Taking Off: How the FAA Reauthorization Bill Could Keep Commercial Flights Grounded

March 31, 2023
Industry, Public Safety, Regulatory, Transportation

James Challou, MJLST Staffer

The last year has been one that the airline industry is eager to forget. Not only did a record number of flight delays and cancellations occur, but the Federal Aviation Administration (FAA) suffered an extremely rare complete system outage and Southwest dealt with a holiday travel meltdown. These incidents, coupled with recent near collisions on runways, have drawn increased scrutiny from lawmakers in Congress as this year they face a September 30threauthorization deadline for the Federal Aviation Administration Reauthorization Act. And while the Federal Aviation Act is a hotly debated topic, lawmakers and industry professionals all agree that a failure to meet the reauthorization deadline could spell disaster.

The need for reauthorization arises from the structure and funding system of the FAA. Reauthorization is a partial misnomer. Though the airline industry was deregulated in 1978, the practice of FAA reauthorization originated with the Airport and Airway Revenue Act of 1970 which created the Airport and Airway Trust Fund (Trust Fund) that is used to finance FAA investments. The authority to collect taxes and to spend from the Trust Fund must be periodically reauthorized to meet agency and consumer needs. Currently, the Trust Fund provides funds for four major FAA accounts: Operations, Facilities & Equipment (F&E), Research, Engineering and Development (RE&D), and Grants-in-Aid for Airports. If the FAA’s authorization expired without an extension, then the agency would be unable to spend revenues allocated from the Trust Fund. The flip side of the unique reauthorization process is that it offers a regular opportunity for Congress to hold the FAA accountable for unfulfilled mandates, to respond to new problems in air travel, and to advocate for stronger consumer protections because enacted changes in reauthorization acts only span a set time period.

On top of the recent spate of industry complications and near disasters, Congress must sift through a myriad of other concerns and issues that pervade the airline industry for the potential upcoming reauthorization. Consumer protection has become an increasingly pressing and hot-button issue as the deluge of canceled flights in the past year left many consumers disgruntled by the treatment and compensation they received. In fact, the Consumer Federation of America and several other consumer and passengers’ right groups recently called upon the House Transportation Committee and the Senate Commerce Committee to prioritize consumer protections. Their requests include requiring compensation when consumers’ flights are delayed and canceled, holding airlines accountable for publishing unrealistic flight schedules, ending junk fee practices in air travel, including prohibiting fees for family seating and for other such services, and requiring all-in pricing, ending federal preemption of airline regulation and allowing state attorneys general and individuals to hold airlines accountable, encouraging stronger DOT enforcement of passenger protections, and prioritizing consumer voices and experiences.

However, not all are sold on enhancing consumer protections via the reauthorization process. Senator Ted Cruz, the top Republican lawmaker on the Commerce, Science, and Transportation Committee has expressed opposition to increased agency and government intervention in the airline industry, citing free market and regulatory overreach concerns. Instead, Cruz and his allies have suggested that the FAA’s technology is outdated, and their sole focus should be on modernizing it.

Indeed, it appears that in the wake of the FAA system outage most interested parties and lawmakers agree that the aging FAA technology needs updating. While at first glance one might think this provides common ground, the opinions on how to update the FAA’s technology are wide-ranging. For example, while some have flagged IT infrastructure and aviation safety systems as the FAA technology to target in order to augment the FAA’s cybersecurity capacity, others are more concerned with providing the agency direction on the status of new airspace inhabitants such as drones and air taxis to facilitate entrants into the market. Even despite cross-party assent that the FAA’s technology necessitates some level of baseline update, a lack of direction for what this means in practice remains.

Another urgent and seemingly undisputed issue that the reauthorization effort faces is FAA staffing. The FAA’s workforce has severely diminished in the past decade. Air traffic controllers, for example, number 1,000 fewer than a decade ago, and more than 10% are eligible to retire. Moreover, a shortage of technical operations employees has grown so severe that union officials have dubbed it to be approaching crisis levels. Resultingly, most lawmakers agree that expanding the FAA’s workforce is paramount.

However, despite the dearth of air traffic controllers and technical operations employees, this proposition has encountered roadblocks as well. Some lawmakers view this as a solution to increase diversity within the ranks of the FAAand offer solutions revolving around this. Currently, only 2.6% of aviation mechanics are women and 94% of aircraft pilots male and 93% of them White. Lawmakers have made several proposals intended to rectify this disparity centering around reducing the cost of entry into FAA professions. However, Republicans have largely refuted such efforts and criticized such efforts as distractions from the chief concern of safety. Additionally, worker groups continue to air concerns about displacing qualified U.S. pilot candidates and undercutting current pilot pay. Any such modifications to the FAA reauthorization bill will require bipartisan support.

Finally, a lingering battle between Democrats and Republicans regarding the confirmation of President Biden’s nominated commissioner have hampered efforts to forge a bipartisan reauthorization bill. Cruz, again spearheading the Republican contingent, has decried Biden’s nominee for possessing no aviation experience and being overly partisan. Proponents, however, have pointed out that only two of the last five commissioners have had any aviation experience and lauded the nominee’s credentials and experience in the military. The surprisingly acrid fight bodes ominously for a reauthorization bill that will have to be bipartisan and is subject to serious time constraints.

The FAA reauthorization process provides valuable insight into how Congress decides agency directives. However, while safety and technology concerns remain the joint focal point of Congress’ intent for the reauthorization bill, in practice there seems to be little common ground between lawmakers. With a September 13th deadline looming, it is increasingly important that lawmakers cooperate to collectively hammer out a reauthorization bill. Failure to do so would severely cripple the FAA and the airline industry in general.

The Future of Neurotechnology: Brain Healing or Brain Hacking?

March 31, 2023
Data Privacy, Human Rights Law, Neuroscience

Gordon Unzen, MJLST Staffer

Brain control and mindreading are no longer ideas confined to the realm of science fiction—such possibilities are now the focus of science in the field of neurotechnology. At the forefront of the neurotechnology revolution is Neuralink, a medical device company owned by Elon Musk. Musk envisions that his device will allow communication with a computer via the brain, restore mobility to the paralyzed and sight to the blind, create mechanisms by which memories can be saved and replayed, give rise to abilities like telepathy, and even transform humans into cyborgs to combat sentient artificial intelligence (AI) machines.[1]

Both theoretical and current applications of brain-interfacing devices, however, raise concerns about infringements upon privacy and freedom of thought, with the technology providing intimate information ripe for exploitation by governments and private companies.[2] Now is the time to consider how to address the ethical issues raised by neurotechnology so that people may responsibly enjoy its benefits.

What is Neurotechnology?

