The U.S. Federal Trade Commission failed to convince a federal judge in San Francisco that DirecTV should pay nearly $4 billion in restitution to customers for allegedly misleading consumers about the costs of programming packages, Bloomberg reports.

The said that “the scope of the maximum potential recovery in this case has been substantially curtailed,” according to reporter Pamela MacLean.

The FTC suit alleged that DirecTV failed to disclose to consumers in 40,000 print, mail, online and TV advertisements that its lower introductory pricing lasted just one year but tied buyers to a two-year contract.

Read the Bloomberg article.

Loewinsohn Flegle Deary Simon has earned a place on the 2018 Elite Trial Lawyers finalist list for Business Torts as selected by editors and reporters of American Lawyer Media’s National Law Journal.

The publication’s research staff selected the Dallas-based firm for its lawyers’ “exemplary performance in cutting-edge work on behalf of plaintiffs over the last 18 months.” Finalists were chosen from 300 submissions across 23 categories.  The selection process is designed to identify firms “that have achieved exemplary results for their clients.”

Earlier this year, the firm was honored as a Tier 1 Law Firm, the highest-possible ranking, by U.S. News – Best Lawyers in America based on confidential feedback from clients and other lawyers. All six of the firm’s principals are listed in The Best Lawyers in America.

Read about the honor.

A Tech & Sourcing blog post on the website of Morgan Lewis offers 10 framework issues to consider when in-house lawyers start thinking about how to support a business client that is looking to implement a new or replacement enterprise resource platform (or more commonly known as an ERP system).

The list, compiled by Barbara Murphy Melby and Ada Finkel, is intended to help in-house lawyers understand the objectives, parameters, and potential risk areas of a transaction.

Some of the issues discussed include key objectives, deal structure and success factors, third-party dependencies, an implementation plan, fees, key risk areas, and more.

Read the article.

Automatic renewals of consumer contracts should be used with care, particularly in light of recent changes to state automatic renewal laws and increased scrutiny from government officials and class action lawyers, warns a recent post on the website of Drinker Biddle & Reath.

The post consists of questions and answers discussed by members of Drinker Biddle’s Class Actions Team and Consumer Contracts Team provide an overview of the laws governing automatic renewals, with a particular focus on California’s ARL.

The questions include such topics as FTC Act requirements, state requirements, how to comply with every ARL, consents, cancellation rights, and more.

Read the article.

A post on Dykema’s The Firewall blog considers the question: Who bears the loss from a breach perpetrated by a data breach fraudster: the consumer whose data was compromised, the financial institution where the data was used, or the business that failed to protect the data?

The author, David B. West, writes that the answer depends on which law applies.

“While statutes require banks and their vendors to protect customers’ Personally Identifiable Information (“PII”), the obligation of other businesses to do so is not as well defined,” West explains. “Regulatory obligations to protect data vary by industry and geography.”

He also discusses relying on common law for data breach losses, recovering damages, and the need for consistent ability to recover losses.

Read the article.

The federal government challenged a judicial decision allowing AT&T to purchase Time Warner, arguing to a federal appeals court in Washington that the ruling suffered from “faulty logic” and ignored basic economic principles, according to The Washington Post.

The Justice Department asserted that the district court misunderstood the power dynamics at work when television distributors such as AT&T negotiate with TV programmers over content prices and terms, writes Brian Fung.

In its filing, the DOJ called the decision a “deeply flawed assessment of the government’s evidence.”

“It is fundamental to the economics of bargaining that a party derives leverage from having the ability to walk away, even if it never actually does so,” the Justice Department wrote.

Read the Washington Post article.

Image by Steve Jurvetson

CNBC reports that some securities lawyers said they were shocked by a tweet from Elon Musk that said Musk was mulling a take-private transaction for Tesla, his electric car company. The tweet even named a target price, $420 a share, and said financing was lined up.

Reporter Liz Moyer quotes Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, who told her, “I do not believe this is the appropriate way to suggest going private.”

If the content of the tweet wasn’t true, lawyers said, it could set up Musk and the company for regulatory action and private lawsuits.

Read the CNBC article.

The practice of “no-poach” agreements in the fast food industry is under scrutiny with a group of Democratic state attorneys-general announcing that they are seeking information on them from eight fast food chains, reports the Wharton School of the University of Pennsylvania.

The chains include Arby’s, Burger King, Dunkin’ Donuts, Wendy’s and Panera Bread.

The legality of non-poaching agreements is suspect, and franchisors take on conveniently conflicting positions when a franchisee is treated as part of their company, said Wharton management professor Peter Cappelli.

Read the article or listen to the podcast.

