel members would keep VRDO rates artificially high in order to prevent investors from “putting” the bonds back to Defendants. When investors tender VRDOs back to RMAs, it triggers the RMAs’ obligation to remarket the VRDOs while also forcing the RMAs to carry the bonds in their inventory. By keeping rates high, Defendants ensured that investors would not exercise their put options on the bonds on a widespread basis. This allowed Defendants to continue to collect remarketing fees for doing, essentially, nothing.
12. Economic analysis provides strong support for the existence of this conspiracy. As detailed below, Plaintiff’s preliminary economic analysis demonstrates that VRDO interest rates were artificially inflated for several years starting as early as 2008 and continuing until late 2015 to early 2016. This economic analysis also demonstrates the existence of several historical patterns in VRDO rates that are each indicative of an agreement among Defendants not to compete in the market for VRDO remarketing services that began to break up in late 2015 to early 2016, around the same time that government authorities began investigating Defendants’ practices in the market for VRDO remarketing services.
13. Defendants’ conspiracy restrained competition in the market for VRDO remarketing services and inflicted significant financial harm on Plaintiff and the Class. Plaintiff and the Class paid billions of dollars in inflated interest rates during the Class Period due to Defendants’ conspiracy. By artificially increasing the rates paid by Plaintiff and the Class, Defendants’ conduct necessarily decreased the amount of funding available for critical public projects and services, as well as the operations of 501(c)(3) organizations. At the same time, Defendants banked hundreds of millions of dollars in the form of remarketing fees charged for services that Defendants never provided.
14. Free-market competition is, and has long been, the fundamental economic policy of the United States. As the Supreme Court has explained, this policy is enshrined in the Sherman Act,2 which makes it per se illegal for competitors (like Defendants here) to conspire and coordinate with each other to limit competition. Defendants’ conspiracy offends the very core of the antitrust laws. Defendants were supposed to be aggressively competing with each other for the business of their customers, but they secretly conspired not to compete against each other and instead to work together to keep rates high. Accordingly, Plaintiff brings this class action to hold Defendants accountable for the injuries they have caused.
Full Complaint at https://images.law.com/contrib/content/uploads/documents/402/36507/2019.02.20-Philly-VRDO-complaint.pdf
Editorial from the CPPC: State AGs Must Protect Consumers and Fill The Void to Challenge PBM Misconduct
February 21, 2019
Last fall’s meeting between the Department of Justice and several State Attorneys General reminds us that sound antitrust enforcement is not just a federal affair. While the Department of Justice called the meeting to discuss the antitrust concerns regarding the consolidation of information and data on technology platforms, the State Attorneys Generals turned the focus of the meeting to consumer protection and data privacy issues. Although they did not see eye to eye on all the issues, the states were clear that they will not stand on the sidelines. Indeed, the states appear to be taking the lead and will coordinate a multi-state antitrust and consumer protection inquiry into the practices of the tech platforms.
Many of the seminal antitrust cases including cases creating key principles of monopolization and merger law were brought by state attorneys generals. State Attorneys Generals have used the power under federal and their own state statutes to protect consumers against anticompetitive and fraudulent conduct in credit card, pharmaceutical, computer and many other markets crucial to consumers.
Much of the recent attention to escalating drug prices has focused on Pharmacy Benefit Managers (“PBMs”), the drug middlemen, who are driving up drug prices and reducing consumer choice. Appropriately the President’s May 2018 Blueprint to Reduce Drug Prices is focusing attention on how the lack of PBM competition and transparency permits PBMs to use their market power to drive up drug prices. In many cases, PBM customers such as states, health plans and employers do not receive the full benefit of these rebates because PBMs do not always classify certain fees as rebates.
Unfortunately, federal antitrust enforcement has simply dropped the ball on PBM competition. The recent approval of the CVS/Aetna deal makes that crystal clear. Over the past decade, the PBM industry has gotten stronger as it has undergone significant horizontal and vertical consolidation, leaving the market with just three large participants – Express Scripts, CVS Health, and OptumRx – that cover more than 85 percent of the PBM market. And the FTC has opposed efforts by states to adopt sensible regulations.
PBM rebate schemes also interfere in the relationship between doctors and their patients. PBMs often prevent consumers from getting the drugs they need or force consumers to switch drugs so they can secure higher rebates. Consumers lose through higher prices, less choice and threatened health care.
In short, the current system is broken, federal enforcers are passive and we need strong enforcement by state attorneys generals to protect competition and consumers.
States have significant advantages over federal enforcers. They are closer to the market and recognize the direct harm to consumers. They have the ability to secure monetary damages. States are often customers and victims of anticompetitive schemes. State enforcers can bring combined antitrust and consumer protection cases. And although each state has limited antitrust and consumer protection resources, states increasingly are using multistate task forces to investigate and prosecute unlawful conduct.
The strategic advantages of State Attorneys General are substantial. They have the authority to investigate and challenge mergers as well as the practices of PBMs under various federal and state laws including the False Claims Act (most states have enacted analogous false claims acts), state law deceptive trade practices acts, and the antitrust laws.
The states have begun to take matters into their own hands. In 2018, over 80 bills related to PBM regulation were introduced in state legislatures across the country and dozens of them were signed into law. Some of this legislation relates to requiring PBMs to have a fiduciary duty to its health plans, prohibiting gag clauses or PBM contract provisions that limit a pharmacist’s ability to inform customers about the least expensive way for customers to purchase prescription drugs; prohibiting a PBM from setting patient copays at a higher level than the health plan’s cost of the drug; requiring rebate transparency; and limiting PBM requirements on independent pharmacies.
There are clear precedents for state action. In the past decade a coalition of over 20 State Attorneys General brought a series of cases against the three major PBMs for manipulating the rebate process – switching patients to less safe, more expensive drugs in order to secure greater rebates. Thousands of consumers were prevented from using the drugs they needed and that worked. Ultimately the state cases were settled with penalties and damages of over $370 million.
The orders in these cases have expired and it seems that the PBMs have returned to their playbooks of misleading consumers and preventing them from getting the drugs they need. State AGs can obtain huge healthcare fraud settlements and judgments, which can provide an additional source of revenue for the states. As PBMs are increasingly scrutinized by the federal and state authorities, State AG investigations and complaints are likely to increase.
While historically State AGs typically coordinate with the federal government, they can certainly act alone or along with other states. Some State AGs with active enforcement agendas have sought to elevate their enforcement levels during periods when they have anticipated or perceived a reduction in federal enforcement. The DOJ and FTC have had a light hand in terms of scrutinizing PBM conduct so State AGs seem to be filling the void. Such an uptick in state level PBM enforcement is now in play and PBMs should take note of the resulting enhanced risk.
Indeed, Ohio and other states are increasing their enforcement activities due to the slow progress by the federal government. In July, then Ohio Attorney General and current Ohio Governor Mike DeWine put “PBMs on notice that their conduct is being heavily scrutinized, and any action that can be taken and proven in court will be filed to protect Ohio taxpayers and the millions of Ohioans who rely on the pharmacy benefits provided.” Ohio’s investigation began at the end of 2017.
And just this week, the new Ohio Attorney General Dave Yost announced he is seeking repayment of nearly $16 million paid to the OptumRx by the Bureau of Workers’ Compensation. A report found that the PBM overcharged the state and violated its contract by failing to adhere to agreed discounts on generic drugs. Yost will take OptumRx to nonbinding mediation, and that fails, the dispute will be taken to court. He has also promised further action against PBMs, saying “they took our money.”
In February 2018, Arkansas Attorney General Leslie Rutledge opened an investigation into CVS Caremark’s reimbursement practices after reviewing complaints of plummeting prescription medication reimbursement rates paid to local pharmacies. She is concerned that the PBM’s “reimbursements do not cover the actual cost of the medications.” If the local pharmacies’ prescription reimbursement rates are lower than their costs to purchase the drugs, they may eventually have to close their doors, which in turn, harms patients.
Fortunately, state AGs are there to protect consumers and competition and they have tremendous interest in controlling drug spending. States are clearly victims of these PBM schemes as significant drug price increases take a substantial amount out of state budgets. State AGs have the tools and need to use their enforcement powers to stop the egregious practices that are currently harming consumers. They are essential to protecting consumers and making the market work. Other State AGs should follow the examples of Arkansas and Ohio, and launch investigations and enforcement actions to stop abuses and ensure that PBMs are actually lowering drug costs.
From:https://www.thecppc.com/single-post/2019/02/21/State-AGs-Must-Protect-Consumers-and-Fill-The-Void-to-Challenge-PBM-Misconduct?utm_campaign=4f29d95c-84d4-42a2-9746-c5c44d551d91&utm_source=so
February 21, 2019
Last fall’s meeting between the Department of Justice and several State Attorneys General reminds us that sound antitrust enforcement is not just a federal affair. While the Department of Justice called the meeting to discuss the antitrust concerns regarding the consolidation of information and data on technology platforms, the State Attorneys Generals turned the focus of the meeting to consumer protection and data privacy issues. Although they did not see eye to eye on all the issues, the states were clear that they will not stand on the sidelines. Indeed, the states appear to be taking the lead and will coordinate a multi-state antitrust and consumer protection inquiry into the practices of the tech platforms.
Many of the seminal antitrust cases including cases creating key principles of monopolization and merger law were brought by state attorneys generals. State Attorneys Generals have used the power under federal and their own state statutes to protect consumers against anticompetitive and fraudulent conduct in credit card, pharmaceutical, computer and many other markets crucial to consumers.
Much of the recent attention to escalating drug prices has focused on Pharmacy Benefit Managers (“PBMs”), the drug middlemen, who are driving up drug prices and reducing consumer choice. Appropriately the President’s May 2018 Blueprint to Reduce Drug Prices is focusing attention on how the lack of PBM competition and transparency permits PBMs to use their market power to drive up drug prices. In many cases, PBM customers such as states, health plans and employers do not receive the full benefit of these rebates because PBMs do not always classify certain fees as rebates.
Unfortunately, federal antitrust enforcement has simply dropped the ball on PBM competition. The recent approval of the CVS/Aetna deal makes that crystal clear. Over the past decade, the PBM industry has gotten stronger as it has undergone significant horizontal and vertical consolidation, leaving the market with just three large participants – Express Scripts, CVS Health, and OptumRx – that cover more than 85 percent of the PBM market. And the FTC has opposed efforts by states to adopt sensible regulations.
PBM rebate schemes also interfere in the relationship between doctors and their patients. PBMs often prevent consumers from getting the drugs they need or force consumers to switch drugs so they can secure higher rebates. Consumers lose through higher prices, less choice and threatened health care.
In short, the current system is broken, federal enforcers are passive and we need strong enforcement by state attorneys generals to protect competition and consumers.
States have significant advantages over federal enforcers. They are closer to the market and recognize the direct harm to consumers. They have the ability to secure monetary damages. States are often customers and victims of anticompetitive schemes. State enforcers can bring combined antitrust and consumer protection cases. And although each state has limited antitrust and consumer protection resources, states increasingly are using multistate task forces to investigate and prosecute unlawful conduct.
The strategic advantages of State Attorneys General are substantial. They have the authority to investigate and challenge mergers as well as the practices of PBMs under various federal and state laws including the False Claims Act (most states have enacted analogous false claims acts), state law deceptive trade practices acts, and the antitrust laws.
The states have begun to take matters into their own hands. In 2018, over 80 bills related to PBM regulation were introduced in state legislatures across the country and dozens of them were signed into law. Some of this legislation relates to requiring PBMs to have a fiduciary duty to its health plans, prohibiting gag clauses or PBM contract provisions that limit a pharmacist’s ability to inform customers about the least expensive way for customers to purchase prescription drugs; prohibiting a PBM from setting patient copays at a higher level than the health plan’s cost of the drug; requiring rebate transparency; and limiting PBM requirements on independent pharmacies.
There are clear precedents for state action. In the past decade a coalition of over 20 State Attorneys General brought a series of cases against the three major PBMs for manipulating the rebate process – switching patients to less safe, more expensive drugs in order to secure greater rebates. Thousands of consumers were prevented from using the drugs they needed and that worked. Ultimately the state cases were settled with penalties and damages of over $370 million.
The orders in these cases have expired and it seems that the PBMs have returned to their playbooks of misleading consumers and preventing them from getting the drugs they need. State AGs can obtain huge healthcare fraud settlements and judgments, which can provide an additional source of revenue for the states. As PBMs are increasingly scrutinized by the federal and state authorities, State AG investigations and complaints are likely to increase.
While historically State AGs typically coordinate with the federal government, they can certainly act alone or along with other states. Some State AGs with active enforcement agendas have sought to elevate their enforcement levels during periods when they have anticipated or perceived a reduction in federal enforcement. The DOJ and FTC have had a light hand in terms of scrutinizing PBM conduct so State AGs seem to be filling the void. Such an uptick in state level PBM enforcement is now in play and PBMs should take note of the resulting enhanced risk.
Indeed, Ohio and other states are increasing their enforcement activities due to the slow progress by the federal government. In July, then Ohio Attorney General and current Ohio Governor Mike DeWine put “PBMs on notice that their conduct is being heavily scrutinized, and any action that can be taken and proven in court will be filed to protect Ohio taxpayers and the millions of Ohioans who rely on the pharmacy benefits provided.” Ohio’s investigation began at the end of 2017.
And just this week, the new Ohio Attorney General Dave Yost announced he is seeking repayment of nearly $16 million paid to the OptumRx by the Bureau of Workers’ Compensation. A report found that the PBM overcharged the state and violated its contract by failing to adhere to agreed discounts on generic drugs. Yost will take OptumRx to nonbinding mediation, and that fails, the dispute will be taken to court. He has also promised further action against PBMs, saying “they took our money.”
In February 2018, Arkansas Attorney General Leslie Rutledge opened an investigation into CVS Caremark’s reimbursement practices after reviewing complaints of plummeting prescription medication reimbursement rates paid to local pharmacies. She is concerned that the PBM’s “reimbursements do not cover the actual cost of the medications.” If the local pharmacies’ prescription reimbursement rates are lower than their costs to purchase the drugs, they may eventually have to close their doors, which in turn, harms patients.
Fortunately, state AGs are there to protect consumers and competition and they have tremendous interest in controlling drug spending. States are clearly victims of these PBM schemes as significant drug price increases take a substantial amount out of state budgets. State AGs have the tools and need to use their enforcement powers to stop the egregious practices that are currently harming consumers. They are essential to protecting consumers and making the market work. Other State AGs should follow the examples of Arkansas and Ohio, and launch investigations and enforcement actions to stop abuses and ensure that PBMs are actually lowering drug costs.
From:https://www.thecppc.com/single-post/2019/02/21/State-AGs-Must-Protect-Consumers-and-Fill-The-Void-to-Challenge-PBM-Misconduct?utm_campaign=4f29d95c-84d4-42a2-9746-c5c44d551d91&utm_source=so
Rebecca Sandefur on access to justice. Her article: “Access to What?” https://www.mitpressjournals.org/doi/full/10.1162/daed_a_00534
Journalists tend to focus on Rebecca Sandefur’s observation that people seeking solutions to civil justice problems may do just as well on their own as with the help of a lawyer. See https://www.nytimes.com/2019/02/13/opinion/legal-issues.html
Sandefur does start her recent article with the point that “resolving justice problems lawfully does not always require lawyer assistance. . . .” But Sandefur’s main point is deeper, and thought provoking. It is that justice is about just resolutions, not necessarily about access to legal services. A broader understanding of what just resolutions entail will help lawyers to work with problem solvers who are not lawyers to craft an array of approaches to achieving just results.
Civil justice problems Sandefur has in mind for solution include a broad array: wage theft, eviction, debt collection, bankruptcy, domestic violence, foreclosure, access to medical treatment, and care and custody of children and dependent adults.
Following is an excerpt from Sandefur’s article (citations omitted):
When a system is broken, the solution is systemic reform. Consider consumer debt. Today, small-claims and lower-civil-court dockets are flooded with debt claims against consumers. These claims have usually been sold by the original debtor, such as a credit-card company, to a third-party debt buyer in a bundle of hundreds or thousands of debts. Such claims against consumers are often based on “bad paper,” insufficient documentation to sustain the debt owners’ claim to the amount demanded. Courts spend scarce time and money processing hundreds of thousands of baseless claims. This situation persists because, in most states, courts do not require creditor-plaintiffs to show that they have documentation of ownership for the debt when they file lawsuits; individual debtors must appear in court and contest the documentation for each debt. In 2014, New York State's then–Chief Judge Jonathan Lippman issued an order requiring debt-owners to produce documentation of the amount claimed at the time of filing. The number of debt lawsuits against New York consumers dropped dramatically.
These are just a few examples from growing evidence that the current course of focusing narrowly on lawyers’ services is wrong, whether the goal is understanding the access problem or taking action to fix it. Looking only at the civil justice activity processed by lawyers or the court system misses most of the action. Focusing on existing programs that deliver legal services and on court cases will never provide a picture of all of the other civil justice activity that never makes it to the justice system–and that is the majority of civil justice activity. Practically speaking, it would be impossible for the nation's existing courts, administrative agencies, and other forums that resolve disputes to process the estimated more than one hundred million justice problems that Americans experience every year. There is no reason to want them to. The rule of law means that most people can rely on most others to be basically compliant with legal norms most of the time, with a fair and accessible legal system as backup.
The access-to-justice crisis is a crisis of exclusion and inequality, for which legal services will sometimes provide a solution. At other times, lawyers’ services will be too expensive and much more than necessary. At other times still, systemic reforms will be the right solution, not providing costly and inefficient assistance to individuals. Lawyers and social scientists have a limited understanding of how to determine which justice problems of the public need lawyers’ services and which do not.
Journalists tend to focus on Rebecca Sandefur’s observation that people seeking solutions to civil justice problems may do just as well on their own as with the help of a lawyer. See https://www.nytimes.com/2019/02/13/opinion/legal-issues.html
Sandefur does start her recent article with the point that “resolving justice problems lawfully does not always require lawyer assistance. . . .” But Sandefur’s main point is deeper, and thought provoking. It is that justice is about just resolutions, not necessarily about access to legal services. A broader understanding of what just resolutions entail will help lawyers to work with problem solvers who are not lawyers to craft an array of approaches to achieving just results.
Civil justice problems Sandefur has in mind for solution include a broad array: wage theft, eviction, debt collection, bankruptcy, domestic violence, foreclosure, access to medical treatment, and care and custody of children and dependent adults.
Following is an excerpt from Sandefur’s article (citations omitted):
When a system is broken, the solution is systemic reform. Consider consumer debt. Today, small-claims and lower-civil-court dockets are flooded with debt claims against consumers. These claims have usually been sold by the original debtor, such as a credit-card company, to a third-party debt buyer in a bundle of hundreds or thousands of debts. Such claims against consumers are often based on “bad paper,” insufficient documentation to sustain the debt owners’ claim to the amount demanded. Courts spend scarce time and money processing hundreds of thousands of baseless claims. This situation persists because, in most states, courts do not require creditor-plaintiffs to show that they have documentation of ownership for the debt when they file lawsuits; individual debtors must appear in court and contest the documentation for each debt. In 2014, New York State's then–Chief Judge Jonathan Lippman issued an order requiring debt-owners to produce documentation of the amount claimed at the time of filing. The number of debt lawsuits against New York consumers dropped dramatically.
These are just a few examples from growing evidence that the current course of focusing narrowly on lawyers’ services is wrong, whether the goal is understanding the access problem or taking action to fix it. Looking only at the civil justice activity processed by lawyers or the court system misses most of the action. Focusing on existing programs that deliver legal services and on court cases will never provide a picture of all of the other civil justice activity that never makes it to the justice system–and that is the majority of civil justice activity. Practically speaking, it would be impossible for the nation's existing courts, administrative agencies, and other forums that resolve disputes to process the estimated more than one hundred million justice problems that Americans experience every year. There is no reason to want them to. The rule of law means that most people can rely on most others to be basically compliant with legal norms most of the time, with a fair and accessible legal system as backup.
The access-to-justice crisis is a crisis of exclusion and inequality, for which legal services will sometimes provide a solution. At other times, lawyers’ services will be too expensive and much more than necessary. At other times still, systemic reforms will be the right solution, not providing costly and inefficient assistance to individuals. Lawyers and social scientists have a limited understanding of how to determine which justice problems of the public need lawyers’ services and which do not.
From Paul Levy:
Consumer Warning: Copyright Trolling by Higbee and Associates
Excerpt:
Over the past few years, the law firm Higbee and Associates (based in Los Angeles, although it pretentiously labels itself a "National Law Firm") has become identified with a pattern of making aggressive and, in many cases, unsupportable demands for the payment of significant sums of money by individuals and nonprofits whose web sites feature copyrighted graphics, and especially photographs, that they saw online but have never tried to license. The firm’s principal, Mathew Higbee, revels in his reputation for aggressive enforcement. (The interview linked above, for example, is featured on his own firm’s web site.)
Either in concert with a specialized search firm or using his own firm’s software, this firm patrols the Internet looking for graphics (especially photographs) that have been copied improperly from online sources. The firm then sends a demand letter bearing Higbee's signature, threatening to seek up to $150,000 in statutory damages as well as attorney fees unless the target of the letter promptly agrees to pay a specified amount. Deploying a tactic that is all too familiar from the depredations of Evan Stone and Prenda Law, the specified amount is low enough – usually in the low four figures, but I have seen high three figures as well —that it is not likely to be cost-effective for the target to hire a knowledgeable copyright lawyer to litigate an infringement lawsuit, even if the claim is bunk or, at least, if there is good reason to believe that the claim can easily be defended. The letter encloses a document identifying the allegedly infringing use as well as the online location where the work was found; another document that purports to authorize the firm to represent the copyright holder in seeking damages in connection with the work; a proposed “settlement agreement”; and a credit card payment form. If the target of the letter does not respond, or responds without agreeing to pay, then the Higbee firm increases the pressure: a non-lawyer who calls herself a “claim resolution specialist” sends an email warning that the claim is going to be “escalated to the attorneys,” at which point “[t]claim gets more stressful and expensive,” and an assurance that “my goal is to not let that happen to you.”
The documents linked above all relate to a single Higbee demand to a single target, but I have seen a number of other demand letters and ensuing emails from this firm, and spoken to several other copyright lawyers who have helped clients respond to Higbee’s blustering and threats, and it appears to me that these are pretty standard exemplars. Indeed, when I was reaching out to some other copyright lawyers to try to get their sense of some of the documents I was reviewing, a number of them guessed that it was Higbee based only on what I said I wanted to ask about, based on work they had done for their clients trying to address his threats against them. Plainly, this is a copyright troll with an outsized reputation.
The Demand to Homeless United for Friendship and Freedom (“HUFF”)
As it happens, I had heard recently from colleagues in the copyright law community about threats that Higbee was making to nonprofits when I was contacted by Thomas Leavitt, a former client in a free speech case, about a Higbee demand to Homeless United for Friendship and Freedom (“HUFF”). HUFF is a loose-knit activist group in Santa Cruz, California, that addresses issues of poverty, with specific reference to homelessness. It maintains a blog which, among other things, shows media coverage related to homelessness. On August 6, 2012, the blog reposted an article from the New York Times about a mass detention of migrants in Greece. That article featured a photograph showing an immigrant in the hands of the Greek police. The photograph could be seen in the HUFF blog post, along with the photo credit “Angelos Tzortzinis/Agence France-Presse — Getty Images.” but although the text of the Times article was placed directly on the blog, the photograph appeared only by virtue of deep-linking to the graphic as it appeared on the Times’ own web site, at this address.
More than six years later, on January 2, 2019, Mathew Higbee sent HUFF his demand letter, accompanied by the other documents described above. Several things jumped out at me. First, instead of reciting that the copyright in the photograph had been registered, and either attaching the registration or at least citing the registration number, the letter recited the photo’s “PicRights Claim Number” – a matter of utterly no consequence for the recipient of the demand. The registration number, by contrast, is far more significant in this context, because, for most copyrighted works (the exception is discussed below), a copyright holder cannot bring suit for infringement until the copyright has been registered, and regardless of the exception, a copyright holder cannot seek statutory damages or attorney fees for infringements that take place before registration, or even for infringements that continue after registration unless the copyright was registered promptly after the work was first published. Because this photograph appeared in the New York Times within a day after the photo was taken, and more than six years before the demand letter was sent, a failure to register would have meant that the letter’s warning about statutory damages and attorney fees was an empty bluff meant to intimidate.
Second, the letter was plainly a boilerplate form, containing somewhat stilted language that was poorly adapted to the specifics of HUFF’s claimed infringement. For example, the letter varies back and forth between referring to the recipient in the second and third person singular, suggests that HUFF might have its wages garnished, warns of action against “the business owner,” and refers to “the attached exhibits” even though only one exhibit was attached. Indeed, the “representation agreement” that was provided along with the demand letter, purporting to show that Agence France-Presse, PicRights and a European version of PicRights had authorized Higbee to pursue claims on its behalf about HUFF’s alleged infringement with respect to this specific photograph, did not identify the photograph but simply indicated that Higbee was handling “a copyright infringement matter.”
Third, the exhibit revealed Higbee’s recognition that the “infringing location” for the copyrighted work was not HUFF’s own web site but rather the web site of the New York Times which, presumably had licensed the photograph (I was able to confirm that assumption by contacting the Times’ legal department). And the Court of Appeals for the Ninth Circuit has decided, in Perfect 10 v. Amazon, that Google does not infringe a photographer’s copyright by including images in its search results, because American copyright law does not prevent the “framing” of deep-linked images that actually sit on the server of a party that is entitled to display the photograph and serve copies of the image to visiting viewers; it is only displaying and distributing from the defendant’s own server that violates the copyright laws (the “server test”).
Higbee Retreats Rapidly When Challenged by a Lawyer
Consequently, I wrote back to Higbee, asking directly whether the copyright in the image had been registered, and pointing out some of the legal flaws in his demand letter as well as the bullying email that had been sent as a followup by his "claims resolution specialist," Rebecca Alvarado. I told him that he needed to issue a prompt retraction of the demand, else we would be seeking a declaratory judgment of non-infringement.
For the complete article, go to https://pubcit.typepad.com/clpblog/2019/02/consumer-warning-copyright-trolling-by-higbee-and-associates.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+ConsumerLawPolicyBlog+%28Consumer+Law+%26+Policy+Blog%29
Consumer Warning: Copyright Trolling by Higbee and Associates
Excerpt:
Over the past few years, the law firm Higbee and Associates (based in Los Angeles, although it pretentiously labels itself a "National Law Firm") has become identified with a pattern of making aggressive and, in many cases, unsupportable demands for the payment of significant sums of money by individuals and nonprofits whose web sites feature copyrighted graphics, and especially photographs, that they saw online but have never tried to license. The firm’s principal, Mathew Higbee, revels in his reputation for aggressive enforcement. (The interview linked above, for example, is featured on his own firm’s web site.)
Either in concert with a specialized search firm or using his own firm’s software, this firm patrols the Internet looking for graphics (especially photographs) that have been copied improperly from online sources. The firm then sends a demand letter bearing Higbee's signature, threatening to seek up to $150,000 in statutory damages as well as attorney fees unless the target of the letter promptly agrees to pay a specified amount. Deploying a tactic that is all too familiar from the depredations of Evan Stone and Prenda Law, the specified amount is low enough – usually in the low four figures, but I have seen high three figures as well —that it is not likely to be cost-effective for the target to hire a knowledgeable copyright lawyer to litigate an infringement lawsuit, even if the claim is bunk or, at least, if there is good reason to believe that the claim can easily be defended. The letter encloses a document identifying the allegedly infringing use as well as the online location where the work was found; another document that purports to authorize the firm to represent the copyright holder in seeking damages in connection with the work; a proposed “settlement agreement”; and a credit card payment form. If the target of the letter does not respond, or responds without agreeing to pay, then the Higbee firm increases the pressure: a non-lawyer who calls herself a “claim resolution specialist” sends an email warning that the claim is going to be “escalated to the attorneys,” at which point “[t]claim gets more stressful and expensive,” and an assurance that “my goal is to not let that happen to you.”
The documents linked above all relate to a single Higbee demand to a single target, but I have seen a number of other demand letters and ensuing emails from this firm, and spoken to several other copyright lawyers who have helped clients respond to Higbee’s blustering and threats, and it appears to me that these are pretty standard exemplars. Indeed, when I was reaching out to some other copyright lawyers to try to get their sense of some of the documents I was reviewing, a number of them guessed that it was Higbee based only on what I said I wanted to ask about, based on work they had done for their clients trying to address his threats against them. Plainly, this is a copyright troll with an outsized reputation.
The Demand to Homeless United for Friendship and Freedom (“HUFF”)
As it happens, I had heard recently from colleagues in the copyright law community about threats that Higbee was making to nonprofits when I was contacted by Thomas Leavitt, a former client in a free speech case, about a Higbee demand to Homeless United for Friendship and Freedom (“HUFF”). HUFF is a loose-knit activist group in Santa Cruz, California, that addresses issues of poverty, with specific reference to homelessness. It maintains a blog which, among other things, shows media coverage related to homelessness. On August 6, 2012, the blog reposted an article from the New York Times about a mass detention of migrants in Greece. That article featured a photograph showing an immigrant in the hands of the Greek police. The photograph could be seen in the HUFF blog post, along with the photo credit “Angelos Tzortzinis/Agence France-Presse — Getty Images.” but although the text of the Times article was placed directly on the blog, the photograph appeared only by virtue of deep-linking to the graphic as it appeared on the Times’ own web site, at this address.
More than six years later, on January 2, 2019, Mathew Higbee sent HUFF his demand letter, accompanied by the other documents described above. Several things jumped out at me. First, instead of reciting that the copyright in the photograph had been registered, and either attaching the registration or at least citing the registration number, the letter recited the photo’s “PicRights Claim Number” – a matter of utterly no consequence for the recipient of the demand. The registration number, by contrast, is far more significant in this context, because, for most copyrighted works (the exception is discussed below), a copyright holder cannot bring suit for infringement until the copyright has been registered, and regardless of the exception, a copyright holder cannot seek statutory damages or attorney fees for infringements that take place before registration, or even for infringements that continue after registration unless the copyright was registered promptly after the work was first published. Because this photograph appeared in the New York Times within a day after the photo was taken, and more than six years before the demand letter was sent, a failure to register would have meant that the letter’s warning about statutory damages and attorney fees was an empty bluff meant to intimidate.
Second, the letter was plainly a boilerplate form, containing somewhat stilted language that was poorly adapted to the specifics of HUFF’s claimed infringement. For example, the letter varies back and forth between referring to the recipient in the second and third person singular, suggests that HUFF might have its wages garnished, warns of action against “the business owner,” and refers to “the attached exhibits” even though only one exhibit was attached. Indeed, the “representation agreement” that was provided along with the demand letter, purporting to show that Agence France-Presse, PicRights and a European version of PicRights had authorized Higbee to pursue claims on its behalf about HUFF’s alleged infringement with respect to this specific photograph, did not identify the photograph but simply indicated that Higbee was handling “a copyright infringement matter.”
Third, the exhibit revealed Higbee’s recognition that the “infringing location” for the copyrighted work was not HUFF’s own web site but rather the web site of the New York Times which, presumably had licensed the photograph (I was able to confirm that assumption by contacting the Times’ legal department). And the Court of Appeals for the Ninth Circuit has decided, in Perfect 10 v. Amazon, that Google does not infringe a photographer’s copyright by including images in its search results, because American copyright law does not prevent the “framing” of deep-linked images that actually sit on the server of a party that is entitled to display the photograph and serve copies of the image to visiting viewers; it is only displaying and distributing from the defendant’s own server that violates the copyright laws (the “server test”).
Higbee Retreats Rapidly When Challenged by a Lawyer
Consequently, I wrote back to Higbee, asking directly whether the copyright in the image had been registered, and pointing out some of the legal flaws in his demand letter as well as the bullying email that had been sent as a followup by his "claims resolution specialist," Rebecca Alvarado. I told him that he needed to issue a prompt retraction of the demand, else we would be seeking a declaratory judgment of non-infringement.
For the complete article, go to https://pubcit.typepad.com/clpblog/2019/02/consumer-warning-copyright-trolling-by-higbee-and-associates.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+ConsumerLawPolicyBlog+%28Consumer+Law+%26+Policy+Blog%29
Press Release, House Committee on Financial Services:
Waters and Green request documents from Consumer Bureau on recent settlements that do not require companies that have violated the law to provide redress to consumers who have been harmed.
Washington DC, February 7, 2019
Tags: CFPBToday, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, and Congressman Al Green (D-TX), Chairman of the Subcommittee on Oversight and Investigations, wrote to Consumer Financial Protection Bureau Director Kathy Kraninger to request documents relating to recent settlements that do not require companies that have violated the law to provide redress to consumers who have been harmed.
“The Consumer Financial Protection Bureau (“Consumer Bureau”) has recently announced several settlements against entities for engaging in unlawful practices without requiring the payment of redress to consumers harmed by the illegal conduct,” the lawmakers wrote. “This stands in stark contrast to the Consumer Bureau’s practice under the leadership of former Director Cordray. During Director Cordray’s tenure, the Consumer Bureau recovered nearly $12 billion in relief for harmed consumers over its first six years.[1] American consumers deserve a Consumer Bureau that will fight to recover their hard-earned money when they are cheated.”
In the letter, the lawmakers requested documents regarding recent Consumer Bureau settlements with Sterling Jewelers Inc., Enova International, Inc, and NDG Financial Corp. et al.
See below for the full letter. [https://financialservices.house.gov/uploadedfiles/letter_to_cfpb_re_settlements_020719.pdf]
The Honorable Kathy Kraninger
Director
Consumer Financial Protection Bureau
1700 G Street, NW
Washington, D.C. 20552
Dear Director Kraninger:
The Consumer Financial Protection Bureau (“Consumer Bureau”) has recently announced several settlements against entities for engaging in unlawful practices without requiring the payment of redress to consumers harmed by the illegal conduct. This stands in stark contrast to the Consumer Bureau’s practice under the leadership of former Director Cordray. During Director Cordray’s tenure, the Consumer Bureau recovered nearly $12 billion in relief for harmed consumers over its first six years.[1] American consumers deserve a Consumer Bureau that will fight to recover their hard-earned money when they are cheated.
On January 16, 2019, the Consumer Bureau announced it had reached a settlement with Sterling Jewelers Inc. (“Sterling”) for numerous claims, including that the company engaged in unfair practices by enrolling consumers who had a Sterling credit card in payment protection insurance without their consent.[2] Under the terms of the settlement, Sterling is required to pay a penalty to the Consumer Bureau of $10 million, but does not have to refund consumers any of the money paid for payment protection insurance.[3] According to the Consumer Bureau’s complaint against Sterling, payment protection insurance generated $60 million in revenue in 2016 alone.[4] The Consumer Bureau has previously required payments to consumers in similar cases where it found that consumers were enrolled in payment protection products without their consent.[5] The Committee is deeply troubled that the Consumer Bureau would allow a company to keep the profits they made from their illegal sales practices.
On January 25, 2019, the Consumer Bureau announced a settlement with Enova International, Inc. (“Enova”), an online lender, for engaging in unfair practices by debiting consumers’ bank accounts without authorization.[6] The settlement requires Enova to pay a $3.2 million civil money penalty to the Consumer Bureau, but contains no provision for paying redress to consumers.[7] The factual findings in the administrative consent order indicates that Enova debited payments on thousands of consumers’ outstanding loans where it did not have authorization and “extracted millions of dollars in unauthorized debits from consumers’ accounts.”[8]
On February 1, 2019, the Consumer Bureau announced a settlement with NDG Financial Corporation and other Defendants (“NDG Financial”) that did not require them to pay either a penalty or restitution to consumers.[9] The Consumer Bureau initiated its action against NDG Financial when the agency was still led by former Director Cordray. In its December 2015 amended complaint, the Consumer Bureau alleged that NDG Financial engaged in unfair, deceptive, and abusive practices by collecting on payday loans that were made in violation of state law.[10]The amended complaint specifically sought “damages and other monetary relief as the Court finds necessary to redress injury to consumers resulting from [NDG Financial’s] violations of federal consumer protection laws including but not limited to restitution and the refund of monies paid.”[11] Yet, the settlement agreement seeks no such relief for the wronged consumers.
Section 1055 of the Consumer Financial Protection Act of 2010 (“CFPA”) explicitly authorizes the Consumer Bureau to obtain relief for consumers, including the refund of money, restitution, or the payment of damages or other monetary relief. 12 U.S.C. § 5565(a)(1)(2).
The Committee has serious concerns about how the Consumer Bureau is exercising its enforcement authority, especially how it is determining whether to require companies to pay redress to consumers that have been harmed. The fact that two of the three settlements involve online lending raises serious questions about the Consumer Bureau’s commitment to protecting America’s consumers from predatory online lending practices.
As part of the Committee’s oversight over the Consumer Bureau,[12] please provide the following records by no later than March 5, 2019:
Sincerely,
MAXINE WATERS
CHAIRWOMAN
AL GREEN
CHAIRMAN
Subcommittee on Oversight and Investigations
cc: The Honorable Patrick McHenry, Ranking Member
Waters and Green request documents from Consumer Bureau on recent settlements that do not require companies that have violated the law to provide redress to consumers who have been harmed.
Washington DC, February 7, 2019
Tags: CFPBToday, Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, and Congressman Al Green (D-TX), Chairman of the Subcommittee on Oversight and Investigations, wrote to Consumer Financial Protection Bureau Director Kathy Kraninger to request documents relating to recent settlements that do not require companies that have violated the law to provide redress to consumers who have been harmed.
“The Consumer Financial Protection Bureau (“Consumer Bureau”) has recently announced several settlements against entities for engaging in unlawful practices without requiring the payment of redress to consumers harmed by the illegal conduct,” the lawmakers wrote. “This stands in stark contrast to the Consumer Bureau’s practice under the leadership of former Director Cordray. During Director Cordray’s tenure, the Consumer Bureau recovered nearly $12 billion in relief for harmed consumers over its first six years.[1] American consumers deserve a Consumer Bureau that will fight to recover their hard-earned money when they are cheated.”
In the letter, the lawmakers requested documents regarding recent Consumer Bureau settlements with Sterling Jewelers Inc., Enova International, Inc, and NDG Financial Corp. et al.
See below for the full letter. [https://financialservices.house.gov/uploadedfiles/letter_to_cfpb_re_settlements_020719.pdf]
The Honorable Kathy Kraninger
Director
Consumer Financial Protection Bureau
1700 G Street, NW
Washington, D.C. 20552
Dear Director Kraninger:
The Consumer Financial Protection Bureau (“Consumer Bureau”) has recently announced several settlements against entities for engaging in unlawful practices without requiring the payment of redress to consumers harmed by the illegal conduct. This stands in stark contrast to the Consumer Bureau’s practice under the leadership of former Director Cordray. During Director Cordray’s tenure, the Consumer Bureau recovered nearly $12 billion in relief for harmed consumers over its first six years.[1] American consumers deserve a Consumer Bureau that will fight to recover their hard-earned money when they are cheated.
On January 16, 2019, the Consumer Bureau announced it had reached a settlement with Sterling Jewelers Inc. (“Sterling”) for numerous claims, including that the company engaged in unfair practices by enrolling consumers who had a Sterling credit card in payment protection insurance without their consent.[2] Under the terms of the settlement, Sterling is required to pay a penalty to the Consumer Bureau of $10 million, but does not have to refund consumers any of the money paid for payment protection insurance.[3] According to the Consumer Bureau’s complaint against Sterling, payment protection insurance generated $60 million in revenue in 2016 alone.[4] The Consumer Bureau has previously required payments to consumers in similar cases where it found that consumers were enrolled in payment protection products without their consent.[5] The Committee is deeply troubled that the Consumer Bureau would allow a company to keep the profits they made from their illegal sales practices.
On January 25, 2019, the Consumer Bureau announced a settlement with Enova International, Inc. (“Enova”), an online lender, for engaging in unfair practices by debiting consumers’ bank accounts without authorization.[6] The settlement requires Enova to pay a $3.2 million civil money penalty to the Consumer Bureau, but contains no provision for paying redress to consumers.[7] The factual findings in the administrative consent order indicates that Enova debited payments on thousands of consumers’ outstanding loans where it did not have authorization and “extracted millions of dollars in unauthorized debits from consumers’ accounts.”[8]
On February 1, 2019, the Consumer Bureau announced a settlement with NDG Financial Corporation and other Defendants (“NDG Financial”) that did not require them to pay either a penalty or restitution to consumers.[9] The Consumer Bureau initiated its action against NDG Financial when the agency was still led by former Director Cordray. In its December 2015 amended complaint, the Consumer Bureau alleged that NDG Financial engaged in unfair, deceptive, and abusive practices by collecting on payday loans that were made in violation of state law.[10]The amended complaint specifically sought “damages and other monetary relief as the Court finds necessary to redress injury to consumers resulting from [NDG Financial’s] violations of federal consumer protection laws including but not limited to restitution and the refund of monies paid.”[11] Yet, the settlement agreement seeks no such relief for the wronged consumers.
Section 1055 of the Consumer Financial Protection Act of 2010 (“CFPA”) explicitly authorizes the Consumer Bureau to obtain relief for consumers, including the refund of money, restitution, or the payment of damages or other monetary relief. 12 U.S.C. § 5565(a)(1)(2).
The Committee has serious concerns about how the Consumer Bureau is exercising its enforcement authority, especially how it is determining whether to require companies to pay redress to consumers that have been harmed. The fact that two of the three settlements involve online lending raises serious questions about the Consumer Bureau’s commitment to protecting America’s consumers from predatory online lending practices.
As part of the Committee’s oversight over the Consumer Bureau,[12] please provide the following records by no later than March 5, 2019:
- All documents and communications referring or related to the issue of restitution in the settlement in Bureau of Consumer Financial Protection and the People of the State of New York, by Letitia James, Attorney General for the State of New York, v. Sterling Jewelers Inc., Case 1:19-cv-00448, including but not limited to, all memoranda (whether draft or final), any and all drafts of the proposed consent order, and all meeting minutes.
- All communications between the Bureau and Sterling or its representatives referring or related to the issue of restitution in the settlement in Bureau of Consumer Financial Protection and the People of the State of New York, by Letitia James, Attorney General for the State of New York, v. Sterling Jewelers Inc., Case 1:19-cv-00448, including but not limited to, any and all drafts of the proposed consent order.
- All documents and communications referring or related to the issue of restitution in the settlement in In the Matter of Enova International, Inc., 2019-CFPB-0003, including but not limited to, all memoranda (whether draft or final), any and all drafts of the proposed consent order, and all meeting minutes.
- All communications between the Bureau and Enova or its representatives referring or related to the issue of restitution in the settlement in In the Matter of Enova International, Inc., 2019-CFPB-0003, including but not limited to, any and all drafts of the proposed consent order.
- All documents and communications referring or related to the issue of restitution in the settlement in Consumer Financial Protection Bureau v. NDG Financial Corp. et al., Case 1:15-cv-05211, including but not limited to, all memoranda (whether draft or final), any and all drafts of the proposed consent order, and all meeting minutes.
- All communications between the Bureau and NDG (or any of the other Defendants named in the settlement) or their representatives referring or related to the issue of restitution in the settlement in Consumer Financial Protection Bureau v. NDG Financial Corp. et al., Case 1:15-cv-05211, including but not limited to, any and all drafts of the proposed consent order.
Sincerely,
MAXINE WATERS
CHAIRWOMAN
AL GREEN
CHAIRMAN
Subcommittee on Oversight and Investigations
cc: The Honorable Patrick McHenry, Ranking Member
Why The Sprint-T-Mobile Merger Epitomizes What Has Gone Wrong With U.S. Merger Enforcement
Diana Moss, President, American Antitrust Institute
Excerpt:
As Sprint and T-Mobile continue to hawk their proposed merger to antitrust enforcers, Congress, and the public, they face a growing tsunami of opposition from consumers, workers, and smaller competitors. This week, the companies go before another congressional committee to attempt to justify a deal that would combine the third and fourth wireless largest telecommunications carriers in the U.S.
The reality of a Sprint-T-Mobile merger is the elimination of the two "disruptive" competitors that have kept the big guys, AT&T and Verizon, on their toes. Worse, it would leave U.S. consumers with a cozy trio of national wireless carriers with strong incentives to collude rather than compete. The deal would virtually guarantee higher prices, less quality, and slower innovation for wireless services for millions of U.S. consumers.
So what is the justification for a combination that would fundamentally restructure the U.S. wireless industry? The deal will purportedly enable Sprint and T-Mobile to roll out 5G networks better and faster than if they did not combine forces. The companies have continued to dangle this enticing but elusive benefit before antitrust enforcers, Congress, and the public, even though both carriers are on record as ready, able, and willing to roll out 5G before they proposed to merge in early 2018.
The Sprint-T-Mobile story boils down to a fallacy that everyone can and should understand. That is, accepting significant harms to competition, consumers, and workers on the claim that the companies can deliver a benefit that both could achieve without the merger. We should not forget that it is the very competition between the existing four wireless carriers that drove Sprint and T-Mobile to begin rolling out 5G as independent wireless rivals.
The specter of Sprint and T-Mobile succeeding in justifying their merger should make every U.S. consumer hot under the collar. It prompted the American Antitrust Institute (AAI) to issue a commentary in June 2018, "Why the Sprint-T-Mobile Merger Should be DOA at the DOJ." AAI's piece laid out the facts: mergers that leave three competitors in a market are demonstrably some of the most virulently anticompetitive and anti-consumer deals because they create incentives to collude and weaken incentives to compete.
Full statement: https://www.antitrustinstitute.org/work-product/why-the-sprint-t-mobile-merger-epitomizes-what-has-gone-wrong-with-u-s-merger-enforcement/
Diana Moss, President, American Antitrust Institute
Excerpt:
As Sprint and T-Mobile continue to hawk their proposed merger to antitrust enforcers, Congress, and the public, they face a growing tsunami of opposition from consumers, workers, and smaller competitors. This week, the companies go before another congressional committee to attempt to justify a deal that would combine the third and fourth wireless largest telecommunications carriers in the U.S.
The reality of a Sprint-T-Mobile merger is the elimination of the two "disruptive" competitors that have kept the big guys, AT&T and Verizon, on their toes. Worse, it would leave U.S. consumers with a cozy trio of national wireless carriers with strong incentives to collude rather than compete. The deal would virtually guarantee higher prices, less quality, and slower innovation for wireless services for millions of U.S. consumers.
So what is the justification for a combination that would fundamentally restructure the U.S. wireless industry? The deal will purportedly enable Sprint and T-Mobile to roll out 5G networks better and faster than if they did not combine forces. The companies have continued to dangle this enticing but elusive benefit before antitrust enforcers, Congress, and the public, even though both carriers are on record as ready, able, and willing to roll out 5G before they proposed to merge in early 2018.
The Sprint-T-Mobile story boils down to a fallacy that everyone can and should understand. That is, accepting significant harms to competition, consumers, and workers on the claim that the companies can deliver a benefit that both could achieve without the merger. We should not forget that it is the very competition between the existing four wireless carriers that drove Sprint and T-Mobile to begin rolling out 5G as independent wireless rivals.
The specter of Sprint and T-Mobile succeeding in justifying their merger should make every U.S. consumer hot under the collar. It prompted the American Antitrust Institute (AAI) to issue a commentary in June 2018, "Why the Sprint-T-Mobile Merger Should be DOA at the DOJ." AAI's piece laid out the facts: mergers that leave three competitors in a market are demonstrably some of the most virulently anticompetitive and anti-consumer deals because they create incentives to collude and weaken incentives to compete.
Full statement: https://www.antitrustinstitute.org/work-product/why-the-sprint-t-mobile-merger-epitomizes-what-has-gone-wrong-with-u-s-merger-enforcement/
9th Circuit to reconsider decision on openly carrying guns in Hawaii
The 9th US Circuit Court of Appeals will re-examine a case concerning the open carrying of firearms in Hawaii. Last year, a panel of the court held that Hawaii violated a man's constitutional rights by denying him a permit to openly carry a firearm for self-defense in public.
https://www.reuters.com/article/us-usa-guns-court/us-appeals-court-to-revisit-open-carrying-of-guns-idUSKCN1PX2A9
9th Circuit to reconsider decision on openly carrying guns in Hawaii
The 9th US Circuit Court of Appeals will re-examine a case concerning the open carrying of firearms in Hawaii. Last year, a panel of the court held that Hawaii violated a man's constitutional rights by denying him a permit to openly carry a firearm for self-defense in public.
https://www.reuters.com/article/us-usa-guns-court/us-appeals-court-to-revisit-open-carrying-of-guns-idUSKCN1PX2A9
From DMN:
Live Nation Acquires Neste, Forming a New Live Joint Venture — Neste Live!
Daniel Sanchez
February 14, 2019
Neste marks the fourth acquisition Live Nation has made so far this year.
Live Nation Entertainment has made another important acquisition.
The live entertainment giant has acquired a majority stake in Neste, a full-service event marketing agency.
Live Nation plans to combine Neste’s expertise with its own extensive resources to launch Neste Live! The live joint venture will focus on talent buying and event production for US music festivals, fairs, and corporate clients.
With Neste Live!, Live Nation will service these markets combining Neste’s artist matching process with its own talent pool. The live joint venture will also combine event production expertise from both companies.
Neste Event Marketing first launched in 1995 as a corporate sponsorship and event marketing agency. The company first serviced the music festival marketplace. Neste eventually added talent buying and event production elements to its services. The event marketing agency has spearheaded and supported over 500 events. Its corporate clientele has included Jack Links, Jockey, Kansas City Life Insurance, Advisors Excel, and the NCAA College World Series.
Speaking about the majority acquisition and the new live joint venture, Gil Cunningham, President of Neste, said,
“We are looking forward to seeing the way Neste Live! unfolds and changes the talent buying process for clients of all kinds.”
Bob Roux, President of US Concerts at Live Nation, explained the live joint venture will help both companies work with even more events and clients in the live entertainment market.
“Gil and the team at Neste are amazing at what they do and make the perfect partners for this new endeavor.”
Based out of Tennessee, the Neste Live! team will report directly to Cunningham.
Neste marks Live Nation’s fourth acquisition so far this year. Last month, the live entertainment giant acquired One Production, a promoter in Singapore. This month, the company acquired Embrace Presents, a Canadian promoter, and Latin promoter Planet Events.
Source: https://www.digitalmusicnews.com/2019/02/14/live-nation-acquisition-neste-live/
Live Nation Acquires Neste, Forming a New Live Joint Venture — Neste Live!
Daniel Sanchez
February 14, 2019
Neste marks the fourth acquisition Live Nation has made so far this year.
Live Nation Entertainment has made another important acquisition.
The live entertainment giant has acquired a majority stake in Neste, a full-service event marketing agency.
Live Nation plans to combine Neste’s expertise with its own extensive resources to launch Neste Live! The live joint venture will focus on talent buying and event production for US music festivals, fairs, and corporate clients.
With Neste Live!, Live Nation will service these markets combining Neste’s artist matching process with its own talent pool. The live joint venture will also combine event production expertise from both companies.
Neste Event Marketing first launched in 1995 as a corporate sponsorship and event marketing agency. The company first serviced the music festival marketplace. Neste eventually added talent buying and event production elements to its services. The event marketing agency has spearheaded and supported over 500 events. Its corporate clientele has included Jack Links, Jockey, Kansas City Life Insurance, Advisors Excel, and the NCAA College World Series.
Speaking about the majority acquisition and the new live joint venture, Gil Cunningham, President of Neste, said,
“We are looking forward to seeing the way Neste Live! unfolds and changes the talent buying process for clients of all kinds.”
Bob Roux, President of US Concerts at Live Nation, explained the live joint venture will help both companies work with even more events and clients in the live entertainment market.
“Gil and the team at Neste are amazing at what they do and make the perfect partners for this new endeavor.”
Based out of Tennessee, the Neste Live! team will report directly to Cunningham.
Neste marks Live Nation’s fourth acquisition so far this year. Last month, the live entertainment giant acquired One Production, a promoter in Singapore. This month, the company acquired Embrace Presents, a Canadian promoter, and Latin promoter Planet Events.
Source: https://www.digitalmusicnews.com/2019/02/14/live-nation-acquisition-neste-live/
From DMN:
Sprint Is Suing AT&T Over ‘Fake’ 5G Advertising Claims
Ashley King
February 8, 2019
Sprint has filed a lawsuit against AT&T for its 5G Evolution branding.AT&T rolled out the branding on phones that still use 4G LTE Advanced technology, which is not true 5G.
Both T-Mobile and Verizon have mocked the branding through social media, but Sprint is the first to respond with litigation. In federal court filings, Sprint is seeking an injunction against AT&T to prevent them from using 5GE tags on devices or in advertising.
The claim filed by Sprint says the network performed a survey and found people believed 5G Evolution was the same thing as actual 5G.
54% of respondents believed 5GE networks were the same or better than true 5G. 43% of people said they believed that buying an AT&T phone in 2019 would be 5G capable.
Sprint argues that AT&T is damaging the reputation of true 5G, which is many times faster than 4G LTE.
AT&T says they will fight the lawsuit while continuing to deploy more 5G Evolution areas across the United States.
They see no problem with the advertising because — according to AT&T — most customers don’t see a problem with it. Sprint proved as much with their consumer survey, AT&T claims.
AT&T clapped back at the lawsuit in a statement to Engadget [ https://www.engadget.com/2019/02/08/att-5g-sprint-lawsuit/ ], mentioning the potential merger with T-Mobile and the reliance on their 5G network.
“Sprint will have to reconcile its arguments to the FCC that it cannot deploy a widespread 5G network without T-Mobile while simultaneously claiming in this suit to be launching ‘legitimate 5G technology imminently’.”
When 4G technology was the new kid on the block, both AT&T and T-Mobile were branding HSPA+ technology as 4G. It’s not surprising to see them doing the same with 5G, though it will be interesting to see how this lawsuit turns out.
See https://www.digitalmusicnews.com/2019/02/08/sprint-att-fake-5g/ where a copy of the complaint filed in court can be found
Sprint Is Suing AT&T Over ‘Fake’ 5G Advertising Claims
Ashley King
February 8, 2019
Sprint has filed a lawsuit against AT&T for its 5G Evolution branding.AT&T rolled out the branding on phones that still use 4G LTE Advanced technology, which is not true 5G.
Both T-Mobile and Verizon have mocked the branding through social media, but Sprint is the first to respond with litigation. In federal court filings, Sprint is seeking an injunction against AT&T to prevent them from using 5GE tags on devices or in advertising.
The claim filed by Sprint says the network performed a survey and found people believed 5G Evolution was the same thing as actual 5G.
54% of respondents believed 5GE networks were the same or better than true 5G. 43% of people said they believed that buying an AT&T phone in 2019 would be 5G capable.
Sprint argues that AT&T is damaging the reputation of true 5G, which is many times faster than 4G LTE.
AT&T says they will fight the lawsuit while continuing to deploy more 5G Evolution areas across the United States.
They see no problem with the advertising because — according to AT&T — most customers don’t see a problem with it. Sprint proved as much with their consumer survey, AT&T claims.
AT&T clapped back at the lawsuit in a statement to Engadget [ https://www.engadget.com/2019/02/08/att-5g-sprint-lawsuit/ ], mentioning the potential merger with T-Mobile and the reliance on their 5G network.
“Sprint will have to reconcile its arguments to the FCC that it cannot deploy a widespread 5G network without T-Mobile while simultaneously claiming in this suit to be launching ‘legitimate 5G technology imminently’.”
When 4G technology was the new kid on the block, both AT&T and T-Mobile were branding HSPA+ technology as 4G. It’s not surprising to see them doing the same with 5G, though it will be interesting to see how this lawsuit turns out.
See https://www.digitalmusicnews.com/2019/02/08/sprint-att-fake-5g/ where a copy of the complaint filed in court can be found
District of Columbia gun control
(By DAR) D.C.’s current gun control regulations can be found at https://mpdc.dc.gov/firearms Qualifying adults may register rifles, shotguns,revolvers, or handguns. In general, carrying a firearm in the District is prohibited.
At an earlier time the District of Columbia had a firearm regulatory scheme that more broadly prohibited the possession of firearms, including possesion of an operable handgun in a home. In 2008 in the case of District of Columbia v. Heller, 128 S.Ct. 2783 (2008), a 5 to 4 majority of the Supreme Court, in an opinion written by Justice Scalia, declared DC’s firearm regulatory scheme unconstitutional to the extent that it prohibited possession of an operable handgun in a home for self-defense purposes.
In an article criticizing the Heller decision, Anthony Picadio points out that the U.S. Supreme has been reluctant to review lower court decisions putting restrictions on gun ownership, including restrictions analogous to those now applicable in the District of Columbia. Following is an excerpt from Mr. Picadio’s article, with footnotes omitted:
Since Heller was decided, and as of October 18, 2018, there have been over 1,310
Second Amendment cases nationwide, challenging restrictive gun laws, with the
overwhelming majority (93%) upholding these restrictions.37 The Supreme Court
was petitioned to accept an appeal in 88 of those cases and in each case the Court
declined to hear the appeal.
Among the cases left standing by the Supreme Court are the following:
Peruta v. California, in which the Ninth Circuit Court of Appeals held that the
Second Amendment does not protect the right to carry concealed firearms in
public;
United States v. Mahin, in which the Fourth Circuit Court of Appeals upheld a
federal law prohibiting persons subject to domestic violence restraining order
from possessing firearms;
Kolbe v. Hogan, in which the Fourth Circuit Court of Appeals held that assault
weapons and large capacity magazines are not protected by the Second
Amendment;
Justice v. Town of Cicero, in which the Seventh Circuit Court of Appeals upheld a
local law requiring registration of all firearms.
These are only a few of the many restrictive Second Amendment decisions the
Supreme Court has left stand after the Heller decision.
The history of the Second Amendment in the courts since the Heller decision does
in fact support Justice Thomas’ lament [in a case dissent] that the courts have failed to afford the Second Amendment “the respect due an enumerated constitutional right.” Perhaps one of the reasons that the Amendment has been so disfavored by the courts is a growing recognition that it was never intended by those who drafted and adopted it to grant any rights to own or use a firearm unconnected to membership in a militia.
Mr. Picadio’s article appears in the PENNSYLVANIA BAR ASSOCIATION QUARTERLY | January 2019
A copy of the article accompanies a newspaper op-ed at https://www.post-gazette.com/opinion/brian-oneill/2019/02/10/Brian-O-Neill-Slavery-root-of-the-Second-Amendment/stories/201902100107
(By DAR) D.C.’s current gun control regulations can be found at https://mpdc.dc.gov/firearms Qualifying adults may register rifles, shotguns,revolvers, or handguns. In general, carrying a firearm in the District is prohibited.
At an earlier time the District of Columbia had a firearm regulatory scheme that more broadly prohibited the possession of firearms, including possesion of an operable handgun in a home. In 2008 in the case of District of Columbia v. Heller, 128 S.Ct. 2783 (2008), a 5 to 4 majority of the Supreme Court, in an opinion written by Justice Scalia, declared DC’s firearm regulatory scheme unconstitutional to the extent that it prohibited possession of an operable handgun in a home for self-defense purposes.
In an article criticizing the Heller decision, Anthony Picadio points out that the U.S. Supreme has been reluctant to review lower court decisions putting restrictions on gun ownership, including restrictions analogous to those now applicable in the District of Columbia. Following is an excerpt from Mr. Picadio’s article, with footnotes omitted:
Since Heller was decided, and as of October 18, 2018, there have been over 1,310
Second Amendment cases nationwide, challenging restrictive gun laws, with the
overwhelming majority (93%) upholding these restrictions.37 The Supreme Court
was petitioned to accept an appeal in 88 of those cases and in each case the Court
declined to hear the appeal.
Among the cases left standing by the Supreme Court are the following:
Peruta v. California, in which the Ninth Circuit Court of Appeals held that the
Second Amendment does not protect the right to carry concealed firearms in
public;
United States v. Mahin, in which the Fourth Circuit Court of Appeals upheld a
federal law prohibiting persons subject to domestic violence restraining order
from possessing firearms;
Kolbe v. Hogan, in which the Fourth Circuit Court of Appeals held that assault
weapons and large capacity magazines are not protected by the Second
Amendment;
Justice v. Town of Cicero, in which the Seventh Circuit Court of Appeals upheld a
local law requiring registration of all firearms.
These are only a few of the many restrictive Second Amendment decisions the
Supreme Court has left stand after the Heller decision.
The history of the Second Amendment in the courts since the Heller decision does
in fact support Justice Thomas’ lament [in a case dissent] that the courts have failed to afford the Second Amendment “the respect due an enumerated constitutional right.” Perhaps one of the reasons that the Amendment has been so disfavored by the courts is a growing recognition that it was never intended by those who drafted and adopted it to grant any rights to own or use a firearm unconnected to membership in a militia.
Mr. Picadio’s article appears in the PENNSYLVANIA BAR ASSOCIATION QUARTERLY | January 2019
A copy of the article accompanies a newspaper op-ed at https://www.post-gazette.com/opinion/brian-oneill/2019/02/10/Brian-O-Neill-Slavery-root-of-the-Second-Amendment/stories/201902100107
FROM PBS WEEKEND NEWSHOUR: the Consumer Financial Protection Bureau is proposing changes to regulations that previously protected borrowers from being trapped in long-term debt
In a major win for the payday lending industry which gives quick loans at exorbitant interest rates, the Consumer Financial Protection Bureau is proposing changes to regulations that protect borrowers from being trapped in long-term debt. Kevin Sweet, Associated Press’ business reporter, joins Hari Sreenivasan for more.
Go to https://www.pbs.org/newshour/show/consumers-may-lose-protections-in-proposed-payday-lending-changes#audio
In a major win for the payday lending industry which gives quick loans at exorbitant interest rates, the Consumer Financial Protection Bureau is proposing changes to regulations that protect borrowers from being trapped in long-term debt. Kevin Sweet, Associated Press’ business reporter, joins Hari Sreenivasan for more.
Go to https://www.pbs.org/newshour/show/consumers-may-lose-protections-in-proposed-payday-lending-changes#audio
Abusive litigator and patent troll Shipping and Transit LLC files for bankruptcy
(By DAR) A complex legal system makes it possible for some companies and lawyers to misuse the legal process to make money. In a recent case involving Shipping and Transit LLC the Judge explained that:
"Plaintiff [Shipping and Transit LLC] 's business model involves filing hundreds of patent infringement lawsuits, mostly against small companies, and leveraging the high cost of litigation to extract settlements for amounts less than $50,000. These tactics present a compelling need for deterrence and to discourage exploitative litigation by patentees who have no intention of testing the merits of their claims. Based on the totality of the circumstances, the Court finds that this [a case by a Defendant who fought back and asked for attorney's fees] is an “exceptional” case. . . . Defendant’s Motion for Attorney Fees and Costs is GRANTED. The Court rules that Defendant is the prevailing party, that Defendant is entitled to recover its costs to the extent taxable under L.R. 54-3, and that Defendant is entitled to recover its reasonable attorney fees under 35 U.S.C. § 285, including fees associated with its motion for attorney fees and costs."
The case report is at https://www.eff.org/files/2017/07/07/shipping_transit_llc_v_hall_-_fee_order.pdf
Daniel Nazer of the Electronic Frontier Foundation reports that Shipping & Transit LLC, formerly known as Arrivalstar, was one of the most prolific patent trolls ever. It filed more than 500 lawsuits alleging patent infringement. Despite having filed so many cases, it never had a court rule on the validity of its patents. In recent years, Shipping & Transit’s usual practice was to dismiss its claims as soon as a defendant spends resources to fight back. A district court in California issued an order this week [see above] ordering Shipping & Transit to pay a defendant's attorney's fees. The court found that Shipping & Transit has engaged in a pattern of “exploitative litigation.” The fee award is from a case called Shipping & Transit LLC v. Hall Enterprises, Inc. After getting sued, Hall told Shipping & Transit that it should dismiss its claims because its patents are invalid under Alice v. CLS Bank. Shipping & Transit refused. Hall then went to the expense of preparing and filing a motion for judgment on the pleadings (PDF at https://www.eff.org/files/2017/07/07/shipping_transit_v_hall_-_motion_for_judgment_on_the_pleadings.pdf) arguing that Shipping & Transit’s patents are invalid. In response, Shipping & Transit voluntarily dismissed its claims. Hall then filed its successful motion for attorney’s fees.
Subsequently Shipping and Transit filed for bankruptcy, declaring the value of its patents to be $1. See https://www.techdirt.com/blog/?company=shipping+%26+transit+llc
(By DAR) A complex legal system makes it possible for some companies and lawyers to misuse the legal process to make money. In a recent case involving Shipping and Transit LLC the Judge explained that:
"Plaintiff [Shipping and Transit LLC] 's business model involves filing hundreds of patent infringement lawsuits, mostly against small companies, and leveraging the high cost of litigation to extract settlements for amounts less than $50,000. These tactics present a compelling need for deterrence and to discourage exploitative litigation by patentees who have no intention of testing the merits of their claims. Based on the totality of the circumstances, the Court finds that this [a case by a Defendant who fought back and asked for attorney's fees] is an “exceptional” case. . . . Defendant’s Motion for Attorney Fees and Costs is GRANTED. The Court rules that Defendant is the prevailing party, that Defendant is entitled to recover its costs to the extent taxable under L.R. 54-3, and that Defendant is entitled to recover its reasonable attorney fees under 35 U.S.C. § 285, including fees associated with its motion for attorney fees and costs."
The case report is at https://www.eff.org/files/2017/07/07/shipping_transit_llc_v_hall_-_fee_order.pdf
Daniel Nazer of the Electronic Frontier Foundation reports that Shipping & Transit LLC, formerly known as Arrivalstar, was one of the most prolific patent trolls ever. It filed more than 500 lawsuits alleging patent infringement. Despite having filed so many cases, it never had a court rule on the validity of its patents. In recent years, Shipping & Transit’s usual practice was to dismiss its claims as soon as a defendant spends resources to fight back. A district court in California issued an order this week [see above] ordering Shipping & Transit to pay a defendant's attorney's fees. The court found that Shipping & Transit has engaged in a pattern of “exploitative litigation.” The fee award is from a case called Shipping & Transit LLC v. Hall Enterprises, Inc. After getting sued, Hall told Shipping & Transit that it should dismiss its claims because its patents are invalid under Alice v. CLS Bank. Shipping & Transit refused. Hall then went to the expense of preparing and filing a motion for judgment on the pleadings (PDF at https://www.eff.org/files/2017/07/07/shipping_transit_v_hall_-_motion_for_judgment_on_the_pleadings.pdf) arguing that Shipping & Transit’s patents are invalid. In response, Shipping & Transit voluntarily dismissed its claims. Hall then filed its successful motion for attorney’s fees.
Subsequently Shipping and Transit filed for bankruptcy, declaring the value of its patents to be $1. See https://www.techdirt.com/blog/?company=shipping+%26+transit+llc
Warren questions Fed resolve on mergers after BB&T-SunTrust deal
By Excerpt:
WASHINGTON — After the proposed merger of BB&T and SunTrust Banks announced this week, Sen. Elizabeth Warren, D-Mass., said she is concerned about the Federal Reserve’s scrutiny of merger and acquisition applications.
“The board's record of summarily approving mergers raises doubts about whether it will serve as a meaningful check on this consolidation that creates a new too big to fail bank and has the potential to hurt consumers,” Warren said in a letter to Fed Chair Jerome Powell on Thursday, the same day the deal was announced.
Warren’s concerns about the merger come less than a year after she questioned the Fed and the Justice Department about how they have reviewed past bank mergers and how they intend to preserve competition and financial stability. She warned in April 2018 that a regulatory relief bill, which she and many other progressive Democrats opposed and which was signed into law in May, would lead to a “wave” of bank mergers
From https://www.americanbanker.com/news/elizabeth-warren-questions-fed-resolve-on-mergers-after-bb-t-suntrust-deal
By Excerpt:
WASHINGTON — After the proposed merger of BB&T and SunTrust Banks announced this week, Sen. Elizabeth Warren, D-Mass., said she is concerned about the Federal Reserve’s scrutiny of merger and acquisition applications.
“The board's record of summarily approving mergers raises doubts about whether it will serve as a meaningful check on this consolidation that creates a new too big to fail bank and has the potential to hurt consumers,” Warren said in a letter to Fed Chair Jerome Powell on Thursday, the same day the deal was announced.
Warren’s concerns about the merger come less than a year after she questioned the Fed and the Justice Department about how they have reviewed past bank mergers and how they intend to preserve competition and financial stability. She warned in April 2018 that a regulatory relief bill, which she and many other progressive Democrats opposed and which was signed into law in May, would lead to a “wave” of bank mergers
From https://www.americanbanker.com/news/elizabeth-warren-questions-fed-resolve-on-mergers-after-bb-t-suntrust-deal
Open Markets Press Release: The Podcast Market is Working and We Must Protect It
February 7, 2019
Spotify yesterday announced plans to buy podcast producer and network Gimlet Media for $230 million as well as podcast recording startup Anchor, two of the most important platforms in the podcast industry. The Open Markets Institute calls for the Federal Trade Commission and European enforcers to block the deals. The market for podcasts is one of the few news media markets that is growing, diverse, and successful, and antitrust enforcers should head off efforts by platform monopolists to take control over the industry.
The podcast market today includes a wide range of truly independent voices able to finance their operations with advertising revenue. Listeners, meanwhile, are able to download podcasts with little interference or personalized tracking by third-party software or advertising monopolists. And this old-school, open market system works. In 2017, US podcast ad revenues was $314 million dollars, and is forecast to hit $659 million by 2020.
This early stage market is, however, highly vulnerable to enclosure. Spotify CEO Daniel Ek has said he plans to spend some $500 million total to buy podcasts and podcast platforms just this year. Such a position would enable Spotify to begin to capture a significant amount of the advertising revenue that now goes straight to podcasters.
A takeover of Anchor, in particular, could also prove to be especially harmful to the industry. Anchor has provided a platform for start-up podcasters to produce, host, and sell advertising for their podcasts. If Spotify plans to change Anchor’s model, it may stifle new players, or lock them into a Spotify controlled system.
The present diversity in the Podcast industry is directly tied to market structure. There is vertical separation between the layers of the market, with software, production, and advertising done independently of one another. There is limited or no data collection, so there is no user-centric behavioral targeting or privacy breaches. This means podcast producers can still profit in a fair market for advertising sponsorships and compete fairly for an audience.
It is vital that the Federal Trade Commission and European anti-monopoly enforcers not only move to protect the podcast market, they should also study it closely for lessons to apply to other news media markets. The podcast market is a glowing example of what an open market looks like in America and the abundance it brings to both creators and listeners, and the political and civic dialogue it enables among citizens.
For media inquiries please contact Stella Roque, Communications Director at roque@openmarketsinstitute.org.
February 7, 2019
Spotify yesterday announced plans to buy podcast producer and network Gimlet Media for $230 million as well as podcast recording startup Anchor, two of the most important platforms in the podcast industry. The Open Markets Institute calls for the Federal Trade Commission and European enforcers to block the deals. The market for podcasts is one of the few news media markets that is growing, diverse, and successful, and antitrust enforcers should head off efforts by platform monopolists to take control over the industry.
The podcast market today includes a wide range of truly independent voices able to finance their operations with advertising revenue. Listeners, meanwhile, are able to download podcasts with little interference or personalized tracking by third-party software or advertising monopolists. And this old-school, open market system works. In 2017, US podcast ad revenues was $314 million dollars, and is forecast to hit $659 million by 2020.
This early stage market is, however, highly vulnerable to enclosure. Spotify CEO Daniel Ek has said he plans to spend some $500 million total to buy podcasts and podcast platforms just this year. Such a position would enable Spotify to begin to capture a significant amount of the advertising revenue that now goes straight to podcasters.
A takeover of Anchor, in particular, could also prove to be especially harmful to the industry. Anchor has provided a platform for start-up podcasters to produce, host, and sell advertising for their podcasts. If Spotify plans to change Anchor’s model, it may stifle new players, or lock them into a Spotify controlled system.
The present diversity in the Podcast industry is directly tied to market structure. There is vertical separation between the layers of the market, with software, production, and advertising done independently of one another. There is limited or no data collection, so there is no user-centric behavioral targeting or privacy breaches. This means podcast producers can still profit in a fair market for advertising sponsorships and compete fairly for an audience.
It is vital that the Federal Trade Commission and European anti-monopoly enforcers not only move to protect the podcast market, they should also study it closely for lessons to apply to other news media markets. The podcast market is a glowing example of what an open market looks like in America and the abundance it brings to both creators and listeners, and the political and civic dialogue it enables among citizens.
For media inquiries please contact Stella Roque, Communications Director at roque@openmarketsinstitute.org.
From Bloomberg: Pilgrim’s Pride Sued Over ‘Natural’ Chicken Marketing: The litigation follows a complaint filed in December with the Federal Trade Commission about its “humane” animal treatment claims.
By Lydia Mulvany
and Deena Shanker
February 7, 2019,
American consumers willingly pay more for foods advertised as “natural,” “organic” or “humane.” Food companies took notice long ago, adding such pledges to all manner of products. But it can be challenging for shoppers to figure out whether those promises are real or empty branding.
A lawsuit against chicken giant Pilgrim’s Pride Corp., filed by advocacy groups Food & Water Watch Inc. and Organic Consumers Association, turns on this very question. And they filed it in what’s arguably one of the most consumer-friendly courts in America.
At issue is the Greeley, Colorado-based company’s marketing claims that its birds are fed “only natural ingredients,” treated humanely and produced in an environmentally responsible way, according to a complaint filed on Wednesday in the Superior Court of the District of Columbia in Washington.
The company’s practices don’t live up to those claims, the plaintiffs alleged. The birds live in crowded, unsanitary warehouses, are abused by employees and have debilitating health conditions due to their breed, which was developed to grow fast, according to court papers. They’re raised with the help of routine use of antibiotics to promote growth and fed genetically modified organisms, the advocacy groups alleged in the filing.
“Contrary to Pilgrim’s Pride’s representations, the chickens who become these products are, as a matter of standard business practices, treated in unnatural, cruel, and inhumane manners, from hatching through slaughter,” according to the complaint. The plaintiffs, represented by Richman Law Group and Animal Equality, are seeking an injunction and corrective advertising.
“We strongly disagree with these allegations and look forward to defending our approach to animal welfare and sustainability,” said Misty Barnes, a spokeswoman for Pilgrim’s Pride.
“It’s a tough position that the company finds itself in.”
Pilgrim’s Pride now faces challenges about its marketing on multiple fronts. In December the company was the subject of a complaint filed by the Humane Society of the United States with the Federal Trade Commission, which said Pilgrim’s Pride was “scalding fully conscious chickens” as a result of its methods for slaughter, yet stating on its website at the time that its birds were being produced “as humanely as possible. ”
At the time, Cameron Bruett, a spokesman for Pilgrim’s Pride, a subsidiary of Brazilian meat processing giant JBS SA, rejected the Humane Society’s allegations.
“Pilgrim’s is committed to the well-being of the poultry under our care,” Bruett wrote in an email. “We welcome the opportunity to defend our approach to animal welfare against these false allegations.”
The language cited by the Humane Society subsequently disappeared from multiple places on the company’s website. Pilgrim’s Pride said at the time that the change in language was part of a long-planned update.
“It’s a tough position that the company finds itself in,” said attorney John E. Villafranco, who practices advertising law at Kelley Drye & Warren LLP. The district where the lawsuit was filed has “maybe the most permissive consumer protection statute in the country.”
https://www.bloomberg.com/news/articles/2019-02-07/pilgrim-s-pride-sued-over-natural-chicken-labels?
From DMN: Five Artists File Two Class-Action Lawsuits Against Sony Music and UMG
Daniel Sanchez, February 6, 2019
Will Sony Music and Universal Music Group willingly return copyrights to artists?
Two major labels have now come under fire in a New York courtroom.
Five musicians have filed two separate class-action lawsuits against Sony Music Entertainment and Universal Music Group (UMG) at the US District Court in the Southern District of New York.
he New York Dolls’ David Johansen along with John Lyon and Paul Collins filed the lawsuit against Sony Music. John Waite and Joe Ely are taking UMG to court.
According to both lawsuits, Sony and UMG have violated Section 203 of the Copyright Act, better known as the ’35-Year-Law.’ The termination law states that creators who assign their copyright to a company or person have the right to reclaim their rights after 35 years.
In violation of that law, enacted in 1976, both major labels have allegedly refused to acknowledge Notices of Termination sent by the artists.
The actions, if successful, could seriously impact the catalog cash-cows enjoyed by the major recording labels.
Evan S. Cohen, an LA music attorney representing the artists, explained,
“Our copyright law provides recording artists and songwriters with a valuable, once-in-a-lifetime chance to terminate old deals and regain their creative works after 35 years. This ‘second chance’ has always been a part of our copyright law.
“Sony and UMG have refused to acknowledge the validity of any of the Notices, and have completely disregarded the artists’ ownership rights by continuing to exploit those recordings and infringing upon our clients’ copyrights.
“This behavior must stop. The legal issues in these class action suits have never been decided by a court, and are of paramount importance to the music industry.”
Cohen also represents over one hundred recording artists who have sent major labels similar Notices of Termination along with Maryann R. Marzano, the LA attorney who successfully brought class-action lawsuits against SiriusXM and Spotify. In addition, Blank Rome LLP’s Gregory M. Bordo, David C. Kistler, and David M. Perry will represent the artists against the major labels. Reportedly Delayed Until February or March
The lawsuit court filings are posted with the DMN article
https://www.digitalmusicnews.com/2019/02/06/sony-music-umg-class-action-lawsuits/
Daniel Sanchez, February 6, 2019
Will Sony Music and Universal Music Group willingly return copyrights to artists?
Two major labels have now come under fire in a New York courtroom.
Five musicians have filed two separate class-action lawsuits against Sony Music Entertainment and Universal Music Group (UMG) at the US District Court in the Southern District of New York.
he New York Dolls’ David Johansen along with John Lyon and Paul Collins filed the lawsuit against Sony Music. John Waite and Joe Ely are taking UMG to court.
According to both lawsuits, Sony and UMG have violated Section 203 of the Copyright Act, better known as the ’35-Year-Law.’ The termination law states that creators who assign their copyright to a company or person have the right to reclaim their rights after 35 years.
In violation of that law, enacted in 1976, both major labels have allegedly refused to acknowledge Notices of Termination sent by the artists.
The actions, if successful, could seriously impact the catalog cash-cows enjoyed by the major recording labels.
Evan S. Cohen, an LA music attorney representing the artists, explained,
“Our copyright law provides recording artists and songwriters with a valuable, once-in-a-lifetime chance to terminate old deals and regain their creative works after 35 years. This ‘second chance’ has always been a part of our copyright law.
“Sony and UMG have refused to acknowledge the validity of any of the Notices, and have completely disregarded the artists’ ownership rights by continuing to exploit those recordings and infringing upon our clients’ copyrights.
“This behavior must stop. The legal issues in these class action suits have never been decided by a court, and are of paramount importance to the music industry.”
Cohen also represents over one hundred recording artists who have sent major labels similar Notices of Termination along with Maryann R. Marzano, the LA attorney who successfully brought class-action lawsuits against SiriusXM and Spotify. In addition, Blank Rome LLP’s Gregory M. Bordo, David C. Kistler, and David M. Perry will represent the artists against the major labels. Reportedly Delayed Until February or March
The lawsuit court filings are posted with the DMN article
https://www.digitalmusicnews.com/2019/02/06/sony-music-umg-class-action-lawsuits/
Opinion: How to Stop Facebook’s Dangerous App Integration Ploy
Its plan to combine Instagram, WhatsApp and Facebook Messenger entrenches its monopoly power, and the F.T.C. should step in.
By Sally Hubbard
Ms. Hubbard is an editor at The Capitol Forum.
Feb. 5, 2019
In response to calls that Facebook be forced to divest itself of WhatsApp and Instagram, Mark Zuckerberg has instead made a strategic power grab: He intends to put Instagram, WhatsApp and Facebook Messenger onto a unified technical infrastructure. The integrated apps are to be encrypted to protect users from hackers. But who’s going to protect users from Facebook?
Ideally, that would be the Federal Trade Commission, the agency charged with enforcing the antitrust laws and protecting consumers from unfair business practices. But the F.T.C. has looked the other way for far too long, failing to enforce its own 2011 consent decree under which Facebook was ordered to stop deceiving users about its privacy claims. The F.T.C. has also allowed Facebook to gobble up any company that could possibly compete against it, including Instagram and WhatsApp.
Not that blocking these acquisitions would have been easy for the agency under the current state of antitrust law. Courts require antitrust enforcers to prove that a merger will raise prices or reduce production of a particular product or service. But proving that prices will increase is nearly impossible in a digital world where consumers pay not with money but with their personal data and by viewing ads.
The integration Mr. Zuckerberg plans would immunize Facebook’s monopoly power from attack. It would make breaking Instagram and WhatsApp off as independent and viable competitors much harder, and thus demands speedy action by the government before it’s too late to take the pieces apart. Mr. Zuckerberg might be betting that he can integrate these three applications faster than any antitrust case could proceed — and he would be right, because antitrust cases take years.
https://www.nytimes.com/2019/02/05/opinion/facebook-integration.html?action=click&module=Opinion&pgtype=Homepage
Its plan to combine Instagram, WhatsApp and Facebook Messenger entrenches its monopoly power, and the F.T.C. should step in.
By Sally Hubbard
Ms. Hubbard is an editor at The Capitol Forum.
Feb. 5, 2019
In response to calls that Facebook be forced to divest itself of WhatsApp and Instagram, Mark Zuckerberg has instead made a strategic power grab: He intends to put Instagram, WhatsApp and Facebook Messenger onto a unified technical infrastructure. The integrated apps are to be encrypted to protect users from hackers. But who’s going to protect users from Facebook?
Ideally, that would be the Federal Trade Commission, the agency charged with enforcing the antitrust laws and protecting consumers from unfair business practices. But the F.T.C. has looked the other way for far too long, failing to enforce its own 2011 consent decree under which Facebook was ordered to stop deceiving users about its privacy claims. The F.T.C. has also allowed Facebook to gobble up any company that could possibly compete against it, including Instagram and WhatsApp.
Not that blocking these acquisitions would have been easy for the agency under the current state of antitrust law. Courts require antitrust enforcers to prove that a merger will raise prices or reduce production of a particular product or service. But proving that prices will increase is nearly impossible in a digital world where consumers pay not with money but with their personal data and by viewing ads.
The integration Mr. Zuckerberg plans would immunize Facebook’s monopoly power from attack. It would make breaking Instagram and WhatsApp off as independent and viable competitors much harder, and thus demands speedy action by the government before it’s too late to take the pieces apart. Mr. Zuckerberg might be betting that he can integrate these three applications faster than any antitrust case could proceed — and he would be right, because antitrust cases take years.
https://www.nytimes.com/2019/02/05/opinion/facebook-integration.html?action=click&module=Opinion&pgtype=Homepage
Heavy local pushback to AMAZON hq in NYC
Company executives have bristled at the intense criticism and, last week at a City Council hearing, seemed to float the notion that Amazon could reconsider its commitment to New York.
The ability of a local legislator to block the deal to bring a major new Amazon campus to Long Island City was exactly what Mr. Cuomo and Mayor Bill de Blasio had tried to avoid when they decided to use a state development process and to bypass more onerous city rules. Opposition, while vocal, seemed futile.
But now, with the insistence of Senate Democrats on appointing Mr. Gianaris to the little-known Public Authorities Control Board, those who want to stop Amazon from coming to Queens have gotten their most tangible boost yet. The board will have to decide on the development plan for Amazon, Mr. Cuomo has said, and could veto it.
From: https://www.nytimes.com/2019/02/04/nyregion/amazon-hq2-board-veto.html?action=click&module=Well&pgtype=Homepage§ion=New%20York
Company executives have bristled at the intense criticism and, last week at a City Council hearing, seemed to float the notion that Amazon could reconsider its commitment to New York.
The ability of a local legislator to block the deal to bring a major new Amazon campus to Long Island City was exactly what Mr. Cuomo and Mayor Bill de Blasio had tried to avoid when they decided to use a state development process and to bypass more onerous city rules. Opposition, while vocal, seemed futile.
But now, with the insistence of Senate Democrats on appointing Mr. Gianaris to the little-known Public Authorities Control Board, those who want to stop Amazon from coming to Queens have gotten their most tangible boost yet. The board will have to decide on the development plan for Amazon, Mr. Cuomo has said, and could veto it.
From: https://www.nytimes.com/2019/02/04/nyregion/amazon-hq2-board-veto.html?action=click&module=Well&pgtype=Homepage§ion=New%20York
Baltimore State’s Attorney Marilyn Mosby announces that her office will no longer prosecute arrests for marijuana possession
MARILYN MOSBY: As an office, I’ve instructed my attorneys that we will no longer be prosecuting the possession of marijuana, regardless of weight, and regardless of criminal history.
TAYA GRAHAM: Which is why Baltimore State’s Attorney Marilyn Mosby has decided to do something about it. This week she announced her office would no longer prosecute arrests for marijuana possession–a sweeping policy change that would apply to possession of unlimited amounts.
MARILYN MOSBY: We are going to continue to proceed upon possession with intent to distribute and distribution charges if there is an articulation of evidence which would indicate some sort of indicia of distribution.
