The National Law Journal

The $25 million settlement that regulators announced with the food delivery service Grubhub on Tuesday should serve as a cautionary tale for other gig economy businesses tempted to engage in deception in their zeal to become a market leader, a Federal Trade Commission staff attorney says. "So, you've developed a technology-driven delivery platform connecting businesses to customers, powered by gig workers doing the driving. Now you need to convince businesses to offer products on your platform, customers to use the platform, and workers to make the deliveries," staff attorney Julia Solomon Ensor wrote on the FTC blog Tuesday. "With so many competitors out there, you may be considering whether there are any creative tactics you can use to gain an edge. Resorting to deceptive advertising claims or unfair business practices isn't the answer.," she wrote, citing as evidence the $25 million fine her agency and the Illinois Attorney General's Office have extracted from Grubhub following a multiyear probe. The statement Grubhub posted on its website said the company has "engaged cooperatively" with the FTC "as they reviewed our business and specific offerings that are prevalent in our industry." Though the statement doesn't elaborate on "offerings that are prevalent," information investigators turned up in their inquiry showed Grubhub executives incessantly watched how rivals addressed customer "pain points," such as the size of delivery fees, and were reluctant to stand pat when a competitor gained an advantage. For example, the suit states that Grubhub had no hidden fees before 2019, when it began engaging in what an executive at the time described as "a pricing shell game" that divided the actual delivery fee into a delivery fee and a service fee that did not show up until the end of the transaction. The suit quotes a former Grubhub executive as saying that the tactic “is working for [Uber Eats] and others and we need to figure out how to make this stuff work for us ASAP because we are just leaving opportunity on the table (literally) while likely losing out on potential new diners that react to this messaging.” Full story from James Palmer and Greg Andrews: https://lnkd.in/efX7Tdip

“Let me say this, there is no heroism in what Mangione did,” New York City Police Department Commissioner Jessica Tisch told reporters. “We don’t celebrate murderers and we don’t lionize the killing of anyone. Any attempt to rationalize this is vile, reckless and offensive towards deeply held principles of justice.” https://lnkd.in/eNq2NgzG

The student loan market is rife with misleading and fraudulent practices, the Consumer Financial Protection Bureau stated in a report released Monday. Much of the misconduct is related to the post-pandemic return to repayment, when 6 million people started paying back their student debt for the first time, the CFPB reported. In total, 28 million people resumed paying student loans this past year following a pause during the COVID-19 crisis, the bureau found. “These violations include failing to provide appropriate avenues for consumers to communicate with their servicers, sending deceptive billing statements, withdrawing excess amounts from borrowers’ deposit accounts, and numerous problems related to processing of [income-driven-repayment] applications,” the report stated. The CFPB highlighted illegal practices from student loan servicers, including private lenders, federal loan servicers and higher education institutions that provide private loans. “The entire higher ed sector is implicated here,” said Stephanie Michelle Hall, PhD, a higher education policy expert at the Center for American Progress. Hall said she was pleased the CFPB report confirmed findings from education research and policy groups, but added the report was still very alarming. It “points to what a lot of us in the field think is a forthcoming default crisis and seeing a lot more federal student loan borrowers default into 2025,” she said. The CFPB stated that lenders misled borrowers about refinancing rules, used illegal collection tactics such as falsely threatening legal action and issued deceptive billing statements. Private lenders also had not made clear to borrowers that refinancing loans would result in losing access to federal loan cancellation programs, the CFPB added. Full story from Dan N.: https://lnkd.in/e4xEjt6n