Neurotechnology describes the use of technology to understand the brain and its processes, with goals to control, repair, or improve brain functioning.[3] Neurotechnology research uses techniques that record brain activity such as functional magnetic resonance imaging (fMRI), and that stimulate the brain such as transcranial electrical stimulation (tES).[4] Both research practices and neurotechnological devices can be categorized as invasive, wherein electrodes are surgically implanted in the brain, or non-invasive, which do not require surgery.[5] Neurotechnology research is still in its infancy but development rates will likely continue accelerating with the use of increasingly advanced AI to help make sense of the data.[6]

Work in neurotechnology has already led to the proliferation of applications impacting fields from medicine to policing. Bioresorbable electronic medication speeds up nerve regeneration, deep brain stimulators function as brain pacemakers targeting symptoms of diseases like Parkinson’s, and neurofeedback visualizes brain activity for the real-time treatment of mental illnesses like depression.[7] Recently, a neurotechnological device that stimulates the spinal cord allowed a stroke patient to regain control of her arm.[8]  Electroencephalogram (EEG) headsets are used by gamers as a video game controller and by transportation services to track when a truck driver is losing focus.[9] In China, the government uses caps to scan employees’ brainwaves for signs of anxiety, rage, or fatigue.[10] “Brain-fingerprinting” technology, which analyzes whether a subject recognizes a given stimulus, has been used by India’s police since 2003 to ‘interrogate’ a suspect’s brain, although there are questions regarding the scientific validity of the practice.[11]

Current research enterprises in neurotechnology aim to push the possibilities much further. Mark Zuckerberg’s Meta financed invasive neurotechnology research using an algorithm that decoded subject’s answers to simple questions from brain activity with a 61% accuracy.[12] The long-term goal is to allow everyone to control their digital devices through thought alone.[13] Musk similarly aims to begin human trials for Neuralink devices designed to help paralyzed individuals communicate without the need for typing, and he hopes this work will eventually allow Neuralink to fully restore their mobility.[14] However, Musk has hit a roadblock in failing to acquire FDA approval for human-testing, despite claiming that Neuralink devices are safe enough that he would consider using them on his children.[15] Others expect that neurofeedback will eventually see mainstream deployment through devices akin to a fitness tracker, allowing people to constantly monitor their brain health metrics.[16]

Ethical Concerns and Neurorights

Despite the possible medical and societal benefits of neurotechnology, it would be dangerous to ignore the ethical red flags raised by devices that can observe and impose on brain functioning. In a world of increasing surveillance, the last bastion of privacy and freedom exists in the brain. This sanctuary is lost when even the brain is subject to data collection practices. Neurotechnology may expose people to dystopian thought policing and hijacking, but more subtly, could lead to widespread adverse psychological consequences as people live in constant fear of their thoughts being made public.[17]

Particularly worrisome is how current government and business practices inform the likely near-future use of data collected by neurotechnology. In law enforcement contexts such as interrogations, neurotechnology could allow the government to cause people to self-incriminate in violation of the Fifth Amendment. Private companies that collect brain data may be required to turn it over to governments, analogous to the use of Fitbit data as evidence in court.[18] If the data do not go to the government, companies may instead sell them to advertisers.[19] Even positive implementations can be taken too far. EEG headsets that allow companies to track the brain activity of transportation employees may be socially desirable, but the widespread monitoring of all employees for productivity is a plausible and sinister next step.

In light of these concerns, ethicist and lawyer Nita Farahany argues for updating human rights law to protect cognitive privacy and liberty.[20] Farahany describes a right of self-determination regarding neurotechnology to secure freedom from interference, to access the technology if desired, and to change one’s own brain by choice.[21] This libertarian perspective acknowledges the benefits of neurotechnology for which many may be willing to sacrifice privacy, while also ensuring that people have an opportunity to say no its imposition. Others take a more paternalistic approach, questioning whether further regulation is needed to limit possible neurotechnology applications. Sigal Samuel notes that cognitive-enhancing tools may create competition that requires people to either use the technology or get left behind.[22] Decisions to engage with neurotechnology thus will not be made with the freedom Farahany imagines.

Conclusion

Neurotechnology holds great promise for augmenting the human experience. The technology will likely play an increasingly significant role in treating physical disabilities and mental illnesses. In the near future, we will see the continued integration of thought as a method to control technology. We may also gain access to devices offering new cognitive abilities from better memory to telepathy. However, using this technology will require people to give up extremely private information about their brain functions to governments and companies. Regulation, whether it takes the form of a revamped notion of human rights or paternalistic lawmaking limiting the technology, is required to navigate the ethical issues raised by neurotechnology. Now is the time to act to protect privacy and liberty.

[1] Rachel Levy & Marisa Taylor, U.S. Regulators Rejected Elon Musk’s Bid to Test Brain Chips in Humans, Citing Safety Risks, Reuters (Mar. 2, 2023), https://www.reuters.com/investigates/special-report/neuralink-musk-fda/.

[2] Sigal Samuel, Your Brain May Not be Private Much Longer, Vox (Mar. 17, 2023), https://www.vox.com/future-perfect/2023/3/17/23638325/neurotechnology-ethics-neurofeedback-brain-stimulation-nita-farahany.

[3] Neurotechnology, How to Reveal the Secrets of the Human Brain?, Iberdrola,https://www.iberdrola.com/innovation/neurotechnology#:~:text=Neurotechnology%20uses%20different%20techniques%20to,implantation%20of%20electrodes%20through%20surgery(last accessed Mar. 19, 2023).

[4] Id.

[5] Id.

[6] Margaretta Colangelo, how AI is Advancing NeuroTech, Forbes (Feb. 12, 2020), https://www.forbes.com/sites/cognitiveworld/2020/02/12/how-ai-is-advancing-neurotech/?sh=277472010ab5.

[7] Advances in Neurotechnology Poised to Impact Life and Health Insurance, RGA (July 19, 2022), https://www.rgare.com/knowledge-center/media/research/advances-in-neurotechnology-poised-to-impact-life-and-health-insurance.

[8] Stroke Patient Regains Arm Control After Nine Years Using New Neurotechnology, WioNews (Feb. 22, 2023), https://www.wionews.com/trending/stroke-patients-can-regain-arm-control-using-new-neurotechnology-says-research-564285.

[9] Camilla Cavendish, Humanity is Sleepwalking into a Neurotech Disaster, Financial Times (Mar. 3, 2023), https://www.ft.com/content/e30d7c75-90a3-4980-ac71-61520504753b.

[10] Samuel, supra note 2.

[11] Id.

[12] Sigal Samuel, Facebook is Building Tech to Read your Mind. The Ethical Implications are Staggering, Vox (Aug. 5, 2019), https://www.vox.com/future-perfect/2019/8/5/20750259/facebook-ai-mind-reading-brain-computer-interface.

[13] Id.

[14] Levy & Taylor, supra note 1.

[15] Id.

[16] Manuela López Restrepo, Neurotech Could Connect Our Brains to Computers. What Could Go Wrong, Right?, NPR (Mar. 14, 2023), https://www.npr.org/2023/03/14/1163494707/neurotechnology-privacy-data-tracking-nita-farahany-battle-for-brain-book.

[17] Vanessa Bates Ramirez, Could Brain-Computer Interfaces Lead to ‘Mind Control for Good’?, Singularity Hub (Mar. 16, 2023), https://singularityhub.com/2023/03/16/mind-control-for-good-the-future-of-brain-computer-interfaces/.

[18] Restrepo, supra note 16.

[19] Samuel, supra note 12.

[20] Samuel, supra note 2.

[21] Id.

[22] Id.

Reckless, Wanton or Willful: Is Firing a “Cold Gun” Criminally Negligent?

March 31, 2023
Criminal Law, Litigation

Ben Lauter, MJLST Staffer

On October 21st, 2021, Alec Baldwin shot Halyna Hutchinson, ending her life. This tragedy was the result of Baldwin’s belief that in his hand at the time was a “cold gun.” In movie making, a cold gun is known to be a gun that does not have any live ammunition in it, or ammunition capable of endangering livelihood. Baldwin believed that he held a “cold gun” because that was what he was told when he was handed the weapon on set. He was given this disclaimer by the first director of the film, not the film’s armorer. After being handed the gun, Baldwin did not take any additional steps to confirm that the gun was indeed “cold.” Moments later, Baldwin triggered the gun to release a round striking Hutchinson and injuring another.

