E-Briefs, News and Notes: NOVEMBER 2024

By Cheryl Lee Johnson 

After a seven day bench trial, Judge Rochon issued a 169-page opinion  preliminarily  enjoining  the merger of two luxury handbag companies, Coach and Capri, pending the FTC’s administrative proceeding. 2024 WL 4647809 at *1. The court agreed that the FTC had shown both a “clear showing of a likelihood of success” and  serious questions about the merger of the companies owning the Coach, Kate Spade,  and Michael Kors brands,  which it alleged would control almost 60% of the accessible luxury handbag market, trigger price increases exceeding 13% and cause consumer harm of  $365 million annually.  Id. at * 5, 9, 38, 67.

MARKET DEFINITION

The defendants disputed the FTC’s  market definition as  “an exercise in gerrymandering,”   contending that there was a single undifferentiated women’s handbag market. Id. at *7, 10. The court however, found the evidence most consistent with a market consisting of “accessible luxury” handbags distinct from “mass market” and “true luxury” handbags. Id. at *10, 24.  Such a separate  market was supported by several Brown Shoe factors, including that the accessible luxury handbags:    1) were generally made of genuine materials like leather; 2)  were generally manufactured in certain Southeast Asia facilities;  3)  had MSRPs of between $100 and $1,000;  4) had  industry recognition as in a distinct product category; 5) were recognized in defendants’ internal documents as a separate market (though the “term  disappear[ed] from their lexicon once the FTC filed suit”);  and  6) were sensitive to price changes.  Id. at *12-24.

The  court also credited the  FTC’s expert analysis that the accessible luxury market passed the hypothetical monopolist test by  significant amounts.  Id. at *34. Criticisms of the FTC’s expert’s reliance on incomplete or stale data and flawed consumer surveys, disregard of cross shopping across markets, and the rejection of his export report in a different case were brushed aside by the judge. Id. at *29-34, 37.

ANTICOMPETITIVE EFFECTS

The FTC’s expert concluded the merged companies would hold some 59% of the accessible luxury market, easily satisfying the presumption of anticompetitive effects triggered by a 30 percent market threshold. Id. at * 38.    Both the post-merger HHI of 3,646 and the 1,449 increase in the HHIs resulting from the merger were also found to be more than high enough to create a “strong presumption of anticompetitive effects”. Id. at * 39.  The court discounted Defendants’ arguments that certain handbag brands, competitors and the resale market were excluded, unreliable industry calculations were relied upon, and that the FTC’s market share calculations lacked certainty. Id. at *39-42.

Additionally, the FTC had “persuasive” evidence of unilateral effects of the merger, given internal documents showing the parties viewed themselves as each other’s fiercest competition, and that the parties competed closely on pricing, discounting and marketing strategies.  Id. at *62-67.  The upward pricing pressure and merger simulation by the FTC’ s expert showed the prices of the handbags could increase between 13% and 18% (taking the form of a price increase or reduction in quality) and cause some $365 million in consumer harm annually. Id. at *67.

DEFENDANTS’ REBUTTAL

The court concluded opportunities for market entry were insufficient to restrain the anticompetitive effects of the merger given the difficulties of establishing a supply chain and the need for consumer data and marketing budgets. Id at *43-51. Likewise, internal competition between the merging companies’ brands was deemed insufficient, given the central planning, price sharing and other coordination across these brands and the fundamental objective of corporate profit maximization. Id. at *51-54.  So too, the argument that the merger would “revitalize” the flagging Michael Kors brand was found wanting, as the brand was clearly not failing, and when viewed as an efficiency defense, was neither merger specific nor consistent with the stated intent of the merger to raise the profile and prices of the Michael Kors brand. Id. at *55-59.

BALANCE OF EQUITIES

The FTC’s “clear showing” of a likelihood of success of the merits of a section 7 violation, was held to create a presumption in favor of preliminary injunctive relief. Id at *69. In weighing the balance of equities, private equities such as the uncertainty  faced by merging parties in closing were not afforded great weight. Id. at *69.  On the other hand, the  strong public interest in enforcement of antitrust laws and the preservation of competition was considered significant. Id. at *69. Finally, the court noted that Section 7 applied to all lines of products and could not be avoided by dissing handbags as nonessential discretionary items and ignoring the fact  that “handbags are important to many women, not only to express themselves through fashion but to aid in their daily lives”. Id. at *69.