Williams Mullen partner Robert K. Cox writes in a post on the firm’s website that the answer to who decides the arbitrability of a dispute — in a case in which a contract includes an arbitration clause — requires consideration involving a multi-step inquiry.

In his article, a court resolving an arbitrability dispute first must determine who decides whether a particular dispute is arbitrable – an arbitrator or the court. Second, if the court determines that it is the proper forum to adjudicate the arbitrability of the dispute, then the court must decide whether the dispute is in fact arbitrable.

“Parties wishing to ensure resolution of ‘gateway’ questions of arbitrability by a specific decision-maker –whether the court or arbitrator –should spell out their preference as clearly as possible in the arbitration clause,” Cox writes. 

Read the article.

An employee invention assignment agreement is a crucial tool for protecting intellectual property, but the laws governing them contain traps for the unwary, warns Jeffrey A. Simmons in Foley & Lardner’s Labor & Employment Law Perspectives.

“If the agreement is too narrow or ambiguous, it may allow inventions to slip away. Further, if the agreement fails to include certain provisions, it may be invalid in certain states,” he explains.

Patentable inventions and copyrightable works are the most significant forms of employee-created intellectual property, but the default rules for those creations are polar opposites, Simmons writes.

Read the article.

Thomas B. Hudson of Hudson Cook writes on the firm’s website that a frequent question he encountered when speaking at industry conferences concerns whether a credit buyer can be required to buy a service contract.

In the context of auto sales, he explains, requiring a service contract in connection with the credit sale of a vehicle does not violate the federal Truth in Lending Act and Regulation Z.

“But the fact that federal disclosure laws don’t prohibit the practice doesn’t mean that the practice is not affected by them. In this case, the key to the application of federal law is the word ‘require.’ When a dealer requires a service contract in financing transactions, but not in similar cash transactions, the charge for the service contract must be treated as a finance charge, added to other finance charges and included in the APR calculation. That’s pretty basic,” Hudson writes.

Read the article.

Authorities say car owners with vehicles inside the collapsed parking garage in Irving, Texas, won’t get to them for several days. No one was hurt, but more than 20 cars have been damaged.

When it comes to repairing their cars, Dallas attorney Micah Dortch of the Potts Law Firm says owners should consider going through their car insurance carriers first, according to a post on the website of Androvett Legal Media & Marketing.

“Individuals should turn in a claim to their own carrier, which should be faster than dealing with the building’s insurer,” says Dortch. “A finger-pointing match is very likely, which is why personal carriers are the best places for the individuals to turn. Then those insurance carriers can go after the general contractor or others responsible for the facility.

“The facility’s general liability insurance should cover any claims and then I expect they would subrogate to the builders of the garage, similar to what has happened with the Allen [Texas] and McKinney football stadiums.”

A firm that represented two software competitors for years without issue can’t ditch one client and then sue it on behalf of the other, a Massachusetts federal court said July 26, according to a Bloomberg Law report.

A Massachusetts federal judge said Sunstein Kann Murphy & Timbers LLP’s breach of duty of loyalty was clear and the situation was not “unforeseeable.”

Reporter Mindy L. Rattan explains: Sunstein represented tech companies Syncro Soft and Altova from 2011 to 2017, until Altova asked Sunstein to sue Syncro Soft for patent infringement in June 2017, the judge said. The next month, Sunstein sent a letter to Syncro Soft terminating the relationship to avoid a conflict of interest. Sunstein then sued Syncro Soft on behalf of Altova in August 2017. Syncro Soft moved to disqualify Sunstein, which the court granted.

Read the Bloomberg Law article.

CNBC is reporting that Google has promoted its general counsel and long-time employee Kent Walker to senior vice president of global affairs.

In his new role, Kent Walker will  oversee Google’s policy, legal, trust and safety, and corporate philanthropy teams.

“In this more public-facing position, his role will be similar to how former CEO Eric Schmidt often represented Google’s interests to governments, before he stepped down from his executive chairman role last December,” explains reporter Jillian D’Onfro. “It’s also similar to the role Brad Smith plays for Microsoft.”

Read the CNBC article.

Smart contracts can easily comply with offer, acceptance, and consideration requirements of conventional contracts, writes Mykyta Sokolov for lawless.tech.

“Requirements of intent and mutual assent may represent a problem; however, not so complicated smart contracts that are performed as it was intended by the parties can comply with such requirements.” she explains.

In her article, she explains the difference between external and internal smart contracts, especially relating to consideration, mutual assent and intent to be bound, electronic agency as a specific intent issue, and offer and acceptance.

Read the article.

A new post on the website of Dickinson Mackaman Tyler & Hagen which discusses what happens if the owners of a business decide to part ways.

