E-Briefs, News and Notes: July 2025

I submitted my first E-Brief during Covid as a way to connect with my fellow section members and keep up to date on most recent antitrust and competition law cases.  After just one E-Brief, I was hooked!  After several years, I was honored to become a Co-Editor.  E-Briefs has changed, grown, and evolved over time but the publication still remains a way to connect with fellow section members and learn about the latest and greatest cases and enforcement actions. 

E-Briefs holds editorial board meetings on the first Tuesday of every month to discuss cases and issues that we want to cover and publish.  All staff (referred to as “E-Briefers”) are welcome to suggest cases, discuss cases, and volunteer to draft an E-Brief.  We cover about four to six opinions in detail every month. For new lawyers, it is fun way to connect with other lawyers on both sides of the ‘v’ along with court clerks and government enforcers and to learn about the latest and greatest cases in our field.  As an E-Briefer, if you cover a recent case, your E-Brief is published!  Publication credits are a great way to get your name out there.  Even better, being in the know about what’s happening in our field and being conversant on the latest circuit split or most recent USSCT case, makes you a better lawyer.  For me, the procedural and legal nerd that I am, it just fun!  So, come try out E-Briefs, all are welcome!  Be warned – you will get hooked!!

Betsy Manifold
Editor

Caroline Corbitt
Editor

The July 10^th Los Angeles mixer connected summer associates, law students and new lawyers interested in Antitrust and Consumer Protection Law, with law firms, public agencies, legal departments and economic consulting firms.  We had a fantastic evening on the Perch Deck in downtown Los Angeles. Your energy and enthusiasm made it a great success!

Check out more photos from the event here.

The Antitrust and Unfair Competition Law Section is excited to once again seek applications for the New Lawyers to Watch award!

With this award, the Antitrust and Unfair Competition Law Section recognizes lawyers in the first eight years of their legal careers who have exhibited outstanding achievements in the practice of antitrust and unfair competition law. Last year, the Section was proud to give this recognition to four New Lawyers! 

Applications should be submitted by August 22, 2025.
Learn More

By Alex J. Tramontano and Avi Walfish

The underlying dispute arose when LabCorp introduced self-service kiosks at its locations in 2017, which were inaccessible to patients who are blind or visually impaired.[1] Despite in-person front-desk accommodations, the kiosks failed to provide equal access, prompting a legally blind plaintiff to sue under the ADA and California’s Unruh Civil Rights Act.

Plaintiff Davis, on behalf of other legally blind individuals, filed a class-action lawsuit against LabCorp. The District Court in the Central District of California, Judge Oguin, certified a damages class of “All legally blind individuals in the United States who visited a LabCorp patient service center in the United States during the applicable limitations period and were denied full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations due to LabCorp’s failure to make its e-check-in kiosks accessible to legally blind individuals.”[2] The Ninth Circuit affirmed the Certification Order.[3] LabCorp then filed a petition for certiorari challenging the Ninth Circuit’s affirmation of the certification of the class.

On June 5, 2025, the Supreme Court issued a per curiam order dismissing the writ as improvidently granted (“DIG”), thereby preserving the Ninth Circuit’s certification of the class action.[4]

Dismissed as Improvidently Granted

The Supreme Court’s dismissal stated simply: “The writ of certiorari is dismissed as improvidently granted. It is so ordered.”[5] This statement typically reflects the Court’s reluctance to decide when procedural complications undermine the appeal’s fitness for review. The procedural snafu that likely drove the dismissal involved two different class certification orders—an initial May 2022 order and a revised August 2022 order—but LabCorp only appealed the first one. At oral argument, the Justices expressed concern that LabCorp’s arguments about uninjured class members primarily applied to the August 2022 order, rather than the May 2022 order from which they were appealing.

Unresolved Questions?

The dismissal leaves some differences unresolved in the approaches adopted by various circuits handling class certification under Rule 23. Some circuits bar certification when damages classes include any uninjured members (Second, Eighth), while others permit certification if no more than a de minimis portion lacks injury (D.C., First). A third group largely defers the question to post-certification stages unless a great many class members lack standing (Ninth, Seventh, Eleventh).

For the Ninth Circuit, the dismissal preserves existing precedent that certification may proceed so long as individualized inquiries regarding damages would not “predominate over common questions,” consistent with Olean Wholesale Grocery Cooperative and related precedents.[6] As the Ninth Circuit stated, Circuit law does not preclude “certification of a class that potentially includes more than a de minimis number of uninjured class members.”[7] This remains significant for California practitioners handling ADA or consumer class actions, confirming that certification in the Ninth Circuit remains permissive for mixed-injury classes without an immediate requirement to exclude potentially uninjured members before certification.

Justice Kavanaugh’s Dissent

Justice Kavanaugh’s dissent took a contrasting approach to the majority’s procedural disposition. He dispatched the procedural issue, noting the August order did “‘not materially alter the composition of the class or materially change in any manner’ the original May class certification order.… The August order did not purport to certify a new class.”[8] He states, “I would hold that a federal court may not certify a damages class that includes both injured and uninjured members. Rule 23 requires that common questions predominate in damages class actions. And when a damages class includes both injured and uninjured members, common questions do not predominate.”[9]

The dissent raises broader policy concerns, warning of “coerced settlements” and their “widespread and significant” consequences. [10] Justice Kavanaugh argues that “overbroad and incorrectly certified classes can ultimately harm consumers, retirees, and workers, among others.” [11] His dissent suggests that, when a procedurally cleaner vehicle arises, he may vote to tighten predominance analysis in mixed-injury class actions, particularly in ADA contexts where statutory damages create substantial exposure.

Practical Impact and Conclusion

The dismissal thus preserves the Ninth Circuit’s approach on mixed-injury class certification as outlined in Olean. The practical impact is that Ninth Circuit law continues to allow more flexibility in class certification than other circuits, though Justice Kavanaugh’s dissenting opinion suggests continued scrutiny when the Court next addresses this issue on the merits.

[1] Laboratory Corporation of America Holdings is referred to herein as LabCorp.
[2] Davis v. Lab’y Corp. of Am. Holdings, 604 F. Supp. 3d 913, 934 (C.D. Cal. 2022), aff’d, No. 22-55873, 2024 WL 489288 (9th Cir. Feb. 8, 2024).
[3] Davis, 2024 WL 489288, at *1 (9th Cir. Feb. 8, 2024), cert. granted in part, 145 S. Ct. 1133, and cert. dismissed as improvidently granted, 605 U.S. —-, 145 S. Ct. 1608 (2025).
[4] Lab’y Corp. of Am. Holdings v. Davis, 605 U.S. —-, 145 S. Ct. 1608, 1608 (U.S. June 5, 2025) (per curiam).
[5] Id.
[6] Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, 31 F.4th 651, 669 (9th Cir. 2022) (en banc); see Lab’y Corp. of Am. Holdings, 145 S. Ct. at 1610 (Kavanaugh, J., dissenting).
[7] Olean, 31 F.4th at 669.
[8] Lab’y Corp. of Am. Holdings, 145 S. Ct. at 1610 (Kavanaugh, J., dissenting).
[9] Id. at 1609.
[10] Id. at 1612.
[11] Id.

U.S. v. Apple, Inc.,  No. 24-cv-4055 (JXN)(LDW), D.N.J. (June 30, 2025) (ECF 283)

By Anna Kang

I. Background

On June 30, 2025, Judge Julien Neals of the United States District Court, District of New Jersey, denied Apple’s motion to dismiss a lawsuit brought by the U.S. Department of Justice (DOJ) and Attorney Generals from twenty states for violating Section 2 of the Sherman Act by engaging in a series of anticompetitive and exclusionary conduct in the smartphone and performance smartphone markets.