By David Lerch

On October 7, 2024, the Ninth Circuit affirmed a fee award to counsel for certain indirect purchasers of cathode ray tubes in an unpublished order.  See In re Cathode Ray Tube Antitrust Litigation, 2023 WL 2808488 (9th Cir. Oct. 7, 2024) (unpublished).  The Court upheld the District Court’s findings that: (1) the settling class would receive benefits later than they would have otherwise based upon counsel’s pursuit of a petition for certiorari from the United States Supreme Court; (2) counsel’s actions put the settlement at risk; (3) a lesser fee award was proper given counsel’s actions in delaying the benefits to the class and putting the settlement at risk; and (4) counsel’s arguments that counsel was working on behalf ofthe non-settling class members in non-repealer states was beside the point, because IPPs from non-repealer states were not part of the settlement.

FACTUAL AND PROCEDURAL BACKGROUND

On November 26, 2007, Plaintiffs filed a class action complaint, alleging a conspiracy to price-fix cathode ray tubes (“CRTs”), a core component of tube-style screens for common devices including televisions and computer monitors.  See In Re: Cathode Ray Tube (CRT) Antitrust Litigation, NDCA Case No. 4:07-cv-05944-JST, ECF 1.  The alleged conspiracy ran from March 1, 1995 to November 25, 2007, involved many of the major companies that produced CRTs, and allegedly resulted in overcharges of billions of dollars to domestic companies that purchased and sold CRTs or products containing CRTs.  In 2015, one group of plaintiffs – the Indirect Purchaser Plaintiffs (“IPP Plaintiffs”) – reached class action settlements with six groups of corporate defendants: Phillips, Panasonic, Hitachi, Toshiba, Samsung, and Thomson/TDA. ECF 3931, 4260.  The settlements included a nationwide class of all persons and/or entities who indirectly purchased CRT Products manufactured and/or sold by the Defendants in the United States for their own use.  ECF No. 1526 at 59-60.  The agreements also included statewide damages classes of indirect purchasers of CRT products seeking damages under the laws of 21 states and the District of Columbia. See id. The Court then certified these classes for settlement purposes in a 2016 order. 

DISTRICT COURT FINAL APPROVAL ORDER

In a September 27, 2022 order, the Court granted final approval to the claims from the 22-state indirect purchaser class.  See In re Cathode Ray Tube (CRT) Antitrust Litigation, 2022 WL 6581118 (N.D. Cal. Sept. 27, 2022).  The District Court noted that, in their opposition to Lead Counsel’s proposed distribution plan, Subclass Counsel repeatedly emphasized the work that they did for the ORS and NRS subclasses. See id. at * 2.  The Court noted that those subclasses are not part of the settlements at issue, and the fee awards at issue in the motion are not intended to compensate counsel for work performed on behalf of the subclasses.  See id.  The District Court concluded that although Subclass Counsel argued that they did not intend to harm the Indirect Purchaser State Classes, their actions had the effect of putting at potential risk, and ultimately delaying by a period of years, the settlements reached on behalf of those plaintiffs. See id.   The District Court noted that because of the delay, “some class members will not receive any benefits from the settlements because they have died, will not be able to be found,” or are companies that have gone bankrupt or no longer exist, and that the class members who do receive benefits will be receiving them years later than they would have without Subclass Counsel’s efforts. See id. The Court therefore concluded that a 50% reduction in the fee award was appropriate. See id.

NINTH CIRCUIT ORDER

The Ninth Circuit concluded that the District Court’s factual findings supporting the attorney fee award to counsel were not clearly erroneous. See In re Cathode Ray Tube Antitrust Litigation, 2023 WL 2808488 at *1.  The Court upheld the district court’s finding that settling class members would receive their settlement benefits later than they would have without counsel’s actions.  The Ninth Circuit noted that the Court entered judgment on July 29, 2020, and so the settlement could have become final, permitting payments on the claims, as early as August 2020. See id.  However, counsel appealed the settlement approval, so that the settlement did not become final until the Supreme Court denied counsel’s petition for a writ of certiorari on June 13, 2022. The Ninth Circuit concluded that the district court thus supportably found that counsel’s actions delayed the conclusion of the settlement and distribution of funds to class members.  See id.