TAYA GRAHAM: And aligns Mosby with progressive prosecutors across the country who have made similar commitments to not prosecute marijuana crimes. Mosby cited the same statistics, that marijuana arrests target people of color.
One of the reasons why we came to the conclusion that we were ultimately not going to prosecute possession of marijuana is because of the statistics and the disparate sort of enforcement of these laws on communities of color, and not the disparate use. The statistics, the data shows that the use among black and white people are the same. Yet in the city of Baltimore it has been an extreme problem, and for a very long time. In 2010 the ACLU put out a report in which, you know, nationally, if you are a black person, you were four times more likely to be arrested for mere possession of marijuana. In the city of Baltimore you were six times more likely to be arrested for possession of marijuana.
Excerpt is from therealnews.com/stories/prosecutor-refuses-to-try-pot-cases-but-police-pledge-to-continue-to-arrest See also foxbaltimore.com/news/local/mosby-to-stop-prosecuting-marijuana-possession-in-baltimore
MARILYN MOSBY: As an office, I’ve instructed my attorneys that we will no longer be prosecuting the possession of marijuana, regardless of weight, and regardless of criminal history.
TAYA GRAHAM: Which is why Baltimore State’s Attorney Marilyn Mosby has decided to do something about it. This week she announced her office would no longer prosecute arrests for marijuana possession–a sweeping policy change that would apply to possession of unlimited amounts.
MARILYN MOSBY: We are going to continue to proceed upon possession with intent to distribute and distribution charges if there is an articulation of evidence which would indicate some sort of indicia of distribution.
TAYA GRAHAM: And aligns Mosby with progressive prosecutors across the country who have made similar commitments to not prosecute marijuana crimes. Mosby cited the same statistics, that marijuana arrests target people of color.
One of the reasons why we came to the conclusion that we were ultimately not going to prosecute possession of marijuana is because of the statistics and the disparate sort of enforcement of these laws on communities of color, and not the disparate use. The statistics, the data shows that the use among black and white people are the same. Yet in the city of Baltimore it has been an extreme problem, and for a very long time. In 2010 the ACLU put out a report in which, you know, nationally, if you are a black person, you were four times more likely to be arrested for mere possession of marijuana. In the city of Baltimore you were six times more likely to be arrested for possession of marijuana.
Excerpt is from therealnews.com/stories/prosecutor-refuses-to-try-pot-cases-but-police-pledge-to-continue-to-arrest See also foxbaltimore.com/news/local/mosby-to-stop-prosecuting-marijuana-possession-in-baltimore
Editor’s note: The article below tells an interesting story of the use of default judgments by RIAA lawyers against remote actors as an aspect of copyright enforcement in the music industry. It reflects the view of the Digital Music News author and others that the RIAA lawyers abuse litigation procedures when they use default judgments to enhance client rights. It may be that many lawyers would be less offended, and some might feel that securing default judgments against remote bad actors advances good public copyright policy, but the critical view of a number of music industry experts seems worth noting.
A copy of the relevant court opinion is here: https://torrentfreak.com/images/ripperdismiss.pdf
Don Allen Resnikoff, Editor
From Digital Music News: RIAA Lawyers Botched a Big One Against FLVTO.biz — So What’s Next?
by Paul Resnikoff
January 25, 2019
The RIAA received a stunning defeat at the hands of Russian stream-ripper, FLVTO.biz. The decision could have far-reaching implications for US-based music, film, TV, fashion, and other IP-focused industries.
This was sort of like the Los Angeles Rams losing 45-0 to the Arizona Cardinals. Not impossible, of course. Just very unlikely — unless the Rams showed up hungover and skipped practice all week.
Which brings us to the Recording Industry Association of America (RIAA), which represents major label goliaths Sony Music Entertainment, Warner Music Group, and Universal Music Group. In its latest battle, the well-funded RIAA squared off against a little-known site operator from Russia, and prepared for an easy victory.
The RIAA, aside from its own highly-paid executives and attorneys, contracted the pricey services of law firm Jenner & Block, a self-described ‘litigation powerhouse‘. The collective legal army went to war against tiny FLVTO.biz, as well as 2conv.com, both sites apparently owned by a guy living in Russia, Tofig Kurbanov.
Who?
At first, the RIAA and Jenner weren’t even sure that Kurbanov was a real person. Apparently that’s the name the RIAA’s lawyers found on some DNS registrations, and that seemed to be the extent of the investigation. The legal team filed against the shadowy operator — along with some mysterious ‘John Does’ — in the U.S. District Court for the Eastern District of Virginia.
The court is conveniently located a few miles away from the RIAA’s F Street offices in downtown Washington, D.C.
According to filings, it looked like the RIAA was trying to serve Mr. Kurbanov by email, instead of actually chasing him down. The whole thing seems a little half-baked, until you realize the strategy at play. Instead of hunting down Kurbanov, or whomever was actually operating these sites, the RIAA was [it seems to the author] actually hoping that nobody would respond.
Why?
Without a response, the RIAA would have scored a quick, default judgment against their overseas John Doe defendant. Decisive decision in hand, the trade group could then force site blocks from ISPs, DNS providers, and search engines, and even recruit assistance from federal agencies like the FBI and Department of Homeland Security.
The resulting decision could then be used to intimidate other YouTube stream-rippers, many of whom are also operating overseas.
This isn’t a brand-new legal tactic. Far from it. And the results are glorious — at least from the perspective of the RIAA. In effect, the plaintiff — in this case the major labels — get pretty much everything they ask for from a federal judge.
Mitch Stoltz, an attorney with the Electronic Frontier Foundation, described the strategy this way:
“These sites, run from outside the U.S., don’t bother appearing in U.S. court to defend themselves—and the labels know this. When one party doesn’t show up to court and the other wins by default, judges often grant the winning party everything they ask for. Record labels, along with luxury brands and other frequent filers of copyright and trademark suits, have been using this tactic to write sweeping orders that claim to bind every kind of Internet intermediary: hosting providers, DNS registrars and registries, CDNs, Internet service providers, and more. Some of these requested orders claim to cover payment providers, search engines, and even Web browsers. Judges often sign these orders without much scrutiny.”
But what if the ‘John Doe’ defendant actually responds?
That would never happen — or so the RIAA and Jenner attorneys [apparently] thought. After all, is a shadowy individual (or group) in Russia (or wherever) really going to fight back, much less show up in a US-based courtroom?
Of course not.
Unless, of course, they do. Which is essentially what happened with FLVTO.biz (technically, Mr. Kurbanov never appeared in person, because he doesn’t have a visa to travel to the United States).
It turns out that Tofig Kurbanov is not only a real person living in Rostov-on-Don, Russia. He was also keenly aware of the legal action against him. Despite the obvious jurisdictional issues — or maybe because of them — Kurbanov decided to respond.
And he responded in full force. Kurbanov did his research, and ultimately hired three different law firms. That included Val Gurvits of Boston Law Group, PC, who started scrappily fighting this case against the polished pros at Jenner.
Gurvitz, along with a team that included Virginia-based Sands Anderson PC and Boston-based Ciampa Fray-Witzer, LLP, immediately started going for the jugular. They argued that this case was filed in the wrong jurisdiction, given that FLVTO and 2conv are based in Russia.
Virginia’s a nice state, but it’s connection to FLVTO is tenuous, at best, according to the defense.
Gurvitz’s team quickly moved to toss the case, suggesting that perhaps California would be the better venue given its proximity to YouTube and the music industry’s nerve center. Jenner & Block fought back, arguing that somehow Virginia was an important market for Kurbanov, and beyond that, targeted by Kurbanov’s sites.
It was a stretch. And it didn’t work.
Not only was Kurbanov ‘showing up,’ he came out swinging. And the RIAA got knocked out in the first round.
Earlier this week, Eastern District Court of Virginia judge Claude M. Hilton ruled that the case simply lacked jurisdiction. But Hilton not only tossed the case from the District Court of Virginia, he also disqualified it from being refiled anywhere else in the United States — California or otherwise.
“Due to the Court’s finding that personal jurisdiction is absent… the Court need not address whether transfer to the Central District of California would be appropriate as that venue would also be without jurisdiction,” Hilton opined.
The RIAA was stunned. The group’s PR person, Jonathan Lamy, was still on vacation. Another exec, Cara Duckworth, told us that the organization hadn’t decided their next step. She was just digesting the decision herself.
Gurvitz said he expects the trade group to appeal. But instead of a slam dunk, the RIAA is now battling to protect a major litigation weapon against alleged copyright infringers. The decision not only dims the RIAA’s hopes of defeating FLVTO.biz, it also raises serious questions about whether other industries can use the same absentee tactic.
That includes the film, TV, gaming, adult, fashion, or any other IP-related industry facing copyright infringement threats from shadowy overseas operators.
“All too often, plaintiffs file actions in US courts against foreign defendants that have no connections with the US – and all too often foreign defendants are subjected to default judgments for failure to appear in a US court,” Gurvitz told us. “We are happy we were able to defend our client from having to defend this action in a US court thousands of miles away from where the relevant business activities take place.”
In the short term, Kurbanov is now free to operate FLVTO.biz and 2conv.com with impunity in the United States, and pretty much anywhere else in the world. But the RIAA’s expected appeal is now far more important than a pair of YouTube stream-rippers, thanks to an extremely inconvenient jurisdictional precedent.
Aside from the ethical qualms, the problem with the RIAA’s legal tactic is that there was a small chance that the shadowy Kurbanov would fight back.
Now, that little miscalculation could change the face of anti-copyright litigation forever.
A copy of the relevant court opinion is here: https://torrentfreak.com/images/ripperdismiss.pdf
Don Allen Resnikoff, Editor
From Digital Music News: RIAA Lawyers Botched a Big One Against FLVTO.biz — So What’s Next?
by Paul Resnikoff
January 25, 2019
The RIAA received a stunning defeat at the hands of Russian stream-ripper, FLVTO.biz. The decision could have far-reaching implications for US-based music, film, TV, fashion, and other IP-focused industries.
This was sort of like the Los Angeles Rams losing 45-0 to the Arizona Cardinals. Not impossible, of course. Just very unlikely — unless the Rams showed up hungover and skipped practice all week.
Which brings us to the Recording Industry Association of America (RIAA), which represents major label goliaths Sony Music Entertainment, Warner Music Group, and Universal Music Group. In its latest battle, the well-funded RIAA squared off against a little-known site operator from Russia, and prepared for an easy victory.
The RIAA, aside from its own highly-paid executives and attorneys, contracted the pricey services of law firm Jenner & Block, a self-described ‘litigation powerhouse‘. The collective legal army went to war against tiny FLVTO.biz, as well as 2conv.com, both sites apparently owned by a guy living in Russia, Tofig Kurbanov.
Who?
At first, the RIAA and Jenner weren’t even sure that Kurbanov was a real person. Apparently that’s the name the RIAA’s lawyers found on some DNS registrations, and that seemed to be the extent of the investigation. The legal team filed against the shadowy operator — along with some mysterious ‘John Does’ — in the U.S. District Court for the Eastern District of Virginia.
The court is conveniently located a few miles away from the RIAA’s F Street offices in downtown Washington, D.C.
According to filings, it looked like the RIAA was trying to serve Mr. Kurbanov by email, instead of actually chasing him down. The whole thing seems a little half-baked, until you realize the strategy at play. Instead of hunting down Kurbanov, or whomever was actually operating these sites, the RIAA was [it seems to the author] actually hoping that nobody would respond.
Why?
Without a response, the RIAA would have scored a quick, default judgment against their overseas John Doe defendant. Decisive decision in hand, the trade group could then force site blocks from ISPs, DNS providers, and search engines, and even recruit assistance from federal agencies like the FBI and Department of Homeland Security.
The resulting decision could then be used to intimidate other YouTube stream-rippers, many of whom are also operating overseas.
This isn’t a brand-new legal tactic. Far from it. And the results are glorious — at least from the perspective of the RIAA. In effect, the plaintiff — in this case the major labels — get pretty much everything they ask for from a federal judge.
Mitch Stoltz, an attorney with the Electronic Frontier Foundation, described the strategy this way:
“These sites, run from outside the U.S., don’t bother appearing in U.S. court to defend themselves—and the labels know this. When one party doesn’t show up to court and the other wins by default, judges often grant the winning party everything they ask for. Record labels, along with luxury brands and other frequent filers of copyright and trademark suits, have been using this tactic to write sweeping orders that claim to bind every kind of Internet intermediary: hosting providers, DNS registrars and registries, CDNs, Internet service providers, and more. Some of these requested orders claim to cover payment providers, search engines, and even Web browsers. Judges often sign these orders without much scrutiny.”
But what if the ‘John Doe’ defendant actually responds?
That would never happen — or so the RIAA and Jenner attorneys [apparently] thought. After all, is a shadowy individual (or group) in Russia (or wherever) really going to fight back, much less show up in a US-based courtroom?
Of course not.
Unless, of course, they do. Which is essentially what happened with FLVTO.biz (technically, Mr. Kurbanov never appeared in person, because he doesn’t have a visa to travel to the United States).
It turns out that Tofig Kurbanov is not only a real person living in Rostov-on-Don, Russia. He was also keenly aware of the legal action against him. Despite the obvious jurisdictional issues — or maybe because of them — Kurbanov decided to respond.
And he responded in full force. Kurbanov did his research, and ultimately hired three different law firms. That included Val Gurvits of Boston Law Group, PC, who started scrappily fighting this case against the polished pros at Jenner.
Gurvitz, along with a team that included Virginia-based Sands Anderson PC and Boston-based Ciampa Fray-Witzer, LLP, immediately started going for the jugular. They argued that this case was filed in the wrong jurisdiction, given that FLVTO and 2conv are based in Russia.
Virginia’s a nice state, but it’s connection to FLVTO is tenuous, at best, according to the defense.
Gurvitz’s team quickly moved to toss the case, suggesting that perhaps California would be the better venue given its proximity to YouTube and the music industry’s nerve center. Jenner & Block fought back, arguing that somehow Virginia was an important market for Kurbanov, and beyond that, targeted by Kurbanov’s sites.
It was a stretch. And it didn’t work.
Not only was Kurbanov ‘showing up,’ he came out swinging. And the RIAA got knocked out in the first round.
Earlier this week, Eastern District Court of Virginia judge Claude M. Hilton ruled that the case simply lacked jurisdiction. But Hilton not only tossed the case from the District Court of Virginia, he also disqualified it from being refiled anywhere else in the United States — California or otherwise.
“Due to the Court’s finding that personal jurisdiction is absent… the Court need not address whether transfer to the Central District of California would be appropriate as that venue would also be without jurisdiction,” Hilton opined.
The RIAA was stunned. The group’s PR person, Jonathan Lamy, was still on vacation. Another exec, Cara Duckworth, told us that the organization hadn’t decided their next step. She was just digesting the decision herself.
Gurvitz said he expects the trade group to appeal. But instead of a slam dunk, the RIAA is now battling to protect a major litigation weapon against alleged copyright infringers. The decision not only dims the RIAA’s hopes of defeating FLVTO.biz, it also raises serious questions about whether other industries can use the same absentee tactic.
That includes the film, TV, gaming, adult, fashion, or any other IP-related industry facing copyright infringement threats from shadowy overseas operators.
“All too often, plaintiffs file actions in US courts against foreign defendants that have no connections with the US – and all too often foreign defendants are subjected to default judgments for failure to appear in a US court,” Gurvitz told us. “We are happy we were able to defend our client from having to defend this action in a US court thousands of miles away from where the relevant business activities take place.”
In the short term, Kurbanov is now free to operate FLVTO.biz and 2conv.com with impunity in the United States, and pretty much anywhere else in the world. But the RIAA’s expected appeal is now far more important than a pair of YouTube stream-rippers, thanks to an extremely inconvenient jurisdictional precedent.
Aside from the ethical qualms, the problem with the RIAA’s legal tactic is that there was a small chance that the shadowy Kurbanov would fight back.
Now, that little miscalculation could change the face of anti-copyright litigation forever.
Does Starbucks rip off coffee farmers?
Some reports suggests that the answer is yes, and has been for years. In contrast, the Starbucks website describes its policies as supportive of the economic interests of farmers. Following is an excerpt from an article at https://www.dailysabah.com/economy/2017/01/18/ethiopias-coffee-farmers-eye-more-fair-trade-amid-rising-share-in-global-market
For every kilogram of coffee beans an Ethiopian farmer sells for $3, it is estimated that people up in the supply chain make around $200.
There are an estimated 15 million farmers who produce 270,000 tons (297,600 tons) of coffee in Ethiopia, the fifth-largest producer in the world after Brazil, Vietnam, Columbia and Indonesia.
Around 95 percent of the coffee is produced by small farmers like 68-year-old Selkamo Kemissa, who work in their own farms and sell their produce to middlemen. These intermediaries are widely suspected of short changing them on the huge profit margins.
Kemissa told Anadolu Agency the Arabica coffee produced on his farm near the small town of Shebedino Woreda - located around 315 kilometers (196 miles) southeast of capital Addis Ababa - ends up in multinational chains like Starbucks, where a single cup of coffee could cost as much as what he gets for a kilogram or even more.
Some reports suggests that the answer is yes, and has been for years. In contrast, the Starbucks website describes its policies as supportive of the economic interests of farmers. Following is an excerpt from an article at https://www.dailysabah.com/economy/2017/01/18/ethiopias-coffee-farmers-eye-more-fair-trade-amid-rising-share-in-global-market
For every kilogram of coffee beans an Ethiopian farmer sells for $3, it is estimated that people up in the supply chain make around $200.
There are an estimated 15 million farmers who produce 270,000 tons (297,600 tons) of coffee in Ethiopia, the fifth-largest producer in the world after Brazil, Vietnam, Columbia and Indonesia.
Around 95 percent of the coffee is produced by small farmers like 68-year-old Selkamo Kemissa, who work in their own farms and sell their produce to middlemen. These intermediaries are widely suspected of short changing them on the huge profit margins.
Kemissa told Anadolu Agency the Arabica coffee produced on his farm near the small town of Shebedino Woreda - located around 315 kilometers (196 miles) southeast of capital Addis Ababa - ends up in multinational chains like Starbucks, where a single cup of coffee could cost as much as what he gets for a kilogram or even more.
The FDA may be backsliding on quality control just as it’s approving more generics
The FDA approved a record 971 generic drugs in the fiscal year ending Sept. 30, according to a report from the accounting firm PricewaterhouseCoopers. That was a 94 percent increase over fiscal 2014, when 500 were approved.
Yet the number of so-called surveillance inspections done globally by the FDA—meant to ensure existing drug-making plants meet U.S. standards—dropped 11 percent, to 1,471, in fiscal 2018 from fiscal 2017. Those inspection numbers also decreased in fiscal 2017, which included Gottlieb’s first few months in office, falling 13 percent from the prior year. The figures were obtained through a public-records request.
Surveillance inspections of just U.S. drug factories declined 11 percent, to 693, from fiscal 2017 to fiscal 2018, the lowest going back for at least a decade, the data show. Such inspections have been falling since 2011, as the agency began focusing more on foreign manufacturers.
Meanwhile, from fiscal 2017 to fiscal 2018, surveillance inspections of foreign factories fell 10 percent, to 778. This was the second year-over-year decline, after surveillance inspections of foreign factories dropped 9 percent from fiscal 2016 to fiscal 2017, reversing a trend of rising inspections over most of the previous decade.
Excerpt from https://www.bloomberg.com/news/features/2019-01-29/america-s-love-affair-with-cheap-drugs-has-a-hidden-cost?cmpid=BBD020119_WKND&utm_medium=email&utm_source=newsletter&utm_term=190201&utm_campaign=weekendreading
The FDA approved a record 971 generic drugs in the fiscal year ending Sept. 30, according to a report from the accounting firm PricewaterhouseCoopers. That was a 94 percent increase over fiscal 2014, when 500 were approved.
Yet the number of so-called surveillance inspections done globally by the FDA—meant to ensure existing drug-making plants meet U.S. standards—dropped 11 percent, to 1,471, in fiscal 2018 from fiscal 2017. Those inspection numbers also decreased in fiscal 2017, which included Gottlieb’s first few months in office, falling 13 percent from the prior year. The figures were obtained through a public-records request.
Surveillance inspections of just U.S. drug factories declined 11 percent, to 693, from fiscal 2017 to fiscal 2018, the lowest going back for at least a decade, the data show. Such inspections have been falling since 2011, as the agency began focusing more on foreign manufacturers.
Meanwhile, from fiscal 2017 to fiscal 2018, surveillance inspections of foreign factories fell 10 percent, to 778. This was the second year-over-year decline, after surveillance inspections of foreign factories dropped 9 percent from fiscal 2016 to fiscal 2017, reversing a trend of rising inspections over most of the previous decade.
Excerpt from https://www.bloomberg.com/news/features/2019-01-29/america-s-love-affair-with-cheap-drugs-has-a-hidden-cost?cmpid=BBD020119_WKND&utm_medium=email&utm_source=newsletter&utm_term=190201&utm_campaign=weekendreading
From Brookings: UPCOMING EVENT
WEBINAR – The Flint water crisis: Lessons learned
Tuesday, Feb 05, 2019 1:00 PM-2:30 PM EST
Online only
REGISTER FOR WEBCAST here: https://attendee.gotowebinar.com/register/7825849173049604365
The Flint water crisis, involving lead contamination of the city’s drinking water and an outbreak of Legionnaires’ disease, has been on the national radar for years—but there are still unanswered questions. What happened, and how? What are the health, political, and economic implications for the city and its people? How widespread is the lead problem in America’s water supplies? How are water utilities and governments responding? What are the possible solutions to address this public health problem?
Join us on Tuesday, February 5, 1:00-2:30 pm EST for a webinar on these topics. We’ll begin with presentations by Anna Clark (Author, Poisoned City: Flint’s Water and the American Urban Tragedy) on Flint and Douglas Farquhar (Program Director, Environmental Health, National Conference of State Legislatures) on what’s happening in other communities.
The presentations will be followed by a discussion with webinar participants.
WEBINAR – The Flint water crisis: Lessons learned
Tuesday, Feb 05, 2019 1:00 PM-2:30 PM EST
Online only
REGISTER FOR WEBCAST here: https://attendee.gotowebinar.com/register/7825849173049604365
The Flint water crisis, involving lead contamination of the city’s drinking water and an outbreak of Legionnaires’ disease, has been on the national radar for years—but there are still unanswered questions. What happened, and how? What are the health, political, and economic implications for the city and its people? How widespread is the lead problem in America’s water supplies? How are water utilities and governments responding? What are the possible solutions to address this public health problem?
Join us on Tuesday, February 5, 1:00-2:30 pm EST for a webinar on these topics. We’ll begin with presentations by Anna Clark (Author, Poisoned City: Flint’s Water and the American Urban Tragedy) on Flint and Douglas Farquhar (Program Director, Environmental Health, National Conference of State Legislatures) on what’s happening in other communities.
The presentations will be followed by a discussion with webinar participants.
Phil the dog’s answer to Punxatawny Phil the groundhog’s spring weather forecast
Phil the dog believes in the science of global warming. He believes that shifting seasons are directly linked to warmer global temperatures. A slight change in temperature is enough to push the spring thaw earlier, and delay the first frost until later in the fall. These environmental changes will cause many trees and spring wildflowers to bloom earlier than in the past. As a result, winter will be shorter, spring earlier, summer longer, and fall arrives later.
Phil the dog relies on EPA data discussed at http://climatechange.lta.org/climate-impacts/shifting-seasons
Phil the dog believes in the science of global warming. He believes that shifting seasons are directly linked to warmer global temperatures. A slight change in temperature is enough to push the spring thaw earlier, and delay the first frost until later in the fall. These environmental changes will cause many trees and spring wildflowers to bloom earlier than in the past. As a result, winter will be shorter, spring earlier, summer longer, and fall arrives later.
Phil the dog relies on EPA data discussed at http://climatechange.lta.org/climate-impacts/shifting-seasons
Tim Wu disccusses his "Curse of Bigness" book on PBS NewsHour
https://www.pbs.org/newshour/show/why-tech-industry-monopolies-could-be-a-curse-for-society
https://www.pbs.org/newshour/show/why-tech-industry-monopolies-could-be-a-curse-for-society
Competition issues in Health Information Technology
In 2014, Katherine Jones and I wrote about competition policy issues affecting health information technology (HIT) businesses, particularly issues involving difficulties in sharing of electronic patient information among systems of competing companies. See https://www.ftc.gov/system/files/documents/public_comments/2014/03/00020-88806.pdf
A business relevant to such competition issues is Epic Systems, an industry leader in health information technology. The company has been criticized for using proprietary software that puts competitors at a disadvantage because it obstructs sharing of patient data. An effect of reduced competition can be higher prices for users of HIT, such as large hospitals.
Sharing of patient data may be relatively simple among hospitals if they all use Epic proprietary software, but more difficult if one of the hospitals uses different proprietary software of a competitor.
In our earlier article we pointed out that in the past companies using proprietary technologies in other so-called “platform” markets such as computer software have achieved and maintained a dominant position in a developing market by limiting competitor access to their proprietary technology. The U.S. government’s action against Microsoft made such allegations of exclusionary conduct.
We pointed out that exclusionary conduct may be addressed through antitrust enforcement after the fact, as it was in the Microsoft case. But we suggested that a preferable approach is proactive government engagement that avoids the antitrust problem by facilitating and encouraging interoperability among products of competitors in the health information technology (HIT) markets. By “interoperability” we meant the extent to which HIT systems of different manufacturers can exchange data, and interpret that shared data.
To the extent that HIT systems are interoperable, so that HIT systems of different manufacturers can easily exchange data, there is less danger that network effects will lead to the dominance of the market by a single large firm. The consequences include lower prices for consumers of HIT, such as hospitals.
Interoperability in HIT markets has been an important component of announced federal healthcare policy. The U.S. Government has been actively involved in both promoting the use of HIT and encouraging the interoperability of HIT products. The use of HIT has been incentivized by federal legislation and reimbursement policies. A goal of the legislation has been to foster the “development of a nationwide health information technology infrastructure” to promote “a more effective marketplace, greater competition . . . [and] increased consumer choice.”
Federal legislation called on the Secretary of Health and Human Services (“HHS”) to invest in and take an active role in: “(1) Health information technology architecture that will support the nationwide electronic exchange and use of health information in a secure, private, and accurate manner. . . .” and “(5) Promotion of the interoperability of clinical data repositories or registries.”
So, what has happened since 2014?
A review of trade press suggests that the U.S. government has not taken strong steps to promote interoperability standards. The CEO of Epic Systems, Judy Faulkner, recently gave a speech in which she promoted Epic’s role in facilitating interoperability standards. She pointed out that her company’s role in promoting standards filled a gap left by lack of government action. There are no public indications of government antitrust scrutiny.
A recent trade press article by Margaret Rouse discusses the business of today’s Epic Systems in a helpful way. See https://searchhealthit.techtarget.com/definition/Epic-Systems-Corp?vgnextfmt=print
Ms. Rouse explains that Epic Systems remains one of the largest providers of health information technology, used primarily by large U.S. hospitals and health systems to access, organize, store and share electronic medical records. The company has a reputation as both a technological leader and one that comes with an expensive price -- sometimes more than $1 billion -- for its products and related installations.
Ms. Rouse says that since the federal government established electronic health record incentive programs in 2009 to promote the adoption of electronic health records through meaningful use of the technology, Epic has seen its client base grow. In 2017, the Milwaukee Journal Sentinel reported that Epic employed 9,700 people and earned revenue of $2.5 billion in 2016. Epic states that 190 million people across the world use its technology. Meanwhile, Forbes has estimated that at least 40% of the U.S. population has medical data stored on an Epic electronic health records (EHR) system, and Epic's clients include some of the biggest names in healthcare.
KLAS Research concluded in 2017 that Epic had the largest EHR market share in acute care hospitals at 25.8%. Epic's top competitor, Cerner Corp., took 24.6% of the market, showing the close tug of war between the two companies for customers. Other competitors include Allscripts (which in 2017 bought McKesson Corp.'s EHR technology), Meditech and AthenaHealth.
Ms. Rouse tells us that “Due to its influence, product costs and, in some cases, practices, the company is often criticized. One of the chief complaints, historically, has been against its EHR systems' lack of interoperability with other vendors' products. Epic seems to have recognized this problem and is taking steps to change.” Also,”The company was also not as fast as smaller EHR vendors to embrace cloud-based medical records systems.”
A recent American Hospital Association report complains about the continuing need to improve interoperability among HIT systems. See https://www.aha.org/system/files/2019-01/Report01_18_19-Sharing-Data-Saving-Lives_FINAL.pdf
The Report suggests, among other things, there needs to be improvement in “consistent use of standards, common vocabulary and 'rules of the road' to connect information-sharing networks. . . .” That improvement will also “improve the ability to distribute information within and across settings, between providers of care, with individuals and within the marketplace. . . .The end goal is complete data sharing via a non-proprietary, vendor-neutral data exchange platform, similar to how the country is served by cable technology.
According to the Report, “The current standards supporting our information sharing infrastructure are incomplete, implemented inconsistently, and may differ between systems. They may not be up to the task of seamless sharing of information. There is an urgent need to coalesce around improved standards that overcome the significant gaps making communication difficult between systems.”
So, in 2019 is there a continued need for government involvement in setting interoperability standards for HIT systems, despite some industry initiatives that have occurred? Is there a need for continuing antitrust scrutiny? Probably yes. The reasons include the goal of bringing down the costs of HIT to users, such as hospitals, and to the end users -- patients.
This posting is by Don Allen Resnikoff, who takes full responsibility for its content.
From The New York Times: Mentally Ill Prisoners Are Held Past Release Dates, Lawsuit Claims
New York keeps mentally ill people in prison after they have finished their sentences because of a lack of supportive housing for them, a lawsuit filed on their behalf argues.
https://www.nytimes.com/2019/01/23/nyregion/prisoners-mentally-ill-lawsuit.html
DC's Bread for the City Opens Its Doors to Furloughed Federal Employees and Contractors
January 10, 2019 by BFC in BFC Updates In the Community https://breadforthecity.org/blog-cat/bfc-updates
For nearly 45 years, Bread for the City has shown up for D.C., and D.C. has shown up for us. With help from our community, we assist tens of thousands of D.C. residents living with low income each and every year. As the government shutdown enters its third week, it’s time for us to show up again. We want furloughed workers to know that Bread for the City is here for you, too.
Beginning Monday, January 14, if you are a District of Columbia resident and are a furloughed federal worker or federal contractor currently out of work because of the furlough, you can visit our NW or SE Centers for a five day supply of groceries. In addition, our medical clinic, located in our NW Center is currently accepting new patients. Visit our services page for more information including hours of operation and documents we will need you to bring in.
To current clients: Bread for the City will continue to be here for you too.
But I also need to say something to our federal elected officials — and one in particular. At the heart of what we do is our sense of equity. When we have economic downturns or man-made crises such as this shutdown, people living with low incomes suffer most. One of the reasons this game of chicken is easy for the powers that be is that those in charge don’t suffer. The people who suffer most are the ones who already struggling to get by.
When our leaders make these kinds of decisions, it impacts everyday people. The ripple effect extends far beyond talking points and news cycles. This bickering over billions for a border wall is now threatening food stamps, housing subsidies and more.
But even in these stressful times, there are glimmers of hope, and our hope is always YOU.
To our donors and volunteers: When the government does not meet its obligations to the people, organizations like ours are all the more important. If this shutdown continues and more people have no choice but to seek help from organizations like Bread for the City, our existing resources — particularly the food program — may be pushed to their limit. In these trying times for so many, if you’re able to give just a little more to help your neighbors, please do. Visit https://www.breadforthecity.org/govshutdown.
And if you’re a furloughed worker looking for something positive to do in the midst of this crisis, we’re always looking for volunteers. Visit https://breadforthecity.org/volunteer/ to find out how you can help.
January 10, 2019 by BFC in BFC Updates In the Community https://breadforthecity.org/blog-cat/bfc-updates
For nearly 45 years, Bread for the City has shown up for D.C., and D.C. has shown up for us. With help from our community, we assist tens of thousands of D.C. residents living with low income each and every year. As the government shutdown enters its third week, it’s time for us to show up again. We want furloughed workers to know that Bread for the City is here for you, too.
Beginning Monday, January 14, if you are a District of Columbia resident and are a furloughed federal worker or federal contractor currently out of work because of the furlough, you can visit our NW or SE Centers for a five day supply of groceries. In addition, our medical clinic, located in our NW Center is currently accepting new patients. Visit our services page for more information including hours of operation and documents we will need you to bring in.
To current clients: Bread for the City will continue to be here for you too.
But I also need to say something to our federal elected officials — and one in particular. At the heart of what we do is our sense of equity. When we have economic downturns or man-made crises such as this shutdown, people living with low incomes suffer most. One of the reasons this game of chicken is easy for the powers that be is that those in charge don’t suffer. The people who suffer most are the ones who already struggling to get by.
When our leaders make these kinds of decisions, it impacts everyday people. The ripple effect extends far beyond talking points and news cycles. This bickering over billions for a border wall is now threatening food stamps, housing subsidies and more.
But even in these stressful times, there are glimmers of hope, and our hope is always YOU.
To our donors and volunteers: When the government does not meet its obligations to the people, organizations like ours are all the more important. If this shutdown continues and more people have no choice but to seek help from organizations like Bread for the City, our existing resources — particularly the food program — may be pushed to their limit. In these trying times for so many, if you’re able to give just a little more to help your neighbors, please do. Visit https://www.breadforthecity.org/govshutdown.
And if you’re a furloughed worker looking for something positive to do in the midst of this crisis, we’re always looking for volunteers. Visit https://breadforthecity.org/volunteer/ to find out how you can help.
Rising Drug Prices Linked to Older Products, Not Just Newer, Better Medications
PITTSBURGH (Jan. 7, 2019) – It’s no secret that drug prices are increasing, but to what extent are rising costs explained by the advent of newer, better drugs? A study from the University of Pittsburgh and the UPMC Center for High-Value Health Care found that new drugs entering the market do drive up prices, but drug companies are also hiking prices on older drugs.
The paper, published in the January issue of Health Affairs, shows that for specialty and generic drugs, new product entry accounted for most of the rising costs, whereas for brand-name drugs, existing products explained most of the cost increases.
“It makes sense to pay more for new drugs because sometimes new drugs are more effective, safer or treat a new disease you didn’t have a treatment for. Sometimes new drugs do bring more value,” said lead author Inmaculada Hernandez, Ph.D., assistant professor at the Pitt School of Pharmacy. “But the high year-over-year increases in costs of existing products do not reflect improved value.”
The researchers examined the list price of tens of thousands of drug codes from a national database between 2005 and 2016 and UPMC Health Plan pharmacy claims over the same time period. Drugs were considered “new” for the first three years they were available, or in the case of generics, the first three years after patent expiration.
What they saw was that each year the price of brand-name oral medications increased by about 9 percent – nearly five times the rate of general inflation over the same time period – and the price of brand-name injectables increased by 15 percent. In both cases, soaring prices were overwhelmingly attributable to existing drugs.
For instance, the list price for Sanofi’s Lantus brand insulin increased by 49 percent in 2014. Lantus had been on the market for more than a decade.
“These types of insulin have been around for a while,” Hernandez said. “Whereas the original patent for Lantus expired in 2015, dozens of secondary patents prevent competition, and it is this lack of competition that allows manufacturers to keep increasing prices much faster than inflation.”
Excerpt from: https://www.upmchealthplan.com/pdf/ReleasePdf/2019_01_07.html
Justice Department’s Reversal on Online Gambling Tracked Memo From Adelson Lobbyists
“The legal reasoning behind the Justice Department’s unusual reversal this week of an opinion that paved the way for online gambling hewed closely to arguments made by lobbyists for casino magnate and top Republican donor Sheldon Adelson. In April 2017, one of the lobbyists sent a memo to top officials in the Justice Department, arguing that a 2011 opinion that benefited online gambling was wrong.
“Officials in the department’s Criminal Division, in turn, forwarded it to the Office of Legal Counsel, which had issued the opinion, and asked attorneys there to re-examine their stance that a law on the books for decades didn’t prohibit online gambling, according to documents and interviews with people familiar with the matter. ... The department’s new position was a victory for Mr. Adelson, who has poured millions into a multiyear lobbying campaign on the matter.”
WSJ https://www.wsj.com/articles/justice-departments-reversal-on-online-gambling-tracked-memo-from-adelson-lobbyists-11547854137?mod=hp_lead_pos4 (paywall) WSJ’S BYRON TAU in D.C. and ALEXANDRA BERZON in Los Angeles:
“The legal reasoning behind the Justice Department’s unusual reversal this week of an opinion that paved the way for online gambling hewed closely to arguments made by lobbyists for casino magnate and top Republican donor Sheldon Adelson. In April 2017, one of the lobbyists sent a memo to top officials in the Justice Department, arguing that a 2011 opinion that benefited online gambling was wrong.
“Officials in the department’s Criminal Division, in turn, forwarded it to the Office of Legal Counsel, which had issued the opinion, and asked attorneys there to re-examine their stance that a law on the books for decades didn’t prohibit online gambling, according to documents and interviews with people familiar with the matter. ... The department’s new position was a victory for Mr. Adelson, who has poured millions into a multiyear lobbying campaign on the matter.”
WSJ https://www.wsj.com/articles/justice-departments-reversal-on-online-gambling-tracked-memo-from-adelson-lobbyists-11547854137?mod=hp_lead_pos4 (paywall) WSJ’S BYRON TAU in D.C. and ALEXANDRA BERZON in Los Angeles:
Anatomy of a big- payout class action:
$2.3M Fee Award in $6.9M Citigroup ERISA Class Action
January 7, 2019 | Posted in : Class Action, Expenses / Costs, Fee Award
A recent Law 360 story by Emily Brill, “Attys Get $2.3M Fee for $6.9M Citigroup ERISA Class Deal,” reports that a New York federal judge has awarded $2.3 million to the attorneys for a class of over 300,000 Citigroup Inc. 401(k) plan participants who negotiated a $6.9 million settlement in a long-running Employee Retirement Income Security Act suit in August. U.S. District Judge Sidney Stein granted final approval to the settlement and fee award closing the book on claims that a Citigroup committee stuffed the company’s 401(k) plan with Citigroup-affiliated funds even though other funds charged lower fees.
The case has been pending since 2007, and its closure came as a relief to class attorney James A. Moore of McTigue Law LLP. “The case was hard-fought for over a decade, and we think the result is an excellent one for plan participants,” Moore said. “Citigroup stopped offering through its 401(k) plan the high cost proprietary funds that were the subject of the lawsuit.” Moore added that he thinks the nearly $7 million recovery “sends a message to other employers that, under the law, they must manage retirement plans in the best interest of employees.”
The Citigroup 401(k) Plan Investment Committee and the class — a group of current and former Citigroup employees — told Judge Stein in August that they had reached a deal to end the case. Soon, Citigroup workers, former workers and retirees who invested in certain funds in the 401(k) plan between Oct. 18, 2001, and Dec. 1, 2005, will be notified of the money headed their way. Judge Stein signed off on the settlement notice.
He also signed an order awarding $2.3 million to the plaintiffs’ attorneys and $15,000 to each of the two class representatives. The order also approved devoting $374,100 of the settlement to case-related expenses, leaving roughly $4.2 million left for the class after all the deductions — attorneys’ fees, class representative fees and expenses — are made.
The settlement notice tells Citigroup workers that the class’s three attorneys and two representatives “have devoted many hours to investigating the claims, bringing this case, and pursuing it for almost 11 years” and that the attorneys “have not been paid for their time and expenses while the case has been pending.”
The class sued Citigroup and its 401(k) plan committee in October 2007, accusing them of putting the bank’s interests ahead of workers’ when stocking the employee retirement plan. The company and plan committee allegedly failed to remove or replace subpar, expensive Citigroup funds from the 401(k) plan’s lineup, allowing Citigroup to reap “substantial revenues” at plan participants’ expense while violating the Employee Retirement Income Security Act, which requires fiduciaries to make decisions in participants’ best interests, according to the complaint.
Citigroup was dropped as a defendant in 2010, leaving the 401(k) investment committee, another committee called the Benefit Plans Investment Committee of Citigroup Inc. and various individual committee members and officers to defend the suit. The class won certification in November 2017. Moore said Monday that the class has more than 300,000 members.
The case is Leber et al. v. The Citigroup 401(k) Plan Investment Committee et al., case number 1:07-cv-09329, in the U.S. District Court for the Southern District of New York.
Article source: http://www.thenalfa.org/blog/2-3m-fee-award-in-6-9m-citigroup-erisa-class-action/
$2.3M Fee Award in $6.9M Citigroup ERISA Class Action
January 7, 2019 | Posted in : Class Action, Expenses / Costs, Fee Award
A recent Law 360 story by Emily Brill, “Attys Get $2.3M Fee for $6.9M Citigroup ERISA Class Deal,” reports that a New York federal judge has awarded $2.3 million to the attorneys for a class of over 300,000 Citigroup Inc. 401(k) plan participants who negotiated a $6.9 million settlement in a long-running Employee Retirement Income Security Act suit in August. U.S. District Judge Sidney Stein granted final approval to the settlement and fee award closing the book on claims that a Citigroup committee stuffed the company’s 401(k) plan with Citigroup-affiliated funds even though other funds charged lower fees.
The case has been pending since 2007, and its closure came as a relief to class attorney James A. Moore of McTigue Law LLP. “The case was hard-fought for over a decade, and we think the result is an excellent one for plan participants,” Moore said. “Citigroup stopped offering through its 401(k) plan the high cost proprietary funds that were the subject of the lawsuit.” Moore added that he thinks the nearly $7 million recovery “sends a message to other employers that, under the law, they must manage retirement plans in the best interest of employees.”
The Citigroup 401(k) Plan Investment Committee and the class — a group of current and former Citigroup employees — told Judge Stein in August that they had reached a deal to end the case. Soon, Citigroup workers, former workers and retirees who invested in certain funds in the 401(k) plan between Oct. 18, 2001, and Dec. 1, 2005, will be notified of the money headed their way. Judge Stein signed off on the settlement notice.
He also signed an order awarding $2.3 million to the plaintiffs’ attorneys and $15,000 to each of the two class representatives. The order also approved devoting $374,100 of the settlement to case-related expenses, leaving roughly $4.2 million left for the class after all the deductions — attorneys’ fees, class representative fees and expenses — are made.
The settlement notice tells Citigroup workers that the class’s three attorneys and two representatives “have devoted many hours to investigating the claims, bringing this case, and pursuing it for almost 11 years” and that the attorneys “have not been paid for their time and expenses while the case has been pending.”
The class sued Citigroup and its 401(k) plan committee in October 2007, accusing them of putting the bank’s interests ahead of workers’ when stocking the employee retirement plan. The company and plan committee allegedly failed to remove or replace subpar, expensive Citigroup funds from the 401(k) plan’s lineup, allowing Citigroup to reap “substantial revenues” at plan participants’ expense while violating the Employee Retirement Income Security Act, which requires fiduciaries to make decisions in participants’ best interests, according to the complaint.
Citigroup was dropped as a defendant in 2010, leaving the 401(k) investment committee, another committee called the Benefit Plans Investment Committee of Citigroup Inc. and various individual committee members and officers to defend the suit. The class won certification in November 2017. Moore said Monday that the class has more than 300,000 members.
The case is Leber et al. v. The Citigroup 401(k) Plan Investment Committee et al., case number 1:07-cv-09329, in the U.S. District Court for the Southern District of New York.
Article source: http://www.thenalfa.org/blog/2-3m-fee-award-in-6-9m-citigroup-erisa-class-action/
Question To what extent is pharmaceutical industry marketing of opioids to physicians associated with subsequent mortality from prescription opioid overdoses?
Findings In this population-based, cross-sectional study, $39.7 million in opioid marketing was targeted to 67 507 physicians across 2208 US counties between August 1, 2013, and December 31, 2015. Increased county-level opioid marketing was associated with elevated overdose mortality 1 year later, an association mediated by opioid prescribing rates; per capita, the number of marketing interactions with physicians demonstrated a stronger association with mortality than the dollar value of marketing.
Meaning The potential role of pharmaceutical industry marketing in contributing to opioid prescribing and mortality from overdoses merits ongoing examination.
For full report: https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2720914
Findings In this population-based, cross-sectional study, $39.7 million in opioid marketing was targeted to 67 507 physicians across 2208 US counties between August 1, 2013, and December 31, 2015. Increased county-level opioid marketing was associated with elevated overdose mortality 1 year later, an association mediated by opioid prescribing rates; per capita, the number of marketing interactions with physicians demonstrated a stronger association with mortality than the dollar value of marketing.
Meaning The potential role of pharmaceutical industry marketing in contributing to opioid prescribing and mortality from overdoses merits ongoing examination.
For full report: https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2720914
from Public Citizen Consumer Law & Policy Blog
CFPB and NY settle with Sterling Jewelers over enrolling customers in credit cards without the customers' consent
Posted: 17 Jan 2019 01:05 PM PST
The State of New York and the Consumer Financial Protection Bureau (which is not shut down) yesterday settled claims against Sterling Jewelers, based on findings that that the company violated the Consumer Financial Protection Act of 2010 by opening store credit-card accounts without customer consent; enrolling customers in payment-protection insurance without their consent; and misrepresenting to consumers the financing terms associated with the credit-card accounts. The CFPB also found Truth in Lending Act violations, based on Sterling signing customers up for credit-card accounts without having received an oral or written request or application from them.
Under the settlement, the company will pay a $10 million civil money penalty to the CFPB and a $1 million civil money penalty to New York. The settlement also includes injunctive relief designed to prevent the continuation of the wrongdoing.
The consent order is here. https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/bcfp_sterling-jewelers_proposed-consent-order.pdf
So apparently Wells Fargo is not the only company to sign people up for accounts without consent. The scope of wrongdoing by Wells Fargo, and the penalty, were of course much larger.
Source: https://pubcit.typepad.com/clpblog/2019/01/cfpb-and-ny-settle-with-sterling-jewelers-over-enrolling-customers-in-credit-cards-without-the-custo.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+ConsumerLawPolicyBlog+%28Consumer+Law+%26+Policy+Blog%29
CFPB and NY settle with Sterling Jewelers over enrolling customers in credit cards without the customers' consent
Posted: 17 Jan 2019 01:05 PM PST
The State of New York and the Consumer Financial Protection Bureau (which is not shut down) yesterday settled claims against Sterling Jewelers, based on findings that that the company violated the Consumer Financial Protection Act of 2010 by opening store credit-card accounts without customer consent; enrolling customers in payment-protection insurance without their consent; and misrepresenting to consumers the financing terms associated with the credit-card accounts. The CFPB also found Truth in Lending Act violations, based on Sterling signing customers up for credit-card accounts without having received an oral or written request or application from them.
Under the settlement, the company will pay a $10 million civil money penalty to the CFPB and a $1 million civil money penalty to New York. The settlement also includes injunctive relief designed to prevent the continuation of the wrongdoing.
The consent order is here. https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/bcfp_sterling-jewelers_proposed-consent-order.pdf
So apparently Wells Fargo is not the only company to sign people up for accounts without consent. The scope of wrongdoing by Wells Fargo, and the penalty, were of course much larger.
Source: https://pubcit.typepad.com/clpblog/2019/01/cfpb-and-ny-settle-with-sterling-jewelers-over-enrolling-customers-in-credit-cards-without-the-custo.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+ConsumerLawPolicyBlog+%28Consumer+Law+%26+Policy+Blog%29
Attorney General nominee William Barr testifies on antitrust
Excerpt from article By TED JOHNSON
WASHINGTON — William Barr, President Donald Trump’s nominee for the next attorney general, said that it was “more important” that the Department of Justice get involved in questions of how effective antitrust enforcers have been in protecting competition amid the growth of tech giants.
“I would like to weigh in on some of these issues,” Barr said at his confirmation hearing on Tuesday, adding that privacy and data gathering were other areas of concern.
Earlier in the day, Barr said he is “sort of interested in stepping back and reassessing or learning more about how the Antitrust Division has been functioning and what their priorities are.”
“I don’t think big is necessarily bad, but I think a lot of people wonder how such huge behemoths that now exist in Silicon Valley have taken shape under the nose of antitrust enforcers.”
He added that there was a way “to win in that marketplace without violating antitrust laws, but I want to find out more about that dynamic.”
Barr expressed his concerns amid increased scrutiny in Washington over the growth of tech companies like Facebook, Google, and Amazon. The Federal Trade Commission has been examining the effectiveness of antitrust laws in a series of hearings, but it is unclear if that will ultimately lead to any changes in legislation.
Barr also said that he would “absolutely” recuse himself from the Justice Department’s antitrust lawsuit against the AT&T-Time Warner merger. A three-judge panel is considering the the DOJ’s appeal.
Sen. Amy Klobuchar (D-Minn.) asked Barr about his prior criticism of the Justice Department’s decision to try to block the transaction. When he was a board member of Time Warner, Barr wrote an affidavit in support of AT&T-Time Warner’s contention that the merger was politically motivated. He wrote in the affidavit that cited Trump’s “prior public animus toward this merger” as a reason many would view the lawsuit as political motivated.
But at the confirmation hearing, Barr toned down his criticsm. He said that his affidavit “speaks for itself,” and that he was expressing concern that the Antitrust Division “wasn’t engaging in some of our arguments…I am not sure why they acted the way they did.”
Makan Delrahim, the chief of the DOJ’s Antitrust Division, has denied that the White House influenced the decision to challenge the merger.
from https://variety.com/2019/politics/news/william-barr-antitrust-impact-tech-giants-1203108418/
Excerpt from article By TED JOHNSON
WASHINGTON — William Barr, President Donald Trump’s nominee for the next attorney general, said that it was “more important” that the Department of Justice get involved in questions of how effective antitrust enforcers have been in protecting competition amid the growth of tech giants.
“I would like to weigh in on some of these issues,” Barr said at his confirmation hearing on Tuesday, adding that privacy and data gathering were other areas of concern.
Earlier in the day, Barr said he is “sort of interested in stepping back and reassessing or learning more about how the Antitrust Division has been functioning and what their priorities are.”
“I don’t think big is necessarily bad, but I think a lot of people wonder how such huge behemoths that now exist in Silicon Valley have taken shape under the nose of antitrust enforcers.”
He added that there was a way “to win in that marketplace without violating antitrust laws, but I want to find out more about that dynamic.”
Barr expressed his concerns amid increased scrutiny in Washington over the growth of tech companies like Facebook, Google, and Amazon. The Federal Trade Commission has been examining the effectiveness of antitrust laws in a series of hearings, but it is unclear if that will ultimately lead to any changes in legislation.
Barr also said that he would “absolutely” recuse himself from the Justice Department’s antitrust lawsuit against the AT&T-Time Warner merger. A three-judge panel is considering the the DOJ’s appeal.
Sen. Amy Klobuchar (D-Minn.) asked Barr about his prior criticism of the Justice Department’s decision to try to block the transaction. When he was a board member of Time Warner, Barr wrote an affidavit in support of AT&T-Time Warner’s contention that the merger was politically motivated. He wrote in the affidavit that cited Trump’s “prior public animus toward this merger” as a reason many would view the lawsuit as political motivated.
But at the confirmation hearing, Barr toned down his criticsm. He said that his affidavit “speaks for itself,” and that he was expressing concern that the Antitrust Division “wasn’t engaging in some of our arguments…I am not sure why they acted the way they did.”
Makan Delrahim, the chief of the DOJ’s Antitrust Division, has denied that the White House influenced the decision to challenge the merger.
from https://variety.com/2019/politics/news/william-barr-antitrust-impact-tech-giants-1203108418/
The NTEU lawsuit on behalf of unpaid federal workers--cite to Complaint
Excerpt from filed Complaint:
This is a collective action lawsuit, brought by Eleazar Avalos and James Davis, on behalf of themselves and all similarly situated individuals. The complaint makes two central allegations. First, it alleges that the government’s failure to timely pay overtime wages earned on December 22, 2018, to Fair Labor Standards Act (FLSA) nonexempt employees like Mr. Avalos and Mr. Davis is illegal. Second, the complaint further alleges an FLSA violation based upon the expected government failure to pay a minimum wage and overtime wages earned for the pay period beginning December 23, 2018 and ending on January 5, 2019. They seek payment of the owed wages, an equal amount of liquidated damages, and other appropriate remedies.
The Complaint is here: https://www.nteu.org/~/media/Files/nteu/docs/public/letters/2018/nteu-shutdown-flsa-complaint.pdf?la=en
Excerpt from filed Complaint:
This is a collective action lawsuit, brought by Eleazar Avalos and James Davis, on behalf of themselves and all similarly situated individuals. The complaint makes two central allegations. First, it alleges that the government’s failure to timely pay overtime wages earned on December 22, 2018, to Fair Labor Standards Act (FLSA) nonexempt employees like Mr. Avalos and Mr. Davis is illegal. Second, the complaint further alleges an FLSA violation based upon the expected government failure to pay a minimum wage and overtime wages earned for the pay period beginning December 23, 2018 and ending on January 5, 2019. They seek payment of the owed wages, an equal amount of liquidated damages, and other appropriate remedies.
The Complaint is here: https://www.nteu.org/~/media/Files/nteu/docs/public/letters/2018/nteu-shutdown-flsa-complaint.pdf?la=en
NYT opinion: Opinion
Can States Fix the Disaster of American Health Care?
The governor of California has proposed some big ideas. Who knows whether he can pull them off, but there’s reason for hope.
By Elisabeth Rosenthal
See the Op-Ed at Opinion https://www.nytimes.com/pages/opinion/index.html
Can States Fix the Disaster of American Health Care?
The governor of California has proposed some big ideas. Who knows whether he can pull them off, but there’s reason for hope.
By Elisabeth Rosenthal
See the Op-Ed at Opinion https://www.nytimes.com/pages/opinion/index.html
From USDOJ:
Reconsidering Whether the Wire Act Applies to Non-Sports Gambling
This [USDOJ] Office concluded in 2011 that the prohibitions of the Wire Act in 18 U.S.C. § 1084(a) are limited to sports gambling. Having been asked to reconsider, we now conclude that the statutory prohibitions are not uniformly limited to gambling on sporting events or contests. Only the second prohibition of the first clause of section 1084(a), which criminalizes transmitting “information assisting in the placing of bets or wagers on any sporting event or contest,” is so limited. The other prohibitions apply to non-sportsrelated betting or wagering that satisfy the other elements of section 1084(a)
Full USDOJ Statement: https://www.justice.gov/olc/file/1121531 [the URL is there at the bottom of the page, despite the shut down warning]
Reconsidering Whether the Wire Act Applies to Non-Sports Gambling
This [USDOJ] Office concluded in 2011 that the prohibitions of the Wire Act in 18 U.S.C. § 1084(a) are limited to sports gambling. Having been asked to reconsider, we now conclude that the statutory prohibitions are not uniformly limited to gambling on sporting events or contests. Only the second prohibition of the first clause of section 1084(a), which criminalizes transmitting “information assisting in the placing of bets or wagers on any sporting event or contest,” is so limited. The other prohibitions apply to non-sportsrelated betting or wagering that satisfy the other elements of section 1084(a)
Full USDOJ Statement: https://www.justice.gov/olc/file/1121531 [the URL is there at the bottom of the page, despite the shut down warning]
THE FTC THINKS YOU PAY TOO MUCH FOR SMARTPHONES. THEY BLAME QUALCOMM
Excerpt from: https://www.wired.com/story/ftc-thinks-you-pay-too-much-smartphones-heres-why/?
Qualcomm CEO Steven Mollenkopf told a federal court Friday that the company requires buyers of its chips to also license its patents, but it argued that it does so for legitimate business reasons.
THE FEDERAL TRADE Commission thinks you're paying too much for smartphones. But it doesn’t blame handset makers like Apple and Samsung or wireless carriers. Instead, the agency blames Qualcomm, which owns key wireless technology patents and makes chips that can be found in most high-end Android phones and many iPhones.
Qualcomm charges companies like Apple a set percentage of the total price of a phone in exchange for the right to use its technology, according to the antitrust suit filed by the FTC. The percentages vary, but Qualcomm generally charges 5 percent of the value of a device, up to a maximum of about $20 per device, according to a legal brief filed by Qualcomm.
Phone makers like Apple and Huawei argue that Qualcomm demands a larger cut of each phone sale than is fair, but that they pay because Qualcomm essentially threatens to cut off their supply of important wireless chips if they don’t. The FTC describes this as a "tax" on cellular phones that drives up prices and hurts competition.
In court Friday, Apple executive Tony Blevins accused the chipmaker of strong-arm tactics. Blevins said that during negotiations in 2013, Qualcomm president Cristiano Amon told him, "I'm your only choice, and I know Apple can afford to pay it,” CNET reports.
Excerpt from: https://www.wired.com/story/ftc-thinks-you-pay-too-much-smartphones-heres-why/?
Qualcomm CEO Steven Mollenkopf told a federal court Friday that the company requires buyers of its chips to also license its patents, but it argued that it does so for legitimate business reasons.
THE FEDERAL TRADE Commission thinks you're paying too much for smartphones. But it doesn’t blame handset makers like Apple and Samsung or wireless carriers. Instead, the agency blames Qualcomm, which owns key wireless technology patents and makes chips that can be found in most high-end Android phones and many iPhones.
Qualcomm charges companies like Apple a set percentage of the total price of a phone in exchange for the right to use its technology, according to the antitrust suit filed by the FTC. The percentages vary, but Qualcomm generally charges 5 percent of the value of a device, up to a maximum of about $20 per device, according to a legal brief filed by Qualcomm.
Phone makers like Apple and Huawei argue that Qualcomm demands a larger cut of each phone sale than is fair, but that they pay because Qualcomm essentially threatens to cut off their supply of important wireless chips if they don’t. The FTC describes this as a "tax" on cellular phones that drives up prices and hurts competition.
In court Friday, Apple executive Tony Blevins accused the chipmaker of strong-arm tactics. Blevins said that during negotiations in 2013, Qualcomm president Cristiano Amon told him, "I'm your only choice, and I know Apple can afford to pay it,” CNET reports.
You pay $4 for a cup of coffee, but farmers earn less than a cent a cup
* A crisis is brewing after green coffee prices slide
* Calls for more value to be added in producing countries
Excerpts from article by Aaron Maasho, Nigel Hunt
Now, a slump in global coffee prices to their lowest in nearly 13 years in September is raising questions about whether it’s worth growing beans at all in some of the traditional coffee heartlands of Central America, Colombia and Ethiopia.
The industry has seen a wave of acquisitions as companies such as Nestle, JAB Holding and Coca-Cola spend billions to boost their market share.
For struggling farmers, though, times are tough. Growers around the world have warned coffee company executives in the West of a growing “social catastrophe”, unless they can help to raise farmers’ incomes.
In a letter last year to chief executives at companies such as Starbucks, Jacobs Douwe Egberts (JDE) and Nestle, a group representing growers in more than 30 countries said there was a risk farms would be abandoned, fuelling social and political unrest as well as more illegal migration.
Some companies are responding. Starbucks, for example, has committed $20 million to help smallholders they do business with in Central America until coffee prices rise above their cost of production. “For us that is an initial step, acknowledging we need to do something helpful in the near term in the countries that need it most,” said Michelle Burns, head of coffee at Starbucks, which buys about 3 percent of the world’s coffee.
One problem for Ethiopian farmers is that most of their coffee is exported in bulk as green, unroasted beans, with most of the processes that add the greatest value taking place afterwards in the countries that consume the coffee.
“There hasn’t been a really significant change in how coffee has been transported, purchased or produced in many decades. It has always just been extracted from the country,” said Rob Terenzi, co-founder of Vega Coffee in the United States.
Fair Trade arrangements for farmers are seen by Terenzi and some other observers as insufficient.
See article at https://www.reuters.com/article/coffee-farmers/coffee-price-slump-leaves-farmers-earning-less-than-a-cent-a-cup-idUSL8N1YJ4D2?te=1&nl=dealbook&emc=edit_dk_20190115
* A crisis is brewing after green coffee prices slide
* Calls for more value to be added in producing countries
Excerpts from article by Aaron Maasho, Nigel Hunt
Now, a slump in global coffee prices to their lowest in nearly 13 years in September is raising questions about whether it’s worth growing beans at all in some of the traditional coffee heartlands of Central America, Colombia and Ethiopia.
The industry has seen a wave of acquisitions as companies such as Nestle, JAB Holding and Coca-Cola spend billions to boost their market share.
For struggling farmers, though, times are tough. Growers around the world have warned coffee company executives in the West of a growing “social catastrophe”, unless they can help to raise farmers’ incomes.
In a letter last year to chief executives at companies such as Starbucks, Jacobs Douwe Egberts (JDE) and Nestle, a group representing growers in more than 30 countries said there was a risk farms would be abandoned, fuelling social and political unrest as well as more illegal migration.
Some companies are responding. Starbucks, for example, has committed $20 million to help smallholders they do business with in Central America until coffee prices rise above their cost of production. “For us that is an initial step, acknowledging we need to do something helpful in the near term in the countries that need it most,” said Michelle Burns, head of coffee at Starbucks, which buys about 3 percent of the world’s coffee.
One problem for Ethiopian farmers is that most of their coffee is exported in bulk as green, unroasted beans, with most of the processes that add the greatest value taking place afterwards in the countries that consume the coffee.
“There hasn’t been a really significant change in how coffee has been transported, purchased or produced in many decades. It has always just been extracted from the country,” said Rob Terenzi, co-founder of Vega Coffee in the United States.
Fair Trade arrangements for farmers are seen by Terenzi and some other observers as insufficient.
See article at https://www.reuters.com/article/coffee-farmers/coffee-price-slump-leaves-farmers-earning-less-than-a-cent-a-cup-idUSL8N1YJ4D2?te=1&nl=dealbook&emc=edit_dk_20190115
A Pennsylvania federal judge issued a nationwide injunction last Monday blocking Trump administration carve-outs to the Affordable Care Act's birth control mandate from taking effect
From the Opinion:
Plaintiffs, the Commonwealth of Pennsylvania and the State of New Jersey (collectively “the States”), have sued the United States of America, President Donald J. Trump, the United States Secretary of Health and Human Services Alex M. Azar II, the United States Secretary of the Treasury Steven T. Mnuchin, and the United States Secretary of Labor Rene Alexander Acosta in their official capacities, as well as each of their agencies (collectively “Defendants”), seeking to enjoin enforcement of two Final Rules that grant exemptions to the Affordable Care Act’s requirement that health plans cover women’s preventive services. The Final Rules “finalize” two Interim Final Rules, which Defendants issued in October 2017 and which this Court enjoined soon thereafter, see Pennsylvania v. Trump, 281 F. Supp.3d 553, 585 (E.D. Pa. 2017). On November 15, 2018, while their appeal of that preliminary injunction was pending, Defendants promulgated the Final Rules currently before the Court. The States move to enjoin enforcement of the Final Rules arguing that, like the IFRs before them, the Final Rules violate a variety of constitutional and statutory provisions. For the reasons set forth below, Plaintiffs’ Case 2:17-cv-04540-WB Document 136 Filed 01/14/19 Page 2 of 65 3 Second Motion for a Preliminary Injunction shall be granted.
From the Order:
ORDERED that Defendants Alex M. Azar II, as Secretary of the United States Department of Health and Human Service; the United States Department of Health Case 2:17-cv-04540-WB Document 135 Filed 01/14/19 Page 1 of 2 2 and Human Services; Steven T. Mnuchin, as Secretary of the United States Department of Treasury; the United States Department of Treasury; Rene Alexander Acosta, as Secretary of the United States Department of Labor; and the United States Department of Labor;1 and their officers, agents, servants, employees, attorneys, designees, and subordinates, as well as any person acting in concert or participation with them, are hereby ENJOINED from enforcing the following Final Rules across the Nation, pending further order of this Court: 1. Religious Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act, 83 Fed. Reg. 57,536 (Nov. 15, 2018); and 2. Moral Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act, 83 Fed. Reg. 57,592 (Nov. 15, 2018).
The Order and Opinion are here:
https://www.attorneygeneral.gov/wp-content/uploads/2019/01/2019-01-14-Order.pdf
https://www.courthousenews.com/wp-content/uploads/2019/01/injunction-opinion.pdf
From the Opinion:
Plaintiffs, the Commonwealth of Pennsylvania and the State of New Jersey (collectively “the States”), have sued the United States of America, President Donald J. Trump, the United States Secretary of Health and Human Services Alex M. Azar II, the United States Secretary of the Treasury Steven T. Mnuchin, and the United States Secretary of Labor Rene Alexander Acosta in their official capacities, as well as each of their agencies (collectively “Defendants”), seeking to enjoin enforcement of two Final Rules that grant exemptions to the Affordable Care Act’s requirement that health plans cover women’s preventive services. The Final Rules “finalize” two Interim Final Rules, which Defendants issued in October 2017 and which this Court enjoined soon thereafter, see Pennsylvania v. Trump, 281 F. Supp.3d 553, 585 (E.D. Pa. 2017). On November 15, 2018, while their appeal of that preliminary injunction was pending, Defendants promulgated the Final Rules currently before the Court. The States move to enjoin enforcement of the Final Rules arguing that, like the IFRs before them, the Final Rules violate a variety of constitutional and statutory provisions. For the reasons set forth below, Plaintiffs’ Case 2:17-cv-04540-WB Document 136 Filed 01/14/19 Page 2 of 65 3 Second Motion for a Preliminary Injunction shall be granted.
From the Order:
ORDERED that Defendants Alex M. Azar II, as Secretary of the United States Department of Health and Human Service; the United States Department of Health Case 2:17-cv-04540-WB Document 135 Filed 01/14/19 Page 1 of 2 2 and Human Services; Steven T. Mnuchin, as Secretary of the United States Department of Treasury; the United States Department of Treasury; Rene Alexander Acosta, as Secretary of the United States Department of Labor; and the United States Department of Labor;1 and their officers, agents, servants, employees, attorneys, designees, and subordinates, as well as any person acting in concert or participation with them, are hereby ENJOINED from enforcing the following Final Rules across the Nation, pending further order of this Court: 1. Religious Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act, 83 Fed. Reg. 57,536 (Nov. 15, 2018); and 2. Moral Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act, 83 Fed. Reg. 57,592 (Nov. 15, 2018).
The Order and Opinion are here:
https://www.attorneygeneral.gov/wp-content/uploads/2019/01/2019-01-14-Order.pdf
https://www.courthousenews.com/wp-content/uploads/2019/01/injunction-opinion.pdf
NYT: Gavin Newsom dives into the highly charged debate over prescription drug prices in his first week as California’s governor
His idea: Find strength in numbers. Within hours of taking office on Monday, Mr. Newsom signed an executive order proposing a plan that would allow California to directly negotiate with drug manufacturers.
The state would bring to the bargaining table not just the 13 million beneficiaries of Medi-Cal (California’s version of Medicaid), but also other state agencies that purchase drugs, including coverage for state workers and prisoners. Down the road, the plan could possibly allow private insurers and employers to join in the savings.
“We think this is a significant step forward,” Mr. Newsom said in a video address. “It’s the right thing to do, and I recognize deeply the anxiety so many of you feel around the issues related to the cost of prescription drugs, and I hope California’s efforts here can lead the way for other states to consider the same.”
https://www.nytimes.com/2019/01/11/health/drug-prices-california.html
His idea: Find strength in numbers. Within hours of taking office on Monday, Mr. Newsom signed an executive order proposing a plan that would allow California to directly negotiate with drug manufacturers.
The state would bring to the bargaining table not just the 13 million beneficiaries of Medi-Cal (California’s version of Medicaid), but also other state agencies that purchase drugs, including coverage for state workers and prisoners. Down the road, the plan could possibly allow private insurers and employers to join in the savings.
“We think this is a significant step forward,” Mr. Newsom said in a video address. “It’s the right thing to do, and I recognize deeply the anxiety so many of you feel around the issues related to the cost of prescription drugs, and I hope California’s efforts here can lead the way for other states to consider the same.”
https://www.nytimes.com/2019/01/11/health/drug-prices-california.html
The Supreme Court has declined to hear an appeal from ExxonMobil regarding Massachusetts Attorney General Maura Healey’s climate change investigation
The Court’s decision requiring production of documents could have implications beyond the state of Massachusetts as Exxon is forced to hand over documents detailing what it knew about climate change and when.
Healey isn't alone in investigating ExxonMobil. In October, former Democratic New York Attorney General Barbara Underwood announced a lawsuit against Exxon Mobil alleging the company misled investors regarding the risk that climate change regulations posed to its business. The probe had been initiated by her predecessor, former Democratic New York Attorney General Eric Schneiderman.
Other States are potential litigants against ExxonMobil.
To find court filings and documents related to the Mass. AGO's investigation of Exxon Mobil: https://www.mass.gov/lists/attorney-generals-office-exxon-investigation
The Court’s decision requiring production of documents could have implications beyond the state of Massachusetts as Exxon is forced to hand over documents detailing what it knew about climate change and when.
Healey isn't alone in investigating ExxonMobil. In October, former Democratic New York Attorney General Barbara Underwood announced a lawsuit against Exxon Mobil alleging the company misled investors regarding the risk that climate change regulations posed to its business. The probe had been initiated by her predecessor, former Democratic New York Attorney General Eric Schneiderman.
Other States are potential litigants against ExxonMobil.
To find court filings and documents related to the Mass. AGO's investigation of Exxon Mobil: https://www.mass.gov/lists/attorney-generals-office-exxon-investigation
From Elizabeth Warren's letter to Comerica on direct deposit fraud issues:
I am writing to seek information regarding security breaches in Comerica's Direct Express debit card program which led to hundreds of Americans becoming victims of fraud when their Social Security, disability, or other federal benefit payments were stolen. This program was managed by Comerica via the now discontinued Direct Express Cardless Benefit Access Service.
Complaints from my constituents, confirmed by detailed reporting in the American Banker, described your company's security vulnerabilities, your mismanaged responses to data breaches, and your misleading and cruel customer service tactics when harmed consumers sought help. I am particularly concerned about the lack of transparency about the security breaches and subsequent fraud schemes that compromised Americans' federal benefits.
The Department of Treasury partners with Comerica and other financial agents to distribute monthly federal benefit payments on behalf of the Social Security Administration, the VA, and at least five other federal agencies. 1 Comerica has administered the Direct Express program since 2008 and provides prepaid debit cards that allow recipients without bank accounts to electronically access Social Security, and other federal benefits, without relying on physical checks. But according to reports "criminals .... stole Direct Express card numbers, addresses and three-digit card identifiers, enabling them to make fraudulent online purchases. In some cases, criminals also called Direct Express to report cards as lost or stolen, or to have PIN numbers changed, and had payments routed to MoneyGram locations where they could pick up a check and cash it."
The letter is at https://www.warren.senate.gov/imo/media/doc/2018.10.16%20Letter%20to%20Comerica%20Bank%20re%20Direct%20Express.pdf
I am writing to seek information regarding security breaches in Comerica's Direct Express debit card program which led to hundreds of Americans becoming victims of fraud when their Social Security, disability, or other federal benefit payments were stolen. This program was managed by Comerica via the now discontinued Direct Express Cardless Benefit Access Service.
Complaints from my constituents, confirmed by detailed reporting in the American Banker, described your company's security vulnerabilities, your mismanaged responses to data breaches, and your misleading and cruel customer service tactics when harmed consumers sought help. I am particularly concerned about the lack of transparency about the security breaches and subsequent fraud schemes that compromised Americans' federal benefits.
The Department of Treasury partners with Comerica and other financial agents to distribute monthly federal benefit payments on behalf of the Social Security Administration, the VA, and at least five other federal agencies. 1 Comerica has administered the Direct Express program since 2008 and provides prepaid debit cards that allow recipients without bank accounts to electronically access Social Security, and other federal benefits, without relying on physical checks. But according to reports "criminals .... stole Direct Express card numbers, addresses and three-digit card identifiers, enabling them to make fraudulent online purchases. In some cases, criminals also called Direct Express to report cards as lost or stolen, or to have PIN numbers changed, and had payments routed to MoneyGram locations where they could pick up a check and cash it."
The letter is at https://www.warren.senate.gov/imo/media/doc/2018.10.16%20Letter%20to%20Comerica%20Bank%20re%20Direct%20Express.pdf
Hospice care and "Do not resuscitate" orders for people with advanced dementia?
Advances in health care can mean an increase in the number of older people suffering from dementia. It may not be obvious that advanced dementia is a terminal illness, but some medical people see it that way. The issue that follows from that point of view is whether a “do not resuscitate” policy and hospice care are appropriate for people with advanced dementia. The issue can be controversial. Some will see the withholding of medical care from a person with advanced dementia as cruel, or even immoral. Others will think that withholding of care is humans, allowing the patient to die with dignity. An NIH article at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4396757/
helpfully reviews the issues. It discusses care options for patients with advanced dementia, including family counseling issues.
Posting by Don Allen Resnikoff
Advances in health care can mean an increase in the number of older people suffering from dementia. It may not be obvious that advanced dementia is a terminal illness, but some medical people see it that way. The issue that follows from that point of view is whether a “do not resuscitate” policy and hospice care are appropriate for people with advanced dementia. The issue can be controversial. Some will see the withholding of medical care from a person with advanced dementia as cruel, or even immoral. Others will think that withholding of care is humans, allowing the patient to die with dignity. An NIH article at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4396757/
helpfully reviews the issues. It discusses care options for patients with advanced dementia, including family counseling issues.
Posting by Don Allen Resnikoff
From DMN:
RCA Records Faces Heavy Pressure to Drop R. Kelly — So Far, No Response
In the wake of the #MeToo movement, pressure continues to build around R. Kelly.
In the past week, Lifetime has aired a six-part documentary featuring women describing sexual misconduct from the singer. The damning biopic, Surviving R. Kelly, chronicles numerous issues involving allegations of sexual assault involving multiple women.
After that documentary aired, the Rape, Abuse and Incest National Network’s sexual crisis hotline received 20% more calls. RAINN president Scott Berkowitz says this is common after high-profile cases.
The story continues here. https://www.digitalmusicnews.com/2019/01/09/rca-records-faces-heavy-pressure-to-drop-r-kelly-no-response-yet/
RCA Records Faces Heavy Pressure to Drop R. Kelly — So Far, No Response
In the wake of the #MeToo movement, pressure continues to build around R. Kelly.
In the past week, Lifetime has aired a six-part documentary featuring women describing sexual misconduct from the singer. The damning biopic, Surviving R. Kelly, chronicles numerous issues involving allegations of sexual assault involving multiple women.
After that documentary aired, the Rape, Abuse and Incest National Network’s sexual crisis hotline received 20% more calls. RAINN president Scott Berkowitz says this is common after high-profile cases.
The story continues here. https://www.digitalmusicnews.com/2019/01/09/rca-records-faces-heavy-pressure-to-drop-r-kelly-no-response-yet/
From Public Citizen
The Growing Rise of Megacompanies Hurts Consumers and Damages Our Democracy
REMINGTON A. GREGG --Consumer & Worker Safeguards--, -Antitrust & Competition Laws-
This month, Apple became the first publicly-traded American company to reach $1 trillion in market value. It is now one of the most powerful companies in the world both in revenue and in the share of the market that it holds. In 2017, Apple took home 79% of the global profit share for smartphones. What does this milestone mean for American consumers?
Megacompany monopolization is not unique to Apple, or even the tech industry. Five banks control half of all assets in the American financial system. Thirty publicly traded companies collect half of the profits produced by all publicly traded companies in the market. According to Business Insider, the difference between how much it costs American companies to make products and how much they make selling products—a mechanism that experts use to measure how much power companies have in the marketplace—is at the highest level since 1950.
When companies consolidate, it makes it harder for plucky startups to gain a foothold as a competitor. As a result, consumers have fewer options, which can drive prices up and innovation down.
Apple has spent decades fostering a consumer-invested ecosystem where users become so familiar and comfortable with its products that it’s difficult to switch another company. This ecosystem is so strong that other companies struggle to create similar systems, effectively allowing Apple to monopolize the market. However, Apple is not the only tech titan set to monopolize the market. Only about 1% of smartphone consumers use an operating system that is not made by Apple or Google.
In industries where corporate consolidation is rampant, such as the tech field, workers’ share of the overall pie is shrinking because these merged companies are focused on efficiency and need fewer workers to perform the necessary jobs, which means fewer people employed in quality, high paying jobs. This leads to an overall decline of the share of the nation’s wealth that goes to workers. In addition, while Apple’s valuation soared to new heights this week, it is aggressively outsourcing its workforce out of the country, taking advantage of poorly-paid workers in other countries and robbing Americans of good jobs.
U.S. Supreme Court Justice Louis Brandeis long ago warned against the “curse of bigness” in corporate power. During the Progressive Era of the 1910s and 1920s, American trustbusters sought to rein-in excessive corporate power by enacting bold laws such as the Clayton and Sherman Act, and the Federal Trade Commission Act, which created the Federal Trade Commission (FTC), to protect competition. However federal antitrust enforcement, the Department of Justice and the FTC, have not used their enforcement powers robustly to curb excessive concentration. Market commentators may argue that stopping companies like Apple, Google, and Amazon from driving out their competitors from the marketplace is impossible. But they are wrong. Congress can fix our antitrust laws to stop companies from growing so big that they stamp out all competition, and Public Citizen will continue to advocate for strong antitrust laws and enforcement that protects consumers against corporate monopolies.
https://citizenvox.org/2018/08/15/the-growing-rise-of-megacompanies-hurts-consumers-and-damages-our-democracy/
The Growing Rise of Megacompanies Hurts Consumers and Damages Our Democracy
REMINGTON A. GREGG --Consumer & Worker Safeguards--, -Antitrust & Competition Laws-
This month, Apple became the first publicly-traded American company to reach $1 trillion in market value. It is now one of the most powerful companies in the world both in revenue and in the share of the market that it holds. In 2017, Apple took home 79% of the global profit share for smartphones. What does this milestone mean for American consumers?
Megacompany monopolization is not unique to Apple, or even the tech industry. Five banks control half of all assets in the American financial system. Thirty publicly traded companies collect half of the profits produced by all publicly traded companies in the market. According to Business Insider, the difference between how much it costs American companies to make products and how much they make selling products—a mechanism that experts use to measure how much power companies have in the marketplace—is at the highest level since 1950.
When companies consolidate, it makes it harder for plucky startups to gain a foothold as a competitor. As a result, consumers have fewer options, which can drive prices up and innovation down.
Apple has spent decades fostering a consumer-invested ecosystem where users become so familiar and comfortable with its products that it’s difficult to switch another company. This ecosystem is so strong that other companies struggle to create similar systems, effectively allowing Apple to monopolize the market. However, Apple is not the only tech titan set to monopolize the market. Only about 1% of smartphone consumers use an operating system that is not made by Apple or Google.
In industries where corporate consolidation is rampant, such as the tech field, workers’ share of the overall pie is shrinking because these merged companies are focused on efficiency and need fewer workers to perform the necessary jobs, which means fewer people employed in quality, high paying jobs. This leads to an overall decline of the share of the nation’s wealth that goes to workers. In addition, while Apple’s valuation soared to new heights this week, it is aggressively outsourcing its workforce out of the country, taking advantage of poorly-paid workers in other countries and robbing Americans of good jobs.
U.S. Supreme Court Justice Louis Brandeis long ago warned against the “curse of bigness” in corporate power. During the Progressive Era of the 1910s and 1920s, American trustbusters sought to rein-in excessive corporate power by enacting bold laws such as the Clayton and Sherman Act, and the Federal Trade Commission Act, which created the Federal Trade Commission (FTC), to protect competition. However federal antitrust enforcement, the Department of Justice and the FTC, have not used their enforcement powers robustly to curb excessive concentration. Market commentators may argue that stopping companies like Apple, Google, and Amazon from driving out their competitors from the marketplace is impossible. But they are wrong. Congress can fix our antitrust laws to stop companies from growing so big that they stamp out all competition, and Public Citizen will continue to advocate for strong antitrust laws and enforcement that protects consumers against corporate monopolies.
https://citizenvox.org/2018/08/15/the-growing-rise-of-megacompanies-hurts-consumers-and-damages-our-democracy/
Ocasio-Cortez reportedly in line for banking post, and that could be bad news for Wall Street
See https://www.cnbc.com/2019/01/11/ocasio-cortez-in-line-for-banking-post-and-that-could-be-bad-news-for-wall-street.html
- Freshman Rep. Alexandria Ocasio-Cortez is in line to be appointed to the House Financial Services Committee, according to a Politico report.
- The New York democratic socialist would be a thorn in the side of Wall Street, which has seen its regulatory burden lowered since Donald Trump became president.
- Ocasio-Cortez also could be an important ally for committee Chairwoman Maxine Waters.
See https://www.cnbc.com/2019/01/11/ocasio-cortez-in-line-for-banking-post-and-that-could-be-bad-news-for-wall-street.html
Big Vaping Companies v. regulators:
F.D.A. Accuses Juul and Altria of Backing Off Plan to Stop Youth Vaping
By Sheila Kaplan
Jan. 4, 2019
WASHINGTON — The Food and Drug Administration is accusing Juul and Altria of reneging on promises they made to the government to keep e-cigarettes away from minors.
Dr. Scott Gottlieb, the agency’s commissioner, is drafting letters to both companies that will criticize them for publicly pledging to remove nicotine flavor pods from store shelves, while secretly negotiating a financial partnership that seems to do the opposite. He plans to summon top executives of the companies to F.D.A. headquarters to explain how they will stick to their agreements given their new arrangement.
Dr. Gottlieb was disconcerted by the commitments the companies made in the deal announced Dec. 19, under which Altria, the nation’s largest maker of traditional cigarettes, agreed to purchase a 35 percent — $13 billion — stake in Juul, the rapidly growing e-cigarette start-up whose products have become hugely popular with teenagers. Public health officials, as well as teachers and parents, fear that e-cigarettes have created a new generation of nicotine addicts.
“Juul and Altria made very specific assertions in their letters and statements to the F.D.A. about the drivers of the youth epidemic,” Dr. Gottlieb said in an interview. “Their recent actions and statements appear to be inconsistent with those commitments.”
In October, after meeting with Dr. Gottlieb, Altria had agreed to stop selling pod-based e-cigarettes until it received F.D.A. permission or until the youth problem was otherwise addressed. In doing so, Howard A. Willard III, Altria’s chief executive, sent the F.D.A. a letter agreeing that pod-based products significantly contribute to the rise in youth vaping.
But the new deal commits the tobacco giant to dramatically expanding the reach of precisely those types of products, by giving Juul access to shelf space in 230,000 retail outlets where Marlboro cigarettes and other Altria tobacco products are sold. (Juul currently sells in 90,000 stores.)
It is a development that startled the F.D.A., which in September had threatened to pull e-cigarettes off the market if companies could not prove within 60 days that they could keep the products away from minors. Altria, Juul and three tobacco companies sent the detailed plans spelling out how they would comply with the agency’s request. Now, those plans appear in jeopardy, Dr. Gottlieb said.
“I’m reaching out to both companies to ask them to come in and explain to me why they seem to be deviating from the representation that they already made to the agency about steps they are taking to restrict their products in a way that will decrease access to kids,” Dr. Gottlieb said.
Dr. Scott Gottlieb, the F.D.A. commissioner, has accused both companies of negotiating with him in bad faith. It is possible that the F.D.A. will pressure Altria to keep Juul flavor pods off its shelf space, but the tobacco company is not likely to consent.
https://www.nytimes.com/2019/01/04/health/fda-juul-altria-youth-vaping.html
F.D.A. Accuses Juul and Altria of Backing Off Plan to Stop Youth Vaping
By Sheila Kaplan
Jan. 4, 2019
WASHINGTON — The Food and Drug Administration is accusing Juul and Altria of reneging on promises they made to the government to keep e-cigarettes away from minors.
Dr. Scott Gottlieb, the agency’s commissioner, is drafting letters to both companies that will criticize them for publicly pledging to remove nicotine flavor pods from store shelves, while secretly negotiating a financial partnership that seems to do the opposite. He plans to summon top executives of the companies to F.D.A. headquarters to explain how they will stick to their agreements given their new arrangement.
Dr. Gottlieb was disconcerted by the commitments the companies made in the deal announced Dec. 19, under which Altria, the nation’s largest maker of traditional cigarettes, agreed to purchase a 35 percent — $13 billion — stake in Juul, the rapidly growing e-cigarette start-up whose products have become hugely popular with teenagers. Public health officials, as well as teachers and parents, fear that e-cigarettes have created a new generation of nicotine addicts.
“Juul and Altria made very specific assertions in their letters and statements to the F.D.A. about the drivers of the youth epidemic,” Dr. Gottlieb said in an interview. “Their recent actions and statements appear to be inconsistent with those commitments.”
In October, after meeting with Dr. Gottlieb, Altria had agreed to stop selling pod-based e-cigarettes until it received F.D.A. permission or until the youth problem was otherwise addressed. In doing so, Howard A. Willard III, Altria’s chief executive, sent the F.D.A. a letter agreeing that pod-based products significantly contribute to the rise in youth vaping.
But the new deal commits the tobacco giant to dramatically expanding the reach of precisely those types of products, by giving Juul access to shelf space in 230,000 retail outlets where Marlboro cigarettes and other Altria tobacco products are sold. (Juul currently sells in 90,000 stores.)