In March 2024, the DOJ—initially joined by a bipartisan coalition of 16 state AGs, now expanded to 20—filed a major lawsuit targeting Apple’s iPhone, alleging that the company blocks critical access points from, and imposes contractual restrictions on, developers to maintain its monopoly power while maximizing its revenue.

As alleged, these critical access points are “gateways” that developers of messaging apps, smartwatches, and digital wallets rely on to improve user experience and compete with Apple’s equivalent products. Through contractual restrictions, Apple also allegedly impedes creation of “super apps” (apps with broad functionality and cross-platform operability) as well as cloud streaming apps—the availability of which would “reduce [iPhone] users’ need to purchase expensive phones with advanced hardware.” (4).

In short, the DOJ’s position is that such anticompetitive conduct harms competition and innovation, and lessens consumer choice “by restricting certain cross-platform technologies that would make it easier for consumers and developers to purchase and develop products for devices outside of the Apple ecosystem.” (3).

In August 2024, Apple moved to dismiss the case, disputing market calculations and anticompetitive effects while relying on refusal-to-deal jurisprudence in its defense. Judge Neals rejected Apple’s arguments, highlighting “significant entry barriers” to the alleged markets (18), and finding the refusal-to-deal doctrine inapplicable to Apple’s position. (21).

II. The court’s discussion

A. DOJ adequately alleges Apple’s possession of monopoly power in the relevant markets

First, the court found that the DOJ adequately pled the relevant smartphone and performance smartphone markets. Concerningthe performance smartphone market, the court recognized that it “constitutes a distinct submarket,” which “varies in price and quality from entry-level smartphones.” (14).  Apple contended that the relevant geographic market of smartphones is global, rather than the United States as defined by the DOJ. The court disagreed with Apple, citing factors such as “factual allegations of consumer behavior,” “valuable promotions” offered by U.S. retailers, “different prices” for the same iPhone across countries, and “regulatory requirements” barring foreign smartphone makers from entering the U.S. market. (15-16).

Having determined the contours of the relevant markets, the court found that Apple possesses monopoly power in both smartphone and performance smartphone markets. Key to the dispute is the minimum percentage of market share to infer monopoly power. (17). There, the court followed the 60 percent rule favored in the Third Circuit. (Id., citingRoyal Mile Co., Inc. v. UPMC, No. 10-1609, 2013 WL 5436925, at *30 (W.D. Pa. Sept. 27, 2013).)  Accordingly, Apple’s “dominant share[s]” in both markets – 65 percent in the smartphone market and 75 percent in the performance smartphone market – supports an allegation of monopoly power. (18).

Moreover, in light of consumer stickiness and investment costs to develop a new smartphone, the court held that there is a “significant” and “increasingly impenetrable barrier” to both smartphone markets. (18-19).  Apple’s arguments concerning “powerful competitors” like Samsung and Google remain to be dealt with during the summary judgment stage. (19).

B. DOJ adequately alleges Apple’s willful maintenance of monopoly power

Apple argued that the imposition of contractual restrictions falls within the lawful refusal-to-deal caveat, and therefore is not exclusionary conduct. (21). Judge Neals disagreed, reasoning that the DOJ’s allegations are not grounded in Apple’s failure to “to deal with its smartphone rivals, but rather that Apple’s conduct is imposing restrictions on developers and smartphone users.” (22-23). 

Notably, in reaching this conclusion, the court cited the recent, landmark ruling on the Google Adtech case, which rejects “application of refusal to deal framework to Google’s conduct that effectively ‘compelled its [ad] publisher customers to use [Google’s services]’).” (23) (citing United States v. Google LLC, No. 23-cv-108, 2025 WL 1132012, at *43 (E.D. Va. Apr. 17, 2025) (emphasis added). Judge Neal’s opinion addsto the refusal-to-deal jurisprudence, distinguishing, on the one hand, business decisions not to engage directly with competitors, and, on the other hand, setting rules affecting third parties’ ability to deal with those competitors.

The court also recognized implementing “technological barriers” as a form of anticompetitive conduct, drawing on cases such as Microsoft (253 F.3d 34) and CoStar Group (No. 23-55662, 2025 WL 1730270 (9th Cir. June 23, 2025)), where as a result of the barriers the use of rivals’ products is significantly reduced. (24-25).  The opinion then went on to credit the DOJ for advancing “allegations of technological barricades that constitute anticompetitive conduct.” (25). Those barriers on iPhone include: discouraging innovation of super apps, suppressing third-party cloud streaming services, disadvantaging cross-platform messaging apps, and limiting non-Apple digital wallets and smartwatches. (25-26).

The court leaves the dispute of whether Apple has good business reasons to limit its “own propriet[ary] technology available to third parties” to be resolved through discovery. (27).

Judge Neals’ decision marks a further success in the DOJ’s ongoing antitrust enforcement efforts against dominant technology companies.

By David Lerch

The Sherman Act has a four-year statute of limitations, 15 U.S.C. § 15b, but if a defendant engages in fraudulent concealment, the limitations period does not begin to run until the plaintiff discovers the violation. Supermarket of Marlinton, Inc. v. Meadow Gold Dairies, Inc., 71 F.3d 119, 122 (4th Cir. 1995).  To toll a limitations period through fraudulent concealment, a plaintiff must demonstrate: (1) the party pleading the statute of limitations fraudulently concealed facts that are the basis of the plaintiff’s claim, and (2) the plaintiff failed to discover those facts within the statutory period, (3) despite the exercise of due diligence.  The Fourth Circuit concluded that an agreement that is kept “non-ink-to-paper” to avoid detection can qualify as an affirmative act of concealment sufficient to toll the statute of limitations.  These tolling issues may be more likely to arise if no-poach enforcement is reinvigorated following the DOJ’s criminal jury trial conviction in United States v. Lopez, No. 2:23-cr-00055 (D. Nev.), on April 14, 2025, in a wage-fixing case.

District Court Decision

Plaintiffs brought a putative class action against nineteen large shipbuilders and naval-engineering consultancies and a recruitment agency, alleging a “no-poach” conspiracy in which the companies agreed not to recruit each other’s employees in an effort to drive down wages. The largest shipbuilders—Defendants General Dynamics and Huntington Ingalls—own the five major private U.S. shipyards that build warships, and another 40% of naval engineers work for naval-engineering consultancies, which also often work as contractors for the federal government (Opinion at 4). Throughout the class period, there was an industry-wide shortage of naval engineers, so a high degree of labor mobility and competition would be expected. Still, naval engineers generally spend their entire careers without being solicited by a rival firm, defendants maintained relatively uniform compensation structures, and salaries were far below what would be available in a competitive market (Opinion at 5). Industry insiders stated that the firms had a gentlemen’s agreement that they would not actively recruit people from competitors, including a “do not hire list” (Opinion at 6).  Plaintiffs allege Defendants concealed this conspiracy by carefully avoiding the creation of any documentation of its existence (Opinion at 7). Several of the interviewees described the conspiracy as a gentlemen’s agreement and described the agreement as “non-ink-to-paper,” which was passed on only as verbal instructions from executives to managers.  Plaintiffs allege the agreement was enforced through private phone calls between high-level executives and unofficial retribution.   No named Plaintiff had worked for any Defendant since 2013, so the district court found that the case was barred by the Sherman Act’s four-year statute of limitations, concluding that a “non-ink-to-paper” agreement cannot constitute an affirmative act of fraudulent concealment to toll the limitations period.

