United States: State AGs In The News - December 30th, 2015

Antitrust

State AGs Take CIDs to the Movies

  • A group of State AGs is investigating movie theater management companies, AMC Entertainment Holdings, Inc., Cinemark Holdings, Inc., and Regal Entertainment Group, for alleged violations of state antitrust law.
  • AMC and Cinemark have disclosed in regulatory filings that they have both received civil investigative demands (CID) from Ohio, Texas, Washington, Florida, New York, Kansas, and the District of Columbia, asking for documents and responses to questions "concerning potentially anticompetitive conduct, including film clearances and participation in certain joint ventures." The State AGs' investigation comes in addition to a U.S. Department of Justice investigation disclosed in May.
  • The state investigation centers on whether the large theater companies are using their combined market share to influence studios into entering into exclusive agreements that preclude independent movie theaters and nonprofit film centers from carrying first run movies if the smaller theater is too closely located to a larger theater.

Consumer Protection

Daily Fantasy Sports Websites Suffer Déjà Vu in Illinois

  • Illinois AG Lisa Madigan issued an opinion in which she indicated that daily fantasy sports betting is illegal under the Illinois Criminal Code, which generally prohibits a person from "operat[ing] an Internet site" that offers "games of chance or skill" played for "money or other thing of value." Madigan indicated that daily fantasy sports does not fit under the broad exception to the gambling provision, which allows "the actual contestants in a bona fide sporting contest" to be paid to play a game of skill.
  • In response to the AG's opinion, DraftKings and FanDuel have filed lawsuits seeking to enjoin AG Madigan from shutting down daily fantasy sports betting in Illinois. DraftKings acknowledges in its complaint the potential for Illinois to cause a ripple effect, stating that "[AG Madigan's] opinion, if left unchecked, will not only force DraftKings to exit the State, but also have a ripple effect, irreparably banning DraftKings' operations throughout the nation and causing it to lose customer goodwill that can never be restored."
  • AG Madigan's legal analysis strikes a similar chord to those made by New York AG Eric Schneiderman in cease-and-desist letters sent to the two largest daily fantasy sports betting sites, DraftKings and FanDuel, in early November. As we indicated in prior posts, many state laws employ a similar definition of gambling, and defendants will likely continute to base arguments on an exception for fantasy sports in the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA). Both Schneiderman and Madigan drew distinctions between fantasy sports betting pools among friends or colleagues (believed to be allowed by UIGEA) and the type of wagers offered by daily fantasy websites like FanDuel and DraftKings.

FTC Offers Policy Guidance for Native Ads

  • The Federal Trade Commission (FTC) issued an enforcement policy statement on deceptively formatted online advertisements, and a business guide to explain how companies can avoid liability under the FTC Act when engaging in Internet marketing and publishing.
  • The policy statement specifically addresses "native advertising," where a company advertises through digital content that resembles news stories, articles, testimonials, product reviews, and other material differing in form from traditional advertisements. The FTC's main concern with native ads is that they can resemble the design, style, and functionality of the media which they accompany. Consumers may not be able to easily determine whether a particular article or post is an advertisement or substantive work.
  • The FTC indicates that the policy is based on the application of traditional consumer protection principles developed under Section 5 of the FTC Act to a rapidly evolving digital marketplace. Thus, it will continue to look to the "net impression" conveyed to consumers by the ads when determining if there is deception. The guide specifically indicates that advertisements will be found deceptive "if they convey to consumers expressly or by implication that they're independent, impartial, or from a source other than the sponsoring advertiser."
  • The guide focuses on the need for effective disclosure and offers examples of how a company can provide clear and conspicuous disclosures with various formats of native advertising. The FTC indicated that when assessing the effectiveness of disclosure, it will apply the perspective of a reasonable consumer; when ads target a specific audience, the perspective will be one of a reasonable member of the targeted group. As a general rule, the more an advertisement resembles content on the publisher's site—both in format and topic—the more likely that the FTC will require disclosure.