With just over a month left before President-elect Donald Trump’s inauguration, Biden-appointed U.S. Solicitor General Elizabeth Prelogar has urged the justices to turn down appeals from Exxon, Sunoco, Chevron and other companies seeking to put a stop to state court climate suits that threaten to cost Big Oil billions of dollars in damages. Prelogar filed her long-awaited brief in the cases last week. The court had asked for the views of her office back in June, signaling its interest in the high-stakes climate change cases. “The petitions for writs of certiorari should be denied,” Prelogar’s brief concluded, after arguing that the court lacks jurisdiction over the appeals. The companies are asking the court to review a Hawaii Supreme Court decision clearing the way for a state court to hear a lawsuit the city and county of Honolulu and a municipal water board have brought over the damage and massive remedial costs associated with climate change. In their lawsuit, Honolulu plaintiffs claim the companies knowingly hid the effects of greenhouse gas emissions for decades and spread disinformation to cast doubt on the science of climate change to the public. The defendants filed a motion to dismiss on the grounds that the claims are preempted by the federal Clean Air Act or the federal common law of transboundary air pollution. According to Prelogar, the Supreme Court lacks jurisdiction to hear the case. The Hawaii Supreme Court’s decision affirming the denial of a dismissal is an “interlocutory” order, whereas the Supreme Court only has the authority to hear appeals of “final judgments” from a state’s highest court, her office argued in its brief. “The Hawaii Supreme Court’s decision in this case is not final in that sense because it affirms the denial of a motion to dismiss and contemplates further proceedings,” the solicitor general wrote. “The party invoking this Court’s jurisdiction bears the burden of showing that ‘delaying review’ until final judgment might ‘seriously erode’ an ‘identifiable federal policy,’” Prelogar added. “Petitioners have failed to meet that burden here.” Full story from Jimmy Hoover: https://lnkd.in/eFaNJMvw

A divided U.S. Court of Appeals for the Tenth Circuit overturned its nearly 30-year-old precedent Monday in holding that a violation of the right to confidential attorney-client calls occurs only if a defendant can show a realistic possibility the prosecution benefited from hearing the communication. The Tenth Circuit overruled its 1995 decision in Shillinger v. Haworth that a defendant is prejudiced and a Sixth Amendment violation occurs whenever the government deliberately and for no legitimate law enforcement purpose becomes privy to confidential attorney-client communications. “[S]hillinger is a twenty-nine-year-old case, and we conclude that Shillinger is out of step with the Supreme Court’s cases on structural error and the ‘very limited class of cases’ to which structural error extends,” Judge Gregory Phillips wrote for the Tenth Circuit. “[W]e now overrule Shillinger and hold instead that a Sixth Amendment violation of the right to confidential communication with an attorney requires the defendant to show prejudice," Phillips added. "Here, [defendant Steven] Hohn concedes that he suffered no prejudice, so his claim automatically fails.” In its decision, the appeals court rejected Hohn’s bid for a retrial on drug and gun charges. The appeal concerned a recorded call that Hohn made to his attorney to discuss defense strategy on April 23, 2012, while in jail. Police obtained the recording through a subpoena while investigating Hohn's alleged involvement in a person's death, and lead prosecutor Terra Morehead listened to it. At one point, Morehead denied knowing about the call even though she had a copy of it, according to court papers. Phillips was joined in the opinion by Chief Judge Jerome Holmes and Judges Harris Hartz, Timothy Tymkovich, Scott Matheson Jr., Allison Eid and Joel Carson. Full story from Avalon Z.: https://lnkd.in/eWfuTSDT

The Federal Trade Commission on Tuesday banned businesses selling short-term lodging and live-ticketed events from using “junk fees” to disguise their total price. Providers of live-event tickets and short-term lodging must clearly advertise to customers the total price, including any fees, under the rule the FTC adopted on a 4-1 vote. The rule mandates that “businesses clearly and conspicuously disclose the true total price inclusive of all mandatory fees whenever they offer, display, or advertise any price of live-event tickets or short-term lodging,” the FTC stated. The total price must present any and all fees, including shipping and packaging costs, before customers enter payment information, the commission added. FTC Commissioner Melissa Holyoak, a Republican, wrote in a concurring statement that she did not support the regulation as proposed but that the final rule protects consumers and competition without expanding the agency's rulemaking authority. Commissioner Andrew Ferguson—a fellow Republican and President-elect Donald Trump's pick to succeed Khan next year—was the agency's sole dissenter. Ferguson wrote that his vote against the rule was in keeping with his post-election pledge to reject any proposed regulation not required by statute while Joe Biden is president. Ferguson added his dissent should not be viewed as his position on the rule’s merits or whether the incoming Trump administration should enforce the rule. “On the merits, Commissioner Holyoak correctly points out that the Final Rule bears little resemblance to the flagrantly unlawful version of the rule the Commission proposed more than a year ago,” Ferguson wrote. “It is therefore a significant improvement over what the Commission originally threatened to inflict on the American economy.” Full story from Dan N.: https://lnkd.in/eEiSDfbk