The district court granted Defendants’ Rule 12(b)(6) motion in April 2024, finding  Plaintiffs’ claims were time-barred by the Sherman Act’s four-year statute of limitations. After a review of Fourth Circuit fraudulent-concealment case law, the Court concluded that Plaintiffs could not succeed on their claim that, by the creation of and participation in a secret conspiracy, the Defendants committed an act of concealment that tolls the statute of limitations because Defendants’ alleged non-ink-to-paper agreement was simply a failure to admit wrongdoing. Scharpf v. Gen. Dynamics Corp., No. 1:23-cv-1372, 2024 WL 1704665, at *8 (E.D. Va. Apr. 19, 2024).

Heightened Pleading Standards Under Rule 9

Normal pleading standards are heightened for allegations of fraudulent concealment by Federal Rule of Civil Procedure 9(b), which states that parties must allege fraud with particularity. However, the Court noted that it applied a “relaxed Rule 9(b) standard” in “cases involving alleged fraud by omission or concealment”—such as allegations of a non-ink-to paper agreement—because “it is well-nigh impossible for plaintiffs to plead all the necessary facts with particularity, given that those facts will often be in the sole possession of the defendant.” Corder v. Antero Res. Corp., 57 F.4th 384, 402 (4th Cir. 2023) (Opinion at 8). A District Court considering a fraudulent-concealment case “should hesitate to dismiss a complaint under Rule 9(b) if the court is satisfied: (1) that the defendant has been made aware of the particular circumstances for which [it] will have to prepare a defense at trial, and (2) that plaintiff has substantial pre-discovery evidence of those facts.” Edmonson, 922 F.3d at 553 (quoting Harrison v. Westinghouse Savannah River Co., 176 F.3d 776, 784 (4th Cir. 1999)) (Opinion at 8-9).

Affirmative Acts Standard

The Court noted that the Supreme Court has stated “that the fraudulent concealment tolling doctrine is to be ‘read into every federal statute of limitations,’” including the Sherman Act. Marlinton, 71 F.3d at 122 (quoting Holmberg v. Armbrecht, 327 U.S. 392, 397 (1946)).  The Court noted that in a series of decisions in the 1980s and 1990s, the Circuits coalesced around three standards: (1) the separate-and-apart standard, (2) the self-concealing standard, and (3) the affirmative-acts standard (Opinion at 10).  Under the separate-and-apart standard, the plaintiffs must show that the defendants engaged in fraudulent concealment separate and apart from the antitrust conspiracy (Opinion at 10).  Under the self-concealing standard, a plaintiff merely must prove that a self-concealing antitrust violation has occurred (Opinion at 11). Finally, under the intermediate affirmative-acts standard, a plaintiff must prove that the defendants affirmatively acted to conceal their antitrust violations, but the plaintiff’s proof may include acts of concealment involved in the antitrust violation itself. (Opinion at 11).

The Court stated that the Circuits have primarily adopted the affirmative-acts standard. The First, Fifth, Sixth, and Ninth Circuits use the affirmative-acts standard. See Berkson v. Del Monte Corp., 743 F.2d 53, 56 (1st Cir. 1984); Pinney Dock & Transp. Co. v. Penn Cent. Corp., 838 F.2d 1445, 1472 (6th Cir. 1988); Conmar Corp. v. Mitsui & Co. (U.S.A.), 858 F.2d 499, 505 (9th Cir. 1988). In the Second, Eleventh, and D.C. Circuits, a plaintiff can either show an affirmative act of concealment or that the defendant committed a self-concealing violation. See New York v. Hendrickson Bros., 840 F.2d 1065, 1083–85 (2d Cir. 1988); Foudy v. Indian River Cnty. Sheriff’s Off., 845 F.3d 1117, 1124 (11th Cir. 2017); Riddell v. Riddell Wash. Corp., 866 F.2d 1480, 1491–92 (D.C. Cir. 1989). In contrast, by an evenly divided en banc panel, the Tenth Circuit affirmed a district court that applied the separate-and-apart standard. See Colorado ex rel. Woodard v. W. Paving Const. Co., 630 F. Supp. 206, 208, 210 (D. Colo. 1986), aff’d by an equally divided court, 841 F.2d 1025 (10th Cir. 1988) (en banc) (per curiam).

The Court explained that its decision in Marlinton supported the conclusion that unwritten agreements can constitute fraudulent concealment (Opinion at 11). In that case, an official testified to secret meetings with officials from other dairies to fix prices, explaining that these meetings were purposefully “conducted away from the office” and that he would fill out his expense reports “in such a manner” that nobody would learn of the meetings (Opinion at 12). The court rejected the separate-and-apart standard as too stringent and found the self-concealing standard inapplicable because concealment is not a necessary element of a price-fixing violation, and instead adopted the intermediate affirmative-acts standard. The Court also cited two District Court cases concluding that secret meetings or agreements could constitute affirmative acts of concealment. (Opinion at 13, citing Jien v. Perdue Farms, Inc., No. 1:19-cv-2521, 2020 WL 5544183, at *13 (D. Md. Sept. 16, 2020), (“off the books” “secret meetings” regarding wage data “plausibly constitute affirmative acts of concealment”) and Pro Slab, Inc. v. Argos USA LLC, No. 2:17-cv-3185, 2019 WL 4544086, at *14 (D.S.C. Sept. 19, 2019) (allegations regarding anticompetitive agreements during secret meetings and misrepresentations as to market conditions” in price-increase letters to customers amounted to more than a mere “failure to admit to wrongdoing.”)

The Court rejected Defendants’ argument that a secret agreement is not an affirmative act of concealment, noting that a previous Fourth Circuit opinion, Pocahontas Supreme Coal Co. v. Bethlehem Steel Corp., 828 F.2d 211 (4th Cir. 1987), was ambiguous as to whether it set forth a fraudulent concealment standard or rested on whether sufficient facts had been alleged (Opinion at 14). The Court stated that in Marlinton, the Fourth Circuit determined that Pocahontas “did not expressly adopt any [fraudulent concealment] standard[]” at all, and instead “simply examined the allegations of the complaint and concluded that the plaintiff had failed to allege facts sufficient to invoke the fraudulent concealment doctrine” (Opinion at 15, citing Marlinton, 71 F.3d at 122).  Likewise, as to Robertson v. Sea Pines Real Estate Cos., 679 F.3d 278 (4th Cir. 2012), the Court stated that it was uncertain whether the district court dismissed the complaint because: (1) the plaintiffs’ allegations were non-particularized, (2) mere failure to inform is legally insufficient, (3) the plaintiffs argument—that the defendants fraudulently concealed their secret agreement in by-laws—was fundamentally implausible, or (4) secret meetings are insufficient as a matter of law (Opinion at 16-17).