In addition, the Ninth Circuit concluded that counsel failed to establish that the district court clearly erred in concluding that counsel’s actions worked against the settling class members’ interests and put the settlement at risk.  The Ninth Circuit noted that at one point, counsel requested that the district court “vacate all orders and judgment . . . approving” a prior version of the settlement, which would have resulted in a return to defendants of the settlement funds in escrow as well as the interest accrued.  See id.  The Ninth Circuit noted that the settlement might have been lost on terms favorable to class members, and so the district court did not clearly err in concluding that counsel worked against the settling class members’ interests by putting the settlement at risk. See id.

The Ninth Circuit noted that, “[i]t is well established that an award of attorneys’ fees from a common fund depends on whether the attorneys’ ‘specific services benefited the fund—whether they tended to create, increase, protect or preserve the fund.’” See id., citing In re FPI/Agretech Sec. Litig., 105 F.3d 469, 473 (9th Cir. 1997) (quoting Class Plaintiffs v. Jaffe & Schlesinger, P.A., 19 F.3d 1306, 1308 (9th Cir. 1994)).  The Court concluded that the district court supportably found that counsel’s actions had the effect of delaying the distribution of settlement funds and putting the settlement at potential risk and so a lesser fee award was appropriate for counsel whose actions threatened the availability of settlement funds and delayed payments to class members. See id.

The Ninth Circuit also rejected counsel’s insistence that it “was not working against the settling class members, it was working for the non-settling class members” in the non-repealer states.  Id. at *2.  The Ninth Circuit agreed with the district court that the indirect purchaser plaintiffs from the non-repealer states “are not part of the settlement at issue here, and the fee awards . . . are not intended to compensate counsel for work performed on [their] behalf.”  See id.  The Court noted that counsel decided to take action on behalf of the non-settling class members, despite significant reasons to doubt the value of the non-repealer state plaintiffs’ claims, even going so far as to, in the words of the district court, “no longer represent a repealer state plaintiff” in order to assuage “the Court’s previously-expressed concerns about a potential conflict.” See id.  The Ninth Circuit stated that this action illustrated counsel’s awareness that vigorous pursuit on behalf of the non-settling class members could conflict with the interests of the settling class members.  The Court concluded its opinion, stating that counsel “made a decision in seeking to represent the non-repealer state plaintiffs” and noting that “[s]ometimes decisions by counsel prove to be unlucrative” but “[t]hat does not render the district court’s fee allocation unjust or unreasonable.”  See id.

By Wesley Sweger

In mid-October, Judge Claudia Wilken preliminarily approved an amended settlement agreement reached in the class action case, In re: College Athlete NIL Litigation, Case No. 20-cv-03919-CW (N.D. Cal.).

For background, this consolidated litigation began as two separate actions: (1) House v. NCAA, 4:20-cv-03919; and (2) Oliver v. NCAA, 4:20-cv-04527. The lead plaintiffs—three college athletes who have either competed or will compete on a Division I team—filed an antitrust lawsuit against the National Collegiate Athletic Association (“NCAA”) and the “Power Five” Conferences—the Pac-12 Conference, Big Ten Conference, Big 12 Conference, Southeastern Conference, and Athletic Coast Conference. At the time of filing, NCAA rules restricted compensation to student athletes in exchange for the commercial use of their names, images, and likenesses (“NIL”) and prohibited NCAA member conferences and schools from sharing with student athletes the revenue they received from third parties for the commercial use of student-athletes’ NIL. Plaintiffs alleged that the challenged NCAA rules violated Section 1 of the Sherman Act because the rules constituted agreements that artificially fixed or depressed prices paid to student athletes for the use of their NIL while competing on Division I teams. The Court granted class certification in November 2023.

The settlement addresses three primary issues: (1) payment of back damages for claims relating to NIL, academic-related awards, and other benefits totally in approximately $2.78 billion to be paid over ten years; (2) increased benefits from institutions to student-athletes going forward, including additional NIL opportunities for student-athletes directly with the institution; (3) and eliminating scholarships limits in favor of roster limits.

