2016

Did the Warriors Commit a Flagrant Privacy Foul?

Paul Gaus, MJLST Staffer

Fans of the National Basketball Association (NBA) know the Golden State Warriors for the team’s offensive exploits on the hardwood. The Warriors boast the NBA’s top offense at nearly 120 points per game. However, earlier this year, events in a different type of court prompted the Warriors to play some defense. On August 29, 2016, a class action suit filed in the Northern District of California alleged the Warriors, along with co-defendants Sonic Notify Inc. and Yinzcam, Inc., violated the Electronic Communications Privacy Act (18 U.S.C. §§ 2510, et. seq.).

Satchell v. Sonic Notify, Inc. et al, focuses on the team’s mobile app. The Warriors partnered with the two other co-defendants to create an app based on beacon technology. The problem, as put forth in the complaint, is that the beacon technology the co-defendants employed mined the plaintiff’s microphone embedded in the smartphone to listen for nearby beacons. The complaint alleges this enabled the Warriors to access the plaintiff’s conversation without her consent.

The use of beacon technology is heralded in the business world as a revolutionary mechanism to connect consumers to the products they seek. Retailers, major sports organizations, and airlines regularly use beacons to connect with consumers. However, traditional beacon technology is based on Bluetooth. According to the InfoSec Institute, mobile apps send out signals and gather data on the basis of Bluetooth signals received. This enables targeted advertising on smartphones.

However, the complaint in Satchell maintains the defendants relied on a different kind of beacon technology: audio beacon technology. In contrast to Bluetooth beacon technology, audio beacon technology relies on sounds. For functionality, audio beacons must continuously listen for audio signals through the smartphone user’s microphone. Therefore, the Warriors app permitted the co-defendants to listen to the plaintiff’s private conversations on her smartphone – violating the plaintiff’s reasonable expectation of privacy.

While the Warriors continue to rack up wins on the court, Satchell has yet to tip off. As of December 5, 2016, the matter remains in the summary judgment phase.


The GIF That Keeps on Giving: The Problem of Dealing with Incidental Findings in Genetic Research.

 Angela Fralish, MJLST Invited Blogger

The ability to sequence a whole genome invites a tremendous opportunity to improve medical care in modern society. We are now able to prepare for, and may soon circumvent, genes carrying traits such as Alzheimer’s, breast cancer and embryonic abnormalities. These advancements hold great promise as well as suggest many new ways of looking at relationships in human subject research.

A 2008 National Institute of Health article, The Law of Incidental Findings in Human Subjects Research, discussed how modern technology has outpaced the capacity of human subject researchers to receive and interpret data responsibly. Disclosure of incidental findings, “data [results] gleaned from medical procedures or laboratory tests that were beyond the aims or goals of the particular laboratory test or medical procedure” is particularly challenging with new genetic testing. Non-paternity for example, which has been found in up to 30% of participants in some studies, result in researchers deciding how to tell participants that they are not biologically related to their parent or child. This finding could not only impact inheritance, custody and adoptions rights, but can also cause lifelong emotional harm. Modern researchers must be equipped to handle many new psychosocial and emotional variables. So where should a researcher look to determine the proper way to manage these “incidentalomas”?

Perspectives, expectations, and interests dictating policies governing incidental finding management are diverse and inconsistent. Some researchers advocate for an absolute ban on all findings of non-paternity because of the potential harm. Others argue that not revealing misattributed paternity result in a lifetime of living with inaccurate family health history. These scenarios can be difficult for all involved parties.

Legal responsibility of disclosure was indirectly addressed in Ande v.Rock in 2001 when the court held that parents did not have property rights to research results which identified spina bifida in their child. In 2016, an incidental finding of genetic mutation led a family to Mayo Clinic for a second opinion on a genetic incidental finding. The family was initially told that a gene mutation related to sudden cardiac death caused their 13-year-old son to die in his sleep, and the gene mutation was also identified in 20 family members. Mayo Clinic revealed the gene was misdiagnosed, but the decedent’s brother already had a defibrillator implanted and received two inappropriate shocks to his otherwise normal and healthy heart. Establishing guidance for the scope and limits of disclosure of incidental findings is a complex process.

Under 45 C.F.R. §§ 46.111 and 46.116, also known as the Common Rule, researchers in all human subject research must discuss any risks or benefits to participants during informed consent. However, there is debate over classification of incidental findings as a risk or benefit because liability can attach. Certainly the parents in Ande v. Rock would have viewed the researchers’ decision not to disclose positive test results for spina bifida as a risk or benefit that should have been discussed at the onset of their four-year involvement. On the other hand, as in the Mayo Clinic example above, is a misdiagnosed cardiac gene mutation a benefit or risk? The answers to these question is very subjective.

The Presidential Commission for the Study of Bioethical Issues has suggested 17 ethical guidelines which include discussing risks and benefits of incidental finding disclosures with research participants. The Commission’s principles are the only guidelines currently addressing incidental findings. There is a desperate need for solid legal guidance when disclosing incidental findings. It is not an easy task, but the law needs to quickly firm-up a foundation for appropriate disclosure in incidental findings.


Digital tracking: Same concept, Different Era

Meibo Chen, MJLST Staffer

The term “paper trail” continues to become more anachronistic in today’s world as time goes on.  While there are some people who still prefer the traditional old-fashioned pen and paper, our modern world has endowed us with technologies like computers and smartphones.  Whether we like it or not, this digital explosion is slowly consuming and taking over the lives of the average American (73% of US adults own a desktop or laptop computer, and 68% own a smartphone).

These new technologies have forced us to re-consider many novel legal issues that arose from their integration into our daily lives.  Recent Supreme Court decisions such as Riley v. California in 2014 pointed out the immense data storage capacity of a modern cell phone, and requires a warrant for its search in the context of a criminal prosecution.  In the civil context, many consumers are concerned with internet tracking.  Indeed, the MJLST published an article in 2012 addressing this issue.

We have grown so accustomed to seeing “suggestions” that eerily match our respective interests.  In fact, internet tracking technology has become far more sophisticated than the traditional cookies, and can now utilizes “fingerprinting” technology to look at battery status or window size to identify a user’s presence or interest. This leads many to fear for their data privacy in similar digital settings.  However, isn’t this digital tracking just the modern adaptation to “physical” tracking that we have grown so accustomed to?

When we physically go to a grocery store, don’t we subject ourselves to the prying eyes of those around us?  Why should it be any different in a cyberspace context?  While seemingly scary accurate at times, “suggestions” or “recommended pages” based on one’s browsing history can actually be beneficial to both the tracked and the tracker.  The tracked gets more personalized search results while the tracker uses that information for better business results between him and the consumer.  Many browsers already sport the “incognito” function to disable the tracks, bring a balance to when consumers want their privacy.  Of course, this tracking technology can be misused, but malicious use of a beneficial technology has always been there in our world.


Recent Ninth Circuit Ruling an Important One for State and Local Governments Seeking to Regulate Genetically Modified Plants

Jody Ferris, Note & Comment Editor

Genetically modified plants (GMOs) are and have always been a hot topic in agriculture and food policy.  Since they were first developed, groups have been lobbying at various levels of government to impose regulations on how they are grown or to have them banned outright. A noteworthy decision has come down for those following legal challenges to GMO regulation. In Alika Atay et al. v. County of Maui et al., the Ninth Circuit court in Hawaii has ruled that state and local governments may regulate the production of GMOs in their jurisdictions.

The original suit was filed by GMO proponents after the County of Maui enacted a ban on genetically modified crops.  The court held that federal regulation of GMOs does not preempt state and local regulation after the variety is commercialized. This means that the United States Department of Agriculture holds jurisdiction over all GMO varieties prior to commercialization, which is the period during development and testing before the variety is sold on the market. According to the Ninth Circuit, after the variety is commercialized, however, state and local governments are free to enact regulations, including outright bans of GMO production, without the need to worry about federal preemption.

Interestingly, the county regulations in Hawaii that were at issue in the suit were nonetheless stricken down by the court because the State of Hawaii already has a comprehensive regulatory scheme which the court held to preempt county GMO regulations.  This outcome disappointed local environmental and anti-GMO groups due to their support of the new county level GMO restrictions.  However, the decision will help clarify the respective regulatory responsibilities between individual counties and the State of Hawaii. Despite the disappointment of these groups, the decision that there is no federal preemption on regulation of commercialized GMO varieties is an important one for many of the states in the Ninth Circuit, as there are counties in Washington and California, for example, which have also enacted bans on GMO production.

This decision will likely be an encouraging one for states wishing to enact their own regulations for how GMO varieties are grown and handled.  It is also encouraging for individual counties who wish to enact GMO bans or county level regulations, should state level regulations not be preemptive.  It will certainly be interesting to follow how state and local governments structure any future regulatory activities in light of this ruling.


Faux News vs. Freedom of Speech?

Tyler Hartney, MJLST Staffer

This election season has produced a lot of jokes on social media. Some of the jokes are funny and other jokes lack an obvious punch line. Multiple outlets are now reporting that this fake news may’ve influenced voters in the 2016 presidential election. Both Facebook and Google have made conscious efforts to reduce the appearance of these fake news stories on their sites in attempt to reduce the click bait, and thus the revenue streams, of these faux news outlets. With the expansion of the use of technology and social media, these types of stories become of a relevant circulation to possibly warrant misinformation being spread on a massive level. Is this like screaming “fire” in a crowded theatre? How biased would filtering this speech become? Facebook was blown to shreds by the media when it was found to have suppressed conservative news outlets, but as a private business it had every right to do so. Experts are now saying that the Russian government made efforts to help spread this fake news to help Donald Trump win the presidency.

First, the only entity that cannot place limits on speech is the state. If Facebook or Google chose to filter the news broadcasted on each site, users still do not have a claim against the entity; this would be a considered a private business choice. These faux news outlets circulate stories that have appeared to be, at times, intentionally and willfully misleading. Is this similar to a man shouting “fire” in a crowded theatre? In essence, the man in the aforementioned commonly used hypothetical knows that his statement is false and that it has a high probability of inciting panic, but the general public will not be aware of the validity of his statement and will have no time to check. The second part of that statement is key. The general public would not hypothetically have time to check the validity of the statement. If government were to begin passing regulations and cracking down on the circulation and creation of these hoax news stories, it would have to prove that these stories create a “clear and present danger” that will bring significant troubles that Congress has the right to protect the public from. This standard was created in the Supreme Court’s decision in Schenck v. United States. The government will not likely be capable of banning these types of faux news stories because, while some may consider these stories dangerous, the audience has the capability of validating the content from these untrusted sources.

Even contemplating government action under this circumstance would require the state to walk a fine line with freedom of political expression. What is humorous and what is dangerously misleading? For example, The Onion posted an article entitled “Biden Forges Presidents Signature Executive Order 54723,” clearly this is a joke; however, it holds the potential ability to insight fury from those who might believe it and create a misinformed public that might use this as material information when casting a ballot. This Onion article is not notably different from another post entitled “FBI AGENT SUSPECTED IN HILLARY EMAIL LEAKS FOUND DEAD IN APPARENT MURDER-SUICIDE” published by the Denver Guardian. With the same potential to mislead the public, there wouldn’t really be any identifiable differences between the two stories. This area of gray would make it extremely difficult to methodically stop the production of fake news while ensuring the protection of the comedic parody news. The only way to protect the public from the dangers of these stories that are apparently being pushed on to the American voting public by the Russian government in an attempt to influence election outcomes is to educate the public on how to verify online accounts.


The Best Process for the Best Evidence

Mary Riverso, MJLST Staffer

Social networking sites are now an integral part of American society. Almost everyone and everything has a profile, typically on multiple platforms. And people like to use them. Companies like having direct contact with their customers, media outlets like having access to viewer opinions, and people like to document their personal lives.

However, as the use of social-networking continues to increase in scope, the information placed in the public sphere is playing an increasingly centralized role in investigations and litigation. Many police departments conduct regular surveillance of public social media posts in their communities because these sites have become conduits for crimes and other wrongful behavior. As a result, litigants increasingly seek to offer records of statements made on social media sites as evidence. So how exactly can content from social media be used as evidence? Ira Robbins explores this issue in her article Writings on the Wall: The Need for an Authorship-Centric Approach to the Authentication of Social-Networking Evidence. The main hurdle is one of reliability. In order to be admitted as evidence, the source of information must be authentic so that a fact-finder may rely on the source and ultimately its content as trustworthy and accurate. However, social media sites are particularly susceptible to forgery, hacking, and alterations. Without a confession, it is often difficult to determine who is the actual author responsible for posting the content.

Courts grapple with this issue – some allow social media evidence only when the record establishes distinctive characteristics of the particular website under Federal Rule of Evidence 901(b)(4), other courts believe authentication is a relatively low bar and as long as the witness testifies to the process by which the record was obtained, then it is ultimately for the jury to determine the credibility of the content. But is that fair? If evidence is supposed to assist the fact-finder in “ascertaining the truth and securing a just determination,” should it not be of utmost importance to determine the author of the content? Is not a main purpose of authentication to attribute the content to the proper author? Social media records may well be the best evidence against a defendant, but without an authorship-centric approach, the current path to their admissibility may not yet be the best process.


A Slow Government’s Response to High-Frequency Trading

Nolan Hudalla, MJLST Staffer

High-frequency trading (HFT) is the use of enhanced technological speed to gain an edge in trading financial instruments. This edge over other investors is often only 1/100th of the blink of an eye, but can provide a company with years of unwavering success. Although HFT became significant within the past decade because of its positive economic advantages, the recent discussion of HFT is becoming increasingly negative. A major reason for this shift in opinion about HFT is due to the increased awareness of unethical trading practices after the 2008 financial crisis.

MJLST published an article last year on the ethics of HFT. In that article, The Law and Ethics of High-Frequency Trading, Steven McNamara advanced various reasons why certain HFT practices violate both business ethics and federal agency regulations. But where do Congress and the SEC stand, and what have they done to correct such unethical practices in HFT?

It appears that the federal government is taking a middling approach to fighting unethical HFT practices. In particular, the SEC has not taken a hard stance on many HFT issues, and Congress has followed suit by not passing any bills in 2016 to fight HFT. However, it is also evident that the SEC and Congress are troubled by ongoing bad practices and are aware of the risk of future violations. Specifically, Congress has introduced several bills “imposing a tax on a broad array of financial transactions that could impact HFT . . . [and] also held hearings in the 114th Congress touching on HFT issues as part of its oversight of the SEC and CFTC.” In addition, the SEC has increased enforcement on serious HFT ethics violations. The agency also approved a new public stock exchange in June with a “speed bump” capable of deterring some HFT activity.


Has GoPro’s Voluntary “Karma” Refund Program Revealed a Gap in Regulatory Jurisdiction over Commercial and Private Drones?

Joey Novak, MJLST Staffer

Drones in the year 2016 are involved in everything from assisting law enforcement to recordings at weddings and sporting events to even the potential for package delivery, and as such, have been rapidly expanding further into recreational and commercial settings. Drones also have one of the most imaginably widespread liability palates you could think of, as 4th Amendment, privacy, property, and products liability issues all combine to form the Frankenstein’s monster of liability, that is if that monster was also subject to 152 pages of operational FAA regulation because he could fly.

With such a wide breadth of hot topic liability issues, it’s not surprising that what should be the most common issue for commercial use has been somewhat overlooked: product liability.  On November 8th, GoPro announced the “recall” of 2,500 Karma drones after the $800 drone had only been on the market for two weeks. Apparently, the design of an off-center camera placement led to increased vibration, leading to connectivity issues and in turn, drones unexpectedly falling out of the sky. Although no actual injuries have been reported, one does not have to make a large leap to imagine a falling drone leading to injury and subsequent liability issues.

The interesting thing about this “recall” is that it revealed a regulatory gap between the FAA (Federal Aviation Administration) and the CPSC (Consumer Product Safety Commission) for drone product liability. With the FAA taking over regulation of drones with their Part 107 regulations released in June of this year, a CPSC spokesperson has stated simply that “[w]e do not have jurisdiction over drones.” But while the FAA does regulate manufacturing of larger aircraft through a certificate process, its oversight of drones to this point has been restricted to operational issues, not the classic manufacturing or design defects that lie at the heart of products liability. Both agencies ended up “recommending” that GoPro proceed with their refund program, and GoPro has stated that they are working “in close coordination” with both agencies. However, GoPro was not actually required to report to either agency or participate in any government-mandated recall program.

Now with drones falling out of the sky, GoPro was greatly self-incentivized to get their products off of the market to avoid what would be pretty cut-and-dry liability in the event that any injuries actually did occur. But what if a potential issue with drones was not so obviously open to liability? Commercial drone companies could unilaterally decide to keep their products on the market if they determine that whatever injury that is occurring may, for example, be more of a result of user error rather than a classic manufacturing or design defect. Companies would then take their chances with potential suits, and the absence of an agency-mandated reporting and recall program could actually assist companies in their defense, as companies would only need to fulfill their post-sale duty to warn about the product’s dangers rather than recall the product entirely.

Restatement (Third) of Torts: Products Liability § 11 imposes liability for failure to recall pursuant to a governmental directive, but in the absence of such a government-mandated requirement a company can only be liable in recall if they decide to voluntarily recall the product and are negligent in doing so. This governmental requirement stems from the thought that, as the Michigan Supreme Court puts it, “the duty to repair or recall is more properly a consideration for administrative agencies and the Legislature.” In fact, as comment c. to the Restatement states, “voluntary recalls are typically undertaken in the anticipation that a government agency will require one anyway.”

If no government agency is requiring recall or repair for drones, companies are presumably left to make the counter-policy determination of whether the cost of potential liability from public injury outweighs the costs associated with repair or recall. While such a determination may require more than this cost-benefit vacuum (such as shareholder relations, consumer goodwill, future sales & outlook, etc.), government-mandated recall programs are put in place to prevent companies from having to weigh costs against public safety. GoPro certainly did the “right thing” here by swiftly engaging in a voluntary refund program (maybe they just wanted some good “Karm- ah forget it), but look for Congress to clarify agency jurisdiction over drone recalls in the near future to protect recreational and commercial drone producers against themselves.


How Yuge Will Trump’s Influence Be on United States Science?

Daniel Baum, MJLST Staffer

Science was only a minute fragment of the candidates’ campaigns, but many researchers have expressed fears about Trump. “Trump will be the first anti-science president we have ever had,” Michael Lubell, director of public affairs for the American Physical Society, told Nature. “The consequences are going to be very, very severe.” How severe, and which kinds of science will Trump influence?

One science topic that was explicitly discussed in the campaigns was climate change. Trump has long denied climate change, and as Trump turned to the Republican Party’s conservative base, he said that his administration will focus on “real environmental challenges, not phony ones.” However, Trump has expressed support for economically beneficial climate change research: he told Science Debate that “[p]erhaps we should be focused on developing energy sources and power production that alleviates the need for dependence on fossil fuels” and specified that those energy sources worth developing include wind, solar, nuclear, and bio-fuels.

Trump has also taken the Republican Party’s businessman’s approach to space and public health research. For space research, Trump thinks that we should seek global partners and would like to expand the role of the commercial space industry in the US space program. Discussing public health research, Trump told conservative radio host Michael Savage, “I hear so much about the NIH, and it’s terrible.” Trump told Science Debate that instead of giving the NIH all the funding it needs, “efforts to support research and public health initiatives will have to be balanced with other scarce resources” by Congress, where the Republicans now control both houses.

In order to do good science, the United States needs the best researchers. However, Trump’s strong anti-immigration stance may dissuade foreign scientists from coming to or staying in the United States to do research—why should a highly skilled researcher come to or stay in the U.S. if he or she will have to do research in an environment hostile to immigrants? With fewer noncitizen scientists, we’ll need to train our own scientists with great science education. Unfortunately, Trump has expressed essentially anti-education policies. He argues that some colleges and universities should bear the burden of students’ loan debt and that the federal government should stop making money off student loans. Trump also wants to pull federal funding from the Department of Education, or demolish it altogether, and make management of public education at the state and local level while removing federal funding for low-income public schools.

Overall, Trump will change science in the United States bigly. If he sticks to the points he made on the campaign trail, the United States will have fewer scientists, and they will mostly only receive federal funding to do research on things that the Republican Party thinks will make Americans money. That could include the development of new environmentally friendly energy sources, but most likely not space or public health research. But there is still hope: this change will only be so yuge if Trump sticks exactly to what he said while campaigning. Already, less than a week after being elected, Trump has backpedaled on his rabid anti-Obamacare stance, and maybe he’ll realize that the best way to make America great again is to make Americans and American science great again.


The Future is Solar: Investing in Solar Energy Using Sale Leasebacks

Alan Morales, MJLST Staffer

Solar energy has come a long way in the last few decades as the cost of producing photovoltaic (PV) cells, the main technology used in converting sunlight into electricity, has significantly decreased. Furthermore, there is a federal tax credit program available, which allows investors in solar energy to claim 30 percent of their solar energy installation cost as a credit on their taxes. This has led residential, commercial and industrial property owners to slowly increase their solar usage.

However solar developers, in many cases, will not have enough tax liability to make immediate use of the tax benefits. An essential financing mechanism for solar developers is a “tax equity” transaction, where tax benefits are sold to raise capital to build the solar project. This demand for cash, has caught the attention of private equity firms, pension funds and foreign investors.

To start, these cash investors must invest through a “blocker” corporation – a US entity treated as a corporation for tax purpose. Cash investors should understand how the tax equity works since they will be investing alongside it. It will also affect what the cash investor can get out of the deal. Then a cash investor might use a sale- leaseback to finance the project. Sale-leasebacks are common in the commercial and industrial rooftop and utility-scale solar markets. In a sale-leaseback, the developer sells a project to a tax equity investor for its fair market value and then the investor leases it back to the developer. In this case, the investor keeps all of the tax benefits, and receives cash in the form of rent from the developer. The developer has taxable gain on the sale to the extent the value of the property exceeds what it cost to build. Although a lessor position is not ideal for some cash investors, it can prove beneficial if they can purchase the project, lease it back to the developer, and sell a portion of the lease to a tax equity investor.

The main benefit to a cash equity investor is the flexibility. Cash investors are in a position to sell as much of its lease position as it wants, and retain as much cash flow as it wants. Sale-leasebacks are enticing for developers because it offers financing for the project while freeing up cash for their other business needs. The tax equity investor is least benefited and would have to become a member of the lessor before the asset is placed in service, which means having to take on some degree of construction risk.