Plaintiffs Sufficiently Allege Fraudulent Concealment

The Scharpf  Court stated that, as no named Plaintiff had worked for Defendants since 2013, Plaintiffs must adequately plead affirmative acts of fraudulent concealment to avoid their claims being time-barred and concluded that, under a relaxed Rule 9(b) standard, Plaintiffs had pled affirmative acts of fraudulent concealment with particularity (Opinion at 18).  The Court concluded that Plaintiffs adequately alleged that Defendants engaged in affirmative acts by creating an illicit no-poach agreement that they deliberately kept non-ink-to-paper. The complaint quotes multiple industry insiders who acknowledge the existence of the no-poach agreement: (1) one witness “confirmed the existence of a ‘gentlemen’s agreement’ among these firms that ‘you didn’t recruit people’ from competitors;” (2) “at least one witness” verified each engineering Defendant’s “adherence to the industry’s no-poach regime;” (3) Defendants have “carefully avoid[ed] putting anything in writing” to “conceal[] their unlawful conduct;” and (4) “Managers with hiring authority repeatedly and independently confirmed the existence of an industry-wide ‘gentlemen’s agreement[.]’”  The Court concluded that these allegations meet Rule 9(b)’s particularity requirement, which is relaxed, but not eliminated, in “cases involving alleged fraud by omission or concealment” like this one, noting that: (1) Defendants allegedly avoided detection by transmitting the agreement orally from executives to managers and by referring to it obliquely; (2) Defendants took these steps “to evade detection or accountability” and (3) the interviewees—who consistently and independently describe a gentlemen’s or non ink-to-paper no-poach agreement—show that Plaintiffs have obtained “substantial prediscovery evidence” of Defendants’ alleged affirmative acts of concealment. Edmonson, 922 F.3d at 553. Rather than pleading based on information and belief, the bulk of Plaintiffs’ allegations are quotes from interviews with industry insiders.

The Court majority disagreed with the dissent’s argument that it was applying the self-concealing standard, noting that a self-concealing violation occurs only when deception or concealment is a necessary element of the antitrust violation and that price-fixing is not inevitably deceptive or concealing and the alleged illegal act is a no-poach conspiracy, which—just like a price-fixing conspiracy—is not inherently deceptive or concealed given that Defendants could openly refuse to hire each other’s employees (Opinion at 19-20).  Defendants allegedly covered up their no-poach conspiracy by, among other things, “carefully avoiding putting anything in writing” and using coded language (Opinion at 20).

Even if a plaintiff adequately alleges affirmative acts, such as a non-ink-to-paper agreement, the plaintiff must still allege facts sufficient to infer that the defendants performed the acts with the intent to prevent or deceive others from discovering their scheme. Courts usually must infer intent from circumstantial evidence. The Court explained that this is why Rule 9(b) states that intent may be alleged generally, and why there is no heightened pleading standard as to the intent elements of fraudulent allegations. See United States ex rel. Taylor v. Boyko, 39 F.4th 177, 197 n.14 (4th Cir. 2022) (Opinion at 20-21), and stated that Courts should first consider whether the affirmative acts themselves imply fraudulent intent (backdated documents versus a response to a question deigned to deflect litigation).  For allegations of unwritten agreements, it will sometimes be difficult to infer fraudulent intent: perhaps it was just simpler for the defendants to communicate orally, versus if an unwritten agreement allegedly had well-defined rules, was in effect for an extended period, or had many participants, such that it would be easier to infer fraudulent intent. Courts should also consider whether the underlying violation—the violation that the affirmative acts are intended to cover up—is obviously illegal. When the alleged violation presents “extremely difficult and particularly close questions of law,” it is more difficult to infer that an affirmative act was intended to avoid detection, as defendants may not have even realized that their actions were illegal. Boland, 868 F. Supp. 2d at 516 (rejecting allegations of affirmative acts of concealment where underlying allegation was that a real estate information-sharing organization’s rules were designed to exclude innovative brokerages) (Opinion at 21-22).

Applying Rule 8’s more lenient standard, the Court concluded that it could infer from Plaintiffs’ allegations that Defendants’ affirmative acts were intended to avoid detection. The Court stated that at the most basic level, it is hard to imagine that a decades-old multilateral agreement—with a clear and apparently anticompetitive rule (you shall not hire your coconspirators’ employees) and a clear exception (unless the employee first applies to you)— would remain unwritten merely for the sake of convenience (Opinion at 22). 

Even though Plaintiffs alleged an affirmative act of concealment with particularity and with the requisite intent, the Court stated that the claim must be dismissed if they failed to exercise due diligence in uncovering the alleged conspiracy. It is possible for a plaintiff to satisfy the due diligence requirement without demonstrating that it engaged in any specific inquiry because if the plaintiff was not on inquiry notice, then there is nothing to provoke inquiry.  A plaintiff is on inquiry notice “if the plaintiff (1) believes he might have been harmed and (2) knows who is responsible for that harm.” SD3 II LLC v. Black & Decker (U.S.) Inc., 888 F.3d 98, 113 (4th Cir. 2018) (Opinion at 24).  The Court stated that Plaintiffs never alleged that they were aware of the no-poach conspiracy before that investigation—on the contrary, they state that they “did not and could not have uncovered Defendants’ conspiracy with the exercise of reasonable diligence. The Plaintiffs at all times believed that they were being compensated at competitive levels and were unaware of the agreement to pay sub-competitive wages.”  Defendants argue that “Plaintiffs have pled their way into inquiry notice” because (1) the alleged conspiracy was widely distributed and so Plaintiffs must have caught a whiff of it and (2) Plaintiffs were on inquiry notice because they allege naval engineers generally spend their entire careers without being solicited by a rival firm,” but the Court concluded that these both were questions of fact.

Frasco v. Flo Health, Inc., 3:21-cv-00757

By James Dugan

In late May, Judge James Donato of the U.S. District Court for the Northern District of California ruled on summary judgment motions filed by Meta and Flo Health Inc.—both defendants in the ongoing Frasco v. Flo Health, Inc. litigation.  See Frasco v. Flo Health, Inc., No. 21-CV-00757-JD, 2025 WL 1476905, at *3 (N.D. Cal. May 22, 2025).  The lawsuit stems from 2021, when Erica Frasco filed the putative class action, alleging that a cell phone application referred to as the Flo App surreptitiously transmitted users’ highly personal information about menstruation, ovulation, and pregnancy goals to Google and Meta through their integration of software-development kits into the app.  Just before ruling on the summary judgment motions, Judge Donato had granted in main part the motion for class certification filed by 8 named plaintiffs, including both a nationwide class (“All Flo App users in the United States who entered menstruation and/or pregnancy information into the Flo Health App between November 1, 2016, and February 28, 2019, inclusive.”) and a California subclass (“All Flo App users in California who entered menstruation and/or pregnancy information into the Flo Health App while residing in California between November 1, 2016, and February 28, 2019, inclusive.”).  See Frasco v. Flo Health, Inc., No. 21-CV-00757-JD, 2025 WL 1433825, at *20 (N.D. Cal. May 19, 2025) (“CC Order”).

Judge Donato analyzed Meta’s and Flo Health Inc.’s motions separately.  With respect to Meta, the court granted summary judgment on the claim under the Wiretap Act, 18 U.S.C. § 2511, reasoning that there is no liability if one party gives prior consent and that “the undisputed record shows that Flo consented to Meta’s data collection practices.”  The court also granted summary judgment on claims under the California Comprehensive Computer Data Access and Fraud Act (CDAFA), Cal. Pen. Code § 502 and “on individual named plaintiffs’ claim that Meta aided and abetted Flo’s intrusion upon seclusion.”  Concerning the former, the court reasoned that the expert plaintiffs relied upon for the claim had been excluded from testifying at trial under FRCP 702, and certification had been denied as well in the CC Order.  With respect to the latter, the court pointed to a prior summary judgment order that granted Google’s motion on “a very similar aiding-and-abetting claim,” reasoning that “Plaintiffs’ evidence for this claim is not materially different from the evidence” proffered there.  In the Google summary judgment order, the court had reasoned that aiding and abetting under California law “requires a defendant to reach a conscious decision to participate in a tortious activity” and that “Plaintiffs did not identify ‘with reasonable particularity’ a non-speculative basis in the record from which a jury could conclude that Google had the requisite knowledge.”  Frasco v. Flo Health, Inc., No. 21-CV-00757-JD, 2024 WL 4280933, at *3 (N.D. Cal. Sept. 23, 2024).  Without any analysis, the court also granted summary judgment on plaintiffs’ UCL claim.  