BREAKING from Jimmy Hoover: The U.S. Supreme Court said Wednesday that it will hear TikTok's appeal to avert a government-imposed sale or shutdown next month, taking up the video-sharing app's First Amendment challenge to the federal Protecting Americans from Foreign Adversary Controlled Applications Act. The court's announcement comes just two days after TikTok and its China-affiliated holding company ByteDance requested an emergency injunction barring the government from enforcing the law. The act, signed by President Joe Biden in April, requires TikTok to be either divested or shut down in the United States. The law's supporters claim the popular app is a national security risk and that the Chinese government can assert influence or even access user data to support interests adversarial to the United States. Opponents, however, have claimed a lack of evidence for such fears and say the law is a form of unconstitutional censorship. The Supreme Court has fast-tracked TikTok's appeal in light of the law's effective date of Jan. 19. Without an injunction, TikTok says the app will need to be shut down immediately, cutting off one of the country's most popular social media platforms, which claims to have 170 million monthly American users. Before waiting for the government's reply, the Supreme Court said it will formally hear the merits of the challengers' appeals on Jan. 10 and asked the parties to brief and argue whether Congress' TikTok ban violates the First Amendment, setting a total of two hours for oral argument. Opening briefs are due Dec. 27. “This case raises novel constitutional questions of profound significance for the entire Nation,” TikTok wrote in its emergency application. The law is set to go into effect the day before Donald Trump is sworn in as president. Asked about whether he would stop the ban, Trump said Monday that he has a “warm spot” in his heart for TikTok. Full story: https://lnkd.in/g9pDMxNr

After 2024, “it’s a whole different world” when it comes to Big Law compensation. https://lnkd.in/eWK5U9bC

President-elect Donald Trump and his team of advisers, including Elon Musk, are exploring radical changes to bank regulation, including shutting down the Federal Deposit Insurance Corp. and the Consumer Financial Protection Bureau or folding them into other agencies, according to news reports. However, former officials and legal experts say that eliminating those agencies, which protect the public from bank failures and abusive financial practices, is highly improbable, even with the White House and both chambers of Congress controlled by Republicans. While the financial sector has bemoaned what they perceive as overregulation under the Biden administration, few bankers, if any, would welcome the elimination of the FDIC. “It would make bankers very nervous,” said William Isaac, who became an FDIC board member in 1978 and was chairman from 1981 and 1985 under President Ronald Reagan. “The FDIC is the glue that holds the whole banking industry together. Getting rid of it is a very bad idea.” As evidence, Isaac pointed to his seven years with the FDIC, during which the agency handled some 3,000 bank failures, including nine of the 10 largest banks in Texas, the most banking insolvencies since the Great Depression. Created under President Barack Obama, the CFPB has never been popular with Republicans. Musk last month called for its elimination, saying, “There are too many duplicative regulatory agencies." While some Republicans consider the funding mechanism for CFPB unconstitutional, the U.S. Supreme Court rejected that claim earlier this year. And the next administration might even reinforce the CFPB in its mission. In September, Trump proposed to cap credit card interest rates at 10%, less than half than their current level. The proposal is similar to the CFPB’s credit card penalties final rule adopted earlier this year. Full story from James Palmer: https://lnkd.in/eCFpbNfv

Nearly a dozen Ukrainian companies represented by Hughes Hubbard & Reed may continue to pursue enforcement of a $34 million international arbitration award against Russia in the U.S. legal system, a federal court ruled. The arbitration exception to the Foreign Sovereign Immunities Act “strips Russia of immunity,” U.S. District Judge Trevor N. McFadden (below) wrote in his memorandum opinion filed Dec. 12. “And because the Court has subject matter jurisdiction and Russia does not dispute service, the Court also has personal jurisdiction over Russia.” Hughes Hubbard on behalf of Stabil LLC and 10 other Ukraine-based gas stations filed a petition in April 2022 asking the D.C. federal court to confirm their damages award against Russia. After Russia annexed the Crimean peninsula by force in 2014, the Geneva-based Permanent Court of Arbitration issued a final judgment in 2019 finding Russia liable for seizing gas stations in Crimea, according to McFadden’s decision. Russian companies have generally become more jaded of Western arbitrators since Russia’s full scale invasion of Ukraine in 2022. Full story from Sulaiman Abdur-Rahman: https://lnkd.in/eHy9ipeS