After this tragic event the State of New Mexico decided to bring the criminal charge of involuntary manslaughter against Baldwin and the film’s armorer, Hannah Gutierrez-Reed (the assistant director took a plea bargain and accepted probation). Both defendants are being charged with two different forms of involuntary manslaughter, one with a firearm enhancement and the other without the enhancement. This blog post will specifically examine the likely outcome for Alec Baldwin under New Mexico’s involuntary manslaughter statutes. As for Gutierrez-Reed, the suspicion is that she could be convicted on the charges brought against her given the nature of her career and alleged expertise.

The first thing to look at is the manslaughter statute and interpreting it. The passage dealing with involuntary manslaughter is Chapter 30, Article 2, Section 30-2-3. The passage codifies what is criminal when there is an unintentional homicide. The statute has different criteria for conviction depending on the conditions going on when the homicide took place. The different criteria is assigned based on if the death took place during lawful or unlawful acts.

The difference between the two is whether the defendant was doing something legal or illegal at the time they unintentionally killed someone. For example, if someone was robbing a bank and unintentionally killed someone during that time, the robber would be, at a minimum, charged with unlawful manslaughter. However, if the homicide happens in an environment where the individual is not doing anything illegal, such as driving the speed limit down the road, the charge would be lawful manslaughter. Determining whether it is lawful or unlawful manslaughter is a critical step because it determines the standard by which the defendant will be held.

In unlawful manslaughter cases, the standard the prosecution must meet is simply proving that the defendant intended to carry out the unlawful act – it would not matter if the homicide was intentional whatsoever. In a lawful manslaughter case, the standard switches to criminal negligence. Criminal negligence requires a demonstration of acting without due caution and circumspection, and/or conduct that is reckless, wanton, or willful. This standard is harder for the prosecution to prove. Essentially, a criminal negligence standard requires a conscious disregard of safety, not just a failure of reasonable care. The prosecution would have to find that Baldwin and/or Guitierrez-Reed didn’t only act with unreasonable care, which is easier, but that they consciously disregarded the safety of others when they handed, and when they used, the “cold gun.”

Applied to the case of Alec Baldwin v. New Mexico, it is likely that Baldwin will walk away without a guilty conviction. This is because Baldwin’s actions do not meet the standards to be found guilty of any form of manslaughter. First, Baldwin’s actions do not reach the strict liability threshold attached with an unlawful manslaughter charge because Baldwin was not engaged in any illegal acts at the time the homicide took place. He was on set of the film he was acting in, and taking actions necessary to make that film. Thus the State will attempt to convict Baldwin by arguing he committed involuntary manslaughter during a lawful act, which carries a criminal negligence standard. Criminal negligence, the term of art used in the statute, is frankly a misguided and confusing standard to use seeing as the common law interpretation of the statute is not a negligence standard at all. Criminal negligence is a reckless, wanton, or willful act. All three necessitate some kind of conscious action. Applied to the facts of the matter, there do not appear to be any details that indicate that Baldwin reflected upon what was going on and fired the gun anyhow. The record seemingly concludes that Baldwin was under the impression that the gun was cold and that he was going to be shooting takes for the scenes of the day. It seems unlikely that a decision-maker could conclude that Baldwin’s action ever amounted to a conscious decision over safety; an unconscious thought perhaps, but a negligent standard is not enough to lead to a conviction in a lawful act manslaughter case. Some additional rationale for the unlikely elevation to conscious disregard or reckless action revolve around the fact that Baldwin is an actor and has precedent for having no reason to believe he would be handed a live gun when he was told it is cold. An actor is considered to rely on the professionals on set.

One fact that may add an additional wrinkle is that on the day in question, instead of being handed the gun from the armorer, Gutierrez-Reed, Baldwin was handed the gun by the assistant director. This difference in protocol might trigger additional requirements for an actor to take additional steps to ensure that the gun was indeed cold, but there is a lack of case law that would suggest that is demanded. In an overall reading of the facts, Baldwin will still likely be acquitted of the charge as he did not act with criminal negligence when he fired the gun that killed Halyna Hutchinson.

Patent Venue and the Western District of Texas: Will Randomly Assigning Judges Really Change Anything?

March 31, 2023
Patents

Nina Elder, MJLST Staffer

According to the 2023 Patent Litigation Report Lex Machina released last month, Judge Alan Albright, of the Western District of Texas, heard more patent cases than any other judge in the nation. This is largely because historically Judge Albright has heard nearly all patent cases filed in his district—a district which has maintained its position as the most popular patent venue  for several years. Last July, to address concerns about Judge Albright’s monopoly over patent cases the Western District of Texas implemented a new rule requiring that judges be randomly assigned to patent cases. Some expected that patent filings in the district would “fall off a cliff” after this change, but the Lex Machine report showed that so far there hasn’t been a major decrease in the number of patent cases filed in the district. However, the question remains: will randomization have a significant effect on the distribution of patent cases in the long term?

Why Texas?

Until relatively recently, the Western District of Texas was not a particularly popular patent venue. Judge Albright’s appointment in 2018 changed that. Before becoming a judge, Albright practiced as a patent litigator for decades. He enjoys patent cases and on multiple occasions encouraged parties to file them in his court. And his efforts succeeded—the Western District of Texas had a meteoric rise in popularity after Albright was appointed, and only two years after he took the bench it went from receiving only 2.5% of patent cases filed nationwide to around 22%.

Plaintiffs have flocked to the Western District of Texas to take advantage of Judge Albright’s plaintiff friendly practices. Plaintiffs prefer his fast-moving schedules because they drive settlement negotiations and limit the time defendants have to develop their case. His patent-specific standing orders provide predictability and his years of patent experience allow for efficient resolution of issues. Albright’s procedures also make it harder for defendants to initiate inter partes review to invalidate plaintiff patents with the Patent Trial and Appeal Board, which has been called a patent death squad.

Because of the way cases are distributed in the Western District of Texas, plaintiffs can almost guarantee they will be assigned to Judge Albright if they file in the Waco division, where he is the sole judge. The district is organized into nine divisions, most with one or two judges. Federal district courts are not required to randomly assign cases and, barring unique circumstances, a case filed in a Western Texas division with only one judge will be assigned to that judge. This ability to choose provides plaintiffs with certainty as to the judge that will preside over their case – something not available in most districts. As a result, nearly all patent cases in the Western District of Texas have been handled by Judge Albright. Albright also transfers cases infrequently, meaning it is unlikely a given case will be transferred to a more defendant-friendly forum.

New Rule Requires Random Assignment

Concerns have been expressed about the monopoly Albright has on patent cases. General concerns revolve around judge shopping as it may undermine fairness and public trust in the judicial system and there is a worry that cases may be won based on procedural advantage rather than the merits. In Judge Albrights case there is unease about non-practicing entities (NPEs). NPEs, or patent trolls as they are often called, generate revenue by suing for infringement, often using abusive litigation tactics. There have been concerns that Judge Albright’s practices benefit patent trolls as after he took the bench more than 70% of new patent cases in the Western District of Texas were brought by NPEs.

In response to this issue, in November 2021 several members of the Senate Judiciary Committee’s intellectual property subcommittee wrote a letter to Chief Justice John Roberts and the Administrative Office of the U.S. Court’s Judicial Conference. While they did not name Albright, they alluded to him by noting “unseemly and inappropriate conduct in one district.” They also sent a letter to the U.S. Patent and Trademark Office expressing concern that Judge Albright repeatedly ignored binding case law and abused his direction by denying transfer motions. The Judicial Conference director, Judge Roslynn R. Mauskopf, said the office would conduct a study and noted that random case assignment safeguards judicial autonomy and prevents judge shopping.  Justice Roberts addressed the issue in his annual report and said that patent venue was one of the top issues facing the judiciary.