It is a development that startled the F.D.A., which in September had threatened to pull e-cigarettes off the market if companies could not prove within 60 days that they could keep the products away from minors. Altria, Juul and three tobacco companies sent the detailed plans spelling out how they would comply with the agency’s request. Now, those plans appear in jeopardy, Dr. Gottlieb said.
“I’m reaching out to both companies to ask them to come in and explain to me why they seem to be deviating from the representation that they already made to the agency about steps they are taking to restrict their products in a way that will decrease access to kids,” Dr. Gottlieb said.
Dr. Scott Gottlieb, the F.D.A. commissioner, has accused both companies of negotiating with him in bad faith. It is possible that the F.D.A. will pressure Altria to keep Juul flavor pods off its shelf space, but the tobacco company is not likely to consent.
https://www.nytimes.com/2019/01/04/health/fda-juul-altria-youth-vaping.html
About shooting deer in Rock Creek Park
My 11 year old granddaughter was upset by a bright pink sign near the Rock Creek Park Nature Center announcing planned sharpshooting of deer. My granddaughter complained that birth control by sterilizing deer would be the more humane approach.
Several organized groups support birth control for deer as a way to control population. They have the same view as my granddaughter: they believe that sterilization is more humane than shooting deer. The groups include the Humane Society, In Defense of Animals, and the National Parks Conservation Association.
I’ve told my granddaughter that I applaud her taking a stand in opposition to shooting deer, and I encouraged her to support the Human Society, In Defense of Animals, and the National Parks Conservation Association as they encourage sterilization rather than shooting.
Pasted in below is part of an article published by people at the National Parks Conservation Association. Among other things, It discusses an unsuccessful law suit against the Park Service brought a few years ago:
The move [to shoot deer] has upset those who prefer birth control over bullets. They want deer to live out their normal lifespans in places where hunting is off limits. Sometimes they sue to prevent the cull.
This happened to Rock Creek Park when a handful of private D.C. citizens, and In Defense of Animals, a national animal-protection nonprofit, filed a lawsuit in 2012. They alleged that the Park Service is cherry-picking its science, and that the park’s plan is inhumane and unnecessary because successful reproductive control exists.
“We love both the deer and the national park, but the decision to kill the deer has affected the public’s ability to enjoy the park and has ruined the Park Service’s reputation here,” says Carol Grunewald, a plaintiff whose property is near the park. “Our scientists show that Rock Creek Park can easily support 300 deer. But regardless of the numbers, the public will no longer stand for the routine, mass extermination of animals.”
Their legal petition included a scientific analysis by Oswald Schmitz, a professor at Yale’s School of Forestry and Environmental Studies, stating that deer don’t have an adverse impact on the park’s vegetation because forests are self-thinning. That is, seedlings compete for sunlight and other resources, most die, and in the end, a thousand seedlings in an area, for example, may produce only 20 trees with or without deer present.
Their action delayed the park’s cull by a year, but ultimately a court dismissed the case on the grounds that Congress granted the Park Service the authority to act in Rock Creek Park’s interest.
Although not a plaintiff in the lawsuit, the Humane Society of the United States (HSUS) also criticized the park’s plan during the public comment period, championing the nonlethal solution of using a fertility-control vaccine on the herd as an alternative.
“We think Rock Creek’s plan is a wasteful killing program and a lost opportunity to repress the growth rate,” says Stephanie Boyles Griffin, senior director of innovative wildlife management and services at HSUS. The group offered to pay 50 percent of the cost of sterilizing the park’s deer. “We asked park officials to give fertility control a chance, to show they had explored and exhausted all methods before resorting to lethal control,” she says. “The problem wasn’t created overnight, so why does it have to be solved overnight?”
This posting is by Don Allen Resnikoff, who takes full responsibility for its content
My 11 year old granddaughter was upset by a bright pink sign near the Rock Creek Park Nature Center announcing planned sharpshooting of deer. My granddaughter complained that birth control by sterilizing deer would be the more humane approach.
Several organized groups support birth control for deer as a way to control population. They have the same view as my granddaughter: they believe that sterilization is more humane than shooting deer. The groups include the Humane Society, In Defense of Animals, and the National Parks Conservation Association.
I’ve told my granddaughter that I applaud her taking a stand in opposition to shooting deer, and I encouraged her to support the Human Society, In Defense of Animals, and the National Parks Conservation Association as they encourage sterilization rather than shooting.
Pasted in below is part of an article published by people at the National Parks Conservation Association. Among other things, It discusses an unsuccessful law suit against the Park Service brought a few years ago:
The move [to shoot deer] has upset those who prefer birth control over bullets. They want deer to live out their normal lifespans in places where hunting is off limits. Sometimes they sue to prevent the cull.
This happened to Rock Creek Park when a handful of private D.C. citizens, and In Defense of Animals, a national animal-protection nonprofit, filed a lawsuit in 2012. They alleged that the Park Service is cherry-picking its science, and that the park’s plan is inhumane and unnecessary because successful reproductive control exists.
“We love both the deer and the national park, but the decision to kill the deer has affected the public’s ability to enjoy the park and has ruined the Park Service’s reputation here,” says Carol Grunewald, a plaintiff whose property is near the park. “Our scientists show that Rock Creek Park can easily support 300 deer. But regardless of the numbers, the public will no longer stand for the routine, mass extermination of animals.”
Their legal petition included a scientific analysis by Oswald Schmitz, a professor at Yale’s School of Forestry and Environmental Studies, stating that deer don’t have an adverse impact on the park’s vegetation because forests are self-thinning. That is, seedlings compete for sunlight and other resources, most die, and in the end, a thousand seedlings in an area, for example, may produce only 20 trees with or without deer present.
Their action delayed the park’s cull by a year, but ultimately a court dismissed the case on the grounds that Congress granted the Park Service the authority to act in Rock Creek Park’s interest.
Although not a plaintiff in the lawsuit, the Humane Society of the United States (HSUS) also criticized the park’s plan during the public comment period, championing the nonlethal solution of using a fertility-control vaccine on the herd as an alternative.
“We think Rock Creek’s plan is a wasteful killing program and a lost opportunity to repress the growth rate,” says Stephanie Boyles Griffin, senior director of innovative wildlife management and services at HSUS. The group offered to pay 50 percent of the cost of sterilizing the park’s deer. “We asked park officials to give fertility control a chance, to show they had explored and exhausted all methods before resorting to lethal control,” she says. “The problem wasn’t created overnight, so why does it have to be solved overnight?”
This posting is by Don Allen Resnikoff, who takes full responsibility for its content
From Public Citizen:
CFPB Complaint Database Scores Win for Times Columnist
Posted: 04 Jan 2019 12:21 PM PST
by Jeff Sovern
The CFPB's former acting director, Mick Mulvaney, compared the Bureau's public database to Yelp and threatened to take it private, though he never did so. Director Kraninger has not made public her plans for the database, to the best of my knowledge, and so public access to the complaints may still be at risk. We have reported before how the database has helped even a consumer law expert. Now Pulitzer-Prize winning NY Times columnist Michelle Goldberg reports how the database helped her secure an $11,000 refund after her own efforts to work things out with her bank had failed:
I’d been signed up for a dubious program that purported to protect users’ credit in certain emergency situations. My bank had been accused of fraudulent practices in connection with it and fined $700 million by the Consumer Financial Protection Bureau, * * * I tried, maddeningly, to seek redress from the bank — cycling through phone trees, screaming at automated operators. No one could tell me how I’d been enrolled in the program, or for how long.
Eventually, I turned to the C.F.P.B. itself, filling out a simple form on its website. A few weeks later, I was notified that the bank had been deducting money from my account for years, and I was being refunded more than $11,000.
I wonder how many consumers have a similar story to tell. House Financial Services Chair Maxine Waters has said she will focus on the Bureau. This seems like one of many topics worth congressional attention.
CFPB Complaint Database Scores Win for Times Columnist
Posted: 04 Jan 2019 12:21 PM PST
by Jeff Sovern
The CFPB's former acting director, Mick Mulvaney, compared the Bureau's public database to Yelp and threatened to take it private, though he never did so. Director Kraninger has not made public her plans for the database, to the best of my knowledge, and so public access to the complaints may still be at risk. We have reported before how the database has helped even a consumer law expert. Now Pulitzer-Prize winning NY Times columnist Michelle Goldberg reports how the database helped her secure an $11,000 refund after her own efforts to work things out with her bank had failed:
I’d been signed up for a dubious program that purported to protect users’ credit in certain emergency situations. My bank had been accused of fraudulent practices in connection with it and fined $700 million by the Consumer Financial Protection Bureau, * * * I tried, maddeningly, to seek redress from the bank — cycling through phone trees, screaming at automated operators. No one could tell me how I’d been enrolled in the program, or for how long.
Eventually, I turned to the C.F.P.B. itself, filling out a simple form on its website. A few weeks later, I was notified that the bank had been deducting money from my account for years, and I was being refunded more than $11,000.
I wonder how many consumers have a similar story to tell. House Financial Services Chair Maxine Waters has said she will focus on the Bureau. This seems like one of many topics worth congressional attention.
From the Minnesota AG press release (October 2018) on its litigation against drug companies concerning insulin pricing
Press ReleaseTuesday, October 16, 2018
Attorney General Lori Swanson Files Lawsuit Against Pharmaceutical Companies Over Deceptive Price Spikes For Insulin
Price Hikes More Than Doubled the Cost Of Diabetes Medication
Minnesota Attorney General Lori Swanson today filed a lawsuit against the nation’s three major manufacturers of insulin used to treat diabetes after prices more than doubled in recent years. The lawsuit alleges that the drug companies—Sanofi-Aventis U.S. LLC, Novo Nordisk, Inc., and Eli Lilly and Co.—deceptively raised the list prices of insulin, making it less affordable to patients in high deductible health plans, the uninsured, and senior citizens on Medicare.
“Insulin is a life-or-death drug for people with diabetes. Many people can’t afford the price hikes but can’t afford to stop taking the medication either,” said Attorney General Swanson.
The list price of some insulin products has more than doubled since 2011 and tripled since 2002. For example, the cost of Levemir increased from $120.64 for 100 units/ml vial in 2012 to $293.75 in 2018; HumaLog increased from $122.60 for 100 units/ml vial in 2011 to $274.70 in 2017; and Lantus increased from $99.35 in 2010 when it first entered the market to $269.54 in 2018.
The lawsuit alleges that the drug companies fraudulently set an artificially high “list” price for their insulin products but then negotiated a lower actual price by paying rebates to pharmacy benefit managers (PBMs). A PBM is a company retained by a health plan to negotiate prices with drug companies and develop “formularies” of approved drugs that policyholders may take. Drug companies want their drugs to be on the formulary because if a drug is not on the formulary, it is not covered by the health plan or costs more. Pharmaceutical companies obtain favorable placement of their products on PBM formularies by artificially raising their list prices and then offering rebates to the PBM in exchange for favorable formulary placements.
PBMs normally get paid in part based on the “spread” between the list price of a drug and the net price paid by the health plan after the rebates (i.e. the greater the “spread,” the higher the compensation.) Because drug companies want their drugs to be on the formulary, they raise list prices so they can offer higher “rebates” or “spreads” to PBMs than their competitors. This causes the “list price” of the drugs to spiral upward. Health insurers receive a portion of the rebates from the PBM and do not pay the list price. Patients who are in high deductible health plans, who are uninsured, or who are on Medicare, however, may end up paying the artificial list price because they do not get the rebates.
Thus, the drug companies establish two prices for their insulin products: a higher artificial list price and the much lower, secret net price that insurance companies pay, which is confidential. PBMs and manufacturers do not disclose the rebates paid for favorable formulary placement, claiming this information is a “trade secret.” In most industries, competitors normally compete with one another to offer lower prices but here, the drug companies compete with each other by raising their prices so they can give larger rebates to the PBMs who are responsible for the placement of their products.
The “spread” between the list and net prices paid by PBMs has increased dramatically in recent years. For example, Lantus’s spread increased seven-fold between 2009 and 2015; HumaLog’s spread nearly tripled between 2009 and 2015; and Levemir’s spread nearly doubled between 2011 and 2014.
The lawsuit alleges that the list prices the drug companies set are so far from their net prices that they are not an accurate approximation of the true cost of insulin and are deceptive and misleading.
Underinsured and uninsured patients who purchase insulin at a pharmacy are unaware of the product’s net price and do not benefit from the rebates or discounts negotiated by PBMs, but instead make payments based on the deceptive list price published by the manufacturers. There are currently nearly 350,000 Minnesotans without health coverage.
The products included in the lawsuit include Sanofi’s Lantus, Novo Nordisk’s NovoLog, and Eli Lilly’s HumaLog, among others.
See https://www.ag.state.mn.us/Office/PressRelease/20181016_InsulinPriceHikes.asp
Press ReleaseTuesday, October 16, 2018
Attorney General Lori Swanson Files Lawsuit Against Pharmaceutical Companies Over Deceptive Price Spikes For Insulin
Price Hikes More Than Doubled the Cost Of Diabetes Medication
Minnesota Attorney General Lori Swanson today filed a lawsuit against the nation’s three major manufacturers of insulin used to treat diabetes after prices more than doubled in recent years. The lawsuit alleges that the drug companies—Sanofi-Aventis U.S. LLC, Novo Nordisk, Inc., and Eli Lilly and Co.—deceptively raised the list prices of insulin, making it less affordable to patients in high deductible health plans, the uninsured, and senior citizens on Medicare.
“Insulin is a life-or-death drug for people with diabetes. Many people can’t afford the price hikes but can’t afford to stop taking the medication either,” said Attorney General Swanson.
The list price of some insulin products has more than doubled since 2011 and tripled since 2002. For example, the cost of Levemir increased from $120.64 for 100 units/ml vial in 2012 to $293.75 in 2018; HumaLog increased from $122.60 for 100 units/ml vial in 2011 to $274.70 in 2017; and Lantus increased from $99.35 in 2010 when it first entered the market to $269.54 in 2018.
The lawsuit alleges that the drug companies fraudulently set an artificially high “list” price for their insulin products but then negotiated a lower actual price by paying rebates to pharmacy benefit managers (PBMs). A PBM is a company retained by a health plan to negotiate prices with drug companies and develop “formularies” of approved drugs that policyholders may take. Drug companies want their drugs to be on the formulary because if a drug is not on the formulary, it is not covered by the health plan or costs more. Pharmaceutical companies obtain favorable placement of their products on PBM formularies by artificially raising their list prices and then offering rebates to the PBM in exchange for favorable formulary placements.
PBMs normally get paid in part based on the “spread” between the list price of a drug and the net price paid by the health plan after the rebates (i.e. the greater the “spread,” the higher the compensation.) Because drug companies want their drugs to be on the formulary, they raise list prices so they can offer higher “rebates” or “spreads” to PBMs than their competitors. This causes the “list price” of the drugs to spiral upward. Health insurers receive a portion of the rebates from the PBM and do not pay the list price. Patients who are in high deductible health plans, who are uninsured, or who are on Medicare, however, may end up paying the artificial list price because they do not get the rebates.
Thus, the drug companies establish two prices for their insulin products: a higher artificial list price and the much lower, secret net price that insurance companies pay, which is confidential. PBMs and manufacturers do not disclose the rebates paid for favorable formulary placement, claiming this information is a “trade secret.” In most industries, competitors normally compete with one another to offer lower prices but here, the drug companies compete with each other by raising their prices so they can give larger rebates to the PBMs who are responsible for the placement of their products.
The “spread” between the list and net prices paid by PBMs has increased dramatically in recent years. For example, Lantus’s spread increased seven-fold between 2009 and 2015; HumaLog’s spread nearly tripled between 2009 and 2015; and Levemir’s spread nearly doubled between 2011 and 2014.
The lawsuit alleges that the list prices the drug companies set are so far from their net prices that they are not an accurate approximation of the true cost of insulin and are deceptive and misleading.
Underinsured and uninsured patients who purchase insulin at a pharmacy are unaware of the product’s net price and do not benefit from the rebates or discounts negotiated by PBMs, but instead make payments based on the deceptive list price published by the manufacturers. There are currently nearly 350,000 Minnesotans without health coverage.
The products included in the lawsuit include Sanofi’s Lantus, Novo Nordisk’s NovoLog, and Eli Lilly’s HumaLog, among others.
See https://www.ag.state.mn.us/Office/PressRelease/20181016_InsulinPriceHikes.asp
WSJ: CVS, UnitedHealth, Humana and other health insurers’ bids to manage Part D prescription-drug plans for seniors have been consistently off in ways that benefit the companies at the expense of taxpayers
1
Joseph Walker and
Christopher Weaver
January 4, 2019
Excerpts from https://www.wsj.com/articles/the-9-billion-upcharge-how-insurers-kept-extra-cash-from-medicare-11546617082?mod=hp_lead_pos1 (Paywall)
Each June, health insurers send the government detailed cost forecasts for providing prescription-drug benefits to more than 40 million people on Medicare.
Year after year, most of those estimates have turned out to be wrong in the particular way that, thanks to Medicare’s arcane payment rules, results in more revenue for the health insurers, a Wall Street Journal investigation has found. As a consequence, the insurers kept $9.1 billion more in taxpayer funds than they would have had their estimates been accurate from 2006 to 2015, according to Medicare data obtained by the Journal.
Those payments have largely been hidden from view since Medicare’s prescription-drug program was launched more than a decade ago, and are an example of how the secrecy of the $3.5 trillion U.S. health-care system promotes and obscures higher spending.
Overdoing ItHealth insurers reaped $9 billion in additional revenue from 2006 to 2015 byoverestimating drug costs to Medicare and keeping a share of the extra money.Extra revenue kept by insurersSource: Centers for Medicare and Medicaid Services
.billion2006’07’08’09’10’11’12’13’14’150.00.20.40.60.81.01.21.4$1.62009x$1.08 billion
Medicare’s prescription-drug benefit, called Part D, was designed to help hold down drug costs by having insurers manage the coverage efficiently. Instead, Part D spending has accelerated faster than all other components of Medicare in recent years, rising 49% from $62.9 billion in 2010 to $93.8 billion in 2017. Medicare experts say the program’s design is contributing to that increase. Total spending for Part D from 2006-15 was about $652 billion.
The cornerstone of Part D is a system in which private insurers such as CVS Health Corp. , UnitedHealth Group Inc. and Humana Inc.submit “bids” estimating how much it will cost them to provide the benefit. The bids include their own profits and administrative costs for each plan. Then Medicare uses the estimates to make monthly payments to the plans.
After the year ends, Medicare compares the plans’ bids to the actual spending. If the insurer overestimated its costs, it pockets a chunk of the extra money it received from Medicare—sometimes all of it—and this can often translate into more profit for the insurer, in addition to the profit built into the approved bid. If the extra money is greater than 5% of the insurer’s original bid, it has to pay some of it back to Medicare.
For instance, in 2015, insurers overestimated costs by about $2.2 billion, and kept about $1.06 billion of it after paying back $1.1 billion to the government, according to the data reviewed by the Journal.
1
Joseph Walker and
Christopher Weaver
January 4, 2019
Excerpts from https://www.wsj.com/articles/the-9-billion-upcharge-how-insurers-kept-extra-cash-from-medicare-11546617082?mod=hp_lead_pos1 (Paywall)
Each June, health insurers send the government detailed cost forecasts for providing prescription-drug benefits to more than 40 million people on Medicare.
Year after year, most of those estimates have turned out to be wrong in the particular way that, thanks to Medicare’s arcane payment rules, results in more revenue for the health insurers, a Wall Street Journal investigation has found. As a consequence, the insurers kept $9.1 billion more in taxpayer funds than they would have had their estimates been accurate from 2006 to 2015, according to Medicare data obtained by the Journal.
Those payments have largely been hidden from view since Medicare’s prescription-drug program was launched more than a decade ago, and are an example of how the secrecy of the $3.5 trillion U.S. health-care system promotes and obscures higher spending.
Overdoing ItHealth insurers reaped $9 billion in additional revenue from 2006 to 2015 byoverestimating drug costs to Medicare and keeping a share of the extra money.Extra revenue kept by insurersSource: Centers for Medicare and Medicaid Services
.billion2006’07’08’09’10’11’12’13’14’150.00.20.40.60.81.01.21.4$1.62009x$1.08 billion
Medicare’s prescription-drug benefit, called Part D, was designed to help hold down drug costs by having insurers manage the coverage efficiently. Instead, Part D spending has accelerated faster than all other components of Medicare in recent years, rising 49% from $62.9 billion in 2010 to $93.8 billion in 2017. Medicare experts say the program’s design is contributing to that increase. Total spending for Part D from 2006-15 was about $652 billion.
The cornerstone of Part D is a system in which private insurers such as CVS Health Corp. , UnitedHealth Group Inc. and Humana Inc.submit “bids” estimating how much it will cost them to provide the benefit. The bids include their own profits and administrative costs for each plan. Then Medicare uses the estimates to make monthly payments to the plans.
After the year ends, Medicare compares the plans’ bids to the actual spending. If the insurer overestimated its costs, it pockets a chunk of the extra money it received from Medicare—sometimes all of it—and this can often translate into more profit for the insurer, in addition to the profit built into the approved bid. If the extra money is greater than 5% of the insurer’s original bid, it has to pay some of it back to Medicare.
For instance, in 2015, insurers overestimated costs by about $2.2 billion, and kept about $1.06 billion of it after paying back $1.1 billion to the government, according to the data reviewed by the Journal.
FDA on fraudulent diet medications
We checked the FDA web site for advice on fraudulent diet drugs after a reader sent us a suspicious looking ad.
The main point of the FDA video and text posting below is that many dietary supplements that promise weight loss contain hidden and dangerous ingredients. The FDA ability to regulate dietary supplements is limited.
See https://www.fda.gov/drugs/resourcesforyou/consumers/buyingusingmedicinesafely/medicationhealthfraud/ucm234592.htm
We checked the FDA web site for advice on fraudulent diet drugs after a reader sent us a suspicious looking ad.
The main point of the FDA video and text posting below is that many dietary supplements that promise weight loss contain hidden and dangerous ingredients. The FDA ability to regulate dietary supplements is limited.
See https://www.fda.gov/drugs/resourcesforyou/consumers/buyingusingmedicinesafely/medicationhealthfraud/ucm234592.htm
Cardless ATMs expand despite security risks
Jan. 3, 2019
Cardless ATMs are on the rise, driven partially by the perception that they are safer to use than physical debit cards for withdrawing cash, according to bankrate.com. Besides allowing for faster cash withdrawals, cardless ATMs, combined with mobile wallets, could make cash unnecessary.
Last year, Chase and Fifth Third allowed card-free ATM access, while PNC followed suit at select terminals. In addition, 3,500 credit unions allowed members to use cardless ATMs via the Co-op Financial Services network.
Cardless ATMs remove the risk of card skimming, the biggest type of fraud afflicting ATMs, but they are not immune to theft, according to the report.
Fraudsters reportedly stole more than $106,000 through a phishing scam from Fifth Third Bank customers after it began offering cardless ATM access. The fraudsters sent a text message to customers and tricked them into visiting a fake website where they provided personal information, which allowed the thieves to initiate cardless ATM transactions.
One Chase Bank customer was robbed after her password and username were stolen. Thieves added a phone number to her account and used a cardless ATM to withdraw funds which they had transferred from her savings account to her checking account.
Mike Byrnes, a product marketing manager at Entust Datacard, said the security aspect of cardless ATMs has not been fully thought through.
Credit: https://www.atmmarketplace.com/news/cardless-atms-expand-despite-security-risks/?utm_source=AMC&utm_medium=email&utm_campaign=Week+In+Review&utm_content=2019-01-04
Jan. 3, 2019
Cardless ATMs are on the rise, driven partially by the perception that they are safer to use than physical debit cards for withdrawing cash, according to bankrate.com. Besides allowing for faster cash withdrawals, cardless ATMs, combined with mobile wallets, could make cash unnecessary.
Last year, Chase and Fifth Third allowed card-free ATM access, while PNC followed suit at select terminals. In addition, 3,500 credit unions allowed members to use cardless ATMs via the Co-op Financial Services network.
Cardless ATMs remove the risk of card skimming, the biggest type of fraud afflicting ATMs, but they are not immune to theft, according to the report.
Fraudsters reportedly stole more than $106,000 through a phishing scam from Fifth Third Bank customers after it began offering cardless ATM access. The fraudsters sent a text message to customers and tricked them into visiting a fake website where they provided personal information, which allowed the thieves to initiate cardless ATM transactions.
One Chase Bank customer was robbed after her password and username were stolen. Thieves added a phone number to her account and used a cardless ATM to withdraw funds which they had transferred from her savings account to her checking account.
Mike Byrnes, a product marketing manager at Entust Datacard, said the security aspect of cardless ATMs has not been fully thought through.
Credit: https://www.atmmarketplace.com/news/cardless-atms-expand-despite-security-risks/?utm_source=AMC&utm_medium=email&utm_campaign=Week+In+Review&utm_content=2019-01-04
Los Angeles Sues the Weather Channel
January 4, 2019CNS
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TLOS ANGELES (CN) — Los Angeles’ city attorney sued The Weather Channel on Thursday, claiming it fraudulently and deceptively uses its Weather Channel App “to amass its users’ private, personal geolocation data,” not, as advertised — “to provide them with ‘personalized local weather data’”— but to monetize the information by selling it to third parties.
Suing on behalf of the People of California, City Attorney Michael Feuer asked the superior court to enjoin the deceptive and unfair business practices, and fine the company $2,500 for each violation, doubled if committed against elderly or disabled people.
Defendant TWC Product and Technology LLC owns and operates The Weather Channel App, which can be downloaded on Apple and Android products. TWC is a subsidiary of IBM.
Excerpt from https://www.courthousenews.com/los-angeles-sues-the-weather-channel%EF%BB%BF/
January 4, 2019CNS
FacebookTwitterGoogle+Email
TLOS ANGELES (CN) — Los Angeles’ city attorney sued The Weather Channel on Thursday, claiming it fraudulently and deceptively uses its Weather Channel App “to amass its users’ private, personal geolocation data,” not, as advertised — “to provide them with ‘personalized local weather data’”— but to monetize the information by selling it to third parties.
Suing on behalf of the People of California, City Attorney Michael Feuer asked the superior court to enjoin the deceptive and unfair business practices, and fine the company $2,500 for each violation, doubled if committed against elderly or disabled people.
Defendant TWC Product and Technology LLC owns and operates The Weather Channel App, which can be downloaded on Apple and Android products. TWC is a subsidiary of IBM.
Excerpt from https://www.courthousenews.com/los-angeles-sues-the-weather-channel%EF%BB%BF/
AZ Police have responded to dozens of calls regarding people threatening and harassing self-driving Waymo vans.
- One man aimed a gun at a Waymo to scare the emergency driver
- One Jeep ran six Waymo vans off the road
The Indian government announced new regulations that appear to limit Walmart and Amazon bundling of its platform business with sales promotion
The regulation will block the companies from selling products supplied by affiliated companies, and also precludes offering their customers special discounts or exclusive products.
The steps taken by India appear to reflect suggestions of some for structural limitations or break-up of Amazon, such as Stacy Mitchel, the co-director of Institute for Local Self-Reliance. Earlier this year she wrote an article for The Nation called, “Amazon doesn’t just want to dominate the market — it wants to become the market.” In the Podcast below from public radio station WNYC, Mitchell describes the history of regulation of corporate concentration. She then explains why she thinks that the government should forcibly separate Amazon's platform business from its other businesses.
This Podcast is at https://www.wnycstudios.org/story/making-america-antitrust-again
Posting by Don Allen Resnikoff, who is responsible for its content
The regulation will block the companies from selling products supplied by affiliated companies, and also precludes offering their customers special discounts or exclusive products.
The steps taken by India appear to reflect suggestions of some for structural limitations or break-up of Amazon, such as Stacy Mitchel, the co-director of Institute for Local Self-Reliance. Earlier this year she wrote an article for The Nation called, “Amazon doesn’t just want to dominate the market — it wants to become the market.” In the Podcast below from public radio station WNYC, Mitchell describes the history of regulation of corporate concentration. She then explains why she thinks that the government should forcibly separate Amazon's platform business from its other businesses.
This Podcast is at https://www.wnycstudios.org/story/making-america-antitrust-again
Posting by Don Allen Resnikoff, who is responsible for its content
Revisiting two influential books on big business and agriculture: Reposting of an earlier review from 2014
The Meat Racket: The Secret Takeover of America's Food Business
By Christopher Leonard
Simon & Schuster, 2014
Foodopoly: The Battle Over the Future of Food and Farming in America
By Wenonah Hauter
The New Press, 2012
Review by Don Allen Resnikoff
The Meat Racket author Christopher Leonard and Foodopoly author Wenonah Hauter both describe a scenario of American agriculture where large wholesale and retail companies bully farmers and misuse consumers while the government stands by and does little to help. They advocate for stronger government action against big companies to help small farmers and consumers. Both authors emphasize the need for policy reform to increase the number of competitors in the business of distributing farm products. Both believe that current antitrust enforcement and relevant legislative mechanisms work poorly.
Their books are addressed to broad audiences, not expert economists or antitrust lawyers, and the reason is plain: The authors hope that informing the masses will lead to public pressure for government action, and that pressure will turn the tide against big companies and improve the future of food and farming in America.
In The Meat Racket, Leonard offers clear and forceful reform recommendations that support the interests of small farmers, although much of the book’s space is devoted to stories of the growth of Tyson Foods, Inc. and other giant wholesale agribusiness companies that act as middlemen between farmers and consumers. Often the companies started as small family businesses, developing innovative, efficient, and often cruel-to-animals factory farming techniques as they grew. As these agribusinesses expanded, their exploitation of farmers also increased.
Leonard’s bottom line on public policy reform is that the government, including antitrust enforcers, needs to better protect farmers as well as the consuming public from the clutches of huge, vertically integrated agribusiness companies. The executive branch of government should, among other things, more vigorously enforce antitrust laws, and Congress should take effective legislative action.
Leonard tells us that large wholesale-level agribusinesses use their great market power to bully farmers into contracts that allow the companies to decree the price of animals, making competitive wholesale market pricing of chicken, pork, and beef virtually irrelevant. The result is impoverished farmers. Farmers have little bargaining power, are hardly entrepreneurs, and are reduced to “a state of indebted servitude, living like modern-day sharecroppers on the ragged edge of bankruptcy.” In past years there were small wholesale meat buyers that competed on price, allowing farmers to bargain on price and make some money, but those wholesalers mainly are now gone.
While large companies like Tyson Foods benefit financially from contract farming arrangements that cause poverty to farmers, the benefits to consumers are dubious. Threshold concerns are the ethical and human health issues of factory-style farming being promoted by companies like Cargill, ConAgra Foods, JBS, Smithfield Foods, and Tyson Foods. Further, large agribusinesses can use their market power to limit supply to and raise prices on consumers without worrying about significant competitive constraints. There are some powerful buyers like McDonalds and Walmart, but Leonard sees them as incidental to the main story of the stranglehold of big agribusiness over ordinary consumers.
Since Leonard’s story is about the extraordinary market power of large agribusiness companies, a reader may wonder why antitrust remedies haven’t been effective. Leonard is judicious in addressing the failures of antitrust enforcement. He recognizes that recent antitrust enforcement is restrained and timid, and that government is unlikely to pursue strong action. Leonard wishes for a more vigorous government response, but he accepts that in the world of real politics, it is not going to happen.
Similarly, if farmers and consumers are being misused by a few big companies, and antitrust enforcement is not working to fix the problem, why hasn’t Congress stepped in yet? Again, Leonard recognizes how things work in the political world.
Leonard tells us the back stories about the political realities that explain the Obama administration’s or Congress’s action, or lack of it. He writes that the transition from the Bush presidency to the Obama presidency in 2008 promised important political change for farmers. Many politically engaged farmer advocates had hoped that an Obama administration would bring tougher antitrust enforcement and congressional action. When Barack Obama campaigned in Democratic primaries against Hillary Clinton in states like Iowa, he rallied great support among farmers who did not follow the urban-based notion that rural people don’t recognize or assert their political interests. Farmers often do. Leonard reports that farmers were impressed by Obama’s push for farm policy reform and unimpressed by Clinton’s apparent lack of interest, as well as by her political ties to Arkansas agribusiness, particularly Tyson Foods. Leonard quotes an Iowa Democratic Party operative as saying about Clinton, “I don’t know a single farmer who would vote for her!”
The Iowa caucus left Clinton in third place, and put Obama first, which some saw as a turning point in his successful quest for nomination and, ultimately, the presidency.
Initially, the new Obama presidency promised important reforms in U.S. agricultural policy. Obama appointed former Iowa governor Tom Vilsack as secretary of agriculture. As governor, Vilsack had been a leading advocate for farmers in his state, and many expected him to successfully continue that advocacy at the national level.
Obama also appointed Christine Varney as head of the Antitrust Division of the U.S. Department of Justice. She quickly became known for her strong rhetoric, promising a new day for antitrust enforcement generally, including helping farmers and food consumers. Varney complained that antitrust enforcement had been all but abandoned, and she vowed to change that under her watch. “[T]here is no adequate substitute for a competitive market, particularly during times of economic distress. . . . [V]igorous antitrust enforcement must play a significant role in the government’s response to economic crises to ensure that markets remain competitive,” Varney said in 2009.
In 2010 the Justice Department’s Antitrust Division and the U.S. Department of Agriculture joined to sponsor a series of hearings around the country on the state of competition in the agriculture sector. It is interesting to reach beyond the Leonard book and into the transcripts and summary report of the hearings, which bring us the comments of people with feet-on-the-ground knowledge of agricultural markets in the United States. The 2012 report is titled “Competition and Agriculture: Voices From the Workshops on Agriculture and Antitrust Enforcement in Our 21st Century Economy and Thoughts on the Way Forward.”
The government report presents testimony by producers of cattle, hogs, poultry, and dairy, as well as growers of fruits and vegetables, about problems of concentration in wholesale food processing and retail. Many who testified specifically raised the issue of monopsony power—market power on the buying side of a market as opposed to the selling side. For example, in Iowa one panelist expressed concern that “larger companies are able to exert more buyer power . . . over farmers.”
Some testified that existing antitrust laws are inattentive to a persistent monopsony problem. During a hearing in Washington, D.C., a farmer remarked that “it’s the monopsony power of these concentrated purchases of farm goods that are stressing the people and the natural systems that are producing food,” and that “[r]ight now antitrust jurisprudence isn’t solving the problem.” Similarly, at a hearing held in Alabama, a union member argued that “[i]n competition we all know the word monopoly. . . . But I want us to learn a new word today. It’s monopsony.”
While the hearings allowed farmers and their supporters to speak out, follow-up action by the government was weak. Promises of reform by the Obama administration faded away when they faced political opposition. The consequence is that today large agribusinesses continue to hold great power over farmers and consumers, and are largely unaffected by antitrust enforcement.
The 2012 report includes language explaining the Obama administration’s lack of action. Leonard points out that while the report enumerates problems and abuses in agricultural markets, including an unprecedented level of market concentration caused by a wave of company mergers, it also says that not much can be done about it. In its concluding analysis, the report mostly focuses on why the Justice Department can’t do much to solve the problems. The report says that antitrust laws weren’t made to solve many of the problems identified during the hearings. It also did not point to any major antitrust case filed by the Obama administration. At a public conference where Leonard’s book was being discussed, Bert Foer, president of the American Antitrust Institute, agreed that antitrust enforcement has failed to meet the challenges of agricultural markets.
While there has been some congressional legislation to improve the lot of farmers, it has been much weaker than originally offered by the Obama administration. Leonard explains that while new coalitions of interest groups have formed to press for legislation favorable to farmers, the pro-farmer interest groups have been outmatched and outmaneuvered by industry lobbyists in Washington. The White House has backed off its initially aggressive stance, and the odds of Congress passing new legislation seem increasingly remote at this point.
The stories Leonard tells in his book reflect the skills of a practiced writer who simply and directly explains agricultural markets and the market power of big companies. He takes us on a straight line, from the fascinating stories of agribusiness industry development to powerful arguments of antitrust and legislative policy.
In contrast, the organizational structure of Hauter’s book is more diffuse, partly because it is a loose cobbling together of her short writings on a number of different topics. Hauter is a political activist who supports an array of causes and groups that are linked only loosely by conventional notions of antitrust and related policy. She offers discussions of diverse topics such as the importance of small family farms, local food sourcing, the undermining of organic farming principles by Whole Foods Market, and grassroots opposition to retailer Walmart for a number of behaviors, including low worker pay. What brings these topics together is that they are all relevant to broad issues of social and political policy linked to big companies.
As mentioned earlier, Hauter’s book focuses on retailers like Walmart and Whole Foods as particular sources of harm, which makes her emphasis different than Leonard’s. Hauter sees giant retailers, particularly Walmart, as pernicious, influencing behavior throughout the supply chain and using great market power to force suppliers to compromise on quality and production standards.
Hauter’s loosely associated points fit with her views about grassroots political action against giant companies like Walmart. It is plain to see from the subtitle of her book that the battle she has in mind is political in a broad sense, and not a battle that accepts the constraints of conventional politics or policy.
Hauter’s book is optimistic in tone, upbeat about the prospect that the reforms she advocates for will be adopted. But it is difficult for a reader to conclude that the political struggle Hauter contemplates is going very well thus far. A striking aspect of both the government hearings about agriculture at the national level and the local political battles against Walmart over low wages is the extent to which Walmart, like other large companies, is able to successfully defend itself and avoid regulation or antitrust enforcement. Big company strategies include very public reasoned rebuttals against a broad array of “big is bad” arguments.
Walmart has launched a counter-campaign to the issues raised in Foodopoly: market power, promotion of highly processed junk food, Tyson Foods-style, corporate-dominated factory farms, low wages, and harm to local businesses. Foodopoly proffers a formidable indictment of Walmart, but the retailer uses skilled public relations techniques and excellent media access to convey its well-honed messages. It points out that it helps the disadvantaged by charging low prices and by providing employment. It claims that it promotes and popularizes organic food and healthy eating. Walmart presents these and other arguments to the public through mass media in a manner intended to develop broad support. Mass media, on the other hand, tends to present the views of Walmart opponents as mere counterpoints, suggesting two evenly balanced sides of an argument.
I see little indication that the government will soon adopt enforcement proposals discussed by Leonard or Hauter and those who agree with them. It seems unlikely, for example, that Tyson Foods or Walmart will soon be dismantled by government enforcers. (The Justice Department’s response to Tyson Foods’ recent plan to buy rival Hillshire Brands was to file a complaint and settle it the same day, August 27, 2014, based on Tyson’s selling its sow purchasing division to a third party.)
But that is not a reason to criticize the efforts of Leonard and Hauter to reach out to a wider audience, nor to demean Hauter’s vision of a multifaceted struggle of mobilizing people against large companies like Walmart or Tyson Foods. On the contrary, big companies may be winning now, but what antitrust and other business regulation will look like decades from now depends a great deal on what the public wants it to be. What the public wants may be influenced by messages like Hauter’s or Leonard’s. The idea of democracy includes political visionaries who reach out and successfully catch the attention of the public, and make a difference.
This positing is by Don Allen Resnikoff who takes full responsibility for its content.
California Court of Appeals' first Muslim judge
Published on Dec 30, 2018
Justice Halim Dhanidina was recently elevated to California’s Courts of Appeal, making him the state’s most senior judge of Muslim faith. The PBS NewsHour Weekend Edition offers an interesting piece with Special Correspondent David Tereshchuk talking with Dhanidina about engaging with supporters and critics alike, and setting an example for what it looks like to be a "Muslim judge" in the United States. The Judge believes in acceptance for people of all religions, and would like to educate those who imagine, without a basis, that he will apply Sharia law. (13 States have passed legislation banning Sharia law, solving what some would say is a non-problem. Other States are considering such legislation.)
The video is at: https://www.youtube.com/watch?reload=9&v=27m2iEdfYv0
Published on Dec 30, 2018
Justice Halim Dhanidina was recently elevated to California’s Courts of Appeal, making him the state’s most senior judge of Muslim faith. The PBS NewsHour Weekend Edition offers an interesting piece with Special Correspondent David Tereshchuk talking with Dhanidina about engaging with supporters and critics alike, and setting an example for what it looks like to be a "Muslim judge" in the United States. The Judge believes in acceptance for people of all religions, and would like to educate those who imagine, without a basis, that he will apply Sharia law. (13 States have passed legislation banning Sharia law, solving what some would say is a non-problem. Other States are considering such legislation.)
The video is at: https://www.youtube.com/watch?reload=9&v=27m2iEdfYv0
Cannabis-related bank reform legislation falls short in Senate
Dec. 27, 2018
A new attempt to give cannabis firms access to legal banking services has failed in the U.S. Senate, according to a new report.https://www.fool.com/investing/2018/12/22/mitch-mcconnell-blocks-marijuana-banking-reform-am.aspx
Sen. Cory Gardner last week reintroduced the States Act, which called for an easing of laws in the cannabis business, in a bid to make sure financial institutions could offer banking services to these firms without being liable for drug trafficking. The act, which was reintroduced as an amendment to the First Step Act, a criminal justice reform bill, failed in the Senate.
If passed, the legislation would free legal cannabis states to directly address creating legal financial services for cannabis industry companies.
Big tobacco companies are reportedly interested in cannabis as a business, so banking issues are a problem for the tobacco companies.
Credit: Motley Fool
Dec. 27, 2018
A new attempt to give cannabis firms access to legal banking services has failed in the U.S. Senate, according to a new report.https://www.fool.com/investing/2018/12/22/mitch-mcconnell-blocks-marijuana-banking-reform-am.aspx
Sen. Cory Gardner last week reintroduced the States Act, which called for an easing of laws in the cannabis business, in a bid to make sure financial institutions could offer banking services to these firms without being liable for drug trafficking. The act, which was reintroduced as an amendment to the First Step Act, a criminal justice reform bill, failed in the Senate.
If passed, the legislation would free legal cannabis states to directly address creating legal financial services for cannabis industry companies.
Big tobacco companies are reportedly interested in cannabis as a business, so banking issues are a problem for the tobacco companies.
Credit: Motley Fool
From DMN:
A Fed Up Musician Demands That YouTube Fix Its Broken Content ID System. More Than 100,000 People Have Signed His Petition.
YouTube’s Content ID has a major copyright infringement problem. Now, people have urged Google to fix it.
As part of the video platform’s large-scale protest against the EU’s Copyright Directive, YouTube has pointed to its Content ID as an existing viable solution.
According to YouTube CEO Susan Wojcicki and YouTube Music chief Lyor Cohen, Content ID already does enough to protect owners.
The story continues here. https://www.digitalmusicnews.com/2018/12/27/christian-buettner-thefatrat-youtube-content-id-petition/
A Fed Up Musician Demands That YouTube Fix Its Broken Content ID System. More Than 100,000 People Have Signed His Petition.
YouTube’s Content ID has a major copyright infringement problem. Now, people have urged Google to fix it.
As part of the video platform’s large-scale protest against the EU’s Copyright Directive, YouTube has pointed to its Content ID as an existing viable solution.
According to YouTube CEO Susan Wojcicki and YouTube Music chief Lyor Cohen, Content ID already does enough to protect owners.
The story continues here. https://www.digitalmusicnews.com/2018/12/27/christian-buettner-thefatrat-youtube-content-id-petition/
Federal regs on added coloring will delay supermarket sales of "bloody" uncooked vegetarian burgers
Impossible Foods, the Silicon Valley-based maker of the eponymous burger, uses genetically modified yeast to mass produce its central ingredient, soy leghemoglobin, or “heme.” It’s heme that gives the Impossible Burger its essential meat-like flavor, the company said. The substance was ready to break out this summer after the U.S. Food and Drug Administration, following years of back-and-forth, declined to challenge findings voluntarily presented by the company that the cooked product is “Generally Recognized as Safe,” or GRAS. Such a “no questions” letter means the FDA found the information provided to be sufficient.
Heme is “responsible for the flavor of blood,” Impossible Foods CEO Patrick Brown said in an interview earlier this year. “It catalyzes reactions in your mouth that generate these very potent odor molecules that smell bloody and metallic.”
It’s how the burger looks that’s now at issue, though. An FDA spokesman said heme, which is red in hue, needs to be formally approved as a color additive before individual consumers can purchase the uncooked product.
“If the firm wishes to sell the uncooked, red-colored ground beef analogue to consumers, pre-market approval of the soy leghemoglobin as a color additive is required,” FDA spokesman Peter Cassell told Bloomberg in a Dec. 17 email. Impossible Foods filed a petition Nov. 5 seeking heme’s formal approval as a color additive, the FDA said. The agency has 90 days to respond, and the timeline can be extended.
Impossible Foods says heme isn’t a color additive as currently used in cooked Impossible Burgers sold in restaurants. However, other future uses might qualify as a color additive, company spokeswoman Rachel Konrad said in an email. The company submitted the FDA petition to retain “maximum flexibility as our products and business continue to evolve.” Konrad declined to say whether uncooked heme-containing products to be sold in supermarkets were one of those contemplated future uses.
Excerpt from: https://www.bloomberg.com/news/articles/2018-12-26/why-the-bloody-impossible-burger-faces-another-fda-hurdle?cmpid=BBD122618_BIZ&utm_medium=email&utm_source=newsletter&utm_term=181226&utm_campaign=bloombergdaily
Impossible Foods, the Silicon Valley-based maker of the eponymous burger, uses genetically modified yeast to mass produce its central ingredient, soy leghemoglobin, or “heme.” It’s heme that gives the Impossible Burger its essential meat-like flavor, the company said. The substance was ready to break out this summer after the U.S. Food and Drug Administration, following years of back-and-forth, declined to challenge findings voluntarily presented by the company that the cooked product is “Generally Recognized as Safe,” or GRAS. Such a “no questions” letter means the FDA found the information provided to be sufficient.
Heme is “responsible for the flavor of blood,” Impossible Foods CEO Patrick Brown said in an interview earlier this year. “It catalyzes reactions in your mouth that generate these very potent odor molecules that smell bloody and metallic.”
It’s how the burger looks that’s now at issue, though. An FDA spokesman said heme, which is red in hue, needs to be formally approved as a color additive before individual consumers can purchase the uncooked product.
“If the firm wishes to sell the uncooked, red-colored ground beef analogue to consumers, pre-market approval of the soy leghemoglobin as a color additive is required,” FDA spokesman Peter Cassell told Bloomberg in a Dec. 17 email. Impossible Foods filed a petition Nov. 5 seeking heme’s formal approval as a color additive, the FDA said. The agency has 90 days to respond, and the timeline can be extended.
Impossible Foods says heme isn’t a color additive as currently used in cooked Impossible Burgers sold in restaurants. However, other future uses might qualify as a color additive, company spokeswoman Rachel Konrad said in an email. The company submitted the FDA petition to retain “maximum flexibility as our products and business continue to evolve.” Konrad declined to say whether uncooked heme-containing products to be sold in supermarkets were one of those contemplated future uses.
Excerpt from: https://www.bloomberg.com/news/articles/2018-12-26/why-the-bloody-impossible-burger-faces-another-fda-hurdle?cmpid=BBD122618_BIZ&utm_medium=email&utm_source=newsletter&utm_term=181226&utm_campaign=bloombergdaily
Huawei Rivals Nokia and Ericsson Struggle to Capitalize on U.S. Scrutiny
Nokia and Ericsson have been slow to release telecom equipment as advanced as Huawei’s, major wireless providers say
By
Stu Woo
Updated Dec. 31, 2018 10:17 a.m. ET
U.S.-led scrutiny of Huawei Technologies Co. should have been good news for its two biggest competitors in the telecommunications-equipment business, Finland’s Nokia Corp. NOK -0.43% and EricssonERIC +0.79% AB of Sweden.
It isn’t turning out to be so simple.
Major European wireless providers—big customers of all three—say Nokia and Ericsson have been slow to release equipment that is as advanced as Huawei’s.
Nokia and Ericsson also face a new, deep-pocketed challenger inSamsung Electronics Co . , the South Korean smartphone giant that is aiming to quickly grow its nascent cellular-infrastructure business.
And there is another big pitfall for the two: Both Nokia and Ericsson fear that if they are seen trying to take advantage, Beijing could retaliate by cutting off access to the massive Chinese market, people familiar with the matter said.
In recent years, Huawei has surpassed the Nordic companies to become the world’s biggest maker of cellular-tower hardware, internet routers and related telecom equipment. For the first three quarters of 2018, Huawei had a 28% share of the global telecom-equipment market, Nokia had 17% and Ericsson 13.4%, according to research-firm Dell’Oro Group. That compares with market shares in 2017 of 27.1% for Huawei, 16.8% for Nokia and 13.2% for Ericsson.
Huawei has dominated the world-wide industry despite being essentially barred from the U.S. over concerns that Beijing could order Huawei to spy on or disable communications networks. Recently, the U.S. has been urging allies to enact similar bans.
Excerpt from WSJ (paywall): https://www.wsj.com/articles/huawei-rivals-nokia-and-ericsson-struggle-to-capitalize-on-u-s-scrutiny-11546252247?mod=hp_lead_pos4
Nokia and Ericsson have been slow to release telecom equipment as advanced as Huawei’s, major wireless providers say
By
Stu Woo
Updated Dec. 31, 2018 10:17 a.m. ET
U.S.-led scrutiny of Huawei Technologies Co. should have been good news for its two biggest competitors in the telecommunications-equipment business, Finland’s Nokia Corp. NOK -0.43% and EricssonERIC +0.79% AB of Sweden.
It isn’t turning out to be so simple.
Major European wireless providers—big customers of all three—say Nokia and Ericsson have been slow to release equipment that is as advanced as Huawei’s.
Nokia and Ericsson also face a new, deep-pocketed challenger inSamsung Electronics Co . , the South Korean smartphone giant that is aiming to quickly grow its nascent cellular-infrastructure business.
And there is another big pitfall for the two: Both Nokia and Ericsson fear that if they are seen trying to take advantage, Beijing could retaliate by cutting off access to the massive Chinese market, people familiar with the matter said.
In recent years, Huawei has surpassed the Nordic companies to become the world’s biggest maker of cellular-tower hardware, internet routers and related telecom equipment. For the first three quarters of 2018, Huawei had a 28% share of the global telecom-equipment market, Nokia had 17% and Ericsson 13.4%, according to research-firm Dell’Oro Group. That compares with market shares in 2017 of 27.1% for Huawei, 16.8% for Nokia and 13.2% for Ericsson.
Huawei has dominated the world-wide industry despite being essentially barred from the U.S. over concerns that Beijing could order Huawei to spy on or disable communications networks. Recently, the U.S. has been urging allies to enact similar bans.
Excerpt from WSJ (paywall): https://www.wsj.com/articles/huawei-rivals-nokia-and-ericsson-struggle-to-capitalize-on-u-s-scrutiny-11546252247?mod=hp_lead_pos4
NYT editorial: State AGs have gone light on big pharma and opioids
Public officials and plaintiffs’ lawyers, by failing to use lawsuits to hold the opioid industry to account, have allowed a containable crisis to mushroom into catastrophe. Repeatedly, they ended lawsuits quickly for the sake of political and financial expediency rather than digging out information that would have alerted the public to the dangers of these drugs.
Consider the case of Florida, which in 2001 became one of the first states to investigate Purdue Pharma. Its attorney general at the time, Robert Butterworth, pointing to a growing number of overdose deaths, declared that he would discover when Purdue Pharma first knew about OxyContin’s abuse.
That never happened. Instead, state investigators interviewed only a single former OxyContin sales representative, and Mr. Butterworth, who was running for a State Senate seat, ended the case soon after it was filed.
He lost his election and the case’s settlement proved empty. While Purdue Pharma agreed to pay $2 million to fund a system that would monitor how Florida doctors prescribed opioids, state legislators blocked its creation. David Aronberg, the state attorney for Palm Beach County, told me that nearly all of the $2 million was returned to the drug company and Florida went on become a major center of the opioid crisis.
The decision by Justice Department officials in 2007 to forgo felony charges against the executives of Purdue Pharma also resulted in the loss of a critical chance to slow the epidemic’s trajectory. Without a public trial, doctors remained unaware about the extent of Purdue Pharma’s deceptions and increasingly prescribe opioids. During the five years that followed the Justice Department settlement, 80,000 people died from overdoses involving pain pills, federal data shows.
Also, in striking these settlements, government officials have agreed to demands by drug companies that information gathered during legal discovery about corporate practices be sealed. Three years after Kentucky settled its lawsuit against Purdue Pharma, a media organization that covers health care, STAT, won a court order this month that will result in the release of records from that case. Those records include the pretrial testimony of Richard Sackler, the son of a founder of Purdue Pharma and the company’s president when the abuse of OxyContin was becoming rampant.
Excerpt from https://www.nytimes.com/2018/12/26/opinion/opioids-lawsuits-purdue-pharma.html?action=click&module=Opinion&pgtype=Homepage
Public officials and plaintiffs’ lawyers, by failing to use lawsuits to hold the opioid industry to account, have allowed a containable crisis to mushroom into catastrophe. Repeatedly, they ended lawsuits quickly for the sake of political and financial expediency rather than digging out information that would have alerted the public to the dangers of these drugs.
Consider the case of Florida, which in 2001 became one of the first states to investigate Purdue Pharma. Its attorney general at the time, Robert Butterworth, pointing to a growing number of overdose deaths, declared that he would discover when Purdue Pharma first knew about OxyContin’s abuse.
That never happened. Instead, state investigators interviewed only a single former OxyContin sales representative, and Mr. Butterworth, who was running for a State Senate seat, ended the case soon after it was filed.
He lost his election and the case’s settlement proved empty. While Purdue Pharma agreed to pay $2 million to fund a system that would monitor how Florida doctors prescribed opioids, state legislators blocked its creation. David Aronberg, the state attorney for Palm Beach County, told me that nearly all of the $2 million was returned to the drug company and Florida went on become a major center of the opioid crisis.
The decision by Justice Department officials in 2007 to forgo felony charges against the executives of Purdue Pharma also resulted in the loss of a critical chance to slow the epidemic’s trajectory. Without a public trial, doctors remained unaware about the extent of Purdue Pharma’s deceptions and increasingly prescribe opioids. During the five years that followed the Justice Department settlement, 80,000 people died from overdoses involving pain pills, federal data shows.
Also, in striking these settlements, government officials have agreed to demands by drug companies that information gathered during legal discovery about corporate practices be sealed. Three years after Kentucky settled its lawsuit against Purdue Pharma, a media organization that covers health care, STAT, won a court order this month that will result in the release of records from that case. Those records include the pretrial testimony of Richard Sackler, the son of a founder of Purdue Pharma and the company’s president when the abuse of OxyContin was becoming rampant.
Excerpt from https://www.nytimes.com/2018/12/26/opinion/opioids-lawsuits-purdue-pharma.html?action=click&module=Opinion&pgtype=Homepage
Barry Lynn's end-of-year list of best anti-monopoly books
The early days of winter are a great time to catch up on your anti-monopoly studies. The days are cold and drear, and the nights dark and long, which make smoldering anger and fiery prose a welcome addition to the home of any true believer in liberty and democracy. A few of our favorites:
The Curse of Bigness: Antitrust in the New Gilded Age, Columbia Global Reports, Tim Wu
An elegant primer for all to understand the thinking that underlays America’s anti-monopoly traditions and the many dangers of concentrated corporate power.
The Myth of Capitalism: Monopolies and the Death of Competition, Wiley, Jonathan Tepper with Denise Hearn
Tepper and Hearn use the growing body of social science research, indicating that America’s economy is structured to favor fewer and fewer corporations, to show how monopolies and oligopolies exacerbate inequality, cut growth and wages, and hurt entrepreneurs.
Globalists: The End of Empire and the Birth of Neoliberalism, Harvard University Press, Quinn Slobodian
A strong history of neoliberalism, including a chronicle of the post-World War I origins of the Geneva School of neoliberal thought. Slobodian details how the ultimate goal of neoliberalism is not to establish market relations and market logic, but to shield markets and private property from democracy.
The Age of Surveillance Capitalism: The Fight for a Human Future at the New Frontier of Power, PublicAffairs, Shoshana Zuboff (January 15, 2019)
Zuboff coined the term "surveillance capitalism" and in this book she details how platform monopolists use their systems to control and exploit an extensive range of human behavior, information, and experience for private gain.
Winners Take All: The Elite Charade of Changing the World, Alfred A. Knopf, Anand Giridharadas
A powerful critique of elite “thought leaders” who spend their professional careers consolidating power and control in the hands of the few, then pretend to make the world a better place through extracurricular activities like philanthropy.
From: https://outlook.live.com/mail/inbox/id/AQMkADAwATM3ZmYAZS04MTcxLTJmMjgtMDACLTAwCgBGAAADRnoWw%2B1oGkecPn377%2FL9tQcA97M33DyMxEGb7MCV%2BuIrtgAAAgEMAAAA97M33DyMxEGb7MCV%2BuIrtgACGgVq4gAAAA%3D%3D
The early days of winter are a great time to catch up on your anti-monopoly studies. The days are cold and drear, and the nights dark and long, which make smoldering anger and fiery prose a welcome addition to the home of any true believer in liberty and democracy. A few of our favorites:
The Curse of Bigness: Antitrust in the New Gilded Age, Columbia Global Reports, Tim Wu
An elegant primer for all to understand the thinking that underlays America’s anti-monopoly traditions and the many dangers of concentrated corporate power.
The Myth of Capitalism: Monopolies and the Death of Competition, Wiley, Jonathan Tepper with Denise Hearn
Tepper and Hearn use the growing body of social science research, indicating that America’s economy is structured to favor fewer and fewer corporations, to show how monopolies and oligopolies exacerbate inequality, cut growth and wages, and hurt entrepreneurs.
Globalists: The End of Empire and the Birth of Neoliberalism, Harvard University Press, Quinn Slobodian
A strong history of neoliberalism, including a chronicle of the post-World War I origins of the Geneva School of neoliberal thought. Slobodian details how the ultimate goal of neoliberalism is not to establish market relations and market logic, but to shield markets and private property from democracy.
The Age of Surveillance Capitalism: The Fight for a Human Future at the New Frontier of Power, PublicAffairs, Shoshana Zuboff (January 15, 2019)
Zuboff coined the term "surveillance capitalism" and in this book she details how platform monopolists use their systems to control and exploit an extensive range of human behavior, information, and experience for private gain.
Winners Take All: The Elite Charade of Changing the World, Alfred A. Knopf, Anand Giridharadas
A powerful critique of elite “thought leaders” who spend their professional careers consolidating power and control in the hands of the few, then pretend to make the world a better place through extracurricular activities like philanthropy.
From: https://outlook.live.com/mail/inbox/id/AQMkADAwATM3ZmYAZS04MTcxLTJmMjgtMDACLTAwCgBGAAADRnoWw%2B1oGkecPn377%2FL9tQcA97M33DyMxEGb7MCV%2BuIrtgAAAgEMAAAA97M33DyMxEGb7MCV%2BuIrtgACGgVq4gAAAA%3D%3D
Rent-A-Center, perennial Christmas grinch
In a current California class-action lawsuit against Rent-A-Center, lawyers argue that the company’s customers, a disproportionate number of whom are people of color, are charged prices that violate the state’s rent-to-own pricing laws. The legal documents say that a Rent-A-Center in Northern California ultimately charged, after installments, $1,379.54 for an Xbox that normally retails at $299.99, and $2,834.19 for a television that sells for $717.60.
The docket and Court filings are at https://dockets.justia.com/docket/california/candce/3:2017cv02335/310704
The FTC and State AGs have been active concerning the company's pricing a credit practices. See https://www.nerdwallet.com/blog/finance/rent-a-center-complaints-lawsuits/
In a current California class-action lawsuit against Rent-A-Center, lawyers argue that the company’s customers, a disproportionate number of whom are people of color, are charged prices that violate the state’s rent-to-own pricing laws. The legal documents say that a Rent-A-Center in Northern California ultimately charged, after installments, $1,379.54 for an Xbox that normally retails at $299.99, and $2,834.19 for a television that sells for $717.60.
The docket and Court filings are at https://dockets.justia.com/docket/california/candce/3:2017cv02335/310704
The FTC and State AGs have been active concerning the company's pricing a credit practices. See https://www.nerdwallet.com/blog/finance/rent-a-center-complaints-lawsuits/
The Complaint recently filed by DC AG Racine against Facebook is here :
http://oag.dc.gov/sites/default/files/2018-12/Facebook-Complaint.pdf
“Facebook failed to protect the privacy of its users and deceived them about who had access to their data and how it was used,” AG Racine said in a statement.
New York City council members railed against Amazon in a December 12 hearing
From article By Shirin Ghaffary Dec 12, 2018
Members of a New York City council committee denounced terms of the recent Amazon HQ2 deal in the first of three public hearings being held about the plans.
“We are not in the business of corporate welfare here at the city council,” said City Council Speaker Corey Johnson, referencing the up to $3 billion in government subsidiesthe company will receive. Johnson, one of the fiercest critics of the deal, spoke at the council’s Committee on Economic Development hearing on Wednesday at City Hall.
Amazon says the move will bring at least 25,000 jobs to the city over the next decade and $27.5 billion in state and city revenue in the next 25 years. Johnson contested these numbers at the hearing, saying they warrant an outside independent verification beyond the report the state commissioned.
Johnson and other council members were upset about being denied oversight of the plan — but that wasn’t on Amazon alone. Both New York City Mayor Bill de Blasio and New York Governor Andrew Cuomo worked together with Amazon to bypass the standard review processes that would have given the city council a chance to veto or even review the deal. The hearing was the first opportunity council members had to publicly and directly vent their frustrations to key people behind the negotiations.
While city council members have threatened to throw a wrench in the process, they’re limited in what they can do. A five-member state board is expected to vote on some aspects of the deal in the new year. Some council members are hoping they can influence new appointees to the board to vote against the plan, but it’s not clear how realistic that outcome is.
One leader from the city’s Economic Development Corporation, James Patchett, who helped work on the deal, took the brunt of the tough questions.
From https://www.recode.net/2018/12/12/18137488/new-york-amazon-hq2-deal-hearing
From article By Shirin Ghaffary Dec 12, 2018
Members of a New York City council committee denounced terms of the recent Amazon HQ2 deal in the first of three public hearings being held about the plans.
“We are not in the business of corporate welfare here at the city council,” said City Council Speaker Corey Johnson, referencing the up to $3 billion in government subsidiesthe company will receive. Johnson, one of the fiercest critics of the deal, spoke at the council’s Committee on Economic Development hearing on Wednesday at City Hall.
Amazon says the move will bring at least 25,000 jobs to the city over the next decade and $27.5 billion in state and city revenue in the next 25 years. Johnson contested these numbers at the hearing, saying they warrant an outside independent verification beyond the report the state commissioned.
Johnson and other council members were upset about being denied oversight of the plan — but that wasn’t on Amazon alone. Both New York City Mayor Bill de Blasio and New York Governor Andrew Cuomo worked together with Amazon to bypass the standard review processes that would have given the city council a chance to veto or even review the deal. The hearing was the first opportunity council members had to publicly and directly vent their frustrations to key people behind the negotiations.
While city council members have threatened to throw a wrench in the process, they’re limited in what they can do. A five-member state board is expected to vote on some aspects of the deal in the new year. Some council members are hoping they can influence new appointees to the board to vote against the plan, but it’s not clear how realistic that outcome is.
One leader from the city’s Economic Development Corporation, James Patchett, who helped work on the deal, took the brunt of the tough questions.
From https://www.recode.net/2018/12/12/18137488/new-york-amazon-hq2-deal-hearing
Is the Altria acquisition of an interest in Juul an antitrust issue?
There are press reports, particularly from Financial Times, that the recent Altria cigarette company's acquisition of some of e-gigarette company Juul's stock includes a standstill provision blocking further acquisition of Juul stock until antitrust issues are cleared with government.
Why the antitrust concern?
Perhaps because, as the FDA's head has explained (see below), five e-cigarette manufacturers represent more than 97 percent of the current market for e-cigs — JUUL, Vuse, MarkTen, Blu, and Logic. As the Huffington Post/Healthline reported last year, large cigarette companies have big interests in e-cigarettes, a rapidly growing market. E-cigarette brand VUSE is owned by R.J. Reynolds Vapor Company, a subsidiary of the tobacco giant Reynolds America. British American Tobacco (BAT), the largest tobacco company in the Europe, owns e-cigarette brand Vype. Blu e-cigarette is owned by Imperial Tobacco, and Altria (formerly Phillip Morris) already owns MarkTen.
So, the acquisition of Juul stock by Altria increases market concentration in e-cigarettes,. But it is not clear whether for antitrust enforcement purposes e-cigarettes are a relevant market and whether the increase in concentration within that market (or a broader market for all tobacco products, or even a possible future market) is significant to antitrust agencies.
But regulatory concern about the consequences of big-company influence on e-cigarette use is not limited to the intellectual silo of antitrust enforcement. Recent FDA information requests about consumer use of e-cigarettes have focused on five large manufacturers, and reflect concerns about the market influence of large companies that are familiar to antitrust enforcers. The FDA, like federal bank regulators, operate on the idea that the largest industry players deserve the closest regulatory scrutiny.
A speech by the FDA head reflects the focus on large manufacturers:
Today, we sent letters to five e-cigarette manufacturers whose products were sold to kids during the enforcement blitz and that, collectively, represent more than 97 percent of the current market for e-cigs — JUUL, Vuse, MarkTen, blu e-cigs, and Logic. These brands will be the initial focus of our attention when it comes to protecting kids. They’re now on notice by the FDA of how their products are being used by youth at disturbing rates. Given the magnitude of the problem, we’re requesting that the manufacturers of these brands and products come back to the FDA in 60 days with robust plans on how they’ll convincingly address the widespread use of their products by minors, or we’ll revisit the FDA’s exercise of enforcement discretion for products currently on the market.
See https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm620185.htm
Posted by Don Allen Resnikoff
From the WSJ: The Food and Drug Administration is backing off a proposal that would have opened up generic companies to possible product-liability lawsuits over drug safety.The FDA had proposed a new federal rule in 2013 that would have allowed people to hold generic-drug companies legally liable for the side effects of medicines. Thursday’s action by the agency withdrew the proposed rule, and keeps generic companies largely impervious to lawsuits.
At issue in the complex matter is whether generic-drug companies are allowed, like brand-name drug companies, to change their drug labels to reflect new safety concerns. Currently, generic-drug companies must follow the labels written by the brand-name companies.
The otherwise arcane issue of drug labels became a major practical issue beginning with a 2011 Supreme Court decision that an injured person can’t bring a claim against generic makers over failure to warn about a drug’s adverse side effects. The court reasoned that generic companies—unlike brand-name companies—shouldn’t be liable because they have no authority to modify their labels.
In 2013, the FDA proposed the rule that would have allowed generic makers to change labels, a step the generic industry largely opposed. Thursday the agency dropped its plans to pursue the new rule.
FDA Commissioner Scott Gottlieb and the FDA’s drug-center director Janet Woodcock said in a statement, “We heard from manufacturers that they believed this change would have imposed on them significant new burdens and liabilities” and that the measure “might have raised the price of generic drugs to patients.”
Excerpt from https://www.wsj.com/articles/fda-withdraws-proposed-rule-that-would-have-exposed-generic-drug-makers-to-liability-11544726478 (paywall)
At issue in the complex matter is whether generic-drug companies are allowed, like brand-name drug companies, to change their drug labels to reflect new safety concerns. Currently, generic-drug companies must follow the labels written by the brand-name companies.
The otherwise arcane issue of drug labels became a major practical issue beginning with a 2011 Supreme Court decision that an injured person can’t bring a claim against generic makers over failure to warn about a drug’s adverse side effects. The court reasoned that generic companies—unlike brand-name companies—shouldn’t be liable because they have no authority to modify their labels.
In 2013, the FDA proposed the rule that would have allowed generic makers to change labels, a step the generic industry largely opposed. Thursday the agency dropped its plans to pursue the new rule.
FDA Commissioner Scott Gottlieb and the FDA’s drug-center director Janet Woodcock said in a statement, “We heard from manufacturers that they believed this change would have imposed on them significant new burdens and liabilities” and that the measure “might have raised the price of generic drugs to patients.”
Excerpt from https://www.wsj.com/articles/fda-withdraws-proposed-rule-that-would-have-exposed-generic-drug-makers-to-liability-11544726478 (paywall)
You think real estate dealings in the US can be rough? Here are real estate sales fraud stories from Russia, told by NYT:
In one common scheme, agents collude with property owners to sell homes and then race to petition judges that the sale should be invalidated because the seller was temporarily insane. Buyers lose their cash, sellers keep the homes and sales agents — and judges who may be in on the scheme — pocket millions of rubles. Buyers may sue to reclaim their money, but the asset that may be the most lucrative for recompense is the apartment, and that is out of reach. Laws routinely protect homeowners in these kind of disputes.
This fraud is prevalent enough that nearly all of the roughly 140,000 transactions annually in Moscow have required sellers to show certificates of sanity in recent years, real estate agents say.
Most fraud involves buildings that are still under construction, where builders offer discounts for prepurchases but often steal the money and declare bankruptcy. The Ministry of Construction reported in August that it has 34,085 open complaints from such transactions.
https://www.nytimes.com/2018/12/25/business/moscow-russia-real-estate.html
In one common scheme, agents collude with property owners to sell homes and then race to petition judges that the sale should be invalidated because the seller was temporarily insane. Buyers lose their cash, sellers keep the homes and sales agents — and judges who may be in on the scheme — pocket millions of rubles. Buyers may sue to reclaim their money, but the asset that may be the most lucrative for recompense is the apartment, and that is out of reach. Laws routinely protect homeowners in these kind of disputes.
This fraud is prevalent enough that nearly all of the roughly 140,000 transactions annually in Moscow have required sellers to show certificates of sanity in recent years, real estate agents say.
Most fraud involves buildings that are still under construction, where builders offer discounts for prepurchases but often steal the money and declare bankruptcy. The Ministry of Construction reported in August that it has 34,085 open complaints from such transactions.
https://www.nytimes.com/2018/12/25/business/moscow-russia-real-estate.html
In the spirit of the holiday season in the USA, 2018:
President Trump questions the existence of Santa Claus, creating doubt about the practice of leaving out milk and cookies on Christmas eve :
https://www.cnn.com/2018/12/25/politics/trump-santa-phone-call/index.html
Some somber seasonal music from Handel's Messiah:
https://www.youtube.com/watch?v=H5-yTzY1dn4
Is the decision of the Texas judge who struck down the ACA a partisan decision?
The New York Times says yes:
https://www.nytimes.com/2018/12/15/opinion/obamacare-unconstitutional-texas-judge.html?action=click&module=Opinion&pgtype=Homepage
The Trump administration, which has long sought to repeal the ACA, applauded Friday’s ruling.
“Wow, but not surprisingly, ObamaCare was just ruled UNCONSTITUTIONAL by a highly respected judge in Texas. Great news for America!” President Trump wrote on Twitter. In a statement, the White House elaborated, saying, “Once again, the President calls on Congress to replace Obamacare and act to protect people with preexisting conditions and provide Americans with quality affordable healthcare.”
The Georgia State AG agrees with the Trump Administration opinion:
https://www.ajc.com/news/opinion/opinion-lawsuit-rule-aca-unconstitutional-will-aid-georgia/1PP6RcRlTNHRGDjDKF0S0J/
The Texas Court's opinion and Order is here:
https://www.documentcloud.org/documents/5629711-Texas-v-US-Partial-Summary-Judgment.html
Simon Johnson on the political power of U.S. banks
Simon Johnson is a leader in bringing competition issues in banking to the attention of the American people. He argues to diverse audiences that banking is controlled by a small number of banks that have outsized political influence. He would like to see big banks controlled by aggressive antitrust enforcement as well as regulatory constraints.
Johnson has an impressive resume. Currently, he is a professor at the MIT Sloan School of Management and a senior fellow at the Peterson Institute for International Economics. He is a cofounder of the BaselineScenario.com, and a member of the FDIC’s Systemic Resolution Advisory Committee. In 2012, he became a member of the private sector systemic risk council founded by Sheila Bair. In July 2014, he joined the Financial Research Advisory Committee of the US Treasury’s Office of Financial Research (OFR). Also, he served as member of the Congressional Budget Office’s Panel of Economic Advisers from April 2009-April 2015.
Johnson was active in opposing the regulatory rollback that occurred in May, 2018, when Congress rolled back some of the restraints imposed on banks after the 2007-2009 global financial crisis. The rollback included reducing federal oversight of banks with between $50 billion and $250 billion in assets.
Johnson testified in opposition to regulatory rollback legislation. He said that $50 billion, as earlier defined under the Dodd-Frank financial reform legislation, is a sensible threshold at which the Federal Reserve should pay more attention to financial institutions.
Johnson’s recent testimony is illustrative of his broader concerns about the structure of our financial system. As part of earlier testimony to Congress in 2016 [https://financialservices.house.gov/uploadedfiles/hhrg-114-ba19-wstate-sjohnson-20161207.pdf] Johnson argued that the nature and structure of our financial system led to the deep crisis of 2008 and 2009, and still poses real risks to our collective economic future. He argued for overall strengthening rather than weakening financial regulation, with a particular focus on capital requirements. He said:
We should be attempting to strengthen the safeguards in the Dodd-Frank financial reform legislation. Repealing or rolling back that legislation poses a major fiscal risk. . . . [A] financial system with dangerously low capital levels – hence prone to major collapses – creates a nontransparent contingent liability for the federal budget in the United States.
Simon Johnson is author of several influential books. An important book concerning the power of bank and bankers to coopt legislators and regulators, written with co-author Jame Kwak, is 13 Bankers – The Wall Street Takeover and the Next Financial Meltdown.
The Johnson/Kwak book offers an excellent discussion of the run-up to the 2008 financial crisis and government efforts to resolve it, emphasizing problems caused by banks that grew to be very big.
The authors invoke the spirit of U.S. antitrust enforcement of the early 1900s, and urge government regulatory policies that limit bank assets.
Johnson and Kwak argue in their book that U.S. government regulatory policy affecting financial institutions has effectively been captured and controlled by people associated with large banks. Government regulators are portrayed as enablers of the country’s 2008 financial crisis. “The U.S. financial elite . . . constituted an oligarchy – a group that gained political power because of its economic power. . . .[T]he major banks engineered a regulatory climate that allowed them to embark on an orgy of product innovation and risk-taking that would create the largest bubble in modern economic history . . . .”
Johnson and Kwak tell us in 13 Bankers that just a few very large banks dominate the U.S. financial system – hence the book title. When CEOs of the largest U.S. banks were called to Washington in March of 2009 to meet with President Obama and senior government officials to discuss the financial meltdown, there were just thirteen. We learn that at the time of the meeting Bank of America’s assets were 16.4 percent of gross domestic product; J.P. Morgan Chase had 14.7; Citigroup 12.9. As of the end of the third quarter of 2010 Johnson and Kwak believed there were six banks that together have assets in excess of 64% of U.S. GDP.
The authors complain that in the dark days of 2008 and 2009 the government chose to rescue the financial system “by extending a blank check to the largest, most powerful banks in their moment of greatest need. The government chose not to impose conditions [on bail-outs] that could reform the industry or even to replace the management of large failed banks.”
Much has happened since 2010, including passage of Dodd-Frank bank reform legislation – elements of which have been under attack in 2018. It is clear, however, that Simon Johnson continues to be concerned about the continuing great size and political power of U.S. Banks.
This posting is by Don Allen Resnikoff, who takes full responsibility for its content
Simon Johnson is a leader in bringing competition issues in banking to the attention of the American people. He argues to diverse audiences that banking is controlled by a small number of banks that have outsized political influence. He would like to see big banks controlled by aggressive antitrust enforcement as well as regulatory constraints.
Johnson has an impressive resume. Currently, he is a professor at the MIT Sloan School of Management and a senior fellow at the Peterson Institute for International Economics. He is a cofounder of the BaselineScenario.com, and a member of the FDIC’s Systemic Resolution Advisory Committee. In 2012, he became a member of the private sector systemic risk council founded by Sheila Bair. In July 2014, he joined the Financial Research Advisory Committee of the US Treasury’s Office of Financial Research (OFR). Also, he served as member of the Congressional Budget Office’s Panel of Economic Advisers from April 2009-April 2015.
Johnson was active in opposing the regulatory rollback that occurred in May, 2018, when Congress rolled back some of the restraints imposed on banks after the 2007-2009 global financial crisis. The rollback included reducing federal oversight of banks with between $50 billion and $250 billion in assets.
Johnson testified in opposition to regulatory rollback legislation. He said that $50 billion, as earlier defined under the Dodd-Frank financial reform legislation, is a sensible threshold at which the Federal Reserve should pay more attention to financial institutions.
Johnson’s recent testimony is illustrative of his broader concerns about the structure of our financial system. As part of earlier testimony to Congress in 2016 [https://financialservices.house.gov/uploadedfiles/hhrg-114-ba19-wstate-sjohnson-20161207.pdf] Johnson argued that the nature and structure of our financial system led to the deep crisis of 2008 and 2009, and still poses real risks to our collective economic future. He argued for overall strengthening rather than weakening financial regulation, with a particular focus on capital requirements. He said:
We should be attempting to strengthen the safeguards in the Dodd-Frank financial reform legislation. Repealing or rolling back that legislation poses a major fiscal risk. . . . [A] financial system with dangerously low capital levels – hence prone to major collapses – creates a nontransparent contingent liability for the federal budget in the United States.
Simon Johnson is author of several influential books. An important book concerning the power of bank and bankers to coopt legislators and regulators, written with co-author Jame Kwak, is 13 Bankers – The Wall Street Takeover and the Next Financial Meltdown.
The Johnson/Kwak book offers an excellent discussion of the run-up to the 2008 financial crisis and government efforts to resolve it, emphasizing problems caused by banks that grew to be very big.
The authors invoke the spirit of U.S. antitrust enforcement of the early 1900s, and urge government regulatory policies that limit bank assets.
Johnson and Kwak argue in their book that U.S. government regulatory policy affecting financial institutions has effectively been captured and controlled by people associated with large banks. Government regulators are portrayed as enablers of the country’s 2008 financial crisis. “The U.S. financial elite . . . constituted an oligarchy – a group that gained political power because of its economic power. . . .[T]he major banks engineered a regulatory climate that allowed them to embark on an orgy of product innovation and risk-taking that would create the largest bubble in modern economic history . . . .”
Johnson and Kwak tell us in 13 Bankers that just a few very large banks dominate the U.S. financial system – hence the book title. When CEOs of the largest U.S. banks were called to Washington in March of 2009 to meet with President Obama and senior government officials to discuss the financial meltdown, there were just thirteen. We learn that at the time of the meeting Bank of America’s assets were 16.4 percent of gross domestic product; J.P. Morgan Chase had 14.7; Citigroup 12.9. As of the end of the third quarter of 2010 Johnson and Kwak believed there were six banks that together have assets in excess of 64% of U.S. GDP.
The authors complain that in the dark days of 2008 and 2009 the government chose to rescue the financial system “by extending a blank check to the largest, most powerful banks in their moment of greatest need. The government chose not to impose conditions [on bail-outs] that could reform the industry or even to replace the management of large failed banks.”
Much has happened since 2010, including passage of Dodd-Frank bank reform legislation – elements of which have been under attack in 2018. It is clear, however, that Simon Johnson continues to be concerned about the continuing great size and political power of U.S. Banks.
This posting is by Don Allen Resnikoff, who takes full responsibility for its content
Regulation shortfall for dementia care
Assisted living facilities were originally designed for people who were largely independent but required help bathing, eating or other daily tasks. Unlike nursing homes, the facilities generally do not provide skilled medical care or therapy, and stays are not paid for by Medicare or Medicaid.
Dementia care is the fastest-growing segment of assisted living. But as these residences market themselves to people with Alzheimer’s and other types of dementia, facilities across the country are straining to deliver on their promises of security and attentive care, according to a Kaiser Health News analysis of inspection records in the three most populous states.
In California, 45 percent of assisted living facilities have violated one or more state dementia regulations during the last five years. Three of the 12 most common California citations in 2017 were related to dementia care.
In Florida, one in every 11 assisted living facilities has been cited since 2013 for not meeting state rules designed to prevent residents from wandering away.
And in Texas, nearly a quarter of the facilities that accept residents with Alzheimer’s have violated one or more state rules related to dementia care, such as tailoring a plan for each resident upon admission or ensuring that staff members have completed special training, according to nearly six years of records.
“There is a belief in our office that many facilities do not staff to the level” necessary to meet the unanticipated “needs of residents, especially medical needs,” said Fred Steele, Oregon’s long-term-care ombudsman. “Many of these are for-profit entities. They are setting staffing ratios that maybe aren’t being set because of the care needs of the residents but are more about the bottom line of their profits.”
Uneven Regulation
These concerns, though particularly acute for people with dementia, apply to all assisted living residents. They are older and frailer than assisted living residents were a generation ago. Within a year, one in five has a fall, one in eight has an emergency room visit and one in 12 has an overnight hospital stay, according to the Centers for Disease Control and Prevention. Half are over 85.
“Assisted living was created to be an alternative to nursing homes, but if you walk into some of the big assisted living facilities, they sure feel like a nursing home,” said Doug Pace, director for mission partnerships with the Alzheimer’s Association.
Yet the rules for assisted living remain looser than for nursing homes. The federal government does not license or oversee assisted living facilities, and states set minimal rules.
From https://www.nytimes.com/2018/12/13/business/assisted-living-violations-dementia-alzheimers.html
Assisted living facilities were originally designed for people who were largely independent but required help bathing, eating or other daily tasks. Unlike nursing homes, the facilities generally do not provide skilled medical care or therapy, and stays are not paid for by Medicare or Medicaid.
Dementia care is the fastest-growing segment of assisted living. But as these residences market themselves to people with Alzheimer’s and other types of dementia, facilities across the country are straining to deliver on their promises of security and attentive care, according to a Kaiser Health News analysis of inspection records in the three most populous states.
In California, 45 percent of assisted living facilities have violated one or more state dementia regulations during the last five years. Three of the 12 most common California citations in 2017 were related to dementia care.
In Florida, one in every 11 assisted living facilities has been cited since 2013 for not meeting state rules designed to prevent residents from wandering away.
And in Texas, nearly a quarter of the facilities that accept residents with Alzheimer’s have violated one or more state rules related to dementia care, such as tailoring a plan for each resident upon admission or ensuring that staff members have completed special training, according to nearly six years of records.
“There is a belief in our office that many facilities do not staff to the level” necessary to meet the unanticipated “needs of residents, especially medical needs,” said Fred Steele, Oregon’s long-term-care ombudsman. “Many of these are for-profit entities. They are setting staffing ratios that maybe aren’t being set because of the care needs of the residents but are more about the bottom line of their profits.”
Uneven Regulation
These concerns, though particularly acute for people with dementia, apply to all assisted living residents. They are older and frailer than assisted living residents were a generation ago. Within a year, one in five has a fall, one in eight has an emergency room visit and one in 12 has an overnight hospital stay, according to the Centers for Disease Control and Prevention. Half are over 85.
“Assisted living was created to be an alternative to nursing homes, but if you walk into some of the big assisted living facilities, they sure feel like a nursing home,” said Doug Pace, director for mission partnerships with the Alzheimer’s Association.
Yet the rules for assisted living remain looser than for nursing homes. The federal government does not license or oversee assisted living facilities, and states set minimal rules.
From https://www.nytimes.com/2018/12/13/business/assisted-living-violations-dementia-alzheimers.html
Lina Khan on Radical Antitrust and the Consumer Welfare Standard
Lina Khan spoke at "Charles River Associate's Annual Brussels Conference: Economic Developments in Competition Policy, 2018" on a panel which asked "Do We Need a 'Radical Antitrust' Answer to 'Populist Antitrust?'" Khan discussed some criticisms of the consumer welfare standard, how competition policy extends beyond antitrust law, and how the legal structure of antitrust enforcement could benefit from more active competition rulemaking from the FTC.
See https://www.youtube.com/watch?v=GVw6HR5duPk&feature=youtu.be
Lina Khan spoke at "Charles River Associate's Annual Brussels Conference: Economic Developments in Competition Policy, 2018" on a panel which asked "Do We Need a 'Radical Antitrust' Answer to 'Populist Antitrust?'" Khan discussed some criticisms of the consumer welfare standard, how competition policy extends beyond antitrust law, and how the legal structure of antitrust enforcement could benefit from more active competition rulemaking from the FTC.
See https://www.youtube.com/watch?v=GVw6HR5duPk&feature=youtu.be
Jack Bogle’s warning about dominant index funds
Bogle, who founded The Vanguard Group in 1974, wrote Thursday in The Wall Street Journal [https://www.wsj.com/articles/bogle-sounds-a-warning-on-index-funds-1543504551] that if current trends continue, index funds will soon own half of all U.S. stocks. He thinks that could lead to a dangerous vacuum in corporate governance – with nobody to effectively police the corporate executives who run America’s largest companies.
“Public policy cannot ignore this growing dominance, and consider its impact on the financial markets, corporate governance, and regulation,” he wrote. “These will be major issues in the coming era.”