A buy-sell agreement addresses voluntary separations – i.e. an owner wants to retire, finds other interests or simply loses the spark with his/her co-owners, explain authors Amy Plummer and Laura Wasson. The agreement also covers involuntary separations – events no one wants to think about, much less plan for – things like bankruptcy, becoming disabled, or passing away.

Their article covers general voluntary buy-sell terms, general involuntary buy-sell terms, tag-along rights, drag-along rights, put  options, and a Texas shoot-out. They also discuss provisions for calculating the valuation of the exiting owner’s interest.

Read the article.

Papa John’s International Inc. founder John Schnatter is suing the pizza chain, demanding internal files related to directors’ handling of his ouster for using a racial slur during a media-training session, reports Bloomberg via the Los Angeles Times.

Schnatter, who owns 29% of the company, resigned as chairman this month but remains on the board.

The report continues:

“Mr. Schnatter sought to inspect documents because of the unexplained and heavy handed way in which the company has treated him” after news surfaced of his use of a racial epithet, the founder’s lawyers said in the suit. After the report, Schnatter resigned as chairman of Papa John’s but later said he regretted the decision.

Read the LA Times article.

Attorneys at Texas-based Deans & Lyons and Brian Branch of New Mexico are suing ZTE USA, the domestic subsidiary of the Chinese cell phone company ZTE Corp., on behalf of a New Mexico man who suffered life-altering burn injuries he attributed to his recently purchased ZTE ZMax Pro Blu phone catching fire while he slept.

According to a release from the firm, the fire occurred after Jose Perez of Bernalillo County, New Mexico, plugged in the phone he had bought just weeks earlier, placing it beside his bed to charge. According to the lawsuit, the phone overheated and ignited while he slept. Perez sustained second- and third-degree burns that left him in critical condition. Still hospitalized nearly nine months later, Perez has had multiple surgeries and skin grafts, and is permanently disabled.

“We believe this phone was dangerous and the manufacturer knew it,” said Deans & Lyons co-founder Michael Lyons, who represents Perez. “We can demonstrate that this phone did not meet recognized industry standards concerning its Chinese manufactured lithium ion battery and its charging system.”

The suit alleges the ZTE phone uses a non-standard, terraced-cell design with non-compliant overhang between the electrodes, leaving it susceptible to overheating, exponentially increasing fire risks, according to the lawsuit.

“Cutting corners is an extension of ZTE’s corporate conduct that includes misappropriation of U.S. intellectual property, lying to the U.S. Government, and, according to the Pentagon, threatening the security of the United States. We intend to hold them accountable for this tragedy,” said Lyons.

The lawsuit, filed July 23, is Jose Antonio Perez v. ZTE (USA), Inc., MetroPCS Texas, LLC, and Ultimate Wireless CSR, LLC, Cause No. D-101-CV-2018-02167 in New Mexico’s First Judicial District Court in Santa Fe County.

A common attraction at major U.S. waterfronts and tourist destinations, the amphibious WWII-era vehicles known as Duck Boats have a long record of design flaws that make them unstable in rough water with often tragic results, according to a post on the web site of Androvett Legal Media & Marketing.

When a sightseeing boat in Branson, Missouri, sank last week in a sudden storm, killing 17, the tour company’s president acknowledged that the boat should not have been on the water during the storm. Safety experts renewed criticism of the boat’s unstable design, including a canopy that can prevent occupants from escaping. More than 40 people have died in Duck Boat accidents since 1999.

“The problems with these boats are well-known. This latest tragedy should spur operators everywhere to take a close look at safety procedures and design issues and ensure that personnel are properly trained to respond to emergencies,” said Steve Fernelius of Houston-based Fernelius Simon, who represents plaintiffs and defendants in personal injury and product liability litigation. “This tragedy must prompt operators to re-examine procedures to ensure there is no chance passengers will be caught in rough water. As these tragic deaths continue to be associated with Duck Boats, the potential liability for operators continues to grow.”

Colin Stretch, Facebook’s top lawyer and the man who led Facebook’s investigation into Russian election interference efforts following the 2016 U.S. presidential election, is leaving the company at the end of the year, according to a Recode report.

Stretch posted on Tuesday that he’s planning to leave the company but will stay on until the end of the year to help find his replacement, writes reporter Kurt Wagner.

Wagner adds:

Stretch’s departure comes during a stressful time for Facebook’s legal team. Not only is the company still grappling with the controversial role it played in the 2016 U.S. election — Russia used to platform to try and divide U.S. voters with inflammatory and inaccurate posts — but it’s also gearing up for the 2018 midterms. Company executives have been open in saying that they expect foreign governments might try again to sway voters.

Read the Record article.