As a result, last July the Chief Judge of the Western District of Texas, Orlando Garcia, instituted a random assignment of patent cases filed in Waco. Under the new rule, patent cases filed in Waco are no longer automatically assigned to Judge Albright, but instead are randomly distributed to one of the 13 judges in the district.

Impacts of the New Rule

Initial reports suggested there was a decrease in patent case filings in the Western District of Texas after the new rule, but more recent Lex Machina data show that there was limited change. Though the number of patent cases on Judge Albright’s docket did decrease, it was not as great a decrease as some expected, and he still received around 50% of all patent cases filed in the district. However, this is largely because Albright is still being assigned any newly filed cases that relate to those currently on his docket. Though randomization hasn’t significantly decreased the patent cases on Albright list yet, the number of cases assigned to him over time should decrease. What remains to be seen however is whether there will be an overall decrease in patent cases filed in the Eastern District of Texas.

What Will Happen in the Future?

It is unclear how this new way of assigning cases in the Western District of Texas will impact the distribution of patent cases. Uncertainty about the behaviors of other judges in the district likely will cause a decrease in filings. There are 12 “new” judges which can preside over patent cases in the district and only five have significant intellectual property experience. Until it is clearer how the other judges in the district handle patent cases, litigants may go elsewhere. However, it is possible that the other judges will follow Albright’s lead. Two judges in the district, Kathleen Cardone and David Counts, have already adopted Albrights’ patent procedures. It is also possible litigants will simply begin targeting judges with patent experience in the district. The new rule does not require random assignment for all patent cases—only those filed in Waco. Plaintiffs can still select their desired judge, as long as it is not Albright.

Even if the Western District loses its spot at the top, Texas will likely remain a popular patent venue. Before the Western District began its rise, the Eastern District of Texas was a patent litigation epicenter. At least for the near future it seems like the Western District of Texas will remain among one of the most popular patent forums; only time will tell the larger effects of the new rule.

Reining in Big Tech

March 31, 2023
Antitrust, Litigation

Shawn Zhang, MJLST Staffer

Introduction

On Tuesday January 24, 2023, the United States Department of Justice, along with the Attorneys General of eight states, have jointly filed a civil antitrust lawsuit against Google for monopolizing multiple digital advertising technology products in violation of Sections 1 and 2 of the Sherman Act.

Background

The Sherman Act (the Act) is the first antitrust statute of the U.S., passed in 1890 as a “comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade.” The alleged violations are for Sections 1 and 2 of the Act.

Section 1 is broad and sweeping in scope. Section 1 declares restraint of trade involving “contract, combination, or conspiracy” to be illegal. A key feature of Section 1 is that the words “contract, combination, or conspiracy” are all concerted actions that require more than one party to engage. Therefore, Section 1 cannot apply to unilateral actions. An example of such concerted action would be horizontal price fixing; multiple competitors in the same market agree with each other to set the same price for a given product. The statute then describes the penalty for violating the Act of being a maximum fine of $100 million for corporations, and/or maximum imprisonment of 10 years.

Section 2, unlike Section 1, prohibits monopolization and the language “every person” indicates that it does not require concerted action. A single entity even attempting to monopolize will be penalized. Concerted actions for monopolization or attempts to monopolize are covered as well by the language “or combine or conspire with any other person or persons.” The penalties for violations of either section can be severe, resulting in massive fines and/or imprisonment. Most enforcement actions are civil, but individuals and businesses may be prosecuted by the Department of Justice. However, criminal prosecutions are typically limited in practice.

Analysis

Google’s business model is driven primarily from their search engine services. The purpose is to deliver users the answers they are seeking. Through this search engine function, Google gains the opportunity to sell advertisements, in which Google earns huge amounts of its revenue from. With its dominance in the search engine industry, Google has obtained dominance in selling advertisements as well.

The complaint alleges that Google monopolizes key digital advertising technologies, collectively referred to as the “ad tech stack,” that website publishers depend on to sell ads. Advertisers rely on this ad tech stack to buy ads and reach potential customers. The complaint also alleges that Google has engaged in a course of anticompetitive and exclusionary conduct over the past 15 years that consists of neutralizing or eliminating ad tech competitors through acquisitions. By doing this, Google has maintained dominance in tools relied on by website publishers and online advertisers. “The Department’s landmark action against Google underscores our commitment to fighting the abuse of market power,” said Associate Attorney General Vanita Gupta. The lawsuit seeks to hold Google accountable for its “longstanding monopolies” in digital advertising technologies that content creators use to sell ads and advertisers use to buy ads on the open internet.

The key contentions to be fought over in this lawsuit includes acquiring competitors, forcing adoption of Google’s tools, distorting auction competition, and auction manipulation. The Act seeks to maintain competition in the markets and eliminate monopolies; the Department of Justice attempts to enforce the spirit of the Act by eliminating the alleged monopolistic behaviors by Google and restoring competition. The agency ultimately seeks both equitable relief on behalf of the American public as well as treble damages for losses sustained by federal government agencies that overpaid for web display advertising.

In light of the developments in antitrust laws, a company must only be found to have violated the statute when it has “engaged in practices that extend beyond competition on the merits.” The plaintiffs must prove that Google’s conduct harms competition, restrains trade, or amounts to monopolization or attempts of monopolization. It is difficult to determine whether Google has engaged in those aforementioned practices, as they could be seen as efficient business conduct. But if the Department of Justice wins the case, it could have huge implications for Google and the rest of the tech industry.

Implications for the Tech Industry

If the Department of Justice succeeds in their lawsuit, Google may face several consequences including divestiture. Microsoft was found to have violated antitrust laws in the late 1990s, and was forced to break up its company into separate companies. Another possible relief would be to force Google to allow other search engines to be the default program for devices including phones and tablets  – which the DOJ has attempted to do in the past. “Alphabet Inc.’s Google pays billions of dollars each year to Apple Inc., Samsung Electronics Co. and other telecom giants to illegally maintain its spot as the No. 1 search engine … Google’s contracts form the basis of the DOJ’s landmark antitrust lawsuit, which alleges the company has sought to maintain its online search monopoly in violation of antitrust laws.”

This case could renew the scrutiny against other tech giants such as Meta and Amazon. If the Department of Justice succeeds, it’s highly likely that they will go after other tech giants as well. The victory of the government may begin an era of tech reform, making it easier for competitors to enter the market and thus offering more options for consumers. Tech giants may be forced to reduce their prices if there are more competitors in the market, which may lead to better consumer welfare.

On the other hand, the government’s victory may harm the tech industry. Google and other tech giants are highly efficient businesses that can provide services for lower costs through economies of scale. By forcing them to split up their companies and preventing them from reaching their efficiencies, their services may become more expensive. However, efficiency is not a justification for monopolies, as monopolies largely bring more harm than benefits to consumers  by being able to impose unreasonably high prices. An example of price gouging due to monopolistic practice was when Martin Shkreli thwarted competition for the drug Daraprim (used to treat HIV patients) and increased prices from $13.50 per pill to $750.00 per pill.

Conclusion

This lawsuit will be watched closely by regulators and tech giants as it could embolden regulators to go after other companies if this attempt is successful.  Regulators are actively looking to rein in big tech companies, as evident by all the antitrust investigations in the past decades, as well as the bill targeting big tech companies currently moving through Congress. The fight between regulators and the tech industry continues, and we look forward to seeing the courts determine a fair ruling that may pave the road for a better economy with greater consumer welfare.