Over the past few decades indexing’s popularity has soared. Holdings have trended steadily upwards, from 4.5% of total U.S. stock market value in 2002 to 9% by 2009. Stock index fund assets now total $4.6 trillion, and their overall percentage of total stock market value has almost doubled again in the last decade to 17%.
Index funds’ growth has had some unintended consequences. As Bogle points out, there are three index fund managers who dominate the field: Vanguard has a 51% share of the market, followed by BlackRock with 21%, and State Street Global with 9%.
There are significant obstacles to becoming a major player, however, so it’s not likely any new competitors will reduce the huge concentration enjoyed by these big powerhouses.
While most economists expect the share of corporate ownership by index funds to increase further over the next decade, index mutual funds will no doubt rise above 50% of total market value – between 2021 and 2024, according to Moody’s. [https://www.reuters.com/article/us-funds-passive/index-funds-to-surpass-active-fund-assets-in-u-s-by-2024-moodys-idUSKBN15H1PN ] That means the so-called ‘Big Three’ would own over 30% of the U.S. stock market, which Bogle says gives them effective control. “I do not believe that such concentration would serve the national interest.”
If historical patterns hold, index funds’ popularity could soon become a problem, Bogle argues. “A handful of giant institutional investors will one day hold voting control of virtually every large U.S. corporation.”
That might leave a power vacuum, leaving corporate chieftains unaccountable. CEOs who run companies supposed to answer to boards of directors, who are in turn elected by shareholders. Index funds are the biggest shareholders at most companies though. In theory, funds are supposed to vote their shares on behalf of their own investors – everyday workers who own fund shares in a 401(k) or IRA account. But there’s a wrinkle: Index funds’ investing strategy revolves around passively buying every stock in the market, while holding cost down as low as possible. The upshot is that they have little wherewithal or incentive to keep tabs on CEOs or other corporate managers.
Excerpts above are from: http://time.com/money/5468239/jack-bogle-index-funds-problem/
Thanks to Newsletter reader Gary Sunden for pointing out the WSJ article. DR
Bogle, who founded The Vanguard Group in 1974, wrote Thursday in The Wall Street Journal [https://www.wsj.com/articles/bogle-sounds-a-warning-on-index-funds-1543504551] that if current trends continue, index funds will soon own half of all U.S. stocks. He thinks that could lead to a dangerous vacuum in corporate governance – with nobody to effectively police the corporate executives who run America’s largest companies.
“Public policy cannot ignore this growing dominance, and consider its impact on the financial markets, corporate governance, and regulation,” he wrote. “These will be major issues in the coming era.”
Over the past few decades indexing’s popularity has soared. Holdings have trended steadily upwards, from 4.5% of total U.S. stock market value in 2002 to 9% by 2009. Stock index fund assets now total $4.6 trillion, and their overall percentage of total stock market value has almost doubled again in the last decade to 17%.
Index funds’ growth has had some unintended consequences. As Bogle points out, there are three index fund managers who dominate the field: Vanguard has a 51% share of the market, followed by BlackRock with 21%, and State Street Global with 9%.
There are significant obstacles to becoming a major player, however, so it’s not likely any new competitors will reduce the huge concentration enjoyed by these big powerhouses.
While most economists expect the share of corporate ownership by index funds to increase further over the next decade, index mutual funds will no doubt rise above 50% of total market value – between 2021 and 2024, according to Moody’s. [https://www.reuters.com/article/us-funds-passive/index-funds-to-surpass-active-fund-assets-in-u-s-by-2024-moodys-idUSKBN15H1PN ] That means the so-called ‘Big Three’ would own over 30% of the U.S. stock market, which Bogle says gives them effective control. “I do not believe that such concentration would serve the national interest.”
If historical patterns hold, index funds’ popularity could soon become a problem, Bogle argues. “A handful of giant institutional investors will one day hold voting control of virtually every large U.S. corporation.”
That might leave a power vacuum, leaving corporate chieftains unaccountable. CEOs who run companies supposed to answer to boards of directors, who are in turn elected by shareholders. Index funds are the biggest shareholders at most companies though. In theory, funds are supposed to vote their shares on behalf of their own investors – everyday workers who own fund shares in a 401(k) or IRA account. But there’s a wrinkle: Index funds’ investing strategy revolves around passively buying every stock in the market, while holding cost down as low as possible. The upshot is that they have little wherewithal or incentive to keep tabs on CEOs or other corporate managers.
Excerpts above are from: http://time.com/money/5468239/jack-bogle-index-funds-problem/
Thanks to Newsletter reader Gary Sunden for pointing out the WSJ article. DR
Einer Elhauge:
HOW HORIZONTAL SHAREHOLDING HARMS OUR ECONOMY—AND WHY ANTITRUST LAW CAN FIX IT
When the leading shareholders of horizontal competitors overlap, horizontal shareholding exists. In Elhauge’s earlier Harvard Law Review article on horizontal shareholding, he argued that economic theory and two industry studies indicated that high levels of horizontal shareholding in concentrated product markets can have anticompetitive effects, even when each individual horizontal shareholder has a minority stake.
Elhauge argued that those anticompetitive effects could help explain high executive compensation rewards executives despite lack of performance, and the historic increase in the gap between corporate profits and investment, and the recent rise in economic inequality.
He also argued that when horizontal shareholding has likely anticompetitive effects, it can be remedied under Clayton Act §7. He recommended that antitrust agencies should investigate any horizontal stock acquisitions that result in high product market concentration.
In a new article, Elhauge argues that new proofs and empirical evidence strongly confirm his earlier claims.
The new article can be found at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3293822
Note from Editor Don Allen Resnikoff: Following is the first of several posts reviewing books by advocates for antitrust enforcement reform who were leaders in a movement to bring the political significance of antitrust enforcement to the attention of the general public
Cornered – the New Monopoly Capitalism and the Economics of Destruction ,
Barry Lynn, John Wiley & Sons, Inc., 2010, 311 pages
Lynn’s background is as a business journalist who is comfortable speaking to a broad audience, clearly and persuasively. He studies industries with a journalist’s eye for detail, but is not bound by conventional wisdom of antitrust lawyers and economists. Currently he directs the Open Markets Institute, and is active researching and writing about big company power. Lynn’s work has gotten much public attention. His work has been profiled on CBS and in the New York Times, and his articles have appeared in publications including Harper’s, the Financial Times, Harvard Business Review, and Foreign Policy. He frequently addresses public forums.
In his 2010 Cornered book Lynn presents a theme that he has since forcefully pressed: concentrated power of big companies in the U.S. economy is causing great harm. The harm he sees ranges from the broadly political – loss of individual liberties -- to physical injury of consumers. He advocates drastic reform of antitrust enforcement, and broad political reform.
Lynn’s book includes many points of continuing relevance. Lynn addresses the entrenched consumer welfare oriented view of antitrust enforcement litigation that focuses on efficiency and prices to consumers. He argues for a return to antitrust enforcement based on social and political values.
Barry Lynn would like to see antitrust enforcement revised, but he wants more. He also would like broad reform of politics in the United States, because “our political economy is run by a compact elite that is able to fuse the power of our public government with the power of private corporate governments . . . .”
Cornered supports Franklin Roosevelt era New Deal reforms: “In instance after instance, the reforms aimed not to lower prices for consumers but to fortify systems of checks and balances, create systems of personal and local ownership, and force large governmental institutions, both public and private, to compete.” New Deal reformers worked to create “a political framework that successfully protected the individual citizen from being crushed” by concentrated industrial forces. A key is a political system organized around “open markets.”
But, Lynn explains, the New Deal reform efforts have been largely squelched. Power is “concentrated once more in the capitalist alone, who is the one actor . . . served . . . by reducing the number of workers . . . and by stripping out the various forms of wealth . . . .” Control over important property interests is “shared among an immensely powerful class [of people] that has largely communalized all its holdings . . . [T]he interest remains only to maximize capital and hence power, even if this means tossing another factory or two full of perfectly necessary machines on the scrap heap.” The author tells us that a financier class holds great power and doesn't care much about preserving domestic factory production.
Lynn worried about concentration in various industries that remain a problem today, even if some details have changed.
One problematic industry is poultry production. Lynn was concerned that in poultry farming, as in pig, dairy, and some other areas of farming, a few large companies effectively control the business of the farmers that provide the relevant product. In addition, Lynn said that the giant poultry companies respect each other’s market territories and avoid competition with each other.
Health insurance is another industry that concerned Lynn: “A 2006 study revealed that in 166 of the top 294 metropolitan areas, a single insurer controls more than half of the HMO and preferred provider business.”
Lynn also complained about mergers of large financial institutions, the “too big to fail,” banks that led to the financial crisis of 2008. Lynn complains that even following the financial “meltdown” of 2008 the U.S. government “responded to the collapse of our financial system in most instances by accelerating consolidation. . . .” Government money was used “to broker and subsidize such whopping mergers as the Wells Fargo takeover of Wachovia, the JPMorgan Chase acquisition of Washington Mutual and Bear Stearns, and Bank of America’s absorption of Countrywide Financial and Merrill Lynch . . . .”
Cornered presents some unconventional approaches to antitrust and political policy. Lynn worries that U.S. industry is not only highly monopolized, but dangerously reliant on systems involving extensive outsourcing and fragile supply chains. The Cornered book explains that fragile supply chains result in products of unpredictable availability and poor quality.
The author explains that even as much industrial production shifts away from the United States to China and other places, some American companies may control the bottleneck of supplying U.S. and other consumers. These companies may sit atop a hierarchy of power, in the manner Lynn ascribed to Wal-Mart: Wal-Mart “sits atop the entire system [of product distribution], where it determines . . . who shall make what and how much they shall earn, and who shall buy what and how much they shall pay.”
The Cornered book tells us that some other U.S. companies, including manufacturers, import products that they “snap together” or otherwise organize for resale. For example, Boeing has applied an import and assemble manufacturing philosophy in construction of passenger aircraft.
Some industry facts have changed since 2010, such as the rise of Amazon. But Lynn’s factual observations concerning outsourcing and fragile supply chains continue to challenge antitrust enforcers to take a fresh look at how modern industries work. His observations about industry systems suggest that antitrust enforcers need to examine the relationships among companies at different levels in the distribution chain. In examining the competitive impact of Wal-Mart conduct, for example, its relations with suppliers can be important.
Some antitrust analysts have discussed outsourcing and supply chain issues like those presented in Cornered. Their comments often tend to suggest that the supply chain issues Lynn identifies are not within the scope of antitrust enforcement. But Bert Foer wrote an article some years ago that takes Lynn’s supply chain points seriously. The article is called Mr. Magoo Visits Wal-Mart: Finding the Right Lens for Antitrust. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1103609
Foer’s article explains that “Wal-Mart is the leading example of a firm whose scale and strategy give it the ability to exercise extraordinary influence over its supply chain.” The article asks “to what extent are the criticized actions [of Wal-Mart] susceptible to treatment under the antitrust laws?” Referring to material in Lynn’s book End of the Line, Foer says that “The transformation of supply lines that Lynn describes can be seen as part of a movement toward tighter and relatively more closed systems which is rapidly changing the way business is done. It should lead antitrust experts to question whether the tools that were developed during a long era of more independent companies acting competitively rather than as integrated segments of large networks, are still adequate.” See also Bert Foer’s comments at URL https://www.ftc.gov/policy/public-comments/2018/08/19/comment-ftc-2018-0054-d-0007 (“The evidence and analysis of monopsony power, including but not limited to, in labor markets”)
Lynn closes his Cornered book with an upbeat if general suggestion that the American people have the ability to reverse the consolidation of power he describes, and “retake control of our political economy.” While It is not clear precisely what actions he expects his audience to take, he does invite us to look at competition issues from outside of the Chicago-Harvard consumer welfare, efficiency, price-oriented enforcement consensus. He asks us to embrace the idea that antitrust enforcement properly has social and political goals. He invites us to study closely the facts of industries, and politics, and encourages us to work to fix what he sees as broken.
In 2010 Lynn worried about a lack of public awareness of much recent industry concentration: “The making of monopoly . . . is once again the business of business in America. Increasingly, it seems, everyone knows this except the American people.” It is fair to say that since then Barry Lynn is one of the people who has done much to increase public awareness.
This posting is by Don Allen Resnikoff, who takes full responsibility for its content
Cornered – the New Monopoly Capitalism and the Economics of Destruction ,
Barry Lynn, John Wiley & Sons, Inc., 2010, 311 pages
Lynn’s background is as a business journalist who is comfortable speaking to a broad audience, clearly and persuasively. He studies industries with a journalist’s eye for detail, but is not bound by conventional wisdom of antitrust lawyers and economists. Currently he directs the Open Markets Institute, and is active researching and writing about big company power. Lynn’s work has gotten much public attention. His work has been profiled on CBS and in the New York Times, and his articles have appeared in publications including Harper’s, the Financial Times, Harvard Business Review, and Foreign Policy. He frequently addresses public forums.
In his 2010 Cornered book Lynn presents a theme that he has since forcefully pressed: concentrated power of big companies in the U.S. economy is causing great harm. The harm he sees ranges from the broadly political – loss of individual liberties -- to physical injury of consumers. He advocates drastic reform of antitrust enforcement, and broad political reform.
Lynn’s book includes many points of continuing relevance. Lynn addresses the entrenched consumer welfare oriented view of antitrust enforcement litigation that focuses on efficiency and prices to consumers. He argues for a return to antitrust enforcement based on social and political values.
Barry Lynn would like to see antitrust enforcement revised, but he wants more. He also would like broad reform of politics in the United States, because “our political economy is run by a compact elite that is able to fuse the power of our public government with the power of private corporate governments . . . .”
Cornered supports Franklin Roosevelt era New Deal reforms: “In instance after instance, the reforms aimed not to lower prices for consumers but to fortify systems of checks and balances, create systems of personal and local ownership, and force large governmental institutions, both public and private, to compete.” New Deal reformers worked to create “a political framework that successfully protected the individual citizen from being crushed” by concentrated industrial forces. A key is a political system organized around “open markets.”
But, Lynn explains, the New Deal reform efforts have been largely squelched. Power is “concentrated once more in the capitalist alone, who is the one actor . . . served . . . by reducing the number of workers . . . and by stripping out the various forms of wealth . . . .” Control over important property interests is “shared among an immensely powerful class [of people] that has largely communalized all its holdings . . . [T]he interest remains only to maximize capital and hence power, even if this means tossing another factory or two full of perfectly necessary machines on the scrap heap.” The author tells us that a financier class holds great power and doesn't care much about preserving domestic factory production.
Lynn worried about concentration in various industries that remain a problem today, even if some details have changed.
One problematic industry is poultry production. Lynn was concerned that in poultry farming, as in pig, dairy, and some other areas of farming, a few large companies effectively control the business of the farmers that provide the relevant product. In addition, Lynn said that the giant poultry companies respect each other’s market territories and avoid competition with each other.
Health insurance is another industry that concerned Lynn: “A 2006 study revealed that in 166 of the top 294 metropolitan areas, a single insurer controls more than half of the HMO and preferred provider business.”
Lynn also complained about mergers of large financial institutions, the “too big to fail,” banks that led to the financial crisis of 2008. Lynn complains that even following the financial “meltdown” of 2008 the U.S. government “responded to the collapse of our financial system in most instances by accelerating consolidation. . . .” Government money was used “to broker and subsidize such whopping mergers as the Wells Fargo takeover of Wachovia, the JPMorgan Chase acquisition of Washington Mutual and Bear Stearns, and Bank of America’s absorption of Countrywide Financial and Merrill Lynch . . . .”
Cornered presents some unconventional approaches to antitrust and political policy. Lynn worries that U.S. industry is not only highly monopolized, but dangerously reliant on systems involving extensive outsourcing and fragile supply chains. The Cornered book explains that fragile supply chains result in products of unpredictable availability and poor quality.
The author explains that even as much industrial production shifts away from the United States to China and other places, some American companies may control the bottleneck of supplying U.S. and other consumers. These companies may sit atop a hierarchy of power, in the manner Lynn ascribed to Wal-Mart: Wal-Mart “sits atop the entire system [of product distribution], where it determines . . . who shall make what and how much they shall earn, and who shall buy what and how much they shall pay.”
The Cornered book tells us that some other U.S. companies, including manufacturers, import products that they “snap together” or otherwise organize for resale. For example, Boeing has applied an import and assemble manufacturing philosophy in construction of passenger aircraft.
Some industry facts have changed since 2010, such as the rise of Amazon. But Lynn’s factual observations concerning outsourcing and fragile supply chains continue to challenge antitrust enforcers to take a fresh look at how modern industries work. His observations about industry systems suggest that antitrust enforcers need to examine the relationships among companies at different levels in the distribution chain. In examining the competitive impact of Wal-Mart conduct, for example, its relations with suppliers can be important.
Some antitrust analysts have discussed outsourcing and supply chain issues like those presented in Cornered. Their comments often tend to suggest that the supply chain issues Lynn identifies are not within the scope of antitrust enforcement. But Bert Foer wrote an article some years ago that takes Lynn’s supply chain points seriously. The article is called Mr. Magoo Visits Wal-Mart: Finding the Right Lens for Antitrust. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1103609
Foer’s article explains that “Wal-Mart is the leading example of a firm whose scale and strategy give it the ability to exercise extraordinary influence over its supply chain.” The article asks “to what extent are the criticized actions [of Wal-Mart] susceptible to treatment under the antitrust laws?” Referring to material in Lynn’s book End of the Line, Foer says that “The transformation of supply lines that Lynn describes can be seen as part of a movement toward tighter and relatively more closed systems which is rapidly changing the way business is done. It should lead antitrust experts to question whether the tools that were developed during a long era of more independent companies acting competitively rather than as integrated segments of large networks, are still adequate.” See also Bert Foer’s comments at URL https://www.ftc.gov/policy/public-comments/2018/08/19/comment-ftc-2018-0054-d-0007 (“The evidence and analysis of monopsony power, including but not limited to, in labor markets”)
Lynn closes his Cornered book with an upbeat if general suggestion that the American people have the ability to reverse the consolidation of power he describes, and “retake control of our political economy.” While It is not clear precisely what actions he expects his audience to take, he does invite us to look at competition issues from outside of the Chicago-Harvard consumer welfare, efficiency, price-oriented enforcement consensus. He asks us to embrace the idea that antitrust enforcement properly has social and political goals. He invites us to study closely the facts of industries, and politics, and encourages us to work to fix what he sees as broken.
In 2010 Lynn worried about a lack of public awareness of much recent industry concentration: “The making of monopoly . . . is once again the business of business in America. Increasingly, it seems, everyone knows this except the American people.” It is fair to say that since then Barry Lynn is one of the people who has done much to increase public awareness.
This posting is by Don Allen Resnikoff, who takes full responsibility for its content
Tweets about CFPB, retweeted by Jeff Sovern
Christopher Peterson, @PetersonLawProf
Today @CFPB settled a case against State Farm Bank for illegal credit report practices. Instead of holding the bank accountable, @CFPB imposed no fines or restitution at all. ZERO. The multi-billion dollar bank paid less than a parking ticket.
Ed Mierzwinski, @edmpirg
We [at USPIRG]anticipated @senatemajldr would force a vote to make the unqualified @KathyKraninger the @CFPB director so we have a new report offering ideas for states, counties and cities to fill the #ProtectConsumers gap.
Christopher Peterson, @PetersonLawProf
Today @CFPB settled a case against State Farm Bank for illegal credit report practices. Instead of holding the bank accountable, @CFPB imposed no fines or restitution at all. ZERO. The multi-billion dollar bank paid less than a parking ticket.
Ed Mierzwinski, @edmpirg
We [at USPIRG]anticipated @senatemajldr would force a vote to make the unqualified @KathyKraninger the @CFPB director so we have a new report offering ideas for states, counties and cities to fill the #ProtectConsumers gap.
Tim Wu: Antitrust’s 10 Most Wanted
Excerpts from Medium.com article (URL below)
An increasing number of industries are dominated by oligopolies and monopolies. Compiled here are firms or industries that are ripe for investigation.
1. Amazon
Amazon has taken a dominant share of online retail in part through the acquisition of competitors. Its practice of aggressively copying successful marketplace products has similarly raised questions as has its bullying of smaller brands, its efforts to control pricing on competing platforms through “most favored nation” contracts, and aggressive use of 18-month noncompete agreements.
2. AT&T/WarnerMedia
AT&T, the one-time telephone monopolist broken up in the 1980s, has moved into television. Since acquiring Time Warner and HBO for $85.4 billion this year, AT&T has begun using HBO as a club against Dish and Dish Sling.
3. Big Agriculture
Over the last five years, the agricultural seed, fertilizer, and chemical industry has consolidated into four global giants: BASF, Bayer, DowDuPont, and ChemChina. According to the U.S. Department of Agriculture, seed prices have tripled since the 1990s, and since the mergers, fertilizer prices are up as well.
4. Big Pharma
The pharmaceutical industry has a long track record of anticompetitive and extortionary practices, including the abuse of patent rights for anticompetitive purposes and various forms of price gouging.
Can something be done about pharmaceutical price gouging on drugs that are out of patent or, perhaps more broadly, the extortionate increases in the prices of prescription drugs?
5. Facebook
Should the Instagram and WhatsApp mergers be retroactively dissolved (effectively breaking up the company)? Did Facebook use its market power and control of Instagram and Instagram Stories to illegally diminish Snapchat from 2016–2018?
6. Google
On its way to becoming the search monopoly, Google acquired advertising competitors iMob and DoubleClick along with rival Waze and other potential competitors. Has Google anticompetitively excluded its rivals?
7. Ticketmaster/Live Nation
Has Live Nation used its power as a promoter to protect Ticketmaster’s monopoly on sales? Was Songkick the victim of an illegal exclusion campaign? Should the Ticketmaster/Live Nation union be dissolved?
8. T-Mobile/Sprint
In what appears to be a straightforward anticompetitive merger, the two carriers are attempting to merge to reduce the wireless market to three major firms (AT&T, Verizon, and Sprint/T-Mobile).
9. U.S. Airline Industry Over the 2010s, the agencies allowed it to consolidate to three major players (four airlines control 85% of the industry), yielding tiny seats, packed cabins, regular overbooking, higher fees, and other well-known unpleasantries?
10. U.S. HospitalsAfter years of consolidation, the number of independent hospitals in most cities and towns has decreased significantly. A series of retrospective studies have found that post-merger, prices increased while the quality of service, measured by mortality rate, decreased.
The preceding excerpts are from the article: https://medium.com/s/story/antitrusts-most-wanted-6c05388bdfb7 (paywall)
Excerpts from Medium.com article (URL below)
An increasing number of industries are dominated by oligopolies and monopolies. Compiled here are firms or industries that are ripe for investigation.
1. Amazon
Amazon has taken a dominant share of online retail in part through the acquisition of competitors. Its practice of aggressively copying successful marketplace products has similarly raised questions as has its bullying of smaller brands, its efforts to control pricing on competing platforms through “most favored nation” contracts, and aggressive use of 18-month noncompete agreements.
2. AT&T/WarnerMedia
AT&T, the one-time telephone monopolist broken up in the 1980s, has moved into television. Since acquiring Time Warner and HBO for $85.4 billion this year, AT&T has begun using HBO as a club against Dish and Dish Sling.
3. Big Agriculture
Over the last five years, the agricultural seed, fertilizer, and chemical industry has consolidated into four global giants: BASF, Bayer, DowDuPont, and ChemChina. According to the U.S. Department of Agriculture, seed prices have tripled since the 1990s, and since the mergers, fertilizer prices are up as well.
4. Big Pharma
The pharmaceutical industry has a long track record of anticompetitive and extortionary practices, including the abuse of patent rights for anticompetitive purposes and various forms of price gouging.
Can something be done about pharmaceutical price gouging on drugs that are out of patent or, perhaps more broadly, the extortionate increases in the prices of prescription drugs?
5. Facebook
Should the Instagram and WhatsApp mergers be retroactively dissolved (effectively breaking up the company)? Did Facebook use its market power and control of Instagram and Instagram Stories to illegally diminish Snapchat from 2016–2018?
6. Google
On its way to becoming the search monopoly, Google acquired advertising competitors iMob and DoubleClick along with rival Waze and other potential competitors. Has Google anticompetitively excluded its rivals?
7. Ticketmaster/Live Nation
Has Live Nation used its power as a promoter to protect Ticketmaster’s monopoly on sales? Was Songkick the victim of an illegal exclusion campaign? Should the Ticketmaster/Live Nation union be dissolved?
8. T-Mobile/Sprint
In what appears to be a straightforward anticompetitive merger, the two carriers are attempting to merge to reduce the wireless market to three major firms (AT&T, Verizon, and Sprint/T-Mobile).
9. U.S. Airline Industry Over the 2010s, the agencies allowed it to consolidate to three major players (four airlines control 85% of the industry), yielding tiny seats, packed cabins, regular overbooking, higher fees, and other well-known unpleasantries?
10. U.S. HospitalsAfter years of consolidation, the number of independent hospitals in most cities and towns has decreased significantly. A series of retrospective studies have found that post-merger, prices increased while the quality of service, measured by mortality rate, decreased.
The preceding excerpts are from the article: https://medium.com/s/story/antitrusts-most-wanted-6c05388bdfb7 (paywall)
Advocate Marcia Bernbaum reports progress on implementation of DC public toilets proposal
On Tuesday, December 4 the DC City Council, as part of a Consent Agenda (packaging proposed legislation with which the attending Council members had no problems) voted 12 - 0 in favor of Bill 22 -223, Public Restroom Facilities & Installation Act of 2018 [https://pffcdc.org/wp-content/uploads/2018/12/B22-223-Public-Restroom-Facilities-Installation-Act-of-2018-Com.-on-Health..pdf]
On Tuesday, December 18 there is a second vote. Assuming that at a minimum 7 of the 13 Council Members vote in favor the Bill will be passed.
Next steps:
This Bill, and any others passed by the DC Council on Dec. 18 will next go to Congress for a 30 day period. Assuming there are no objections on the Hill the Bill goes to the Mayor to be signed.
The Executive will implement the guidelines included in the Bill, including two pilots included in the Bill:
The Kojo Show on NPR recently interviewed public toilet advocates: See The plan to bring public restrooms to DC [https://thekojonnamdishow.org/shows/2018-12-03/the-plan-to-bring-public-restrooms-to-d-c] runs 28 minutes.
On Tuesday, December 4 the DC City Council, as part of a Consent Agenda (packaging proposed legislation with which the attending Council members had no problems) voted 12 - 0 in favor of Bill 22 -223, Public Restroom Facilities & Installation Act of 2018 [https://pffcdc.org/wp-content/uploads/2018/12/B22-223-Public-Restroom-Facilities-Installation-Act-of-2018-Com.-on-Health..pdf]
On Tuesday, December 18 there is a second vote. Assuming that at a minimum 7 of the 13 Council Members vote in favor the Bill will be passed.
Next steps:
This Bill, and any others passed by the DC Council on Dec. 18 will next go to Congress for a 30 day period. Assuming there are no objections on the Hill the Bill goes to the Mayor to be signed.
The Executive will implement the guidelines included in the Bill, including two pilots included in the Bill:
- One or two stand-alone public restrooms open 24/7;
- A pilot of a program where businesses are provided incentives to open their restrooms to the public.
The Kojo Show on NPR recently interviewed public toilet advocates: See The plan to bring public restrooms to DC [https://thekojonnamdishow.org/shows/2018-12-03/the-plan-to-bring-public-restrooms-to-d-c] runs 28 minutes.
From DigitalMusicNews
As litigation pressure mounts, FCC chairman Ajit Pai has admitted that Russians interfered with the agency’s open commenting process related to the repeal of net neutrality.
An extremely contentious battle over net neutrality in the United States has a familiar interloper: Russia. Earlier this week, Federal Communications Commission (FCC) chairman Ajit Pai flatly admitted that Russian operatives were actively attempting to persuade the agency to repeal net neutrality, with the agency’s open commenting period gamed with thousands of fake comments from Russian accounts.
In a court filing issued this week, Pai admitted that it was a “fact” that a “half-million comments [were] submitted from Russian e-mail addresses and… nearly eight million comments [were] filed by e-mail addresses from e-mail domains associated with FakeMailGenerator.com…”
(The full statement from Pai is here).
The admission marks a strong shift for Pai, who previously denied or negated the importance of fake comments during the FCC’s open commenting period.
The filing itself is part of a broader lawsuit against the FCC by The New York Times and Buzzfeed, both of whom are seeking access to FCC documents under the Freedom of Information Act (FOIA). The FCC, led by Pai, has pushed back on those requests, arguing that the release of sensitive internal documents could open the agency to security threats.
An earlier report found that nearly 100 percent of verified comments from actual citizens were in favor of preserving net neutrality.
Separately, FCC chairwoman Jessica Rosenworcel has sharply criticized her own agency, while calling for the release of the documents in question. She also pointed to extreme spamming of the FCC’s comment system, with Russian interference a major contributing factor.
“As many as nine and a half million people had their identities stolen and used to file fake comments, which is a crime under both federal and state laws,” Rosenworcel declared. “Nearly eight million comments were filed from e-mail domains associated with FakeMailGenerator.com. On top of this, roughly half a million comments were filed from Russian e-mail addresses.
“Something here is rotten — and it’s time for the FCC to come clean.”
The open commenting period occurred in 2017, ahead of the FCC’s momentous rollback of net neutrality rules.Since that point, a number of U.S. states have fiercely fought back against the FCC’s decision, with California leading the charge. Earlier this year, California passed a strong net neutrality protection law, setting the stage for a major showdown against the FCC and the U.S. Department of Justice.
Within moments of passing its neutrality-protecting SB 822, the U.S. Department of Justice filed a lawsuit. Soon thereafter, several major ISPs filed their own lawsuits.
Just recently, California agreed to stay the implementation of its neutrality protection law, pending a ruling by the D.C. Circuit Court in early 2019. The FCC’s rollback prohibits any “state or local measures that would effectively impose rules or requirements that we have repealed,” though California legislators argue that the FCC lacks jurisdiction to enforce its provisions.
The DOJ’s lawsuit, perhaps symbolically, has been filed as United States v. State of California.
Credit: https://www.digitalmusicnews.com/2018/12/05/fcc-ajit-pai-russia-net-neutrality/
As litigation pressure mounts, FCC chairman Ajit Pai has admitted that Russians interfered with the agency’s open commenting process related to the repeal of net neutrality.
An extremely contentious battle over net neutrality in the United States has a familiar interloper: Russia. Earlier this week, Federal Communications Commission (FCC) chairman Ajit Pai flatly admitted that Russian operatives were actively attempting to persuade the agency to repeal net neutrality, with the agency’s open commenting period gamed with thousands of fake comments from Russian accounts.
In a court filing issued this week, Pai admitted that it was a “fact” that a “half-million comments [were] submitted from Russian e-mail addresses and… nearly eight million comments [were] filed by e-mail addresses from e-mail domains associated with FakeMailGenerator.com…”
(The full statement from Pai is here).
The admission marks a strong shift for Pai, who previously denied or negated the importance of fake comments during the FCC’s open commenting period.
The filing itself is part of a broader lawsuit against the FCC by The New York Times and Buzzfeed, both of whom are seeking access to FCC documents under the Freedom of Information Act (FOIA). The FCC, led by Pai, has pushed back on those requests, arguing that the release of sensitive internal documents could open the agency to security threats.
An earlier report found that nearly 100 percent of verified comments from actual citizens were in favor of preserving net neutrality.
Separately, FCC chairwoman Jessica Rosenworcel has sharply criticized her own agency, while calling for the release of the documents in question. She also pointed to extreme spamming of the FCC’s comment system, with Russian interference a major contributing factor.
“As many as nine and a half million people had their identities stolen and used to file fake comments, which is a crime under both federal and state laws,” Rosenworcel declared. “Nearly eight million comments were filed from e-mail domains associated with FakeMailGenerator.com. On top of this, roughly half a million comments were filed from Russian e-mail addresses.
“Something here is rotten — and it’s time for the FCC to come clean.”
The open commenting period occurred in 2017, ahead of the FCC’s momentous rollback of net neutrality rules.Since that point, a number of U.S. states have fiercely fought back against the FCC’s decision, with California leading the charge. Earlier this year, California passed a strong net neutrality protection law, setting the stage for a major showdown against the FCC and the U.S. Department of Justice.
Within moments of passing its neutrality-protecting SB 822, the U.S. Department of Justice filed a lawsuit. Soon thereafter, several major ISPs filed their own lawsuits.
Just recently, California agreed to stay the implementation of its neutrality protection law, pending a ruling by the D.C. Circuit Court in early 2019. The FCC’s rollback prohibits any “state or local measures that would effectively impose rules or requirements that we have repealed,” though California legislators argue that the FCC lacks jurisdiction to enforce its provisions.
The DOJ’s lawsuit, perhaps symbolically, has been filed as United States v. State of California.
Credit: https://www.digitalmusicnews.com/2018/12/05/fcc-ajit-pai-russia-net-neutrality/
Documents released in a British parliamentary committee inquiry suggests that Facebook and CEO Mark Zuckerberg may have given select developers special access to user data and deliberated on whether to sell that data.
A WSJ video (behind a paywall) is interesting in that it shows the documents:
https://www.wsj.com/articles/u-k-releases-internal-facebook-emails-deliberating-data-access-1544022496?mod=cx_picks&cx_navSource=cx_picks&cx_tag=video&cx_artPos=1#cxrecs_s
A WSJ video (behind a paywall) is interesting in that it shows the documents:
https://www.wsj.com/articles/u-k-releases-internal-facebook-emails-deliberating-data-access-1544022496?mod=cx_picks&cx_navSource=cx_picks&cx_tag=video&cx_artPos=1#cxrecs_s
Bloomberg: Exchange-traded funds are making stock markets dumber -- and more expensive.
That’s the finding of researchers at Stanford University, Emory University and the Interdisciplinary Center of Herzliya in Israel. They’ve uncovered evidence that higher ownership of individual stocks by ETFs widens the bid-ask spreads in those shares, making them more expensive to trade and therefore less attractive.
This phenomenon eventually turns stocks into drones that move in lockstep with their industry. It makes life harder for traders seeking informational edges by offering fewer opportunities to capitalize on insights into earnings and other signals.
The study is the latest to point out signs of diminished efficiency in markets increasingly overrun by the funds.
Excerpt from https://www.bloomberg.com/news/articles/2017-04-19/etfs-seen-creating-market-that-s-both-mindless-and-too-expensive
That’s the finding of researchers at Stanford University, Emory University and the Interdisciplinary Center of Herzliya in Israel. They’ve uncovered evidence that higher ownership of individual stocks by ETFs widens the bid-ask spreads in those shares, making them more expensive to trade and therefore less attractive.
This phenomenon eventually turns stocks into drones that move in lockstep with their industry. It makes life harder for traders seeking informational edges by offering fewer opportunities to capitalize on insights into earnings and other signals.
The study is the latest to point out signs of diminished efficiency in markets increasingly overrun by the funds.
Excerpt from https://www.bloomberg.com/news/articles/2017-04-19/etfs-seen-creating-market-that-s-both-mindless-and-too-expensive
Gerrymandering in Wisconsin
Recent news reports discuss whether the legislature in Wisconsin remains dominated by Republicans despite a majority Democratic party vote in the state, arguably because of gerrymandering. Without expressing any opinion on that issue, here is Scotusblog's history of litigation on the gerrymandering issue in Wisconsin:
Gill v. Whitford (U.S. Supreme Court)
Docket No.Op. Below16-1161W.D. Wis. Oct 3, 2017
Tr.Aud.Jun 18, 2018- Roberts OT 2017Holding: Plaintiffs -- Wisconsin Democratic voters who rested their claim of unconstitutional partisan gerrymandering on statewide injury -- have failed to demonstrate Article III standing.
Judgment: Vacated and remanded, 9-0, in an opinion by Chief Justice Roberts on June 18, 2018. Thomas and Gorsuch joined the opinion except as to Part III. Justice Kagan filed a concurring opinion, in which Justices Ginsburg, Breyer, and Sotomayor joined. Justice Thomas filed an opinion concurring in part and concurring in the judgment, in which Justice Gorsuch joined.
Excerpt of SCOTUSblog Coverage:
Symposium: The Supremes put off deciding whether politics violates the Constitution (Hans von Spakovsky)
Symposium: The elections clause as a structural constraint on partisan gerrymandering of Congress (Richard Pildes)
Symposium: Back to the drawing board for political gerrymandering plaintiffs (John Phillippe)
Posting by Don Allen Resnikoff
A brief book review by Don Allen Resnikoff:
The Curse of Bigness: Antitrust in the New Gilded Age
by Tim Wu, Columbia Global Reports, RRP, 170 pages.
Tim Wu’s short new book argues for a return to a more aggressive style of antitrust law enforcement in the U.S.
Wu makes his argument in a way that is accessible to a broad array of people, not just antitrust litigators and scholars. His book has drawn a lot of attention in popular media.
What has gone wrong with antitrust law? Wu explains in his introductory chapter that the law is suffering from the ideas of Robert Bork and the Chicago School of thinking: “Bork contended, implausibly, that the Congress of 1890 exclusively intended the antitrust law to deal with one very narrow type of harm: higher prices to consumers. That theory, the ‘consumer welfare’ approach, has enfeebled the law.”
An example of enfeeblement is abandonment by the government of big monopolization cases like those pursued in the past. In the distant past the Teddy Roosevelt, William Howard Taft, and Woodrow Wilson Administrations pressed monopolization cases against Standard Oil, Morgan banking interests, and others. More recently, federal and state governments have pressed monopolization cases against IBM, AT&T, and Microsoft.
The IBM, AT&T, and Microsoft cases focused on exclusionary and other anti-competitive conduct, and Wu praises them as doing some good in promoting competition. The prosecution of each case was disabled to some extent by wavering support from government. The Reagan Administration dismissed the U.S. v. IBM prosecution as “without merit.” The Bush Administration agreed to a consent decree for the U.S. Microsoft case that many found to be too mild. The Microsoft decree did have some important provisions that aided competition, such as requiring Microsoft to share information that permits competitor’s products to successfully interface with Microsoft products. The AT&T decree was strong in breaking up AT&T when it was entered in 1982, but the government has since permitted mergers which have in effect largely put the AT&T Humpty-Dumpty back together again.
Despite the disabilities of the recent monopolization cases, Wu describes what followed in recent years as much worse. Some examples: The government permission for reassembly of the AT&T monopoly; merger of airlines to just a few players; consolidation of the cable and pharmaceutical industries, and an array of permitted mergers in beer, seed and pesticides (Monsanto/Bayer), and other industries.
Perhaps most concerning to Wu is the emergence of dominant tech firms like Google, Ebay, Facebook, and Amazon. These companies, once disruptive upstarts, have become defensive behemoths that discourage new disruptive upstart companies, often by simply merging with them. Government enforcers have done little to discourage the mergers.
Wu has suggestions for reform of antitrust enforcement. He would like to see more vigorous merger enforcement. He would also like to see a return to government prosecution of big monopoly cases in the style of the cases against IBM, AT&T, and Microsoft, but with strong remedies like the break-up remedy initially used for AT&T. He would like more proactive government investigations into companies that have long-lasting dominant market power.
And, Wu would like to see the jettisoning of government prosecutor’s reliance on the “consumer welfare” standard for antitrust enforcement and its preoccupation with avoiding high consumer prices. Instead, he believes prosecutors and courts should focus on finding antitrust violations based on whether the targeted conduct is that which “promotes competition or whether it is such as may suppress or even destroy competition”—the standard prescribed by Justice Brandeis in his Chicago Board of Trade opinion of 1918.
Wu explains that a Brandeisian “protection of competition” test has the advantage of being focused on conduct and a process, as opposed to an abstract value such as maximization of consumer welfare. He argues that a protection of competition test will be practical and predictable, contrary to the complaints of critics. His analysis of recent big monopolization cases supports his argument. In those cases defendants like Microsoft beat down rivals in products like the web browser by pressing coercive arrangements on the industry. Deciding that such arrangements are anti-competitive need not turn on whether the prosecutor can prove what the price of browsers would be in a but-for world where browser rivals are not forced out of business.
I admire Wu’s ability to explain his points about reforming antitrust enforcement in a way that is understandable for a non-technical audience. But I think it is fair to say that Wu oversimplifies a bit for his non-technical book audience.
Some of the complexity of discussion about antitrust enforcement standards was on display at a recent FTC panel discussion on the consumer welfare standard, in which Wu participated. The session can be seen at https://www.ftc.gov/news-events/audio-video/video/ftc-hearing-5-nov-1-alternatives-consumer-welfare-standard-consumer
Some FTC panelists argued that the consumer welfare standard can be used in a flexible way, as it was in the Microsoft litigation. There the main focus was on anti-competitive behavior by Microsoft executives, not on consumer prices in a but-for world. Part of Tim Wu’s response to the argument that the consumer welfare standard can be used flexibly is his observation that frequently courts are using the consumer welfare standard in a narrow and inflexible way. That has led to many unfortunate case decisions that permit anti-competitive outcomes.
Some panelists at the FTC discussion raised questions about the relationship between Tim Wu’s reform proposals and political activism. One panelist referred to Tim Wu’s views as “left-wing.” I don’t think that suggestion is fair, at least in relation to the Gilded Age book, for reasons Wu explained at a recent book-store talk (at the Politics & Prose shop in D.C.). He explained that his core goal is to reinvigorate antitrust enforcement and broaden the goal of prosecutions so that they encompass traditional antitrust goals of protecting competition. The book does not address broader political reform proposals.
The discussion in Tim Wu’s Gilded Age book of the political corruption caused by large companies is so compelling that the reader is left hoping that there are political reform solutions bigger and broader than fixing the standards for antitrust investigations and prosecutions. A critical comment is possible about the limited scope of Wu’s suggestions for reform of a sort that Wu refers to in another context as “external.” It is like criticizing the Star Wars movie because it fails to explain the science of intergalactic travel. Similarly, it is true that Wu’s Gilded Age book does not suggest a broad political program for curing the political corruption caused by large and powerful companies, but that is not what the book is about.
This review is by Don Allen Resnikoff, who takes full responsibility for its content
The Curse of Bigness: Antitrust in the New Gilded Age
by Tim Wu, Columbia Global Reports, RRP, 170 pages.
Tim Wu’s short new book argues for a return to a more aggressive style of antitrust law enforcement in the U.S.
Wu makes his argument in a way that is accessible to a broad array of people, not just antitrust litigators and scholars. His book has drawn a lot of attention in popular media.
What has gone wrong with antitrust law? Wu explains in his introductory chapter that the law is suffering from the ideas of Robert Bork and the Chicago School of thinking: “Bork contended, implausibly, that the Congress of 1890 exclusively intended the antitrust law to deal with one very narrow type of harm: higher prices to consumers. That theory, the ‘consumer welfare’ approach, has enfeebled the law.”
An example of enfeeblement is abandonment by the government of big monopolization cases like those pursued in the past. In the distant past the Teddy Roosevelt, William Howard Taft, and Woodrow Wilson Administrations pressed monopolization cases against Standard Oil, Morgan banking interests, and others. More recently, federal and state governments have pressed monopolization cases against IBM, AT&T, and Microsoft.
The IBM, AT&T, and Microsoft cases focused on exclusionary and other anti-competitive conduct, and Wu praises them as doing some good in promoting competition. The prosecution of each case was disabled to some extent by wavering support from government. The Reagan Administration dismissed the U.S. v. IBM prosecution as “without merit.” The Bush Administration agreed to a consent decree for the U.S. Microsoft case that many found to be too mild. The Microsoft decree did have some important provisions that aided competition, such as requiring Microsoft to share information that permits competitor’s products to successfully interface with Microsoft products. The AT&T decree was strong in breaking up AT&T when it was entered in 1982, but the government has since permitted mergers which have in effect largely put the AT&T Humpty-Dumpty back together again.
Despite the disabilities of the recent monopolization cases, Wu describes what followed in recent years as much worse. Some examples: The government permission for reassembly of the AT&T monopoly; merger of airlines to just a few players; consolidation of the cable and pharmaceutical industries, and an array of permitted mergers in beer, seed and pesticides (Monsanto/Bayer), and other industries.
Perhaps most concerning to Wu is the emergence of dominant tech firms like Google, Ebay, Facebook, and Amazon. These companies, once disruptive upstarts, have become defensive behemoths that discourage new disruptive upstart companies, often by simply merging with them. Government enforcers have done little to discourage the mergers.
Wu has suggestions for reform of antitrust enforcement. He would like to see more vigorous merger enforcement. He would also like to see a return to government prosecution of big monopoly cases in the style of the cases against IBM, AT&T, and Microsoft, but with strong remedies like the break-up remedy initially used for AT&T. He would like more proactive government investigations into companies that have long-lasting dominant market power.
And, Wu would like to see the jettisoning of government prosecutor’s reliance on the “consumer welfare” standard for antitrust enforcement and its preoccupation with avoiding high consumer prices. Instead, he believes prosecutors and courts should focus on finding antitrust violations based on whether the targeted conduct is that which “promotes competition or whether it is such as may suppress or even destroy competition”—the standard prescribed by Justice Brandeis in his Chicago Board of Trade opinion of 1918.
Wu explains that a Brandeisian “protection of competition” test has the advantage of being focused on conduct and a process, as opposed to an abstract value such as maximization of consumer welfare. He argues that a protection of competition test will be practical and predictable, contrary to the complaints of critics. His analysis of recent big monopolization cases supports his argument. In those cases defendants like Microsoft beat down rivals in products like the web browser by pressing coercive arrangements on the industry. Deciding that such arrangements are anti-competitive need not turn on whether the prosecutor can prove what the price of browsers would be in a but-for world where browser rivals are not forced out of business.
I admire Wu’s ability to explain his points about reforming antitrust enforcement in a way that is understandable for a non-technical audience. But I think it is fair to say that Wu oversimplifies a bit for his non-technical book audience.
Some of the complexity of discussion about antitrust enforcement standards was on display at a recent FTC panel discussion on the consumer welfare standard, in which Wu participated. The session can be seen at https://www.ftc.gov/news-events/audio-video/video/ftc-hearing-5-nov-1-alternatives-consumer-welfare-standard-consumer
Some FTC panelists argued that the consumer welfare standard can be used in a flexible way, as it was in the Microsoft litigation. There the main focus was on anti-competitive behavior by Microsoft executives, not on consumer prices in a but-for world. Part of Tim Wu’s response to the argument that the consumer welfare standard can be used flexibly is his observation that frequently courts are using the consumer welfare standard in a narrow and inflexible way. That has led to many unfortunate case decisions that permit anti-competitive outcomes.
Some panelists at the FTC discussion raised questions about the relationship between Tim Wu’s reform proposals and political activism. One panelist referred to Tim Wu’s views as “left-wing.” I don’t think that suggestion is fair, at least in relation to the Gilded Age book, for reasons Wu explained at a recent book-store talk (at the Politics & Prose shop in D.C.). He explained that his core goal is to reinvigorate antitrust enforcement and broaden the goal of prosecutions so that they encompass traditional antitrust goals of protecting competition. The book does not address broader political reform proposals.
The discussion in Tim Wu’s Gilded Age book of the political corruption caused by large companies is so compelling that the reader is left hoping that there are political reform solutions bigger and broader than fixing the standards for antitrust investigations and prosecutions. A critical comment is possible about the limited scope of Wu’s suggestions for reform of a sort that Wu refers to in another context as “external.” It is like criticizing the Star Wars movie because it fails to explain the science of intergalactic travel. Similarly, it is true that Wu’s Gilded Age book does not suggest a broad political program for curing the political corruption caused by large and powerful companies, but that is not what the book is about.
This review is by Don Allen Resnikoff, who takes full responsibility for its content
Bloomberg reports:
A federal judge in Washington warned CVS Health Corp. and Aetna Inc. not to integrate operations after learning CVS closed its acquisition of the health insurer before obtaining court approval of an antitrust settlement the companies reached with the government.
U.S. District Judge Richard Leon blasted the companies and the Justice Department at a court hearing Thursday for treating him like a “rubber stamp.” He complained he was “being kept in the dark, kind of like a mushroom.”
“You need to slow this down,” Leon told Justice Department lawyer Jay Owen. “You’re like a freight train out of control. And you’re operating as if this is just some rubber-stamp operation. It is not, and it will not be.”
(Related: CVS Health Now Owns Aetna -- https://www.thinkadvisor.com/2018/11/28/cvs-health-now-owns-aetna/?slreturn=20181101133907)
CVS closed the $68 billion Aetna acquisition on Wednesday after receiving final regulatory approvals. The combination will create a health care giant with a hand in insurance, prescription-drug benefits and drugstores across the U.S.
The Justice Department cleared the deal in October after requiring the sale of Aetna’s Medicare prescription-drug plans to WellCare Health Plans Inc. The sale is intended to address the government’s concerns that the merger would otherwise harm competition between CVS and Aetna.
DOJ Consent
CVS, based in Woonsocket, Rhode Island, said in a statement the closing of the deal was done with the “full knowledge and consent” of the Justice Department and was in compliance with the federal law governing court approvals of merger settlements, known as the Tunney Act.
Merger settlements negotiated between the Justice Department and companies require court approval. The process can take months, and it’s routine for merging companies to close their deals before a judge signs off.
Nonetheless, the move irked Leon, who has previously taken issue with companies that treat their merger as a fait accompli. He said he probably won’t consider final approval to the settlement until the summer, at which point the companies will be far along in their integration. That will make it difficult to unwind the merger if he doesn’t approve the settlement, he said.
“The risk is on the public that I can unwind it and that we can recoup whatever negative consequences there were on the public in that interim seven months, and that’s going to be a big problem for me, if it should come out that way,” he said.
It’s not the first time the Justice Department’s antitrust division has faced Leon’s wrath. Leon oversaw the division’s unsuccessful challenge to AT&T Inc.’s takeover of Time Warner. During the trial, he criticized the government’s lawyers for their handling of the case.
From: https://www.thinkadvisor.com/2018/11/30/cvs-aetna-closed-their-deal-a-judge-is-not-happy/
A federal judge in Washington warned CVS Health Corp. and Aetna Inc. not to integrate operations after learning CVS closed its acquisition of the health insurer before obtaining court approval of an antitrust settlement the companies reached with the government.
U.S. District Judge Richard Leon blasted the companies and the Justice Department at a court hearing Thursday for treating him like a “rubber stamp.” He complained he was “being kept in the dark, kind of like a mushroom.”
“You need to slow this down,” Leon told Justice Department lawyer Jay Owen. “You’re like a freight train out of control. And you’re operating as if this is just some rubber-stamp operation. It is not, and it will not be.”
(Related: CVS Health Now Owns Aetna -- https://www.thinkadvisor.com/2018/11/28/cvs-health-now-owns-aetna/?slreturn=20181101133907)
CVS closed the $68 billion Aetna acquisition on Wednesday after receiving final regulatory approvals. The combination will create a health care giant with a hand in insurance, prescription-drug benefits and drugstores across the U.S.
The Justice Department cleared the deal in October after requiring the sale of Aetna’s Medicare prescription-drug plans to WellCare Health Plans Inc. The sale is intended to address the government’s concerns that the merger would otherwise harm competition between CVS and Aetna.
DOJ Consent
CVS, based in Woonsocket, Rhode Island, said in a statement the closing of the deal was done with the “full knowledge and consent” of the Justice Department and was in compliance with the federal law governing court approvals of merger settlements, known as the Tunney Act.
Merger settlements negotiated between the Justice Department and companies require court approval. The process can take months, and it’s routine for merging companies to close their deals before a judge signs off.
Nonetheless, the move irked Leon, who has previously taken issue with companies that treat their merger as a fait accompli. He said he probably won’t consider final approval to the settlement until the summer, at which point the companies will be far along in their integration. That will make it difficult to unwind the merger if he doesn’t approve the settlement, he said.
“The risk is on the public that I can unwind it and that we can recoup whatever negative consequences there were on the public in that interim seven months, and that’s going to be a big problem for me, if it should come out that way,” he said.
It’s not the first time the Justice Department’s antitrust division has faced Leon’s wrath. Leon oversaw the division’s unsuccessful challenge to AT&T Inc.’s takeover of Time Warner. During the trial, he criticized the government’s lawyers for their handling of the case.
From: https://www.thinkadvisor.com/2018/11/30/cvs-aetna-closed-their-deal-a-judge-is-not-happy/
From DigitalMusicNews 11/20/18
Multiple AMLC Board Members Quit as a Post-MMA Turf War Breaks Out
Donald Trump signed the Music Modernization Act at on October 11th.
Last week, DMN first reported on the formation of the American Music Licensing Collective, or AMLC, which is focused on fulfilling the duties the the MMA’s Mechanical Licensing Collective (MLC).
Now, that group has quickly lost a pair of board members, for reasons that remain suspicious. Others are also rumored to be departing.
The AMLC was the first to declare its intentions of handling the responsibilities of the Mechanical Licensing Collective, or MLC, which is a collective mandated by the now-passed Music Modernization Act (MMA). Interestingly, the AMLC beat a consortium of major publishers to the punch, a group that was largely expected to assume the MLC’s responsibilities with no competition.
But at least two AMLC heavy-hitters have contracted a quick case of cold feet, according to details confirmed by Digital Music News.Among the quickly-departed are George Howard and Larry Mestel, with neither offering a reason for their exits.
Both are extremely qualified to help manage the MLC’s charter of administering digital mechanical licenses. George Howard is the cofounder of both Music Audience Exchange and TuneCore, and CIO of Riptide Publishing. Mestel is the founder of independent publishing and entertainment company Primary Wave.
But earlier this week, the profiles of both Howard and Mestel were removed from the AMLC site with no explanation. Howard didn’t respond to an email sent on Monday, and the AMLC did not offer a reason for the departures.
Other names were also floated as either exiting or opting not to sign onto the AMLC at the last minute. We’ll report more departures as we confirm them.
Separately, a source close to the AMLC claimed that the departures were directly tied to threats by major publishers, with the National Music Publishers’ Association (NMPA) and at least one highly-influential publishing executive cited.
That group may be unhappy to be battling an MLC contender, though government-created agencies and contracts typically involve bidding processes. In fact, ‘no bid contracts’ are often regarded as an unfair, and a sign of corruption.
We reached out to NMPA president David Israelite on Monday morning to discuss the allegations, but have yet to receive a response.
Separately, AMLC cofounder Jeff Price confirmed to DMN that threats had been issued, but declined to name names. Price, who cofounded TuneCore and more recently founded Audiam, remains a board member of the AMLC but noted that he has “received threats that I recuse myself from the board or suffer repercussions to my career.”
Beyond that, Price was uncertain if other board members had received similar threats, but strongly suggested the possibility. “If there is a coordinated effort, and a colluded or orchestrated effort occurring to remove people from the AMLC, the question is why?”
“Is there something with the core mission statement they want to change? Otherwise what could it possibly be?”
That ‘core mission’ is likely a contentious one to the NMPA, which has been accused — by Price and others — of creating an MLC structure that unfairly enriches major publishers at the expense of independent songwriters.
Indeed, the formation of the AMLC appears to be motivated by issues related to MLC conflicts of interest, specifically those tied to the treatment of ‘unallocated funds’.
According to the MMA’s language, mechanical licenses that remain unclaimed after just one year will be largely mopped up by major publishers according to marketshare, an arrangement that has drawn protest. The value of the initial unclaimed tranche of funds has been estimated to be as high as $1.5 billion, at least according to a report by Variety.
But at least one other AMLC member says that there haven’t been threats — and the rest are remaining with the organization.
That includes AMLC board member Benji Rogers, who says he’s received largely positive feedback. “I intend to stay and have had no pressure to leave,” Rogers emailed DMN.
“Actually the opposite. People seem to be excited about it.”
Ricardo Ordoñez, who aims to rectify longstanding problems with international mechanical licensing payment flows via the AMLC, also said he’s staying put. “I am still on the board and not planning to leave,” Ordoñez told us on Monday.
Prodigious multi-platinum songwriter Rick Carnes is also remaining on the board: “Yes I will be remaining on the AMLC board….” Carnes emailed. “It is important that ALL of the potential MLC boards have qualified and dedicated Songwriter board members. It is in that interest that I agreed to serve on the AMLC.”
Also staying put is Stewart Copeland, former drummer of The Police and the highest-profile AMLC member.
Separately, there’s been no MLC-related announcement from the NMPA or its members.
That group, which helped to mastermind the passage of the Music Modernization Act through Congress, has been rumored to have pre-selected SoundExchange to oversee MLC mechanical administration. Prominent members of that group are expected to include Sony/ATV, Warner/Chappell, and Universal Music Publishing Group (UMPG), among others.
Multiple AMLC Board Members Quit as a Post-MMA Turf War Breaks Out
Donald Trump signed the Music Modernization Act at on October 11th.
Last week, DMN first reported on the formation of the American Music Licensing Collective, or AMLC, which is focused on fulfilling the duties the the MMA’s Mechanical Licensing Collective (MLC).
Now, that group has quickly lost a pair of board members, for reasons that remain suspicious. Others are also rumored to be departing.
The AMLC was the first to declare its intentions of handling the responsibilities of the Mechanical Licensing Collective, or MLC, which is a collective mandated by the now-passed Music Modernization Act (MMA). Interestingly, the AMLC beat a consortium of major publishers to the punch, a group that was largely expected to assume the MLC’s responsibilities with no competition.
But at least two AMLC heavy-hitters have contracted a quick case of cold feet, according to details confirmed by Digital Music News.Among the quickly-departed are George Howard and Larry Mestel, with neither offering a reason for their exits.
Both are extremely qualified to help manage the MLC’s charter of administering digital mechanical licenses. George Howard is the cofounder of both Music Audience Exchange and TuneCore, and CIO of Riptide Publishing. Mestel is the founder of independent publishing and entertainment company Primary Wave.
But earlier this week, the profiles of both Howard and Mestel were removed from the AMLC site with no explanation. Howard didn’t respond to an email sent on Monday, and the AMLC did not offer a reason for the departures.
Other names were also floated as either exiting or opting not to sign onto the AMLC at the last minute. We’ll report more departures as we confirm them.
Separately, a source close to the AMLC claimed that the departures were directly tied to threats by major publishers, with the National Music Publishers’ Association (NMPA) and at least one highly-influential publishing executive cited.
That group may be unhappy to be battling an MLC contender, though government-created agencies and contracts typically involve bidding processes. In fact, ‘no bid contracts’ are often regarded as an unfair, and a sign of corruption.
We reached out to NMPA president David Israelite on Monday morning to discuss the allegations, but have yet to receive a response.
Separately, AMLC cofounder Jeff Price confirmed to DMN that threats had been issued, but declined to name names. Price, who cofounded TuneCore and more recently founded Audiam, remains a board member of the AMLC but noted that he has “received threats that I recuse myself from the board or suffer repercussions to my career.”
Beyond that, Price was uncertain if other board members had received similar threats, but strongly suggested the possibility. “If there is a coordinated effort, and a colluded or orchestrated effort occurring to remove people from the AMLC, the question is why?”
“Is there something with the core mission statement they want to change? Otherwise what could it possibly be?”
That ‘core mission’ is likely a contentious one to the NMPA, which has been accused — by Price and others — of creating an MLC structure that unfairly enriches major publishers at the expense of independent songwriters.
Indeed, the formation of the AMLC appears to be motivated by issues related to MLC conflicts of interest, specifically those tied to the treatment of ‘unallocated funds’.
According to the MMA’s language, mechanical licenses that remain unclaimed after just one year will be largely mopped up by major publishers according to marketshare, an arrangement that has drawn protest. The value of the initial unclaimed tranche of funds has been estimated to be as high as $1.5 billion, at least according to a report by Variety.
But at least one other AMLC member says that there haven’t been threats — and the rest are remaining with the organization.
That includes AMLC board member Benji Rogers, who says he’s received largely positive feedback. “I intend to stay and have had no pressure to leave,” Rogers emailed DMN.
“Actually the opposite. People seem to be excited about it.”
Ricardo Ordoñez, who aims to rectify longstanding problems with international mechanical licensing payment flows via the AMLC, also said he’s staying put. “I am still on the board and not planning to leave,” Ordoñez told us on Monday.
Prodigious multi-platinum songwriter Rick Carnes is also remaining on the board: “Yes I will be remaining on the AMLC board….” Carnes emailed. “It is important that ALL of the potential MLC boards have qualified and dedicated Songwriter board members. It is in that interest that I agreed to serve on the AMLC.”
Also staying put is Stewart Copeland, former drummer of The Police and the highest-profile AMLC member.
Separately, there’s been no MLC-related announcement from the NMPA or its members.
That group, which helped to mastermind the passage of the Music Modernization Act through Congress, has been rumored to have pre-selected SoundExchange to oversee MLC mechanical administration. Prominent members of that group are expected to include Sony/ATV, Warner/Chappell, and Universal Music Publishing Group (UMPG), among others.
Rapper/business mogul Jay-Z (Shawn Carter) asks NY Court to block arbitration because of lack of arbitrator panel racial diversity
Excerpts from the filed Complaint:
he AAA’s lack of African-American arbitrators came as a surprise to Petitioners,
in part because of the AAA’s advertising touting its diversity. This blatant failure of the AAA to
ensure a diverse slate of arbitrators is particularly shocking given the prevalence of mandatory
arbitration provisions in commercial contracts across nearly all industries. It would stand to
reason that prospective litigants—which undoubtedly include minority owned and operated
businesses—expect there to be the possibility that the person who stands in the shoes of both
judge and jury reflects the diverse population.
By virtue of the increasing prevalence of arbitrations in commercial contracts,
arbitrators have gained unprecedented power to oversee and make decisions regarding significant
business disputes. The AAA’s arbitration procedures, and specifically its roster of neutrals for
large and complex cases in New York, deprive Mr. Carter and his companies of the equal
protection of the laws, equal access to public accommodations, and mislead consumers into
believing that they will receive a fair and impartial adjudication.
When a contract violates New York law, New York courts do not hesitate to
invalidate that contract provision as void as against public policy, notwithstanding the fact that
the parties willingly agreed to the provision. The AAA’s failure to provide a venire of arbitrators
that includes more than a token number of African-Americans renders the arbitration provision
in the contract void as against public policy. Accordingly, Petitioners seek a preliminary
injunction staying the pending arbitration under CPLR 7503(b) for a minimum of ninety days, so
that Petitioners may work with AAA to include sufficient African-American arbitrators from
which the parties may choose.
FILED: NEW YORK COUNTY CLERK 11/28/2018 10:32 AM
INDEX NO. 655894/2018
NYSCEF DOC. NO. 1
URL: https://dlbjbjzgnk95t.cloudfront.net/1105000/1105807/655894_2018_shawn_c_carter_et_al_v_shawn_c_carter_et_al_petition_1.pdf
Excerpts from the filed Complaint:
he AAA’s lack of African-American arbitrators came as a surprise to Petitioners,
in part because of the AAA’s advertising touting its diversity. This blatant failure of the AAA to
ensure a diverse slate of arbitrators is particularly shocking given the prevalence of mandatory
arbitration provisions in commercial contracts across nearly all industries. It would stand to
reason that prospective litigants—which undoubtedly include minority owned and operated
businesses—expect there to be the possibility that the person who stands in the shoes of both
judge and jury reflects the diverse population.
By virtue of the increasing prevalence of arbitrations in commercial contracts,
arbitrators have gained unprecedented power to oversee and make decisions regarding significant
business disputes. The AAA’s arbitration procedures, and specifically its roster of neutrals for
large and complex cases in New York, deprive Mr. Carter and his companies of the equal
protection of the laws, equal access to public accommodations, and mislead consumers into
believing that they will receive a fair and impartial adjudication.
When a contract violates New York law, New York courts do not hesitate to
invalidate that contract provision as void as against public policy, notwithstanding the fact that
the parties willingly agreed to the provision. The AAA’s failure to provide a venire of arbitrators
that includes more than a token number of African-Americans renders the arbitration provision
in the contract void as against public policy. Accordingly, Petitioners seek a preliminary
injunction staying the pending arbitration under CPLR 7503(b) for a minimum of ninety days, so
that Petitioners may work with AAA to include sufficient African-American arbitrators from
which the parties may choose.
FILED: NEW YORK COUNTY CLERK 11/28/2018 10:32 AM
INDEX NO. 655894/2018
NYSCEF DOC. NO. 1
URL: https://dlbjbjzgnk95t.cloudfront.net/1105000/1105807/655894_2018_shawn_c_carter_et_al_v_shawn_c_carter_et_al_petition_1.pdf
Part of GM's recent product announcement suggests that the electric hybrid car may be on its way out, to be replaced by the electric-only car
In GM’s recent announcement “unallocating” a number of GM car plants, this sentence appears: ” GM now intends to prioritize future vehicle investments in its next-generation battery-electric architectures.”
Industry analysts suggest that the day of the hybrid electric car is over, and the future belongs to all-electric cars. Following is an excerpt from an article in Quartz: https://qz.com/1474677/gm-kills-the-chevrolet-volt-as-plug-in-hybrids-lose-market-share/
Plug-in hybrid cars, originally designed to be the transition between conventional cars and their electric successors, are looking more like a dead-end in automotive evolution. Likely, they won’t be missed.
The latest line in their epitaph was written by General Motors today (Nov. 26) when the automaker announced it was killing off its Chevrolet Volt, which arrived in 2011, along with five other models. The company is shuttering seven factories worldwide and shedding more than 14,000 salaried staff and factory jobs by the end of 2019 as the company retools for the future. “GM now intends to prioritize future vehicle investments in its next-generation battery-electric architectures,” GM Chairman and CEO Mary Barra said in a statement. The company will still build its popular all-electric Bolt sedan.
GM’s decision marks the latest transition in automobiles from combustion engines to electric. This quarter the sales of battery electric (BEV) and plug-in hybrid vehicles, which have tracked each other closely since 2014, finally diverged. The sales of battery electric cars soared 120%, outselling plug-in hybrids 3-to-1 in the third quarter, reports (paywall) Bloomberg New Energy Finance. BEV sales hit more than 77,000, thanks to Tesla’s red-hot Model 3, compared 29,000 plug-in hybrids, a 6% decline from a year earlier.
What happened? Plug-in hybrids tried to be everything to everyone. Electric drive and gasoline range? Check. Recharge at home, work or while driving? Covered. But they were always a compromise because they’re dragging around two drivetrains, rather than optimizing for one. As a result, they tended to have slightly higher prices (the Volt is $5,000 more than the all-electric Nissan Leaf) without the full high-octane performance or cachet of their all-electric cousins. While buyers claimed they want a hybrid option, just as they might pick a car with a sunroof, it seems many would rather plug-in, or fill up, but not both.
Before car companies committed to electric vehicles, almost all were waiting until batteries had improved, and buyers demanded electric vehicles (only 1.2% of US car sales were EVs last year). Well, batteries have improved and Tesla has proved you can make one of the most popular cars on the market powered only on batteries.
Since 2014, lithium-ion battery prices have fallen more than 50% while the median EV range now exceeds 100 miles, enough to cover the vast majority of drivers’ needs. After accounting for the reduced cost in fuel and maintenance, BEVs are winning over those who might have once favored the plug-in hybrid middle-ground.
In GM’s recent announcement “unallocating” a number of GM car plants, this sentence appears: ” GM now intends to prioritize future vehicle investments in its next-generation battery-electric architectures.”
Industry analysts suggest that the day of the hybrid electric car is over, and the future belongs to all-electric cars. Following is an excerpt from an article in Quartz: https://qz.com/1474677/gm-kills-the-chevrolet-volt-as-plug-in-hybrids-lose-market-share/
Plug-in hybrid cars, originally designed to be the transition between conventional cars and their electric successors, are looking more like a dead-end in automotive evolution. Likely, they won’t be missed.
The latest line in their epitaph was written by General Motors today (Nov. 26) when the automaker announced it was killing off its Chevrolet Volt, which arrived in 2011, along with five other models. The company is shuttering seven factories worldwide and shedding more than 14,000 salaried staff and factory jobs by the end of 2019 as the company retools for the future. “GM now intends to prioritize future vehicle investments in its next-generation battery-electric architectures,” GM Chairman and CEO Mary Barra said in a statement. The company will still build its popular all-electric Bolt sedan.
GM’s decision marks the latest transition in automobiles from combustion engines to electric. This quarter the sales of battery electric (BEV) and plug-in hybrid vehicles, which have tracked each other closely since 2014, finally diverged. The sales of battery electric cars soared 120%, outselling plug-in hybrids 3-to-1 in the third quarter, reports (paywall) Bloomberg New Energy Finance. BEV sales hit more than 77,000, thanks to Tesla’s red-hot Model 3, compared 29,000 plug-in hybrids, a 6% decline from a year earlier.
What happened? Plug-in hybrids tried to be everything to everyone. Electric drive and gasoline range? Check. Recharge at home, work or while driving? Covered. But they were always a compromise because they’re dragging around two drivetrains, rather than optimizing for one. As a result, they tended to have slightly higher prices (the Volt is $5,000 more than the all-electric Nissan Leaf) without the full high-octane performance or cachet of their all-electric cousins. While buyers claimed they want a hybrid option, just as they might pick a car with a sunroof, it seems many would rather plug-in, or fill up, but not both.
Before car companies committed to electric vehicles, almost all were waiting until batteries had improved, and buyers demanded electric vehicles (only 1.2% of US car sales were EVs last year). Well, batteries have improved and Tesla has proved you can make one of the most popular cars on the market powered only on batteries.
Since 2014, lithium-ion battery prices have fallen more than 50% while the median EV range now exceeds 100 miles, enough to cover the vast majority of drivers’ needs. After accounting for the reduced cost in fuel and maintenance, BEVs are winning over those who might have once favored the plug-in hybrid middle-ground.
In first for the organization Housing Rights Initiative, two NYC landlord lawsuits achieve class certification
The Upper Manhattan and Bronx J-51 cases are the group's first to reach the milestone
From: https://therealdeal.com/2018/10/08/in-first-for-housing-rights-initiative-two-landlord-lawsuits-achieve-class-certification/
By Will Parker | October 08, 2018 12:31PM
It’s been a slow march in the state courts, but as of last week, two class action lawsuits generated by the Housing Rights Initiative achieved class certification — the first of the group’s cases to reach this milestone.
Over the last two years HRI has organized more than 40 lawsuits against landlords, most alleging “schemes” to up rents more than prevailing laws allow.
The first of the two landlords in the class actions, Scharfman Organization, is alleged to have defrauded tenants of 260 Convent Avenue in Hamilton Heights. In the second, Richard Albert is similarly accused by his tenants at 3045 Godwin Terrace in the Bronx.
Both lawsuits allege the landlords’ companies broke the law by accepting the J-51 property tax benefit while deregulating rent-stabilized apartments. Keeping apartments rent-stabilized is a required condition of tax program, according to state law.
Should they win their cases, the more than 100 current and former tenants of both buildings could receive rent overcharge refunds and damages.
“My constituents living at 3045 Godwin Terrace deserve better!” Bronx City Council member Andrew Cohen said in a statement. “They deserve to have their rent-stabilized leases rightfully restored to their apartments.”
Albert was not reachable by phone and Mark Scharfman declined to comment. This is the ninth complaint HRI has helped put together against Scharfman’s companies.
Apart from J-51 cases, HRI has ventured into less tested waters by filing class actions against landlords alleged to have overcharged on rent by exaggerating the cost of apartment renovations, or “Individual Apartment Improvements.” A couple of these cases were dismissed by lower courts and then refiled. One, against Harlem property owner Big City Realty, faced an appeals court panel in July. The majority of the panel decided the complaint should have survived a motion to dismiss so that discovery could first be granted to the tenant plaintiffs to help prove their claims.
The Upper Manhattan and Bronx J-51 cases are the group's first to reach the milestone
From: https://therealdeal.com/2018/10/08/in-first-for-housing-rights-initiative-two-landlord-lawsuits-achieve-class-certification/
By Will Parker | October 08, 2018 12:31PM
It’s been a slow march in the state courts, but as of last week, two class action lawsuits generated by the Housing Rights Initiative achieved class certification — the first of the group’s cases to reach this milestone.
Over the last two years HRI has organized more than 40 lawsuits against landlords, most alleging “schemes” to up rents more than prevailing laws allow.
The first of the two landlords in the class actions, Scharfman Organization, is alleged to have defrauded tenants of 260 Convent Avenue in Hamilton Heights. In the second, Richard Albert is similarly accused by his tenants at 3045 Godwin Terrace in the Bronx.
Both lawsuits allege the landlords’ companies broke the law by accepting the J-51 property tax benefit while deregulating rent-stabilized apartments. Keeping apartments rent-stabilized is a required condition of tax program, according to state law.
Should they win their cases, the more than 100 current and former tenants of both buildings could receive rent overcharge refunds and damages.
“My constituents living at 3045 Godwin Terrace deserve better!” Bronx City Council member Andrew Cohen said in a statement. “They deserve to have their rent-stabilized leases rightfully restored to their apartments.”
Albert was not reachable by phone and Mark Scharfman declined to comment. This is the ninth complaint HRI has helped put together against Scharfman’s companies.
Apart from J-51 cases, HRI has ventured into less tested waters by filing class actions against landlords alleged to have overcharged on rent by exaggerating the cost of apartment renovations, or “Individual Apartment Improvements.” A couple of these cases were dismissed by lower courts and then refiled. One, against Harlem property owner Big City Realty, faced an appeals court panel in July. The majority of the panel decided the complaint should have survived a motion to dismiss so that discovery could first be granted to the tenant plaintiffs to help prove their claims.
What is the law on genetic modifications of babies?
None in China, where media reports a recent unprecedented use of gene modification technology on human babies.
In the US, two crucial sentences inside a federal spending bill in 2015 (https://www.congress.gov/bill/114th-congress/house-bill/2029/text), the U.S. Congress effectively banned the human testing of gene-editing techniques that could produce genetically modified babies.
The language in the bill is a clear reference to the use of techniques like CRISPR to modify the human germline (see “Engineering the Perfect Baby”). Most scientists agree that testing germline editing in humans is irresponsible at this point. But regulators have decided that the description also fits mitochondrial replacement therapy, which entails removing the nucleus from a human egg and transplanting it into one from a different person to prevent the transmission of debilitating or even deadly mitochondrial disorders to children.
See https://www.technologyreview.com/s/602219/the-unintended-consequence-of-congresss-ban-on-designer-babies/ for more detail, and for the argument that the U.S. ban is too broad.
None in China, where media reports a recent unprecedented use of gene modification technology on human babies.
In the US, two crucial sentences inside a federal spending bill in 2015 (https://www.congress.gov/bill/114th-congress/house-bill/2029/text), the U.S. Congress effectively banned the human testing of gene-editing techniques that could produce genetically modified babies.
The language in the bill is a clear reference to the use of techniques like CRISPR to modify the human germline (see “Engineering the Perfect Baby”). Most scientists agree that testing germline editing in humans is irresponsible at this point. But regulators have decided that the description also fits mitochondrial replacement therapy, which entails removing the nucleus from a human egg and transplanting it into one from a different person to prevent the transmission of debilitating or even deadly mitochondrial disorders to children.
See https://www.technologyreview.com/s/602219/the-unintended-consequence-of-congresss-ban-on-designer-babies/ for more detail, and for the argument that the U.S. ban is too broad.
Gas Stations Shouldn't Delay Card Swipe Fee Deal, Court Told
By Christopher Cole
Excerpt from Law360 (paywall) https://www.law360.com/articles/1104678?ta_id=758500&utm_source=targeted-alerts&utm_medium=email&utm_campaign=case-article-alert
-- A tentative deal to end a class action over credit card swipe fees shouldn’t get delayed because brand gasoline retailers are locked in disputes with the oil companies whose fuel they sell, class lawyers have told a New York federal judge.
Merchants that are suing banks and major credit card issuers including Visa and Mastercard are trying to gain court approval to seal a $900 million addition to roughly $5.3 billion already set aside to pay out claims that the retailers were overcharged fees that they pay when they run credit cards. The class action claims the card issuers set up network rules that led to higher fees than merchants would pay in a competitive market.
But so-called “branded operators” — primarily gas stations and convenience stores that sell fuel from oil companies like Shell — are objecting to the settlement (https://www.law360.com/articles/1104187) , saying they are concerned that retailers will be counted as class members in name only and get left out of any financial claims. The class attorneys said those disputes are with the oil companies and the settlement should be approved before the disputes are resolved.
The Robins, Kaplan letter defending the settlement is here: https://dlbjbjzgnk95t.cloudfront.net/1104000/1104678/https-ecf-nyed-uscourts-gov-doc1-123114910718.pdf
By Christopher Cole
Excerpt from Law360 (paywall) https://www.law360.com/articles/1104678?ta_id=758500&utm_source=targeted-alerts&utm_medium=email&utm_campaign=case-article-alert
-- A tentative deal to end a class action over credit card swipe fees shouldn’t get delayed because brand gasoline retailers are locked in disputes with the oil companies whose fuel they sell, class lawyers have told a New York federal judge.
Merchants that are suing banks and major credit card issuers including Visa and Mastercard are trying to gain court approval to seal a $900 million addition to roughly $5.3 billion already set aside to pay out claims that the retailers were overcharged fees that they pay when they run credit cards. The class action claims the card issuers set up network rules that led to higher fees than merchants would pay in a competitive market.
But so-called “branded operators” — primarily gas stations and convenience stores that sell fuel from oil companies like Shell — are objecting to the settlement (https://www.law360.com/articles/1104187) , saying they are concerned that retailers will be counted as class members in name only and get left out of any financial claims. The class attorneys said those disputes are with the oil companies and the settlement should be approved before the disputes are resolved.
The Robins, Kaplan letter defending the settlement is here: https://dlbjbjzgnk95t.cloudfront.net/1104000/1104678/https-ecf-nyed-uscourts-gov-doc1-123114910718.pdf
How to use IRS data to evaluate charities
There are many excellent tools and organizations to help you determine which organizations might be putting your money to good uses vs. spending your money on administrative overhead. One organization that can help you is CharityWatch (https://www.charitywatch.org/home) a nonprofit charity watchdog and information service. In rating charities they try and help you maximize the effectiveness of every dollar you contribute to a charity by providing donors with the information they need to make more informed giving decisions.
If you want to do some investigating on your own, most charities must file a 990 tax return with the IRS. These forms contain a wealth of information about charities, but like most tax forms, they can be difficult to digest. But you only need to focus on a few pages. The first page will give you a summary of the organization’s revenue and expenses during the most recent two years. Charities are required to make their 990 forms available through their websites or by calling.
Page 7 gives you a list of the organization’s officers, directors, key employees, highest compensated employees and independent contractors (though only those receiving more than $100,000 from the organization). Page 9 and 10 are important. Page 9 tells you the source of the organization's revenue. Page 10 breaks down the organization’s expenses, in two ways. First it lists amounts spent on different types of expenses, such as program, salaries and wages, office expenses, information technology, travel, etc. Second it divides up each of these expenses according to whether it was a program-service expense, management expense or fundraising expense.
By focusing on line 25 (Total Functional Expenses) you can figure out the percentage of its revenue that a charity spends on its services vs. its fundraising and management (overhead). You can use a simple formula to figure out overhead:
Line 25C (management) plus 25D (fundraising) divided by line 25A (total expenses).
For a more complete description of how to read a 990 see: https://www.charitychoices.com/page/how-read-charity-990-tax-form
Thanks to Betsy Carrier for this information
There are many excellent tools and organizations to help you determine which organizations might be putting your money to good uses vs. spending your money on administrative overhead. One organization that can help you is CharityWatch (https://www.charitywatch.org/home) a nonprofit charity watchdog and information service. In rating charities they try and help you maximize the effectiveness of every dollar you contribute to a charity by providing donors with the information they need to make more informed giving decisions.
If you want to do some investigating on your own, most charities must file a 990 tax return with the IRS. These forms contain a wealth of information about charities, but like most tax forms, they can be difficult to digest. But you only need to focus on a few pages. The first page will give you a summary of the organization’s revenue and expenses during the most recent two years. Charities are required to make their 990 forms available through their websites or by calling.
Page 7 gives you a list of the organization’s officers, directors, key employees, highest compensated employees and independent contractors (though only those receiving more than $100,000 from the organization). Page 9 and 10 are important. Page 9 tells you the source of the organization's revenue. Page 10 breaks down the organization’s expenses, in two ways. First it lists amounts spent on different types of expenses, such as program, salaries and wages, office expenses, information technology, travel, etc. Second it divides up each of these expenses according to whether it was a program-service expense, management expense or fundraising expense.
By focusing on line 25 (Total Functional Expenses) you can figure out the percentage of its revenue that a charity spends on its services vs. its fundraising and management (overhead). You can use a simple formula to figure out overhead:
Line 25C (management) plus 25D (fundraising) divided by line 25A (total expenses).
For a more complete description of how to read a 990 see: https://www.charitychoices.com/page/how-read-charity-990-tax-form
Thanks to Betsy Carrier for this information
Comment by Don Allen Resnikoff:
Tim Wu on US v. IBM
In his short book The Curse of Bigness: Antitrust in the New Gilded Age, Columbia Global Reports, RRP, 170 pages, Tim Wu argues for a return to an earlier and more aggressive interpretation of U.S. antitrust law. Tim Wu would like antitrust enforcement to focus on reducing the economic and political power of large companies. He argues vehemently for reviving the kind of big anti-monopoly cases the USDOJ pursued in the past.
At one point in his book Tim Wu focuses on the last series of monopoly cases pursued by the federal government, including the cases against IBM, Microsoft, and AT&T.
Wu’s focus on the US v. IBM case is particularly interesting to me. He is one of relatively few commenters who describe the case as having merit, and doing some good.
I worked on the US. v. IBM case during its last few years before the Reagan administration dismissed the case in 1982. My agreement with Wu is based on that experience. I participated in the moot-court like inquiry that USDOJ antitrust chief William Baxter conducted before he decided to abandon the case. As first assistant to the US v. IBM trial chief I was the senior trial staff person on hand in New York when the phone call came in from one of Baxter’s assistants in Washington directing me to hotfoot it over to the nearby Cravath, Swaine, & Moore offices and meet with IBM’s lawyer Tom Barr. My chore was to deal with papers terminating the litigation. The papers described the case as “without merit.” I recall walking over to the Cravath offices very slowly, after talking with the staff.
Wu believes that the US v IBM case was important for holding a regulatory gun to the head of IBM for many years, even if at the end the Reagan administration dropped the case. Wu attributes the success of then upstarts Microsoft and Apple to the restraints IBM placed on itself to avoid government action. For example, IBM dropped its practice of tying (“bundling”) hardware and software, which facilitated an independent software industry, and development of personal computers. Wu promises a deeper dive into the IBM case in a forthcoming article called “Tech Dominance and the Policeman at the Elbow.”
I hope that Wu’s new article will go into more detail on the merits of the US v. IBM case. The allegations and proofs in the government’s case support Wu’s focus on the concern that companies like IBM and Microsoft may seek to squelch competitors by creating barriers to entry. The barriers can be effective and anti-competitive whether or not they are viewed that way by “Chicago school” critics.
With regard to the allegations and proofs in the US v. IBM case, a brief but fair summary can be found in a USDOJ brief filed in 1995 in connection with a tangentially related IBM court action. See https://www.justice.gov/atr/case-document/united-states-memorandum-1969-case
The 1995 USDOJ summary explains that the US v. IBM action that ended in 1982 alleged that IBM had undertaken exclusionary and predatory conduct with the aim and effect of eliminating competition so that IBM could maintain its monopoly position in general purpose digital computers. Specifically, the Government contended that IBM engaged in anticompetitive practices "for the purpose or with the effect of restraining or attempting to restrain actual or potential competitors from entering" the relevant markets.
The Government alleged that IBM's bundling of software with "related computer hardware equipment" for a single price was anti-competitive. A related allegation addressed the IBM practice of insisting on proprietary rather than industry standard interfaces between elements of the computer systems, and then arbitrarily shifting the standards in a way that created barriers for competitors.
Another allegation was that IBM predatorily priced and preannounced specialized computer systems that the Government termed "fighting machines." IBM allegedly introduced the specialized computer systems "knowing [the products] had unusually low profit expectations." Allegedly, IBM "developed and announced" the products "primarily for the purpose or with the effect of discouraging actual and potential customers from acquiring [competing products] " A goal was to discourage successful manufacturers of specialized computer systems from expanding into the general purpose systems that were IBM’s core business.
Also, in an effort to deter entry and injure competition, IBM allegedly "announced future production and marketing [of certain products] when it believed or had reason to believe that it was unlikely to be able to produce and market such products within the announced time frame . . . ."
To remedy these alleged violations, the Government sought, inter alia, divestiture.
The decision to dismiss the US v. IBM case was made in 1982 by USDOJ’s new antitrust chief, William Baxter. It is clear that the Reagan administration gave Baxter the job of antitrust chief with the expectation that he would rigorously apply Chicago School antitrust principles to USDOJ enforcement. He did that. The goal-posts set by Baxter for evaluating the US v. IBM case were narrow.
Baxter’s reasons for dismissal did include case management problems: the case went on for 13 years, and was not concisely presented. But the reasons for dismissal went far beyond that. From a narrow Chicago School point of view the allegations of IBM conduct creating barriers to competition did not pass muster. Baxter appeared to agree with Robert Bork’s often-quoted assessment that “There was no sensible explanation for IBM’s dominance . . . other than superior efficiency . . .”