The final approval hearing will take place in April 2025.

By Lillian Grinnell

Last month, in In re Social Media Adolescent Addiction/Personal Injury Products Litigation, a MDL based in the Northern District of California, Judge Gonzales-Rogers granted the plaintiffs – made up of thirty-four states, various school districts and local government entities, as well as children and adolescents – a victory by largely denying the motion to dismiss by Meta, accused of harming children by designing its various social media platforms to be as addictive as possible, thereby creating severe mental health problems in their wake.

The claims contained within the MDL include unfair practices, consumer protection, misrepresentation, and concealment. In addition, the plaintiffs made claims under the Children’s Online Privacy Act (“COPPA”), a federal law intended to safeguard children’s online personal information and thus requires websites that target children to implement certain safeguards. Meta’s social media companies are accused of ignoring these requirements. Meta argued in its motion to dismiss that it did not need to abide by COPPA’s directive to not collect personal information or do so in an FTC-approved manner, as its social media platforms were not directed to children. But it conceded that it did have “actual knowledge” that children under the age of 13 were using the platforms during the relevant time period, which the Court held was sufficient to become subject to COPPA. Thus, the motion to dismiss was denied as to these claims.

In addition, while the defendant companies argued that the plaintiffs’ claims were barred by Section 230, Judge Gonzales-Rogers ruled that it was premature to dismiss at this early stage of litigation any “theories of liability predicated on a failure-to-warn of known risks of addiction attendant to any platform features or as to platform construction in general.” In re Soc. Media Adolescent Addiction/Pers. Inj. Prod. Liab. Litig., No. 4:23-CV-05448-YGR, 2024 WL 4532937, at *1 (N.D. Cal. Oct. 15, 2024). Section 230 protects websites from liability if a plaintiff were to try and treat them as the publisher or speaker of information provided by a third-party content provider – for example, a post by a user. But other features of social media websites are also protected, such as auto-play features, displays of likes, and disruptive notifications. While these features had already been found by the Court to be covered under Section 230, the plaintiff states argued that the design and deployment of them was in itself the targeted action of their claims. Here the Court sided with Meta, but other features not previously held to be covered did survive the motion to dismiss: “appearance altering filters; platform features that hindered time restrictions; and Instagram’s ‘multiple accounts’ function.” Id. at *20.

Of note, the Court also held that Section 230 did not automatically preclude the plaintiffs’ failure to warn claims regarding the alleged inherent danger of the social media sites, so long as the features targeted did not revolve around Meta’s status as publisher. The states had presented these theories in “broad strokes” and “[t]he Court’s skepticism of these claims is noted, but for now, the claims proceed.” Id. at 22.

With regard to the consumer protection claims, the Court largely denied the motion to dismiss, except for when Section 230, statements of opinion, and the Noerr-Pennington doctrine were implicated.  The Court held that Meta was incorrect and that the state statutes sued under lacked the scope relied upon by the States for the claims alleged. Certain states, however, including California, were dismissed from the negligent misrepresentation claim, as the Court held that those states’ statutes did not permit them. Finally, the personal injury claims by consumer plaintiffs survived “to the extent based on an omissions or failure to warn theory” but were dismissed “to the extent based on affirmative statements.” Id. at 62.

By Cora Allen

This month, U.S. chipmaker Intel Corp. was handed a major win by the EU’s highest court in a long-running legal battle with the European Commission (“Commission”) over a record-setting €1.06 billion ($1.14 billion) fine the Commission levied against Intel in 2009 for abusing its market dominance in the sale of computer chips.

BACKGROUND

The dispute dates back to a complaint lodged by Intel’s closest rival in 2000, prompting an investigation by the Commission, and, in 2009, a decision that Intel had abused its dominant position in the worldwide market for a specific type of chip used in computers (x86 CPUs) by offering rebates to computer makers Dell, HP, NEC, and Lenovo in return for those companies buying most of their x86 CPUs from Intel.  In reaching its decision, the Commission conducted a legal test referred to as the as-efficient-competitor (“AEC”) test to determine whether an equally efficient competitor could compete with Intel notwithstanding the rebates, concluding over significant contrary evidence submitted by Intel that Intel’s practices were capable of producing exclusionary effects.  Along with the decision came a then-record setting €1.06 billion fine.