 

Mental Health Telehealth Services May Not Be Protecting Your Data

March 5, 2023
Administrative Law, COVID-19, Data Privacy, Health, Healthcare, Internet, New Technology, Privacy

Tessa Wright, MJLST Staffer

The COVID-19 pandemic changed much about our daily lives, and nowhere have those changes been more visible than in the healthcare industry. During the pandemic, there were overflowing emergency rooms coupled with doctor shortages.[1] In-person medical appointments were canceled, and non-emergency patients had to wait months for appointments.[2] In response, the use of telehealth services began to increase rapidly.[3] In fact, one 2020 study found that telehealth visits accounted for less than 1% of health visits prior to the pandemic and increased to as much as 80% of visits when the pandemic was at its peak.[4] And, while the use of telehealth services has decreased slightly in recent years, it seems as though it is likely here to stay. Nowhere has the use of telehealth services been more prevalent than in mental health services.[5] Indeed, as of 2022, telehealth still represented over 36% of outpatient mental health visits.[6] Moreover, a recent study found that since 2020, over one in three mental health outpatient visits have been delivered by telehealth.[7] And while this increased use in telehealth services has helped make mental health services more affordable and accessible to many Americans, this shift in the way healthcare is provided also comes with new legal concerns that have yet to be fully addressed.

Privacy Concerns for Healthcare Providers

One of the largest concerns surrounding the increased use of telehealth in mental health services is privacy. There are several reasons for this. The primary concern has been due to the fact that telehealth takes place over the phone or via personal computers. When using personal devices, it is nearly impossible to ensure HIPAA compliance. However, the majority of healthcare providers now offer telehealth options that connect directly to their private healthcare systems, which allows for more secure data transmission.[8] While there are still concerns surrounding this issue, these secure servers have helped mitigate much of the concern.[9]

Privacy Concerns with Mental Health Apps

The other privacy concern surrounding the use of telehealth services for mental health is a little more difficult to address. This concern comes from the increased use of mental health apps. Mental health apps are mobile apps that allow users to access online talk therapy and psychiatric care.[10] With the increased use of telehealth for mental health services, there has also been an increase in the use of these mental health apps. Americans are used to their private medical information being protected by the Health Insurance Portability and Accountability Act (HIPAA).[11] HIPAA is a federal law that creates privacy rules for our medical records and other individually identifiable health information during the flow of certain health care transactions.[12] But HIPAA wasn’t designed to handle modern technology.[13] The majority of mental health apps are not covered by HIPAA rules, meaning that these tech companies can sell the private health data from their apps to third parties, with or without consent.[14] In fact, a recent study that analyzed 578 mental health-related apps found that nearly half (44%) of the apps shared users’ personal health information with third parties.[15] This personal health information can include psychiatric diagnoses and medication prescriptions, as well as other identifiers including age, gender, ethnicity, religion, credit score, etc.[16]

In fact, according to a 2022 study, a popular therapy app, BetterHelp, was among the worst offenders in terms of privacy.[17] “BetterHelp has been caught in various controversies, including a ‘bait and switch’ scam where it advertised therapists that weren’t actually on its service, poor quality of care (including trying to provide gay clients with conversion therapy), and paying YouTube influencers if their fans sign up for therapy through the app.”[18]

An example of information that does get shared is the intake questionnaire.[19] An intake questionnaire needs to be filled out on BetterHelp, or other therapy apps, in order for the customer to be matched with a provider.[20] The answers to these intake questionnaires were specifically found to have been shared by BetterHelp with an analytics company, along with the approximate location and device of the user.[21]

Another example of the type of data that is shared is metadata.[22] BetterHelp can share information about how long someone uses the app, how long the therapy sessions are, how long someone spends sending messages on the app, what times someone logs into the app, what times someone sends a message or speaks to their therapists, the approximate location of the user, how often someone opens the app, and so on.[23] According to the ACLU, data brokers, Facebook, and Google were found to be among the recipients of other information shared from BetterHelp.[24]

It is also important to note that deleting an account may not remove all of your personal information, and there is no way of knowing what data will remain.[25] It remains unclear how long sensitive information that has been collected and retained could be available for use by the app.

What Solutions Are There?

The U.S. Department of Health and Human Services recently released updated guidance on HIPAA, confirming that the HIPAA Privacy Rule does not apply to most health apps because they are not “covered entities” under the law.[26]  Additionally, the FDA put out guidance saying that it is going to use its enforcement discretion when dealing with mental health apps.[27] This means that if the privacy risk seems to be low, the FDA is not going to enforce or chase these companies.[28]

Ultimately, if mental telehealth services are here to stay, HIPAA will need to be expanded to cover the currently unregulated field of mental health apps. HIPAA and state laws would need to be specifically amended to include digital app-based platforms as covered entities.[29] These mental health apps are offering telehealth services, similar to any healthcare provider that is covered by HIPAA. Knowledge that personal data is being shared so freely by mental health apps often leads to distrust, and due to those privacy concerns, many users have lost confidence in them. In the long run, regulatory oversight would increase the pressure on these companies to show that their service can be trusted, potentially increasing their success by growing their trust with the public as well.

Notes

[1] Gary Drenik, The Future of Telehealth in a Post-Pandemic World, Forbes, (Jun. 2, 2022), https://www.forbes.com/sites/garydrenik/2022/06/02/the-future-of-telehealth-in-a-post-pandemic-world/?sh=2ce7200526e1.

[2] Id.

[3] Id.

[4] Madjid Karimi, et. al., National Survey Trends in Telehealth Use in 2021: Disparities in Utilization and Audio vs. Video Services, Office of Health Policy (Feb. 1, 2022).

[5] Shreya Tewari, How to Navigate Mental Health Apps that May Share Your Data, ACLU (Sep. 28, 2022).

[6] Justin Lo, et. al., Telehealth has Played an Outsized Role Meeting Mental Health Needs During the Covid-19 Pandemic, Kaiser Family Foundation, (Mar. 15, 2022), https://www.kff.org/coronavirus-covid-19/issue-brief/telehealth-has-played-an-outsized-role-meeting-mental-health-needs-during-the-covid-19-pandemic/.

[7] Id.

[8] Supra note 1.

[9] Id.

[10] Heather Landi, With Consumers’ Health and Privacy on the Line, do Mental Wellness Apps Need More Oversight?, Fierce Healthcare, (Apr. 21, 2021), https://www.fiercehealthcare.com/tech/consumers-health-and-privacy-line-does-digital-mental-health-market-need-more-oversight.

[11] Peter Simons, Your Mental Health Information is for Sale, Mad in America, (Feb. 20, 2023), https://www.madinamerica.com/2023/02/mental-health-information-for-sale/.

[12] Supra note 5.

[13] Supra note 11.

[14] Id.

[15] Deb Gordon, Using a Mental Health App? New Study Says Your Data May Be Shared, Forbes, (Dec. 29, 2022), https://www.forbes.com/sites/debgordon/2022/12/29/using-a-mental-health-app-new-study-says-your-data-may-be-shared/?sh=fe47a5fcad2b.

[16] Id.

[17] Supra note 11.

[18] Id.

[19] Supra note 5.

[20] Id.

[21] Id.

[22] Id.

[23] Id.

[24] Id.

[25] Supra note 5.

[26] Id.

[27] Supra note 10.

[28] Id.

[29] Supra note 11.

EJScreen: The Environmental Justice Tool That You Didn’t Know You Needed

March 4, 2023
Discrimination, Environment, Environmental Justice, Environmental Law, EPA, Industry, Public Health, Public Safety

Emma Ehrlich, Carlisle Ghirardini, MJLST Staffer

What is EJScreen?