But arguably IBM’s conduct would be found to be effectively anti-competitive if more assertive standards for antitrust illegality were applied. It is instructive that in August of 1984 the European Commission reached a settlement agreement with IBM that required IBM to facilitate interchangeability of complementary computer system products. For example, IBM was required to reveal hardware and software interface specifications to allow rivals to achieve compatibility. Also, IBM was required to cooperate with a European agency working to establish standardized interface standards.
The later USDOJ settlement in the US v. Microsoft case addressed similar concerns. In US v. Microsoft, for example, a focus was on computer code used to integrate the Internet Explorer with Windows. The government’s concern was about “middleware,” software that fits in the middle between applications and an operating system. The worry was that Microsoft integrated code in a way that was opaque to rivals, so that removing Microsoft middleware and substituting rival middleware would cause Windows to crash.
The US cases against IBM and Microsoft reinforce a basic point of Tim Wu’s Curse of Bigness book: A goal for the prosecutor and Court in a monopolization case is to maintain an open mind and carefully examine the facts to determine whether the main effect of product design and marketing practices of a monopolist is to block competitors and thereby deprive customers of choice.
This posting is by Don Allen Resnikoff, who is wholly responsible for the views expressed.
Tim Wu on US v. IBM
In his short book The Curse of Bigness: Antitrust in the New Gilded Age, Columbia Global Reports, RRP, 170 pages, Tim Wu argues for a return to an earlier and more aggressive interpretation of U.S. antitrust law. Tim Wu would like antitrust enforcement to focus on reducing the economic and political power of large companies. He argues vehemently for reviving the kind of big anti-monopoly cases the USDOJ pursued in the past.
At one point in his book Tim Wu focuses on the last series of monopoly cases pursued by the federal government, including the cases against IBM, Microsoft, and AT&T.
Wu’s focus on the US v. IBM case is particularly interesting to me. He is one of relatively few commenters who describe the case as having merit, and doing some good.
I worked on the US. v. IBM case during its last few years before the Reagan administration dismissed the case in 1982. My agreement with Wu is based on that experience. I participated in the moot-court like inquiry that USDOJ antitrust chief William Baxter conducted before he decided to abandon the case. As first assistant to the US v. IBM trial chief I was the senior trial staff person on hand in New York when the phone call came in from one of Baxter’s assistants in Washington directing me to hotfoot it over to the nearby Cravath, Swaine, & Moore offices and meet with IBM’s lawyer Tom Barr. My chore was to deal with papers terminating the litigation. The papers described the case as “without merit.” I recall walking over to the Cravath offices very slowly, after talking with the staff.
Wu believes that the US v IBM case was important for holding a regulatory gun to the head of IBM for many years, even if at the end the Reagan administration dropped the case. Wu attributes the success of then upstarts Microsoft and Apple to the restraints IBM placed on itself to avoid government action. For example, IBM dropped its practice of tying (“bundling”) hardware and software, which facilitated an independent software industry, and development of personal computers. Wu promises a deeper dive into the IBM case in a forthcoming article called “Tech Dominance and the Policeman at the Elbow.”
I hope that Wu’s new article will go into more detail on the merits of the US v. IBM case. The allegations and proofs in the government’s case support Wu’s focus on the concern that companies like IBM and Microsoft may seek to squelch competitors by creating barriers to entry. The barriers can be effective and anti-competitive whether or not they are viewed that way by “Chicago school” critics.
With regard to the allegations and proofs in the US v. IBM case, a brief but fair summary can be found in a USDOJ brief filed in 1995 in connection with a tangentially related IBM court action. See https://www.justice.gov/atr/case-document/united-states-memorandum-1969-case
The 1995 USDOJ summary explains that the US v. IBM action that ended in 1982 alleged that IBM had undertaken exclusionary and predatory conduct with the aim and effect of eliminating competition so that IBM could maintain its monopoly position in general purpose digital computers. Specifically, the Government contended that IBM engaged in anticompetitive practices "for the purpose or with the effect of restraining or attempting to restrain actual or potential competitors from entering" the relevant markets.
The Government alleged that IBM's bundling of software with "related computer hardware equipment" for a single price was anti-competitive. A related allegation addressed the IBM practice of insisting on proprietary rather than industry standard interfaces between elements of the computer systems, and then arbitrarily shifting the standards in a way that created barriers for competitors.
Another allegation was that IBM predatorily priced and preannounced specialized computer systems that the Government termed "fighting machines." IBM allegedly introduced the specialized computer systems "knowing [the products] had unusually low profit expectations." Allegedly, IBM "developed and announced" the products "primarily for the purpose or with the effect of discouraging actual and potential customers from acquiring [competing products] " A goal was to discourage successful manufacturers of specialized computer systems from expanding into the general purpose systems that were IBM’s core business.
Also, in an effort to deter entry and injure competition, IBM allegedly "announced future production and marketing [of certain products] when it believed or had reason to believe that it was unlikely to be able to produce and market such products within the announced time frame . . . ."
To remedy these alleged violations, the Government sought, inter alia, divestiture.
The decision to dismiss the US v. IBM case was made in 1982 by USDOJ’s new antitrust chief, William Baxter. It is clear that the Reagan administration gave Baxter the job of antitrust chief with the expectation that he would rigorously apply Chicago School antitrust principles to USDOJ enforcement. He did that. The goal-posts set by Baxter for evaluating the US v. IBM case were narrow.
Baxter’s reasons for dismissal did include case management problems: the case went on for 13 years, and was not concisely presented. But the reasons for dismissal went far beyond that. From a narrow Chicago School point of view the allegations of IBM conduct creating barriers to competition did not pass muster. Baxter appeared to agree with Robert Bork’s often-quoted assessment that “There was no sensible explanation for IBM’s dominance . . . other than superior efficiency . . .”
But arguably IBM’s conduct would be found to be effectively anti-competitive if more assertive standards for antitrust illegality were applied. It is instructive that in August of 1984 the European Commission reached a settlement agreement with IBM that required IBM to facilitate interchangeability of complementary computer system products. For example, IBM was required to reveal hardware and software interface specifications to allow rivals to achieve compatibility. Also, IBM was required to cooperate with a European agency working to establish standardized interface standards.
The later USDOJ settlement in the US v. Microsoft case addressed similar concerns. In US v. Microsoft, for example, a focus was on computer code used to integrate the Internet Explorer with Windows. The government’s concern was about “middleware,” software that fits in the middle between applications and an operating system. The worry was that Microsoft integrated code in a way that was opaque to rivals, so that removing Microsoft middleware and substituting rival middleware would cause Windows to crash.
The US cases against IBM and Microsoft reinforce a basic point of Tim Wu’s Curse of Bigness book: A goal for the prosecutor and Court in a monopolization case is to maintain an open mind and carefully examine the facts to determine whether the main effect of product design and marketing practices of a monopolist is to block competitors and thereby deprive customers of choice.
This posting is by Don Allen Resnikoff, who is wholly responsible for the views expressed.
Sackler family members face mass litigation and criminal investigations over Purdue conduct and opioids crisis:
Suffolk county in Long Island has sued several family members, and Connecticut and New York are considering criminal fraud and racketeering charges against leading family members
Joanna Walters in New York
@Joannawalters13
Members of the multibillionaire philanthropic Sackler family that owns the maker of prescription painkiller OxyContin are facing mass litigation and likely criminal investigation over the opioids crisis still ravaging America.
Some of the Sacklers wholly own Connecticut-based Purdue Pharma, the company that created and sells the legal narcotic OxyContin, a drug at the center of the opioid epidemic that now kills almost 200 people a day across the US.
Suffolk county on Long Island, New York, recently sued several family members personally over the overdose deaths and painkiller addiction blighting local communities. Now lawyers warn that action will be a catalyst for hundreds of other US cities, counties and states to follow suit.
At the same time, prosecutors in Connecticut and New York are understood to be considering criminal fraud and racketeering charges against leading family members over the way OxyContin has allegedly been dangerouslyoverprescribed and deceptively marketed to doctors and the public over the years, legal sources told the Guardian last week.
“This is essentially a crime family … drug dealers in nice suits and dresses,” said Paul Hanly, a New York city lawyer who represents Suffolk county and is also a lead attorney in a huge civil action playing out in federal court in Cleveland, Ohio, involving opioid manufacturers and distributors.
Source: Excerpt is from https://www.theguardian.com/us-news/2018/nov/19/sackler-family-members-face-mass-litigation-criminal-investigations-over-opioids-crisis
Suffolk county in Long Island has sued several family members, and Connecticut and New York are considering criminal fraud and racketeering charges against leading family members
Joanna Walters in New York
@Joannawalters13
Members of the multibillionaire philanthropic Sackler family that owns the maker of prescription painkiller OxyContin are facing mass litigation and likely criminal investigation over the opioids crisis still ravaging America.
Some of the Sacklers wholly own Connecticut-based Purdue Pharma, the company that created and sells the legal narcotic OxyContin, a drug at the center of the opioid epidemic that now kills almost 200 people a day across the US.
Suffolk county on Long Island, New York, recently sued several family members personally over the overdose deaths and painkiller addiction blighting local communities. Now lawyers warn that action will be a catalyst for hundreds of other US cities, counties and states to follow suit.
At the same time, prosecutors in Connecticut and New York are understood to be considering criminal fraud and racketeering charges against leading family members over the way OxyContin has allegedly been dangerouslyoverprescribed and deceptively marketed to doctors and the public over the years, legal sources told the Guardian last week.
“This is essentially a crime family … drug dealers in nice suits and dresses,” said Paul Hanly, a New York city lawyer who represents Suffolk county and is also a lead attorney in a huge civil action playing out in federal court in Cleveland, Ohio, involving opioid manufacturers and distributors.
Source: Excerpt is from https://www.theguardian.com/us-news/2018/nov/19/sackler-family-members-face-mass-litigation-criminal-investigations-over-opioids-crisis
AAI Asks First Circuit to Preserve Pharma Antitrust Class Actions Targeting Generic Exclusion (In re Asacol Antitrust Litigation)
AAI filed an amicus brief in the First Circuit Court of Appeals warning that unreasonable class action standards threaten to harm competition and consumers in the critically important pharmaceutical sector.
In In re Asacol Antitrust Litig., a class of indirect purchasers challenged an alleged "product hopping" scheme whereby brand-drug manufacturer Warner Chilcott pulled an ulcerative colitis drug from the market just as its patent was set to expire, only to substitute a replacement, patented drug and thereby stave off generic entry that would have benefitted consumers.
Read More https://www.antitrustinstitute.org/work-product/aai-asks-first-circuit-to-preserve-pharma-antitrust-class-actions-targeting-generic-exclusion-in-re-asacol-antitrust-litigation/
AAI filed an amicus brief in the First Circuit Court of Appeals warning that unreasonable class action standards threaten to harm competition and consumers in the critically important pharmaceutical sector.
In In re Asacol Antitrust Litig., a class of indirect purchasers challenged an alleged "product hopping" scheme whereby brand-drug manufacturer Warner Chilcott pulled an ulcerative colitis drug from the market just as its patent was set to expire, only to substitute a replacement, patented drug and thereby stave off generic entry that would have benefitted consumers.
Read More https://www.antitrustinstitute.org/work-product/aai-asks-first-circuit-to-preserve-pharma-antitrust-class-actions-targeting-generic-exclusion-in-re-asacol-antitrust-litigation/
Facebook on Thanksgiving eve took responsibility for hiring a Washington-based lobbying company, Definers Public Affairs, that pushed negative stories about Facebook’s critics, including the philanthropist George Soros.
Facebook’s communications and policy chief, Elliot Schrage, said in a memo posted Wednesday that he was responsible for hiring the group, and had done so to help protect the company’s image and conduct research about high-profile individuals who spoke critically about the social media platform. Mr. Schrage will be leaving the company, a move planned before the memo was released.
Facebook fired Definers last week, after a New York Times investigation published on Nov. 14.
“Did we ask them to do work on George Soros?” Mr. Schrage wrote in the memo, a draft of which had circulated online earlier in the week. “Yes.”
***
The Shrage memo is here: https://newsroom.fb.com/news/2018/11/elliot-schrage-on-definers/
Source: https://www.nytimes.com/2018/11/22/business/on-thanksgiving-eve-facebook-acknowledges-details-of-times-investigation.html?action=click&module=Latest&pgtype=Homepage
Facebook’s communications and policy chief, Elliot Schrage, said in a memo posted Wednesday that he was responsible for hiring the group, and had done so to help protect the company’s image and conduct research about high-profile individuals who spoke critically about the social media platform. Mr. Schrage will be leaving the company, a move planned before the memo was released.
Facebook fired Definers last week, after a New York Times investigation published on Nov. 14.
“Did we ask them to do work on George Soros?” Mr. Schrage wrote in the memo, a draft of which had circulated online earlier in the week. “Yes.”
***
The Shrage memo is here: https://newsroom.fb.com/news/2018/11/elliot-schrage-on-definers/
Source: https://www.nytimes.com/2018/11/22/business/on-thanksgiving-eve-facebook-acknowledges-details-of-times-investigation.html?action=click&module=Latest&pgtype=Homepage
The total value of the incentive package New York is using to lure Amazon could top $2.8 billion.
Amazon announced Tuesday that it would build new headquarters in New York City and Washington D.C.’s Virginia suburbs, each of which would host around 25,000 workers.
The New York City headquarters, built on the East River waterfront in Queens, would vault Amazon into the ranks of the city’s top private-sector employers while transforming a site now mostly occupied by industrial buildings and parking lots.
Snagging the online retailer, though, comes at a cost.
In addition to nearly $1.53 billion in tax credits and grants offered by the state, Amazon would also qualify for two big tax breaks from the city.
If it creates 25,000 jobs, as promised, Amazon would qualify for a city corporate income tax credit worth nearly $900 million over 12 years. On top of that, it would get a 15-year property-tax abatement worth an estimated $386 million.
Those city tax credits aren’t unique to the Amazon deal. They have long been available to other companies, too, as a way of incentivizing growth and development outside Manhattan’s crowded business districts.
Gov. Andrew Cuomo and New York City Mayor Bill de Blasio said they expect to more than recoup that amount in the form of personal income taxes paid by Amazon’s employees, sales tax and economic activity generated by the company’s presence.
Cuomo on Tuesday predicted that the project would eventually bring in $27.5 billion in new state revenue over the next 25 years, though that figure would depend on Amazon creating 40,000 new jobs in New York City — far more than the initial 25,000 it has promised. State budget director Robert Mujica said that calculation also includes an assumption that other businesses not connected to Amazon will have to hire as many as 67,000 workers to serve the needs of the company and its employees.
Some experts say that revenue projection, which includes ancillary jobs like a food vendor who sells sandwiches to Amazon workers, may overestimate the company’s impact.
“I’m not a big fan of counting the indirect jobs,” said Nicole Gelinas, a senior fellow at the Manhattan Institute. She said vendors would likely sell to someone else if Amazon weren’t there.
Source: https://www.washingtonpost.com/business/incentives-to-amazon-could-top-28-billion-in-nyc/2018/11/14/86ecfc8a-e85a-11e8-8449-1ff263609a31_story.html?utm_term=.283684e6726c
Democrats have captured state AG offices from Republicans in four states — Colorado, Michigan, Nevada and Wisconsin — while maintaining control of AG seats in New York, California, Illinois, Maryland, and eight other states, plus the District of Columbia.
Combined with the eight states where current Democratic AGs were not up for election and the two states where Democrats have been or will likely soon be appointed as AGs, those results mean that a Democrat will soon be the top prosecutor in a majority of U.S. states — including Iowa, Massachusetts and Maryland, where Republicans will control the governors’ mansions.
“Compared to the last few cycles, this was a resurgence on the Democratic attorney general side,” said Joe Jacquot, a Foley & Lardner LLP partner and former chief deputy attorney general of Florida. “I think those AGs — not only the ones that won in significant states, like Michigan, Wisconsin and Nevada, but also as a whole — feel a new motivation, and I think you’re going to see them press that in enforcement actions.”
The increased enforcement could include banking and financial issues.
Credit: Joe Hill, Law 360 (paywall)
Posting by Don Allen Resnikoff, who is responsible for the content
A Brief Book Review, by Don Allen Resnikoff:
THE FIXER: MY ADVENTURES SAVING STARTUPS FROM DEATH BY POLITICS,
by Bradley Tusk (Portfolio/Penguin, 2018)
Bradley Tusk’s short book reads like a promotional piece for his business. He is a consultant for businesses that need to fight political battles to survive. Successful clients have included the taxi app company, Uber, a fantasy sports company, FanDuel, and on-line insurer Lemonade.
Tusk wants you to know that he is pragmatic about politics, and tough minded. He describes politicians as motivated largely by self interest and the wishes of “pay-to-play” money donors. Politicians seldom do what is right for their broader constituency simply because it is the right thing to do.
Tusk’s book is worth reading for its war stories. The stories convey insights about the realities of interactions between competition and local politics.
Tusk’s stories have a common thread. The new businesses Tusk represents are disruptive, typically depending on modern internet technology. The new businesses challenge large commercial interests that are protected by favorable regulation. The businesses challenged by Tusk’s clients are well-connected politically, because they make large money contributions to politicians. For that reason the entrenched businesses are in a good position to preserve regulations that protect them.
Tusk’s strategy for his clients is to develop a campaign that puts pressure on politicians to dismantle the regulations that favor entrenched market players. That will clear a path for his clients.
Tusk’s first big client was Uber. When Tusk represented Uber it was a disruptive upstart, not the 800 pound gorilla it has become. Uber had not yet compromised its ability to charm the public. Uber’s innovative app-based business model challenged local government regulated and protected “yellow cabs.” Local governments regulated the cabs, but not necessarily in a way that made them cheap or efficient. Local governments often limited taxi competition by limiting the number of licenses, called “medallions,” that issued.
Local yellow cab interests were politically important in holding on to protective regulation, although the cab industry story differs from the FanDuel and Lemonade stories in that many yellow cab drivers are individual or otherwise small enterprises.
Tusk’s strategies for Uber involved mobilizing Uber customers to complain to legislators, and using lobbying firms to persuade regulators. A public relations campaign was launched as well. A key to Uber’s success was that customers disliked the traditional yellow cabs, but liked Uber.
Early victories for Uber were achieved in the District of Columbia and New York City, where regulations that blocked Uber were dismantled. The New York City victory marked a turning point for Uber. Here is an excerpt from the book outlining the New York strategy:
A memo I wrote [Uber’s] Travis in mid-2011 laying out my initial thoughts on how Uber should deal with its New York City problem ended up encompassing many of the same tactics we’d use over the next five years to fight the taxi industry: In every jurisdiction, make taxi’s opposition all about their own corrupt, entrenched needs, and not about the good of drivers or riders; align Uber with any elected official who really cared about technology and innovation; draw attention to taxi’s long and ugly history of racism; posit Uber as a way to fundamentally change that; and demonstrate that Uber drivers were all individual small businesses and this was a new and different type of opportunity for them. Taxi’s strength was their political influence. We needed to make it their weakness.
For the purposes of this brief review we will not explore in detail Tusk’s additional strategies for Uber, Fanduel, and Lemonade. They are, of course, available in Tusk’s book.
Like Tusk, the FTC and USDOJ have engaged in challenges to local regulations that favor particular entrenched businesses. But that is regulatory action that is tangential to Tusk’s business activity, which involves a lot of grass-roots effort and lobbying of politicians. Tusk’s approach is mostly about political campaigns that involve customer support and action, in addition to employing lobbyists. Tusk’s activity for his clients carries the spirit of street fighting.
The Tusk stories are useful in a way that is reminiscent of the industry studies economists have traditionally done to provide insight into particular markets. The stories help us understand app based taxi service, fantasy sports, and on-line insurance, all of which rely on the internet. Knowledge about particular markets is obviously a useful predicate for considering the need for market regulation.
This posting is by Don Allen Resnikoff, who takes full responsibility for its content.
THE FIXER: MY ADVENTURES SAVING STARTUPS FROM DEATH BY POLITICS,
by Bradley Tusk (Portfolio/Penguin, 2018)
Bradley Tusk’s short book reads like a promotional piece for his business. He is a consultant for businesses that need to fight political battles to survive. Successful clients have included the taxi app company, Uber, a fantasy sports company, FanDuel, and on-line insurer Lemonade.
Tusk wants you to know that he is pragmatic about politics, and tough minded. He describes politicians as motivated largely by self interest and the wishes of “pay-to-play” money donors. Politicians seldom do what is right for their broader constituency simply because it is the right thing to do.
Tusk’s book is worth reading for its war stories. The stories convey insights about the realities of interactions between competition and local politics.
Tusk’s stories have a common thread. The new businesses Tusk represents are disruptive, typically depending on modern internet technology. The new businesses challenge large commercial interests that are protected by favorable regulation. The businesses challenged by Tusk’s clients are well-connected politically, because they make large money contributions to politicians. For that reason the entrenched businesses are in a good position to preserve regulations that protect them.
Tusk’s strategy for his clients is to develop a campaign that puts pressure on politicians to dismantle the regulations that favor entrenched market players. That will clear a path for his clients.
Tusk’s first big client was Uber. When Tusk represented Uber it was a disruptive upstart, not the 800 pound gorilla it has become. Uber had not yet compromised its ability to charm the public. Uber’s innovative app-based business model challenged local government regulated and protected “yellow cabs.” Local governments regulated the cabs, but not necessarily in a way that made them cheap or efficient. Local governments often limited taxi competition by limiting the number of licenses, called “medallions,” that issued.
Local yellow cab interests were politically important in holding on to protective regulation, although the cab industry story differs from the FanDuel and Lemonade stories in that many yellow cab drivers are individual or otherwise small enterprises.
Tusk’s strategies for Uber involved mobilizing Uber customers to complain to legislators, and using lobbying firms to persuade regulators. A public relations campaign was launched as well. A key to Uber’s success was that customers disliked the traditional yellow cabs, but liked Uber.
Early victories for Uber were achieved in the District of Columbia and New York City, where regulations that blocked Uber were dismantled. The New York City victory marked a turning point for Uber. Here is an excerpt from the book outlining the New York strategy:
A memo I wrote [Uber’s] Travis in mid-2011 laying out my initial thoughts on how Uber should deal with its New York City problem ended up encompassing many of the same tactics we’d use over the next five years to fight the taxi industry: In every jurisdiction, make taxi’s opposition all about their own corrupt, entrenched needs, and not about the good of drivers or riders; align Uber with any elected official who really cared about technology and innovation; draw attention to taxi’s long and ugly history of racism; posit Uber as a way to fundamentally change that; and demonstrate that Uber drivers were all individual small businesses and this was a new and different type of opportunity for them. Taxi’s strength was their political influence. We needed to make it their weakness.
For the purposes of this brief review we will not explore in detail Tusk’s additional strategies for Uber, Fanduel, and Lemonade. They are, of course, available in Tusk’s book.
Like Tusk, the FTC and USDOJ have engaged in challenges to local regulations that favor particular entrenched businesses. But that is regulatory action that is tangential to Tusk’s business activity, which involves a lot of grass-roots effort and lobbying of politicians. Tusk’s approach is mostly about political campaigns that involve customer support and action, in addition to employing lobbyists. Tusk’s activity for his clients carries the spirit of street fighting.
The Tusk stories are useful in a way that is reminiscent of the industry studies economists have traditionally done to provide insight into particular markets. The stories help us understand app based taxi service, fantasy sports, and on-line insurance, all of which rely on the internet. Knowledge about particular markets is obviously a useful predicate for considering the need for market regulation.
This posting is by Don Allen Resnikoff, who takes full responsibility for its content.
DAR Commentary: Deltrahim tells CNBC he ignores the President’s opinions on Antitrust –
From https://www.investorideas.com/news/2018/main/11133CNBC-MakanDelrahim.asp
Interview excerpt:
FABER: But when the president writes, and this is from this summer, "In my opinion, The Washington Post is nothing more than an expensive lobbyist for Amazon as it uses protection against anti-trust claims, which many feel should be brought." Again, as the man who runs enforcement for the anti-trust division, when you hear something like that from the executive, is there a response that you have?
DELRAHIM: Well, we hear that from executive and legislative. I mean, by the way, these types of concerns raised about Amazon are bipartisan. And Senators raise them, the president has raised it. It's -- again, I think it's great that we have such a debate about free markets and the anti-trust laws there to protect the free markets. As far as what we do in our enforcement, you know, we need the evidence, we need the economics, we go to court. And politics, you know, that goes on between various aspects of the government don't affect our decisions to make these cases.
Could that be true? Is it consistent with past USDOJ deference to Presidential opinion?
Teddy Roosevelt famously was an active participant in antitrust enforcement. Writers Johnson and Kwak tell us that:
In late February 1902, J.P. Morgan, the leading financier of his day, went to the White House to meet with President Theodore Roosevelt and Attorney General Philander Knox. The government had just announced an antitrust suit -- the first of its kind -- against Morgan's recently formed railroad monopoly, Northern Securities, and this was a tense moment for the stock market. Morgan argued strongly that his industrial trusts were essential to American prosperity and competitiveness.
The banker wanted a deal. "If we have done anything wrong, send your man to my man and they can fix it up," he offered. But the president was blunt: "That can't be done." And Knox succinctly summarized Roosevelt's philosophy. "We don't want to fix it up," he told Morgan, "we want to stop it."
Johnson and Kwak make it clear that, more recently, Barack Obama was much more than a passive commenter on USDOJ enforcement. When leading bankers visited the White House in 2008, at the height on the banking crisis, the President was not shy in expressing himself:
"My administration is the only thing between you and the pitchforks," he famously told the bankers.
Johnson and Kwak complain that the enforcement that followed the Obama statement was weak, but that is not because President Obama was not engaged in the process of enforcement (or lack of it).
Perhaps Delrahim’s characterization of President Trump as a political commenter on USDOJ policy without much effect is less than fully persuasive.
Posted by Don Allen Resnikoff, who takes full responsibility for the content.
From https://www.investorideas.com/news/2018/main/11133CNBC-MakanDelrahim.asp
Interview excerpt:
FABER: But when the president writes, and this is from this summer, "In my opinion, The Washington Post is nothing more than an expensive lobbyist for Amazon as it uses protection against anti-trust claims, which many feel should be brought." Again, as the man who runs enforcement for the anti-trust division, when you hear something like that from the executive, is there a response that you have?
DELRAHIM: Well, we hear that from executive and legislative. I mean, by the way, these types of concerns raised about Amazon are bipartisan. And Senators raise them, the president has raised it. It's -- again, I think it's great that we have such a debate about free markets and the anti-trust laws there to protect the free markets. As far as what we do in our enforcement, you know, we need the evidence, we need the economics, we go to court. And politics, you know, that goes on between various aspects of the government don't affect our decisions to make these cases.
Could that be true? Is it consistent with past USDOJ deference to Presidential opinion?
Teddy Roosevelt famously was an active participant in antitrust enforcement. Writers Johnson and Kwak tell us that:
In late February 1902, J.P. Morgan, the leading financier of his day, went to the White House to meet with President Theodore Roosevelt and Attorney General Philander Knox. The government had just announced an antitrust suit -- the first of its kind -- against Morgan's recently formed railroad monopoly, Northern Securities, and this was a tense moment for the stock market. Morgan argued strongly that his industrial trusts were essential to American prosperity and competitiveness.
The banker wanted a deal. "If we have done anything wrong, send your man to my man and they can fix it up," he offered. But the president was blunt: "That can't be done." And Knox succinctly summarized Roosevelt's philosophy. "We don't want to fix it up," he told Morgan, "we want to stop it."
Johnson and Kwak make it clear that, more recently, Barack Obama was much more than a passive commenter on USDOJ enforcement. When leading bankers visited the White House in 2008, at the height on the banking crisis, the President was not shy in expressing himself:
"My administration is the only thing between you and the pitchforks," he famously told the bankers.
Johnson and Kwak complain that the enforcement that followed the Obama statement was weak, but that is not because President Obama was not engaged in the process of enforcement (or lack of it).
Perhaps Delrahim’s characterization of President Trump as a political commenter on USDOJ policy without much effect is less than fully persuasive.
Posted by Don Allen Resnikoff, who takes full responsibility for the content.
Stacy Mitchell advocates break-up of Amazon
Mitchell is the co-director of Institute for Local Self-Reliance. Earlier this year she wrote an article for The Nation called, “Amazon doesn’t just want to dominate the market — it wants to become the market.” In the Podcast below from public radio station WNYC, Mitchell describes the history of regulation of corporate concentration in a manner reminiscent of Tim Wu. She then explains why she thinks that the government should forcibly separate Amazon's platform business from its other businesses.
This Podcast is at https://www.wnycstudios.org/story/making-america-antitrust-again
Mitchell is the co-director of Institute for Local Self-Reliance. Earlier this year she wrote an article for The Nation called, “Amazon doesn’t just want to dominate the market — it wants to become the market.” In the Podcast below from public radio station WNYC, Mitchell describes the history of regulation of corporate concentration in a manner reminiscent of Tim Wu. She then explains why she thinks that the government should forcibly separate Amazon's platform business from its other businesses.
This Podcast is at https://www.wnycstudios.org/story/making-america-antitrust-again
AAI Files Comments in FTC Competition Hearings
On November 15, the AAI submitted comments in response to the Federal Trade Commission's request for public comments for Hearing #2 On Competition and Consumer Protection in the 21st Century. The FTC sought feedback on eleven wide-ranging topics, including the propriety of the consumer welfare standard, how antitrust law should account for public policy concerns, evidence of increasing concentration and changing price-cost margins, reform priorities, international convergence, error costs, out-of-market benefits, and monopsony and buyer power.
Read More - https://www.antitrustinstitute.org/work-product/aai-files-comments-in-ftc-competition-hearings/
On November 15, the AAI submitted comments in response to the Federal Trade Commission's request for public comments for Hearing #2 On Competition and Consumer Protection in the 21st Century. The FTC sought feedback on eleven wide-ranging topics, including the propriety of the consumer welfare standard, how antitrust law should account for public policy concerns, evidence of increasing concentration and changing price-cost margins, reform priorities, international convergence, error costs, out-of-market benefits, and monopsony and buyer power.
Read More - https://www.antitrustinstitute.org/work-product/aai-files-comments-in-ftc-competition-hearings/
Tim Wu: Competition policy as politics
Tim Wu’s Op-ed in Sunday’s NY Times anticipates his forthcoming book “The Curse of Bigness: Antitrust in the New Gilded Age.” Wu presents competition policy as a political issue. The dominance of big companies leads to totalitarianism. Former FTC Commissioner Robert Pitofsky warned in 1979 that “massively concentrated economic power, or state intervention induced by that level of concentration, is incompatible with liberal, constitutional democracy.” Antitrust has more than an economic goal. It is a check against the political dangers of unaccountable private power.
Tim Wu’s book, which will be available shortly (I do not have access to a preview copy), is likely to discuss details of how government should enforce the antitrust laws. In earlier writing, Wu has argued for antitrust enforcement that reaches beyond the current “consumer welfare” standard. He argues for post-consumer welfare antitrust that will be practical and predictable. (See https://www.competitionpolicyinternational.com/wp-content/uploads/2018/04/CPI-Wu.pdf)
Wu’s new book comes at a moment when it has become plain that the political importance of antitrust is known not only to devotees of Brandeis and Pitofsky, but also to Donald Trump.
President Donald Trump recently said that his administration is looking into antitrust violations by Amazon, Facebook and Google parent Alphabet.
In a video interview with Axios' Jonathan Swan and Jim VandeHei, Trump said he's "not looking to hurt" the U.S. tech giants but is considering action.
"We are looking at [antitrust] very seriously," Trump said. "Look, that doesn't mean we're doing it, but we're certainly looking and I think most people surmise that, I would imagine."
Trump says administration is looking into antitrust violations by Amazon, other tech giants
- President Donald Trump says his administration is looking into antitrust violations by Amazon, Facebook and Google parent Alphabet.
- In an interview with Axios, Trump says he's "not looking to hurt" the U.S. tech giants but is considering action.
Berkeley Lovelace Jr. | @BerkeleyJr
Published 7:02 AM ET Mon, 5 Nov 2018 Updated 2:20 PM ET Mon, 5 Nov 2018 CNBC.com
Rex Curry | Reuters
Jeff Bezos, Chairman and CEO of Amazon, speaks at the George W. Bush Presidential Center's Forum on Leadership in Dallas, Texas, U.S., April 20, 2018.
President Donald Trump said his administration is looking into antitrust violations by Amazon, Facebook and Google parent Alphabet.
In a video interview with Axios' Jonathan Swan and Jim VandeHei that aired on Sunday, Trump said he's "not looking to hurt" the U.S. tech giants but is considering action.
"We are looking at [antitrust] very seriously," Trump said. "Look, that doesn't mean we're doing it, but we're certainly looking and I think most people surmise that, I would imagine."
Trump said others have also considered action against tech companies but a "previous administration" stopped that. "They were talking about this years ago. You know they were actually talking about this same subject — monopoly."
Shares of the three tech companies were essentially flat in premarket trading on Monday.
The president has repeatedly attacked Amazon, saying without evidence that package deliveries by the U.S. Postal Service for Amazon were costing the service money.
Trump has also been critical of Amazon CEO Jeff Bezos, who owns The Washington Post.
Mike Allen, co-founder and executive editor of Axios, told CNBC on Monday he thinks Trump was being serious about this inquiry into big tech.
"The president has been talking about this for a long time," Allen said in a "Squawk Box" interview. He also mentioned Trump's "obsession" with Amazon.
Tech companies have been under the microscope in Washington recently on efforts to prevent foreign meddling in U.S. elections.
Source: https://www.cnbc.com/2018/11/05/trump-looking-into-antitrust-violations-against-amazon-other-tech-giants.html
Watch: CNBC's Is Google a monopoly?
Is Google a monopoly? https://www.cnbc.com/video/2018/11/01/is-google-a-monopoly.html
Tim Wu's "told you so" on AT&T --Time Warner
From his NYT Op-Ed:
Last week, HBO went dark for both DISH and DISH-Sling, the main competitors to DirecTV and DirecTV Now, AT&T’s television services. This brazenly anticompetitive strategy does not portend a happy future for the viewing public, or for HBO itself.
At the risk of saying “we told you so,” it was widely predicted before the merger that AT&T would use HBO and other Time Warner media properties in just this way. When the Justice Department sued (unsuccessfully) to block the merger last year, its case was premised on the idea that AT&T would use its ownership of such properties to hurt its rivals in telecommunications. And now it is doing so.
Post-merger, AT&T has the means and the incentive to raise prices on valuable content (like HBO or the coverage of the N.C.A.A. “March Madness” basketball tournament) for cheaper, “unintegrated” telecom competitors that have been saving consumers money. If its rivals refuse to pay up, it can withhold the content entirely, diminishing them as competitors.
Full Op-ed: https://www.nytimes.com/2018/11/07/opinion/att-hbo-antitrust.html?action=click&module=Opinion&pgtype=Homepagewww.nytimes.com/2018/11/07/opinion/att-hbo-antitrust.html?action=click&module=Opinion&pgtype=Homepage
Concentration in Cardiology Markets Associated with Higher Prices and Lower Quality of Care
Study by: Thomas Koch, Brett Wendling, and Nathan E. Wilson
In recent years local markets for physician services have become increasingly concentrated. A new study uses Medicare claims and enrollment data to examine the effect of cardiology market structure on utilization and health outcomes for four patient populations—those treated for hypertension, a chronic cardiac condition, an acute cardiac condition, or an acute myocardial infarction (AMI). The study found that higher market concentration is associated with higher total expenditures and worse health outcomes. In three of the sample populations, patients residing in a zip code at the 75th percentile of cardiology market concentration were found to have a 5 to 7 percent greater chance of risk-adjusted mortality as compared with identical patients in a zip code at the 25th percentile of market concentration.
Researchers also found that there was a 7 to 11 percent increase in expenditures when moving from the 25th percentile to the 75th percentile of market concentration. The negative correlation between concentration and quality of care found in this study indicates that antitrust agencies have reason to be concerned about the effects of consolidation in physician markets on the price and quality of healthcare services.
Full study here. http://www.hsr.org/hsr/abstract.jsp?aid=53913902447
Study by: Thomas Koch, Brett Wendling, and Nathan E. Wilson
In recent years local markets for physician services have become increasingly concentrated. A new study uses Medicare claims and enrollment data to examine the effect of cardiology market structure on utilization and health outcomes for four patient populations—those treated for hypertension, a chronic cardiac condition, an acute cardiac condition, or an acute myocardial infarction (AMI). The study found that higher market concentration is associated with higher total expenditures and worse health outcomes. In three of the sample populations, patients residing in a zip code at the 75th percentile of cardiology market concentration were found to have a 5 to 7 percent greater chance of risk-adjusted mortality as compared with identical patients in a zip code at the 25th percentile of market concentration.
Researchers also found that there was a 7 to 11 percent increase in expenditures when moving from the 25th percentile to the 75th percentile of market concentration. The negative correlation between concentration and quality of care found in this study indicates that antitrust agencies have reason to be concerned about the effects of consolidation in physician markets on the price and quality of healthcare services.
Full study here. http://www.hsr.org/hsr/abstract.jsp?aid=53913902447
NYT: A strike by antiquarian booksellers against Amazon succeedsIt was a rare concerted uprising against any part of Amazon by any of its millions of suppliers, leading to an even rarer capitulation. Even the book dealers said they were surprised at the sudden reversal by AbeBooks, the company’s secondhand and rare bookselling network.
The uprising, which involved nearly 600 booksellers in 27 countries removing about four million books, was set off by the retailer’s decision to cut off stores in five countries: the Czech Republic, Poland, Hungary, South Korea and Russia. AbeBooks never explained its actions beyond saying it was related to payment processing.
“[Amazon sub] AbeBooks was saying entire countries were expendable to its plans,” said Scott Brown, a Eureka, Calif., bookseller who was an organizer of the strike. “Booksellers everywhere felt they might be next.”
The matter was apparently resolved when Sally Burdon, an Australian bookseller who is president of the International League of Antiquarian Booksellers, spoke with Arkady Vitrouk, chief executive of AbeBooks. In a Wednesday email to her members after their talk, Ms. Burdon said Mr. Vitrouk apologized for the platform’s behavior “a number of times” and said booksellers in the affected countries would not be dropped as scheduled on Nov. 30.
From: https://www.nytimes.com/2018/11/07/technology/amazon-bookseller-protest-strike.html?rref=collection%2Fsectioncollection%2Fbusiness&action=click&contentCollection=business®ion=stream&module=stream_unit&version=latest&contentPlacement=9&pgtype=sectionfront
The uprising, which involved nearly 600 booksellers in 27 countries removing about four million books, was set off by the retailer’s decision to cut off stores in five countries: the Czech Republic, Poland, Hungary, South Korea and Russia. AbeBooks never explained its actions beyond saying it was related to payment processing.
“[Amazon sub] AbeBooks was saying entire countries were expendable to its plans,” said Scott Brown, a Eureka, Calif., bookseller who was an organizer of the strike. “Booksellers everywhere felt they might be next.”
The matter was apparently resolved when Sally Burdon, an Australian bookseller who is president of the International League of Antiquarian Booksellers, spoke with Arkady Vitrouk, chief executive of AbeBooks. In a Wednesday email to her members after their talk, Ms. Burdon said Mr. Vitrouk apologized for the platform’s behavior “a number of times” and said booksellers in the affected countries would not be dropped as scheduled on Nov. 30.
From: https://www.nytimes.com/2018/11/07/technology/amazon-bookseller-protest-strike.html?rref=collection%2Fsectioncollection%2Fbusiness&action=click&contentCollection=business®ion=stream&module=stream_unit&version=latest&contentPlacement=9&pgtype=sectionfront
After mid-terms, MD Consumer Rights Coalition is cautiously optimistic about what the future holds in both Maryland and in Congress.
From a recent email letter to supporters:
In Congress, a number of candidates who support economic rights, affordable healthcare, and consumer protections won their elections. Deb Haaland, a Native American woman, was elected to Congress from New Mexico on a platform of economic fairness and immigration rights. Haaland and Sharice Davids (D-KS) are the first two Native American women elected to Congress. Ilhan Omar, the first Somali-American woman (and one of the first Muslim women) elected to Congress, won her race in Minnesota on a detailed economic rights platform including a federal jobs guarantee and increasing taxes on the wealthy. Alexandria Ocasio-Cortez (D-NY) became the youngest woman elected to Congress and ran a strong campaign centered on strong proposals for economic equity.
Shared themes of economic justice, Medicare for All, debt-free college,and reducing income inequality and the racial wealth gap vaulted Rashida Talib (D-MI), a Muslim woman, Ayanna Pressely (D-MA), an African-American former City Councilwoman, and Veronica Escobar (D-TX), a Latina former county judge, to Congress.
In January, there will be 223 Democrats and 197 Republicans in the House of Representatives. As Democrats ascend to leadership in House Congressional committees, several economic rights and consumer protection champions will chair committees including Maxine Waters (D-CA), who will chair the House Financial Services Committee, and Maryland’s own Elijah Cummings (D-MD), who will helm the House Oversight Committee. This means that it will be far more difficult for Members of Congress who oppose economic rights and consumer protections to attempt to overturn Obama-era regulations.
In the U.S. Senate, there will be 51 Republicans and 46 Democrats. This means that there may be strong differences between the Senate and House as they work towards passage of consumer protection legislation.
The Maryland Consumer Rights Coalition believes that consumer protection is a bipartisan issue: regulations help businesses and consumers both know the rules and operate from the same rule book in the marketplace. We look forward to working with members of Congress on both sides of the aisle to pass strong consumer protection legislation.
In Maryland, Governor Larry Hogan was re-elected, becoming only the second Republican governor to win a second term in Maryland. In the State House, Democrats held onto a super-majority in the House and Senate-meaning they can override a veto by the Governor. A number of new legislators elected to both the House and Senate ran on campaigns highlighting economic equity and inclusion issues.
Governor Hogan has already laid out his agenda highlighting tax cuts and greater accountability and oversight of schools, among other issues. What does these policies mean for public education and for low-income and working families?
What do these elections mean for us – and for the issues we care about – in Congress and in Annapolis? How can we take the energy and enthusiasm that so many individuals demonstrated in their work around the midterm elections and translate that momentum into the legislative session and federal advocacy?
Step one: join us at our Economic Summit & Consumer Celebration on November 15th when Congressman Jamie Raskin will share his thoughts on are his thoughts on how we should move forward and articulate, expand, and deepen the movement for economic rights in Maryland and Congress in this new political landscape. Congressman Raskin is one of the nation’s strongest progressive voices and strategists, and we’re delighted to present him with our Federal Champion of the Year award. You can buy tickets by clicking here.
From a recent email letter to supporters:
In Congress, a number of candidates who support economic rights, affordable healthcare, and consumer protections won their elections. Deb Haaland, a Native American woman, was elected to Congress from New Mexico on a platform of economic fairness and immigration rights. Haaland and Sharice Davids (D-KS) are the first two Native American women elected to Congress. Ilhan Omar, the first Somali-American woman (and one of the first Muslim women) elected to Congress, won her race in Minnesota on a detailed economic rights platform including a federal jobs guarantee and increasing taxes on the wealthy. Alexandria Ocasio-Cortez (D-NY) became the youngest woman elected to Congress and ran a strong campaign centered on strong proposals for economic equity.
Shared themes of economic justice, Medicare for All, debt-free college,and reducing income inequality and the racial wealth gap vaulted Rashida Talib (D-MI), a Muslim woman, Ayanna Pressely (D-MA), an African-American former City Councilwoman, and Veronica Escobar (D-TX), a Latina former county judge, to Congress.
In January, there will be 223 Democrats and 197 Republicans in the House of Representatives. As Democrats ascend to leadership in House Congressional committees, several economic rights and consumer protection champions will chair committees including Maxine Waters (D-CA), who will chair the House Financial Services Committee, and Maryland’s own Elijah Cummings (D-MD), who will helm the House Oversight Committee. This means that it will be far more difficult for Members of Congress who oppose economic rights and consumer protections to attempt to overturn Obama-era regulations.
In the U.S. Senate, there will be 51 Republicans and 46 Democrats. This means that there may be strong differences between the Senate and House as they work towards passage of consumer protection legislation.
The Maryland Consumer Rights Coalition believes that consumer protection is a bipartisan issue: regulations help businesses and consumers both know the rules and operate from the same rule book in the marketplace. We look forward to working with members of Congress on both sides of the aisle to pass strong consumer protection legislation.
In Maryland, Governor Larry Hogan was re-elected, becoming only the second Republican governor to win a second term in Maryland. In the State House, Democrats held onto a super-majority in the House and Senate-meaning they can override a veto by the Governor. A number of new legislators elected to both the House and Senate ran on campaigns highlighting economic equity and inclusion issues.
Governor Hogan has already laid out his agenda highlighting tax cuts and greater accountability and oversight of schools, among other issues. What does these policies mean for public education and for low-income and working families?
What do these elections mean for us – and for the issues we care about – in Congress and in Annapolis? How can we take the energy and enthusiasm that so many individuals demonstrated in their work around the midterm elections and translate that momentum into the legislative session and federal advocacy?
Step one: join us at our Economic Summit & Consumer Celebration on November 15th when Congressman Jamie Raskin will share his thoughts on are his thoughts on how we should move forward and articulate, expand, and deepen the movement for economic rights in Maryland and Congress in this new political landscape. Congressman Raskin is one of the nation’s strongest progressive voices and strategists, and we’re delighted to present him with our Federal Champion of the Year award. You can buy tickets by clicking here.
Grass-roots campaigner Desmond Meade on the successful Florida ballot initiative on ex-felons' right to vote
For those engaged in local campaigns concerning consumer and other citizen rights, there is encouragement in the success of the grass roots campaign to restore voting rights to ex-felons in the state of Florida. At least 1.4 million people have regained the right to vote in Florida, following the passage of Amendment 4, a statewide initiative to re-enfranchise people with felony convictions who have completed their sentences, excluding people convicted of murder or sex offenses. The amendment passed with 64.5 percent of the vote. It needed 60 percent to pass.
There has been a lot of media coverage, but left-leaning Democracy Now's reporting includes a touching video interview with Desmond Meade, a convicted felon who spearheaded the fight for Amendment 4. Desmond Meade is the president of the Florida Rights Restoration Coalition. He’s also chair of Floridians for a Fair Democracy. DAR
The Democracy Now video, including the interview with Desmond Meade, is here: https://www.democracynow.org/2018/11/7/love_prevails_floridians_celebrate_massive_restoration
Posting by Don Allen Resnikoff, who is responsible for the content
For those engaged in local campaigns concerning consumer and other citizen rights, there is encouragement in the success of the grass roots campaign to restore voting rights to ex-felons in the state of Florida. At least 1.4 million people have regained the right to vote in Florida, following the passage of Amendment 4, a statewide initiative to re-enfranchise people with felony convictions who have completed their sentences, excluding people convicted of murder or sex offenses. The amendment passed with 64.5 percent of the vote. It needed 60 percent to pass.
There has been a lot of media coverage, but left-leaning Democracy Now's reporting includes a touching video interview with Desmond Meade, a convicted felon who spearheaded the fight for Amendment 4. Desmond Meade is the president of the Florida Rights Restoration Coalition. He’s also chair of Floridians for a Fair Democracy. DAR
The Democracy Now video, including the interview with Desmond Meade, is here: https://www.democracynow.org/2018/11/7/love_prevails_floridians_celebrate_massive_restoration
Posting by Don Allen Resnikoff, who is responsible for the content
Medicaid expansion scores election wins and losses across the country
By Harris Meyer | November 7, 2018
Updated at 2:40 a.m. ET
From the Rocky Mountains to the Great Plains to New England, Medicaid expansion got a big boost Tuesday from ballot initiatives that appeared headed for passage and from gubernatorial victories by Democrats in several states who made expansion a central issue.
Vvoters in Nebraska and Utah approved mandatory ballot initiatives to extend Medicaid coverage under the Affordable Care Act to adults with incomes under 138% of the federal poverty level. Republican governors and lawmakers in those states had repeatedly refused to pass it.
Democratic gubernatorial candidates who campaigned on expansion won contests in Kansas and Maine, both states where Republican governors have rejected it. Those victories made expansion much more likely.
On the other hand, a Republican who either oppose expansion or favor imposing limits on eligibility, such as work requirements, won in Florida, and a Republican may win in Georgia. Their Democratic opponents had made Medicaid expansion central to their campaigns.
In Michigan, a state that already expanded Medicaid, the Democratic gubernatorial candidate prevailed against a GOP opponent who favored work requirements. Gretchen Whitmer now will have to convince GOP lawmakers not to move forward with those eligibility limits, which likely would reduce enrollment.
But in Ohio, former U.S. Senator and current Attorney General Mike DeWine, who supported work requirements for the state's expansion program, beat the Democrat, Richard Cordray, who opposed a work mandate.
From: https://www.modernhealthcare.com/article/20181107/NEWS/181109942?utm_source=modernhealthcare&utm_campaign=am&utm_medium=email&utm_content=20181107-NEWS-181109942
DAR comment: The outcome of Tuesday's Medicaid ballot initiatives and some of the governor and Senate races underlines the obvious point that health care and other consumer advocacy points require buy-in of voters; there are many voters who would seem to be helped by expanded government support for health care and other government benefits who vote against because of other issues, such as those emphacized in the rhetoric of Donald Trump. Obviously, consumer benefit policy advocacy and political advocacy are linked.
Policy as politics: McCaskill's focus on health care and wage issues did not carry the day in Missouri
McCaskill's campaign focused primarily on pocketbook issues, like health care. She backed a ballot initiative raising Missouri's minimum wage and a union-led referendum on the Republican-backed right to work law passed by the Missouri General Assembly.
In Kansas City, voters turned out overwhelmingly for McCaskill, but it wasn't enough to carry her to victory. And while Greene County, which contains Springfield, turned out for Hawley, McCaskill fared better than Hillary Clinton did in the 2016 presidential election.
While McCaskill insisted she's a moderate, Hawley sought to tie her to national Democratic leaders, including U.S. Senate Minority Leader Chuck Schumer, D-N.Y., and House Minority Leader Nancy Pelosi, D-Calif.
During the campaign, McCaskill said she supported increased border security and she touted an endorsement by the union that represents Border Patrol agents, while Hawley accused her of supporting a "radical" immigration bill. The bill McCaskill is co-sponsoring would halt family separations at the border.
McCaskill tried to focus the race on protecting parts of former President Barack Obama's Affordable Care Act -- the same one Trump campaigned on repealing. Hawley is part of a Republican lawsuit that would undo the health care law.
Hawley, in response, said he supported a stand-alone law requiring that insurance companies provide coverage for those with pre-existing conditions. His campaign released an ad featuring his son, who he said has a rare chronic bone condition.
https://www.msn.com/en-us/news/politics/republican-hawley-beats-mccaskill-to-capture-us-senate-seat-in-missouri/ar-BBPqKtI?ocid=spartandhp
McCaskill's campaign focused primarily on pocketbook issues, like health care. She backed a ballot initiative raising Missouri's minimum wage and a union-led referendum on the Republican-backed right to work law passed by the Missouri General Assembly.
In Kansas City, voters turned out overwhelmingly for McCaskill, but it wasn't enough to carry her to victory. And while Greene County, which contains Springfield, turned out for Hawley, McCaskill fared better than Hillary Clinton did in the 2016 presidential election.
While McCaskill insisted she's a moderate, Hawley sought to tie her to national Democratic leaders, including U.S. Senate Minority Leader Chuck Schumer, D-N.Y., and House Minority Leader Nancy Pelosi, D-Calif.
During the campaign, McCaskill said she supported increased border security and she touted an endorsement by the union that represents Border Patrol agents, while Hawley accused her of supporting a "radical" immigration bill. The bill McCaskill is co-sponsoring would halt family separations at the border.
McCaskill tried to focus the race on protecting parts of former President Barack Obama's Affordable Care Act -- the same one Trump campaigned on repealing. Hawley is part of a Republican lawsuit that would undo the health care law.
Hawley, in response, said he supported a stand-alone law requiring that insurance companies provide coverage for those with pre-existing conditions. His campaign released an ad featuring his son, who he said has a rare chronic bone condition.
https://www.msn.com/en-us/news/politics/republican-hawley-beats-mccaskill-to-capture-us-senate-seat-in-missouri/ar-BBPqKtI?ocid=spartandhp
"Trump Administration Spares Corporate Wrongdoers Billions in Penalties"
The New York Times reports:
Across the corporate landscape, the Trump administration has presided over a sharp decline in financial penalties against banks and big companies accused of malfeasance, according to analyses of government data and interviews with more than 60 former and current federal officials. The approach mirrors the administration’s aggressive deregulatory agenda throughout the federal government.
The New York Times and outside experts tallied enforcement activity at the S.E.C. and the Justice Department, the two most powerful agencies policing the corporate and financial sectors. Comparing cases filed during the first 20 months of the Trump presidency with the final 20 months of the Obama administration, the review found:
• A 62 percent drop in penalties imposed and illicit profits ordered returned by the S.E.C., to $1.9 billion under the Trump administration from $5 billion under the Obama administration;
• A 72 percent decline in corporate penalties from the Justice Department’s criminal prosecutions, to $3.93 billion from $14.15 billion, and a similar percent drop in civil penalties against financial institutions, to $7.4 billion;
• A lighter touch toward the banking industry, with the S.E.C. ordering banks to pay $1.7 billion during the Obama period, nearly four times as much as in the Trump era, and Mr. Trump’s Justice Department bringing 17 such cases, compared with 71.
The full article is here. https://www.nytimes.com/2018/11/03/us/trump-sec-doj-corporate-penalties.html
The New York Times reports:
Across the corporate landscape, the Trump administration has presided over a sharp decline in financial penalties against banks and big companies accused of malfeasance, according to analyses of government data and interviews with more than 60 former and current federal officials. The approach mirrors the administration’s aggressive deregulatory agenda throughout the federal government.
The New York Times and outside experts tallied enforcement activity at the S.E.C. and the Justice Department, the two most powerful agencies policing the corporate and financial sectors. Comparing cases filed during the first 20 months of the Trump presidency with the final 20 months of the Obama administration, the review found:
• A 62 percent drop in penalties imposed and illicit profits ordered returned by the S.E.C., to $1.9 billion under the Trump administration from $5 billion under the Obama administration;
• A 72 percent decline in corporate penalties from the Justice Department’s criminal prosecutions, to $3.93 billion from $14.15 billion, and a similar percent drop in civil penalties against financial institutions, to $7.4 billion;
• A lighter touch toward the banking industry, with the S.E.C. ordering banks to pay $1.7 billion during the Obama period, nearly four times as much as in the Trump era, and Mr. Trump’s Justice Department bringing 17 such cases, compared with 71.
The full article is here. https://www.nytimes.com/2018/11/03/us/trump-sec-doj-corporate-penalties.html
AAI Asks Seventh Circuit for Better Monopolization Standards (Viamedia v. Comcast)
The American Antitrust Institute (AAI) and Public Knowledge have filed an amicus brief in the Seventh Circuit Court of Appeals (Link: https://www.antitrustinstitute.org/wp-content/uploads/2018/11/Viamedia-v.-Comcast-11.1.18.pdf) urging the court to reverse a district court's dismissal of refusal-to-deal and tying claims based on overly demanding monopolization standards.
Among other things, the brief argues that the district court improperly extended the defendant-friendly Trinko decision to mean that a refusal-to-deal claim can only be brought if a plaintiff shows that the monopolist's conduct had no potential rational purpose. And it improperly extended the defendant-friendly Masushita decision to mean that a plaintiff cannot avoid summary judgment unless it presents evidence that "tends to exclude" the possibility that the monopolist's conduct was lawful.
Read More - URL https://www.antitrustinstitute.org/work-product/aai-asks-seventh-circuit-for-better-monopolization-standards-viamedia-v-comcast/
The American Antitrust Institute (AAI) and Public Knowledge have filed an amicus brief in the Seventh Circuit Court of Appeals (Link: https://www.antitrustinstitute.org/wp-content/uploads/2018/11/Viamedia-v.-Comcast-11.1.18.pdf) urging the court to reverse a district court's dismissal of refusal-to-deal and tying claims based on overly demanding monopolization standards.
Among other things, the brief argues that the district court improperly extended the defendant-friendly Trinko decision to mean that a refusal-to-deal claim can only be brought if a plaintiff shows that the monopolist's conduct had no potential rational purpose. And it improperly extended the defendant-friendly Masushita decision to mean that a plaintiff cannot avoid summary judgment unless it presents evidence that "tends to exclude" the possibility that the monopolist's conduct was lawful.
Read More - URL https://www.antitrustinstitute.org/work-product/aai-asks-seventh-circuit-for-better-monopolization-standards-viamedia-v-comcast/
20 minutes of John Oliver on State Attorneys General
Many State AGs are elected, and if that is true in your state then John Oliver wants you to do some research and vote. Many State AGs, Republican and Democrat are highly partisan, and spend great effort challenging the federal government, for better or worse. Oliver seems able to focus on worse.
The YouTube video URL follows. WARNING: Oliver uses profanity, and jokes.
https://www.youtube.com/watch?v=UpdMYOtAmKY
Many State AGs are elected, and if that is true in your state then John Oliver wants you to do some research and vote. Many State AGs, Republican and Democrat are highly partisan, and spend great effort challenging the federal government, for better or worse. Oliver seems able to focus on worse.
The YouTube video URL follows. WARNING: Oliver uses profanity, and jokes.
https://www.youtube.com/watch?v=UpdMYOtAmKY
From NYT:
Letitia James and Keith H. Wofford faced off on Tuesday in their only debate for New York attorney general
Mr. Wofford, a Republican, had called for multiple debates, but Ms. James, a Democrat who is handily leading in public polls, agreed to just this debate at the Manhattan studios of Spectrum NY1 — and it nearly did not happen.
The New York attorney general’s office currently has dozens of actions against Mr. Trump and his administration, including a lawsuit against the president’s charitable foundation and another challenging efforts to ask a citizenship question on the census.
Ms. James has vowed to continue the efforts against Mr. Trump and his policies, and she continued to embrace that role on Tuesday. “Attorneys general across this country have been the firmest pillars of our democracy,” she said.
Her one question to Mr. Wofford was why he had voted for Mr. Trump for president in 2016.
From: https://www.nytimes.com/2018/10/31/nyregion/letitia-james-keith-wofford-debate.html?fallback=0&recId=1CLKskjlCJ60b6AUG479Co1il2n&locked=0&geoContinent=NA&geoRegion=DC&recAlloc=contextual-bandit-home-geo&geoCountry=US&blockId=midterm-elections&imp_id=267963940&action=click&module=Election%202018&pgtype=Homepage
Christy McDonald of Detroit Public Television shares a look at a close Attorney General race in Michigan, where Democratic candidate Dana Nessel is running against Republican candidate Tom Leonard.
The video is here: https://www.youtube.com/watch?v=uhCb11aq3RI
Pence speech suggests full bore US government conflict with China -- so resolution of trade and tariff issues affecting US consumers may be difficult
Vice President Mike Pence's speech blasting China was a "wake up call," according to CNBC's Jim Cramer.
Pence's Oct. 4 address at Washington's Hudson Institute accused China of "malign" efforts to undermine President Donald Trump and sway the November midterm elections from Republicans — a charge China has denied.
Cramer described the tone of the Pence speech as not just hawkish but a "declaration of economic war."
Cramer said: "It was a recognition that it's a communist country" and not really an ally of the U.S. because it "has none of the protections that democracies afford," he added.The U.S. and China are currently locked in a trade war that's seen each side imposing tariffs on each other's products.
However, Cramer said the divide between the world's two largest economic superpowers is bigger than trade.
Source: https://www.cnbc.com/2018/10/24/cramer-pence-speech-on-china-most-important-of-trump-administration.html
The Pence speech is here: https://www.whitehouse.gov/briefings-statements/remarks-vice-president-pence-administrations-policy-toward-china/
Excerpt from Pence speech:
But I come before you today because the American people deserve to know that, as we speak, Beijing is employing a whole-of-government approach, using political, economic, and military tools, as well as propaganda, to advance its influence and benefit its interests in the United States.
China is also applying this power in more proactive ways than ever before, to exert influence and interfere in the domestic policy and politics of this country.
Under President Trump’s leadership, the United States has taken decisive action to respond to China with American action, applying the principles and the policies long advocated in these halls.
In our National Security Strategy that the President Trump released last December, he described a new era of “great power competition.” Foreign nations have begun to, as we wrote, “reassert their influence regionally and globally,” and they are “contesting [America’s] geopolitical advantages and trying [in essence] to change the international order in their favor.”
Vice President Mike Pence's speech blasting China was a "wake up call," according to CNBC's Jim Cramer.
Pence's Oct. 4 address at Washington's Hudson Institute accused China of "malign" efforts to undermine President Donald Trump and sway the November midterm elections from Republicans — a charge China has denied.
Cramer described the tone of the Pence speech as not just hawkish but a "declaration of economic war."
Cramer said: "It was a recognition that it's a communist country" and not really an ally of the U.S. because it "has none of the protections that democracies afford," he added.The U.S. and China are currently locked in a trade war that's seen each side imposing tariffs on each other's products.
However, Cramer said the divide between the world's two largest economic superpowers is bigger than trade.
Source: https://www.cnbc.com/2018/10/24/cramer-pence-speech-on-china-most-important-of-trump-administration.html
The Pence speech is here: https://www.whitehouse.gov/briefings-statements/remarks-vice-president-pence-administrations-policy-toward-china/
Excerpt from Pence speech:
But I come before you today because the American people deserve to know that, as we speak, Beijing is employing a whole-of-government approach, using political, economic, and military tools, as well as propaganda, to advance its influence and benefit its interests in the United States.
China is also applying this power in more proactive ways than ever before, to exert influence and interfere in the domestic policy and politics of this country.
Under President Trump’s leadership, the United States has taken decisive action to respond to China with American action, applying the principles and the policies long advocated in these halls.
In our National Security Strategy that the President Trump released last December, he described a new era of “great power competition.” Foreign nations have begun to, as we wrote, “reassert their influence regionally and globally,” and they are “contesting [America’s] geopolitical advantages and trying [in essence] to change the international order in their favor.”
NY Judge says fantasy sports is gambling
The opinion is here:
https://dlbjbjzgnk95t.cloudfront.net/1096000/1096870/fantasyruling-2-29.pdf
White, et al. v. Cuomo
IndexNo.: 5851-16
Excerpt:
Accordingly, it is hereby
ORDERED,ADJUDGED AND DECLARED that Plaintiff's motion for Summary Judgment is granted herein (and Defendant's cross-motion denied) as follows: that Chapter 237 of the Laws of the State of N ew York, to the extent that it authorizes and regulates IFS within the State of New York, is found null arid void as in violation of Article I, §9 of the New York State Constitution; and it is further
ORDERED, ADIDDGED and DECLARED that Defendant's cross-motion for summary judgment granting dismissal of the within action is granted herein (and plaintiffs motion denied) as follows; Chapter 237 of the Laws of the State of New York, to the extent that it excludes IFS from the scope of the New York State Penal Law definition of "gambling" at Article 225, is not in violation of Article I, §9 of the New York State Constitution,
The opinion is here:
https://dlbjbjzgnk95t.cloudfront.net/1096000/1096870/fantasyruling-2-29.pdf
White, et al. v. Cuomo
IndexNo.: 5851-16
Excerpt:
Accordingly, it is hereby
ORDERED,ADJUDGED AND DECLARED that Plaintiff's motion for Summary Judgment is granted herein (and Defendant's cross-motion denied) as follows: that Chapter 237 of the Laws of the State of N ew York, to the extent that it authorizes and regulates IFS within the State of New York, is found null arid void as in violation of Article I, §9 of the New York State Constitution; and it is further
ORDERED, ADIDDGED and DECLARED that Defendant's cross-motion for summary judgment granting dismissal of the within action is granted herein (and plaintiffs motion denied) as follows; Chapter 237 of the Laws of the State of New York, to the extent that it excludes IFS from the scope of the New York State Penal Law definition of "gambling" at Article 225, is not in violation of Article I, §9 of the New York State Constitution,
Following is the study that is the source for many media articles:
Advertising in Young Children's Apps: A Content Analysis
Meyer, Marisa*; Adkins, Victoria, MSW†; Yuan, Nalingna, MS*; Weeks, Heidi M., PhD‡; Chang, Yung-Ju, PhD§; Radesky, Jenny, MD*
Journal of Developmental & Behavioral Pediatrics: October 26, 2018 - Volume Publish Ahead of Print - Issue - p
Objective: Young children use mobile devices on average 1 hour/day, but no studies have examined the prevalence of advertising in children's apps. The objective of this study was to describe the advertising content of popular children's apps.
Methods: To create a coding scheme, we downloaded and played 39 apps played by children aged 12 months to 5 years in a pilot study of a mobile sensing app; 2 researchers played each app, took detailed notes on the design of advertisements, and iteratively refined the codebook (interrater reliability 0.96). Codes were then applied to the 96 most downloaded free and paid apps in the 5 And Under category on the Google Play app store.
Results: Of the 135 apps reviewed, 129 (95%) contained at least 1 type of advertising. These included use of commercial characters (42%); full-app teasers (46%); advertising videos interrupting play (e.g., pop-ups [35%] or to unlock play items [16%]); in-app purchases (30%); prompts to rate the app (28%) or share on social media (14%); distracting ads such as banners across the screen (17%) or hidden ads with misleading symbols such as “$” or camouflaged as gameplay items (7%). Advertising was significantly more prevalent in free apps (100% vs 88% of paid apps), but occurred at similar rates in apps labeled as “educational” versus other categories.
Conclusion: In this exploratory study, we found high rates of mobile advertising through manipulative and disruptive methods. These results have implications for advertising regulation, parent media choices, and apps' educational value.
Advertising in Young Children's Apps: A Content Analysis
Meyer, Marisa*; Adkins, Victoria, MSW†; Yuan, Nalingna, MS*; Weeks, Heidi M., PhD‡; Chang, Yung-Ju, PhD§; Radesky, Jenny, MD*
Journal of Developmental & Behavioral Pediatrics: October 26, 2018 - Volume Publish Ahead of Print - Issue - p
- Abstract -https://journals.lww.com/jrnldbp/Abstract/publishahead/Advertising_in_Young_Children_s_Apps___A_Content.99257.aspx#article-abstract-content1
Objective: Young children use mobile devices on average 1 hour/day, but no studies have examined the prevalence of advertising in children's apps. The objective of this study was to describe the advertising content of popular children's apps.
Methods: To create a coding scheme, we downloaded and played 39 apps played by children aged 12 months to 5 years in a pilot study of a mobile sensing app; 2 researchers played each app, took detailed notes on the design of advertisements, and iteratively refined the codebook (interrater reliability 0.96). Codes were then applied to the 96 most downloaded free and paid apps in the 5 And Under category on the Google Play app store.
Results: Of the 135 apps reviewed, 129 (95%) contained at least 1 type of advertising. These included use of commercial characters (42%); full-app teasers (46%); advertising videos interrupting play (e.g., pop-ups [35%] or to unlock play items [16%]); in-app purchases (30%); prompts to rate the app (28%) or share on social media (14%); distracting ads such as banners across the screen (17%) or hidden ads with misleading symbols such as “$” or camouflaged as gameplay items (7%). Advertising was significantly more prevalent in free apps (100% vs 88% of paid apps), but occurred at similar rates in apps labeled as “educational” versus other categories.
Conclusion: In this exploratory study, we found high rates of mobile advertising through manipulative and disruptive methods. These results have implications for advertising regulation, parent media choices, and apps' educational value.
NYT: Rural Hospitals are closing: State Medicaid expansion choices have an effect
In its June report to Congress, the Medicare Payment Advisory Commission found that of the 67 rural hospitals that closed since 2013, about one-third were more than 20 miles from the next closest hospital.
A study published last year in Health Affairs by researchers from the University of Minnesota found that over half of rural counties now lack obstetric services. Another study, published in Health Services Research, showed that such closures increase the distance pregnant women must travel for delivery.
And another published earlier this year in JAMA found that higher-risk, preterm births are more likely in counties without obstetric units. (Some hospitals close obstetric units without closing the entire hospital.)
Ms. Kozhimannil, a co-author of all three studies, said, “What’s left are maternity care deserts in some of the most vulnerable communities, putting pregnant women and their babies at risk.”
Many factors can underlie the financial decision to close a hospital. Rural populations are shrinking, and the trend of hospital mergers and acquisitions can contribute to closures as services are consolidated.
Another factor: Over the long term, we are using less hospital care as more services are shifted to outpatient settings and as inpatient care is performed more rapidly. In 1960, an average appendectomy required over six days in the hospital; today one to two days is the norm.
Part of the story is political: the decision by many red states not to take advantage of federal funding to expand Medicaid as part of the Affordable Care Act. Some states cited fiscal concerns for their decisions, but ideological opposition to Obamacare was another factor.
In rural areas, lower incomes and higher rates of uninsured people contribute to higher levels of uncompensated hospital care — meaning many people are unable to pay their hospital bills. Uncompensated care became less of a problem in hospitals in states that expanded Medicaid.
In a Commonwealth Fund Issue Brief, researchers from Northwestern Kellogg School of Management found that hospitals in Medicaid expansion states saved $6.2 billion in uncompensated care, with the largest reductions in states with the highest proportion of low-income and uninsured patients. Consistent with these findings, the vast majority of recent hospital closings have been in states that have not expanded Medicaid.
Richard Lindrooth, a professor at the University of Colorado School of Public Health, led a study in Health Affairs on the relationship between Medicaid expansion and hospitals’ financial health. Hospitals in nonexpansion states took a financial hit and were far more likely to close. In the continuing battle within some states about whether or not to expand Medicaid, “hospitals’ futures hang in the balance,” he said.
Excerpts are from: https://www.nytimes.com/2018/10/29/upshot/a-sense-of-alarm-as-rural-hospitals-keep-closing.html?rref=collection%2Fsectioncollection%2Fbusiness&action=click&contentCollection=business®ion=rank&module=package&version=highlights&contentPlacement=6&pgtype=sectionfront
Objecting class members' counsel's petition to U.S. Supreme Court in opposition to "cy pres" remedies; Public Citizen response
The introduction of the Petition follows:
INTRODUCTION
Petitioners, as class members, challenge an $8.5 million class settlement negotiated between class counsel and the defendant that pays the class no money, but instead directs millions to class counsel and funnels the remainder to third parties, including class counsel's alma maters and nonprofits to which the defendant already contributes. This is a clear abuse and must be curtailed.
This Court has long recognized that Rule 23(b)(3) opt-out class actions are an "adventuresome" innova tion fraught with potential conflicts. E.g., Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 614, 625-26 (1997). Rule 23 must be "applied with the interests of absent class members in close view." Id. at 629. The Court has consistently rejected the use of proce dural tactics by plaintiffs or defendants to game class actions. E.g., China Agritech, Inc. v. Resh, 138 S. Ct. 1800 (2018); Microsoft Corp. v. Baker, 137 S. Ct. 1702 (2017); Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016); Standard Fire Ins. Co. v. Knowles, 568 U.S. 588 (2013).
Because of conflicts of interest inherent in the class-action process-especially with regard to settlements-careful judicial scrutiny is necessary lest class counsel and the defendant bargain away the rights of the class members on terms that minimize payoff by the defendant, maximize benefit to class counsel, and leave injured class members out in the cold. Yet the Ninth Circuit below took the opposite approach, declaring that close scrutiny of the terms of a cy pres settlement would be "an intrusion into the private parties' negotiations" and therefore "improper and disruptive to the settlement process." Pet. App. 15.
The majority of class actions that survive motions to dismiss are resolved by settlement. As one court has noted, "Inequitable settlements are an unfortunate recurring bug in our system of class litigation." Pearson v. Target Corp., - F.3d -, 2018 WL 3117848, at *1 (7th Cir. Jun. 26, 2018) (Wood, C.J.) ("Pearson II"). In the absence oflegal rules providing proper incentives, the negotiating parties' preferences readily achieved even in the absence of explicit collusion-are to structure a settlement that maximizes the class attorneys' share of the settlement value of the case while minimizing cost to the defendant, all at the expense of absent class members. In re Dry Max Pampers Litig., 724 F.3d 713, 717-18 (6th Cir. 2013) (Kethledge, J.); see generally Howard M. Erichson, Aggregation as Disempowerment: Red Flags in Class Action Settlements, 92 Notre Dame L. Rev. 859, 874-903 (2016) ("Erichson"). Parties structure settlements to hide the economic reality, create the appearance of a larger recovery, and thus support a larger claim for attorneys' fees. This case involves one of the most notorious devices used to create the "illusion of compensation," so-called cy pres recovery. Martin H. Redish et al., Cy Pres Relief and the Pathologies of the Modern Class Action: A Normative and Empirical Analysis, 62 Fla. L. Rev. 617 (2010) ("Redish").
The Ninth Circuit treated the cy pres arrangement here as equivalent to a class settlement paying $8.5 million to class members. In fact they got zero. All the money went to class counsel and to favored non profit organizations affiliated with class counsel and the defendant. It is not fair or reasonable under Rule 23(e) for class attorneys to arrogate millions for themselves and nothing for their clients. In ratifying the district court's approval of this settlement, the Ninth Circuit adopted several holdings that create perverse incentives that encourage both gamesman ship at the expense of absent class members and meritless class actions designed to benefit only attor neys. If this Court affirms the Ninth Circuit's approach, cy pres settlements like this one, previously substantially deterred by other appellate courts' re fusal to endorse them, will become dramatically more common, even supplanting settlements that currently directly pay class members tens of millions of dollars. The Court should reverse the judgment below, thereby making clear that class counsel has a fiduciary duty to class members, and that Rule 23(e) requires courts to align the interests of class counsel with the interests of their clients.
From https://www.supremecourt.gov/DocketPDF/17/17-961/52594/20180709130345481_17-961BriefForPetitioners.pdf
Public Citizen's brief is here:
- Amicus Curiae Brief (09/05/2018) https://www.citizen.org/system/files/case_documents/frank_v_gaos_amicus_curiae.pdf
Following is a Case Description posted by Public Citizen:
The plaintiffs in this case brought a class action against Google for violating users’ privacy by disclosing their Internet search terms to third-party websites. The complaint alleged claims for violation of the Stored Communications Act and several state-law causes of action. The class includes approximately 129 million people. Following mediation, the parties entered into a settlement providing for injunctive relief, an $8.5 million settlement fund, and attorney’s fees. Because distribution to the individual class members was infeasible, the settlement provided for cy pres distribution of the fund to organizations dedicated to protecting Internet privacy. In accordance with federal Rule of Civl Procedure 23(e), the district court then evaluated the settlement to assess whether it was fair, reasonable, and adequate, and held that it was. Two objectors to the settlement appealed and, after losing the appeal, petitioned for Supreme Court review. The Court accepted the case to consider whether distributing the settlement fund as cy pres rather than directly to class members complies with Rule 23(e).
Public Citizen filed an amicus brief in support of the settling parties. The brief explained that, to allow appropriate use of cy pres settlements while preventing their misuse, the federal appellate courts have articulated a consistent set of standards to assess cy pres awards. The courts allow settlements involving cy pres payments when distributions to individual class members are impracticable or when class members to whom distributions are practicable have been fully compensated for their losses. And the courts agree that proposed cy pres awards must be carefully scrutinized to ensure that they adequately benefit class members in ways that have a sufficient relationship to the claims asserted by the class.
In this case, the courts properly applied these broadly accepted standards. The brief also explained that, contrary to the suggestion in the amicus brief of the Solicitor General, Article III neither limits the ability of parties to settle a case nor addresses the form of distribution of compensatory relief.
California Net Neutrality Law Put on Hold Until Federal Lawsuit Is ResolvedBy Ted Johnson
WASHINGTON — California’s net neutrality law, signed last month by Gov. Jerry Brown, will be put on hold until federal litigation over the FCC’s role is resolved.
The state’s attorney general, Xavier Becerra, agreed to pause the implementation of the law, which includes the strongest net neutrality protections of any state measure that has passed recently. The same day that Brown signed the law, the Justice Department sued to stop it, arguing that only the federal government can regulate interstate commerce.
California’s passage of the law was in response to the FCC’s decision late last year to repeal many of the net neutrality rules it had in place, including ones that ban internet providers from blocking or throttling traffic, or engaging in paid privatization.
After that action, a number of public interest groups and state attorneys general sued to challenge the FCC’s action, including a provision to preempt any state-level attempts to implement their own net neutrality rules. Oral arguments in the D.C. Circuit Court of Appeals case are scheduled for Feb. 1.
FCC chairman Ajit Pai called California’s agreement to pause its law a “substantial concession” that “reflects the strength of the case made by the United States earlier this month. It also demonstrates, contrary to the claims of the law’s supporters, that there is no urgent problem that these regulations are needed to address.”
State Sen. Scott Wiener, who authored California’s law, said, “of course, I very much want to see California’s net neutrality law go into effect immediately, in order to protect access to the internet. Yet I also understand and support the Attorney General’s rationale for allowing the DC circuit appeal to be resolved before we move forward to defend our net neutrality law in court.”
California’s law was due to go into effect on Jan. 1.
From: https://variety.com/2018/politics/politics/california-net-neutrality-law-on-hold-1202999031/
WASHINGTON — California’s net neutrality law, signed last month by Gov. Jerry Brown, will be put on hold until federal litigation over the FCC’s role is resolved.
The state’s attorney general, Xavier Becerra, agreed to pause the implementation of the law, which includes the strongest net neutrality protections of any state measure that has passed recently. The same day that Brown signed the law, the Justice Department sued to stop it, arguing that only the federal government can regulate interstate commerce.
California’s passage of the law was in response to the FCC’s decision late last year to repeal many of the net neutrality rules it had in place, including ones that ban internet providers from blocking or throttling traffic, or engaging in paid privatization.
After that action, a number of public interest groups and state attorneys general sued to challenge the FCC’s action, including a provision to preempt any state-level attempts to implement their own net neutrality rules. Oral arguments in the D.C. Circuit Court of Appeals case are scheduled for Feb. 1.
FCC chairman Ajit Pai called California’s agreement to pause its law a “substantial concession” that “reflects the strength of the case made by the United States earlier this month. It also demonstrates, contrary to the claims of the law’s supporters, that there is no urgent problem that these regulations are needed to address.”
State Sen. Scott Wiener, who authored California’s law, said, “of course, I very much want to see California’s net neutrality law go into effect immediately, in order to protect access to the internet. Yet I also understand and support the Attorney General’s rationale for allowing the DC circuit appeal to be resolved before we move forward to defend our net neutrality law in court.”
California’s law was due to go into effect on Jan. 1.
From: https://variety.com/2018/politics/politics/california-net-neutrality-law-on-hold-1202999031/
NYT: Service providers drop Gab
Pittsburgh shooter Bowers’s affiliation with Gab has already cost the company dearly. On Saturday, the company’s web hosting provider, Joyent, said it would stop hosting the site, according to an email posted by Gab on Twitter. Gab’s website went offline Sunday night and was replaced with a statement saying that its service would be temporarily inaccessible while it switched to a new hosting provider.
In addition, GoDaddy, the domain name provider, told Gab it had 24 hours to move its domain name to another service, after finding content on the site that promoted violence.
The payment processing platform Stripe, which Gab has used to receive fees for its paid Gab Pro membership level, and which froze Gab’s account this month for violating its terms of service, said it was suspending transfers to the company’s bank account pending an investigation, according to another email posted to Twitter by Gab. PayPal, another payment processor, canceled Gab’s account, saying it had been closely monitoring the site even before Saturday’s massacre.
Source: https://www.nytimes.com/2018/10/28/us/gab-robert-bowers-pittsburgh-synagogue-shootings.html?rref=collection%2Fsectioncollection%2Fbusiness&action=click&contentCollection=business®ion=rank&module=package&version=highlights&contentPlacement=2&pgtype=sectionfront
Pittsburgh shooter Bowers’s affiliation with Gab has already cost the company dearly. On Saturday, the company’s web hosting provider, Joyent, said it would stop hosting the site, according to an email posted by Gab on Twitter. Gab’s website went offline Sunday night and was replaced with a statement saying that its service would be temporarily inaccessible while it switched to a new hosting provider.
In addition, GoDaddy, the domain name provider, told Gab it had 24 hours to move its domain name to another service, after finding content on the site that promoted violence.
The payment processing platform Stripe, which Gab has used to receive fees for its paid Gab Pro membership level, and which froze Gab’s account this month for violating its terms of service, said it was suspending transfers to the company’s bank account pending an investigation, according to another email posted to Twitter by Gab. PayPal, another payment processor, canceled Gab’s account, saying it had been closely monitoring the site even before Saturday’s massacre.
Source: https://www.nytimes.com/2018/10/28/us/gab-robert-bowers-pittsburgh-synagogue-shootings.html?rref=collection%2Fsectioncollection%2Fbusiness&action=click&contentCollection=business®ion=rank&module=package&version=highlights&contentPlacement=2&pgtype=sectionfront
Kavanaugh, Gorsuch, and Thomas v FDR New Deal style regulation?
The early phase of the Congressional hearings for Justice Kavanaugh involved some focus on his views about the power of administrative agencies. Democratic Senators in particular worried that Kavanaugh's judicial opinions were restrictive of the power of administrative agencies that carry out various government regulatory functions. Op-ed writer Eric Posner shares that concern, worrying that a conservative U.S. Supreme Court could bring us back to the kind of judicial thinking that prevailed prior to the FDR New Deal.
We recall that antipathy to regulations intended to protect workers and consumers dates back to at least 1905. Lochner v. New York was a 1905 Supreme Court case that blocked legislation limiting working hours for bakers. The theory of the Court involved support for freedom of contract. The years 1905 to 1936 have been called the “Lochner era,” ending with a partisan battle by Democrat President Franklin Delano Roosevelt.
Roosevelt wanted to stop the U.S. Supreme Court from blocking his regulatory efforts, so he threatened to use his popularity and power with Congress to increase the number of Justices. Such “court packing” would give Roosevelt the power to appoint sympathetic judges and change case decision outcomes. Faced with that challenge, the nine sitting Justices became more inclined to see things Roosevelt’s way. Case decisions on regulatory issues began to go Roosevelt’s way, and court packing was not pursued.
But Eric Posner is worried that a new Lochner era may soon be upon us. Following is an excerpt from his Op-Ed. DAR
The conservative assault on the administrative state has four elements.
First, Justices Gorsuch and Thomas want to revive a discredited legal rule that was invoked by the Supreme Court in 1935 and then abandoned. The “nondelegation doctrine” says that Congress may not “delegate” its legislative power to administrative agencies — in other words, authorize agencies to make policy through regulation. That doctrine is at issue again in the Gundy case, where the challengers argue that Congress gave the attorney general too much discretion to set the rules for sex offenders.
Second, Justices Gorsuch, Kavanaugh and Thomas want to undermine a rule called the Chevron doctrine, after a 1984 Supreme Court case. That rule says that when an agency regulation is based on a reasonable interpretation of a statute, courts should “defer” to the agency. The Chevron rule codified existing judicial recognition of the core idea of the administrative state. Specialists — in environmental hazards, in credit markets, in workplace safety — should regulate. Generalist judges, who end up disagreeing with one another and causing administrative confusion, should keep their hands off. The Chevron doctrine is at issue in the Nielsen case, where the challengers have urged the court not to defer to the government’s interpretation of the immigration statute.
Third, the conservative justices dislike the principle of agency autonomy and have looked askance at job protections for agency officials.
Fourth, the conservative justices have endorsed a novel interpretation of the First Amendment that protects businesses from regulation — from campaign finance regulation, labor regulation and even regulations that require them to disclose information to consumers.
What is the basis for this radical change in the law? Justices Kavanaugh, Gorsuch and Thomas claim to be “originalists,” who believe that the court should strike down laws that violate the original understanding of the Constitution. But the founders did not bar Congress from creating administrative agencies or think that the First Amendment protected businesses from commercial regulation.
Many liberals think that the conservative justices are cat’s paws of business. But their claims to the contrary, businesses do not oppose regulation. Businesses constantly beseech the agencies to regulate — not themselves, but the other businesses that they compete with or depend on, and are harmed by. The new conservative jurisprudence may help some businesses in the short run but ultimately will undermine the legal structure in which they flourish.
The answer is both obvious and depressing. The modern conservative jurisprudence is an exercise in nostalgia, a yearning for pre-New Deal America when, supposedly, government was less oppressive and people were freer than they are today. You can see this nostalgia in the homilies to olden times in Justices Gorsuch’s and Kavanaugh’s lectures — and their insistence that answers to today’s challenges can be found in a theory of government invented in the 18th century by men wearing breeches and powdered wigs.
https://www.nytimes.com/2018/10/23/opinion/supreme-court-brett-kavanaugh-trump-.html?action=click&module=Opinion&pgtype=Homepage
The early phase of the Congressional hearings for Justice Kavanaugh involved some focus on his views about the power of administrative agencies. Democratic Senators in particular worried that Kavanaugh's judicial opinions were restrictive of the power of administrative agencies that carry out various government regulatory functions. Op-ed writer Eric Posner shares that concern, worrying that a conservative U.S. Supreme Court could bring us back to the kind of judicial thinking that prevailed prior to the FDR New Deal.