Intel appealed to the General Court of the EU, which upheld the decision and fine in 2014.  Intel then appealed to the European Court of Justice—the highest court in the EU—which reversed, setting aside the lower court judgment, and referring the case back to the General Court for reconsideration.

On remand, the General Court set aside the Commission’s decision in part, doing away with the €1.06 billion fine in its entirety.  The Commission then appealed, arguing the General Court had infringed the legal doctrine of ne ultra petita, or “not beyond the request,” by deciding more than it had been asked to decide, had made numerous legal errors when applying the AEC test, and had incorrectly assessed evidence.

This brings us to October 24, 2024, when—at long last—the European Court of Justice, dismissed the Commission’s appeal and upheld the General Court decision to partly dismiss the charges of anticompetitive behavior against Intel and quash the fine entirely.

THE OCTOBER 24 DECISION

In its 63-page order upholding the General Court’s decision, the European Court of Justice analyzed the standard of proof required of the Commission.  The high court emphasized that it falls to the Commission to prove infringements to the requisite legal standard.  This means the Commission is obligated to undertake an analysis of all relevant factual circumstances, including the extent of a company’s dominant position, the share of the market affected by the allegedly abusive conduct, and (specifically with regards to rebates) the conditions and arrangements for granting the contested rebates, their duration, and their amount.

With regard to the AEC test, the Commission had argued that the General Court had taken an overly “formalistic” approach in examining the sufficiency of the Commission’s application of the test.  However, the Court of Justice confirmed that it is proper for the General Court to examine any argument that is intended to call into question the Commission’s assessments and that is capable of invalidating the conclusions reached by the Commission. Ultimately, the high court concluded that the General Court did not err in setting aside the Commission’s decision for the Commission’s failure to convincingly rebut Intel’s countervailing evidence.

As the decision notes, “[t]he [C]ommission is under a specific obligation to assess the possible existence of a strategy aiming to exclude competitors that are at least as efficient as that undertaking from the market.”

ONGOING DISPUTE

While this decision marks a major win for Intel, the case is not over.  Following an earlier defeat, the Commission reimposed part of the fine against Intel related to certain rebates, which it believed were particularly flagrant abuses of competition law.  Intel continues to challenge that €376 million fine in court.

Transaction Threatens to Negatively Affect Care for Vulnerable Patients and Harm Home Health and Hospice Nurses Critical to Providing that Care

The Justice Department, together with the Attorneys General of Maryland, Illinois, New Jersey, and New York, filed a civil antitrust lawsuit today to block UnitedHealth Group Incorporated (UnitedHealth)’s proposed $3.3 billion acquisition of rival home health and hospice services provider Amedisys Inc. (Amedisys). The complaint filed in the District of Maryland alleges that the transaction would eliminate competition between UnitedHealth and Amedisys (Defendants). Since UnitedHealth’s prior acquisition of Amedisys’s home health and hospice rival LHC Group Inc. (LHC) in 2023, Defendants have been two of the largest home health and hospice providers in the United States. Eliminating the competition between UnitedHealth and Amedisys would harm patients who receive home health and hospice services, insurers who contract for home health services, and nurses who provide home health and hospice services.

*        *        *

As described in the complaint, home health and hospice services constitute critically important parts of the American healthcare system. Home health care helps patients recover from hospitalization or receive continuing treatment for a chronic condition at home, while hospice provides comfort and support to terminally ill patients and their family members. Patients rely on the skill and expertise of home health and hospice nurses, who must effectively treat patients at home.

Today, Defendants are fierce competitors in the provision of home health and hospice services. According to the complaint, Amedisys’s former CEO and current Board Chairman, has acknowledged that the “pure competition” between UnitedHealth and Amedisys helps them “keep each other honest” and “driv[e] better and better quality” to the benefit of their patients. Further, the two companies view each other as close competitors for home health and hospice nurses. UnitedHealth’s proposed acquisition of Amedisys would eliminate that competition and threaten the benefits it provides. UnitedHealth’s market share after the transaction would make the merger presumptively illegal in:

• Hundreds of local home health care markets, with an annual volume of commerce exceeding $1.6 billion annually, in 23 states and the District of Columbia;
• Dozens of local hospice markets, with an annual volume of commerce exceeding $300 million annually, in 8 states; and
• Hundreds of local markets for home health and hospice nurse labor, employing at least 8,000 nurses, in 24 states.