Despite this, Meta was unable to completely bow out of the lawsuit as the court denied summary judgment on the claims under the California Invasion of Privacy Act (CIPA), Cal. Pen. Code §§ 631-32.  The court reasoned, “Disputes of fact abound with respect to the scope of consent, the timing of Meta’s ‘interception’ or ‘eavesdropping,’ whether Meta ‘intended’ to intercept communications, whether Meta’s interception occurred while the communications were ‘in transit,’ and the like.”  The court also noted that class certification had been granted for the § 632 claim but was denied for the § 631 claim in the CC Order, thus meaning that only “the § 632 claim will proceed on a classwide basis for the California subclass while the § 631 claim will proceed solely for [three individual plaintiffs.”

The court was less receptive to Flo’s motion for summary judgment, granting it only with respect to the named plaintiffs’ implied contract and UCL claims, “unjust enrichment claim to the extent it is asserted as an independent cause of action, as it overlaps with plaintiffs’ other substantive claims” and claims asserted by a plaintiff who did not start using the Flo App until after the class period.  The court denied summary judgment on arguments that “all claims are time barred,” reasoning that there were “fact issues about the applicability of the fraudulent concealment doctrine” and that it would be for the jury to determine if “Flo’s privacy disclosures sufficed to give users constructive notice of the alleged misconduct.”  The court also denied Flo’s request to enforce the class waiver in its terms of use, pointing to the CC Order where Judge Donato provided a thorough analysis as to why “the waiver is unconscionable on procedural and substantive grounds for many of the same reasons as those given in [Discover Bank v. Superior Ct., 36 Cal. 4th 148 (2005)] and the California cases that followed.” CC Order at 11. 

Along with denying the motion in other regards, the bulk of the court’s analysis set forth the reasons plaintiffs’ claim under the Confidentiality of Medical Information Act (CMIA), Cal. Civ. Code §§ 56 et seq., was allowed to proceed.  Flo had argued that it is not a “Provider of health care” and that the “CMIA did not apply to pregnancy and fertility tracker apps like Flo from 2016 through 2019.”   The court rejected this, reasoning that “Flo ignores the plain text of both § 56.05(j) and § 56.06(b).”  Again, pointing to the CC Order, Judge Donato found numerous “fact disputes about Flo’s services and practices” which precluded summary judgment.  Quoting Cal. Civ. Code § 56.05(j), the court also found Flo’s argument that because the data was “de-identified,” it was not “medical information” unavailing.  There, the court held that a reasonable jury could find that some transmitted information “include[d] or contain[ed] any element of personal identifying information sufficient to allow identification of the individual.”  Accordingly, the CMIA claim will proceed to trial on a classwide basis. 

While a sparse opinion, Judge Donato’s ruling provides insight into how the CMIA can apply to medical-based apps.  Moreover, the CC Order is an important example of plaintiffs eluding the confines of class action waivers. 

The jury trial started on July 21, 2025.  See ECF No. 632.

Gamboa v. Apple Inc., No. 24-CV-01270-EKL, 2025 WL 1684890 (N.D. Cal. June 16, 2025)

By Wesley Sweger

On June 16, 2025, Judge Eumi Lee of the Northern District of California denied Apple’s motion to dismiss a second amended complaint alleging that Apple’s iCloud restrictions violate Section 2 of the Sherman Act and California’s Unfair Competition Law (“UCL”). This ruling follows the court’s February 2025 dismissal of Plaintiffs’ first amended complaint. A summary of that opinion can be found in the March 2025 E-Brief on the CLA Website. Plaintiffs subsequently “added substantial new allegations to address the pleading deficiencies.” 2025 WL 1684890 at *1.

Background

Apple offers a cloud storage platform called iCloud, which allows users to store various types of data—including photos, videos, music, device settings, and apps—on remote servers and access them across Apple devices. While third-party cloud storage providers can store most types of data, iCloud is the only platform permitted to store certain “restricted files,” such as “app data and device settings” “needed to restore a device when it is replaced” or after a factory reset. 2025 WL 660190, *1. Plaintiffs—two individuals seeking to represent a nationwide class of consumers—alleged that these file restrictions confer “an enormous structural advantage” on iCloud that prevents rivals from offering a “full-service” alternative. Id.

Plaintiffs bring claims for monopolization, attempted monopolization, and a UCL violation.Apple moved to dismiss, arguing that the claims are time-barred and insufficiently pled.

Market Definition

The parties disputed whether Plaintiffs plausibly define a relevant product market that includes all economic substitutes for iCloud. Plaintiffs allege two alternative market definitions: (1) a market for cloud platforms capable of hosting all types of files (i.e., a “full-service,” iCloud-only market); and (2) a broader market for all cloud storage on Apple mobile devices. The court did not rule on the viability of the iCloud-only market but held that Plaintiffs plausibly allege the broader market.

Apple argued that the broader market improperly excludes local storage as an economic substitute for cloud storage. The court disagreed, finding that cloud storage offers distinct features—such as automatic backup, cross-device access, and a reduced risk of data loss—that local storage lacks. The court noted that whether local storage is a sufficient substitute raises factual questions that cannot be fully resolved at the pleading stage.

Monopoly Power — High Market Share

Plaintiffs alleged that Apple holds a 96.1% share of cloud storage revenue on Apple devices, based on data from industry analysts. The court found this figure sufficient to plausibly allege monopoly power.

Barriers to Entry

Apple argued that barriers to entry were implausible given that other major technology firms have entered the market. The court rejected this argument, reasoning that Apple’s sustained dominance despite such entry supports the inference of significant entry barriers.

Barriers to Expansion

The court also credited Plaintiffs’ new allegations regarding barriers to expansion. According to Plaintiffs, Apple’s rivals have failed to grow their user base in recent years, despite iCloud’s allegedly higher prices and lower quality. The court held that this persistence in market dominance further supports the plausibility of monopoly power.

Anticompetitive Conduct (Tying)

Plaintiffs reasserted their tying claim under Section 2 of the Sherman Act after the court dismissed it under Section 1 due to the absence of concerted conduct. Apple challenged whether there was a tying arrangement between its mobile devices (the tying product) and iCloud (the tied product)—i.e., whether Apple sells mobile devices only on the condition that buyers also purchase iCloud, or that buyers agree not to purchase cloud storage from other suppliers.

The court found Plaintiffs plausibly allege a tying arrangement in the form of a “technological tie,” wherein Apple uses its product design to exclude rivals from the cloud storage market. Quoting Areeda & Hovenkamp, the court explained, a technological tie requires “the defendant’s power in some primary product, as well as its product design that excludes rivals in a market for a secondary product.” 2025 WL 1684890 at *4.

Although users are not required to purchase iCloud, the court found that Apple’s file restrictions could have a coercive effect, as evidenced by iCloud’s dominant market share despite allegedly inferior quality and higher prices.