We recall that antipathy to regulations intended to protect workers and consumers dates back to at least 1905. Lochner v. New York was a 1905 Supreme Court case that blocked legislation limiting working hours for bakers. The theory of the Court involved support for freedom of contract. The years 1905 to 1936 have been called the “Lochner era,” ending with a partisan battle by Democrat President Franklin Delano Roosevelt.
Roosevelt wanted to stop the U.S. Supreme Court from blocking his regulatory efforts, so he threatened to use his popularity and power with Congress to increase the number of Justices. Such “court packing” would give Roosevelt the power to appoint sympathetic judges and change case decision outcomes. Faced with that challenge, the nine sitting Justices became more inclined to see things Roosevelt’s way. Case decisions on regulatory issues began to go Roosevelt’s way, and court packing was not pursued.
But Eric Posner is worried that a new Lochner era may soon be upon us. Following is an excerpt from his Op-Ed. DAR
The conservative assault on the administrative state has four elements.
First, Justices Gorsuch and Thomas want to revive a discredited legal rule that was invoked by the Supreme Court in 1935 and then abandoned. The “nondelegation doctrine” says that Congress may not “delegate” its legislative power to administrative agencies — in other words, authorize agencies to make policy through regulation. That doctrine is at issue again in the Gundy case, where the challengers argue that Congress gave the attorney general too much discretion to set the rules for sex offenders.
Second, Justices Gorsuch, Kavanaugh and Thomas want to undermine a rule called the Chevron doctrine, after a 1984 Supreme Court case. That rule says that when an agency regulation is based on a reasonable interpretation of a statute, courts should “defer” to the agency. The Chevron rule codified existing judicial recognition of the core idea of the administrative state. Specialists — in environmental hazards, in credit markets, in workplace safety — should regulate. Generalist judges, who end up disagreeing with one another and causing administrative confusion, should keep their hands off. The Chevron doctrine is at issue in the Nielsen case, where the challengers have urged the court not to defer to the government’s interpretation of the immigration statute.
Third, the conservative justices dislike the principle of agency autonomy and have looked askance at job protections for agency officials.
Fourth, the conservative justices have endorsed a novel interpretation of the First Amendment that protects businesses from regulation — from campaign finance regulation, labor regulation and even regulations that require them to disclose information to consumers.
What is the basis for this radical change in the law? Justices Kavanaugh, Gorsuch and Thomas claim to be “originalists,” who believe that the court should strike down laws that violate the original understanding of the Constitution. But the founders did not bar Congress from creating administrative agencies or think that the First Amendment protected businesses from commercial regulation.
Many liberals think that the conservative justices are cat’s paws of business. But their claims to the contrary, businesses do not oppose regulation. Businesses constantly beseech the agencies to regulate — not themselves, but the other businesses that they compete with or depend on, and are harmed by. The new conservative jurisprudence may help some businesses in the short run but ultimately will undermine the legal structure in which they flourish.
The answer is both obvious and depressing. The modern conservative jurisprudence is an exercise in nostalgia, a yearning for pre-New Deal America when, supposedly, government was less oppressive and people were freer than they are today. You can see this nostalgia in the homilies to olden times in Justices Gorsuch’s and Kavanaugh’s lectures — and their insistence that answers to today’s challenges can be found in a theory of government invented in the 18th century by men wearing breeches and powdered wigs.
https://www.nytimes.com/2018/10/23/opinion/supreme-court-brett-kavanaugh-trump-.html?action=click&module=Opinion&pgtype=Homepage
From Public Citizen
Sant'Ambrogio: Federal government filed only eight consumer protection cases in federal court in a recent year (click title for Public Citizen website)
Posted: 27 Oct 2018 09:58 AM PDT
by Jeff Sovern
According to Private Enforcement in Administrative Courts, 72 Vanderbilt Law Review, (Forthcoming), [https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3246738] by Michael Sant'Ambrogio of Michigan State, in the year ending March 31, 2017, the government filed only eight consumer protection cases in federal court, which contrasts with the 9,706 cases filed by private plaintiffs. Sometimes we see the argument that we don't need private enforcement of consumer laws because public enforcement is sufficient. If the numbers Sant'Ambrogio reports are accurate, they make that claim harder to make; indeed, they make it ludicrous. To be sure, many government cases are resolved short of filing in federal court, some government cases are resolved in internal administrative proceedings, and state agencies--especially AG's offices--also file consumer protection cases, but those categories are unlikely to come close to solving underenforcement problems.
Opinion: Patent Thickets Blocks More Affordable Drugs: The Case of Humira
October 23, 2018
From: https://www.thecppc.com/single-post/2018/10/23/How-Patent-Thickets-Blocks-More-Affordable-Drugs-The-Case-of-Humira?utm_campaign=06332353-a8ee-4aba-b739-ad057a76f56a&utm_source=so
The drug manufacturer AbbieVie Inc. has thrown up a formidable shield of patents around its drug Humira, preventing cheaper versions of the medicine from coming to market. This patent abuse should not be allowed to stand, and Congress, the Department of Health and Human Services, and the Food and Drug Administration should stop this manipulation and enact reforms to combat further abuses.
Humira has been around for over fifteen years and is one of the world's best selling drugs, with over $18 billion in global sales. It is used to treat inflammatory diseases-everything from rheumatoid arthritis to gut disorders-and it is extremely expensive, with a list price of over $50,000 per patient. Humira is also a biologic medicine, meaning it is made from living cells in a process similar to brewing. It accounts for over 60% of AbbieVie's revenue.
The main patent for Humira (which gives the drug manufacturer a monopoly on the drug) expired in 2016, so you would think that consumers could now benefit from biosimilars (cheaper versions of this medicine analogous to generic drugs). But AbbieVie has obtained over one hundred additional patents for Humira, an incredibly number for a single drug, and these patents extend into the 2020s and 2030s. They have 22 patents for various treatments, 14 patents for the drug's formulation, 24 patents on its manufacturing practices, and 15 other patents. Moreover, the company has filed suit to block two biosimilar versions approved by the FDA.
This is a prime example of what FDA Commissioner Scott Gottlieb criticized as "patent thickets" that block biosimilars and generic drugs and thwart competition, making consumers pay much higher prices. The biosimilar versions of Humira would sell at a 10% to 25% discount, which could help a lot of people struggling to afford their medicines.
As a result, AbbieVie still has a monopoly on Humira, and its price has risen to over $60,000 annually for some patients, and that earns over $12 billion in sales in the United States. And they are not the only company doing this. The drug company Johnson & Johnson has also created a thicket of over 100 patents around the anti-inflammatory drug Remicade to block cheaper generic drugs and increase its profits. Evidence shows that patent abuse, where companies file many different patents and make small changes to drugs to extend their exclusivity, is a serious and growing problem.
In Europe, where the legal environment is more friendly to patent challenges, over 20 biosimilar drugs have been approved since 2006, with immense benefits for patients. In the United States, these "patent thickets" have choked off much of the market, and only five versions are available.
One way to reduce patent abuse would be to pass the CREATES Act, a bipartisan bill that would make it easier for medicines whose patents have expired to be sold as cheaper generic versions. It allows generic drug companies to sue patented drug companies to compel them to provide samples they need to make these cheaper versions.
Patents should be used to reward substantive research and real innovation, not to maintain a monopoly and force consumers to pay skyrocketing prices.
October 23, 2018
From: https://www.thecppc.com/single-post/2018/10/23/How-Patent-Thickets-Blocks-More-Affordable-Drugs-The-Case-of-Humira?utm_campaign=06332353-a8ee-4aba-b739-ad057a76f56a&utm_source=so
The drug manufacturer AbbieVie Inc. has thrown up a formidable shield of patents around its drug Humira, preventing cheaper versions of the medicine from coming to market. This patent abuse should not be allowed to stand, and Congress, the Department of Health and Human Services, and the Food and Drug Administration should stop this manipulation and enact reforms to combat further abuses.
Humira has been around for over fifteen years and is one of the world's best selling drugs, with over $18 billion in global sales. It is used to treat inflammatory diseases-everything from rheumatoid arthritis to gut disorders-and it is extremely expensive, with a list price of over $50,000 per patient. Humira is also a biologic medicine, meaning it is made from living cells in a process similar to brewing. It accounts for over 60% of AbbieVie's revenue.
The main patent for Humira (which gives the drug manufacturer a monopoly on the drug) expired in 2016, so you would think that consumers could now benefit from biosimilars (cheaper versions of this medicine analogous to generic drugs). But AbbieVie has obtained over one hundred additional patents for Humira, an incredibly number for a single drug, and these patents extend into the 2020s and 2030s. They have 22 patents for various treatments, 14 patents for the drug's formulation, 24 patents on its manufacturing practices, and 15 other patents. Moreover, the company has filed suit to block two biosimilar versions approved by the FDA.
This is a prime example of what FDA Commissioner Scott Gottlieb criticized as "patent thickets" that block biosimilars and generic drugs and thwart competition, making consumers pay much higher prices. The biosimilar versions of Humira would sell at a 10% to 25% discount, which could help a lot of people struggling to afford their medicines.
As a result, AbbieVie still has a monopoly on Humira, and its price has risen to over $60,000 annually for some patients, and that earns over $12 billion in sales in the United States. And they are not the only company doing this. The drug company Johnson & Johnson has also created a thicket of over 100 patents around the anti-inflammatory drug Remicade to block cheaper generic drugs and increase its profits. Evidence shows that patent abuse, where companies file many different patents and make small changes to drugs to extend their exclusivity, is a serious and growing problem.
In Europe, where the legal environment is more friendly to patent challenges, over 20 biosimilar drugs have been approved since 2006, with immense benefits for patients. In the United States, these "patent thickets" have choked off much of the market, and only five versions are available.
One way to reduce patent abuse would be to pass the CREATES Act, a bipartisan bill that would make it easier for medicines whose patents have expired to be sold as cheaper generic versions. It allows generic drug companies to sue patented drug companies to compel them to provide samples they need to make these cheaper versions.
Patents should be used to reward substantive research and real innovation, not to maintain a monopoly and force consumers to pay skyrocketing prices.
From The ABA
DoNotPay app aims to help users sue anyone in small claims court--without a lawyer
By Jason Tashea
A new update to an existing chatbot app promises to allow users to "sue anyone in small claims court for up to $25,000 without the help of a lawyer," though early users warn of technical bugs and legal and ethical concerns.
Launched Wednesday, new updates to DoNotPay, a company that first made a splash by automating challenges to parking tickets in court without an attorney, will allow a user to sue anyone in small claims court in any county in all 50 states—without the need for retaining a lawyer. Previously only a web tool, the new product is also available for iPhone and will also include new features allowing users to find deals on prescription and over-the-counter drugs; make an appointment at the California Department of Motor Vehicles; and see if they are eligible to opt-in to various class-action settlements. The app also aims to fight unfair bank fees; earn refunds from ride-hailing companies; fix errors in a credit report; and dispute bank transactions.
An Android version is in the works.
“I want people to be addicted to fighting for their rights,” says Josh Browder, CEO of DoNotPay, who hopes his revamped app will be a one-stop shop for consumer protection issues.
The idea for the new app was born out of a project the company released last year, which helped people sue Equifax for up to $25,000 after the credit company’s 2017 data breach affecting 143 million people.
“Although lots of lawyers said it wasn’t possible,” said Browder in a statement reported by Yahoo Finance, “I was shocked when people won $9,000, $10,000 and $11,000 judgments. Even when Equifax appealed, the average person still prevailed.”
The new small claims suit feature, which Browder demoed at the Clio Cloud Conference last week in New Orleans, asks a user for their name and address and what the claim size is to determine whether it complies with a state’s limit, among other factors. It then generates a demand letter, creates a filing, helps serve notice of the suit and provides other support to usher users through the trial process. The app even generates suggested scripts and questions pro se litigants can use when they go to court. Parties are often not represented by an attorney in a small claim proceeding because it is either not permitted by law or because the amount in controversy is too low to justify the cost of an attorney.
Browder says the new application has three goals: Getting users what’s owed, fighting corporations and fighting bureaucracy.
Not just a small claims app, DoNotPay acquired Visabot to assist in the application of green cards and other visa applications. Previously, Visabot charged for many of its services (a green card application was $150, for example). All features on DoNotPay, including immigration, are free to users.
This isn’t to say that the new app won’t make money. While the revenue model is still a work in progress, Browder sees a future where after helping someone challenge a cellphone bill, they offer deals to switch carriers and take a commission based on conversions. While the app will require extensive user data to function, Browder says the venture-backed DoNotPay will not store or sell user data.
Of course, many of these features raise the specter of the unlicensed practice of law, a criminal offense in California, where Browder is based.
For his part, Browder is “a bit worried” about potential challenges. However, he believes that he can avoid some of these issues since his product is free to users. Further, he argues that the app is a free speech issue because its underlying code is speech. Code has been found to be speech on issues as broad as publishing encryption source code to the sharing of digital blueprints of 3-D printed guns.
“If you can 3-D print a gun,” he says, “you should be able to print a few documents.”
The legal profession is only one possible group to take issue with the new tool—the other are the users themselves. While the automated process was set up with the assistance of lawyers and paralegals, there’s no lawyer oversight of the app’s final products.
Asked how users should manage their dissatisfaction towards the product, Browder says it’s easy. “They can sue us with the app.”
In the day after the app’s release, several Twitter users took issue with technical and legal aspects of the tool. Nicole Bradick, a 2012 ABA Journal Legal Rebel, noted that the tool did not work properly. Gabriel Teninbaum, director of Suffolk University Law School’s Institute on Legal Innovation & Technology in Boston, said that he was given bad, inaccurate advice on Massachusetts law. Chase Hertel, counsel and deputy director for the ABA Center for Innovation, expressed concerns that the immigration feature did not fully inform people of various ongoing and evolving issues.
For his part, Browder says DoNotPay has pushed numerous updates to handle some of the technical issues.
Regarding the immigration feature, Browder defends it as the same tool it was before acquisition, which had “extremely positive reviews.” He adds that “we not only plan to maintain it, but also expand it.”
“While I can understand the skepticism of the legal establishment, I worked with public defenders in [Massachusetts] in detail to ensure it’s accurate,” says Browder over email regarding criticisms coming from Massachusetts. “Accuracy is an objective term and not opinion. Unless they can point to a precise and specific contradiction between the demand letter [DoNotPay] provides and [Massachusetts] law, it is false and defamatory to suggest it’s inaccurate.”
Updated on Oct. 11 after the app’s launch to add details about the issues users were reporting and Browder’s response.
Source: http://www.abajournal.com/news/article/file_a_smalls_claims_suit_anywhere_in_the_country_through_an_app
DoNotPay app aims to help users sue anyone in small claims court--without a lawyer
By Jason Tashea
A new update to an existing chatbot app promises to allow users to "sue anyone in small claims court for up to $25,000 without the help of a lawyer," though early users warn of technical bugs and legal and ethical concerns.
Launched Wednesday, new updates to DoNotPay, a company that first made a splash by automating challenges to parking tickets in court without an attorney, will allow a user to sue anyone in small claims court in any county in all 50 states—without the need for retaining a lawyer. Previously only a web tool, the new product is also available for iPhone and will also include new features allowing users to find deals on prescription and over-the-counter drugs; make an appointment at the California Department of Motor Vehicles; and see if they are eligible to opt-in to various class-action settlements. The app also aims to fight unfair bank fees; earn refunds from ride-hailing companies; fix errors in a credit report; and dispute bank transactions.
An Android version is in the works.
“I want people to be addicted to fighting for their rights,” says Josh Browder, CEO of DoNotPay, who hopes his revamped app will be a one-stop shop for consumer protection issues.
The idea for the new app was born out of a project the company released last year, which helped people sue Equifax for up to $25,000 after the credit company’s 2017 data breach affecting 143 million people.
“Although lots of lawyers said it wasn’t possible,” said Browder in a statement reported by Yahoo Finance, “I was shocked when people won $9,000, $10,000 and $11,000 judgments. Even when Equifax appealed, the average person still prevailed.”
The new small claims suit feature, which Browder demoed at the Clio Cloud Conference last week in New Orleans, asks a user for their name and address and what the claim size is to determine whether it complies with a state’s limit, among other factors. It then generates a demand letter, creates a filing, helps serve notice of the suit and provides other support to usher users through the trial process. The app even generates suggested scripts and questions pro se litigants can use when they go to court. Parties are often not represented by an attorney in a small claim proceeding because it is either not permitted by law or because the amount in controversy is too low to justify the cost of an attorney.
Browder says the new application has three goals: Getting users what’s owed, fighting corporations and fighting bureaucracy.
Not just a small claims app, DoNotPay acquired Visabot to assist in the application of green cards and other visa applications. Previously, Visabot charged for many of its services (a green card application was $150, for example). All features on DoNotPay, including immigration, are free to users.
This isn’t to say that the new app won’t make money. While the revenue model is still a work in progress, Browder sees a future where after helping someone challenge a cellphone bill, they offer deals to switch carriers and take a commission based on conversions. While the app will require extensive user data to function, Browder says the venture-backed DoNotPay will not store or sell user data.
Of course, many of these features raise the specter of the unlicensed practice of law, a criminal offense in California, where Browder is based.
For his part, Browder is “a bit worried” about potential challenges. However, he believes that he can avoid some of these issues since his product is free to users. Further, he argues that the app is a free speech issue because its underlying code is speech. Code has been found to be speech on issues as broad as publishing encryption source code to the sharing of digital blueprints of 3-D printed guns.
“If you can 3-D print a gun,” he says, “you should be able to print a few documents.”
The legal profession is only one possible group to take issue with the new tool—the other are the users themselves. While the automated process was set up with the assistance of lawyers and paralegals, there’s no lawyer oversight of the app’s final products.
Asked how users should manage their dissatisfaction towards the product, Browder says it’s easy. “They can sue us with the app.”
In the day after the app’s release, several Twitter users took issue with technical and legal aspects of the tool. Nicole Bradick, a 2012 ABA Journal Legal Rebel, noted that the tool did not work properly. Gabriel Teninbaum, director of Suffolk University Law School’s Institute on Legal Innovation & Technology in Boston, said that he was given bad, inaccurate advice on Massachusetts law. Chase Hertel, counsel and deputy director for the ABA Center for Innovation, expressed concerns that the immigration feature did not fully inform people of various ongoing and evolving issues.
For his part, Browder says DoNotPay has pushed numerous updates to handle some of the technical issues.
Regarding the immigration feature, Browder defends it as the same tool it was before acquisition, which had “extremely positive reviews.” He adds that “we not only plan to maintain it, but also expand it.”
“While I can understand the skepticism of the legal establishment, I worked with public defenders in [Massachusetts] in detail to ensure it’s accurate,” says Browder over email regarding criticisms coming from Massachusetts. “Accuracy is an objective term and not opinion. Unless they can point to a precise and specific contradiction between the demand letter [DoNotPay] provides and [Massachusetts] law, it is false and defamatory to suggest it’s inaccurate.”
Updated on Oct. 11 after the app’s launch to add details about the issues users were reporting and Browder’s response.
Source: http://www.abajournal.com/news/article/file_a_smalls_claims_suit_anywhere_in_the_country_through_an_app
Restaurants, food allergies, and the law
For some, food allergies can mean that a take-out restaurant meal is a killer. Web-MD advises that people with serious food allergies should pick large corporate restaurants that are systematic about choosing food ingredients and providing information to customers. Small mom-and-pop operations have legal responsibilities to be careful, but are less likely to be systematic about knowing their ingredients and communicating with vulnerable customers. A recent prosecution for criminal negligence in the UK illustrates the problem. Owners of a small Indian-food carry out were convicted of criminally negligent manslaughter after the tragic death of a 15 year old customer with a serious peanut allergy.
Sources:
https://www.webmd.com/allergies/features/food-allergies-tips-for-eating-out#4
https://nam02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.itv.com%2Fnews%2F2018-10-26%2Ftakeaway-bosses-guilty-of-manslaughter-by-gross-negligence-after-nut-allergy-death-of-15-year-old-megan-lee%2F&data=02%7C01%7C%7C589861fef4f44c85de5f08d63cc610ce%7C84df9e7fe9f640afb435aaaaaaaaaaaa%7C1%7C0%7C636763218705484378&sdata=oFXNuFG8U9aqiobR8Ct7g3yBRBaUfnTu1ZJVL8n90Hk%3D&reserved=0
Posted by Don Allen Resnikoff
For some, food allergies can mean that a take-out restaurant meal is a killer. Web-MD advises that people with serious food allergies should pick large corporate restaurants that are systematic about choosing food ingredients and providing information to customers. Small mom-and-pop operations have legal responsibilities to be careful, but are less likely to be systematic about knowing their ingredients and communicating with vulnerable customers. A recent prosecution for criminal negligence in the UK illustrates the problem. Owners of a small Indian-food carry out were convicted of criminally negligent manslaughter after the tragic death of a 15 year old customer with a serious peanut allergy.
Sources:
https://www.webmd.com/allergies/features/food-allergies-tips-for-eating-out#4
https://nam02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.itv.com%2Fnews%2F2018-10-26%2Ftakeaway-bosses-guilty-of-manslaughter-by-gross-negligence-after-nut-allergy-death-of-15-year-old-megan-lee%2F&data=02%7C01%7C%7C589861fef4f44c85de5f08d63cc610ce%7C84df9e7fe9f640afb435aaaaaaaaaaaa%7C1%7C0%7C636763218705484378&sdata=oFXNuFG8U9aqiobR8Ct7g3yBRBaUfnTu1ZJVL8n90Hk%3D&reserved=0
Posted by Don Allen Resnikoff
David Boies, attorney for Elizabeth Holmes and her company Theranos: information on aggressive lawyering that you won’t learn in a law school
In his book Bad Blood: Secrets and Lies in a Silicon Valley Startup (Knopf), Wall Street Journal reporter John Carreyrou reviews his investigative reporting about the bad behavior of Elizabeth Holmes and her company Theranos. It was Carreyrou who broke the story in the Wall Street Journal that Theranos was essentially a scam, falsely promising new technology that yielded valuable analytical results from a pin prick of blood. In fact the new technique was not reliable. Elizabeth Holmes ended up being charged by the SEC with defrauding investors.
Theranos board members included some famous people, such as Henry Kissinger and George Shultz. When Theranos needed legal counsel, Elizabeth Holmes hired the well known firm of Boies, Schiller, and Flexner, led by David Boies.
An interesting aspect of the Carreyrou book is its focus on the tactics of David Boies and his firm. Author Carreyrou, who apparently is not a lawyer himself, expresses surprise and dismay about aggressive tactics used by the Boies firm.
What Carreyrou seems to find most upsetting is the Boies firm’s aggressive behavior toward whistle-blowers who exposed Theranos, including Tyler Shultz, the grandson of George Shultz. Tyler was an important early source for Carreyrou’s investigative reporting.
In a book chapter called “The Ambush,” Carreyrou recounts how Tyler visited his grandfather to discuss the grandfather’s concern that Tyler was speaking to the press and saying unflattering things about Theranos. Tyler had specifically asked that no lawyers be present for the meeting, but grandfather George Shultz had two Boies partners waiting out of sight in an upstairs room.
After some conversation with Tyler that George Shultz found unsatisfactory, the grandfather brought the lawyers downstairs. The lawyers told Tyler that they had identified him as the person who had leaked Theranos information to the Wall Street Journal. The lawyers handed Tyler a temporary restraining order, a notice to appear in court, and a letter saying that Theranos believed Tyler had violated confidentiality obligations. The lawyers communicated that Theranos was prepared to file a law suit.
The next day Tyler met again with a Boies firm lawyer, who asked Tyler to sign an affidavit swearing he had not spoken to a reporter, and to name anyone he knew who did. Tyler did not sign. Instead he ended the meeting and consulted with a lawyer of his own.
Tyler then engaged in some days of lawyer-led negotiations. The topics were the affidavit the Boies firm asked for, and the threats of litigation. Tyler eventually agreed to sign an affidavit saying he had spoken to the press, but he refused to include any information about other press sources.
What happened next, says Carreyrou, is that Boies Schiller resorted to the “bare-knuckles tactics it had become notorious for. Brille [the Boies firm attorney] let it be known that if Tyler didn’t sign the affidavit and name the Journal’s sources, the firm would make sure to bankrupt his entire family when it took him to court. Tyler also received a tip that he was being surveilled by private investigators.”
Boies Schiller also put pressure on other sources for Carreyrou’s reporting about Theranos: “Boies Schiller’s Mike Brille sent a letter to Rochelle Gibbons threatening to sue her if she didn’t cease making what he termed ‘false and defamatory’ statements” about Theranos.
The Wall Street Journal itself was the target of legal hardball. The Journal received a formal letter from David Boies: “Citing several California statutes, the letter sternly demanded that the Journal 'destroy or return all Theranos trade secrets and confidential information in its possession.’” That was followed a few days later by a 23 page letter from Boies to the Journal threatening a lawsuit.
The day came when David Boies met with Wall Street Journal people in an effort to squelch publication of Carreyrou’s investigative article about Theranos. The Boies effort was unsuccessful. The Carreyrou article on Theranos’ bad behavior ran on October 15, 2015.
For Tyler Shultz, the price for being a whistle blower included $400,000 in legal bills, estrangement from his famous grandfather, and much personal anguish.
What lessons can be drawn from Carreyrou’s description of the Boies firm’s practices? Not that Boies or his firm’s lawyers necessarily did anything illegal or unethical. The Carreyrou book does not provide enough information to justify that conclusion. It may be, for example, that David Boies and his firm had great faith in Theranos technology.
But even in the absence of clear evidence of illegality or unethical lawyer behavior there is significance in Carreyrou’s sense of outrage. Careyrou feels that “bare-knuckles” lawyering was used on behalf of Theranos in an effort to suppress information from Tyler Shultz and Carreyrou’s other sources of information. Also, that aggressive lawyering was used in an effort to squelch publication of his reporting. A main element of the bare-knuckles lawyering described by Carreyrou is the threat of legal liability and litigation expense.
Even where it is legal and ethical, such aggressive lawyer behavior should be examined further by those interested in legal policy. The behavior suggests a problem: that the complexity of laws and legal proceedings may have the unintended side effect of facilitating bullying by parties with deep legal resources. The targets of such bullying may be individuals like Tyler Shultz, or small companies. Bullying based on unmatched deep resources can occur, for example, in the context of landlord-tenant disputes involving small commercial tenants, and franchisor-franchisee disputes where the franchisees have limited resources.
Bare-knuckles bullying by lawyers that is within the bounds of legality and permissible ethics is nevertheless concerning. Among other bad effects, bullying may result in information about wrongdoing being suppressed, inappropriate financial burdens being imposed on targets of bullying, and failure to fairly resolve disputes among parties.
This posting is by Don Allen Resnikoff, who takes full responsibility for its contents
In his book Bad Blood: Secrets and Lies in a Silicon Valley Startup (Knopf), Wall Street Journal reporter John Carreyrou reviews his investigative reporting about the bad behavior of Elizabeth Holmes and her company Theranos. It was Carreyrou who broke the story in the Wall Street Journal that Theranos was essentially a scam, falsely promising new technology that yielded valuable analytical results from a pin prick of blood. In fact the new technique was not reliable. Elizabeth Holmes ended up being charged by the SEC with defrauding investors.
Theranos board members included some famous people, such as Henry Kissinger and George Shultz. When Theranos needed legal counsel, Elizabeth Holmes hired the well known firm of Boies, Schiller, and Flexner, led by David Boies.
An interesting aspect of the Carreyrou book is its focus on the tactics of David Boies and his firm. Author Carreyrou, who apparently is not a lawyer himself, expresses surprise and dismay about aggressive tactics used by the Boies firm.
What Carreyrou seems to find most upsetting is the Boies firm’s aggressive behavior toward whistle-blowers who exposed Theranos, including Tyler Shultz, the grandson of George Shultz. Tyler was an important early source for Carreyrou’s investigative reporting.
In a book chapter called “The Ambush,” Carreyrou recounts how Tyler visited his grandfather to discuss the grandfather’s concern that Tyler was speaking to the press and saying unflattering things about Theranos. Tyler had specifically asked that no lawyers be present for the meeting, but grandfather George Shultz had two Boies partners waiting out of sight in an upstairs room.
After some conversation with Tyler that George Shultz found unsatisfactory, the grandfather brought the lawyers downstairs. The lawyers told Tyler that they had identified him as the person who had leaked Theranos information to the Wall Street Journal. The lawyers handed Tyler a temporary restraining order, a notice to appear in court, and a letter saying that Theranos believed Tyler had violated confidentiality obligations. The lawyers communicated that Theranos was prepared to file a law suit.
The next day Tyler met again with a Boies firm lawyer, who asked Tyler to sign an affidavit swearing he had not spoken to a reporter, and to name anyone he knew who did. Tyler did not sign. Instead he ended the meeting and consulted with a lawyer of his own.
Tyler then engaged in some days of lawyer-led negotiations. The topics were the affidavit the Boies firm asked for, and the threats of litigation. Tyler eventually agreed to sign an affidavit saying he had spoken to the press, but he refused to include any information about other press sources.
What happened next, says Carreyrou, is that Boies Schiller resorted to the “bare-knuckles tactics it had become notorious for. Brille [the Boies firm attorney] let it be known that if Tyler didn’t sign the affidavit and name the Journal’s sources, the firm would make sure to bankrupt his entire family when it took him to court. Tyler also received a tip that he was being surveilled by private investigators.”
Boies Schiller also put pressure on other sources for Carreyrou’s reporting about Theranos: “Boies Schiller’s Mike Brille sent a letter to Rochelle Gibbons threatening to sue her if she didn’t cease making what he termed ‘false and defamatory’ statements” about Theranos.
The Wall Street Journal itself was the target of legal hardball. The Journal received a formal letter from David Boies: “Citing several California statutes, the letter sternly demanded that the Journal 'destroy or return all Theranos trade secrets and confidential information in its possession.’” That was followed a few days later by a 23 page letter from Boies to the Journal threatening a lawsuit.
The day came when David Boies met with Wall Street Journal people in an effort to squelch publication of Carreyrou’s investigative article about Theranos. The Boies effort was unsuccessful. The Carreyrou article on Theranos’ bad behavior ran on October 15, 2015.
For Tyler Shultz, the price for being a whistle blower included $400,000 in legal bills, estrangement from his famous grandfather, and much personal anguish.
What lessons can be drawn from Carreyrou’s description of the Boies firm’s practices? Not that Boies or his firm’s lawyers necessarily did anything illegal or unethical. The Carreyrou book does not provide enough information to justify that conclusion. It may be, for example, that David Boies and his firm had great faith in Theranos technology.
But even in the absence of clear evidence of illegality or unethical lawyer behavior there is significance in Carreyrou’s sense of outrage. Careyrou feels that “bare-knuckles” lawyering was used on behalf of Theranos in an effort to suppress information from Tyler Shultz and Carreyrou’s other sources of information. Also, that aggressive lawyering was used in an effort to squelch publication of his reporting. A main element of the bare-knuckles lawyering described by Carreyrou is the threat of legal liability and litigation expense.
Even where it is legal and ethical, such aggressive lawyer behavior should be examined further by those interested in legal policy. The behavior suggests a problem: that the complexity of laws and legal proceedings may have the unintended side effect of facilitating bullying by parties with deep legal resources. The targets of such bullying may be individuals like Tyler Shultz, or small companies. Bullying based on unmatched deep resources can occur, for example, in the context of landlord-tenant disputes involving small commercial tenants, and franchisor-franchisee disputes where the franchisees have limited resources.
Bare-knuckles bullying by lawyers that is within the bounds of legality and permissible ethics is nevertheless concerning. Among other bad effects, bullying may result in information about wrongdoing being suppressed, inappropriate financial burdens being imposed on targets of bullying, and failure to fairly resolve disputes among parties.
This posting is by Don Allen Resnikoff, who takes full responsibility for its contents
Theodore Frank, professional class action settlement objector
On October 31, attorney Theodore Frank will argue his own case before the U.S. Supreme Court. The case concerns objection by Mr. Frank and the non-profit he heads, Center for Class Action Fairness, to a class action settlement involving Google as Defendant.
The Google class action settlement is one of many class action settlements Mr. Frank has objected to. Objecting to class action settlements is Mr. Frank’s profession.
Mr. Frank’s Google class action settlement case arises from an $8.5 million settlement between Google and class action lawyers. The class action complaint says that Google violated users’ privacy rights.
Under the settlement, the lawyers are to be paid more than $2 million, but members of the class they represented get nothing. Instead Google agreed to make contributions to institutions concerned with privacy on the internet, including centers at Harvard, Stanford and Chicago-Kent College of Law.
A divided three-judge panel of the United States Court of Appeals for the Ninth Circuit, in San Francisco, upheld the settlement. The opinion can be found at http://www.scotusblog.com/wp-content/uploads/2018/04/17-961-opinion-below.pdf In dissent, Judge J.Clifford Wallace expressed concerns about the payments.
Google’s position is that while class action settlements can be bad, the particular settlement is good. The Google brief on the Writ of Certiorari to the Supreme Court is at https://www.supremecourt.gov/DocketPDF/17/17-961/61166/20180829194522714_17-961%20bs.pdf
The story of Mr. Frank as objector to the Google settlement draws attention to the role that professional class action settlement objectors play as class action spoilers. Not surprisingly, there are those who are highly critical of the objectors’ spoiler role, and others who see at least some objectors as a force for good, limiting class actions that lack social value.
Commenters have observed that there is a cottage industry of professional objectors: attorneys who earn a livelihood by opposing settlements on behalf of unnamed class members. Professional objectors may threaten to file meritless appeals of final judgments merely to extract a payoff. Class attorneys have a strong incentive to pay objectors to withdraw their appeal to avoid the cost of delay.
Professional objectors are widely unpopular, “perhaps the least popular parties in the history of civil procedure,” according to one observer. A judge has observed that “[f]ederal courts are increasingly weary of professional objectors.”
Theodore Frank’s legal practice is unusual in that he and the non-profit he heads do not take payments from Plaintiffs’ counsel. A Bloomberg-BNA article explains that he does not accept “green mail,” a name for payments demanded by, and made to, an objector to drop an objection to a settlement.
“That’s always been the position of the Center for Class Action Fairness,” Frank said to Bloomberg-BNA about his organization. “Not only is that the position, but we’re looking for opportunities for courts to order divestments of green mail payments.”
“We lose money on every objection,” Frank told Bloomberg BNA. “If we weren’t doing it as a non-profit, we couldn’t do it. And if we didn’t have generous donors, and attorneys taking 50-, 60- and 70-percent pay cuts, we couldn’t do what we do.”
The bottom line point is that there can be great value in legitimate and well grounded objections to class action settlements made in good faith. It polices the settlement process. The policy challenge is to allow such beneficial objections while suppressing extortionate green mail objections made in bad faith.
Credits: Much of the content of this comment is drawn from The New York Times story at https://www.nytimes.com/2018/10/15/us/politics/theodore-frank-supreme-court.html Also, the article by Lopatka-Smith, which is at https://judicialstudies.duke.edu/sites/default/files/centers/judicialstudies/class-action_objectors_0.pdf Also, The Bloomberg-BNA article at https://www.bna.com/ted-frank-lightning-n57982069046/
This comment is posted by Don Allen Resnikoff, who takes full responsibility for its content
On October 31, attorney Theodore Frank will argue his own case before the U.S. Supreme Court. The case concerns objection by Mr. Frank and the non-profit he heads, Center for Class Action Fairness, to a class action settlement involving Google as Defendant.
The Google class action settlement is one of many class action settlements Mr. Frank has objected to. Objecting to class action settlements is Mr. Frank’s profession.
Mr. Frank’s Google class action settlement case arises from an $8.5 million settlement between Google and class action lawyers. The class action complaint says that Google violated users’ privacy rights.
Under the settlement, the lawyers are to be paid more than $2 million, but members of the class they represented get nothing. Instead Google agreed to make contributions to institutions concerned with privacy on the internet, including centers at Harvard, Stanford and Chicago-Kent College of Law.
A divided three-judge panel of the United States Court of Appeals for the Ninth Circuit, in San Francisco, upheld the settlement. The opinion can be found at http://www.scotusblog.com/wp-content/uploads/2018/04/17-961-opinion-below.pdf In dissent, Judge J.Clifford Wallace expressed concerns about the payments.
Google’s position is that while class action settlements can be bad, the particular settlement is good. The Google brief on the Writ of Certiorari to the Supreme Court is at https://www.supremecourt.gov/DocketPDF/17/17-961/61166/20180829194522714_17-961%20bs.pdf
The story of Mr. Frank as objector to the Google settlement draws attention to the role that professional class action settlement objectors play as class action spoilers. Not surprisingly, there are those who are highly critical of the objectors’ spoiler role, and others who see at least some objectors as a force for good, limiting class actions that lack social value.
Commenters have observed that there is a cottage industry of professional objectors: attorneys who earn a livelihood by opposing settlements on behalf of unnamed class members. Professional objectors may threaten to file meritless appeals of final judgments merely to extract a payoff. Class attorneys have a strong incentive to pay objectors to withdraw their appeal to avoid the cost of delay.
Professional objectors are widely unpopular, “perhaps the least popular parties in the history of civil procedure,” according to one observer. A judge has observed that “[f]ederal courts are increasingly weary of professional objectors.”
Theodore Frank’s legal practice is unusual in that he and the non-profit he heads do not take payments from Plaintiffs’ counsel. A Bloomberg-BNA article explains that he does not accept “green mail,” a name for payments demanded by, and made to, an objector to drop an objection to a settlement.
“That’s always been the position of the Center for Class Action Fairness,” Frank said to Bloomberg-BNA about his organization. “Not only is that the position, but we’re looking for opportunities for courts to order divestments of green mail payments.”
“We lose money on every objection,” Frank told Bloomberg BNA. “If we weren’t doing it as a non-profit, we couldn’t do it. And if we didn’t have generous donors, and attorneys taking 50-, 60- and 70-percent pay cuts, we couldn’t do what we do.”
The bottom line point is that there can be great value in legitimate and well grounded objections to class action settlements made in good faith. It polices the settlement process. The policy challenge is to allow such beneficial objections while suppressing extortionate green mail objections made in bad faith.
Credits: Much of the content of this comment is drawn from The New York Times story at https://www.nytimes.com/2018/10/15/us/politics/theodore-frank-supreme-court.html Also, the article by Lopatka-Smith, which is at https://judicialstudies.duke.edu/sites/default/files/centers/judicialstudies/class-action_objectors_0.pdf Also, The Bloomberg-BNA article at https://www.bna.com/ted-frank-lightning-n57982069046/
This comment is posted by Don Allen Resnikoff, who takes full responsibility for its content
An Interview with Diana Moss (American Antitrust Institute)
by Jon Baker (American University)
Ahead of the inaugural conference on Challenges to Antitrust in a Changing Economy, at Harvard Law School on November 9th, CPI reached out to Jon Baker (Professor, American University) and Diana Moss (President, American Antitrust Institute). They will participate in “The Consumer Welfare Standard” panel, together with Rob Atkinson (President, Information Technology and Innovation Foundation), Renata Hesse (Partner, Sullivan & Cromwell), and Einer Elhauge (Professor, Harvard Law School).
In this exclusive interview, Diana Moss has responded to three questions asked by Professor Baker on the consumer welfare standard and its current application in US antitrust law.
This conference is co-organized by CPI and CCIA. To see the full program and register free, please click here.
Following is Q and A # 1. For the other 2, see
https://www.competitionpolicyinternational.com/cpi-talks-on-the-consumer-welfare-standard/?utm_source=CPI+Subscribers&utm_campaign=b47147cbd9-EMAIL_CAMPAIGN_2018_10_20_07_01&utm_medium=email&utm_term=0_0ea61134a5-b47147cbd9-236508653
Some progressives say that antitrust rules pay insufficient attention to harms to suppliers, including workers; harms along competitive dimensions other than price and output, such as quality or innovation; and the ways that the exercise of market power may undermine non-economic values, as by creating anti-democratic political pressures or limiting the opportunity of small businesses to compete. To what extent are these concerns justified?
Today’s debate over the role of antitrust has generated a lot of blue sky thinking about the state of U.S. antitrust. I think of this debate as a very different process from that of crafting constructive reform proposals. Actual reform requires knowledge of how the laws and standard have been and can be applied by enforcers and the courts. For example, we know that the consumer welfare standard can address the price and non-price dimensions (e.g., quality and innovation) of competition. The standard also reaches to the harms resulting from the exercise of market power anywhere along the supply chain (e.g., consumers and workers). The control of economic power serves to limit barriers to entry and exclusionary conduct that targets smaller innovative rivals and in stemming the growth of political power.
In sum, if enforcers and courts used the full scope of the law and standard, antitrust would today be more effective in defending and promoting our markets. The reality has been different, namely, a narrow interpretation of the consumer welfare standard under the conservative ideology has held sway for decades. In response to this, some proposals advocate for wholesale reforms that would essentially do away with any standard. This risks reforms that divert the antitrust laws to purposes for which they are not designed and could exacerbate the current state of under-enforcement.
As a progressive (as I will articulate more in my panel remarks), I think of constructive reform as including a more nuanced approach through a package of complementary proposals. These include: (1) legislative clarification of the full scope of the law and increased appropriations for the agencies for enforcement; (2) guidance from the agencies that articulates a “dynamic and symmetric” consumer welfare standard (describes in #2 below) and requirements for implementing it; and (3) efforts to strengthen or introduce presumptions of illegality in mergers and some forms of conduct.
by Jon Baker (American University)
Ahead of the inaugural conference on Challenges to Antitrust in a Changing Economy, at Harvard Law School on November 9th, CPI reached out to Jon Baker (Professor, American University) and Diana Moss (President, American Antitrust Institute). They will participate in “The Consumer Welfare Standard” panel, together with Rob Atkinson (President, Information Technology and Innovation Foundation), Renata Hesse (Partner, Sullivan & Cromwell), and Einer Elhauge (Professor, Harvard Law School).
In this exclusive interview, Diana Moss has responded to three questions asked by Professor Baker on the consumer welfare standard and its current application in US antitrust law.
This conference is co-organized by CPI and CCIA. To see the full program and register free, please click here.
Following is Q and A # 1. For the other 2, see
https://www.competitionpolicyinternational.com/cpi-talks-on-the-consumer-welfare-standard/?utm_source=CPI+Subscribers&utm_campaign=b47147cbd9-EMAIL_CAMPAIGN_2018_10_20_07_01&utm_medium=email&utm_term=0_0ea61134a5-b47147cbd9-236508653
Some progressives say that antitrust rules pay insufficient attention to harms to suppliers, including workers; harms along competitive dimensions other than price and output, such as quality or innovation; and the ways that the exercise of market power may undermine non-economic values, as by creating anti-democratic political pressures or limiting the opportunity of small businesses to compete. To what extent are these concerns justified?
Today’s debate over the role of antitrust has generated a lot of blue sky thinking about the state of U.S. antitrust. I think of this debate as a very different process from that of crafting constructive reform proposals. Actual reform requires knowledge of how the laws and standard have been and can be applied by enforcers and the courts. For example, we know that the consumer welfare standard can address the price and non-price dimensions (e.g., quality and innovation) of competition. The standard also reaches to the harms resulting from the exercise of market power anywhere along the supply chain (e.g., consumers and workers). The control of economic power serves to limit barriers to entry and exclusionary conduct that targets smaller innovative rivals and in stemming the growth of political power.
In sum, if enforcers and courts used the full scope of the law and standard, antitrust would today be more effective in defending and promoting our markets. The reality has been different, namely, a narrow interpretation of the consumer welfare standard under the conservative ideology has held sway for decades. In response to this, some proposals advocate for wholesale reforms that would essentially do away with any standard. This risks reforms that divert the antitrust laws to purposes for which they are not designed and could exacerbate the current state of under-enforcement.
As a progressive (as I will articulate more in my panel remarks), I think of constructive reform as including a more nuanced approach through a package of complementary proposals. These include: (1) legislative clarification of the full scope of the law and increased appropriations for the agencies for enforcement; (2) guidance from the agencies that articulates a “dynamic and symmetric” consumer welfare standard (describes in #2 below) and requirements for implementing it; and (3) efforts to strengthen or introduce presumptions of illegality in mergers and some forms of conduct.
DC public restrooms legislation proposed
Marcy Bernbaum, a retired USAID official, and a D.C. resident, has a mission of providing help to the most disadvantaged citizens. A particular campaign she has focused on is providing access to public toilets in the District of Columbia.
Her efforts, and the efforts of many others, have now resulted in a legislative proposal: D.C. Council Bill 22-0223 has the goal of installing and maintaining clean, safe, and available public restrooms. Support has come from churches, advocacy organizations, community associations and others.
Here is an excerpt from Marcy Bernbaum’s op-ed in the Washington Post. https://www.washingtonpost.com/opinions/why-does-dc-have-so-few-public-restrooms/2017/12/15/951e3fde-cfcf-11e7-9d3a-bcbe2af58c3a_story.html?utm_term=.33069c2c8867
We did an inventory of restrooms in private facilities in five D.C. neighborhoods: Gallery Place, Dupont Circle, Georgetown, the K Street corridor and Columbia Heights. And we carried out a comprehensive search to identify public restrooms open during the day as well as those open 24/7.
To our amazement, we found that there are only three public restrooms in all of the District that are open 24/7: those at Union Station, the Lincoln Memorial and the Jefferson Memorial — and there are no signs telling you how to get to them. Imagine it is late at night. You are walking down the street and urgently have to go to the bathroom. If you can't make it and experience the misfortune of having no choice but to "go" outside and are caught by a police officer, you risk receiving a fine of up to $500, up to 90 days in jail or both. During the day, off the Mall there are only six public restrooms in downtown Washington, their hours are limited, and there are no signs to tell you where they are.
The situation isn't much better when it comes to finding private facilities with restroom access. Forty-two of the 85 private facilities we visited in early 2015 permitted people who weren't patrons to use their restrooms. When we visited the same facilities in early 2016, the number had dwindled to 28. And when we returned to the same facilities in mid-2017, only 11 (or 13 percent) permitted entry to non-patrons.
In April, D.C. Council members Brianne K. Nadeau (D-Ward 1), David Grosso (I-At Large), Elissa Silverman (I-At Large) and Robert C. White Jr. (D-At Large) introduced Bill 22-0223, the Public Restroom Facilities Installation and Promotion Act of 2017.
The bill would work toward creating public restrooms and establish an incentive for private businesses to make their restrooms available to the public.
Marcy Bernbaum, a retired USAID official, and a D.C. resident, has a mission of providing help to the most disadvantaged citizens. A particular campaign she has focused on is providing access to public toilets in the District of Columbia.
Her efforts, and the efforts of many others, have now resulted in a legislative proposal: D.C. Council Bill 22-0223 has the goal of installing and maintaining clean, safe, and available public restrooms. Support has come from churches, advocacy organizations, community associations and others.
Here is an excerpt from Marcy Bernbaum’s op-ed in the Washington Post. https://www.washingtonpost.com/opinions/why-does-dc-have-so-few-public-restrooms/2017/12/15/951e3fde-cfcf-11e7-9d3a-bcbe2af58c3a_story.html?utm_term=.33069c2c8867
We did an inventory of restrooms in private facilities in five D.C. neighborhoods: Gallery Place, Dupont Circle, Georgetown, the K Street corridor and Columbia Heights. And we carried out a comprehensive search to identify public restrooms open during the day as well as those open 24/7.
To our amazement, we found that there are only three public restrooms in all of the District that are open 24/7: those at Union Station, the Lincoln Memorial and the Jefferson Memorial — and there are no signs telling you how to get to them. Imagine it is late at night. You are walking down the street and urgently have to go to the bathroom. If you can't make it and experience the misfortune of having no choice but to "go" outside and are caught by a police officer, you risk receiving a fine of up to $500, up to 90 days in jail or both. During the day, off the Mall there are only six public restrooms in downtown Washington, their hours are limited, and there are no signs to tell you where they are.
The situation isn't much better when it comes to finding private facilities with restroom access. Forty-two of the 85 private facilities we visited in early 2015 permitted people who weren't patrons to use their restrooms. When we visited the same facilities in early 2016, the number had dwindled to 28. And when we returned to the same facilities in mid-2017, only 11 (or 13 percent) permitted entry to non-patrons.
In April, D.C. Council members Brianne K. Nadeau (D-Ward 1), David Grosso (I-At Large), Elissa Silverman (I-At Large) and Robert C. White Jr. (D-At Large) introduced Bill 22-0223, the Public Restroom Facilities Installation and Promotion Act of 2017.
The bill would work toward creating public restrooms and establish an incentive for private businesses to make their restrooms available to the public.
A business tax measure to fund homelessness services
is on the ballot for San Francisco voters in San Francisco County, California, on November 6, 2018.
A yes vote is a vote in favor of authorizing the city and county of San Francisco to fund housing and homelessness services by taxing certain businesses at the following rates:
A no vote is a vote against authorizing the city and county of San Francisco to tax businesses at the above rates to fund housing and homelessness services.
Credit: balletopedia.org
Not all businesses support the San Francisco tax proposal. See https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=6&cad=rja&uact=8&ved=2ahUKEwiClq2V9pPeAhXSwFkKHfoWCqEQFjAFegQIBRAB&url=https%3A%2F%2Fwww.businessinsider.com%2Fmarc-benioff-and-jack-dorsey-clash-over-san-francisco-homeless-measure-prop-c-2018-10&usg=AOvVaw0j7wtU1oE5T-AnRBnwaD3Q
is on the ballot for San Francisco voters in San Francisco County, California, on November 6, 2018.
A yes vote is a vote in favor of authorizing the city and county of San Francisco to fund housing and homelessness services by taxing certain businesses at the following rates:
- 0.175 percent to 0.69 percent on gross receipts for businesses with over $50 million in gross annual receipts, or
- 1.5 percent of payroll expenses for certain businesses with over $1 billion in gross annual receipts and administrative offices in San Francisco.
A no vote is a vote against authorizing the city and county of San Francisco to tax businesses at the above rates to fund housing and homelessness services.
Credit: balletopedia.org
Not all businesses support the San Francisco tax proposal. See https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=6&cad=rja&uact=8&ved=2ahUKEwiClq2V9pPeAhXSwFkKHfoWCqEQFjAFegQIBRAB&url=https%3A%2F%2Fwww.businessinsider.com%2Fmarc-benioff-and-jack-dorsey-clash-over-san-francisco-homeless-measure-prop-c-2018-10&usg=AOvVaw0j7wtU1oE5T-AnRBnwaD3Q
Regulators have been cracking down on abusive rent-to-own deals
offered by operators of manufactured home communities, otherwise known as trailer parks, in which people shell out thousands of dollars for run-down homes that they never actually get to buy
The New York attorney general’s office is expected to announce a settlement that could give hundreds of people who signed rent-to-own leases with a trailer park the right to tear up those deals and recoup any deposits they paid, according to two people briefed on the matter who were not authorized to speak publicly.
The settlement is with eight trailer park operators, including two publicly traded “real estate investment trusts,” that run more than 100 parks from Long Island to upstate New York. The settlement would end a yearlong investigation by the attorney general’s office, which had received dozens of complaints from renters about misleading sales pitches by park operators, the people said.
Private equity firms and large real estate investors have been looking to buy trailer parks and combine them into larger companies. They are attractive investments because prefabricated homes are relatively cheap to produce and maintain. New manufactured homes often sell for as little as $70,000.
One of the companies settling with New York is Sun Communities, which has a market value of $9 billion and whose shares have soared nearly a thousand percent in the last decade. Sun operates more than 300 parks for manufactured homes and recreational vehicles.
Sun representatives didn’t respond to a phone message seeking comment.
The contracts, which typically last seven to 10 years, sometimes referred to rent payments as “mortgage payments,” even though the tenants would take possession of the property only if they made a large payment at the end of the contract.
The state negotiated some of the settlement terms with the New York Housing Association, which represents manufactured home parks in New York. Mark Glaser, a lawyer for the association, said the group had “cooperated with the attorney general’s office and was pleased to help facilitate a resolution of the issues under review.”
The terms are similar to ones that led a number of state attorneys general, including those in Wisconsin and Pennsylvania, to sue rent-to-own housing firms. Regulators in those states have said the rent-to-own contracts were deceptive.
From https://www.nytimes.com/2018/10/18/business/trailer-park-rent-settlement.html?rref=collection%2Fsectioncollection%2Fbusiness&action=click&contentCollection=business®ion=rank&module=package&version=highlights&contentPlacement=2&pgtype=sectionfront
offered by operators of manufactured home communities, otherwise known as trailer parks, in which people shell out thousands of dollars for run-down homes that they never actually get to buy
The New York attorney general’s office is expected to announce a settlement that could give hundreds of people who signed rent-to-own leases with a trailer park the right to tear up those deals and recoup any deposits they paid, according to two people briefed on the matter who were not authorized to speak publicly.
The settlement is with eight trailer park operators, including two publicly traded “real estate investment trusts,” that run more than 100 parks from Long Island to upstate New York. The settlement would end a yearlong investigation by the attorney general’s office, which had received dozens of complaints from renters about misleading sales pitches by park operators, the people said.
Private equity firms and large real estate investors have been looking to buy trailer parks and combine them into larger companies. They are attractive investments because prefabricated homes are relatively cheap to produce and maintain. New manufactured homes often sell for as little as $70,000.
One of the companies settling with New York is Sun Communities, which has a market value of $9 billion and whose shares have soared nearly a thousand percent in the last decade. Sun operates more than 300 parks for manufactured homes and recreational vehicles.
Sun representatives didn’t respond to a phone message seeking comment.
The contracts, which typically last seven to 10 years, sometimes referred to rent payments as “mortgage payments,” even though the tenants would take possession of the property only if they made a large payment at the end of the contract.
The state negotiated some of the settlement terms with the New York Housing Association, which represents manufactured home parks in New York. Mark Glaser, a lawyer for the association, said the group had “cooperated with the attorney general’s office and was pleased to help facilitate a resolution of the issues under review.”
The terms are similar to ones that led a number of state attorneys general, including those in Wisconsin and Pennsylvania, to sue rent-to-own housing firms. Regulators in those states have said the rent-to-own contracts were deceptive.
From https://www.nytimes.com/2018/10/18/business/trailer-park-rent-settlement.html?rref=collection%2Fsectioncollection%2Fbusiness&action=click&contentCollection=business®ion=rank&module=package&version=highlights&contentPlacement=2&pgtype=sectionfront
The campaign for Proposition 10, a ballot initiative that would loosen California state restraints on local rent control laws.
The effort has stoked a battle that has already consumed close to $60 million in political spending, a sizable figure even in a state known for heavily funded campaigns.
Depending on which side is talking, Proposition 10 is either a much-needed tool to help cities solve a housing crisis or a radically misguided idea that will only make things worse. Specifically, it would repeal the Costa-Hawkins Rental Housing Act, which prevents cities from applying rent control laws to single-family homes and apartments built after 1995.
The initiative drive builds on the growing momentum of local efforts to expand tenant protections.
From: https://www.nytimes.com/2018/10/12/business/economy/california-rent-control-tenants.html?rref=collection%2Fsectioncollection%2Fbusiness&action=click&contentCollection=business®ion=rank&module=package&version=highlights&contentPlacement=2&pgtype=sectionfront
The effort has stoked a battle that has already consumed close to $60 million in political spending, a sizable figure even in a state known for heavily funded campaigns.
Depending on which side is talking, Proposition 10 is either a much-needed tool to help cities solve a housing crisis or a radically misguided idea that will only make things worse. Specifically, it would repeal the Costa-Hawkins Rental Housing Act, which prevents cities from applying rent control laws to single-family homes and apartments built after 1995.
The initiative drive builds on the growing momentum of local efforts to expand tenant protections.
From: https://www.nytimes.com/2018/10/12/business/economy/california-rent-control-tenants.html?rref=collection%2Fsectioncollection%2Fbusiness&action=click&contentCollection=business®ion=rank&module=package&version=highlights&contentPlacement=2&pgtype=sectionfront
Washington Post says dark money from both left and right groups participated in Kavanaugh public advocacy campaigns
From the Post article:
Judicial Crisis Network is a 501(c)(4) advocacy organization — a “dark money” group that is not required to disclose the sources of its funding, regardless of the industry groups or individual donors behind them. It poured at least $5.3 million into its pro-Kavanaugh advertising campaign, much of it targeting vulnerable Senate Democrats in red and swing states. At least $1.5 million of that was spent defending Kavanaugh after Christine Blasey Ford went public with her allegation of sexual assault against him.
A liberal group of a similar stripe, Demand Justice, spent at least $700,000 of a planned $5 million campaign trying to scuttle Kavanaugh’s nomination.
https://www.msn.com/en-us/news/politics/collins-blasted-‘dark-money’-groups-in-kavanaugh-fight-one-just-paid-to-thank-her-for-her-vote/ar-BBOkLwr?ocid=spartandhp
From the Post article:
Judicial Crisis Network is a 501(c)(4) advocacy organization — a “dark money” group that is not required to disclose the sources of its funding, regardless of the industry groups or individual donors behind them. It poured at least $5.3 million into its pro-Kavanaugh advertising campaign, much of it targeting vulnerable Senate Democrats in red and swing states. At least $1.5 million of that was spent defending Kavanaugh after Christine Blasey Ford went public with her allegation of sexual assault against him.
A liberal group of a similar stripe, Demand Justice, spent at least $700,000 of a planned $5 million campaign trying to scuttle Kavanaugh’s nomination.
https://www.msn.com/en-us/news/politics/collins-blasted-‘dark-money’-groups-in-kavanaugh-fight-one-just-paid-to-thank-her-for-her-vote/ar-BBOkLwr?ocid=spartandhp
From DC AG Racine: OAG's "Cure the Streets" program
Earlier this summer, the District saw a tragic spike in violence where 13 people were shot in 11 separate incidents over Memorial Day weekend. In response, the Council gave OAG funds to set up a pilot program for violence interruption. In just four months, OAG has launched “Cure the Streets” in the District and it’s already showing some signs of progress.
Cure the Streets is operating in two pilot sites in Wards 5 and 8, which have some of the highest rates of gun violence in the city. This pilot program uses a proven, public-health approach to treat violence as a disease, focusing on three main actions:
Interrupt: Interrupt potentially violent conflicts by preventing retaliation and mediating simmering disputes;
- Treat: Identify and treat individuals at the highest risk for conflict by providing support services and changing behavior; and
- Change: Engage communities in changing norms around violence.
Although Cure the Streets is just getting started, it’s already making a positive difference in these communities. We must continue investing in these data-driven, proven solutions to stop violence before it happens and save lives in the District.
Karl A. Racine
Attorney General
AAI Statement: DOJ's Approval of CVS-Aetna Merger Imperils Competition and Consumers in Critical Parts of Healthcare Supply Chain
Today [10/10/2018] , the U.S. Department of Justice (DOJ) approved the vertical merger of leading retail pharmacy and pharmacy benefits manager (PBM) CVS with major health insurer Aetna. "While the DOJ obtained divestitures to address the horizontal overlap in CVS's and Aetna's Medicare Part D individual prescription drug plans, it did nothing to address the significant vertical competitive problems raised by the combination," said AAI President Diana Moss.
The approval of CVS-Aetna comes on the heels of the DOJ's recent approval of a similar vertical merger of PBM Express Scripts and heath insurer Cigna.
"Within a short period of time, antitrust enforcers have green-lighted a fundamental restructuring of important segments of the healthcare industry in the U.S.," said Moss. "Competition now depends almost entirely on having 'enough' rivalry between integrated PBM-insurers. This 'roll-the-dice' model of competition stands in stark contrast to a model of standalone PBMs competing hard to gain insurers' drug plan business and insurers aggressively seeking out competitive PBM services."
In a March 26, 2018 letter to the DOJ, AAI raised serious concerns about the competitive effects of the proposed merger. The deal creates a large, vertically integrated PBM-insurer that operates in upstream and downstream markets featuring only a few rivals. AAI also provided testimony at the California Department of Insurance hearings on the proposed merger.
"We are disappointed that the DOJ did not address a merged CVS-Aetna's enhanced incentives to use their market positions to disadvantage rival PBMs, independent pharmacies, and rival health insurers," said Moss. "Competition will undoubtedly suffer, as will consumers through higher prices, lower quality, less innovation, and less choice," Moss added, noting that any efficiencies claims would have to be monumentally large to overcome significant competitive concerns. AAI says the DOJ's decision highlights the need for new guidelines on vertical mergers.
AAI's advocacy against the CVS-Aetna merger explains that giant PBM-insurer organizations created by the recent swath of merger approvals will make it harder for companies with more innovative business models to enter markets. Because of widespread vertical integration, new entrants will be forced to enter at both the PBM and insurer levels to be viable competitors.
"If ever there were a vertical merger that should have been challenged by antitrust enforcers, this would be it," said Moss. High levels of concentration in the PBM and insurer markets, demonstrated exclusionary conduct by one of the merging parties, and past enforcement actions involving consolidation in these important markets are all powerful indicators that the deal should have been deemed illegal.
Wash Post Op-Ed on Pay to Protest
By Mara Verheyden-Hilliard and
Carl Messineo
September 11
Mara Verheyden-Hilliard is executive director of the Partnership for Civil Justice Fund. Carl Messineo is the group’s legal director.
For the first time, the U.S. government wants demonstrators to pay to use our parks, sidewalks and streets to engage in free speech in the nation’s capital. This should be called what it is: a protest tax.
This is a bold effort by the Trump administration to burden and restrict access to public spaces for First Amendment activities in Washington. If enacted, it would fundamentally alter participatory democracy in the United States.
Last month, Interior Secretary Ryan Zinke announced the administration’s radical, anti-democratic rewriting of regulations governing free speech and demonstrations on public lands under federal jurisdiction in Washington. Under the proposal, which is open to public comment, the National Park Service (NPS) would charge protesters “event management” costs. This would include the cost of barricades and fencing erected at the discretion of police, the salaries of personnel deployed to monitor the protest, trash removal and sanitation charges, permit application charges and costs assessed on “harm to turf” — the effects of engaging in free speech on grass, as if our public green spaces are for ornamental viewing.
And it goes beyond just the Mall. Want to protest in front of the Trump hotel on Pennsylvania Avenue? Under this proposal, you’ll have to take out your checkbook, because the NPS maintains control over the broad sidewalks of Pennsylvania Avenue. In addition to the upfront costs to even request a permit, you may be billed for the cost of barricades erected around the hotel — fencing you didn’t ask for but that the hotel wants.
Such a “pay to protest” plan will probably be challenged in court. The right to petition the government for a redress of grievances cannot be burdened by such charges. And discretionary fees or measures that can serve as a proxy for content-based discrimination are unconstitutional.
This is just one element of a larger initiative to close off public space to silence dissent by both financial and physical restriction. The NPS has, at the same time, quietly sneaked into its new regulatory proposal a plan to essentially close the iconic White House sidewalk to protest, leaving only five feet for a narrow pedestrian walkway.
During the Vietnam War, the Nixon White House was surrounded by buses to block protesters from approaching the sidewalk. Now, the government seeks to remove the protests by taking the public spaces out from under our feet. What’s next, closing Lafayette Square?
The NPS describes our democratic rights as too costly for our democracy. An NPS spokeswoman justified the measure as cost recovery, pointing to last year’s Women’s March as having imposed “a pretty heavy cost” on the government.
Free speech is not a cost. It is a value. It is a fundamental pillar of democracy.
For the full op-ed, see https://www.washingtonpost.com/opinions/the-trump-administration-wants-to-tax-protests-what-happened-to-free-speech/2018/09/11/70f08bfa-b5e1-11e8-b79f-f6e31e555258_story.html?noredirect=on&utm_term=.8d0af0c6ddc1
By Mara Verheyden-Hilliard and
Carl Messineo
September 11
Mara Verheyden-Hilliard is executive director of the Partnership for Civil Justice Fund. Carl Messineo is the group’s legal director.
For the first time, the U.S. government wants demonstrators to pay to use our parks, sidewalks and streets to engage in free speech in the nation’s capital. This should be called what it is: a protest tax.
This is a bold effort by the Trump administration to burden and restrict access to public spaces for First Amendment activities in Washington. If enacted, it would fundamentally alter participatory democracy in the United States.
Last month, Interior Secretary Ryan Zinke announced the administration’s radical, anti-democratic rewriting of regulations governing free speech and demonstrations on public lands under federal jurisdiction in Washington. Under the proposal, which is open to public comment, the National Park Service (NPS) would charge protesters “event management” costs. This would include the cost of barricades and fencing erected at the discretion of police, the salaries of personnel deployed to monitor the protest, trash removal and sanitation charges, permit application charges and costs assessed on “harm to turf” — the effects of engaging in free speech on grass, as if our public green spaces are for ornamental viewing.
And it goes beyond just the Mall. Want to protest in front of the Trump hotel on Pennsylvania Avenue? Under this proposal, you’ll have to take out your checkbook, because the NPS maintains control over the broad sidewalks of Pennsylvania Avenue. In addition to the upfront costs to even request a permit, you may be billed for the cost of barricades erected around the hotel — fencing you didn’t ask for but that the hotel wants.
Such a “pay to protest” plan will probably be challenged in court. The right to petition the government for a redress of grievances cannot be burdened by such charges. And discretionary fees or measures that can serve as a proxy for content-based discrimination are unconstitutional.
This is just one element of a larger initiative to close off public space to silence dissent by both financial and physical restriction. The NPS has, at the same time, quietly sneaked into its new regulatory proposal a plan to essentially close the iconic White House sidewalk to protest, leaving only five feet for a narrow pedestrian walkway.
During the Vietnam War, the Nixon White House was surrounded by buses to block protesters from approaching the sidewalk. Now, the government seeks to remove the protests by taking the public spaces out from under our feet. What’s next, closing Lafayette Square?
The NPS describes our democratic rights as too costly for our democracy. An NPS spokeswoman justified the measure as cost recovery, pointing to last year’s Women’s March as having imposed “a pretty heavy cost” on the government.
Free speech is not a cost. It is a value. It is a fundamental pillar of democracy.
For the full op-ed, see https://www.washingtonpost.com/opinions/the-trump-administration-wants-to-tax-protests-what-happened-to-free-speech/2018/09/11/70f08bfa-b5e1-11e8-b79f-f6e31e555258_story.html?noredirect=on&utm_term=.8d0af0c6ddc1
A second look at The Case Against the Supreme Court, the 2014 book by Erwin Chemerinsky
This seems like a good moment to take down from the bookshelf Erwin Chemerinsky’s 2014 book, The Case Against the Supreme Court (Viking, 386 pages).
The book argues that over time the U.S. Supreme Court’s decisions have frequently been wrong. The wrong case decisions are often a product of the ideology of the Justices who decide the cases. For Chemerinsky, ideology means the “values, views, and prejudices” of the Justices. Those values, views and prejudices are not necessarily the same as those of a particular political party, but often overlap. There have been some moments when the Court’s wrong decisions were partisan in the sense of favoring a particular political party’s agenda.
The author’s suggestions for structural reform of the Court are mild. He does not, for example, advocate doing away with the Court's power to review laws for their constitutionality. He would have Congress impose term limits, perhaps 18 years, so that the prevailing ideologies of a particular moment in history are less likely to persist for decades.
But Chemerinsky would like to see Justices appointed who share his own strongly felt ideological views, which he is not reluctant to express. He believes, for example, that the Justices should permit latitude so the government can use regulations to aid workers and consumers. He believes the Justices should allow the government to protect ethnic minorities. He opposes “originalist” approaches to construing the Constitution.
Chemerinsky is not recommending that operatives for a particular political party he favors be appointed as Justices – very few people have that point. But it seems likely that he would subscribe to the popular observation that elections matter.
Turning to some of the history recounted by the author, one point of ideology that has caused harm concerns race. The “separate but equal” doctrine justifying racial separation was the law of the land for many decades. The doctrine was abandoned by the U.S. Supreme Court only in 1954, in Brown v. Board of Education, which Chemerinsky hails as a high point of good Supreme Court decision making. But it took the Court a long time to get there -- decades. And Chemerinsky finds the Court’s follow-up on the Brown decision to be less than perfect.
And, Chemerinsky points out, the ideology of the judges deciding Brown was crucial. The deciding judges believed in racial equality and were not “originalists.” They did not limit interpretation of the Constitution to what the framers originally intended. Recall that framer Thomas Jefferson (who wrote "all men are created equal") owned slaves, and engaged in sexual predation.
Among other points of ideology that have caused harm is hostility to ethnic minorities such as the Japanese. In Korematsu v. United States, the Court, in a 6-3 decision, upheld evacuation and internment of Japanese-American citizens. Chemerinsky points out that the decision was highly offensive in its reliance on ethnicity alone to decide who is a threat to national security.
Another important point of ideology is antipathy to regulations intended to protect workers and consumers. Lochner v. New York was a 1905 Supreme Court case that blocked legislation limiting working hours for bakers. The theory of the Court involved support for freedom of contract. The years 1905 to 1936 have been called the “Lochner era,” ending with a partisan battle by Democrat President Franklin Delano Roosevelt.
Roosevelt wanted to stop the U.S. Supreme Court from blocking his regulatory efforts, so he threatened to use his popularity and power with Congress to increase the number of Justices. Such “court packing” would give Roosevelt the power to appoint sympathetic judges and change case decision outcomes. Faced with that challenge, the nine sitting Justices became more inclined to see things Roosevelt’s way. Case decisions on regulatory issues began to go Roosevelt’s way, and court packing was not pursued.
This article is posted by Don Allen Resnikoff, who takes entire responsibility for the views expressed.
This seems like a good moment to take down from the bookshelf Erwin Chemerinsky’s 2014 book, The Case Against the Supreme Court (Viking, 386 pages).
The book argues that over time the U.S. Supreme Court’s decisions have frequently been wrong. The wrong case decisions are often a product of the ideology of the Justices who decide the cases. For Chemerinsky, ideology means the “values, views, and prejudices” of the Justices. Those values, views and prejudices are not necessarily the same as those of a particular political party, but often overlap. There have been some moments when the Court’s wrong decisions were partisan in the sense of favoring a particular political party’s agenda.
The author’s suggestions for structural reform of the Court are mild. He does not, for example, advocate doing away with the Court's power to review laws for their constitutionality. He would have Congress impose term limits, perhaps 18 years, so that the prevailing ideologies of a particular moment in history are less likely to persist for decades.
But Chemerinsky would like to see Justices appointed who share his own strongly felt ideological views, which he is not reluctant to express. He believes, for example, that the Justices should permit latitude so the government can use regulations to aid workers and consumers. He believes the Justices should allow the government to protect ethnic minorities. He opposes “originalist” approaches to construing the Constitution.
Chemerinsky is not recommending that operatives for a particular political party he favors be appointed as Justices – very few people have that point. But it seems likely that he would subscribe to the popular observation that elections matter.
Turning to some of the history recounted by the author, one point of ideology that has caused harm concerns race. The “separate but equal” doctrine justifying racial separation was the law of the land for many decades. The doctrine was abandoned by the U.S. Supreme Court only in 1954, in Brown v. Board of Education, which Chemerinsky hails as a high point of good Supreme Court decision making. But it took the Court a long time to get there -- decades. And Chemerinsky finds the Court’s follow-up on the Brown decision to be less than perfect.
And, Chemerinsky points out, the ideology of the judges deciding Brown was crucial. The deciding judges believed in racial equality and were not “originalists.” They did not limit interpretation of the Constitution to what the framers originally intended. Recall that framer Thomas Jefferson (who wrote "all men are created equal") owned slaves, and engaged in sexual predation.
Among other points of ideology that have caused harm is hostility to ethnic minorities such as the Japanese. In Korematsu v. United States, the Court, in a 6-3 decision, upheld evacuation and internment of Japanese-American citizens. Chemerinsky points out that the decision was highly offensive in its reliance on ethnicity alone to decide who is a threat to national security.
Another important point of ideology is antipathy to regulations intended to protect workers and consumers. Lochner v. New York was a 1905 Supreme Court case that blocked legislation limiting working hours for bakers. The theory of the Court involved support for freedom of contract. The years 1905 to 1936 have been called the “Lochner era,” ending with a partisan battle by Democrat President Franklin Delano Roosevelt.
Roosevelt wanted to stop the U.S. Supreme Court from blocking his regulatory efforts, so he threatened to use his popularity and power with Congress to increase the number of Justices. Such “court packing” would give Roosevelt the power to appoint sympathetic judges and change case decision outcomes. Faced with that challenge, the nine sitting Justices became more inclined to see things Roosevelt’s way. Case decisions on regulatory issues began to go Roosevelt’s way, and court packing was not pursued.
This article is posted by Don Allen Resnikoff, who takes entire responsibility for the views expressed.
- States have important role in CFPB suit against student lender Navient
The states’ lawsuits will take on increased importance if the federal consumer bureau pursues its case in a weak manner, or drops its case against Navient.
See: https://www.nytimes.com/2018/10/07/business/student-loans-navient.html
From: DMN:
Ticketmaster Is Now In the Crosshairs of the U.S. Federal Trade Commission
Weeks after an explosive undercover report revealed that Ticketmaster works closely with scalpers to sell their second-hand tickets; the FTC has announced a workshop to investigate how online ticketing is handled.
Ticketmaster parent company Live Nation witnessed its stock price drop as much as 5.5% after the report of the workshop. But a little damage control helped to recover some of those losses.
So what’s the FTC doing, exactly?
The story continues here. -- https://www.digitalmusicnews.com/2018/10/05/ticketmaster-scalper-federal-trade-commission-ftc/
Ticketmaster Is Now In the Crosshairs of the U.S. Federal Trade Commission
Weeks after an explosive undercover report revealed that Ticketmaster works closely with scalpers to sell their second-hand tickets; the FTC has announced a workshop to investigate how online ticketing is handled.
Ticketmaster parent company Live Nation witnessed its stock price drop as much as 5.5% after the report of the workshop. But a little damage control helped to recover some of those losses.
So what’s the FTC doing, exactly?
The story continues here. -- https://www.digitalmusicnews.com/2018/10/05/ticketmaster-scalper-federal-trade-commission-ftc/
Chinese ride-share company Didi is at the center of the ride-hailing web that it and its investor SoftBank have spun.
Truces and alliances between regional players may follow.
Didi has invested in Lyft, Uber through the deal they cut in August 2016, Southeast Asia’s Grab, India’s Ola, and the Middle East’s Careem. It put $100 million into and later acquired Brazil’s 99. Didi was last valued at $57 billion during its $4.6 billion financing in December 2017, and is reportedly in talks with South Korea’s Mirae Asset Financial Group to raise an additional $263 million.
SoftBank also has a stake in most of these ride-hailing companies, positioning it to broker truces and alliances between regional players, like Uber’s recent sale of its Southeast Asia operations to Grab. According to data from industry research firm PitchBook, SoftBank has invested five times in Ola, four times in Didi, four times in Grab, once in Uber, and once in 99. It’s unclear how much these investments total, but they are well into the billions. SoftBank is playing the ride-hailing version of Risk, but it also owns a piece of all the players. So long as a single company controls a country or region, so that it’s not burning money to compete, SoftBank seems likely to be happy with the outcome.
That said, insofar as SoftBank has picked a single winner, it seems like Didi. It’s notable that Didi has continued to expand globally even as Uber has now repeatedly withdrawn from key international markets, first in China, then Russia and most recently in Southeast Asia. SoftBank has also not-so-subtly hinted that it would like to see Uber retreat. Rajeev Misra, a SoftBank board director who also sits on Uber’s board, told the Financial Times in January that Uber should focus on its core markets, which he identified as the US, Europe, Latin America, and Australia. Uber CEO Dara Khosrowshahi said Uber would “invest aggressively” in the Southeast Asia business about a month before it sold to Grab.
From https://qz.com/1261177/softbanks-winner-in-ride-hailing-is-chinas-didi-chuxing-not-uber/
Truces and alliances between regional players may follow.
Didi has invested in Lyft, Uber through the deal they cut in August 2016, Southeast Asia’s Grab, India’s Ola, and the Middle East’s Careem. It put $100 million into and later acquired Brazil’s 99. Didi was last valued at $57 billion during its $4.6 billion financing in December 2017, and is reportedly in talks with South Korea’s Mirae Asset Financial Group to raise an additional $263 million.
SoftBank also has a stake in most of these ride-hailing companies, positioning it to broker truces and alliances between regional players, like Uber’s recent sale of its Southeast Asia operations to Grab. According to data from industry research firm PitchBook, SoftBank has invested five times in Ola, four times in Didi, four times in Grab, once in Uber, and once in 99. It’s unclear how much these investments total, but they are well into the billions. SoftBank is playing the ride-hailing version of Risk, but it also owns a piece of all the players. So long as a single company controls a country or region, so that it’s not burning money to compete, SoftBank seems likely to be happy with the outcome.
That said, insofar as SoftBank has picked a single winner, it seems like Didi. It’s notable that Didi has continued to expand globally even as Uber has now repeatedly withdrawn from key international markets, first in China, then Russia and most recently in Southeast Asia. SoftBank has also not-so-subtly hinted that it would like to see Uber retreat. Rajeev Misra, a SoftBank board director who also sits on Uber’s board, told the Financial Times in January that Uber should focus on its core markets, which he identified as the US, Europe, Latin America, and Australia. Uber CEO Dara Khosrowshahi said Uber would “invest aggressively” in the Southeast Asia business about a month before it sold to Grab.
From https://qz.com/1261177/softbanks-winner-in-ride-hailing-is-chinas-didi-chuxing-not-uber/
States Urge Justices To Flip Illinois Brick In Apple Case -- See briefs below:
Brief for states:
https://dlbjbjzgnk95t.cloudfront.net/1088000/1088314/states.pdf
Excerpt:
This case presents a rare opportunity to revisit the controversial holding in Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977). The Court can overrule its precedents based on briefing by amici, and it has done so before. The Court should do so again here.
I. Section 4 of the Clayton Act directs that “any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor . . . and shall recover threefold the damages by him sustained.” 15 U.S.C. § 15(a). It is widely accepted that consumers can be injured when manufacturers take concerted action to fix supracompetitive prices and distributors of the overpriced products pass on some or all of the overcharges to end users.
Before 1977, when this Court decided Illinois Brick, lower courts generally allowed consumers who purchased goods made by an antitrust violator to prove that they had been harmed by overcharges passed on to them by intermediaries in the distribution chain. Illinois Brick, however, held that an “indirect purchaser” is categorically forbidden from attempting to prove damages from an antitrust violation. 431 U.S. at 726. Instead, “the overcharged direct purchaser should be deemed for purposes of section 4 to have suffered the full injury from the overcharge.” Id.
The Court admitted that this conclusive presumption “denies recovery to those indirect purchasers who may have been actually injured by antitrust violations.” Id. at 746. The Court did not identify any statutory text denying recovery to “any person who shall be injured,” 15 U.S.C. § 15(a), by an antitrust violation. Instead, the Court reasoned that “the legislative purpose” of “encouraging vigorous private enforcement of the antitrust laws” was “better served” by a ban on “attempting to apportion the overcharge among all that may have absorbed a part of it.” Ill. Brick, 431 U.S. at 745-46.
Brief for AAI:
https://dlbjbjzgnk95t.cloudfront.net/1088000/1088314/americanantitrust.pdf
Brief for Open Markets:
https://dlbjbjzgnk95t.cloudfront.net/1088000/1088314/http-www-supremecourt-gov-docketpdf-17-17-204-65344-20181001145735965_17-204-20amicus-20bom-pdfa-pdf.pdf
Brief for states:
https://dlbjbjzgnk95t.cloudfront.net/1088000/1088314/states.pdf
Excerpt:
This case presents a rare opportunity to revisit the controversial holding in Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977). The Court can overrule its precedents based on briefing by amici, and it has done so before. The Court should do so again here.
I. Section 4 of the Clayton Act directs that “any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor . . . and shall recover threefold the damages by him sustained.” 15 U.S.C. § 15(a). It is widely accepted that consumers can be injured when manufacturers take concerted action to fix supracompetitive prices and distributors of the overpriced products pass on some or all of the overcharges to end users.
Before 1977, when this Court decided Illinois Brick, lower courts generally allowed consumers who purchased goods made by an antitrust violator to prove that they had been harmed by overcharges passed on to them by intermediaries in the distribution chain. Illinois Brick, however, held that an “indirect purchaser” is categorically forbidden from attempting to prove damages from an antitrust violation. 431 U.S. at 726. Instead, “the overcharged direct purchaser should be deemed for purposes of section 4 to have suffered the full injury from the overcharge.” Id.
The Court admitted that this conclusive presumption “denies recovery to those indirect purchasers who may have been actually injured by antitrust violations.” Id. at 746. The Court did not identify any statutory text denying recovery to “any person who shall be injured,” 15 U.S.C. § 15(a), by an antitrust violation. Instead, the Court reasoned that “the legislative purpose” of “encouraging vigorous private enforcement of the antitrust laws” was “better served” by a ban on “attempting to apportion the overcharge among all that may have absorbed a part of it.” Ill. Brick, 431 U.S. at 745-46.
Brief for AAI:
https://dlbjbjzgnk95t.cloudfront.net/1088000/1088314/americanantitrust.pdf
Brief for Open Markets:
https://dlbjbjzgnk95t.cloudfront.net/1088000/1088314/http-www-supremecourt-gov-docketpdf-17-17-204-65344-20181001145735965_17-204-20amicus-20bom-pdfa-pdf.pdf
Could you be seated next to someone's service horse on your next Alaska Airlines flight?
Alaska Airlines News release
The updated policy aligns with recent airline industry changes and provides clear guidance and a consistent and safe travel experience for guests and employees. This change is being made to protect the health and safety of passengers and crew while maintaining a safe and orderly operation.
Summary of the new policy, which goes into effect for all travel occurring on or after Oct. 1, 2018, regardless of when booked:
Customers traveling with one or more emotional support animals after Oct. 1 have the option to limit their travel to only one emotional support animal, to travel without their animal, or to receive a full refund if they no longer wish to travel.
Learn more about the support animal policy at alaskaair.com.
CONTACT: Media Relations, (206) 304-0008, newsroom@alaskaair.com
URL: https://newsroom.alaskaair.com/news-releases?item=123851
Alaska Airlines News release
The updated policy aligns with recent airline industry changes and provides clear guidance and a consistent and safe travel experience for guests and employees. This change is being made to protect the health and safety of passengers and crew while maintaining a safe and orderly operation.
Summary of the new policy, which goes into effect for all travel occurring on or after Oct. 1, 2018, regardless of when booked:
- May bring only one emotional support animal on the flight.
- Emotional support animals will be limited to either a dog or cat. No other species of animal will be permitted.
- For the safety of other passengers, all emotional support animals must be in a carrier or leashed at all times.
- Must provide appropriate documentation and 48-hours advance notice, per our existing policy.uests traveling with an emotional support animal:
- Guests traveling with a trained service animal:
- Service animals (now includes psychiatric service animals) will be limited to either a dog, cat or miniature horse.
- Service animals must be under the control of their owner at all times.
- Alaska Airlines accepts fully trained psychiatric service animals as trained service animals—no documentation is required for service animals.
Customers traveling with one or more emotional support animals after Oct. 1 have the option to limit their travel to only one emotional support animal, to travel without their animal, or to receive a full refund if they no longer wish to travel.
Learn more about the support animal policy at alaskaair.com.
CONTACT: Media Relations, (206) 304-0008, newsroom@alaskaair.com
URL: https://newsroom.alaskaair.com/news-releases?item=123851
- From Health Affairs Blog
September 13, 2018
URL: 10.1377/hblog20180907.685440
- erpt from article:
Limited access to reliable transportation causes millions of Americans to forgo important medical care every year. Transportation barriers are most prominent among the poor, elderly, and chronically ill—populations for whom routine access to ambulatory and preventive care is most important.
Payers that focus on vulnerable populations have taken steps to address transportation barriers by providing non-emergency medical transportation (NEMT) benefits to select beneficiaries. A majority of Medicare Advantage (MA) plans and state Medicaid programs currently provide NEMT benefits.
NEMT benefits are typically administered by specialized brokers that coordinate and dispatch private cars, taxis, or specialized vehicles to bring patients to medical appointments. Multiple reports have highlighted challenges with traditional approaches to NEMT delivery, including poor customer service, inadequate responsiveness, and fraud and abuse. In the face of these challenges, payers and health care delivery organizations have been experimenting with new strategies for delivering NEMT.
An approach that has attracted considerable attention is the use of transportation network companies (TNCs)—such as Uber or Lyft—to provide NEMT services. NEMT brokers such as such as American Logistics Corporation, National MedTrans, American Medical Response, and Access2Care are all now piloting TNC-based rides. New companies, such as Circulation and RoundTrip, have emerged to help hospitals and health plans offer TNC-based rides. And both Lyft and Uber are contracting directly with health plans and delivery organizations to provide NEMT services.
Despite the proliferation of these programs, there is scant data regarding their impact. Here we report the results from a large-scale, system-wide implementation of Lyft-based NEMT services at CareMore Health.
As is typical for MA plans, CareMore contracts with brokers to administer its NEMT benefits. Historically, these NEMT brokers arranged for rides using private car services. In 2016, CareMore launched a pilot program to evaluate the impact of Lyft-based C2C rides on patient experience and costs. The pilot ran for two months at select CareMore locations in Southern California, during which a total of 479 rides were provided. Results were encouraging: wait times decreased by 30 percent and per-ride costs decreased by 32 percent, and satisfaction rates were 80 percent.