To address some of the overlaps between UnitedHealth and Amedisys, UnitedHealth has proposed to divest certain facilities to VitalCaring Group (VitalCaring). But as the complaint alleges, the proposed divestiture does not alleviate harm in over 100 home health, hospice, and labor markets, which generate at least a billion dollars in revenue annually, serve at least 200,000 patients, and employ at least 4,000 nurses. As further alleged in the complaint, VitalCaring has lower quality scores than either UnitedHealth or Amedisys and is beset by financial challenges, including a potential legal judgment approaching a half-billion dollars. According to a Texas court, before becoming CEO of VitalCaring, its current CEO was running a competitor of VitalCaring while also running VitalCaring “from the shadows.”

The United States also seeks civil penalties against Amedisys for falsely certifying compliance with its obligations under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act). The complaint alleges that Amedisys violated the HSR Act because, at the time of its sworn certification, Amedisys failed to produce millions of documents or disclose the deletion of other documents. For each day that Amedisys was in violation of the HSR Act, the United States seeks a monetary penalty of up to $51,744, as authorized by statute.

The U.S. Court of Appeals for the First Circuit today affirmed the U.S. District Court for the District of Massachusetts’ ruling in favor of the Justice Department and the Attorneys General of six states and the District of Columbia in their civil antitrust lawsuit to stop the Northeast Alliance between American Airlines and JetBlue.
November 8, 2024

The Federal Trade Commission will host a virtual public workshop on December 18, 2024, that will examine predatory pricing and its potential effects on consumers, competition, and innovation.

The workshop, Competition Snuffed Out: How Predatory Pricing Harms Competition, Consumers, and Innovation, will feature speakers with experience on how predatory pricing has impacted competition and consumers. Economists, academics, and antitrust litigators will discuss predatory pricing caselaw and economic scholarship.

FTC Chair Lina M. Khan will provide opening remarks at the workshop.

Topics to be discussed will include:

• How does predatory pricing harm competition, consumers, and innovation?
• What would a successful predatory pricing case look like under current doctrine?
• How does the Supreme Court’s decision in Brooke Group align with current market dynamics?
• Under what circumstances does current economic literature and legal scholarship suggest that predatory pricing can be an effective, profit-maximizing strategy to gain or entrench market power?
• Does legal doctrine need to change to match modern-day economic realities? How so?
•  

The workshop is scheduled from 9:30am to 12:30pm ET. Additional information, including a list of speakers and the agenda, will be posted on the event page in advance of the workshop. A link to view the workshop will be posted to the FTC’s website at FTC.gov the morning of the event.

A Federal Trade Commission lawsuit is leading to changes for consumers who use H&R Block’s do-it-yourself online tax filing products. A proposed FTC settlement would stop H&R Block from unfairly requiring consumers seeking to downgrade to a cheaper H&R Block product to contact customer service, from unfairly deleting users’previously entered data and from making deceptive claims about “free” tax filing.

The tax-filing company has agreed to a proposed settlement that will require the company to make a number of changes for the 2025 tax filing season in addition to longer-term changes. The settlement would also require the company to pay $7 million to the FTC to be used to redress consumers harmed by the company’s unlawful practices.

“American taxpayers who seek tax-filing help should be able to choose the services they need—and know the truth about how much they’ll pay,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC’s action today will help lower the stress and expense of tax season for millions of taxpayers.”

The FTC filed an administrative lawsuit against H&R Block in February 2024, charging that the company deceptively advertised that its online tax filing products were “free” when many—if not most—consumers could not actually file for free. 

H&R Block also failed to explain clearly which of its products cover what forms, schedules, or tax situations, leading many consumers to spend time completing their tax returns in products that were more expensive than they needed. When consumers later attempted to downgrade to a less expensive product after realizing they did not need or want those more expensive products, H&R Block presented them with a series of time-consuming obstacles. First, consumers had to contact customer service by phone or chat to request to downgrade, which was time-consuming. Then, when consumers did downgrade, H&R Block deleted the data they had previously entered, costing consumers additional time to re-enter their tax information in the downgraded product. Consumers who sought to upgrade encountered no such obstacles.