Attempted Monopolization

Apple argued that specific intent cannot be inferred from exclusionary conduct alone. The court disagreed, noting that such an inference may be appropriate when the defendant already possesses monopoly power. The court explained that conduct not probative of monopolistic intent in a competitive market may be “clearly exclusionary” when performed by a monopolist. Id. Because Plaintiffs allege Apple is already a monopolist, specific intent could be inferred from its exclusionary conduct.

UCL

Because Plaintiffs plausibly allege a Sherman Act violation, the court allowed the UCL “unlawful” prong claim to proceed. The court did not reach whether the “unfair” prong was independently satisfied.

Statute of Limitations

The court reaffirmed its prior holding that it is premature to dismiss Plaintiffs’ claims as time-barred. Plaintiffs allege a continuing violation based on Apple’s ongoing enforcement of its file restriction policy. However, the court again expressed skepticism toward Plaintiffs’ alternative theory that the statute of limitations runs from the date of each iCloud purchase, rather than from the date of Apple’s allegedly anticompetitive conduct.

In re Alphabet, Inc. Shareholder Derivative Litigation

By James Rich and Alex Tramontano

In re Alphabet, Inc. Shareholder Derivative Litigation arose from consolidated shareholder actions brought on behalf of Alphabet Inc. (“Alphabet”), nominally, against the company and certain executives and members of its board. The shareholders allege the individual defendants engaged in conduct that facilitated and concealed anti-competitive practices, which ultimately damaged the company in the form of money spent on investigations and civil actions, potential fines, and loss of brand reputation.[1] Both complaints seek to hold the individual defendants responsible and redress the harm caused to the company by the alleged anti-competitive behavior.

Settlement Terms

On May 30, 2025, the parties filed a settlement agreement in the Northern District of California. The settlement includes an agreement from Alphabet to invest in regulatory compliance and implement a series of corporate governance reforms. These include the creation of a new Board-level Risk and Compliance Committee (“RCC”); the establishment of a senior-VP-level Trust and Compliance Committee (“TCC”), which will report directly to the CEO and RCC, to oversee regulatory and compliance matters, as well as a Trust and Compliance Steering Committee (“TCSC”) to provide recommendations and escalations to the TCC; the adoption of enhanced internal policies to preserve communications; and a commitment to invest $500 million over the next ten years in compliance to support these initiatives. [2]

The settlement focuses on structural reforms to be undertaken by Alphabet. [3] There is no direct indication the individual defendants contributed to the settlement or the $500m Alphabet has committed to spend on compliance.  Alphabet does indicate, to the extent available, it will cause insurance proceeds from the defendants’ insurers to pay for any attorneys’ fee and expense award in excess of any applicable self-insured retention.[4]

Supplemental Briefing

Judge Lin had questions for both sides and issued an order requiring supplemental briefing.  Questions to Alphabet focused on, regardless of settlement:

• How much money did Alphabet spend on compliance in the last 10 years?
• How much money is Alphabet projected to spend on compliance in the next 10 years?
• How many of the corporate reforms agreed to in the settlement would Alphabet implement?[5]

While Alphabet’s lawyers acknowledged that the company was already in the process of expanding its compliance spending and regulatory oversight practices, they insisted that the settlement represents an enumeration of their commitment to targeted reform.[6]

The substantive question posed to the plaintiffs focused on the complaint’s allegations the Board ignored red flags because “it was controlled by insiders” and how the proposed settlement would fix that purported issue.[7] The Plaintiffs stated they believe this settlement will generally increase “Board-level oversight,” which will help the company moving forward, but did not provide more details.[8]  They argued the newly formed RCC represents an innovation that “[r]elatively few major public companies have,” and it will assume responsibility for regulatory oversight matters.[9] While it is not entirely clear from the settlement agreement nor the supplemental briefing how the RCC members will be chosen, they suggest that the RCC will enhance the Board’s role and visibility into compliance oversight.[10] Plaintiffs also claim it may represent an innovative governance mechanism that other technology companies could adopt. These new policies, they argue, could represent “a benchmark for other major American corporations.”[11]

Preliminary Approval Granted

The proposed settlement received preliminary approval on July 8, 2025.[12] The Court will hold a settlement fairness hearing (“Settlement Hearing”) on September 30, 2025 at 1:30 p.m., to be held both in person at the San Francisco Courthouse of the United States District Court for the Northern District of California, Courtroom 15, 18th Floor, 450 Golden Gate Ave., San Francisco, CA 94102, and online via the Court’s public hearing Zoom Webinar.[13]

Comparison to Notable Derivative Claims Stemming from Antitrust Actions

This agreement mirrors settlements in similar antitrust derivative shareholder actions, most notably Pfizer and Balmer (Microsoft). [14] Like Alphabet, those settlements created and provided funding for compliance/antitrust oversight committees, but did not expressly require any payment from the individual stakeholders named as defendants. The most notable difference between Alphabet and those settlements is the amount of money reserved by Alphabet, which is five to ten times the amount set aside in those cases (adjusted for inflation).

[1] In re Alphabet, Inc. Shareholder Derivative Litigation, No. 3:23-cv-01186-RFL (“Lead Action”) and No. 3:21-cv-9388-RFL (“Consolidated”) (all ECF citations herein refer to the docket of the Lead Action).
[2] Plaintiff’s Motion for Preliminary Approval, ECF No. 86 at 2-4.
[3] Plaintiff’s Declaration in Support of Preliminary Approval of Derivative Settlement, ECF No. 87-1.
[4] Id. at 23.
[5] Order Requesting Supplemental Briefing, ECF No. 90 at 1.
[6] Defendant’s Response re: Order Requesting Supplemental Briefing, ECF No. 92 at 1-3.
[7] Order Requesting Supplemental Briefing, ECF No. 90 at 1-2.
[8] Supplemental Brief re Motion for Preliminary Approval of Derivative Settlement and Order, ECF No. 91 at 1.
[9] Plaintiff’s Motion for Preliminary Approval, ECF No. 86 at 3.
[10] Id. at 2-3.
[11] Id. at 4.
[12] Order Preliminarily Approving Settlement and Providing for Notice, as Modified, ECF No. 103
[13] Id. at 2.
[14] Barovic v Balmer et al., No. 2:14-cv-00540-JCC, ECF No. 112 (Final Order and Judgement) (W.D. WA Jan 13, 2016); In re Pfizer Inc. Shareholder Derivative Litigation, No. 1:09-cv-7822, ECF No. 127 (Judgment and Order) (S.D.N.Y. May 2, 2011).

Friday, July 11, 2025
Office of Public Affairs

Today, the Justice Department filed a statement of interest in the United States District Court for the District of Columbia in the case of Children’s Health Defense et al. v. Washington Post et al. The lawsuit — led by plaintiffs allegedly deplatformed for sharing independent news and opinion related to the COVID-19 pandemic — alleges that the Washington Post, BBC, AP, and Reuters colluded with one another and with the large digital platforms to suppress competition from independent perspectives that rival mainstream media.  The statement of interest explains how the antitrust laws protect viewpoint competition in news markets.    

“When companies abuse their market power to block out and deplatform independent voices and protect legacy media, they harm competition and threaten the free flow of information on which consumers depend,” said Assistant Attorney General Abigail Slater of the Justice Department’s Antitrust Division. “This Antitrust Division will always defend the principle that the antitrust laws protect free markets, including the marketplace of ideas.”   

The Antitrust Division routinely files statements of interest and amicus briefs in federal court where doing so will help protect competition and consumers, including by encouraging the sound development of the antitrust laws. A collection of these statements of antitrust and amicus filings is publicly available on the Division’s website.