EJScreen was developed by the Environmental Protection Agency (“EPA”) in 2010, 16 years after President Clinton’s Executive Order 12898 required federal agencies to begin keeping data regarding “environmental and human health risks borne by populations identified by race, national origin or income.” The program has been available to the public through the EPA’s website since 2015 and is a mapping tool that allows users to look at specific geographic locations and set overlays that show national percentiles for categories such as income, people of color, pollution, health disparities, etc. Though the EPA warns that EJScreen is simply a screening tool and has its limits, the EPA uses the program in “[i]nforming outreach and engagement practices, [i]mplementing aspects of …permitting, enforcement, [and] compliance, [d]eveloping retrospective reports of EPA work, [and] [e]nhancing geographically based initiatives.”

As the EPA warns on its website, EJScreen does not contain all pertinent information regarding environmental justice and other data should be collected when studying specific areas. However, EJScreen is still being improved and was updated to EJScreen 2.0 in 2022 to account for more data sets, including data on which areas lack access to food, broadband, and medical services, as well as health disparities such as asthma and life expectancy.

Current Uses

EJScreen software is now being used to evaluate the allocation of federal funding. In February of this year, the EPA announced that it will be allocating $1 billion of funding from President Biden’s Bipartisan Infrastructure Law to Superfund cleanup projects such as cleanups of sites containing retired mines, landfills, and processing and manufacturing plants. The EPA said that 60% of new projects are in locations that EJScreen indicated were subject to environmental justice concerns.

EJScreen is also used to evaluate permits. The EPA published its own guidance in August of 2022 to address environmental justice permitting procedures. The guidance encourages states and other recipients of financial assistance from the EPA to use EJScreen as a “starting point” when looking to see if a project whose permit is being considered may conflict with environmental justice goals. The EPA believes this will “make early discussions more meaningful and productive and add predictability and efficiency to the permitting process.” If an early EJScreen brings a project into question, the EPA instructs permitters to consider additional data before making a permitting decision.

Another use of EJScreen is in the review of Title VI Civil Rights Act Complaints. Using the authority provided by Title VI, the EPA has promulgated rules that prohibit any agency or group that is receiving federal funding from the EPA from functioning in a discriminatory way based on race, color, or national origin. The rules also enable people to submit Title VI complaints directly to the EPA when they believe a funding recipient is acting in a discriminatory manner. If it is warranted by the complaint, the EPA will conduct an investigation. Attorneys that have reviewed EPA response letters expressing its decision to conduct an investigation based on a complaint have noted that the EPA often cites EJScreen when explaining why they decided to move forward with an investigation.

In October of 2022, the EPA sent a “Letter of Concern” to the Louisiana Department of Environmental Quality (“LDEQ”) and the Louisiana Department of Health stating that an initial investigation suggests that the two departments have acted in ways that had “disparate adverse impacts on Black residents” when issuing air permits or informing the public of health risks. When discussing a nearby facility’s harmful health effects on residents, the EPA cites data from EJScreen in concluding that the facility is much more likely to have effects on black residents of Louisiana compared to non-black residents. The letter also touches on incorrect uses of EJScreen in saying that LDEQ’s conclusion that a proposed facility would not affect surrounding communities was misleading because the LDEQ used EJScreen to show that there were no residents within a mile of the proposed facility but ignored a school located only 1.02 miles away from the proposed location.

Firms such as Beveridge & Diamond have recognized the usefulness of this technology. They urge industry decision makers to use this free tool, and others similar to it, to preemptively consider environmental justice issues that their permits and projects may face when being reviewed by the EPA or local agencies.

Conclusion

In conclusion, EJScreen has the potential to be a useful tool, especially as the EPA continues to update it with data for additional demographics. However, users of the software should heed EPA’s warning that this is simply a screening tool. It is likely best used to rule out locations for certain projects, rather than be solely relied on for approving projects in certain locations, which requires more recent data to be collected.

Lastly, EJScreen is just one of many environmental justice screening tools being used and developed. Multiple states have been developing their own screening programs, and there is research showing that using state screening software may be more beneficial than national software. An environmental justice screening tool was also developed by the White House Council on Environmental Quality in 2022. Its Climate and Economic Justice Screening Tool is meant to assist the government in assigning federal funding to disadvantaged communities. The consensus seems to be that all available screening tools are helpful in at least some way and should be consulted by funding recipients and permit applicants in the early rounds of their decision making processes.

A Manhattan Federal Jury Found Trademark Rights to Extend to the Metaverse. Why Should You Care?

March 4, 2023
Intellectual Property, Internet, Trademark Law

Carlisle Ghirardini, MJLST Staffer

Earlier this month, the federal court in the Southern District of New York issued an opinion regarding a luxury fashion brand’s trademark rights in the Metaverse – the first trial verdict concerning trademarks in non-fungible tokens (NFTs).[1] The suit was brought in January of 2022 by the Parisian fashion giant Hermès when a digital artist created NFTs of the brand’s iconic “Birkin bag” and made a profit selling these “MetaBirkins.”[2]

The key question in the suit came down to whether the NFT was likened to art, which would receive First Amendment protection, or a consumer product, which would be subject to trademark infringement liabilities.[3] A federal grand jury found the artist’s use of the Birkin name and style to be more commercial than artistic in nature, and, therefore, potentially infringing on Hermès’ trademarks depending on public perception.[4]

Trademark infringement is the unauthorized use of a mark in a way that would confuse a consumer as to the source of the product or service connected to the mark.[5] Surveys and social media evidence in this case showed confusion among NFT consumers as to Hermès’ involvement with the MetaBirkins, which led the jury to find the use of the mark to be infringing and a capitalization of the Hermès brand’s goodwill for profit.[6] Hermès was awarded $133,000 in total damages – a small win for the fashion powerhouse, but a huge win for brand owners across many different industries who now know their trademark rights may be protectable in the Metaverse.[7]

I don’t use or understand the Metaverse – why should I care about this decision?

Even for those who don’t know what an NFT is, this decision to extend trademarks rights to the Metaverse is still important. First, it is well known that many brands are now registering trademarks in the Metaverse, so if a consumer sees a brand in this realm, there is a higher likelihood of confusion of association with that virtual good or service. If people assume a connection between a brand and the illegal use of its mark, the brand is at risk of significant damage. For example, if an unauthorized user opened a Metaverse McDonald’s which gave out racy or controversial happy meal prizes, McDonald’s could face serious backlash if its consumers believed McDonald’s to be condoning such activities.[8]Although it seems like this connection may be less convincing or harmful for a big brand like McDonald’s, it was enough to compel Hermès to protect the integrity of their brand and their customers.[9] It is not only big brands that can be victims of such infringement, however. While it is easy to understand why someone would take advantage of a more recognized company due to greater traffic, this could easily happen to smaller brands we know and love. If the little coffee shop chain you frequent is hurt by such virtual infringement, perhaps by a local competitor, it could run them out of business. Connecting a brand in the Metaverse to products or values they are not aligned with could have damaging real world effects.[10]

Just as brand exposure in the Metaverse can cause harm, it also has the potential to benefit businesses. Such virtual brand display, which is cheaper than buying advertising or opening a new brick and mortar store, can translate to more business in the real world.[11] Brands have started creating virtual experiences that have driven in-store sales and served as powerful marketing. Vans shoe and skateboard company, for example, made a Metaverse skatepark in which users could earn points when “boarding” that were redeemable for discounts inside real Vans stores.[12] Chipotle released a burrito-making game that yielded “burrito bucks” for exchange in their actual restaurants.[13] As use of NFTs grows, and as brands recognize the ramifications of the Hermès lawsuit, we will likely continue to see more trademarks used in the Metaverse. Brand owners should keep in mind the dangers of failing to sufficiently protect their trademarks in the virtual space and the potential for benefits if used strategically.