The proposed settlement would require H&R Block to stop its illegal conduct by making it easier for consumers to downgrade products and by eliminating its practice of completely deleting consumers’ previously entered data. By February 15, 2025, the company will be required to allow consumers to downgrade products without spending time contacting customer service.

In addition to the $7 million payment, the proposed order would also require H&R Block, by the 2026 tax filing season, to stop completely deleting consumers’ previously entered information. Specifically, when a consumer downgrades back to the product they upgraded from, H&R Block must ensure that the consumer returns to the same point in filing where they were when they upgraded, saving consumers significant time and effort. H&R Block must also provide an easily noticeable and always available way for consumers to downgrade without having to call customer service or chat with a live customer service agent.

The proposed order also would require H&R Block to disclose in its “free” advertising either the percentage of taxpayers who are actually eligible to use any “free” products or that the majority of taxpayers do not qualify.

The Commission vote to accept the consent agreement was 5-0. Commissioner Andrew Ferguson issued a statement. Commissioner Melissa Holyoak concurs in acceptance of the proposed consent agreement for public comment but notes that such acceptance does not constitute her final approval. 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 the package is published in the Federal Register, after which the Commission will decide whether to make the proposed consent order final. Instructions for filing comments appear in the published notice. Once processed, comments will be posted on Regulations.gov.

OAKLAND – California Attorney General Rob Bonta, as part of a coalition of 17 attorneys general, filed an amicus brief in defense of the Federal Trade Commission’s (FTC) prohibition on the use of most non-compete agreements. Non-compete agreements are contractual agreements, typically signed at the behest of an employer, that prevent employees from working for a competitor or starting their own business within an industry. These agreements often constrain wage growth and limit job mobility, particularly among workers who are not in a position to negotiate. In April 2024, with support from Attorney General Bonta and a multistate coalition, the FTC finalized a nationwide rule prohibiting employers from entering into or enforcing these agreements in most cases. The rule was subsequently challenged by a real estate brokerage in Florida.  

“California has some of the strongest worker protections in the country, and we believe all workers have the right to choose the job and employer that is best for them,” said Attorney General Bonta. “The federal prohibition on the use of non-competes allows workers the opportunity to seek better wages and career opportunities by finding new employment within their industry. This rule will promote innovation, competition, and better working conditions – and we believe it’s on firm legal ground.”

Although California has prohibited the use of non-compete agreements by employers since the 1800s, these agreements have proliferated at a national level. Studies show that an estimated 18% of American workers are bound by non-compete agreements, and 38% have agreed to one in the past, usually because an employer insisted on them. In today’s amicus brief, Attorney General Bonta and a multistate coalition argue that the rule will provide a uniform and predictable national floor of protections that will benefit workers; foster greater innovation, entrepreneurship, and competition in critical industries, including the healthcare industry; and provide important consistency for workers and employers operating in multi-state labor markets.  

A copy of the brief can be found on California Department of Justice website.

OAKLAND — California Attorney General Rob Bonta today issued a statement in response to a Court of Appeals decision affirming the lower court’s decision to end the anticompetitive Northeast Alliance. The Northeast Alliance was an anticompetitive joint venture that enabled two of the largest airlines in the United States to function like a single carrier on certain routes, threatening competition in an industry already experiencing the negative impacts of market consolidation. On September 21, 2021, Attorney General Bonta, along with the U.S. Department of Justice and a bipartisan coalition of states, sued the airlines over the Northeast Alliance. In July 2023, Attorney General Bonta secured a final permanent injunction by the U.S. District Court for the District of Massachusetts. 

“The court’s decision affirms what we know to be true: from more expensive tickets, to low quality service, American Airlines and JetBlue’s Northeast Alliance was anticompetitive and harmful to consumers nationwide,” said Attorney General Bonta. “We are proud to have worked with our federal and state partners to secure this important win for consumers. Antitrust enforcement is about protecting the economy for everyone — whether for groceries or across the tech sector or in retail, I will continue to step in when our competitive market is threatened.”

A copy of the decision can be found on the California Department of Justice website.