Tuesday, July 8, 2025

Office of Public Affairs

The Program Incentivizes Individuals to Report Postal-Related Antitrust Crimes that Undermine the Competitive Process or Market Competition Across Industries

The Justice Department’s Antitrust Division today announces its partnership with the United States Postal Service to create the Whistleblower Rewards Program. For the first time, the Antitrust Division will offer rewards for individuals who report antitrust crimes and related offenses that harm consumers, taxpayers, and free market competition across industries from healthcare to agriculture — under existing law and at no additional cost to the taxpayer.

“Antitrust crimes and related offenses that harm free market competition often occur in secret, making detection a formidable challenge. The new Whistleblower Rewards Program will create a new pipeline of leads from individuals with firsthand knowledge of criminal antitrust and related offenses that will help us break down those walls of secrecy and hold violators accountable,” said Assistant Attorney General Abigail Slater of the Antitrust Division. “This program raises the stakes: If you’re fixing prices or rigging bids, don’t assume your scheme is safe — we will find and prosecute you, and someone you know may get a reward for helping us do it.”

Wednesday, July 9, 2025

Office of Public Affairs

A federal grand jury has returned an indictment against Timothy J. Leiweke, the Co-Founder and Chief Executive Officer of Oak View Group (OVG), for orchestrating a conspiracy to rig the bidding process for an arena at a public university in Austin, Texas, the Justice Department’s Antitrust Division announced today. OVG develops and provides a variety of services to live entertainment venues.

The indictment, filed in the U.S. District Court for the Western District of Texas, alleges that, from approximately February 2018 through at least June 2024, Leiweke conspired with the Chief Executive Officer of a competitor to rig the bidding for the development, management, and use of a multi-purpose arena that was to be located on the campus of a public university in Austin, Texas (the “Arena Project”).  

“As outlined in the indictment, the Defendant rigged a bidding process to benefit his own company and deprived a public university and taxpayers of the benefits of competitive bidding,” said Assistant Attorney General Abigail Slater of the Justice Department’s Antitrust Division. “The Antitrust Division and its law enforcement partners will continue to hold executives who cheat to avoid competition accountable.”

“Unfair business practices, like those employed here, make it very difficult for the American people to pursue prosperity like our founders intended,” said U.S. Attorney Justin R. Simmons for the Western District of Texas. “In the Western District of Texas, we’re proud to work with our colleagues in the Antitrust Division on these types of cases, and we will do all we can to ensure those who engage in the type of conduct described in this case are held to account.”

“Timothy Leiweke allegedly led a scheme designed to steer the contract for entertainment services at a public university’s arena to his company. Public contracts are subject to laws requiring an open and competitive bid process to ensure a level playing field,” said Assistant Director in Charge Christopher G. Raia of the FBI New York Field Office. “The FBI is determined to ensure that those who disregard fair competition principles do not benefit from a rigged bidding process targeting our communities and public institutions.”

“An important part of the mission of the Office of Inspector General is to investigate allegations of corruption and illegal influence in the American workplace,” said Special Agent in Charge Jonathan R. Mellone of the U.S. Department of Labor, Office of the Inspector General, Northeast region. “We will continue to work closely with our law enforcement partners to investigate these types of allegations.”

According to the indictment, in September 2017, Leiweke informed colleagues that he had learned another venue-services company was “bidding against us” for the Arena Project and wanted to “find a way to get [the competitor] some of the business” and “get them to back down.”  In November 2017, Leiweke informed others that he was “[m]ore than happy talking to [the competitor] about not bidding and [receiving certain subcontracts]” but had “no interest in working with them if they intend on putting in a bid.” In February of 2018, Leiweke ultimately reached an agreement with the competitor’s CEO, pursuant to which the competitor agreed that it would stand down and neither submit nor join an independent competing bid for the Arena Project. In exchange for the competitor’s agreement to stand down, Leiweke represented that the competitor would receive Arena Project’s subcontracts. Consistent with the bid-rigging agreement, the competitor did not submit a competing bid for the Arena Project. OVG ultimately submitted the sole qualified bid and won the Arena Project.  The arena opened to the public in April 2022, and OVG continues to receive significant revenues from the project to date.

OVG and Legends Hospitality have agreed to pay $15 million and $1.5 million in penalties, respectively, in connection with the conduct alleged in the indictment against Leiweke.

July 8, 2025

Today, the Federal Trade Commission sent warning letters to four companies who claim their consumer goods are of U.S. origin, reminding them to comply with the FTC’s “Made in USA” requirements. Additionally, the FTC sent letters to Amazon and Walmart regarding third-party sellers who appear to be making deceptive “Made in USA” claims about their products on those online marketplaces. 

“‘Made in the USA’ is not just a slogan – it’s a sign that a product connects us to the workers and businesses that make America great,” said FTC Chairman Andrew N. Ferguson. “Consumers want to have confidence that when they buy something labelled ‘Made in the USA’ they are actually supporting American workers and the American economy. Companies that falsely claim their products are ‘Made in the USA’ can expect to hear from the FTC.”

The FTC sent warning letters to flagpole retailer Americana Liberty, footwear maker Oak Street Manufacturing, LLC, football equipment company Pro Sports Group LLC, and personal care products manufacturer USA Big Mountain Paper Inc.

The warning letters explain that the FTC Act and the Made in USA Labeling Rule require that products advertised as “Made in the USA” must be “all or virtually all” made in the United States. The FTC warned these companies to discontinue such claims or provide substantiation that the products at issue are in fact “all or virtually all” made in the United States. Companies that violate the FTC Act and the MUSA Labeling Rule may be subject to legal action including the issuance of an administrative subpoena, the filing of a federal lawsuit, injunctive relief, and civil penalties or other monetary relief. 

The FTC also sent letters to Amazon andWalmart, explaining the FTC’s “Made in USA” requirements and how they apply to online marketplaces. The letters also identify third-party sellers who may be making deceptive U.S.-origin claims on those online marketplaces. In each letter, the FTC points out that such claims may violate the FTC Act and run afoul of the platform’s specific terms of service.

Under proposed settlement order, NextMed and its principals will pay $150,000 and be banned from misrepresenting products and reviews

July 14, 2025

The operators of telemedicine company Southern Health Solutions, Inc., doing business as Next Medical and NextMed, have agreed to settle the Federal Trade Commission’s charges that they used deceptive cost and weight loss claims, as well as fake reviews and testimonials to lure consumers into buying their weight-loss membership programs that had hidden terms and conditions.

In its complaint, the FTC alleges that New York-based NextMed, its founders Robert Epstein, and CEO Frank Leonardo III sold telehealth weight-loss programs providing access to medical providers who could prescribe popular glucagon-like peptide 1 agonist (GLP-1) weight-loss drugs, such as Wegovy and Ozempic, that were the subject of skyrocketing interest when NextMed began offering its weight-loss programs in early 2022. NextMed sold its membership programs at an advertised monthly price, typically at $138 or $188, without adequately disclosing that the price did not include the cost of the actual GLP-1 drug, the cost of the lab work required to determine eligibility for such drugs, or the cost of the consultation with a medical provider that was necessary to obtain a prescription.

The complaint also alleges that NextMed failed to adequately disclose that its membership programs had a required one-year commitment with early termination fees, and that many customers who called to cancel or request refunds faced significant delays in resolving their complaints due to NextMed’s insufficient customer service staffing and capacity.