California just passed its net neutrality law. The DOJ is already suing
https://money.cnn.com/2018/09/30/technology/california-net-neutrality-law/index.html
by Heather Kelly @heatherkellySeptember 30, 2018: 11:58 PM ET
The Department of Justice said it is filing a lawsuit against the state of California over its new net neutrality protections, hours after Gov. Jerry Brown signed the bill into law on Sunday.The California law would be the strictest net neutrality protections in the country, and could serve as a blueprint for other states. Under the law, internet service providers will not be allowed to block or slow specific types of content or applications, or charge apps or companies fees for faster access to customers.
The Department of Justice says the California law is illegal and that the state is "attempting to subvert the Federal Government's deregulatory approach" to the internet.
"Under the Constitution, states do not regulate interstate commerce—the federal government does," Attorney General Jeff Sessions said in a statement. "Once again the California legislature has enacted an extreme and illegal state law attempting to frustrate federal policy. The Justice Department should not have to spend valuable time and resources to file this suit today, but we have a duty to defend the prerogatives of the federal government and protect our Constitutional order."
As the largest economy in the United States and the fifth largest economy in the world, California has significant influence over how other states regulate businesses and even federal laws and regulations. That power is being tested under the Trump administration, which is currently battling the state in court over multiple issues, including emissions standards, immigration laws and the sale of federal lands..
"It's critically important for states to step in," state senator Scott Wiener, who co-authored the bill, told CNNMoney. "What California does definitely impacts the national conversation. I do believe that this bill ... will move us in a positive direction nationally on net neutrality."
For that to happen, the law will likely have to survive a legal battle. In addition to the lawsuit from the Department of Justice, ISPs may sue California over the bill. Major broadband companies, including AT&T and Comcast, have lobbied heavily against the California bill. (AT&T is the parent company of CNN.) They say the new rules will result in higher prices for consumers.
Jonathan Spalter, president of USTelecom -- a trade group representing broadband providers -- said while the group supports "strong and enforceable net neutrality protections for every American," the bill was "neither the way to get there nor will it help advance the promise and potential of California's innovation DNA."
"Rather than 50 states stepping in with their own conflicting open internet solutions, we need Congress to step up with a national framework for the whole internet ecosystem and resolve this issue once and for all," Spalter said.
Broadband providers lobbied against the California law, but were also for the repeal of the most recent federal regulations.
"The broadband providers say they don't want state laws, they want federal laws," said Gigi Sohn, a fellow at the Georgetown Law Institute for Technology and a former lawyer at the FCC, in an interview. "But they were the driving force behind the federal rules being repealed ... The federal solution they want is nothing, or extremely weak."
The FCC is fighting California over a pre-exemption clause included in its 2017 order repealing net neutrality protections. The FCC holds that it can preempt state-level laws because broadband service crosses state lines. Legal experts are split over whether or not the FCC can challenge a state net neutrality law, but Wiener believes the clause is unenforceable.
"We don't think the FCC has the power to preempt state action," said Wiener. "We are prepared to defend this law. We believe that California has the power to protect the internet and to protect our residents and businesses."
Barbara van Schewick, a professor at Stanford Law School, says the California bill is on solid legal ground and that California is within its legal rights.
"An agency that has no power to regulate has no power to preempt the states, according to case law. When the FCC repealed the 2015 Open Internet Order, it said it had no power to regulate broadband internet access providers. That means the FCC cannot prevent the states from adopting net neutrality protections because the FCC's repeal order removed its authority to adopt such protections," said van Schewick.
The bill was approved by lawmakers in early September, but it had been unclear if Brown would veto or approve the comprehensive measure, even though it had broad support from state Democrats.
California is the third state to pass its own net neutrality regulations, following Washington and Oregon. However, it is the first to match the thorough level of protections that had been provided by the Obama-era federal net neutrality regulations repealed by the Federal Communications Commission in June. At least some other states are expected to model future net neutrality laws on California's.
The original FCC rules included a two page summary and more than 300 additional pages with additional protections and clarifications on how they worked. While other states mostly replicated the two-page summary, California took longer crafting its law in order to match the details in the hundreds of supporting pages, said van Schewick.
"Most people don't understand how hard it is to do a solid net neutrality law," said van Schewick. "What's so special about California is that it includes not just two pages of rules, but all of the important protections from the text of the order and as a result closes the loopholes."
Loopholes addressed in California's new law include a prohibition on "zero rating," which allows carriers to exempt content from certain companies (like their own streaming services) from counting against a customer's data usage. The prohibition would not apply if a carrier wanted to exempt an entire category of content, like all streaming services. It also bans interconnection fees, which are charges a company pays when its data enters the internet provider's network.
The FCC says those rules will hurt consumers.
"The law prohibits many free-data plans, which allow consumers to stream video, music, and the like exempt from any data limits. They have proven enormously popular in the marketplace, especially among lower-income Americans. But notwithstanding the consumer benefits, this state law bans them," said Ajit Pai, chairman of the FCC, in a statement.
The authors of the bill did have support from consumer and labor groups, grassroots activists, and small and mid-sized tech companies including Twilio, Etsy and Sonos. Larger technology companies, like Apple, Google, and Facebook, have stayed quietly on the sidelines.
Sohn and van Schewick believe states with legislatures controlled by Democrats are the ones most likely to pass strong net neutrality protections. Other states have already started working on similar bills, including New York and New Mexico.
From DMN:
California Passes Its Strict Net Neutrality Bill Into Law
— Setting the Stage for a Fight Against Trump’s FCC
California’s tough net neutrality bill is now state law, thanks to a signature from governor Jerry Brown on Sunday (September 30th).
It’s easily the toughest net neutrality measure in the nation. Now, it’s the law in the country’s most populous and economically powerful state, thanks to a signature from governor Jerry Brown.
The ratification happened late Sunday (September 30th), with Brown approving SB 822, which was simply titled ‘Communications: broadband Internet access service.’ The bill, which places strict limitations on ISPs like Verizon, AT&T, and Comcast, was led by California Senator Scott Wiener (D-San Francisco).
The story continues here: https://www.digitalmusicnews.com/2018/09/30/california-net-neutrality-law/
https://money.cnn.com/2018/09/30/technology/california-net-neutrality-law/index.html
by Heather Kelly @heatherkellySeptember 30, 2018: 11:58 PM ET
The Department of Justice said it is filing a lawsuit against the state of California over its new net neutrality protections, hours after Gov. Jerry Brown signed the bill into law on Sunday.The California law would be the strictest net neutrality protections in the country, and could serve as a blueprint for other states. Under the law, internet service providers will not be allowed to block or slow specific types of content or applications, or charge apps or companies fees for faster access to customers.
The Department of Justice says the California law is illegal and that the state is "attempting to subvert the Federal Government's deregulatory approach" to the internet.
"Under the Constitution, states do not regulate interstate commerce—the federal government does," Attorney General Jeff Sessions said in a statement. "Once again the California legislature has enacted an extreme and illegal state law attempting to frustrate federal policy. The Justice Department should not have to spend valuable time and resources to file this suit today, but we have a duty to defend the prerogatives of the federal government and protect our Constitutional order."
As the largest economy in the United States and the fifth largest economy in the world, California has significant influence over how other states regulate businesses and even federal laws and regulations. That power is being tested under the Trump administration, which is currently battling the state in court over multiple issues, including emissions standards, immigration laws and the sale of federal lands..
"It's critically important for states to step in," state senator Scott Wiener, who co-authored the bill, told CNNMoney. "What California does definitely impacts the national conversation. I do believe that this bill ... will move us in a positive direction nationally on net neutrality."
For that to happen, the law will likely have to survive a legal battle. In addition to the lawsuit from the Department of Justice, ISPs may sue California over the bill. Major broadband companies, including AT&T and Comcast, have lobbied heavily against the California bill. (AT&T is the parent company of CNN.) They say the new rules will result in higher prices for consumers.
Jonathan Spalter, president of USTelecom -- a trade group representing broadband providers -- said while the group supports "strong and enforceable net neutrality protections for every American," the bill was "neither the way to get there nor will it help advance the promise and potential of California's innovation DNA."
"Rather than 50 states stepping in with their own conflicting open internet solutions, we need Congress to step up with a national framework for the whole internet ecosystem and resolve this issue once and for all," Spalter said.
Broadband providers lobbied against the California law, but were also for the repeal of the most recent federal regulations.
"The broadband providers say they don't want state laws, they want federal laws," said Gigi Sohn, a fellow at the Georgetown Law Institute for Technology and a former lawyer at the FCC, in an interview. "But they were the driving force behind the federal rules being repealed ... The federal solution they want is nothing, or extremely weak."
The FCC is fighting California over a pre-exemption clause included in its 2017 order repealing net neutrality protections. The FCC holds that it can preempt state-level laws because broadband service crosses state lines. Legal experts are split over whether or not the FCC can challenge a state net neutrality law, but Wiener believes the clause is unenforceable.
"We don't think the FCC has the power to preempt state action," said Wiener. "We are prepared to defend this law. We believe that California has the power to protect the internet and to protect our residents and businesses."
Barbara van Schewick, a professor at Stanford Law School, says the California bill is on solid legal ground and that California is within its legal rights.
"An agency that has no power to regulate has no power to preempt the states, according to case law. When the FCC repealed the 2015 Open Internet Order, it said it had no power to regulate broadband internet access providers. That means the FCC cannot prevent the states from adopting net neutrality protections because the FCC's repeal order removed its authority to adopt such protections," said van Schewick.
The bill was approved by lawmakers in early September, but it had been unclear if Brown would veto or approve the comprehensive measure, even though it had broad support from state Democrats.
California is the third state to pass its own net neutrality regulations, following Washington and Oregon. However, it is the first to match the thorough level of protections that had been provided by the Obama-era federal net neutrality regulations repealed by the Federal Communications Commission in June. At least some other states are expected to model future net neutrality laws on California's.
The original FCC rules included a two page summary and more than 300 additional pages with additional protections and clarifications on how they worked. While other states mostly replicated the two-page summary, California took longer crafting its law in order to match the details in the hundreds of supporting pages, said van Schewick.
"Most people don't understand how hard it is to do a solid net neutrality law," said van Schewick. "What's so special about California is that it includes not just two pages of rules, but all of the important protections from the text of the order and as a result closes the loopholes."
Loopholes addressed in California's new law include a prohibition on "zero rating," which allows carriers to exempt content from certain companies (like their own streaming services) from counting against a customer's data usage. The prohibition would not apply if a carrier wanted to exempt an entire category of content, like all streaming services. It also bans interconnection fees, which are charges a company pays when its data enters the internet provider's network.
The FCC says those rules will hurt consumers.
"The law prohibits many free-data plans, which allow consumers to stream video, music, and the like exempt from any data limits. They have proven enormously popular in the marketplace, especially among lower-income Americans. But notwithstanding the consumer benefits, this state law bans them," said Ajit Pai, chairman of the FCC, in a statement.
The authors of the bill did have support from consumer and labor groups, grassroots activists, and small and mid-sized tech companies including Twilio, Etsy and Sonos. Larger technology companies, like Apple, Google, and Facebook, have stayed quietly on the sidelines.
Sohn and van Schewick believe states with legislatures controlled by Democrats are the ones most likely to pass strong net neutrality protections. Other states have already started working on similar bills, including New York and New Mexico.
From DMN:
California Passes Its Strict Net Neutrality Bill Into Law
— Setting the Stage for a Fight Against Trump’s FCC
California’s tough net neutrality bill is now state law, thanks to a signature from governor Jerry Brown on Sunday (September 30th).
It’s easily the toughest net neutrality measure in the nation. Now, it’s the law in the country’s most populous and economically powerful state, thanks to a signature from governor Jerry Brown.
The ratification happened late Sunday (September 30th), with Brown approving SB 822, which was simply titled ‘Communications: broadband Internet access service.’ The bill, which places strict limitations on ISPs like Verizon, AT&T, and Comcast, was led by California Senator Scott Wiener (D-San Francisco).
The story continues here: https://www.digitalmusicnews.com/2018/09/30/california-net-neutrality-law/
Nobel Prize-winning economist Joseph Stiglitz says it’s time for the US to update its antitrust laws
Nobel Prize-winning economist Joseph Stiglitz says it’s time for the US to update its antitrust laws
By Richard Feloni & Andy Kiersz
There are plenty of companies that may feel too big to you, whether it’s trillion-dollar monoliths Apple and Amazon, or even the cable company you’re forced to deal with every day.
But the question of whether they’ve got so much power that they’re harming the economy is the subject of a debate in the spotlight once again.
For Nobel Prize-winning economist Joseph Stiglitz of Columbia University, there is indeed a monopoly and monopsony problem in the United States, and it’s high time to address it with new antitrust laws.
At a recent Federal Trade Commission hearing on the subject, Stiglitz said, “The point is, if our standard competitive analysis tools don’t show that there is a problem, it suggests something may be wrong with the tools themselves.”
The bedrock of America’s antitrust law was primarily built in the late 19th and early 20th century, during the democratic and reform-minded Progressive Era that followed the Gilded Age’s reign of robber barons and progression of inequality.
Even Adam Smith, the father of capitalism himself, warned in “The Wealth of Nations” against the consolidation of market power in the hands of a few. This is represented on the selling side by monopoly and on the buying side by monopsony, a term coined in the 20th century that refers to firms using their size to push down suppliers’ prices (Walmart is arguably an example).
Years of economic research has found that when market power is highly concentrated, barriers to entry prevent new competitors from building businesses, consumers have fewer options, and employees receive lower wages. This in turn slows overall economic growth.
Even before data on market power was routinely gathered, the federal government established the definition for an illegal monopoly and an illegal merger with the Sherman Act of 1890 and the Clayton Act of 1914. It also created the FTC in 1914 to enforce these rules.
Continue reading…https://www.businessinsider.com/economist-joseph-stiglitz-us-must-update-antitrust-laws-2018-9
Nobel Prize-winning economist Joseph Stiglitz says it’s time for the US to update its antitrust laws
By Richard Feloni & Andy Kiersz
There are plenty of companies that may feel too big to you, whether it’s trillion-dollar monoliths Apple and Amazon, or even the cable company you’re forced to deal with every day.
But the question of whether they’ve got so much power that they’re harming the economy is the subject of a debate in the spotlight once again.
For Nobel Prize-winning economist Joseph Stiglitz of Columbia University, there is indeed a monopoly and monopsony problem in the United States, and it’s high time to address it with new antitrust laws.
At a recent Federal Trade Commission hearing on the subject, Stiglitz said, “The point is, if our standard competitive analysis tools don’t show that there is a problem, it suggests something may be wrong with the tools themselves.”
The bedrock of America’s antitrust law was primarily built in the late 19th and early 20th century, during the democratic and reform-minded Progressive Era that followed the Gilded Age’s reign of robber barons and progression of inequality.
Even Adam Smith, the father of capitalism himself, warned in “The Wealth of Nations” against the consolidation of market power in the hands of a few. This is represented on the selling side by monopoly and on the buying side by monopsony, a term coined in the 20th century that refers to firms using their size to push down suppliers’ prices (Walmart is arguably an example).
Years of economic research has found that when market power is highly concentrated, barriers to entry prevent new competitors from building businesses, consumers have fewer options, and employees receive lower wages. This in turn slows overall economic growth.
Even before data on market power was routinely gathered, the federal government established the definition for an illegal monopoly and an illegal merger with the Sherman Act of 1890 and the Clayton Act of 1914. It also created the FTC in 1914 to enforce these rules.
Continue reading…https://www.businessinsider.com/economist-joseph-stiglitz-us-must-update-antitrust-laws-2018-9
Website USAReally is based in Moscow and has received funding from the Federal News Agency, a Russian media conglomerate with ties to the Internet Research Agency, the “troll farm” whose employees were indicted by the special counsel, Robert S. Mueller III, for interfering in the 2016 presidential election.
Caught flat-footed by the influence campaigns of 2016, intelligence agencies and tech companies in the United States have spent months looking for hidden Russian footprints ahead of the midterm elections.
USAReally’s website, which began publishing in May, does not advertise its Russian roots. But in many ways, it is operating in plain sight.
Its founder, Alexander Malkevich, is a Russian journalist with little previous experience in American media. Its domain was registered through a Russian company, and its formation was announced in a news release on the Federal News Agency’s website. The project, originally known as “USAReally, Wake Up Americans,” was intended to promote “information and problems that are hushed up by major American publications controlled by the political elite of the United States,” according to the release.
Today, USAReally’s website depicts the United States as a democracy in decline, riddled with crime and divided by partisan rancor.
Full article: https://www.nytimes.com/2018/09/25/technology/usareally-russian-news-site-propaganda.html?rref=collection%2Fsectioncollection%2Fbusiness&action=click&contentCollection=business®ion=rank&module=package&version=highlights&contentPlacement=2&pgtype=sectionfront
Caught flat-footed by the influence campaigns of 2016, intelligence agencies and tech companies in the United States have spent months looking for hidden Russian footprints ahead of the midterm elections.
USAReally’s website, which began publishing in May, does not advertise its Russian roots. But in many ways, it is operating in plain sight.
Its founder, Alexander Malkevich, is a Russian journalist with little previous experience in American media. Its domain was registered through a Russian company, and its formation was announced in a news release on the Federal News Agency’s website. The project, originally known as “USAReally, Wake Up Americans,” was intended to promote “information and problems that are hushed up by major American publications controlled by the political elite of the United States,” according to the release.
Today, USAReally’s website depicts the United States as a democracy in decline, riddled with crime and divided by partisan rancor.
Full article: https://www.nytimes.com/2018/09/25/technology/usareally-russian-news-site-propaganda.html?rref=collection%2Fsectioncollection%2Fbusiness&action=click&contentCollection=business®ion=rank&module=package&version=highlights&contentPlacement=2&pgtype=sectionfront
Russia-sponsored US TV
Clandestine Russian government efforts to spread disruptive information in the US have gotten great attention, but other Russian government sponsored efforts are in plain sight. One example is website USAReally, as discussed in the NY Times article above. The NY Times says that USAReally’s website depicts the United States as a democracy in decline, riddled with crime and divided by partisan rancor.
Another Russian government sponsored media outlet in plain site is RT. Wikipedia says that RT is a Russian international television network funded by the Russian government. It operates cable and satellite television channels directed to audiences outside of Russia, as well as providing Internet content in English, Spanish, French, German, Arabic and Russian.
Here is an interesting example of RT content, a segment explaining how US voting machines can be hacked. See https://www.youtube.com/watch?v=fmM2xkeyPI0
In some ways the RT segment resembles the NY Times discussion of vulnerable US voting machines that appears below, but the RT piece is different. It is more alarmist in tone, and arguably exaggerates the likelihood of people physically engaging with voting machines to insert compromising devices.
The RT voting machine story reflects a propaganda strategy of some interest and complexity. The story suggests that the US government is fumbling in its efforts to protect voting rights, which has the ring of a Russian propaganda point. But the story is not stupid, working from concerns that have a basis in a reality of voting machine problems, as discussed by the New York Times article that follows.
Posting by Don Allen Resnikoff, who is entirely responsible for the content
Clandestine Russian government efforts to spread disruptive information in the US have gotten great attention, but other Russian government sponsored efforts are in plain sight. One example is website USAReally, as discussed in the NY Times article above. The NY Times says that USAReally’s website depicts the United States as a democracy in decline, riddled with crime and divided by partisan rancor.
Another Russian government sponsored media outlet in plain site is RT. Wikipedia says that RT is a Russian international television network funded by the Russian government. It operates cable and satellite television channels directed to audiences outside of Russia, as well as providing Internet content in English, Spanish, French, German, Arabic and Russian.
Here is an interesting example of RT content, a segment explaining how US voting machines can be hacked. See https://www.youtube.com/watch?v=fmM2xkeyPI0
In some ways the RT segment resembles the NY Times discussion of vulnerable US voting machines that appears below, but the RT piece is different. It is more alarmist in tone, and arguably exaggerates the likelihood of people physically engaging with voting machines to insert compromising devices.
The RT voting machine story reflects a propaganda strategy of some interest and complexity. The story suggests that the US government is fumbling in its efforts to protect voting rights, which has the ring of a Russian propaganda point. But the story is not stupid, working from concerns that have a basis in a reality of voting machine problems, as discussed by the New York Times article that follows.
Posting by Don Allen Resnikoff, who is entirely responsible for the content
NYT: Vulnerable US voting machines
There are roughly 350,000 voting machines in use in the country today, all of which fall into one of two categories: optical-scan machines or direct-recording electronic machines. Each of them suffers from significant security problems.
With optical-scan machines, voters fill out paper ballots and feed them into a scanner, which stores a digital image of the ballot and records the votes on a removable memory card. The paper ballot, in theory, provides an audit trail that can be used to verify digital tallies. But not all states perform audits, and many that do simply run the paper ballots through a scanner a second time. Fewer than half the states do manual audits, and they typically examine ballots from randomly chosen precincts in a county, instead of a percentage of ballots from all precincts. If the randomly chosen precincts aren’t ones where hacking occurred or where machines failed to accurately record votes, an audit won’t reveal anything — nor will it always catch problems with early-voting, overseas or absentee ballots, all of which are often scanned in county election offices, not in precincts.
Direct-recording electronic machines, or D.R.E.s, present even more auditing problems. Voters use touch screens or other input devices to make selections on digital-only ballots, and votes are stored electronically. Many D.R.E.s have printers that produce what’s known as a voter-verifiable paper audit trail — a scroll of paper, behind a window, that voters can review before casting their ballots. But the paper trail doesn’t provide the same integrity as full-size ballots and optical-scan machines, because a hacker could conceivably rig the machine to print a voter’s selections correctly on the paper while recording something else on the memory card. About 80 percent of voters today cast ballots either on D.R.E.s that produce a paper trail or on scanned paper ballots. But five states still use paperless D.R.E.s exclusively, and an additional 10 states use paperless D.R.E.s in some jurisdictions.
The voting-machine industry — an estimated $300-million-a-year business — has long been as troubling as the machines it makes, known for its secrecy, close political ties (overwhelmingly to the Republican Party) and a revolving door between vendors and election offices. More than a dozen companies currently sell voting equipment, but a majority of machines used today come from just four — Diebold Election Systems, Election Systems & Software (ES&S), Hart InterCivic and Sequoia Voting Systems. Diebold (later renamed Premier) and Sequoia are now out of business. Diebold’s machines and customer contracts were sold to ES&S and a Canadian company called Dominion, and Dominion also acquired Sequoia. This means that more than 80 percent of the machines in use today are under the purview of three companies — Dominion, ES&S and Hart InterCivic.
Many of the products they make have documented vulnerabilities and can be subverted in multiple ways. Hackers can access voting machines via the cellular modems used to transmit unofficial results at the end of an election, or subvert back-end election-management systems — used to program the voting machines and tally votes — and spread malicious code to voting machines through them. Attackers could design their code to bypass pre-election testing and kick in only at the end of an election or under specific conditions — say, when a certain candidate appears to be losing — and erase itself afterward to avoid detection. And they could make it produce election results with wide margins to avoid triggering automatic manual recounts in states that require them when results are close.
From: https://www.nytimes.com/2018/09/26/magazine/election-security-crisis-midterms.html?action=click&module=Top%20Stories&pgtype=Homepage
There are roughly 350,000 voting machines in use in the country today, all of which fall into one of two categories: optical-scan machines or direct-recording electronic machines. Each of them suffers from significant security problems.
With optical-scan machines, voters fill out paper ballots and feed them into a scanner, which stores a digital image of the ballot and records the votes on a removable memory card. The paper ballot, in theory, provides an audit trail that can be used to verify digital tallies. But not all states perform audits, and many that do simply run the paper ballots through a scanner a second time. Fewer than half the states do manual audits, and they typically examine ballots from randomly chosen precincts in a county, instead of a percentage of ballots from all precincts. If the randomly chosen precincts aren’t ones where hacking occurred or where machines failed to accurately record votes, an audit won’t reveal anything — nor will it always catch problems with early-voting, overseas or absentee ballots, all of which are often scanned in county election offices, not in precincts.
Direct-recording electronic machines, or D.R.E.s, present even more auditing problems. Voters use touch screens or other input devices to make selections on digital-only ballots, and votes are stored electronically. Many D.R.E.s have printers that produce what’s known as a voter-verifiable paper audit trail — a scroll of paper, behind a window, that voters can review before casting their ballots. But the paper trail doesn’t provide the same integrity as full-size ballots and optical-scan machines, because a hacker could conceivably rig the machine to print a voter’s selections correctly on the paper while recording something else on the memory card. About 80 percent of voters today cast ballots either on D.R.E.s that produce a paper trail or on scanned paper ballots. But five states still use paperless D.R.E.s exclusively, and an additional 10 states use paperless D.R.E.s in some jurisdictions.
The voting-machine industry — an estimated $300-million-a-year business — has long been as troubling as the machines it makes, known for its secrecy, close political ties (overwhelmingly to the Republican Party) and a revolving door between vendors and election offices. More than a dozen companies currently sell voting equipment, but a majority of machines used today come from just four — Diebold Election Systems, Election Systems & Software (ES&S), Hart InterCivic and Sequoia Voting Systems. Diebold (later renamed Premier) and Sequoia are now out of business. Diebold’s machines and customer contracts were sold to ES&S and a Canadian company called Dominion, and Dominion also acquired Sequoia. This means that more than 80 percent of the machines in use today are under the purview of three companies — Dominion, ES&S and Hart InterCivic.
Many of the products they make have documented vulnerabilities and can be subverted in multiple ways. Hackers can access voting machines via the cellular modems used to transmit unofficial results at the end of an election, or subvert back-end election-management systems — used to program the voting machines and tally votes — and spread malicious code to voting machines through them. Attackers could design their code to bypass pre-election testing and kick in only at the end of an election or under specific conditions — say, when a certain candidate appears to be losing — and erase itself afterward to avoid detection. And they could make it produce election results with wide margins to avoid triggering automatic manual recounts in states that require them when results are close.
From: https://www.nytimes.com/2018/09/26/magazine/election-security-crisis-midterms.html?action=click&module=Top%20Stories&pgtype=Homepage
Low price association health plans spark tussle between state regulators, business groups
By Harris Meyer | September 27, 2018
Some business associations and insurers are plunging ahead in launching a cheaper type of health plan newly permitted by the Trump administration, while others are holding back due to big regulatory and legal uncertainties about the future of these products.
Since the U.S. Department of Labor issued a final rule in June allowing small employers and self-employers to band together across state lines and form to association health plans (AHPs), there have been intensive discussions between business groups, state insurance commissioners and Labor Department officials about how states can regulate these plans.
Pennsylvania Insurance Commissioner Jessica Altman has taken the position that AHPs must comply with state laws and Affordable Care Act provisions governing individual and small group plans. The Labor Department wrote to Altman last month to say the rule "does not modify the states' existing authority to regulate AHPs under state insurance laws."
She and other state insurance regulators fret that the growth of AHPs will destabilize their ACA-regulated individual and small-group markets, leave consumers uncovered for healthcare services they need and lead to a spike in insurance fraud and insolvencies associated with lightly regulated AHPs in the past.
But a coalition of 10 business associations, including the National Federation of Independent Business, argue that federal law does not allow states to bar groups of employers from forming association health plans together.
Association plans are deemed large-group plans exempt from state regulation under the federal Employee Retirement Income Security Act.
Earlier this month, the Nebraska Farm Bureau and Medica announced they were teaming up to offer a menu of association health plans in 2019 for individual farmers, ranchers and small agriculture-related businesses. The plans will have essentially the same benefits as ACA market plans with premium savings of up to 25%, they say. Rates will vary based on age, geographic location, and type of business.
"We hear stories every day about how farmers and ranchers are struggling to provide affordable coverage for their families," said Steve Nelson, president of the Nebraska Farm Bureau. "That's what drove us to put this together."
The Nebraska Department of Insurance said other business groups also have applied to start AHPs.
In August, three chambers of commerce in Nevada announced they would offer an association health plan through UnitedHealth Group that will aggregate small firms into one large-group plan, though they initially aren't making it available to sole proprietor businesses.
But other associations say they're taking a wait-and-see stance, citing resistance to the AHP rule from many state insurance commissioners, combined with a federal lawsuit filed in July by 12 Democratic attorneys general to block the rule.
"We wanted to jump on it fast, and then the states sued," said Chris Paulitz, senior vice president of membership and marketing for the Financial Services Institute, an association representing nearly 30,000 self-employed individual financial advisers. "There's too much up in the air from a legal standpoint."
Since the rule was issued, a number of state insurance departments have issued emergency rules and bulletins limiting AHPs or highlighting existing state laws that prohibit key features of plans allowed under the new federal rule.
Several states, including Connecticut, Massachusetts, New York, Oregon and Pennsylvania, have said they will look at the small employers and individuals signing up for AHPs and apply state and ACA rules for small-group and individual coverage to them, essentially nullifying the AHP structure.
In a Sept. 10 bulletin, the Oregon Division of Financial Regulation said it would follow more demanding federal guidelines issued in 2011 for determining bona fide association plans that qualify for an ERISA exemption from state insurance requirements.
Regulators in Connecticut, Maryland, Massachusetts and New York are taking an even harder line. They say their state laws permit no exception for bona fide association plans, meaning that none qualify for an ERISA exemption.
In contrast, the Nebraska Department of Insurance fully recognizes the Trump administration's new AHP rule, including allowing sole proprietors to join association plans. Its officials say they aren't worried about AHPs drawing younger and healthier people out of the Affordable Care Act market and driving up premiums because the new plans likely will attract mostly consumers who already have dropped out of the ACA market due to high premiums.
Laura Arp, the department's life and health administrator, noted that consumer protection provisions in the Affordable Care Act and state law still apply to AHPs, including rules prohibiting annual and lifetime benefit caps and discrimination against people with pre-existing medical conditions.
From: http://www.modernhealthcare.com/article/20180927/NEWS/180929912?utm_source=modernhealthcare&utm_medium=email&utm_content=20180927-NEWS-180929912&utm_campaign=am
From: Department of Justice
U.S. Attorney’s Office
Eastern District of New York
FOR IMMEDIATE RELEASE
Tuesday, September 25, 2018
Queens Attorney and Second Individual Indicted For Scheme to Bribe a Witness in Double Homicide Trial on Long Island
A superseding indictment was unsealed today in federal court in Brooklyn charging Queens-based criminal defense attorney John Scarpa, Jr., and Charles Gallman, also known as “T.A.,” with violating the Travel Act by bribing a witness who testified in a double-homicide trial in Suffolk County Supreme Court. Scarpa was arrested earlier today and will be arraigned this afternoon in federal court in Brooklyn before United States Magistrate Judge Steven L. Tiscione. Gallman will be arraigned at a later date.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Richard A. Brown, District Attorney of Queens County, announced the charges.
“As alleged, the defendants bribed a witness to commit perjury in an effort to help Scarpa’s client, who had committed two execution-style murders, escape justice,” stated United States Attorney Donoghue. “This Office and our law enforcement partners will never tolerate the rigging of a trial and will vigorously prosecute attorneys or anyone else who seeks to undermine the integrity of the judicial process by witness tampering.” Mr. Donoghue also expressed his grateful appreciation to the Office of the Suffolk County District Attorney for its assistance during the investigation.
“Defense attorneys do all they can to help their clients fight criminal charges, which is everyone’s right by law,” stated FBI Assistant Director-in-Charge Sweeney. “However, Mr. Scarpa allegedly broke the law trying to get his client off the hook for murder charges by bribing a witness. Everyone accused deserves the best defense, but attorneys cannot use illegal methods to win in court.”
“We will continue to work with our federal partners to root out corruption in the criminal justice system wherever it is found,” stated Queens District Attorney Brown. “I will say again that integrity is the foundation of our criminal justice system. These allegations go to the core of that foundation and are prejudicial to the administration of justice. The charges today send a strong message to those who would undermine that integrity that they will be held accountable. I commend the United States Attorney’s Office for the Eastern District and the Federal Bureau of Investigation, the Suffolk County District Attorney’s Office and my Rackets, Special Victims and District Attorney’s Detective Bureaus for their vigorous pursuit of justice in this matter.”
As alleged in the indictment and detailed in court filings, the charges stem from an investigation conducted by the Queens County District Attorney’s Office. Court-authorized intercepted communication between Scarpa and Gallman showed how the two men plotted to bribe a witness, Luis Cherry, in a Suffolk County criminal trial against Reginald Ross. Scarpa represented Ross, who was ultimately convicted of the unrelated murders of two men: Raymond Hirt, a road crew flagman killed at his jobsite in May 2010 because Ross was upset about traffic, and John Williams, whom he shot to death in October 2010 as Williams was going to work, mistaking Williams for his brother. Cherry participated in the Williams murder, and had pleaded guilty to that murder as well as another.
On January 13, 2015, Gallman visited Cherry at Downstate Correctional Facility and spoke to him about testifying at Ross’s trial. Thereafter, Gallman reported to Scarpa: “Anything we need, he’s willing. Whichever way you wanna play it, he’s willing.” Later in the conversation Scarpa asked, “So this guy is willing to do whatever?” And Gallman confirmed, “Whatever you need, John. Whatever you need.” Gallman added that there was a “bunch of stuff I wrote down that [Cherry] wants.”
Scarpa called Cherry as a defense witness at trial and led Cherry through perjurious testimony relevant to the Williams murder. For example, Cherry claimed that he had committed the murder alone after he crawled from the driver’s seat and exited through the passenger side of his vehicle with firearms in both hands despite physical evidence that clearly indicated two gunmen were involved. When asked on cross-examination about meeting Gallman, Cherry falsely denied that they had talked about the murder case.
The charges in the superseding indictment are allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted, Scarpa and Gallman face up to five years’ imprisonment on each count.
The government’s case is being handled by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Lindsay K. Gerdes and Andrey Spektor are in charge of the prosecution.
from https://www.justice.gov/usao-edny/pr/queens-attorney-and-second-individual-indicted-scheme-bribe-witness-double-homicide
U.S. Attorney’s Office
Eastern District of New York
FOR IMMEDIATE RELEASE
Tuesday, September 25, 2018
Queens Attorney and Second Individual Indicted For Scheme to Bribe a Witness in Double Homicide Trial on Long Island
A superseding indictment was unsealed today in federal court in Brooklyn charging Queens-based criminal defense attorney John Scarpa, Jr., and Charles Gallman, also known as “T.A.,” with violating the Travel Act by bribing a witness who testified in a double-homicide trial in Suffolk County Supreme Court. Scarpa was arrested earlier today and will be arraigned this afternoon in federal court in Brooklyn before United States Magistrate Judge Steven L. Tiscione. Gallman will be arraigned at a later date.
Richard P. Donoghue, United States Attorney for the Eastern District of New York, William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI), and Richard A. Brown, District Attorney of Queens County, announced the charges.
“As alleged, the defendants bribed a witness to commit perjury in an effort to help Scarpa’s client, who had committed two execution-style murders, escape justice,” stated United States Attorney Donoghue. “This Office and our law enforcement partners will never tolerate the rigging of a trial and will vigorously prosecute attorneys or anyone else who seeks to undermine the integrity of the judicial process by witness tampering.” Mr. Donoghue also expressed his grateful appreciation to the Office of the Suffolk County District Attorney for its assistance during the investigation.
“Defense attorneys do all they can to help their clients fight criminal charges, which is everyone’s right by law,” stated FBI Assistant Director-in-Charge Sweeney. “However, Mr. Scarpa allegedly broke the law trying to get his client off the hook for murder charges by bribing a witness. Everyone accused deserves the best defense, but attorneys cannot use illegal methods to win in court.”
“We will continue to work with our federal partners to root out corruption in the criminal justice system wherever it is found,” stated Queens District Attorney Brown. “I will say again that integrity is the foundation of our criminal justice system. These allegations go to the core of that foundation and are prejudicial to the administration of justice. The charges today send a strong message to those who would undermine that integrity that they will be held accountable. I commend the United States Attorney’s Office for the Eastern District and the Federal Bureau of Investigation, the Suffolk County District Attorney’s Office and my Rackets, Special Victims and District Attorney’s Detective Bureaus for their vigorous pursuit of justice in this matter.”
As alleged in the indictment and detailed in court filings, the charges stem from an investigation conducted by the Queens County District Attorney’s Office. Court-authorized intercepted communication between Scarpa and Gallman showed how the two men plotted to bribe a witness, Luis Cherry, in a Suffolk County criminal trial against Reginald Ross. Scarpa represented Ross, who was ultimately convicted of the unrelated murders of two men: Raymond Hirt, a road crew flagman killed at his jobsite in May 2010 because Ross was upset about traffic, and John Williams, whom he shot to death in October 2010 as Williams was going to work, mistaking Williams for his brother. Cherry participated in the Williams murder, and had pleaded guilty to that murder as well as another.
On January 13, 2015, Gallman visited Cherry at Downstate Correctional Facility and spoke to him about testifying at Ross’s trial. Thereafter, Gallman reported to Scarpa: “Anything we need, he’s willing. Whichever way you wanna play it, he’s willing.” Later in the conversation Scarpa asked, “So this guy is willing to do whatever?” And Gallman confirmed, “Whatever you need, John. Whatever you need.” Gallman added that there was a “bunch of stuff I wrote down that [Cherry] wants.”
Scarpa called Cherry as a defense witness at trial and led Cherry through perjurious testimony relevant to the Williams murder. For example, Cherry claimed that he had committed the murder alone after he crawled from the driver’s seat and exited through the passenger side of his vehicle with firearms in both hands despite physical evidence that clearly indicated two gunmen were involved. When asked on cross-examination about meeting Gallman, Cherry falsely denied that they had talked about the murder case.
The charges in the superseding indictment are allegations, and the defendants are presumed innocent unless and until proven guilty. If convicted, Scarpa and Gallman face up to five years’ imprisonment on each count.
The government’s case is being handled by the Office’s Organized Crime and Gangs Section. Assistant United States Attorneys Lindsay K. Gerdes and Andrey Spektor are in charge of the prosecution.
from https://www.justice.gov/usao-edny/pr/queens-attorney-and-second-individual-indicted-scheme-bribe-witness-double-homicide
Proposal to Limit the Anti-Competitive Power of Institutional Investors
Last revised: 1 Nov 2017
Eric A. Posner University of Chicago - Law School
Fiona M. Scott Morton Yale School of Management; National Bureau of Economic Research (NBER)
E. Glen Weyl Microsoft Research New York City; Princeton University - Julis Rabinowitz Center for Public Policy and Finance
Abstract
Recent scholarship has shown that institutional investors may cause softer competition among product market rivals because of their significant ownership stakes in competing firms in concentrated industries. However, while calls for litigation against them under Section 7 of the Clayton Act are understandable, private or indiscriminate government litigation could also cause significant disruption to equity markets because of its inherent unpredictability and would fail to eliminate most of the harms from common ownership.
To minimize this disruption while achieving competitive conditions in oligopolistic markets, the Department of Justice and the Federal Trade Commission should take the lead by adopting a public enforcement policy of the Clayton Act against institutional investors. Investors in firms in well-defined oligopolistic industries would benefit from a safe harbor from government enforcement of the Clayton Act if they either limit their holdings of an industry to a small stake (no more than 1% of the total size of the industry) or hold the shares of only a single “effective firm” per industry. Free-standing index funds that commit to pure passivity would not be limited in size.
Using simulations based on empirical evidence, we show that under broad assumptions this policy would generate many times larger competitive gains than harms to diversification and other values. The policy would also improve corporate governance by institutional investors.
Citation:
Posner, Eric A. and Scott Morton, Fiona M. and Weyl, E. Glen, A Proposal to Limit the Anti-Competitive Power of Institutional Investors (March 22, 2017). Antitrust Law Journal, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2872754 or http://dx.doi.org/10.2139/ssrn.2872754
Last revised: 1 Nov 2017
Eric A. Posner University of Chicago - Law School
Fiona M. Scott Morton Yale School of Management; National Bureau of Economic Research (NBER)
E. Glen Weyl Microsoft Research New York City; Princeton University - Julis Rabinowitz Center for Public Policy and Finance
Abstract
Recent scholarship has shown that institutional investors may cause softer competition among product market rivals because of their significant ownership stakes in competing firms in concentrated industries. However, while calls for litigation against them under Section 7 of the Clayton Act are understandable, private or indiscriminate government litigation could also cause significant disruption to equity markets because of its inherent unpredictability and would fail to eliminate most of the harms from common ownership.
To minimize this disruption while achieving competitive conditions in oligopolistic markets, the Department of Justice and the Federal Trade Commission should take the lead by adopting a public enforcement policy of the Clayton Act against institutional investors. Investors in firms in well-defined oligopolistic industries would benefit from a safe harbor from government enforcement of the Clayton Act if they either limit their holdings of an industry to a small stake (no more than 1% of the total size of the industry) or hold the shares of only a single “effective firm” per industry. Free-standing index funds that commit to pure passivity would not be limited in size.
Using simulations based on empirical evidence, we show that under broad assumptions this policy would generate many times larger competitive gains than harms to diversification and other values. The policy would also improve corporate governance by institutional investors.
Citation:
Posner, Eric A. and Scott Morton, Fiona M. and Weyl, E. Glen, A Proposal to Limit the Anti-Competitive Power of Institutional Investors (March 22, 2017). Antitrust Law Journal, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2872754 or http://dx.doi.org/10.2139/ssrn.2872754
Do Institutional Investors Suppress Competition?
By Vito J. Racanelli
Can institutional investing have anticompetitive effects? I’m still not convinced.
The idea, known as the common-ownership theory, received another airing at a panel debate at the Harvard Club Monday. As Barron’s recently wrote, the model is based on studies of airlines and banks that suggest when groups of big investors such as index or mutual funds hold material equity stakes in several companies in the same industry, they can foster behavior such as consumer price increases that improves the profits of the companies they own.
Panelist Douglas H. Ginsburg, a judge on the District of Columbia US Court of Appeals and a well-known critic of the theory, said that those who argue common ownership runs afoul of antitrust regulation are “opportunistically naïve” to believe laws such as the Sherman Ant-Trust Act and the Clayton Act are aimed at ownership by large asset managers. Those who argue the contrary, he said, aren’t interpreting the law consistently with what it intends.
Continue reading…https://www.barrons.com/articles/do-big-investors-push-the-antitrust-envelope-1537220418
By Vito J. Racanelli
Can institutional investing have anticompetitive effects? I’m still not convinced.
The idea, known as the common-ownership theory, received another airing at a panel debate at the Harvard Club Monday. As Barron’s recently wrote, the model is based on studies of airlines and banks that suggest when groups of big investors such as index or mutual funds hold material equity stakes in several companies in the same industry, they can foster behavior such as consumer price increases that improves the profits of the companies they own.
Panelist Douglas H. Ginsburg, a judge on the District of Columbia US Court of Appeals and a well-known critic of the theory, said that those who argue common ownership runs afoul of antitrust regulation are “opportunistically naïve” to believe laws such as the Sherman Ant-Trust Act and the Clayton Act are aimed at ownership by large asset managers. Those who argue the contrary, he said, aren’t interpreting the law consistently with what it intends.
Continue reading…https://www.barrons.com/articles/do-big-investors-push-the-antitrust-envelope-1537220418
From NYT and ProPublica:
Sloan Kettering’s Cozy Deal With Start-Up
At Memorial Sloan Kettering Cancer Center in Manhattan, doctors and staff objected to a for-profit venture that could be lucrative for a few leading researchers and board members
The company, Paige.AI, is one in a burgeoning field of start-ups that are applying artificial intelligence to health care, yet it has an advantage over many competitors: The company has an exclusive deal to use the cancer center’s vast archive of 25 million patient tissue slides, along with decades of work by its world-renowned pathologists.
Memorial Sloan Kettering holds an equity stake in Paige.AI, as does a member of the cancer center’s executive board, the chairman of its pathology department and the head of one of its research laboratories. Three other board members are investors.
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The arrangement has sparked considerable turmoil among doctors and scientists at Memorial Sloan Kettering, which has intensified in the wake of an investigation by ProPublica and The New York Times into the failures of its chief medical officer, Dr. José Baselga, to disclose some of his financial ties to the health and drug industries in dozens of research articles. He resigned last week, and Memorial Sloan Kettering’s chief executive, Dr. Craig B. Thompson, announced a new task force on Monday to review the center’s conflict-of-interest policies.
Article at https://www.nytimes.com/2018/09/20/health/memorial-sloan-kettering-cancer-paige-ai.html?action=click&module=Top%20Stories&pgtype=Homepage
Sloan Kettering’s Cozy Deal With Start-Up
At Memorial Sloan Kettering Cancer Center in Manhattan, doctors and staff objected to a for-profit venture that could be lucrative for a few leading researchers and board members
- An artificial intelligence start-up founded by three insiders at Memorial Sloan Kettering Cancer Center debuted with great fanfare in February, with $25 million in venture capital and the promise that it might one day transform how cancer is diagnosed.
The company, Paige.AI, is one in a burgeoning field of start-ups that are applying artificial intelligence to health care, yet it has an advantage over many competitors: The company has an exclusive deal to use the cancer center’s vast archive of 25 million patient tissue slides, along with decades of work by its world-renowned pathologists.
Memorial Sloan Kettering holds an equity stake in Paige.AI, as does a member of the cancer center’s executive board, the chairman of its pathology department and the head of one of its research laboratories. Three other board members are investors.
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The arrangement has sparked considerable turmoil among doctors and scientists at Memorial Sloan Kettering, which has intensified in the wake of an investigation by ProPublica and The New York Times into the failures of its chief medical officer, Dr. José Baselga, to disclose some of his financial ties to the health and drug industries in dozens of research articles. He resigned last week, and Memorial Sloan Kettering’s chief executive, Dr. Craig B. Thompson, announced a new task force on Monday to review the center’s conflict-of-interest policies.
Article at https://www.nytimes.com/2018/09/20/health/memorial-sloan-kettering-cancer-paige-ai.html?action=click&module=Top%20Stories&pgtype=Homepage
The EU is checking how Amazon gathers information on sales made by competitors on Amazon Marketplace
The concern is that the information gives Amazon an edge when it sells to customers, EU Competition Commissioner Margrethe Vestager told reporters at a press conference in Brussels.
While she stressed that the EU investigation of Amazon is at a very early stage, she said her team is “trying to understand this issue in full."
“The question here is about the data” Amazon collects from smaller merchants on its site, Vestager said. “Do you then also use this data to do your own calculations, as to what is the new big thing, what is it that people want, what kind of offers do they like to receive, what makes them buy things? That has made us start a preliminary” investigation, she said.
From https://www.bloomberg.com/news/articles/2018-09-19/amazon-probed-by-eu-on-data-collection-from-rival-retailers
From DMN:
Ticketmaster Is Working Hand-In-Hand With Scalpers, Undercover Investigation Reveals
A new undercover investigation from CBC News and the Toronto Star has revealed what customers have long-suspected: Ticketmaster is working hand-in-hand with scalpers.
Back in July, the CBC sent reporters undercover to Ticket Summit 2018 in Las Vegas, which is a convention designed for live entertainment industry executives. The reporters posed as scalpers with hidden cameras attached to their bodies while recording themselves being pitched on Ticketmaster’s professional reseller program.
That members-only program is called TradeDesk, billed as ‘The Most Power Ticket Sales Tool. Ever.”
The story continues here: .https://www.digitalmusicnews.com/2018/09/19/ticketmaster-supports-scalpers/
Ticketmaster Is Working Hand-In-Hand With Scalpers, Undercover Investigation Reveals
A new undercover investigation from CBC News and the Toronto Star has revealed what customers have long-suspected: Ticketmaster is working hand-in-hand with scalpers.
Back in July, the CBC sent reporters undercover to Ticket Summit 2018 in Las Vegas, which is a convention designed for live entertainment industry executives. The reporters posed as scalpers with hidden cameras attached to their bodies while recording themselves being pitched on Ticketmaster’s professional reseller program.
That members-only program is called TradeDesk, billed as ‘The Most Power Ticket Sales Tool. Ever.”
The story continues here: .https://www.digitalmusicnews.com/2018/09/19/ticketmaster-supports-scalpers/
Statement of the Department of Justice Antitrust Division on the Closing of Its Investigation of the Cigna–Express Scripts Merger
September 17, 2018
Assistant Attorney General Makan Delrahim of the Antitrust Division of the U.S. Department of Justice issued the following statement today in connection with the closing of the Division’s investigation into Cigna Corporation’s $67 billion proposed acquisition of Express Scripts Holding Co. (“ESI”):
“Quality healthcare and competitive pricing for healthcare services and pharmaceutical drugs is critical to U.S. consumers. After a thorough review of the proposed transaction, the Antitrust Division has determined that the combination of Cigna, a health insurance company, and ESI, a pharmacy benefit management (“PBM”) company, is unlikely to result in harm to competition or consumers.”
During the Antitrust Division’s comprehensive, six-month investigation, it received over two million documents, analyzed transactional data from the merging companies and other industry firms, and interviewed over 100 knowledgeable industry participants.
In particular, the Division analyzed whether the merger would: (1) substantially lessen competition in the sale of PBM services or (2) raise the cost of PBM services to Cigna’s health insurance rivals. PBM services are sold to employers and health insurance companies to manage their pharmacy benefits, which can include designing formularies, processing prescription claims, and providing access to pharmacy networks and pharmaceutical rebates.
The merger is unlikely to lessen competition substantially in the sale of PBM services because Cigna’s PBM business nationwide is small. The Division also determined that the proposed transaction is unlikely to lessen competition substantially in markets for customers because at least two other large PBM companies and several smaller PBM companies will remain in the market post-merger.
In evaluating whether the merger may harm competition for the sale of PBM services, the Division understands that Cigna intends to use ESI for PBM services and that Cigna’s current PBM services provider, UnitedHealthcare’s subsidiary Optum, will be free to compete for PBM customers that purchase medical insurance from Cigna upon closing of the transaction.
The Division also considered how the merger would affect ESI’s incentives to provide competitive PBM services to Cigna’s health insurance rivals. ESI currently sells PBM services to some of Cigna’s rivals. The merger is unlikely to enable Cigna to increase costs to Cigna’s health insurance rivals due to competition from vertically-integrated and other PBMs. The merger is unlikely to lead ESI to raise PBM prices to Cigna’s rivals because that likely would result in the merged company losing PBM customers and not result in Cigna’s gaining a sufficient volume of additional health insurance business to offset the loss of PBM customers.
Updated September 17, 2018
https://www.justice.gov/atr/closing-statement
September 17, 2018
Assistant Attorney General Makan Delrahim of the Antitrust Division of the U.S. Department of Justice issued the following statement today in connection with the closing of the Division’s investigation into Cigna Corporation’s $67 billion proposed acquisition of Express Scripts Holding Co. (“ESI”):
“Quality healthcare and competitive pricing for healthcare services and pharmaceutical drugs is critical to U.S. consumers. After a thorough review of the proposed transaction, the Antitrust Division has determined that the combination of Cigna, a health insurance company, and ESI, a pharmacy benefit management (“PBM”) company, is unlikely to result in harm to competition or consumers.”
During the Antitrust Division’s comprehensive, six-month investigation, it received over two million documents, analyzed transactional data from the merging companies and other industry firms, and interviewed over 100 knowledgeable industry participants.
In particular, the Division analyzed whether the merger would: (1) substantially lessen competition in the sale of PBM services or (2) raise the cost of PBM services to Cigna’s health insurance rivals. PBM services are sold to employers and health insurance companies to manage their pharmacy benefits, which can include designing formularies, processing prescription claims, and providing access to pharmacy networks and pharmaceutical rebates.
The merger is unlikely to lessen competition substantially in the sale of PBM services because Cigna’s PBM business nationwide is small. The Division also determined that the proposed transaction is unlikely to lessen competition substantially in markets for customers because at least two other large PBM companies and several smaller PBM companies will remain in the market post-merger.
In evaluating whether the merger may harm competition for the sale of PBM services, the Division understands that Cigna intends to use ESI for PBM services and that Cigna’s current PBM services provider, UnitedHealthcare’s subsidiary Optum, will be free to compete for PBM customers that purchase medical insurance from Cigna upon closing of the transaction.
The Division also considered how the merger would affect ESI’s incentives to provide competitive PBM services to Cigna’s health insurance rivals. ESI currently sells PBM services to some of Cigna’s rivals. The merger is unlikely to enable Cigna to increase costs to Cigna’s health insurance rivals due to competition from vertically-integrated and other PBMs. The merger is unlikely to lead ESI to raise PBM prices to Cigna’s rivals because that likely would result in the merged company losing PBM customers and not result in Cigna’s gaining a sufficient volume of additional health insurance business to offset the loss of PBM customers.
Updated September 17, 2018
https://www.justice.gov/atr/closing-statement
What makes a monopoly in the age of Amazon?
By Lydia DePillis
It’s not often that a government agency decides to do a wholesale rethink of how to do its job. But that’s what’s happening at the Federal Trade Commission.
On Thursday, the federal watchdog tasked with protecting consumers from fraud and anti-competitive behavior kicked off a months-long series of hearings. The goal: Figuring out whether regulators need to be tougher on companies that have staked out ever-larger chunks of the markets they serve.
+ READ MORE at https://nam03.safelinks.protection.outlook.com/?url=https%3A%2F%2Fcompetitionpolicyinternational.us2.list-manage.com%2Ftrack%2Fclick%3Fu%3D66710f1b2f6afb55512135556%26id%3D620bb40a4f%26e%3Dc9725fdc15&data=02%7C01%7C%7C00eb2b99a2af4b41a8ca08d61c8f0e41%7C84df9e7fe9f640afb435aaaaaaaaaaaa%7C1%7C0%7C636727798071942816&sdata=3Oz8xE%2B0X8d1FIb2IbSWJrlHgWu1SS8xjsbaCN9r2lE%3D&reserved=0
Investor expert Ray Dalio traces connection between government policies to fix the 2008 financial crash and resulting wealth disparities and political unrest that will complicate government strategies for future debt crises
In an interesting interview for Bloomberg TV, Dalio explains that recovery from the 2008 crisis involved such government policies as low interest rates and "quantitative easing," asset buying, that increase wealth disparities between rich and poor, and create political discord. That discord may interfere with government efforts to deal with a future economic crisis. Needless to say, not all experts agree with Dalio's analysis, but it is thought provoking. The URL for the interview follows.
Posted by Don Allen Resnikoff
https://www.bloomberg.com/view/articles/2018-09-12/ray-dalio-spells-out-america-s-worst-nightmare
In an interesting interview for Bloomberg TV, Dalio explains that recovery from the 2008 crisis involved such government policies as low interest rates and "quantitative easing," asset buying, that increase wealth disparities between rich and poor, and create political discord. That discord may interfere with government efforts to deal with a future economic crisis. Needless to say, not all experts agree with Dalio's analysis, but it is thought provoking. The URL for the interview follows.
Posted by Don Allen Resnikoff
https://www.bloomberg.com/view/articles/2018-09-12/ray-dalio-spells-out-america-s-worst-nightmare
The FTC is holding hearings of great interest to antitrust and consumer advocates. Here is what the FTC says it is interested in:
The Commission is especially interested in new empirical research that indicates (or contraindicates) a causal relationship with respect to any of the topics identified for comment. Upon review and consideration of a public comment highlighting such research, the Commission may request the voluntary sharing of the data and models underlying the comment, in accordance with general principles of peer review of social scientific inquiry, and consistent with confidentiality or other limitations on the sharing of such data.
Commenters are invited to address one or more of the following topics generally, or with respect to a specific industry, such as the health care,5 high-tech6, or energy7 industries.
1) The state of antitrust and consumer protection law and enforcement, and their development, since the Pitofsky hearings. Of particular interest to the Commission: (a) the continued viability of the consumer welfare standard for antitrust law enforcement and policy; (b) economic analysis and evidence on market competitiveness, enforcement policy, and the effects of past FTC enforcement decisions; (c) the identification of new developments in markets and in business-to-business or business-to-consumer relationships; (d) the benefits and costs associated with the growth of international competition and consumer protection enforcement regimes; and (e) the advisory and advocacy role of the FTC regarding enforcement efforts by competition and consumer protection
agencies outside the United States, when such efforts have a direct effect on important U.S. interests. Comments filed in electronic form should be submitted using this link.
2) Competition and consumer protection issues in communication, information, and media technology networks. FTC staff’s 1996 Competition Policy in the New High-Tech Global Marketplace report8 discussed the competitive analysis of both unilateral and joint conduct in industries subject to network effects; and FTC staff’s 2007 Broadband Connectivity and Competition Policy report9 addressed similar issues in the broadband internet access service market. Of particular interest to the Commission: (a) whether contemporary industry practices in networked industries continue to present competition and consumer protection concerns like those discussed in the prior reports; (b) the welfare effects of regulatory intervention to promote standardization and interoperability; (c) the application of the FTC’s Section 5 authority to the broadband internet access service business; and (d) unique competition and consumer protection issues associated with internet and online commerce. Comments filed in electronic form should be submitted using this link.
3) The identification and measurement of market power and entry barriers, and the evaluation of collusive, exclusionary, or predatory conduct or conduct that violates the consumer protection statutes enforced by the FTC, in markets featuring “platform” businesses.10 Of particular interest to the Commission: (a) whether the platform business model has unique implications for antitrust and consumer protection law enforcement and policy; and (b) whether and how the presence of “network effects” should affect the Commission’s analysis of competition and consumer protection issues in these markets. Comments filed in electronic form should be submitted using this link.
4) The intersection between privacy, big data, and competition.11 Of particular interest to the Commission: (a) data as a dimension of competition, and/or as an impediment to entry into or expansion within a relevant market; (b) competition on privacy and data security attributes (between, for example, social media companies or app developers), and the importance of this competition to consumers and users; (c) whether consumers prefer free/ad-supported products to products offering similar services or capabilities but that are neither free nor adsupported; (d) the benefits and costs of privacy laws and regulations, including the effect of such regulations on innovation, product offerings, and other dimensions of competition and consumer protection; (e) the benefits and costs of varying state, federal and international privacy laws and regulations, including the conflicts associated with those standards; and (f) competition and consumer protection implications of use and location tracking mechanisms. Comments filed in electronic form should be submitted using this link.
5) The Commission’s remedial authority to deter unfair and deceptive conduct in privacy and data security matters. Of particular interest to the Commission: (a) the efficacy of the Commission’s use of its current remedial authority; and (b) the identification of any additional tools or authorities the Commission may need to adequately deter unfair and deceptive conduct related to privacy and data security. Comments filed in electronic form should be submitted using this link.
6) Evaluating the competitive effects of corporate acquisitions and mergers. Of particular interest to the Commission: (a) the economic and legal analysis of vertical and conglomerate mergers; (b) whether the doctrine of potential competition is sufficient to identify and analyze the competitive effects (if any) associated with the acquisition of a firm that may be a nascent competitive threat; (c) the analysis of acquisitions and holding of a non-controlling ownership interest in competing companies; (d) the identification and evaluation of the exercise of monopsony power and buyer-power as arising from consolidation; (e) the identification and evaluation of differentiated but potentially competing technologies, and of disruptive or generational changes in technology, and how such technologies affect competitive effects analysis; and (f) empirical validation of the analytical tools used to evaluate acquisitions and mergers (e.g., models of upward pricing pressure, gross upward pricing pressure, net innovation pressure, critical loss analysis, compensating marginal cost reduction, merger simulation, natural experiments, and empirical estimation of demand systems). Comments filed in electronic form should be submitted using this link.
7) The evidence and analysis of monopsony power, including but not limited to, in labor markets. Of particular interest to the Commission: (a) the analytic framework applied to conduct and transactions that negatively or positively affect competition between employers as buyers in labor markets; (b) evidence regarding the existence and exercise of buyer monopsony or market power in properly defined markets, including by employers in labor markets; (c) the exercise of monopsony power through collusion, including in labor markets through employer collusion; and (d) the use of non-competition agreements and the conditions under which their use may be inconsistent with the antitrust laws. Comments filed in electronic form should be submitted using this link.
8) The role of intellectual property and competition policy in promoting innovation. The Commission has taken a dual-pronged approach to issues arising at the intersection of intellectual property and antitrust law: (1) antitrust enforcement against harmful business conduct involving intellectual property; and (2) competition advocacy regarding the development of intellectual property law. The Commission has articulated its enforcement positions in a number of public documents, including the joint Commission and Department of Justice 2017 Antitrust Guidelines for the Licensing of Intellectual Property12 and 2007 Antitrust Enforcement and Intellectual Property Rights report.13 The Commission has engaged in substantial competition advocacy with respect to the legal and policy regime related to intellectual property rights, including its three “IP” reports: the 2003 To Promote Innovation14 report, the 2011 Evolving IP Marketplace15 report, and the 2016 Patent Assertion Entity Activity16 report. Of particular interest to the Commission: (a) the adoption and utilization of novel business practices (beyond those addressed in the Commission’s prior guidance and actions)17 with respect to obtaining or enforcing intellectual property rights, where such practices may be inconsistent with the antitrust laws; (b) identification of contemporary patent doctrine that substantially affects innovation and raises the greatest challenges for competition policy; (c) evaluation of intellectual property litigation in competitive effects analysis; and (d) evaluation of efficiencies and entry considerations in technology markets in merger analysis. Comments filed in electronic form should be submitted using this link.
9) The consumer welfare implications associated with the use of algorithmic decision tools, artificial intelligence, and predictive analytics. Of particular interest to the Commission: (a) the welfare effects and privacy implications associated with the application of these technologies to consumer advertising and marketing campaigns; (b) the welfare implications associated with use of these technologies in the determination of a firm’s pricing and output decisions; and (c) whether restrictions on the use of computer and machine learning and data analytics affect innovation or consumer rights and opportunities in existing or future markets, or in the development of new business models. Comments filed in electronic form should be submitted using this link.
10) The interpretation and harmonization of state and federal statutes and regulations that prohibit unfair and deceptive acts and practices. Of particular interest to the Commission: (a) whether and to what extent other enforcement entities authorized to prosecute unfair or deceptive acts and practices apply FTC precedent in their enforcement efforts; and (b) whether the Commission can, and to what extent it should, take steps to promote harmonization between the FTC Act and similar statutes. Comments filed in electronic form should be submitted using this link.
11) The agency’s investigation, enforcement and remedial processes. Of particular interest to the Commission: (a) whether the agency’s investigative process can be improved without diminishing the ability of the Commission to identify and prosecute prohibited conduct; (b) the extent to which the Commission’s Part 3 process facilitates timely and efficient administrative litigation; (c) the efficacy of the Commission’s current use of its remedial authority; and (d) willingness of affected parties to cooperate with the Commission in conducting postinvestigation and enforcement retrospectives. Comments filed in electronic form should be submitted using this link.
From:https://www.ftc.gov/system/files/attachments/hearings-competition-consumer-protection-21st-century/hearings-announcement_0.pdf
Broadcast email from DC AG Racine: student loan litigation
Last year, I sued the U.S. Department of Education for delaying a rule that would make it easier for students to get their loans forgiven when their school is proven to have defrauded students. This week, a federal judge ruled that the Trump administration’s move to delay this student protection was illegal.
This ruling is a victory for student borrowers, especially here in the District which has the highest student debts in the nation. On average, District borrowers owe more than $46,000 in federal student loans and more than 1-in-4 student borrowers owe over $80,000. With soaring debt here and across the nation, our struggling borrowers need robust protections against predatory schools that try to cheat them.
To preserve another critical student borrower protection, I’m also suing the Department of Education for delaying the Gainful Employment Rule. This rule would require for-profit schools to disclose to students the costs, average debt load, and job prospects of their programs. Enacting this rule is important because predatory schools commonly exaggerate job placement rates to prospective students.
When the federal government fails to do its job, I believe we have a responsibility to step up to protect our residents. I won’t stand idly by while the Trump Administration slashes student borrower protections.
Karl A. Racine
Attorney General
Last year, I sued the U.S. Department of Education for delaying a rule that would make it easier for students to get their loans forgiven when their school is proven to have defrauded students. This week, a federal judge ruled that the Trump administration’s move to delay this student protection was illegal.
This ruling is a victory for student borrowers, especially here in the District which has the highest student debts in the nation. On average, District borrowers owe more than $46,000 in federal student loans and more than 1-in-4 student borrowers owe over $80,000. With soaring debt here and across the nation, our struggling borrowers need robust protections against predatory schools that try to cheat them.
To preserve another critical student borrower protection, I’m also suing the Department of Education for delaying the Gainful Employment Rule. This rule would require for-profit schools to disclose to students the costs, average debt load, and job prospects of their programs. Enacting this rule is important because predatory schools commonly exaggerate job placement rates to prospective students.
When the federal government fails to do its job, I believe we have a responsibility to step up to protect our residents. I won’t stand idly by while the Trump Administration slashes student borrower protections.
Karl A. Racine
Attorney General
Prosecutors from the US Department of Justice (DOJ) have asked a California judge to delay a grocery wholesaler's lawsuit against former Bumble Bee Foods CEO Chris Lischewski over concerns that it could complicate the criminal case against him.
Lischewski, who was indicted on criminal price-fixing charges in May 2018 and subsequently stepped down to focus on his defense, is also the defendant in a civil lawsuit from Associated Wholesale Grocers (AWG) that claims the company was harmed by the tuna canner's price-fixing.
Prosecutor Leslie Wulff wrote in a filing that allowing the AWG lawsuit to proceed, which could involve depositions of witnesses including Lischewski, could potentially interfere with the prosecution and run the risk of violating the former CEO's fifth amendment right prohibiting self-incrimination.
From the filing:
"The government’s proposed stay balances the government’s interest in protecting the integrity of the criminal proceedings, Mr. Lischewski’s fifth amendment rights, and the victims’ interest in conducting discovery and seeking restitution for the price-fixing scheme."
From: https://www.undercurrentnews.com/2018/09/10/prosecutors-want-suit-against-lischewski-stalled-due-to-criminal-case/
A bill, introduced by Rep. Darrell Issa, proposes dividing the Ninth Circuit into three regionally based divisions
—The text of the bill is at https://judiciary.house.gov/wp-content/uploads/2018/09/HR-6730.pdf
The three divisions would be a Northern Division composed of the district courts in Alaska, Idaho, Montana, Oregon and Washington’s Eastern and Western districts of Washington; a Middle Division made up of the courts in Guam, Hawaii, Nevada and the Northern Mariana Islands, as well as California’s Eastern and Northern districts; and a Southern Division including Arizona and the Southern and Central districts of California.
Ross Todd of Law.com's Recorder periodical reports that Brian Fitzpatrick of Vanderbilt University Law School, who advocated splitting the Ninth Circuit at a subcommittee hearing chaired by Issa last year [see https://www.law.com/therecorder/almID/1202781463210/house-panel-restarts-debate-on-splitting-ninth-circuit/], said that he wasn’t sure that the representative’s proposal would address his central concern—that the size of the circuit leads to three-judge panels that are more likely to be made up of ideological outliers: “I think we would expect fewer outliers within each of the three regional divisions relative to the makeup of the divisions because each division will have only 11 judges,” he said. “I am not sure if that conclusion carries over to the ‘circuit’ division, however,” said Fitzpatrick, noting that the ratio of judges on the circuit division compared to the court’s total—13 of 24—closely mirrors the makeup of current Ninth Circuit en banc panels—11 of the court’s 29 current active judges.
Todd's full article is at https://www.law.com/therecorder/2018/09/12/house-committee-to-take-up-measure-to-reconfigure-the-ninth-circuit/?kw=House%20Committee%20to%20Take%20Up%20Measure%20to%20Reconfigure%20the%20Ninth%20Circuit&et=editorial&bu=TheRecorder&cn=20180912&src=EMC-Email&pt=AfternoonUpdate
The DCist: These Are Some Of The Areas Most Susceptible To Flooding In D.C.
While it may be that the worst effects of Hurricane Florence will have stayed south of D.C., the storm provided an occasion for reporter by Natalie Delgadillo to review areas in DC most susceptible to flooding. Here are some excerpts from her suggestions:
The National Mall
Areas around the National Mall are some of the lowest points in the city. Flooding from the Potomac River in 1936 and 1942 overwhelmed the National Mall, stranding the Jefferson Memorial like an island. In 2006, persistent rain flooded the National Archives building, the Internal Revenue Service, the Commerce Department, the Justice Department, and several museums on the mall.
That's why the Army Corp of Engineers installed a levee across 17th Street in 2014. It's meant to keep all of downtown D.C. safe from flooding off the Potomac—though it wouldn't be much help if, as in the 2006 storm, the rainwater just became too much for the city's storm drains to bear.
The Wharf
The new businesses on the Wharf have been there open for less than a year, and already they're facing the test of floods. Back in 2003, when rains from Hurricane Isabel hit the District, the Southwest waterfront was inundated.
The Capitol Riverfront/Yards Park
Hurricane Isabel also caused major tidal flooding in Navy Yard in 2003, and too much water this weekend could cause flooding again.
Georgetown Harbour
In 2011, Georgetown Harbour officials failed to deploy a levee to protect the area from flooding, and the boardwalk area was inundated. Restaurants and businesses had to be evacuated, the gas and water turned off.
Rock Creek Park
Here's one everybody knows: Rock Creek Park is always flooding. The trails running along the creek often become unusable for bikers during heavy or persistent rains.
Alexandria
Alexandria has already been dealing with a lot of flooding this week from high tide conditions and lots of rain.
The city has been giving out sand bags since Monday.
DAR comment: It seems an obvious question whether global warming and rising sea levels are relevant to hurricane Florence and the flooding travails of DC, as is also true in Miami and other near sea level cities, although that isn't discussed in the DCist story.
Expert Marshall Shepherd recently addressed that point in an article that appears in The Verge:
We do have higher sea level because of climate change. So whenever we have these types of storms, you’re probably dealing with a more significant storm surge because of that than you would perhaps 100 years ago. The literature certainly suggests that on a global, average sense, we would start to see more intense storms because of the warming oceans perhaps, and changing upper level wind patterns. The jury is still out on whether you’re going to see more or less of them.
In fact, most of the literature I have seen has suggested that you might not see them as frequently — but when you do they’ll be stronger. Yes there’s likely some connection between climate change and hurricanes, but I think it’s irresponsible to conclusively start linking individual storms to climate change, particularly as the storm is unfolding. I’m more concerned about the immediate impacts of the hazard.
See https://www.theverge.com/2018/9/10/17844258/hurricane-florence-atlantic-storm-category-four-intensity-unusual
Posting by Don Allen Resnikoff
Four national healthcare organizations sue HHS over delay of its final rule on price ceilings in the 340B drug discount program.
The 340B program is intended to help hospitals to provide pharmaceuticals to needy patients. The expected rule would set price ceilings and impose civil penalties on pharmaceutical companies that knowingly overcharge hospitals in the program. The Department of Health and Human Services delayed the rule for a fifth time in June, [see https://www.fiercehealthcare.com/payer/for-fifth-time-hhs-delays-340b-drug-ceiling-prices-and-penalitiesafter it was initially issued in January 2017.]
The American Hospital Association, America’s Essential Hospitals, 340B Health and the Association of American Medical Colleges are signed on to the lawsuit (PDF). The lawsuit Complaint can be viewed at https://www.aha.org/system/files/2018-09/180911-340b-delay-suit-complaint.pdf In it, they argue that the nearly two-year delay is unlawful under the Administration Procedure Act.
The 340B program is intended to help hospitals to provide pharmaceuticals to needy patients. The expected rule would set price ceilings and impose civil penalties on pharmaceutical companies that knowingly overcharge hospitals in the program. The Department of Health and Human Services delayed the rule for a fifth time in June, [see https://www.fiercehealthcare.com/payer/for-fifth-time-hhs-delays-340b-drug-ceiling-prices-and-penalitiesafter it was initially issued in January 2017.]
The American Hospital Association, America’s Essential Hospitals, 340B Health and the Association of American Medical Colleges are signed on to the lawsuit (PDF). The lawsuit Complaint can be viewed at https://www.aha.org/system/files/2018-09/180911-340b-delay-suit-complaint.pdf In it, they argue that the nearly two-year delay is unlawful under the Administration Procedure Act.
The Economics Of Amateurism: Breaking Down The Latest Lawsuit Against The NCAA
By Thomas Baker In what could prove to be a battle of economic experts, the NCAA is back in court and must once again defend its amateurism regulations from its own student-athletes. The current case is In Re: Grant-in-Aid Cap Antitrust Litigation and was initiated in the United States District Court for the Northern District of California by former NCAA student-athletes Shawne Alston and Justine Hartman.
Read the article at
https://competitionpolicyinternational.us2.list-manage.com/track/click?u=66710f1b2f6afb55512135556&id=0a7c194709&e=b23ef9e519
FTC Commissioner proposes FTC rule making as supplement to antitrust litigation
From: https://www.ftc.gov/system/files/documents/public_statements/1408196/chopra_-_comment_to_hearing_1_9-6-18.pdf
Excerpt of statement by FTC Commissioner Chopra, who credits Lina Kahn for her help
I see three major benefits to the FTC engaging in rulemaking under “unfair methods of competition,” even if the conduct could be condemned under predecessor antitrust laws. As I describe above, the current approach generates ambiguity, is unduly burdensome, and suffers from a democratic participation deficit. Rulemaking can create value for the marketplace and benefit the public on all of these fronts.
First, rulemaking would enable the Commission to issue clear rules to give market participants sufficient notice about what the law is and is not, helping ensure that enforcement is predictable.30 The APA requires agencies engaging in rulemaking to provide the public with adequate notice of a proposed rule. The notice must include the substance of the rule, the legal authority under which the agency has proposed the rule, and the date the rule will come into effect.31 An agency must publish the final rule in the Federal Register, at least 30 days before the rule becomes effective.
These procedural requirements promote clear rules and clear notice. As the Supreme Court has stated, a “fundamental principle” in our legal system is that “laws which regulate persons or entities must give fair notice of conduct that is forbidden or required.”32 Clear rules also help deliver consistent enforcement and predictable results. Reducing ambiguity about what the law is will enable market participants to channel their resources and behavior more productively, and will allow market entrants and entrepreneurs to compete on more of a level playing field. Second, establishing rules could help relieve antitrust enforcement of steep costs and prolonged trials. Establishing through rulemaking that certain conduct constitutes an “unfair method of competition” would obviate the need to establish the same through adjudication. Targeting conduct through rulemaking, rather than adjudication, might lessen the burden of expert fees or protracted litigation, potentially saving significant resources on a present-value basis.33 Moreover, establishing a rule through APA rulemaking can be faster than litigating multiple cases on a similar subject matter. For taxpayers and market participants, the present value of net benefits through the promulgation of a clear rule that reduces the need for litigation is higher than pursuing multiple, protracted matters through litigation.
At the same time, rulemaking is not
so fast that it surprises market participants. Establishing a rule through participatory rulemaking can often be far more efficient. This is particularly important in the context of declining government enforcement relative to economic activity, as documented by the American Bar Association.34
And third, rulemaking would enable the Commission to establish rules through a transparent and participatory process, ensuring that everyone who may be affected by a new rule has the opportunity to weigh in on it. APA procedures require that an agency provide the public with meaningful opportunity to comment on the rule’s content through the submission of written “data, views, or arguments.”35 The agency must then consider and address all submitted comments before issuing the final rule. If an agency adopts a rule without observing these procedures, a court may strike down the rule.36
This process is far more participatory than adjudication. Unlike judges, who are confined to the trial record when developing precedent-setting rules and standards, the Commission can put forth rules after considering a comprehensive set of information and analysis.37 Notably, this would also allow the FTC to draw on its own informational advantage – namely, its ability to collect and aggregate information and to study market trends and industry practices over the long term and outside the context of litigation.38 Drawing on this expertise to develop standards will help antitrust enforcement and policymaking better reflect empirical realities and better keep pace with evolving business practices.
From: https://www.ftc.gov/system/files/documents/public_statements/1408196/chopra_-_comment_to_hearing_1_9-6-18.pdf
Excerpt of statement by FTC Commissioner Chopra, who credits Lina Kahn for her help
I see three major benefits to the FTC engaging in rulemaking under “unfair methods of competition,” even if the conduct could be condemned under predecessor antitrust laws. As I describe above, the current approach generates ambiguity, is unduly burdensome, and suffers from a democratic participation deficit. Rulemaking can create value for the marketplace and benefit the public on all of these fronts.
First, rulemaking would enable the Commission to issue clear rules to give market participants sufficient notice about what the law is and is not, helping ensure that enforcement is predictable.30 The APA requires agencies engaging in rulemaking to provide the public with adequate notice of a proposed rule. The notice must include the substance of the rule, the legal authority under which the agency has proposed the rule, and the date the rule will come into effect.31 An agency must publish the final rule in the Federal Register, at least 30 days before the rule becomes effective.
These procedural requirements promote clear rules and clear notice. As the Supreme Court has stated, a “fundamental principle” in our legal system is that “laws which regulate persons or entities must give fair notice of conduct that is forbidden or required.”32 Clear rules also help deliver consistent enforcement and predictable results. Reducing ambiguity about what the law is will enable market participants to channel their resources and behavior more productively, and will allow market entrants and entrepreneurs to compete on more of a level playing field. Second, establishing rules could help relieve antitrust enforcement of steep costs and prolonged trials. Establishing through rulemaking that certain conduct constitutes an “unfair method of competition” would obviate the need to establish the same through adjudication. Targeting conduct through rulemaking, rather than adjudication, might lessen the burden of expert fees or protracted litigation, potentially saving significant resources on a present-value basis.33 Moreover, establishing a rule through APA rulemaking can be faster than litigating multiple cases on a similar subject matter. For taxpayers and market participants, the present value of net benefits through the promulgation of a clear rule that reduces the need for litigation is higher than pursuing multiple, protracted matters through litigation.
At the same time, rulemaking is not
so fast that it surprises market participants. Establishing a rule through participatory rulemaking can often be far more efficient. This is particularly important in the context of declining government enforcement relative to economic activity, as documented by the American Bar Association.34
And third, rulemaking would enable the Commission to establish rules through a transparent and participatory process, ensuring that everyone who may be affected by a new rule has the opportunity to weigh in on it. APA procedures require that an agency provide the public with meaningful opportunity to comment on the rule’s content through the submission of written “data, views, or arguments.”35 The agency must then consider and address all submitted comments before issuing the final rule. If an agency adopts a rule without observing these procedures, a court may strike down the rule.36
This process is far more participatory than adjudication. Unlike judges, who are confined to the trial record when developing precedent-setting rules and standards, the Commission can put forth rules after considering a comprehensive set of information and analysis.37 Notably, this would also allow the FTC to draw on its own informational advantage – namely, its ability to collect and aggregate information and to study market trends and industry practices over the long term and outside the context of litigation.38 Drawing on this expertise to develop standards will help antitrust enforcement and policymaking better reflect empirical realities and better keep pace with evolving business practices.
The New York Times:
Amazon’s Antitrust Antagonist Has a Breakthrough Idea
By David Streitfeld
The dead books are on the top floor of Southern Methodist University’s law library.
“Antitrust Dilemma.” “The Antitrust Impulse.” “Antitrust in an Expanding Economy.” Shelf after shelf of volumes ignored for decades. There are a dozen fat tomes with transcripts of the congressional hearings on monopoly power in 1949, when the world was in ruins and the Soviets on the march. Lawmakers believed economic concentration would make America more vulnerable.
At the end of the antitrust stacks is a table near the window. “This is my command post,” said Lina Khan.
It’s nothing, really. A few books are piled up haphazardly next to a bottle with water and another with tea. Ms. Khan was in Dallas quite a bit over the last year, refining an argument about monopoly power that takes aim at one of the most admired, secretive and feared companies of our era: Amazon.
The retailer overwhelmingly dominates online commerce, employs more than half a million people and powers much of the internet itself through its cloud computing division. On Tuesday, it briefly became the second company to be worth a trillion dollars.
If competitors tremble at Amazon’s ambitions, consumers are mostly delighted by its speedy delivery and low prices. They stream its Oscar-winning movies and clamor for the company to build a second headquarters in their hometowns. Few of Amazon’s customers, it is safe to say, spend much time thinking they need to be protected from it.
But then, until recently, no one worried about Facebook, Google or Twitter either. Now politicians, the media, academics and regulators are kicking around ideas that would, metaphorically or literally, cut them down to size. Members of Congress grilled social media executives on Wednesday in yet another round of hearings on Capitol Hill. Not since the Department of Justice took on Microsoft in the mid-1990s has Big Tech been scrutinized like this.
Amazon has more revenue than Facebook, Google and Twitter put together, but it has largely escaped sustained examination. That is beginning to change, and one significant reason is Ms. Khan.
In early 2017, when she was an unknown law student, Ms. Khan published “Amazon’s Antitrust Paradox” in the Yale Law Journal. Her argument went against a consensus in antitrust circles that dates back to the 1970s — the moment when regulation was redefined to focus on consumer welfare, which is to say price. Since Amazon is renowned for its cut-rate deals, it would seem safe from federal intervention.
Continue reading…https://www.nytimes.com/2018/09/07/technology/monopoly-antitrust-lina-khan-amazon.html
Klobuchar questions Kavanaugh on antitrust
By CPI on September 6, 2018No Comment
Senator Amy Klobuchar (D – MN) joined fellow Democrats Wednesday in grilling Supreme Court nominee Brett Kavanaugh over his views on antitrust issues.
Klobuchar, ranking member on the Senate Judiciary Antitrust Subcommittee, said that Supreme Court decisions on antitrust issues in recent years, including the decisions in Ohio v. American Express, Leegin Creative Leather Products v. PSKS and Bell Atlantic v. Twombly, have made it harder to enforce our antitrust laws.
Klobuchar: “Senator Lee and I run the Antitrust Subcommittee…and in recent years…the Supreme Court has made it harder to enforce our antitrust laws in cases like Trinco, Twombly, Leegin, and most recently Ohio v. American Express. This could not be happening at a more troubling time. We’re experiencing a wave of industry consolidation. Annual merger filings increased by more than 50% between 2010 and 2016. I’m concerned that the Court, the Roberts Court, is going down the wrong path and your major antitrust opinions would have rejected challenges to mergers that majorities found to be anticompetitive. I’m afraid you’re going to move it even further down the path. Starting with 2008, in the Whole Foods case, where Whole Foods attempted to buy Wild Oats Market. Very complicated. I’m going to go to the guts of it from my opinion. The majority of courts and…what happened is the Republican majority FTC challenges a deal, and you dissent and you apply your own pricing test to the merger. My simple question is: where did you get this pricing test?”
Kavanaugh: “I would have affirmed the decision by the district judge in that case which allowed the merger and the district judge is Judge Friedman, an appointee of President Clinton’s to the district court. I was following his analysis of the merger. The case is very fact specific…it really turns on whether the larger supermarket sells organic food or not.”
Klobuchar: “Where did you get the pricing test…? You used different tests. I’m trying to figure that out. What legal authority actually requires a government to satisfy your standard to block a merger? …I remember in our discussion you cited these non-binding horizontal merger guidelines that you used to come up with this test.”
Kavanaugh: “You’re looking at the effect on competition and what the Supreme Court has told us, at least from the late 1970s, is to look at the effect on consumers and what’s the effect on the prices for consumers and the theory of the district court and Judge Friedman in this case was that the merger would not cause an increase in prices because they were competing in a broader market that included larger supermarkets that also sold organic food. The question is whether there an organic food market solely or a broader supermarket market.”
Klobuchar also asked Kavanaugh questions about net neutrality, consumer regulation and other issues. She suggested that the public may be focused more on economic issues than the Supreme Court, but “it’s our case to make that it does matter.”
Klobuchar: “Or in another case you wrote a dissent against the rules [that] protect net neutrality, rules that help all citizens, and small businesses have an even playing field when it comes to accessing the Internet. Another example that seems mired in legalese, but is critical for Americans, antitrust law. In recent years the conservative majority on the Supreme Court has made it harder and harder to enforce the nation’s antitrust laws, ruling in favor of consolidation and market dominance. Yet two of Judge Kavanaugh’s major antitrust opinions suggest that he would push the court even further down this pro-merger path. We should have more competition and not less.”
From: https://www.competitionpolicyinternational.com/us-sen-klobuchar-questions-kavanaugh-on-antitrust/?utm_source=CPI+Subscribers&utm_campaign=ac38616102-EMAIL_CAMPAIGN_2018_09_07_06_39&utm_medium=email&utm_term=0_0ea61134a5-ac38616102-236474137
By CPI on September 6, 2018No Comment
Senator Amy Klobuchar (D – MN) joined fellow Democrats Wednesday in grilling Supreme Court nominee Brett Kavanaugh over his views on antitrust issues.
Klobuchar, ranking member on the Senate Judiciary Antitrust Subcommittee, said that Supreme Court decisions on antitrust issues in recent years, including the decisions in Ohio v. American Express, Leegin Creative Leather Products v. PSKS and Bell Atlantic v. Twombly, have made it harder to enforce our antitrust laws.
Klobuchar: “Senator Lee and I run the Antitrust Subcommittee…and in recent years…the Supreme Court has made it harder to enforce our antitrust laws in cases like Trinco, Twombly, Leegin, and most recently Ohio v. American Express. This could not be happening at a more troubling time. We’re experiencing a wave of industry consolidation. Annual merger filings increased by more than 50% between 2010 and 2016. I’m concerned that the Court, the Roberts Court, is going down the wrong path and your major antitrust opinions would have rejected challenges to mergers that majorities found to be anticompetitive. I’m afraid you’re going to move it even further down the path. Starting with 2008, in the Whole Foods case, where Whole Foods attempted to buy Wild Oats Market. Very complicated. I’m going to go to the guts of it from my opinion. The majority of courts and…what happened is the Republican majority FTC challenges a deal, and you dissent and you apply your own pricing test to the merger. My simple question is: where did you get this pricing test?”