Consumer Financial Protection Bureau

CFPB Throws Wrench in the Works of Debt-Collection Mill

  • The Consumer Financial Protection Bureau (CFPB) entered into a consent order with Frederick J. Hanna & Associates, resolving claims that the Georgia law firm, and its three principal partners, violated the Fair Debt Collection Practices Act (FDCPA) and the Consumer Financial Protection Act (CFPA) through the use of deceptive court filings and faulty evidence.
  • In the complaint the CFPB alleged that Hanna & Associates filed lawsuits through an automated process completed predominantly by non-attorney staff, with an attorney signing the complaint. The process allegedly allowed the firm to generate more than 130,000 debt collection lawsuits over a two-year time frame. It further alleged that the firm made unsubstantiated claims in its complaints and used faulty sworn statements to intimidate debtor-defendants, but when challenged, the firm would move to dismiss the lawsuits.
  • The consent order requires the firm and the indicated principal partners to jointly pay $3.1 million as a civil penalty to the CFPB. It enjoins the firm and partners from filing, or threatening to file, debt-enforcement lawsuits unless there are specific documents reviewed by attorneys showing that the debt is accurate and enforceable. It also prohibits the use of affidavits as evidence if they do not specifically and accurately describe the signer's knowledge of the relevant facts and documents.

Financial Industry

Banking Regulators Team Up on FTC Act Enforcement

  • The Board of Governors of the Federal Reserve System (FRB) and the Federal Deposit Insurance Corporation (FDIC) reached settlements with WEX Bank and its institutionally-affiliated party, Higher One, Inc., for alleged deceptive practices in violation of Section 5 of the FTC Act. Under Section 8 of the FDI Act, banking regulators are given authority to enforce the FTC Act's prohibition on unfair or deceptive practices over the entities they regulate.
  • The FRB and the FDIC alleged that Higher One and WEX Bank omitted material information about fees and certain features (such as the locations of fee-free ATMs) associated with debit card accounts used by students to receive financial aid disbursements. As a result, the banks were alleged to have collected $31 million in improper fees from students over a two year period. The FRB had previously settled with Cole Taylor Bank regarding its affiliation with Higher One during the period in question, issuing a civil penalty of $3.5 million.
  • The settlements require Higher One to pay civil penalties of $2.23 million to both the Board and to the FDIC (for a total of $4.46 million). In addition, WEX Bank is required to pay a civil penalty of $1.75 million to the FDIC. The banks must also provide approximately $55 million in restitution to an estimated 1.47 million harmed students.

Ohio AG Pursues Piece of London Whale for Pensioners

  • Ohio AG Mike DeWine, representing the Ohio Public Employees Retirement System (OPERS), and together with public pension funds from Oregon and Arkansas as lead plaintiffs, reached a settlement with JPMorgan Chase & Co. to resolve allegations that the investment bank issued false and misleading statements when reporting trades made and positions held by the bank through a trader in its London office nicknamed the "London Whale."
  • The lawsuit alleged that JPMorgan misled investors during a 38-day period following the announcement of the bank's large position in certain derivative instruments. Plaintiffs claim that by describing the position as "risk management" or "hedging," when in fact it comprised illiquid and speculative bets that carried additional risk of loss, JPMorgan convinced investors that there would not be significant losses associated. Once the trading losses from those risky bets materialized, the plaintiffs claim JPMorgan's stock value plummeted, causing class members to collectively lose more than a billion dollars.
  • The settlement agreement requires JPMorgan to pay $150 million to the harmed investors. The class action was filed in U.S. District Court for the Southern District of New York and includes all investors who bought shares in JPMorgan from April 13, 2012 to May 21, 2012.

Intellectual Property

California AG Offshores Liability to Indian Firm

  • California AG Kamala Harris reached an agreement with Indian company Pratibha Syntex Ltd., to resolve allegations that the textile maker violated California Business Professional Code Section 17200 by using pirated software to gain an unfair advantage over its competitors.
  • In the complaint AG Harris argued that because Pratibha saved money by not paying licensing fees, it was able to hire additional employees and invest greater in research and development, thus giving it an unfair advantage over other firms manufacturing and selling clothing in California.
  • The stipulated final judgment requires Pratibha to pay $100,000 in restitution, and prohibits Pratibha from using unlicensed or pirated software, as well as from making copies of licensed software without the permission of the copyright holder. It also requires Pratibha to perform regular audits of the software on its computers, and to fix violations within 45 days.
  • More interesting than the precise terms of the settlement, this marks the first time that a State AG has obtained a judgment in state court against a foreign company for what was essentially alleged copyright violations occurring wholly abroad.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions