Legal Library: Cases and Proceedings

The FTC taking action against education technology provider Chegg Inc. for its lax data security practices that exposed sensitive information about millions of its customers and employees, including Social Security numbers, email addresses and passwords.

7-Eleven, Inc. and Marathon Petroleum Corporation have agreed to divest retail fuel assets used to sell gasoline and diesel fuel in 293 local markets across 20 states, to settle Federal Trade Commission charges that 7-Eleven’s acquisition of Marathon’s Speedway subsidiary violated federal antitrust laws. The complaint alleges that the acquisition will harm competition for the retail sale of fuel in 293 local markets across Arizona; California; Florida; Illinois; Indiana; Kentucky; Massachusetts; Michigan; North Carolina; New Hampshire; Nevada; New York; Ohio; Pennsylvania; Rhode Island; South Carolina; Tennessee; Utah; Virginia, and West Virginia. In addition to the divestitures, the proposed order prohibits 7-Eleven from enforcing any noncompete provisions as to any franchisees or employees working at or doing business with the divested assets. On November 10, 2021, the Commission announced the final consent agreement in this matter.

The Federal Trade Commission sued 7-Eleven, Inc and its parent company, Seven & i Holdings Co., Ltd., alleging the convenience store chain violated a 2018 FTC consent order by acquiring a fuel outlet in St. Petersburg, Fla. without providing the Commission prior notice.

In 2019, following a public comment period, the FTC has approved a modified final order requiring industrial gas suppliers Praxair, Inc. and Linde AG to sell assets in nine industrial gases product markets in numerous U.S. geographic markets to four divestiture buyers. The nine product markets in which the Commission alleged harm in its October 2018 complaint are bulk liquid oxygen, bulk liquid nitrogen, bulk liquid argon, bulk liquid carbon dioxide, bulk liquid hydrogen, bulk refined helium, on-site hydrogen, on-site carbon monoxide, and excimer laser gases. In November 2022, the FTC announced the approval of a petition to modify the final order in this case.

The Federal Trade Commission has taken action against a for-profit medical school in the Caribbean and its Illinois-based operators, alleging they deceptively marketed the school’s medical license exam test pass rate and residency matches to lure prospective students. The school and its operators are also charged with violating the Holder Rule, which preserves rights for injured consumers, and the Credit Practices Rule, which protects consumers in credit contracts. The $1.2 million judgment against Saint James School of Medicine and its operators will go toward refunds and debt cancellation for students harmed by the deceptive marketing.

The Federal Trade Commission authorized a lawsuit in federal court to block the proposed merger between virtual reality (VR) giant Meta and Within Unlimited, the VR studio that markets Supernatural, a leading VR fitness app. Formerly known as Facebook Inc., Meta sells the most widely used VR headset, operates a widely used VR app store, and already owns many popular VR apps, including Beat Saber, reportedly one of the best-selling VR apps of all time, which it markets for fitness use. The agency alleges that Meta’s proposed acquisition of Within would stifle competition and dampen innovation in the dynamic, rapidly growing U.S. markets for fitness and dedicated-fitness VR apps. A federal court complaint and request for preliminary relief was filed in U.S. District Court for the Northern District of California to halt the transaction.

The Federal Trade Commission filed suit against the operators of the online store Glowyy for failing to deliver on promises that they could quickly ship products like face masks, sanitizer, and other personal protective equipment (PPE) related to the coronavirus pandemic.

The lawsuit alleges that the company violated the FTC’s Mail, Internet and Telephone Order Rule (Mail Order Rule), which requires that companies notify consumers of shipping delays in a timely manner and give consumers the chance to cancel orders and receive prompt refunds.

In September 2019, the FTC announced a complaint against the operators of two student loan debt relief schemes, and a financing company that assisted them, with bilking millions of dollars from consumers. The FTC alleged Manhattan Beach Ventures and Equitable Acceptance Corporation and Student Advocates Team, and the financing company that assisted them illegally charged upfront fees that the companies led consumers to believe went towards their student loans, and falsely promised that their services would permanently lower or even eliminate their loan payments or balances. On August 18, 2022, the FTC it was sending more than $822,000 back to defrauded consumers.