Notes

[1] Reed Clancy and Alexander Curylo, Verdict Reached in MetaBirkin NFT Case, AIPLA NEWSTAND (Feb. 9, 2023), https://www.lexology.com/library/detail.aspx?g=0faf6e67-38b4-4add-971d-badd08199c0c&utm_source=Lexology+Daily+Newsfeed&utm_medium=HTML+email+-+Body+-+General+section&utm_campaign=AIPLA+2013+subscriber+daily+feed&utm_content=Lexology+Daily+Newsfeed+2023-02-13&utm_term=.

[2] Muzamil Abdul Huq et al., Hermès Successfully Defends its Trademark in the Metaverse, AIPLA NEWSTAND (Feb. 9, 2023), https://www.lexology.com/library/detail.aspx?g=6dba3b12-030d-41ff-98c6-1c2aad6468ce&utm_source=Lexology+Daily+Newsfeed&utm_medium=HTML+email+-+Body+-+General+section&utm_campaign=AIPLA+2013+subscriber+daily+feed&utm_content=Lexology+Daily+Newsfeed+2023-02-13&utm_term=.

[3] Id.

[4] Id.

[5] About Trademark Infringement, U.S. PATENT AND TRADEMARK OFFICE, https://www.uspto.gov/page/about-trademark-infringement (last visited Feb. 17, 2023).

[6] Huq et al., Hermès Successfully Defends its Trademark in the Metaverse, AIPLA NEWSSTAND (Feb. 9, 2023).

[7] Id.

[8] Joanna Fantozzi, Why Every Restaurant Operator Should Care About NFTs and the Metaverse Right Now, NATION’SRESTAURANT NEWS (Feb. 25, 2022) https://www.nrn.com/technology/why-every-restaurant-operator-should-care-about-nfts-and-metaverse-right-now.

[9] Zachary Small, Hermès Wins MetaBirkins Lawsuit; Jurors Not Convinced NFTs Are Art, N.Y. TIMES (Feb. 8, 2023), https://www.nytimes.com/2023/02/08/arts/hermes-metabirkins-lawsuit-verdict.html.

[10] Fantozzi, Why Every Restaurant Operator Should Care About NFTs and the Metaverse Right Now, NATION’SRESTAURANT NEWS (Feb. 25, 2022).

[11] Id.

[12] Andrew Hanson, Understanding the Metaverse and its Impact on the Future of Digital Marketing, CUKER (Mar. 29, 2022), https://www.cukeragency.com/understanding-metaverse-and-its-impact-future-digi/.

[13] Dani James, How Retailers are Connecting the Metaverse to real World Sales and Revenues, RETAILDIVE (Nov. 14, 2022), https://www.retaildive.com/news/retailers-connecting-metaverse-roblox-real-world-revenue/636209/.

Hazardous Train Derailment: How a Poor Track Record for Private Railway Company May Impact Negligence Lawsuit Surrounding Major Incident

March 4, 2023
EPA, Litigation, Public Health, Public Safety, Torts Law, Transportation

Annelise Couderc, MJLST Staffer

The Incident

On Friday, February 3rd a train with about 150 cars, many carting hazardous chemicals, derailed in East Palestine, Ohio. The derailment resulted in the leakage and combustion of an estimated 50 train cars containing chemicals hazardous to both humans and the environment. The mayor of East Palestine, Ohio initially evacuated the city, and neighboring towns were told to stay indoors with residents being told they could return five days following the explosion. According to a member of the National Transportation Safety Board, 14 cars containing multiple hazardous chemicals including vinyl chloride, a chemical in plastic products which is associated with increased risk of liver cancer and cancer generally, were “exposed to fire,” combusted into the air which could then be inhaled by residents or leach into the environment. There have been reports by residents of foul smells and headaches since the incident, and locals have reported seeing dead fish in waterways.

The train and railroad in question are owned and operated by Norfolk Southern, a private railway company. Norfolk Southern transports a variety of materials, but is known for its transportation of coal through the East and Midwest regions of the country. In order to prevent a large explosion with the chemicals remaining in the train cars, Norfolk Southern conducted a “controlled release” of the chemicals discharging “potentially deadly fumes into the air” on Monday, February 6th. While the controlled release was likely immediately necessary for safety purposes, exposure to vinyl chloride as a gas can be very dangerous, leading to headaches, nausea, liver cancer, and birth defects.

Government and Norfolk Southern Responds

Following the derailment and fires, a variety of governmental authorities have converged to tackle the issue, in addition to Norfolk Southern. The Environmental Protection Agency (EPA) and Norfolk Southern are monitoring air-quality, and giving guidance to determine when investigators and fire fighters may enter the scene safely. In a joint statement on February 8th, the Governors of Ohio and Pennsylvania, as well as East Palestine’s Fire Chief, announced that evacuated residents could return to their homes. As an act of good faith Norfolk Southern enlisted an independent contractor to work with local and federal officials to test air and water quality, and pledged $25,000 to the American Red Cross and its shelters to help residents. The Ohio National Guard has also been brought onto the scene.

As more information is released, things are heating up in the press as reporters try to learn more about what happened. In a press conference on February 8th with Ohio’s governor, Mike DeWine, the commander of the Ohio National Guard pushed a cable news reporter who refused to stop his live broadcast after asked by authorities and was subsequently arrested and held in jail for five hours. DeWine denies authorizing the arrest, and a Pentagon official has come out condemning the behavior as unacceptable. The Ohio attorney general will lead an investigation into the arrest.

Lawsuit Filed Alleges Negligence

Norfolk Southern’s history regarding brake safety as well as general operational changes in the railroad sector will perhaps play a factor in the lawsuit recently filed in response to the incident. In East Palestine, Ohio, residents and a local business owner are alleging negligence in a lawsuit against Norfolk Southern in federal court. Union organizers have expressed concerns that operating changes and cost-cutting measures like the elimination of 1/3 of workers in the last six years have resulted in less thorough inspection and less preventative maintenance. Although railroads are considered the safest form of transporting hazardous chemicals, Federal Railroad Administration (FRA) data shows that hazardous chemicals were released in 11 accidents in 2022, and 20 in both 2020 and 2018. Recently, there has been an uptick in derailments, and although most occur in remote locations, train car derailments have in fact killed people in the past.

The class-action lawsuit alleges negligence against Norfolk Southern for “failing to maintain and inspect its tracks; failing to maintain and inspect its rail cars; failing to provide appropriate instruction and training to its employees; failing to provide sufficient employees to safely and reasonably operate its trains; and failing to reasonably warn the general public.” The plaintiffs allege the company should have known of the dangers posed, and therefore breached their duty to the public.

Specifically relevant to this accident may be Norfolk Southern’s lobbying efforts against the mandatory use of Electronically Controlled Pneumatic (ECP) brakes. In 2014, likely in response to increased incidents, the Obama administration “proposed improving safety regulations for trains carrying petroleum and other hazardous materials,” which included brake improvement. The 2015 Fixing America’s Surface Transportation (FAST) Act required the Department of Transportation (DOT) to test ECP braking, and the Government Accountability Office to calculate the costs and benefits of ECP braking.[1] The U.S. Government Accountability Office (GAO) conducted a cost benefit test on the ECP braking, and found the costs outweighed the benefits.[2] The FRA, the Pipeline and Hazardous Materials Safety Administration (PHMSA), and DOT subsequently abandoned the ECP brake provision of the regulation in 2017. The move followed a change in administration and over $6 million in lobbying money towards GOP politicians and the Trump administration by the American Association of Railroads, a lobbying group of which Norfolk Southern is a dues-paying member.