Kavanaugh: “I would have affirmed the decision by the district judge in that case which allowed the merger and the district judge is Judge Friedman, an appointee of President Clinton’s to the district court. I was following his analysis of the merger. The case is very fact specific…it really turns on whether the larger supermarket sells organic food or not.”
Klobuchar: “Where did you get the pricing test…? You used different tests. I’m trying to figure that out. What legal authority actually requires a government to satisfy your standard to block a merger? …I remember in our discussion you cited these non-binding horizontal merger guidelines that you used to come up with this test.”
Kavanaugh: “You’re looking at the effect on competition and what the Supreme Court has told us, at least from the late 1970s, is to look at the effect on consumers and what’s the effect on the prices for consumers and the theory of the district court and Judge Friedman in this case was that the merger would not cause an increase in prices because they were competing in a broader market that included larger supermarkets that also sold organic food. The question is whether there an organic food market solely or a broader supermarket market.”
Klobuchar also asked Kavanaugh questions about net neutrality, consumer regulation and other issues. She suggested that the public may be focused more on economic issues than the Supreme Court, but “it’s our case to make that it does matter.”
Klobuchar: “Or in another case you wrote a dissent against the rules [that] protect net neutrality, rules that help all citizens, and small businesses have an even playing field when it comes to accessing the Internet. Another example that seems mired in legalese, but is critical for Americans, antitrust law. In recent years the conservative majority on the Supreme Court has made it harder and harder to enforce the nation’s antitrust laws, ruling in favor of consolidation and market dominance. Yet two of Judge Kavanaugh’s major antitrust opinions suggest that he would push the court even further down this pro-merger path. We should have more competition and not less.”
From: https://www.competitionpolicyinternational.com/us-sen-klobuchar-questions-kavanaugh-on-antitrust/?utm_source=CPI+Subscribers&utm_campaign=ac38616102-EMAIL_CAMPAIGN_2018_09_07_06_39&utm_medium=email&utm_term=0_0ea61134a5-ac38616102-236474137
U.S. is expected to let lapse $600 million in funding to combat global disease outbreaks
From: http://centerforpolicyimpact.org/2018/02/09/penny-wise-pandemic-foolish/
The money was appropriated in 2014 at the height of a catastrophic Ebola outbreak in West Africa. Yet there is considerable evidence that this emergency funding worked. In West Africa and other parts of the world, the CDC has trained disease detectives to diagnose, prevent and contain outbreaks.
When Ebola again began to spread in the Democratic Republic of the Congo last year, health officials, including those trained and supported by the CDC, were able to act swiftly to contain the virus, saving lives and preventing what could have been a massive disaster.
To end this funding now would be like a homeowner, having just been spared from a fire by a smoke alarm, deciding to disconnect the alarm.
We’ve made this mistake before. It’s relatively easy to garner support to fight infectious diseases when they are rampant and capturing our attention, but too often the motivation to sustain funding wanes when the infection appears to be under control. Peter Sands, executive director of The Global Fund, argues that our approach to fighting infections is characterized by “cycles of panic followed by neglect.”
Global health history is full of such examples. In a study that I co-authored, we found 75 episodes of malaria resurgence, where in most cases countries had successfully controlled malaria, only to have it come roaring back once they cut their malaria programs.
This is why the findings by Summers and colleagues are so urgent. When economic losses from a pandemic are expected to exceed $500 billon per year, penny-pinching on our funding to prevent outbreaks is glaringly short-sighted.
Perhaps most curious is the CDC’s reported plan to deal with dwindling resources by downscaling efforts in 39 of the 49 countries where this funding is currently deployed. Most pandemics begin with a spark — a pathogen jumps from domesticated or wild animals to humans. And yet the CDC plans to lessen its vigilance in some of the most likely places in the world for that spark to occur, countries such as China, Pakistan, Haiti, Rwanda and the Congo.
Pandemics know no boundaries. That is especially true now, when factors such as international travel, climate change, deforestation and human-animal interactions are accelerating the spread of infectious diseases. In our modern age, when an outbreak in a far-off land can quickly reach our backyard, there is no room for territorial thinking. Like ships on an ocean, we rise and fall together.
We cannot make the world safe from pandemic diseases by looking away after an emergency fades, nor by hoping that infectious diseases stay within the borders of far-away nations. It is time for us to end the cycles of panic and neglect and invest reasonably and rationally in outbreak preparedness every day and everywhere. The human and economic costs of inaction are intolerable.
From: http://centerforpolicyimpact.org/2018/02/09/penny-wise-pandemic-foolish/
The money was appropriated in 2014 at the height of a catastrophic Ebola outbreak in West Africa. Yet there is considerable evidence that this emergency funding worked. In West Africa and other parts of the world, the CDC has trained disease detectives to diagnose, prevent and contain outbreaks.
When Ebola again began to spread in the Democratic Republic of the Congo last year, health officials, including those trained and supported by the CDC, were able to act swiftly to contain the virus, saving lives and preventing what could have been a massive disaster.
To end this funding now would be like a homeowner, having just been spared from a fire by a smoke alarm, deciding to disconnect the alarm.
We’ve made this mistake before. It’s relatively easy to garner support to fight infectious diseases when they are rampant and capturing our attention, but too often the motivation to sustain funding wanes when the infection appears to be under control. Peter Sands, executive director of The Global Fund, argues that our approach to fighting infections is characterized by “cycles of panic followed by neglect.”
Global health history is full of such examples. In a study that I co-authored, we found 75 episodes of malaria resurgence, where in most cases countries had successfully controlled malaria, only to have it come roaring back once they cut their malaria programs.
This is why the findings by Summers and colleagues are so urgent. When economic losses from a pandemic are expected to exceed $500 billon per year, penny-pinching on our funding to prevent outbreaks is glaringly short-sighted.
Perhaps most curious is the CDC’s reported plan to deal with dwindling resources by downscaling efforts in 39 of the 49 countries where this funding is currently deployed. Most pandemics begin with a spark — a pathogen jumps from domesticated or wild animals to humans. And yet the CDC plans to lessen its vigilance in some of the most likely places in the world for that spark to occur, countries such as China, Pakistan, Haiti, Rwanda and the Congo.
Pandemics know no boundaries. That is especially true now, when factors such as international travel, climate change, deforestation and human-animal interactions are accelerating the spread of infectious diseases. In our modern age, when an outbreak in a far-off land can quickly reach our backyard, there is no room for territorial thinking. Like ships on an ocean, we rise and fall together.
We cannot make the world safe from pandemic diseases by looking away after an emergency fades, nor by hoping that infectious diseases stay within the borders of far-away nations. It is time for us to end the cycles of panic and neglect and invest reasonably and rationally in outbreak preparedness every day and everywhere. The human and economic costs of inaction are intolerable.
Creating Effective Health Care Markets
September 7, 2018
by David Blumenthal, M.D.
Toplines:
The conditions underlying the effective functioning of market economies do not currently exist in health care
Supporters of market-based approaches to health care should seek to promote competition and develop better information on provider prices and quality
Article intro:
Disagreement about the role of markets lies at the root of many of our fiercest health care controversies. One side believes that unleashing market forces will rescue our health care system. From this viewpoint, government involvement is inherently destructive, except in rare circumstances. Many opponents of the Affordable Care Act share this opinion.
The other side believes that health care markets are deeply flawed and that government must play a major role in achieving a higher-performing health system. These people point out that markets make no claim to ensuring equity in the use of health care resources, only improved efficiency. Supporters of the ACA tend to hold this view.
Given this fundamental divide, it’s worth considering the conditions underlying the effective functioning of market economies, whether those conditions currently prevail in health care and, if not, what changes would be required to establish them.
www.commonwealthfund.org/blog/2018/creating-effective-health-care-markets?omnicid
What can the Trump Administration do to rein in Google, Twitter, and Facebook?
Wired has some ideas. It asked some antitrust experts for their thoughts. A main theme is that the government's options are limited, but antitrust enforcers could do more to stop mergers with anti-competitive potential. DR
https://www.wired.com/story/how-to-curb-silicon-valley-power-even-with-weak-antitrust-laws/
Is Apple-Shazam an example of a tech merger that should be blocked? Did the EU get it wrong?Or are the findings of no likely harm to competition well founded?
European Commission - Press release
http://europa.eu/rapid/press-release_IP-18-5662_en.htm
Mergers: Commission clears Apple's acquisition of ShazamBrussels, 6 September 2018
The European Commission has approved under the EU Merger Regulation the proposed acquisition of Shazam by Apple. The Commission concluded that the merger would not adversely affect competition in the European Economic Area or any substantial part of it.
Commissioner Margrethe Vestager, in charge of competition policy, said: "Data is key in the digital economy. We must therefore carefully review transactions which lead to the acquisition of important sets of data, including potentially commercially sensitive ones, to ensure they do not restrict competition. After thoroughly analysing Shazam's user and music data, we found that their acquisition by Apple would not reduce competition in the digital music streaming market."
Today's decision follows an in-depth [http://europa.eu/rapid/press-release_IP-18-3505_en.htm] investigation of Apple's proposed acquisition of Shazam. Apple operates "Apple Music", which is the second largest music streaming service in Europe, after Spotify. Shazam offers a leading music recognition application ("app") in the European Economic Area (EEA) and worldwide.
The Commission's investigation
Apple and Shazam mainly offer complementary services and do not compete with each other. The Commission opened an in-depth investigation to assess:
- whether Apple would obtain access to commercially sensitive data about customers of its competitors for the provision of music streaming services in the EEA, and whether such data could allow Apple to directly target its competitors' customers and encourage them to switch to Apple Music. As a result, competing music streaming services could have been put at a competitive disadvantage.
- considering Shazam's strong position in the market for music recognition apps, whether Apple Music's competitors would be harmed if Apple, after the transaction, were to discontinue referrals from the Shazam app to them.
The Commission found that:
- the merged entity would not be able to shut out competing providers of digital music streaming services by accessing commercially sensitive information about their customers. In particular, access to Shazam's data would not materially increase Apple's ability to target music enthusiasts and any conduct aimed at making customers switch would only have a negligible impact. As a result, competing providers of digital music streaming services would not be shut out of the market;
- the merged entity would not be able to shut out competing providers of digital music streaming services by restricting access to the Shazam app. This reflects the fact the app has a limited importance as an entry point to the music streaming services of Apple Music's competitors; and
- the integration of Shazam's and Apple's datasets on user data would not confer a unique advantage to the merged entity in the markets on which it operates. Any concerns in that respect were dismissed because Shazam's data is not unique and Apple's competitors would still have the opportunity to access and use similar databases.
Companies and products
Apple is a US based global technology company which designs, manufactures and sells mobile communication, media devices, portable digital music players and personal computers. It also sells and delivers digital content online and offers the music and video streaming service ''Apple Music''.
Shazam is a UK based developer and distributor of music recognition applications for smartphones, tablets and PCs. It mainly generates revenues from online advertising, and commissions earned on referrals of users to digital music streaming and download services, such as Apple Music, Spotify and Deezer.
__._,_.___
9th Circuit: "We consider whether the Eighth Amendment’s prohibition on cruel and unusual punishment bars a city from prosecuting people criminally for sleeping outside on public property when those people have no home or other shelter to go to. We conclude that it does."
http://cdn.ca9.uscourts.gov/datastore/opinions/2018/09/04/15-35845.pdf
http://cdn.ca9.uscourts.gov/datastore/opinions/2018/09/04/15-35845.pdf
NYT: The Government’s New Strategy to Crack Down on ‘Stock Trader Spoofing’
The Justice Department charged two former Deutsche Bank traders late last month with wire fraud for placing and quickly canceling orders to move markets.
By Peter J. Henning
The Justice Department has tried to crack down on traders who try to move markets by entering and quickly canceling orders, conduct that goes by the catchy moniker “spoofing.”
But the government’s early prosecution of the crime has faced a big setback. In just the second trial for spoofing, which the Dodd-Frank Act outlawed, a Connecticut jury acquitted a former trader at UBS of spoofing this spring. That raised questions about whether prosecutors can pursue these cases.
Late July the Justice Department took a new tack. Rather than use the spoofing law, prosecutors charged two former Deutsche Bank traders, James Vorley and Cedric Chanu, with wire fraud. The government claims the pair placed and quickly canceled orders for precious metals futures contracts to create the impression that there was greater supply or demand.
https://www.nytimes.com/2018/09/04/business/dealbook/government-strategy-crack-down-on-spoofing.html?rref=collection%2Fsectioncollection%2Fbusiness&action=click&contentCollection=business®ion=stream&module=stream_unit&version=latest&contentPlacement=4&pgtype=sectionfront
The Justice Department charged two former Deutsche Bank traders late last month with wire fraud for placing and quickly canceling orders to move markets.
By Peter J. Henning
The Justice Department has tried to crack down on traders who try to move markets by entering and quickly canceling orders, conduct that goes by the catchy moniker “spoofing.”
But the government’s early prosecution of the crime has faced a big setback. In just the second trial for spoofing, which the Dodd-Frank Act outlawed, a Connecticut jury acquitted a former trader at UBS of spoofing this spring. That raised questions about whether prosecutors can pursue these cases.
Late July the Justice Department took a new tack. Rather than use the spoofing law, prosecutors charged two former Deutsche Bank traders, James Vorley and Cedric Chanu, with wire fraud. The government claims the pair placed and quickly canceled orders for precious metals futures contracts to create the impression that there was greater supply or demand.
https://www.nytimes.com/2018/09/04/business/dealbook/government-strategy-crack-down-on-spoofing.html?rref=collection%2Fsectioncollection%2Fbusiness&action=click&contentCollection=business®ion=stream&module=stream_unit&version=latest&contentPlacement=4&pgtype=sectionfront
President Trump says tech firms may be in a “very antitrust situation”
Referring to Google, Amazon, and Facebook, he repeatedly said he can’t comment publicly on whether they should be broken up.
“I won’t comment on the breaking up, of whether it’s that or Amazon or Facebook,” Trump said in an Oval Office interview Thursday with Bloomberg News. “As you know, many people think it is a very antitrust situation, the three of them [including Google]. But I just, I won’t comment on that.”
Note: Our angry comment translator is unavailable to explain Trump's antitrust thinking. DR
https://www.bloomberg.com/news/articles/2018-08-30/google-under-fire-again-on-search-as-hatch-calls-for-ftc-probe
Referring to Google, Amazon, and Facebook, he repeatedly said he can’t comment publicly on whether they should be broken up.
“I won’t comment on the breaking up, of whether it’s that or Amazon or Facebook,” Trump said in an Oval Office interview Thursday with Bloomberg News. “As you know, many people think it is a very antitrust situation, the three of them [including Google]. But I just, I won’t comment on that.”
Note: Our angry comment translator is unavailable to explain Trump's antitrust thinking. DR
https://www.bloomberg.com/news/articles/2018-08-30/google-under-fire-again-on-search-as-hatch-calls-for-ftc-probe
California abolishes cash bail, aiming to treat rich and poor defendants equally
SMARTINEZ, Calif. —California has abolished bail as a condition of pretrial release, a controversial move to address inequities in the justice system that have often allowed those with personal wealth to walk free while poor defendants, unable to pay, have been incarcerated.
The measure, signed into law by Gov. Jerry Brown (D) on Tuesday, puts California at the head of a small group of states that have made bail reform a priority amid rising incarceration rates and increasing concerns about the justice system’s economic and racial biases.
From https://www.msn.com/en-us/news/crime/california-abolishes-cash-bail-aiming-to-treat-rich-and-poor-defendants-equally/ar-BBMDdn3?ocid=spartandhp
SMARTINEZ, Calif. —California has abolished bail as a condition of pretrial release, a controversial move to address inequities in the justice system that have often allowed those with personal wealth to walk free while poor defendants, unable to pay, have been incarcerated.
The measure, signed into law by Gov. Jerry Brown (D) on Tuesday, puts California at the head of a small group of states that have made bail reform a priority amid rising incarceration rates and increasing concerns about the justice system’s economic and racial biases.
From https://www.msn.com/en-us/news/crime/california-abolishes-cash-bail-aiming-to-treat-rich-and-poor-defendants-equally/ar-BBMDdn3?ocid=spartandhp
DMN: California’s ‘Gold Standard’ Net Neutrality Bill Moves Towards a Final Vote
California’s stringent net neutrality bill, SB 822, has been overwhelmingly approved by the State Assembly.
The California State Assembly has overwhelmingly passed net neutrality bill SB 822, 58-17. The lopsided decision, issued Thursday (August 30th), will send the tough provision to the California Senate before it hits the desk of state governor Jerry Brown.
Both are widely expected to pass the measure.
The story continues here. https://www.digitalmusicnews.com/2018/08/30/california-net-neutrality-final-vote/
Copy of Statement of Arbitrator -- Kaepernick:
The Justice Department's filed "statement of interest" that sides with a group of students rejected for admission by Harvard University who allege the school discriminates against Asian-American applicants.
The URL for the filing appears below. In the "statement of interest" the Justice Department says that Harvard can't show it is following legal restrictions established to limit how race is used as a factor in admissions, essentially agreeing with the plaintiffs in the case, Students for Fair Admissions.
https://www.justice.gov/opa/press-release/file/1090856/download?utm_medium=email&utm_source=govdelivery
The University responded Thursday.
"We are deeply disappointed that the Department of Justice has taken the side of Edward Blum and Students for Fair Admissions, recycling the same misleading and hollow arguments that prove nothing more than the emptiness of the case against Harvard. This decision is not surprising given the highly irregular investigation the DOJ has engaged in thus far, and its recent action to repeal Obama-era guidelines on the consideration of race in admission," the Harvard statement said.
"Harvard does not discriminate against applicants from any group, and will continue to vigorously defend the legal right of every college and university to consider race as one factor among many in college admissions, which the Supreme Court has consistently upheld for more than 40 years. Colleges and universities must have the freedom and flexibility to create the diverse communities that are vital to the learning experience of every student, and Harvard is proud to stand with the many organizations and individuals who are filing briefs in support of this position today," the statement continued.
The URL for Harvard's 8/27/2018 filed Reply is here: https://admissionscase.harvard.edu/files/adm-case/files/harvards_reply_brief_iso_summary_judgment.pdf
A number of amicus briefs have been filed in support of Harvard. URLs can be found at https://admissionscase.harvard.edu/supporting-documents
The initial Kaepernick grievance filing by the Geragos firm is here: http://a.espncdn.com/pdf/2017/1015/KaepernickGrievance_r.pdf
From DC AG Racine's recent newsletter-- short term residential rentals (like Air BnB):
Last week, I demanded landlords at 33 apartment buildings detail how their commercial short-term rentals work. This action was in response to residents who claim they were not informed about hotel-like businesses operating in their apartment buildings and worry that the rowdy guests pose safety concerns. Under the law, landlords must disclose their operation of these hotel-like units to their residents. These requests for information will help us determine if the landlords misled their long-standing residents about the short-term rentals and if they violated District consumer protection or rent control laws.
I will continue to use all the tools at my disposal to ensure that commercialized short-term apartment rentals do not endanger District residents or our supply of affordable housing.
Last week, I demanded landlords at 33 apartment buildings detail how their commercial short-term rentals work. This action was in response to residents who claim they were not informed about hotel-like businesses operating in their apartment buildings and worry that the rowdy guests pose safety concerns. Under the law, landlords must disclose their operation of these hotel-like units to their residents. These requests for information will help us determine if the landlords misled their long-standing residents about the short-term rentals and if they violated District consumer protection or rent control laws.
I will continue to use all the tools at my disposal to ensure that commercialized short-term apartment rentals do not endanger District residents or our supply of affordable housing.
In July The New York City Council voted in favor of a new law requiring Airbnb and similar home-share companies to share data on their users with NYC government
The law was characterized by the council as one that would “provide the City with an additional tool to enforce the laws against illegal short term rentals.” “This bill is about transparency and bringing accountability to billion-dollar companies who are not being good neighbors,” explained NYC Councilwoman Carlina Rivera.
You can read the text here --legistar.council.nyc.gov/ViewReport.ashx?M=R&N=Text&GID=61&ID=3143400&GUID=AB36F650-AAE2-444B-A300-8CF56C056E99&Title=Legislation+Text
The law was characterized by the council as one that would “provide the City with an additional tool to enforce the laws against illegal short term rentals.” “This bill is about transparency and bringing accountability to billion-dollar companies who are not being good neighbors,” explained NYC Councilwoman Carlina Rivera.
You can read the text here --legistar.council.nyc.gov/ViewReport.ashx?M=R&N=Text&GID=61&ID=3143400&GUID=AB36F650-AAE2-444B-A300-8CF56C056E99&Title=Legislation+Text
Three editorials (pointed out by Consumer Law and Policy Blog)
The Washington Post, addressing the current work of the CFPB and the Department of Education, had editorials yesterday and today pertinent to student loans and higher education: Read "The Trump administration’s scandalous handling of student loans," here. Read "How Betsy DeVos could trigger another financial meltdown," here.
The New York Times, addressing proposed changes by the Office of the Comptroller of the Currency to the rules for banks compliance with the Community Reinvestment Act, writes "A Green Light for Banks to Start ‘Redlining’ Again," here.
The Washington Post, addressing the current work of the CFPB and the Department of Education, had editorials yesterday and today pertinent to student loans and higher education: Read "The Trump administration’s scandalous handling of student loans," here. Read "How Betsy DeVos could trigger another financial meltdown," here.
The New York Times, addressing proposed changes by the Office of the Comptroller of the Currency to the rules for banks compliance with the Community Reinvestment Act, writes "A Green Light for Banks to Start ‘Redlining’ Again," here.
Email from Solar United Neighbors (excerpt): As part of a settlement agreement with Solar United Neighbors, the DC government, Pepco, and other stakeholders, last week the DC Public Service Commission (PSC) rejected Pepco’s proposal to increase residential demand charges in our electric bills.
Residential demand charges are a particularly unfair, confusing, and unpredictable rate increase because of how they are calculated and how they can impact your bill for the rest of the year. Typically, demand charges have been applied to large commercial operations, where the impact of the energy use—say to run a factory full of equipment—would materially impact the amount of energy the grid needed to supply. Residential demand charges, on the other hand, make no sense and are punitive to those who try to lower their bills by using less energy and installing solar panels on their roofs.One of the important factors in the settlement was the strong public outcry against the rate increase.
Residential demand charges are a particularly unfair, confusing, and unpredictable rate increase because of how they are calculated and how they can impact your bill for the rest of the year. Typically, demand charges have been applied to large commercial operations, where the impact of the energy use—say to run a factory full of equipment—would materially impact the amount of energy the grid needed to supply. Residential demand charges, on the other hand, make no sense and are punitive to those who try to lower their bills by using less energy and installing solar panels on their roofs.One of the important factors in the settlement was the strong public outcry against the rate increase.
A U.S. federal judge authorizes the seizure of Citgo Petroleum Corp. to satisfy a Venezuelan government debt
The ruling that could set off a scramble among Venezuela’s many unpaid creditors to wrest control of its only obviously seizable U.S. asset.
Judge Leonard P. Stark of the U.S. District Court in Wilmington, Del., issued the ruling.
The court order raises the likelihood that Venezuela’s state oil company, Petróleos de Venezuela SA, will lose control of a valuable external asset amid the country’s deepening economic and political crisis. The decision could still be appealed to a higher, federal court.
Excerpts from https://www.wsj.com/articles/u-s-judge-authorizes-seizure-of-venezuelas-citgo-1533853734 (paywall)
The ruling that could set off a scramble among Venezuela’s many unpaid creditors to wrest control of its only obviously seizable U.S. asset.
Judge Leonard P. Stark of the U.S. District Court in Wilmington, Del., issued the ruling.
The court order raises the likelihood that Venezuela’s state oil company, Petróleos de Venezuela SA, will lose control of a valuable external asset amid the country’s deepening economic and political crisis. The decision could still be appealed to a higher, federal court.
Excerpts from https://www.wsj.com/articles/u-s-judge-authorizes-seizure-of-venezuelas-citgo-1533853734 (paywall)
What is the effect on US automobile consumers of the Trump Administration's new trade deal with Mexico? Not much, according to Bloomberg -- Washington selling tweaks to existing treaties as historic victories
By
David Fickling
and
Anjani Trivedi
August 28, 2018, 3:20 AM
A car can look like a fantastic bargain on the lot, only to reveal itself as a lemon when you drive it away. It’s not so different with trade agreements.
Take the deal hammered out Monday between the U.S. and Mexico on automotive imports, which the two countries hope to extend to Canada, the third member of the North American Free Trade Agreement.
The key elements certainly look dramatic: lifting rules-of-origin requirements to 75 percent to avoid import tariffs, and a separate rule that 40 percent to 45 percent of content come from factories paying more than $16 an hour. The wage rule in particular is about twice what Mexican assembly-line workers make, and four times the average at parts companies there.
When you take a look under the hood, though, there’s a lot less than meets the eye.
Take those rules-of-origin requirments. These specify the share of a car’s content that must be made within Nafta, and have been at 62.5 percent for 16 years. Usefully, the National Highway Traffic Safety Administration already produces data on rules of origin so that U.S. consumers can buy local, and these show which cars would be affected by the change.
Big Deal
Just three Mexican-made cars that don't currently attract Nafta tariffs will do so under the revised agreement, according to NHTSA data
Based on the NHTSA’s data, there are just three models made in Mexico that are currently exempt but would attract tariffs under the new regime: Nissan Motor Co.’s Versa Sedan, Audi AG’s SQ5, and Fiat Chrysler Automobiles NV’s Fiat 500. Of these, only the Versa sells more than a handful of models in the U.S., with 106,772 vehicles shipped in 2017.
The wage rules are likely to be tougher, though even there the devil is in the detail. Almost all non-Nafta content in Mexican-made cars sold in the U.S. comes from Germany, Japan or South Korea, where total compensation typically takes pay well above $16 an hour. So unless the requirement relates solely to Nafta workers earning at least $16 per hour (full details haven’t been released yet), the rules will only really affect vehicles that are at least 55 percent made in Mexico.
That’s a similarly small group. Excluding Ford Motor Co.’s Fusion and Fiesta, General Motors Co.’s Chevrolet City Express, and Mazda Motor Corp.’s Mazda2 — which are already off the U.S. market or heading that way — they sold a collective 658,640 units in 2017, according to our calculations. That compares with total imports from Mexico of about 2.44 million cars.
There’s still likely to be some pain at the margins. The impact of the rules on parts supply chains could reduce earnings at Mazda and Nissan by 5 billion yen ($45 million) and 15 billion yen, respectively, or 4 percent and 2 percent of operating profits, according to Nomura Holdings Inc.’s estimates. With automakers continuing to battle rising costs from President Donald Trump’s other tariffs, any additional pressure won’t help.
Still, the small list of affected vehicles chimes with the equanimity with which the agreement is being greeted in Mexico.
About 70 percent of the country’s light-vehicle exports to the U.S. would be compliant under the new rules, with the remaining 30 percent getting a five-year phase-in period running through 2024, Economy Minister Ildefonso Guajardo told a press conference Monday. Even those that fall short would only receive the usual tariff of 2.5 percent for cars and 25 percent for trucks — levels that Volkswagen AG, Hyundai Motor Co., Kia Motors Corp. and others consider worth paying on swathes of models in return for Mexico’s drastically cheaper labor costs.
It’s likely to be a similar story with Canada, which shouldn’t be affected at all by the wage rules. “Canada should find it relatively simple to join the U.S.-Mexico consensus” and the agreement is a “fundamentally positive development” that should reduce perceptions of risks around Nafta, Brett House, deputy chief economist at Bank of Nova Scotia, wrote in a note after the announcement.
The Honda CR-V and two-door Civic, the Ford Flex, and three Lincoln and Cadillac models are the only Canada-produced cars that would be swept up in an extended version of the U.S-Mexico deal
It shouldn’t be all that surprising that this deal is more limited than it first appears. Mexico is scarcely going to agree to devastate its domestic industry to please President Trump.
Indeed, its modest nature should be considered a virtue, and global equity markets are quite right to be rallying in relief that this element of uncertainty has been lifted.
If Washington can sell tweaks to existing treaties as historic victories that merit a ratcheting-down of global tensions, that’s good news for the other seemingly intractable trade disputes rumbling around the world.
https://www.bloomberg.com/view/articles/2018-08-28/trump-s-mexico-trade-deal-looks-like-a-lemon?cmpid=BBD082818_BIZ&utm_medium=email&utm_source=newsletter&utm_term=180828&utm_campaign=bloombergdaily
A slightly different take on trade deal and auto prices from CBS News:
Maybe higher wage requirements and higher local content requirements (aluminum and steel) will cause auto prices to rise
https://www.msn.com/en-us/money/markets/if-trump-slaps-auto-tariffs-on-canada-heres-what-itll-cost-the-us/ar-BBMDZO3?ocid=spartandhp
Maybe higher wage requirements and higher local content requirements (aluminum and steel) will cause auto prices to rise
https://www.msn.com/en-us/money/markets/if-trump-slaps-auto-tariffs-on-canada-heres-what-itll-cost-the-us/ar-BBMDZO3?ocid=spartandhp
WSJ Editors worry that "Half-Nafta" means higher auto prices
Excerpt:
The deal also imposes new red tape and costs on the auto industry to punish
imports. The deal says that to get tariff-free treatment cars sold in North
America must have 75% of their content made here, up from 62.5%, and at
least 40% of the content must be made with workers who earn $16 an hour.
This is politically managed trade, and its economic logic is the opposite of Mr.
Trump’s domestic deregulation agenda. Ford and GM seem to have made
their peace with this intrusion into their management, but car makers with
assembly plants in Tennessee, Alabama and other GOP-leaning U.S. states
could suffer if they import more than 25% of their parts.
This auto gambit is part of the Trump-Lighthizer strategy to blow up global
supply chains, and it is a political strategy to get a revised deal through
Congress. That also explains the deal’s new labor provisions that go far to
imposing U.S.-style labor laws on Mexico. The details still aren’t clear, but Mr.
Lighthizer said Monday those rules will be “enforceable” on Mexico as part of
the new deal.
https://www.wsj.com/articles/half-a-nafta-1535413208?mod=searchresults&page=1&pos=9 (pay wall)
Excerpt:
The deal also imposes new red tape and costs on the auto industry to punish
imports. The deal says that to get tariff-free treatment cars sold in North
America must have 75% of their content made here, up from 62.5%, and at
least 40% of the content must be made with workers who earn $16 an hour.
This is politically managed trade, and its economic logic is the opposite of Mr.
Trump’s domestic deregulation agenda. Ford and GM seem to have made
their peace with this intrusion into their management, but car makers with
assembly plants in Tennessee, Alabama and other GOP-leaning U.S. states
could suffer if they import more than 25% of their parts.
This auto gambit is part of the Trump-Lighthizer strategy to blow up global
supply chains, and it is a political strategy to get a revised deal through
Congress. That also explains the deal’s new labor provisions that go far to
imposing U.S.-style labor laws on Mexico. The details still aren’t clear, but Mr.
Lighthizer said Monday those rules will be “enforceable” on Mexico as part of
the new deal.
https://www.wsj.com/articles/half-a-nafta-1535413208?mod=searchresults&page=1&pos=9 (pay wall)
Is Judge Kavanaugh a Fan of Antitrust Laws?
By CPI on August 27, 2018
Posted by The Legal Intelligencer
By Carl W. Hittinger and Tyson Y. Herrold
We know Judge Brett Kavanaugh is a fan of the Washington Nationals. But is he also a fan of the antitrust laws? On July 9, 2018, President Donald Trump nominated Kavanaugh, who currently sits on the U.S. Court of Appeals for the District of Columbia Circuit, to replace retiring justice and long-time swing voter Anthony Kennedy. Judge Kavanaugh is sure to be the subject of exacting congressional scrutiny on any number of topics. But the Senate Judiciary Committee should not overlook Kavanuagh’s antitrust jurisprudence. As of this writing, Kavanaugh’s Senate Judiciary Committee hearing is scheduled to begin on Sept. 4.
Unlike Justice Neil Gorsuch, who practiced antitrust law in the private sector and authored three unanimous antitrust opinions while on the U.S. Court of Appeals for the Tenth Circuit, Judge Kavanaugh has no private antitrust experience. Kavanaugh has authored two antitrust dissents while on the D.C. Circuit, both of which drew sharp criticism from fellow judicial panel members. Despite his limited antitrust experience, these dissents shed some light on Kavanaugh’s antitrust and economic persuasion and provide fertile ground for congressional examination.
‘FTC v. Whole Foods Market’
In the 2008 case of FTC v. Whole Foods, the FTC filed a motion for preliminary injunction challenging Whole Foods’ merger with Wild Oats, which the district court denied. The ensuing appeal to the D.C. Circuit turned on the appropriate definition of the relevant product market. The FTC defined the market as “premium, natural, and organic supermarkets,” called “PNOS” for short. According to the FTC, these stores “focus on high-quality perishables,” “generally have high levels of customer services,” “target affluent and well educated customers,” and “emphasi[ze] … social and environmental responsibility.”
D.C. Circuit Judge Janice Brown, with Judge David Tatel concurring in the judgement, agreed with the FTC’s narrow PNOS market definition and rejected Whole Foods’ proposed alternative market, which included so-called “conventional” supermarkets. In support, Judge Brown pointed to evidence of lower profits on “high-quality perishables” where Whole Foods and Wild Oats competed, compared to where they did not. Further economic data from the FTC showed that, although PNOSs competed with conventional supermarkets for “dry grocery” goods, conventional supermarkets had little to no effect on margins for the “high-quality perishables” sold by PNOSs. Judge Brown also relied on Whole Foods’ proprietary “internal projections” that a majority of Wild Oats’ consumers would switch to Whole Foods if the former chain closed, as well as “pseudonymous blog postings” by Whole Foods’ CEO that conventional supermarkets were “unable to compete” with PNOSs.
Dissenting, Kavanaugh branded the FTC’s case “weak” and, by extension, the court’s decision to preliminarily enjoin the merger (according to him), “a relic of a bygone era when antitrust law was divorced from basic economic principles.”
First, Kavanaugh criticized the court for “diluting the standard for preliminary injunction relief.” He argued that its purportedly lenient application of that standard allowed the “FTC to just snap its fingers and temporarily block a merger.” Citing Robert Bork’s famous (or infamous) book “The Antitrust Paradox,” Kavanaugh explained, “the FTC’s position … calls to mind the bad old days when mergers were viewed with suspicion regardless of their economic benefits.”
In turn, in his concurrence, Judge Tatel called Kavanaugh’s criticism “baffling” and noted that the court “scrupulously followed … the likelihood of success standard.” He rebuked Kavanaugh for his “zeal to reach the merits and preempt the FTC” and reminded him that the preliminary injunction standard was designed by Congress to maintain the status quo pending the FTC’s administrative review of mergers within its jurisdiction.
Second, throwing binding case authority to the winds (not to mention stare decisis), Kavanaugh criticized the court for relying too heavily on the Supreme Court’s Brown Shoe v. United States decision, which framed “practical indicia,” or factors, used to identify discrete product submarkets in merger cases. He called that binding decision “free-wheeling,” and commented that it “has not stood the test of time.” Kavanaugh again approvingly quoted a passage from Bork’s “Antitrust Paradox,” contending that, while it would be “overhasty to say that the Brown Shoe opinion is the worst antitrust essay ever written, … [it] has considerable claim to the title.”
Third, Kavanaugh rejected the court’s PNOS product market, citing Whole Foods’ economic expert. Kavanaugh applauded that expert for relying on “all-but-dispositive price evidence” that prices were uniform across Whole Foods’ stores, regardless of whether there was a competing PNOS like Wild Oats in the area. This observation drew further sharp criticism from Judge Tatel who, calling Kavanaugh’s “all-but-dispositive” price evidence “all-but-meaningless,” pointed out that Whole Foods’ expert testimony only showed pricing on a single day and only after “Whole Foods announced its intent to acquire Wild Oats.” This made the data susceptible, according to Judge Tatel, to “manipulation” and “gave Whole Foods every incentive to eliminate any price differences that may have previously existed between its stores … not only to avoid antitrust liability, but also because the company was no longer competing with Wild Oats.”
Continue reading…https://www.law.com/thelegalintelligencer/2018/08/24/is-judge-kavanaugh-a-fan-of-antitrust-laws-lets-take-a-look/
By CPI on August 27, 2018
Posted by The Legal Intelligencer
By Carl W. Hittinger and Tyson Y. Herrold
We know Judge Brett Kavanaugh is a fan of the Washington Nationals. But is he also a fan of the antitrust laws? On July 9, 2018, President Donald Trump nominated Kavanaugh, who currently sits on the U.S. Court of Appeals for the District of Columbia Circuit, to replace retiring justice and long-time swing voter Anthony Kennedy. Judge Kavanaugh is sure to be the subject of exacting congressional scrutiny on any number of topics. But the Senate Judiciary Committee should not overlook Kavanuagh’s antitrust jurisprudence. As of this writing, Kavanaugh’s Senate Judiciary Committee hearing is scheduled to begin on Sept. 4.
Unlike Justice Neil Gorsuch, who practiced antitrust law in the private sector and authored three unanimous antitrust opinions while on the U.S. Court of Appeals for the Tenth Circuit, Judge Kavanaugh has no private antitrust experience. Kavanaugh has authored two antitrust dissents while on the D.C. Circuit, both of which drew sharp criticism from fellow judicial panel members. Despite his limited antitrust experience, these dissents shed some light on Kavanaugh’s antitrust and economic persuasion and provide fertile ground for congressional examination.
‘FTC v. Whole Foods Market’
In the 2008 case of FTC v. Whole Foods, the FTC filed a motion for preliminary injunction challenging Whole Foods’ merger with Wild Oats, which the district court denied. The ensuing appeal to the D.C. Circuit turned on the appropriate definition of the relevant product market. The FTC defined the market as “premium, natural, and organic supermarkets,” called “PNOS” for short. According to the FTC, these stores “focus on high-quality perishables,” “generally have high levels of customer services,” “target affluent and well educated customers,” and “emphasi[ze] … social and environmental responsibility.”
D.C. Circuit Judge Janice Brown, with Judge David Tatel concurring in the judgement, agreed with the FTC’s narrow PNOS market definition and rejected Whole Foods’ proposed alternative market, which included so-called “conventional” supermarkets. In support, Judge Brown pointed to evidence of lower profits on “high-quality perishables” where Whole Foods and Wild Oats competed, compared to where they did not. Further economic data from the FTC showed that, although PNOSs competed with conventional supermarkets for “dry grocery” goods, conventional supermarkets had little to no effect on margins for the “high-quality perishables” sold by PNOSs. Judge Brown also relied on Whole Foods’ proprietary “internal projections” that a majority of Wild Oats’ consumers would switch to Whole Foods if the former chain closed, as well as “pseudonymous blog postings” by Whole Foods’ CEO that conventional supermarkets were “unable to compete” with PNOSs.
Dissenting, Kavanaugh branded the FTC’s case “weak” and, by extension, the court’s decision to preliminarily enjoin the merger (according to him), “a relic of a bygone era when antitrust law was divorced from basic economic principles.”
First, Kavanaugh criticized the court for “diluting the standard for preliminary injunction relief.” He argued that its purportedly lenient application of that standard allowed the “FTC to just snap its fingers and temporarily block a merger.” Citing Robert Bork’s famous (or infamous) book “The Antitrust Paradox,” Kavanaugh explained, “the FTC’s position … calls to mind the bad old days when mergers were viewed with suspicion regardless of their economic benefits.”
In turn, in his concurrence, Judge Tatel called Kavanaugh’s criticism “baffling” and noted that the court “scrupulously followed … the likelihood of success standard.” He rebuked Kavanaugh for his “zeal to reach the merits and preempt the FTC” and reminded him that the preliminary injunction standard was designed by Congress to maintain the status quo pending the FTC’s administrative review of mergers within its jurisdiction.
Second, throwing binding case authority to the winds (not to mention stare decisis), Kavanaugh criticized the court for relying too heavily on the Supreme Court’s Brown Shoe v. United States decision, which framed “practical indicia,” or factors, used to identify discrete product submarkets in merger cases. He called that binding decision “free-wheeling,” and commented that it “has not stood the test of time.” Kavanaugh again approvingly quoted a passage from Bork’s “Antitrust Paradox,” contending that, while it would be “overhasty to say that the Brown Shoe opinion is the worst antitrust essay ever written, … [it] has considerable claim to the title.”
Third, Kavanaugh rejected the court’s PNOS product market, citing Whole Foods’ economic expert. Kavanaugh applauded that expert for relying on “all-but-dispositive price evidence” that prices were uniform across Whole Foods’ stores, regardless of whether there was a competing PNOS like Wild Oats in the area. This observation drew further sharp criticism from Judge Tatel who, calling Kavanaugh’s “all-but-dispositive” price evidence “all-but-meaningless,” pointed out that Whole Foods’ expert testimony only showed pricing on a single day and only after “Whole Foods announced its intent to acquire Wild Oats.” This made the data susceptible, according to Judge Tatel, to “manipulation” and “gave Whole Foods every incentive to eliminate any price differences that may have previously existed between its stores … not only to avoid antitrust liability, but also because the company was no longer competing with Wild Oats.”
Continue reading…https://www.law.com/thelegalintelligencer/2018/08/24/is-judge-kavanaugh-a-fan-of-antitrust-laws-lets-take-a-look/
NYT: Central bankers are wrestling with the idea that how companies compete and exert power affects the overall well-being of the economy.
From the NYT: While these topics more commonly show up in debates around antitrust policy or how the labor market is regulated, it may have implications for the work of central banks as well. For example, if concentrated corporate power is depressing wage growth, the Fed may be able to keep interest rates lower for longer without inflation breaking out. If online retail makes prices jump around more than they once did, policymakers should be more reluctant to make abrupt policy changes based on short-term swings in consumer prices.
Alan Krueger, a Princeton economist, argues that monopsony power is most likely part of the apparent puzzle of why wage growth is low. By his estimates, wages should be rising 1 to 1.5 percentage points faster than they are, given recent inflation levels and the unemployment rate. His paper is at https://www.kansascityfed.org/~/media/files/publicat/sympos/2018/papersandhandouts/824180824kruegerremarks.pdf?la=en
Nicolas Crouzet and Janice Eberly of Northwestern University presented a paper pointing out that more of the investment of modern corporations takes the form of intangible capital, like software and patents, rather than machines and other physical goods. That may be a reason low interest rate policies by central banks over the past decade didn’t prompt more capital spending. Banks are generally disinclined to treat intellectual property or other intangible items as collateral against loans, which could mean interest rate cuts by a central bank have less power to generate increased investment spending. The Crouzet-Eberly paper is at https://www.kansascityfed.org/~/media/files/publicat/sympos/2018/papersandhandouts/824180810eberlycrouzetpaper.pdf?la=enwww.kansascityfed.org/~/media/files/publicat/sympos/2018/papersandhandouts/824180810eberlycrouzetpaper.pdf?la=en
The NYT article is at https://www.nytimes.com/2018/08/25/upshot/big-corporations-influence-economy-central-bank.html?action=click&module=Well&pgtype=Homepage§ion=The%20Upshot
From the NYT: While these topics more commonly show up in debates around antitrust policy or how the labor market is regulated, it may have implications for the work of central banks as well. For example, if concentrated corporate power is depressing wage growth, the Fed may be able to keep interest rates lower for longer without inflation breaking out. If online retail makes prices jump around more than they once did, policymakers should be more reluctant to make abrupt policy changes based on short-term swings in consumer prices.
Alan Krueger, a Princeton economist, argues that monopsony power is most likely part of the apparent puzzle of why wage growth is low. By his estimates, wages should be rising 1 to 1.5 percentage points faster than they are, given recent inflation levels and the unemployment rate. His paper is at https://www.kansascityfed.org/~/media/files/publicat/sympos/2018/papersandhandouts/824180824kruegerremarks.pdf?la=en
Nicolas Crouzet and Janice Eberly of Northwestern University presented a paper pointing out that more of the investment of modern corporations takes the form of intangible capital, like software and patents, rather than machines and other physical goods. That may be a reason low interest rate policies by central banks over the past decade didn’t prompt more capital spending. Banks are generally disinclined to treat intellectual property or other intangible items as collateral against loans, which could mean interest rate cuts by a central bank have less power to generate increased investment spending. The Crouzet-Eberly paper is at https://www.kansascityfed.org/~/media/files/publicat/sympos/2018/papersandhandouts/824180810eberlycrouzetpaper.pdf?la=enwww.kansascityfed.org/~/media/files/publicat/sympos/2018/papersandhandouts/824180810eberlycrouzetpaper.pdf?la=en
The NYT article is at https://www.nytimes.com/2018/08/25/upshot/big-corporations-influence-economy-central-bank.html?action=click&module=Well&pgtype=Homepage§ion=The%20Upshot
Companies and advocacy groups file amicus brief asking appeals court to review the FCC decision to end net neutrality rules.
Software developer Mozilla Corp., video-sharing service Vimeo LLC, and e-commerce site Etsy Inc., and other technology advocacy groups and media companies filed the brief Monday in the U.S. Court of Appeals for the District of Columbia Circuit [#18-1051], joining a petition by attorneys general of 22 states and D.C. against the FCC order ending net neutrality.
The brief is at https://blog.mozilla.org/wp-content/uploads/2018/08/As-filed-Initial-NG-Petitioners-Brief-Mozilla-v-FCC-20Aug2018-1.pdf
Software developer Mozilla Corp., video-sharing service Vimeo LLC, and e-commerce site Etsy Inc., and other technology advocacy groups and media companies filed the brief Monday in the U.S. Court of Appeals for the District of Columbia Circuit [#18-1051], joining a petition by attorneys general of 22 states and D.C. against the FCC order ending net neutrality.
The brief is at https://blog.mozilla.org/wp-content/uploads/2018/08/As-filed-Initial-NG-Petitioners-Brief-Mozilla-v-FCC-20Aug2018-1.pdf
PBS Newshour segment suggests that stock buybacks artificially limit supply and raise price of stocks
www.pbs.org/newshour/show/why-recent-stock-market-gains-might-not-benefit-the-economy
Excerpt:
Irene Tung:
By buying back a company’s stock, the company is removing from the open market a number of shares, creating an artificial scarcity of shares, which then temporarily drives up the price.
www.pbs.org/newshour/show/why-recent-stock-market-gains-might-not-benefit-the-economy
Excerpt:
Irene Tung:
By buying back a company’s stock, the company is removing from the open market a number of shares, creating an artificial scarcity of shares, which then temporarily drives up the price.
From NYT: Opinion about negative effects of stock buybacks
By William Lazonick and Ken Jacobson
Excerpt:
In 2003, the S.E.C. revealed that it was aware of the use of buybacks to manipulate the stock market. The agency acknowledged, in amending Rule 10b-18 to include block trades, that “during the late 1990s, it was reported that many companies were spending more than half their net income on massive buyback programs that were intended to boost share prices — often supporting their share price at levels far above where they would otherwise trade.” But its 2003 amendment was hardly a solution.
From 2003 to 2007, the value of buybacks by companies in the S.&P. 500 Index quadrupled, reaching almost $600 billion in 2007. With their cash reserves depleted by this orgy of buyback activity, these companies were more vulnerable when the downturn came. Having wasted billions on buybacks, many of them incurred huge losses and required mass layoffs to avoid bankruptcy.
After plummeting in 2008 and 2009, buybacks have again soared: A record $800 billion in buybacks by S.&P. 500 companies is predicted for this year.
Democrats have argued that the Republican tax cuts have funded increased buybacks. While this is true, the damage done by corporate stock buybacks over the past decades has been systemic.
Short of a Congressional ban on buybacks, as Ms. Baldwin proposes, the S.E.C. should immediately rescind Rule 10b-18, and confront the reality of stock market manipulation that open market repurchases entail. If Congress and regulators do not take action to rein in buybacks, the rampant economic inequality that already afflicts the United States will only get worse.
www.nytimes.com/2018/08/23/opinion/ban-stock-buybacks.html?action=click&module=Opinion&pgtype=Homepage
By William Lazonick and Ken Jacobson
Excerpt:
In 2003, the S.E.C. revealed that it was aware of the use of buybacks to manipulate the stock market. The agency acknowledged, in amending Rule 10b-18 to include block trades, that “during the late 1990s, it was reported that many companies were spending more than half their net income on massive buyback programs that were intended to boost share prices — often supporting their share price at levels far above where they would otherwise trade.” But its 2003 amendment was hardly a solution.
From 2003 to 2007, the value of buybacks by companies in the S.&P. 500 Index quadrupled, reaching almost $600 billion in 2007. With their cash reserves depleted by this orgy of buyback activity, these companies were more vulnerable when the downturn came. Having wasted billions on buybacks, many of them incurred huge losses and required mass layoffs to avoid bankruptcy.
After plummeting in 2008 and 2009, buybacks have again soared: A record $800 billion in buybacks by S.&P. 500 companies is predicted for this year.
Democrats have argued that the Republican tax cuts have funded increased buybacks. While this is true, the damage done by corporate stock buybacks over the past decades has been systemic.
Short of a Congressional ban on buybacks, as Ms. Baldwin proposes, the S.E.C. should immediately rescind Rule 10b-18, and confront the reality of stock market manipulation that open market repurchases entail. If Congress and regulators do not take action to rein in buybacks, the rampant economic inequality that already afflicts the United States will only get worse.
www.nytimes.com/2018/08/23/opinion/ban-stock-buybacks.html?action=click&module=Opinion&pgtype=Homepage
Nearly a decade after the crisis, the country's biggest banks are starting to raise their Washington profile.
from Bloomberg News article:
A prime example: the push for the Federal Reserve to reconsider its capital surcharge for global systemically important banks, an additional capital requirement for the country’s eight largest banks.
While Fed officials have not indicated that they have any immediate plans to recalibrate the surcharge, the fight is one that solely affects the industry’s largest institutions — a constituency that has garnered little traction in policymaking circles in recent years.
It’s a sign, observers say, that the biggest banks are starting to reassert themselves, after absorbing much of the blame for the financial crisis a decade ago. While moving legislation through Congress is likely to remain an uphill battle given ongoing suspicion of Wall Street on both sides of the aisle, the banks are now raising the profile of key issues they would like President Trump’s regulators to tackle at the banking agencies.
“They’ve come out of the shadows,” said Camden Fine, president and chief executive of Calvert Advisors and the former head of the Independent Community Bankers of America. “They’re becoming more vocal, more aggressive, more strident about the issues that are top priorities to them.”
Legislation to benefit the biggest banks would likely still prove difficult. But in some notable cases even lawmakers are starting to feel more comfortable supporting initiatives to help Wall Street institutions — especially now that regulatory relief for smaller institutions has passed Congress. Republican lawmakers in the House and Senate have both recently sent letters to the Fed asking it to reconsider the capital surcharge, a move backed by the industry. And just last week, seven Republican senators asked the Fed to consider further tailoring prudential standards for those above the $250 billion asset threshold as well as for those with assets between $100 billion and $250 billion.
The shift can also be seen in the fight over the Volcker Rule, a ban on proprietary trading that mostly affects the biggest institutions. As reported by The Wall Street Journal, representatives from more than half a dozen of the biggest banks have raised alarms about the Fed’s proposed revision to the rule, which they argue could make compliance even harder. The biggest banks have largely opposed the Volcker Rule since its creation under the Dodd-Frank Act.
As larger banks seek to re-enter the public debate, they’re bolstered by the support of two industry groups that have recently been revamped: The Financial Services Forum, which now represents eight major banks, is under new leadership, and the Bank Policy Institute, which speaks for large and regional institutions, is the byproduct of a merger between The Clearing House Association and the Financial Services Roundtable. The two groups recently collaborated on a joint blog post about the capital surcharge.
“There is a desire to have more of a voice in the conversation,” said Barbara Hagenbaugh, executive vice president and head of communications for the Financial Services Forum. “We think it is important and appropriate to address the issues of unique importance to our members and to convey the vital role they play in the economy.”
from Bloomberg News article:
A prime example: the push for the Federal Reserve to reconsider its capital surcharge for global systemically important banks, an additional capital requirement for the country’s eight largest banks.
While Fed officials have not indicated that they have any immediate plans to recalibrate the surcharge, the fight is one that solely affects the industry’s largest institutions — a constituency that has garnered little traction in policymaking circles in recent years.
It’s a sign, observers say, that the biggest banks are starting to reassert themselves, after absorbing much of the blame for the financial crisis a decade ago. While moving legislation through Congress is likely to remain an uphill battle given ongoing suspicion of Wall Street on both sides of the aisle, the banks are now raising the profile of key issues they would like President Trump’s regulators to tackle at the banking agencies.
“They’ve come out of the shadows,” said Camden Fine, president and chief executive of Calvert Advisors and the former head of the Independent Community Bankers of America. “They’re becoming more vocal, more aggressive, more strident about the issues that are top priorities to them.”
Legislation to benefit the biggest banks would likely still prove difficult. But in some notable cases even lawmakers are starting to feel more comfortable supporting initiatives to help Wall Street institutions — especially now that regulatory relief for smaller institutions has passed Congress. Republican lawmakers in the House and Senate have both recently sent letters to the Fed asking it to reconsider the capital surcharge, a move backed by the industry. And just last week, seven Republican senators asked the Fed to consider further tailoring prudential standards for those above the $250 billion asset threshold as well as for those with assets between $100 billion and $250 billion.
The shift can also be seen in the fight over the Volcker Rule, a ban on proprietary trading that mostly affects the biggest institutions. As reported by The Wall Street Journal, representatives from more than half a dozen of the biggest banks have raised alarms about the Fed’s proposed revision to the rule, which they argue could make compliance even harder. The biggest banks have largely opposed the Volcker Rule since its creation under the Dodd-Frank Act.
As larger banks seek to re-enter the public debate, they’re bolstered by the support of two industry groups that have recently been revamped: The Financial Services Forum, which now represents eight major banks, is under new leadership, and the Bank Policy Institute, which speaks for large and regional institutions, is the byproduct of a merger between The Clearing House Association and the Financial Services Roundtable. The two groups recently collaborated on a joint blog post about the capital surcharge.
“There is a desire to have more of a voice in the conversation,” said Barbara Hagenbaugh, executive vice president and head of communications for the Financial Services Forum. “We think it is important and appropriate to address the issues of unique importance to our members and to convey the vital role they play in the economy.”
Opinion from DMN:
You Can’t ‘Remaster’ a Brand-New Copyright, U.S. Court of Appeals Rules
August 21, 2018
Remastered oldies sound better. But they’re ultimately technical improvements that don’t constitute a brand-new copyright, the 9th Circuit Court of Appeals just ruled.The complexity of U.S. Copyright Law is now becoming outright absurd, especially as it relates to ‘pre-1972’ oldies recordings. For those just tuning in, federal copyright law in the United States only covers recorded works released after February 15th, 1972, with earlier works defaulting to a patchwork of state laws.
That, of course, has created a giant gray area for rights owners, as well as licensees. Unfortunately, those gray areas have translated into years of expensive litigation and confusion. And, some frankly absurd results.
A reversal of an earlier absurdity just happened in Pasadena, California, where the 9th Circuit Court of Appeals ruled that a remastered song doesn’t create a new copyright.
Why would a remastering create a brand-new copyright, you ask? Well, back in 2016, a lower court ruled that a remastering introduces substantially new elements into the recording, making it a brand-new work. That argument was cleverly posited by CBS Radio, which is fending off a lawsuit alleging that it should pay royalties for pre-1972 recordings.
The lawsuit was lodged by ABS Entertainment, which owns the recording copyrights of Al Green and other ‘oldies’ performers.
In a nutshell, CBS argued that it technically was never playing the old vinyl LPs of pre-1972 tracks. Instead, the station played digitally remastered CDs and digital files, which were released after 1972. Therefore, they should only be liable for post-1972 statutory rates under federal law, which are much lower.
The lower District Court agreed, opening up a number of strange possibilities. Read literally, the ruling meant that any recording copyright could theoretically be extended forever, as long as it was remixed before its expiration date. Other theoretical possibilities were equally hair-raising, though the 9th Circuit ruling has now slammed the door on a myriad of remastering loopholes.
Instead, the 9th Circuit has rejected the idea that a remaster is a substantially unique work deserving for new protections.“It should be evident that a remastered sound recording is not eligible for independent copyright protection as a derivative work unless its essential character and identity reflect a level of independent sound recording authorship that makes it a variation distinguishable from the underlying work,” 9th Circuit Court judge Richard Linn opined.
“That is so even if the digital version would be perceived by a listener to be a brighter or cleaner rendition.”
Accordingly, this case is now headed back to the lower District Court for reconsideration — and perhaps a more sane ruling.
The strange ruling is rooted in arcane U.S. Copyright Law, and this particular wrinkle isn’t quite getting fixed by the Music Modernization Act.Sadly, the Music Modernization Act (MMA) is threatening to further complicate oldies copyrights, in different ways. Under the CLASSICS sub-bill, pre-1972 oldies recordings would enjoy longer copyright terms and broader protections, but also be subject to a patchwork of state laws. That would give copyright owners the greatest level of protection and royalties, simply because states often carry stronger laws and payment requirements for pre-1972 works.
Perhaps predictably, CLASSICS has drawn a counter-proposal in the form of a competing bill. The ACCESS to Recordings Act, introduced by Oregon Democratic Senator Ron Wyden, would place pre-1972 recordings on the same copyright footing as every other recording, pre- or post-1972, a structure that would vastly simplify recording copyright in the US.
At this stage, it’s unclear if ACCESS will hamper the MMA’s chances of passage in the Senate (and ultimately into law).
Here’s the 9th Circuit Court Appeals ruling in ABS Entertainment Inc. v. CBS Corp. et al. [https://www.digitalmusicnews.com/wp-content/uploads/2011/07/9th_circuit_pre_1972_remaster.pdf]
See https://www.digitalmusicnews.com/2018/08/21/remaster-copyright-district-court-appeals/
You Can’t ‘Remaster’ a Brand-New Copyright, U.S. Court of Appeals Rules
August 21, 2018
Remastered oldies sound better. But they’re ultimately technical improvements that don’t constitute a brand-new copyright, the 9th Circuit Court of Appeals just ruled.The complexity of U.S. Copyright Law is now becoming outright absurd, especially as it relates to ‘pre-1972’ oldies recordings. For those just tuning in, federal copyright law in the United States only covers recorded works released after February 15th, 1972, with earlier works defaulting to a patchwork of state laws.
That, of course, has created a giant gray area for rights owners, as well as licensees. Unfortunately, those gray areas have translated into years of expensive litigation and confusion. And, some frankly absurd results.
A reversal of an earlier absurdity just happened in Pasadena, California, where the 9th Circuit Court of Appeals ruled that a remastered song doesn’t create a new copyright.
Why would a remastering create a brand-new copyright, you ask? Well, back in 2016, a lower court ruled that a remastering introduces substantially new elements into the recording, making it a brand-new work. That argument was cleverly posited by CBS Radio, which is fending off a lawsuit alleging that it should pay royalties for pre-1972 recordings.
The lawsuit was lodged by ABS Entertainment, which owns the recording copyrights of Al Green and other ‘oldies’ performers.
In a nutshell, CBS argued that it technically was never playing the old vinyl LPs of pre-1972 tracks. Instead, the station played digitally remastered CDs and digital files, which were released after 1972. Therefore, they should only be liable for post-1972 statutory rates under federal law, which are much lower.
The lower District Court agreed, opening up a number of strange possibilities. Read literally, the ruling meant that any recording copyright could theoretically be extended forever, as long as it was remixed before its expiration date. Other theoretical possibilities were equally hair-raising, though the 9th Circuit ruling has now slammed the door on a myriad of remastering loopholes.
Instead, the 9th Circuit has rejected the idea that a remaster is a substantially unique work deserving for new protections.“It should be evident that a remastered sound recording is not eligible for independent copyright protection as a derivative work unless its essential character and identity reflect a level of independent sound recording authorship that makes it a variation distinguishable from the underlying work,” 9th Circuit Court judge Richard Linn opined.
“That is so even if the digital version would be perceived by a listener to be a brighter or cleaner rendition.”
Accordingly, this case is now headed back to the lower District Court for reconsideration — and perhaps a more sane ruling.
The strange ruling is rooted in arcane U.S. Copyright Law, and this particular wrinkle isn’t quite getting fixed by the Music Modernization Act.Sadly, the Music Modernization Act (MMA) is threatening to further complicate oldies copyrights, in different ways. Under the CLASSICS sub-bill, pre-1972 oldies recordings would enjoy longer copyright terms and broader protections, but also be subject to a patchwork of state laws. That would give copyright owners the greatest level of protection and royalties, simply because states often carry stronger laws and payment requirements for pre-1972 works.
Perhaps predictably, CLASSICS has drawn a counter-proposal in the form of a competing bill. The ACCESS to Recordings Act, introduced by Oregon Democratic Senator Ron Wyden, would place pre-1972 recordings on the same copyright footing as every other recording, pre- or post-1972, a structure that would vastly simplify recording copyright in the US.
At this stage, it’s unclear if ACCESS will hamper the MMA’s chances of passage in the Senate (and ultimately into law).
Here’s the 9th Circuit Court Appeals ruling in ABS Entertainment Inc. v. CBS Corp. et al. [https://www.digitalmusicnews.com/wp-content/uploads/2011/07/9th_circuit_pre_1972_remaster.pdf]
See https://www.digitalmusicnews.com/2018/08/21/remaster-copyright-district-court-appeals/
Court decides: Constitution does not require State to require access to minimum level of education by which the child can attain literacy
The decision is here:http://mediad.publicbroadcasting.net/p/michigan/files/opinion_-_gary_b_vs_richard_snyder__16-13292.pdf [UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION ]
Language from the opinion:
The conditions and outcomes of Plaintiffs' schools, as alleged, are nothing short of devastating. When a child who could be taught to read goes untaught, the child suffers a lasting injury—and so does society. But the Court is faced with a discrete question: does the Due Process Clause demand that a State affirmatively provide each child with a minimum level of education by which the child can attain literacy? Based on the foregoing analysis, the answer to the question is no.
The decision is here:http://mediad.publicbroadcasting.net/p/michigan/files/opinion_-_gary_b_vs_richard_snyder__16-13292.pdf [UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION ]
Language from the opinion:
The conditions and outcomes of Plaintiffs' schools, as alleged, are nothing short of devastating. When a child who could be taught to read goes untaught, the child suffers a lasting injury—and so does society. But the Court is faced with a discrete question: does the Due Process Clause demand that a State affirmatively provide each child with a minimum level of education by which the child can attain literacy? Based on the foregoing analysis, the answer to the question is no.
The Trump Administration's National Park Service proposes fees for free speech demonstrations on federal land
A DCist article explains that NPS released a list of 14 proposed rule changes to the permitting process. One of the new rules under consideration is a requirement for permit applicants to pay fees for free speech demonstrations, to help NPS recover some of the costs of managing the events and providing security. NPS already requires people to pay for special event permits.
“The federal government and taxpayers shouldn’t be required to underwrite the cost of somebody’s special event, whether it’s a concert, wedding, or gathering of some sort,” said NPS spokesman Mike Litterst. “We’re just asking the question,” he said of the proposal to apply the same reasoning to demonstrations. He said there has been no discussion yet of what the fees would be.
The Park Service said the “volume and complexity” of permit requests for the National Mall and White House have increased over the years. NPS issues around 750 permits for First Amendment demonstrations and an additional 1,500 permits for special events in and around D.C. each year.
The NPS proposal URL is https://www.nps.gov/nama/learn/news/upload/TPM-Proposed-Rule-Regs-Draft-08-06-18.pdf
One proposal is: "Consider requiring permit applicants to pay fees to allow the NPS to recover some of the costs of administering permitted activities that contain protected speech."
A DCist article explains that NPS released a list of 14 proposed rule changes to the permitting process. One of the new rules under consideration is a requirement for permit applicants to pay fees for free speech demonstrations, to help NPS recover some of the costs of managing the events and providing security. NPS already requires people to pay for special event permits.
“The federal government and taxpayers shouldn’t be required to underwrite the cost of somebody’s special event, whether it’s a concert, wedding, or gathering of some sort,” said NPS spokesman Mike Litterst. “We’re just asking the question,” he said of the proposal to apply the same reasoning to demonstrations. He said there has been no discussion yet of what the fees would be.
The Park Service said the “volume and complexity” of permit requests for the National Mall and White House have increased over the years. NPS issues around 750 permits for First Amendment demonstrations and an additional 1,500 permits for special events in and around D.C. each year.
The NPS proposal URL is https://www.nps.gov/nama/learn/news/upload/TPM-Proposed-Rule-Regs-Draft-08-06-18.pdf
One proposal is: "Consider requiring permit applicants to pay fees to allow the NPS to recover some of the costs of administering permitted activities that contain protected speech."
Ninth Circuit Says Remastered Songs Not Original in Win for Pre-1972 Artists
Even if engineers make the sound brighter or cleaner, they do not alter the expressive character and identity of the original recording. The decision wipes away a creative defense mounted by broadcasting companies.
https://www.law.com/therecorder/2018/08/20/ninth-circuit-says-remastered-songs-not-original-in-win-for-pre-1972-artists/?kw=Ninth%20Circuit%20Says%20Remastered%20Songs%20Not%20Original%20in%20Win%20for%20Pre-1972%20Artists
Even if engineers make the sound brighter or cleaner, they do not alter the expressive character and identity of the original recording. The decision wipes away a creative defense mounted by broadcasting companies.
https://www.law.com/therecorder/2018/08/20/ninth-circuit-says-remastered-songs-not-original-in-win-for-pre-1972-artists/?kw=Ninth%20Circuit%20Says%20Remastered%20Songs%20Not%20Original%20in%20Win%20for%20Pre-1972%20Artists
Who knew? There is a theme song for those who don't like competition: The Too Much Competition Blues
https://www.youtube.com/watch?v=VR717pSC5Kc
https://www.youtube.com/watch?v=VR717pSC5Kc
Grunes and Stucke on terminating ASCAP and BMI decrees
In their article at https://www.competitionpolicyinternational.com/potential-legal-issues-in-terminating-the-ascap-and-bmi-decrees/?utm_source=CPI+Subscribers&utm_campaign=afe405147d-EMAIL_CAMPAIGN_2018_08_17_03_46&utm_medium=email&utm_term=0_0ea61134a5-afe405147d-236508653
Grunes and Stucke point out, among other things, that the decrees have played an important role in mitigating the antitrust risks from ASCAP and BMI while promoting the efficiencies from collective licensing; and that it is a problem that if the ASCAP and BMI consent decrees were terminated, the duopoly would remain, and licensees and consumers would bear the risk of unduly restrictive anticompetitive practices.
A related problem pointed out by the authors is the difficulty the DOJ would likely face in convincing the court that terminating the decrees would benefit the public, given that it reached the opposite conclusion a couple of years ago. Moreover, the concerns the DOJ heard during its review process from licensees, such as Netflix, Pandora, and religious broadcasters, would undercut the argument that the public would somehow benefit from the decrees’ termination.
In their article at https://www.competitionpolicyinternational.com/potential-legal-issues-in-terminating-the-ascap-and-bmi-decrees/?utm_source=CPI+Subscribers&utm_campaign=afe405147d-EMAIL_CAMPAIGN_2018_08_17_03_46&utm_medium=email&utm_term=0_0ea61134a5-afe405147d-236508653
Grunes and Stucke point out, among other things, that the decrees have played an important role in mitigating the antitrust risks from ASCAP and BMI while promoting the efficiencies from collective licensing; and that it is a problem that if the ASCAP and BMI consent decrees were terminated, the duopoly would remain, and licensees and consumers would bear the risk of unduly restrictive anticompetitive practices.
A related problem pointed out by the authors is the difficulty the DOJ would likely face in convincing the court that terminating the decrees would benefit the public, given that it reached the opposite conclusion a couple of years ago. Moreover, the concerns the DOJ heard during its review process from licensees, such as Netflix, Pandora, and religious broadcasters, would undercut the argument that the public would somehow benefit from the decrees’ termination.
NYT: NY State's ethical horrors
A NYT editorial on an AG candidate mentions in passing that "Albany has long been a chamber of ethical horrors." It then provides the following litany:
n March, Gov. Andrew Cuomo’s former senior aide Joseph Percoco was convicted on corruption charges.
In May, former Assembly Speaker Sheldon Silver, a Democrat, was also convicted of corruption.
In July, the former Republican Senate majority leader, Dean Skelos, was convicted of bribery, extortion and conspiracy. Prosecutors said he used his office to pressure businesses to pay his son $300,000 for no-show jobs.
The same month, Alain Kaloyeros, a key figure behind Mr. Cuomo’s “Buffalo Billion” economic initiative, was convicted in a bid-rigging scheme.
And: Not to be forgotten are the allegations against former Attorney General Eric Schneiderman, who resigned in disgrace earlier this year after women who dated him accused him of choking them and beating them up.
See https://www.nytimes.com/2018/08/19/opinion/zephyr-teachout-new-york-attorney-general.html?action=click&pgtype=Homepage&clickSource=story-heading&module=opinion-c-col-left-region®ion=opinion-c-col-left-region&WT.nav=opinion-c-col-left-region
A NYT editorial on an AG candidate mentions in passing that "Albany has long been a chamber of ethical horrors." It then provides the following litany:
n March, Gov. Andrew Cuomo’s former senior aide Joseph Percoco was convicted on corruption charges.
In May, former Assembly Speaker Sheldon Silver, a Democrat, was also convicted of corruption.
In July, the former Republican Senate majority leader, Dean Skelos, was convicted of bribery, extortion and conspiracy. Prosecutors said he used his office to pressure businesses to pay his son $300,000 for no-show jobs.
The same month, Alain Kaloyeros, a key figure behind Mr. Cuomo’s “Buffalo Billion” economic initiative, was convicted in a bid-rigging scheme.
And: Not to be forgotten are the allegations against former Attorney General Eric Schneiderman, who resigned in disgrace earlier this year after women who dated him accused him of choking them and beating them up.
See https://www.nytimes.com/2018/08/19/opinion/zephyr-teachout-new-york-attorney-general.html?action=click&pgtype=Homepage&clickSource=story-heading&module=opinion-c-col-left-region®ion=opinion-c-col-left-region&WT.nav=opinion-c-col-left-region
NYT: To fight shoplifting, some big retail companies are employing aggressive legal tactics — sometimes against people who didn’t do anything wrong.
But those strategies disproportionately harm low-income shoppers, who say they’re unmatched in the legal fight against the world’s largest retailers.
See NYT at https:// www.nytimes.com/2018/08/17/business/falsely-accused-of-shoplifting-but-retailers-demand-they-pay.html?WT.nav=top-news&action=click&=&=&=&=&=&=&clickSource=story-heading&emc=edit_ne_20180817&hp=&module=second-column-region&nl=evening-briefing&nlid=67075843ng-briefing&pgtype=Homepage®ion=top-news&te=1
But those strategies disproportionately harm low-income shoppers, who say they’re unmatched in the legal fight against the world’s largest retailers.
See NYT at https:// www.nytimes.com/2018/08/17/business/falsely-accused-of-shoplifting-but-retailers-demand-they-pay.html?WT.nav=top-news&action=click&=&=&=&=&=&=&clickSource=story-heading&emc=edit_ne_20180817&hp=&module=second-column-region&nl=evening-briefing&nlid=67075843ng-briefing&pgtype=Homepage®ion=top-news&te=1
Does Airbnb suppress some bad reviews by renters? Some customers complain that their negative reviews are suppressed and never appear publicly.
An acquaintance says she recently complained to Airbnb about a rental that was misdescribed as to condition, size, and convenience. She received a partial refund, but her critical review was never published. The property listing shows only the positive reviews my acquaintance relied on when booking.
The Airbnb website says “To promote trust and transparency in our community, we won't delete reviews unless they violate our content policy.”
That may be true, but some on-line bloggers have a different impression.
One wrote:
“I recently concluded my second stay in two months, and for the second time, my review has not appeared on my host's page, nor have I received any feedback.”
Another wrote:
“Same thing here. Only can see my review in My reviews column but it is not publish on the host page and can't even contact the Airbnb helpline or their email.”
Yet another:
“I have the same problem and cant contact Airbnb! One of my reviews for a host does not appear on their page ( it was there for only 2 days) it was not a bad review at all, quite the contrery. However, i did deduct stars due to bad communication on the day of check in and problems accessing their property (Our host did not communicate with us and did not reply to our message the day before or on the day of check in and we couldn't get into her house. even so, I did not make this public but only told her in the private feedback) . I have noticed that this host has full stars and my review is now not on her page, which makes me feel that hosts can manipulate their ratings. Im trying to get answers to this as it makes me very weary to trust airbnb reviews in the future.”
Yet another:
“I am wondering the same thing. Are negative reviews not published? I didn't post any feelings in my review, only facts. Therefore I believe it's important for others to know how terrible this host was. Despite me calling AirBandB for help with the matter, nothing was resolved. And now, the only recourse I have is to review the place and it won't publish.”
DAR comment: I can’t vouch for any of these complaints, except for the first cited above. What is your experience? It does seem that it is misleading if a property has negative reviews that are not disclosed to prospective renters.
Posted by Don Allen Resnikoff
An acquaintance says she recently complained to Airbnb about a rental that was misdescribed as to condition, size, and convenience. She received a partial refund, but her critical review was never published. The property listing shows only the positive reviews my acquaintance relied on when booking.
The Airbnb website says “To promote trust and transparency in our community, we won't delete reviews unless they violate our content policy.”
That may be true, but some on-line bloggers have a different impression.
One wrote:
“I recently concluded my second stay in two months, and for the second time, my review has not appeared on my host's page, nor have I received any feedback.”
Another wrote:
“Same thing here. Only can see my review in My reviews column but it is not publish on the host page and can't even contact the Airbnb helpline or their email.”
Yet another:
“I have the same problem and cant contact Airbnb! One of my reviews for a host does not appear on their page ( it was there for only 2 days) it was not a bad review at all, quite the contrery. However, i did deduct stars due to bad communication on the day of check in and problems accessing their property (Our host did not communicate with us and did not reply to our message the day before or on the day of check in and we couldn't get into her house. even so, I did not make this public but only told her in the private feedback) . I have noticed that this host has full stars and my review is now not on her page, which makes me feel that hosts can manipulate their ratings. Im trying to get answers to this as it makes me very weary to trust airbnb reviews in the future.”
Yet another:
“I am wondering the same thing. Are negative reviews not published? I didn't post any feelings in my review, only facts. Therefore I believe it's important for others to know how terrible this host was. Despite me calling AirBandB for help with the matter, nothing was resolved. And now, the only recourse I have is to review the place and it won't publish.”
DAR comment: I can’t vouch for any of these complaints, except for the first cited above. What is your experience? It does seem that it is misleading if a property has negative reviews that are not disclosed to prospective renters.
Posted by Don Allen Resnikoff
A lesson to politicians everywhere: Italy’s governing right wing party wrote off safety fears about the motorway bridge that collapsed in Genoa as a children’s “fairy story”
The "fairy tale" jibe at the regional president and other officials was on the party’s website, but is now deleted
The Five Star Movement (M5S), which has been leading the country’s government since earlier this year, has made political capital out of opposing major construction and infrastructure projects, which often draw opposition in Italy because they can be disruptive to local residents.
In 2013 a statement on the party’s website described warnings of “the imminent collapse of the Morandi Bridge” as a “favoletta”, an Italian word meaning a children’s fantasy tale or fairy story. The bridge collapsed on Tuesday killing at least 39 people and severing the country’s A10 motorway.
The statement has since been deleted from the party’s website, but a cached version is still visible online. It was drawn up in opposition to the “Gronda di Genova”, a major infrastructure project to improve the motorways in the city region that included work on the now collapsed bridge.
Some architects and engineers had warned that the bridge, built by Italian civil engineer Riccardo Morandi in the 1960s, suffered from fatal design flaws; reinforcement work was carried out on it in 2016 in an attempt to shore it up. A complete rebuild was not carried out to avoid disruption, however.
The statement on the M5S website accuses the regional president who backed the reinforcement work of not having read a public inquiry report into the state of the bridge, and says the party “asks ourselves what credibility those who support the great works can still have”.
Other infrastructure projects opposed by the M5S include a new high-speed rail line from Turin to the south France, which was also the subject of protests and which has been put under review by the incoming transport ministry and similarly described as a waste of money.
Improvements to the bridge were also included by the M5S on a list of infrastructure projects which could be scrapped subject to a review of the costs and benefits.
Bridges designed by the late civil engineer Mr Morandi tend to be unusual because the planner used reinforced concrete instead of steel cables for the stays of the bridge, and used relatively few cables compared to most other designs.
The story is from https://www.independent.co.uk/news/world/europe/genoa-bridge-collapse-safety-issues-italy-government-five-star-movement-league-populists-a8492201.html
The "fairy tale" jibe at the regional president and other officials was on the party’s website, but is now deleted
The Five Star Movement (M5S), which has been leading the country’s government since earlier this year, has made political capital out of opposing major construction and infrastructure projects, which often draw opposition in Italy because they can be disruptive to local residents.
In 2013 a statement on the party’s website described warnings of “the imminent collapse of the Morandi Bridge” as a “favoletta”, an Italian word meaning a children’s fantasy tale or fairy story. The bridge collapsed on Tuesday killing at least 39 people and severing the country’s A10 motorway.
The statement has since been deleted from the party’s website, but a cached version is still visible online. It was drawn up in opposition to the “Gronda di Genova”, a major infrastructure project to improve the motorways in the city region that included work on the now collapsed bridge.
Some architects and engineers had warned that the bridge, built by Italian civil engineer Riccardo Morandi in the 1960s, suffered from fatal design flaws; reinforcement work was carried out on it in 2016 in an attempt to shore it up. A complete rebuild was not carried out to avoid disruption, however.
The statement on the M5S website accuses the regional president who backed the reinforcement work of not having read a public inquiry report into the state of the bridge, and says the party “asks ourselves what credibility those who support the great works can still have”.
Other infrastructure projects opposed by the M5S include a new high-speed rail line from Turin to the south France, which was also the subject of protests and which has been put under review by the incoming transport ministry and similarly described as a waste of money.
Improvements to the bridge were also included by the M5S on a list of infrastructure projects which could be scrapped subject to a review of the costs and benefits.
Bridges designed by the late civil engineer Mr Morandi tend to be unusual because the planner used reinforced concrete instead of steel cables for the stays of the bridge, and used relatively few cables compared to most other designs.
The story is from https://www.independent.co.uk/news/world/europe/genoa-bridge-collapse-safety-issues-italy-government-five-star-movement-league-populists-a8492201.html
Twitter CEO Jack Dorsey interviewed about Alex Jones "time out" decision
Dors
D Dorsey addresses the company’s decision to give Alex Jones, the controversial conspiracy theorist and radio host, a “timeout,” removing his ability to tweet for seven days. conspiracy theorist and radio host, a “timeout,” removing his ability to tweet for seven days. to tweet for seven days.
https://www.nbcnews.com/nightly-news/video/exclusive-twitter-ceo-jack-dorsey-addresses-alex-jones-timeout-decision-1299834435689
Dors
D Dorsey addresses the company’s decision to give Alex Jones, the controversial conspiracy theorist and radio host, a “timeout,” removing his ability to tweet for seven days. conspiracy theorist and radio host, a “timeout,” removing his ability to tweet for seven days. to tweet for seven days.
https://www.nbcnews.com/nightly-news/video/exclusive-twitter-ceo-jack-dorsey-addresses-alex-jones-timeout-decision-1299834435689
ConAgra seeks US Supreme Court cert of lead-paint judgment it says is "retroactively imposing massive liability based on a defendant’s nearly century-old promotion of its then-lawful products without requiring proof of reliance thereon or injury therefrom. . . ."
The cert petition is here: http://www.leadlawsuits.com/wp-content/uploads/2018/07/ConAgra-cert-petition.pdf
The cert petition statement of questions presented:
Petitioners (or their predecessors) are two of the dozens of companies that promoted lead pigments for use in house paints from the late-nineteenth to midtwentieth centuries, when interior residential use of lead paint was both lawful and widespread. Now, decades later, the decision below has deemed those lawful activities a “public nuisance,” and has ordered petitioners to pay hundreds of millions of dollars to remedy the continued existence of lead paint inside residences constructed before 1951 in ten of the most populous counties in California.
This massive judgment was not imposed because petitioners’ paint was traced to any such residence. Instead, the linchpin for imposing this massive liability was petitioners’ speech, not their paint. Yet plaintiffs were expressly relieved of any need to demonstrate that anyone relied on the speech for which petitioners were held liable. In fact, plaintiffs stipulated that they had no proof of reliance, and the trial court expressly held that no such proof was required. Instead, under the legal ruling below, it was enough that petitioners (or their predecessors) promoted lead paint for interior residential use during the first half of the twentieth century. In short, petitioners were ordered to pay hundreds of millions of dollars to remediate a decades-old problem that plaintiffs were not required to trace to either petitioners’ paint or their speech.
The questions presented are:
1. Whether imposing massive and retroactive “public nuisance” liability without requiring proof that the defendant’s nearly century-old conduct caused any ii individual plaintiff any injury violates the Due Process Clause.
2. Whether retroactively imposing massive liability based on a defendant’s nearly century-old promotion of its then-lawful products without requiring proof of reliance thereon or injury therefrom violates the First Amendment.
Santa Clara county provides its summary of the case history in April, at https://www.sccgov.org/sites/cco/leadpaint/Documents/Fact%20Sheet%20Re%20Lawsuit.pdf
The Santa Clara summary follows:
In 2000, the County of Santa Clara filed this landmark case to hold former lead paint manufacturers responsible for promoting lead paint for use in homes despite their knowledge that the product was highly toxic. Young children are especially vulnerable to lead poisoning, and lead paint is the predominance source of lead poisoning. There is no known level of exposure to lead that is considered safe, and the effects of lead poisoning are irreversible. Lower level exposure can result in reduced IQ and attention, and high level exposure can result in coma, convulsions and death.
Nine other California cities and counties joined the lawsuit, with the County of Santa Clara taking the lead role in prosecuting the case on behalf of the People of the State of California. The other cities and counties involved are the City and County of San Francisco, the Cities of Oakland and San Diego, and the Counties of Alameda, Los Angeles, Monterey, San Mateo, Solano, and Ventura.
In 2014, the Santa Clara County Superior Court
The cert petition is here: http://www.leadlawsuits.com/wp-content/uploads/2018/07/ConAgra-cert-petition.pdf
The cert petition statement of questions presented:
Petitioners (or their predecessors) are two of the dozens of companies that promoted lead pigments for use in house paints from the late-nineteenth to midtwentieth centuries, when interior residential use of lead paint was both lawful and widespread. Now, decades later, the decision below has deemed those lawful activities a “public nuisance,” and has ordered petitioners to pay hundreds of millions of dollars to remedy the continued existence of lead paint inside residences constructed before 1951 in ten of the most populous counties in California.
This massive judgment was not imposed because petitioners’ paint was traced to any such residence. Instead, the linchpin for imposing this massive liability was petitioners’ speech, not their paint. Yet plaintiffs were expressly relieved of any need to demonstrate that anyone relied on the speech for which petitioners were held liable. In fact, plaintiffs stipulated that they had no proof of reliance, and the trial court expressly held that no such proof was required. Instead, under the legal ruling below, it was enough that petitioners (or their predecessors) promoted lead paint for interior residential use during the first half of the twentieth century. In short, petitioners were ordered to pay hundreds of millions of dollars to remediate a decades-old problem that plaintiffs were not required to trace to either petitioners’ paint or their speech.
The questions presented are:
1. Whether imposing massive and retroactive “public nuisance” liability without requiring proof that the defendant’s nearly century-old conduct caused any ii individual plaintiff any injury violates the Due Process Clause.
2. Whether retroactively imposing massive liability based on a defendant’s nearly century-old promotion of its then-lawful products without requiring proof of reliance thereon or injury therefrom violates the First Amendment.
Santa Clara county provides its summary of the case history in April, at https://www.sccgov.org/sites/cco/leadpaint/Documents/Fact%20Sheet%20Re%20Lawsuit.pdf
The Santa Clara summary follows:
In 2000, the County of Santa Clara filed this landmark case to hold former lead paint manufacturers responsible for promoting lead paint for use in homes despite their knowledge that the product was highly toxic. Young children are especially vulnerable to lead poisoning, and lead paint is the predominance source of lead poisoning. There is no known level of exposure to lead that is considered safe, and the effects of lead poisoning are irreversible. Lower level exposure can result in reduced IQ and attention, and high level exposure can result in coma, convulsions and death.
Nine other California cities and counties joined the lawsuit, with the County of Santa Clara taking the lead role in prosecuting the case on behalf of the People of the State of California. The other cities and counties involved are the City and County of San Francisco, the Cities of Oakland and San Diego, and the Counties of Alameda, Los Angeles, Monterey, San Mateo, Solano, and Ventura.
In 2014, the Santa Clara County Superior Court