The Federal Trade Commission is returning more than $10 million to consumers who were charged undisclosed fees by online lender LendingClub Corporation. The FTC is distributing refunds directly to more than 15,000 LendingClub customers and encouraging additional LendingClub customers to apply for refunds.

The FTC sued LendingClub in April 2018, charging that the company falsely promised loan applicants that they would receive a specific loan amount with “no hidden fees,” when in reality the company deducted hundreds or even thousands of dollars in hidden up-front fees from the loans. The FTC also alleged that LendingClub told consumers they were approved for loans when they were not and took money from consumers’ bank accounts without authorization.

The Federal Trade Commission is sending payments totaling more than $9.7 million to 61,990 consumers who were charged hidden fees by LendingClub Corporation.

These payments are the result of a claims process conducted by the FTC in February 2022. It is the second distribution of funds in this matter and brings the total amount refunded to consumers to more than $17.6 million.

The Federal Trade Commission required ARKO Corp. and its subsidiary GPM to roll back anticompetitive provisions of their acquisition of 60 Express Stop retail fuel outlets from Corrigan Oil Company last year. The complaint alleged that as originally proposed, the agreement not to compete that ARKO and GPM required Corrigan to sign as part of the acquisition harmed customers in local retail gasoline and retail diesel fuel markets throughout Michigan and Ohio. The order required them to amend a non-compete agreement they imposed on Corrigan, agree to obtain prior approval from the Commission before acquiring retail fuel assets under certain circumstances, and return to Corrigan five retail fuel outlets, among other provisions.  On Aug. 9, 2022, the Commission announced the final consent agreement in this matter.

As a condition of Hikma Pharmaceuticals PLC’s $375 million acquisition of generic drug services company Custopharm, Inc., the Federal Trade Commission required Custopharm’s parent company, private equity fund Water Street Healthcare Partners, LLC to retain and transfer Custopharm’s assets related to the corticosteroid drug triamcinolone acetonide, or TCA, to another company Water Street owns, Long Grove Pharmaceuticals, LLC. According to the complaint, absent a remedy, Hikma likely would have stopped developing its injectable TCA product, forestalling the increased price competition it would have brought to the market. Thus without this remedy, the acquisition likely would have harmed future competition in the U.S. market for injectable triamcinolone acetonide.

The Federal Trade Commission has required Prince International Corp. and Ferro Corp. to divest three facilities used to make porcelain enamel frit, glass enamel, and forehearth colorants, as a condition of Prince’s parent company – American Securities Partners VII, L.P. – acquiring competitor Ferro Corp. for $2.1 billion.  According to the complaint, the acquisition as proposed likely would allow the merged firm to unilaterally raise prices for porcelain enamel frit in the North American market, and for forehearth colorants in the world market. It  also would eliminate Prince as an independent competitor in the world market for glass enamel, increasing the likelihood of coordination between the merged firm and its largest competitor, Fenzi Holdings SPV S.p.A. On July 5, 2022, the Commission announced the final consent agreement in this matter.

The Federal Trade Commission required Medtronic, Inc. to divest a key subsidiary of Intersect ENT, Inc. as a condition of acquiring Intersect. Under the FTC consent decree, Instersect’s Fiagon subsidiary, which makes ear, nose, and throat navigation systems and balloon sinus dilation products, will be sold to Hemostasis, LLC. According to the complaint, without this divestiture, the acquisition would pose a threat to future competition in the United States for both ENT navigation systems and balloon sinus dilation products. On June 30, 2022, the Commission announced the final consent agreement in this matter.

The Federal Trade Commission filed an administrative complaint and authorized a suit in federal court, to block Hackensack Meridian Health, Inc.’s proposed acquisition of Englewood Healthcare Foundation. The complaint alleges that the merged healthcare system would control three of the six inpatient general acute care hospitals in Bergen County, New Jersey. The proposed acquisition would eliminate close competition between Hackensack Meridian Health and Englewood in Bergen County and leave insurers with few alternatives for inpatient general acute care services, which encompass a broad range of inpatient medical and surgical diagnostic and treatment services that require an overnight hospital stay. On Aug. 4, 2021, the FTC obtained a preliminary injunction halting the acquisition while the administrative trial is underway. On March 22, 2022, the Third Circuit Court of Appeals affirmed the preliminary injunction. The administrative trial is scheduled to begin on April 22, 2022.