Despite bragging about their use of ECP brakes in 2007 in their quarterly report, Norfolk Southern’s lobbying group opposed mandatory ECP brakes, stating “In particular, the proposals for significantly more stringent speed limits than in place today and electronically controlled pneumatic (ECP) brakes could dramatically affect the fluidity of the railroad network and impose tremendous costs without providing offsetting safety benefits.” Although the type of brakes on the train in East Palestine is unknown as of now, a former FRA senior official told a news organization that ECP brakes would have reduced the severity of the accident. Whether or not using ECP braking while hauling hazardous materials constitutes negligence, despite the federal government finding they are not beneficial enough to make it mandatory, the fact that Norfolk Southern opposed its implementation may still influence the litigation.

Although the current lawsuit filed alleges negligence against Norfolk Southern, the private company, it is perhaps possible to approach the legal debate from an agency perspective. Did the PMHSA and FRA permissibly interpret FAST in failing to include ECP braking requirements when they were explicitly mentioned in the FAST text? Did the agencies come to an acceptable conclusion about ECP braking based on the data? If a court were to find the agencies’ decisions were outside of the scope of the authority granted to them by FAST, or that the decision was arbitrary and capricious, the agencies could be forced to reevaluate the regulation regarding ECP braking. Congress could also pass more specific legislation in response, to increase safety measures to prevent something like this from happening again.

The events are still unfolding from the train derailment in Ohio, and there are still many unknown variables. It will be interesting to see how the facts unfold, and how/if residents are about to recoup their losses and recover from the emotional distress this event undoubtedly caused.

Notes

[1] Regulations.gov, regulations.gov (search in search bar for “phmsa-2017-0102”; then choose “Electronically Controlled Pneumatic Braking- Updated Regulatory Impact Analysis”; then click “download.”)

[2] Regulations.gov, regulations.gov (search in search bar for “phmsa-2017-0102”; then choose “Technical Corrections to the Electronically Controlled Pneumatic Braking Final Updated RIA December 2017”; then click “download.”)

Call of Regulation: How Microsoft and Regulators Are Battling for the Future of the Gaming Industry

February 21, 2023
Agencies, Antitrust, EU Law, FTC, Video Games

Caroline Moriarty, MJLST Staffer

In January of 2022 Microsoft announced its proposed acquisition of Activision Blizzard, a video game company, promising to “bring the joy and community of gaming to everyone, across every device.” However, regulators in the United States, the EU, and the United Kingdom have recently indicated that they may block this acquisition due to its antitrust implications. In this post I’ll discuss the proposed acquisition, its antitrust concerns, recent actions from regulators, and prospects for the deal’s success.

Background

Microsoft, along with making the Windows platform, Microsoft Office suite, Surface computers, cloud computing software, and of new relevance, Bing, is a major player in the video game space. Microsoft owns Xbox, which along with Nintendo and Sony (PlayStation) is one of the three most popular gaming consoles. One of the main ways these consoles distinguish themselves from their competitors is by categorizing certain games as “exclusives,” where certain games can only be played on a single console. For example, Spiderman can only be played on PlayStation, the Mario games are exclusive to Nintendo, and Halo can only be played on Xbox. Other games, like Grand Theft Auto, Fortnite, and FIFA are offered on multiple platforms, allowing consumers to play the game on whatever console they already own.

Activision Blizzard is a video game holding company, which means the company owns games developed by game development studios. They then make decisions about marketing, creative direction, and console availability for individual games. Some of their most popular games include World of Warcraft, Candy Crush, Overwatch, and one of the most successful game franchises ever, Call of Duty. Readers outside of the gaming space may recognize Activision Blizzard’s name from recent news stories about its toxic workplace culture.

In January 2022, Microsoft announced its intention to purchase Activision Blizzard for $68.7 billion dollars, which would be the largest acquisition in the company’s history. The company stated that its goals were to expand into mobile gaming, as well as make more titles available, especially through Xbox Game Pass, a streaming service for games. After the announcement, critics pointed out two main issues. First, if Microsoft owned Activision Blizzard, it would be able to make the company’s titles exclusive to Xbox. This is especially problematic in relation to the Call of Duty franchise. Not only does the Call of Duty franchise include the top three most popular games of 2022, but it’s estimated that 400 million people play at least one of the games, 42% of whom play on Playstation. Second, if Microsoft owned Activision Blizzard, it could also make its titles exclusive to Xbox Game Pass, which would change the structure of the relatively new cloud streaming market.

The Regulators

Microsoft’s proposed acquisition has drawn scrutiny from the FTC, the European Commission, and the UK Competition and Markets Authority. In what the New York Times has dubbed “a global alignment on antitrust,” the three regulators have pursued a connected strategy. First, the European Commission announced an investigation of the deal in November, signaling that the deal would take time to close. Then, a month later, the FTC sued in its own administrative court, which is more favorable to antitrust claims. In February 2023, the Competition and Markets Authority released provisional findings on the effect of the acquisition on UK markets, writing that the merger may be expected to result in a substantial lessening of competition. Finally, the EU commission also completed its investigation, concluding that the possibility of Microsoft making Activision Blizzard titles exclusives “could reduce competition in the markets for the distribution of console and PC video games, leading to higher prices, lower quality and less innovation for console game distributors, which may, in turn, be passed on to consumers.” Together, the agencies are indicating a new era in antitrust – one that is much tougher on deals than in the recent past.

Specifically, the FTC called out Microsoft on its past acquisitions in its complaint. When Microsoft acquired Bethesda (another video game company, known for games like The Elder Scrolls: Skyrim) in 2021, the company told the European Commission that they would keep titles available on other consoles. After the deal cleared, Microsoft announced that many Bethesda titles, including highly anticipated games like Starfield and Redfall, would be Microsoft exclusives. The FTC used this in its complaint to show that any promises by Microsoft to keep games like Call of Duty available to all consumers could be broken at any time. Microsoft has disputed this characterization, arguing that the company made decisions to make titles exclusive on a “case-by-case basis,” which was in line with what it told the European Commission.

For the current deal, Microsoft has agreed to make Call of Duty available on the Nintendo Switch, and it claims to have made an offer to Sony, guaranteeing the franchise would remain available on PlayStation for ten years. This type of guarantee is known as conduct remedy, which preserves competition through requirements that the merged firm commits to take certain business actions or refrain from certain business conduct going forward. In contrast, structural remedies usually require a company to divest certain assets by selling parts of the business. One example of conduct remedies was in the Live Nation – Ticketmaster merger. The companies agreed not to retaliate against concert venue customers that switched to a different service nor tie sales of ticketing services to concerts it promoted. However, as the recent Taylor Swift ticketing dilemma proves, conduct remedies may not be effective in eliminating anticompetitive behavior.

Conclusion

Microsoft faces an uphill battle with its proposed acquisition. Despite its claims that Xbox does not exercise outsize influence in the gaming industry, the sheer size and potential effects of this acquisition make Microsoft’s claims much weaker. Further, the company faces stricter scrutiny from new regulators in the United States. Assistant Attorney General Jonathan Kanter, who leads the DOJ’s antitrust division, has already indicated that he prefers structural remedies to conduct ones, and Lina Khan, FTC commissioner, is well known for her opposition to big tech companies. If Microsoft wants this deal to succeed, it may have to provide more convincing evidence that it will act differently than its anticompetitive conduct in the past.

Home | Contact Publishing Services | My Account