The FTC also alleged that the company suppressed negative reviews on Trustpilot by selectively challenging critical reviews, offering Amazon gift cards to consumers to remove or change negative reviews, and by conditioning refunds on consumers’ agreement to remove negative reviews. In addition, the complaint alleges that the company generated fake positive reviews that were posted on Trustpilot and used testimonials and before-and-after photos from people who were not NextMed clients and had not used GLP-1 drugs for weight loss.  

“Consumers who signed up for NextMed’s programs faced significant unexpected costs and the company’s customer service failures prevented consumers from cancelling or getting a refund,” said Christopher Mufarrige, Director of the FTC’s Bureau of Consumer Protection. “Today’s action makes clear that companies cannot hide important information from consumers or neglect their responsibility to respond to valid complaints and concerns.”

In its complaint, the FTC alleges that NextMed, Epstein and Leonardo:

• lured customers with unsubstantiated weight loss claims that members of its weight-loss programs lose 53 pounds and 23% of their body weight on average;
• used deceptive before and after photos of people who were not their customers in its marketing materials;
• published fake testimonials created by hired individuals, employees, and family members who did not use NextMed’s programs or GLP-1 drugs;
• distorted consumer reviews by flagging negative reviews without a basis, selectively soliciting positive reviews from satisfied customers, and providing refunds or gift cards in exchange for customers changing or removing negative reviews;
• failed to adequately disclose the terms of its membership programs, including the 12-month commitment and early termination fee;
• failed to process consumers’ cancellation and refund requests in a timely manner due having insufficient staffing and capacity to handle those requests; and
• failed to obtain informed consent to charge consumers.

In addition to requiring NextMed and its principals to pay $150,000, which is expected to be used to provide refunds to consumers, the proposed consent order:

• prohibits them from misrepresenting the cost of telehealth services, including what is included in that cost, the timing or manner of billing or any charge, that a consumer authorized a transaction or is obligated to pay a charge, or material information relating to refund and cancellation policies;
• requires competent and reliable evidence to support claims about the average or typical results users will achieve;
• prohibits misrepresentations that reviews are truthful or from real consumers, and requires disclosure of any unexpected material connection with endorsers or reviewers;
• prohibits manipulation of reviews, including selectively soliciting reviews from consumers more likely to provide positive reviews, offering payments or incentives to consumers to remove or edit negative reviews, and reporting or disputing negative reviews as false or suspicious without a reasonable basis for doing so;
• requires them to obtain informed consent before billing consumers and authorization to use any electronic fund transfer; and
• requires them to clearly disclose important terms relating to refunds or cancellations before consumers are asked to pay, provide a simple way for consumers to request cancellations or refunds, and to promptly honor any cancellation or refund requests that comply with policies that were in effect at the time of purchase.

The Commission vote to issue the administrative complaint and to accept the proposed consent agreement was 3-0.

The FTC will publish a description of the consent agreement package in the Federal Register soon. The agreement will be subject to public comment for 30 days after publication in the Federal Register, after which the Commission will decide whether to make the proposed consent order final. Instructions for filing comments will appear in the published notice. Once processed, comments will be posted on Regulations.gov.

Tuesday, July 1, 2025

Action represents fourth settlement, continued enforcement priority under the California Consumer Privacy Act

OAKLAND — California Attorney General Rob Bonta today announced a settlement pending court approval with website publisher Healthline Media LLC (Healthline), resolving allegations that its use of online tracking technology on its health information website, Healthline.com, violated the California Consumer Privacy Act (CCPA). An investigation by the California Department of Justice (DOJ) found that Healthline failed to allow consumers to opt out of targeted advertising and shared data with third parties without CCPA-mandated privacy protections — including data suggesting that a person may have a serious health condition. The proposed settlement, pending final approval from the court, includes $1.55 million in civil penalties and strong injunctive terms, including a novel term that prohibits Healthline from sharing article titles that reveal that a consumer may have already been diagnosed with a medical condition — banning the company from engaging in these types of data transmissions.

“Our settlement with Healthline underscores that Californians have critical privacy rights under the CCPA to fight online surveillance — including by website publishers. Healthline shared data with third parties that could have revealed consumers’ private medical diagnoses, and while doing so, disregarded consumer’s rights to opt-out of the sale and sharing of this data,” said Attorney General Bonta. “California continues to lead the nation in enforcing our robust privacy protection law, and businesses that collect consumer data must honor consumers’ privacy rights. My office is committed to the continued enforcement of the CCPA — every Californian has the right to their online privacy.” 

Healthline.com is a health and wellness information website that is one of the top 40 most visited websites in the world. Healthline generates revenue by showing ads — some of which are personally targeted at the reader. To maximize ad revenue, Healthline allows online trackers, like cookies and pixels, to communicate data about readers to advertisers and other third parties. Healthline shared data that could uniquely identify the consumer, in addition to the title of the article they were reading. Some titles indicated that the reader may have already been diagnosed with a serious illness, such as “You’ve Been Newly Diagnosed with MS. What’s Next?” And because these online trackers run invisibly in the background in the first milliseconds when a webpage loads, consumers often have no idea how many online trackers might be running. In Healthline’s case, dozens of trackers were sharing consumer data with numerous third parties.

The complaint filed today alleges Healthline violated the CCPA and the Unfair Competition Law by:

• Failing to opt consumers out of the sharing of their personal information for targeted advertising. The CCPA gives consumers the right to opt-out of the sale or sharing of their personal information for certain targeted advertising. Businesses and website publishers must honor these requests, including requests submitted through the Global Privacy Control. Healthline continued to share data with some third parties involved in advertising, even for consumer who exercised their right to opt -out.  
• Violating the Purpose Limitation Principle. Under the CCPA, a business’s use of personal information is limited to the purposes for which the personal information was collected or processed or another disclosed, compatible purpose. Healthline violated this principle by sharing article titles suggesting a consumer may have already been diagnosed with a specific medical condition to target advertising at the consumer.   
• Failing to maintain CCPA-required contracts. Healthline had not ensured its advertising contracts contain privacy protections for readers’ data required by the CCPA. Instead, Healthline had assumed, but not verified, that the third parties had agreed to abide by an industry contractual framework. 
• Deceiving consumers about privacy practices. The Unfair Competition Law prohibits deceptive business practices. Healthline.com featured a “consent banner” that did not disable tracking cookies, despite purporting to do so if a consumer unchecked a box.   

Under the settlement today, Healthline is required to ensure that its opt-out mechanisms work correctly; must stop disclosing information that can link a specific consumer to a specific article title that suggests that consumers have been diagnosed with a disease; must maintain a CCPA compliance program that, among other things, mandates that Healthline audits its contracts for specific, required privacy terms or confirm that third parties have signed an industry contractual framework that includes those terms; and maintain accurate online disclosures and privacy policy. 

Today’s settlement represents Attorney General Bonta’s fourth enforcement action under the CCPA, and his continued priority to enforce California’s robust privacy laws:  

In June 2024, Attorney General Bonta and Los Angeles City Attorney Hydee Feldstein Soto announced a $500,000 settlement with Tilting Point Media LLC resolving allegations that the company violated the CCPA and federal law by collecting and sharing children’s data without parental consent in their popular mobile app game “SpongeBob: Krusty Cook-Off.”  In February 2024, Attorney General Bonta announced a settlement with DoorDash, resolving allegations that the company violated the CCPA and COPPA, by selling California customers’ personal information without providing notice or an opportunity to opt out of that sale.  In August 2022, the Attorney General announced a settlement with Sephora resolving allegations that it failed to disclose to consumers that it was selling their personal information and failed to process opt-out requests via user-enabled global privacy controls in violation of the CCPA.