Legal Library: Cases and Proceedings

The Federal Trade Commission filed an administrative complaint and authorized a federal court lawsuit to block Illumina’s $7.1 billion proposed acquisition of Grail—a maker of a non-invasive, early detection liquid biopsy test that can screen for multiple types of cancer in asymptomatic patients at very early stages using DNA sequencing. Illumina is the only provider of DNA sequencing that is a viable option for these multi-cancer early detection, or MCED, tests in the United States.

The complaint alleges the proposed acquisition will diminish innovation in the U.S. market for MCED tests, which could be used to detect up to 50 types of cancer. Most of these types of cancer are not screened for at all today, and the MCED test could save millions of lives around the world. The trial began on Aug. 24, 2021. On May 20, 2021, the FTC authorized staff to dismiss its federal court complaint for Preliminary Injunction and Temporary Restraining Order.

San Juan IPA, Inc., an independent physician association in Farmington, New Mexico, has agreed to pay a $263,000 civil penalty to the FTC to settle allegations that it violated a 2005 order. The 2005 case alleged that San Juan IPA orchestrated agreements among competing member physicians to coordinate joint pricing, collectively negotiated contracts with payors on behalf of members, and refused to deal with payors except on collectively determined price terms.

To remedy these allegations, the 2005 order prohibited San Juan from, among other things, entering into, maintaining, enforcing, or facilitating any agreement or understanding among any physicians (1) to negotiate on behalf of any physician with any payor, (2) to deal, refuse to deal, or threaten to refuse to deal with any payor, (3) regarding any term upon which any physician deals with a payor, including price terms, and (4) not to deal individually with any payor or not to deal with a payor except through the IPA. The order also prohibited San Juan from attempting to engage in, or encouraging any person to engage in, any prohibited action.

The Federal Trade Commission and state partners have filed a complaint in federal court alleging that pesticide manufacturers Syngenta Crop Protection and Corteva, Inc. have used so-called “loyalty” programs to block and restrict generic competition from pesticide markets, leaving farmers to pay elevated prices for crop protection. The complaint seeks to bar Syngenta and Corteva from continuing these programs and from entering into any similar arrangements in the future, and to restore competition to affected markets.

In March 2022, the FTC issued an administrative complaint against Denver-based HomeAdvisor, Inc. – a company affiliated with Angi – alleging it used a wide range of deceptive and misleading tactics in selling home improvement project leads to service providers since 2014, including small businesspeople operating in the “gig” economy.

The Federal Trade Commission and the California Department of Financial Protection and Innovation (DFPI) are taking action against various companies doing business as Home Matters USA, Academy Home Services, Atlantic Pacific Service Group, and Golden Home Services America, and the owners of the companies, Dominic Ahiga and Roger Scott Dyer, for operating a sham mortgage relief operation that misled consumers and cost them millions. In the first case brought jointly by the two agencies, the FTC and DFPI allege that the companies charged consumers thousands of dollars with false promises they would negotiate with consumers’ mortgage lenders to alter their loans, at times even representing they were affiliated with government COVID-19 relief programs. A federal court has temporarily shut down the operation and frozen the assets of the defendants in the case.

The Federal Trade Commission has filed an administrative complaint against Electronic Payment Systems and its owners, John Dorsey and Thomas McCann, for allegedly opening credit card processing merchant accounts for fictitious companies on behalf of Money Now Funding, a business opportunity scam that the FTC previously sued. By ignoring warning signs that the merchants were fake, Electronic Payment Systems assisted Money Now Funding in laundering millions of dollars of consumers’ credit card payments to the scammers from 2012 to 2013.

In a consent agreement settling the matter, which the FTC has accepted for public comment, Electronic Payment Systems and its owners have agreed to restrictions on the merchants for whom they can provide credit card payment processing services, as well as additional merchant screening and monitoring requirements. The FTC is not able to obtain a monetary judgment in this case because of the Supreme Court’s decision in AMG Capital Management v. FTC.

The Federal Trade Commission filed a law enforcement action to block U.S. semiconductor chip supplier Nvidia Corp.’s $40 billion acquisition of UK-based semiconductor design firm Arm Ltd., the largest transaction in the history of the semiconductor industry. The FTC’s action seeks to preserve competition in markets for computer chips used in datacenters and in automotive advanced driver assistance systems. The complaint named Nvidia Corp., Arm Ltd., and Arm owner Softbank Group Corp. In February 2022, Nvidia Corp. announced that it had terminated its proposed acquisition of Arm Ltd. (Arm) from SoftBank Group Corp, and the Commission dismissed the complaint.

The Federal Trade Commission filed an administrative complaint alleging that Altria Group, Inc. and JUUL Labs, Inc. entered a series of agreements, including Altria’s acquisition of a 35% stake in JUUL, that eliminated competition in violation of federal antitrust laws. According to the complaint, this series of agreements involved Altria ceasing to compete in the U.S. market for closed-system electronic cigarettes in return for a substantial ownership interest in JUUL, by far the dominant player in that market. In an initial decision announced on Feb. 24, 2022, Chief Administrative Law Judge D. Michael Chappell dismissed the antitrust charges in the complaint.

The Federal Trade Commission has taken action against credit services company Credit Karma for deploying dark patterns to misrepresent that consumers were “pre-approved” for credit card offers. The FTC alleges that the company used claims that consumers were “pre-approved” and had “90% odds” to entice them to apply for offers that, in many instances, they ultimately did not qualify for. The agency’s order requires the company to pay $3 million that will be sent to consumers who wasted time applying for these credit cards and to stop making these types of deceptive claims.

The Federal Trade Commission sued Electrowarmth Products, LLC and its owner, Daniel W. Grindle, alleging that they falsely claimed the heated fabric mattress pads they sell for truck bunks were made in the USA. The FTC charged Grindle and Electrowarmth with violating the Textile Act and the Federal Trade Commission Act. According to the complaint, Grindle and Electrowarmth violated these acts by labeling and advertising the origin of the textiles used in their products as the United States, when these textile fiber products were wholly imported from China. The proposed order prohibits Grindle and Electrowarmth from making any country-of-origin claim about a product or service unless the claim is not misleading and they have a reasonable basis that substantiates their claim. It also requires Grindle and Electrowarmth to make certain disclosures about the country of origin of any product subject to the Textile Fiber Products Identification Act, and to provide compliance reports.

The FTC and six states filed a lawsuit against rental listing platform Roomster Corp. and its owners John Shriber and Roman Zaks for allegedly duping consumers seeking affordable housing by paying for fake reviews and then charging for access to phony listings.  Separately, the FTC and the states filed a proposed order against Jonathan Martinez—who allegedly sold Roomster tens of thousands of fake reviews—requiring him to pay $100,000 and cooperate in the FTC’s case against Roomster.

The Federal Trade Commission filed a lawsuit against data broker Kochava Inc. for selling geolocation data from hundreds of millions of mobile devices that can be used to trace the movements of individuals to and from sensitive locations. Kochava’s data can reveal people’s visits to reproductive health clinics, places of worship, homeless and domestic violence shelters, and addiction recovery facilities. The FTC alleges that by selling data tracking people, Kochava is enabling others to identify individuals and exposing them to threats of stigma, stalking, discrimination, job loss, and even physical violence. The FTC’s lawsuit seeks to halt Kochava’s sale of sensitive geolocation data and require the company to delete the sensitive geolocation information it has collected.