Corporate Ethics

You Gotta Fight for Your Right to Repair

Christopher Cerny, MJLST Staffer

Last spring, as the first wave of the coronavirus pandemic hit critical heights, many states faced a daunting reality. The demand for ventilators, an “external set of lungs” designed to breathe for a patient too weak or compromised to breathe on their own, skyrocketed. Hospitals across the United States and countries around the globe clamored for more of the life saving devices. In March and April of 2020, the increasing need for this equipment forced doctors in Washington State, New York, Italy, and around the world to make heartbreaking decisions to prioritize the scarce supply. With this emergency equipment operating at maximum capacity, any downtime meant another potential life lost. But biomeds, hospital technicians who maintain these crucial medical devices, were frequently unable to troubleshoot or repair out-of-service ventilators to return them to the frontlines. This failure to fix the much-needed equipment was not due to lack of time or training. Instead, it was because many manufacturers restrict access to repair materials, such as manuals, parts, or diagnostic equipment. According to one survey released in February 2021, 76% of biomeds said that manufacturers denied them access to parts or service manuals in the previous three months and 80% said they have equipment that cannot be serviced due to manufacturers’ restrictions to service keys, parts, or materials.

While the prohibition of repairs of life support equipment highlights the extreme danger this restriction creates, the situation is not unique to hospitals and emergency equipment. As technology becomes increasingly complex and proprietary, all manner of tech manufacturers are erecting more and more barriers that prevent owners and independent repair shops from working on their products. Tesla, for example, is adamant about restricting repairs to its vehicles. The electric vehicle auto maker will not provide parts or authorize repairs if performed at an uncertified, independent repair shop or end user. Tesla has gone so far as to block cars repaired outside of its network from using its Superchargers. Apple historically also prevented end users from performing their own repairs, utilizing specialized tools and restricting access to parts. John Deere requires farmers to comply with a software licensing agreement that is in appearance designed to protect the company’s proprietary software, but in practice prevents farmers from clearing error codes to start their farm equipment without an authorized technician.

In response to these obstructions to repair, the Right to Repair movement solidified around the simple proposition that end users and independent repair shops should be provided the same access to manuals and parts that many tech companies reserve solely to themselves or their subsidiaries. This proposition is catching on and the legislatures in twenty-five states are currently considering thirty-nine bills involving the right to repair. However, of the thirty-nine bills, only three address medical technology with the bulk of the proposals devoted to general consumer products—think appliances, iPads, and smart devices—and farm equipment.

Massachusetts is an early adopter of right to repair laws. Its legislature passed a law in 2012 specific to motor vehicles that, inter alia, standardized diagnostic and service information, mandated its accessibility by owners and independent or third-party repair shops, and established any violation of the provisions of the act as an unfair method of competition and an unfair trade practice. This past November, Massachusetts voters approved a ballot measure that expanded the scope of the 2012 right to repair law and closed a loophole that could circumvent the requirements imposed in the earlier statute. Automakers lobbied in force to oppose the measure, spending in excess of $25 million in advertising and other efforts. Taking into account the money spent by both sides of the ballot measure, the right to repair initiative was the most expensive measure campaign in Massachusetts history. The European Union is also taking steps to broaden access to repair materials and information. The European Parliament passed a resolution aimed at facilitating a circular economy. Acknowledging the finite nature of many of the rare elements used in modern technology, the European Union is aiming to make technology last longer and to create a second-hand market for older models. The resolution expanding repair access is a part of that effort by ensuring the ease of repair to prolong the life of the technology and delay obsolescence.

Some manufacturers are making concessions in the face of the Right to Repair Movement. Apple, notoriously one of the most restrictive manufacturers, did an about face in 2019 and expanded access to “parts, tools, training, repair manuals and diagnostics” for independent repair businesses working on out of warranty iPhones. Tesla opened its repair platform to independent repair shops in the European Union after the EU Commission received complaints, but the access can be prohibitively expensive at €125 per hour for the use of diagnostics and programming software. However, these minimal efforts are stop-gap measures designed to slow the tide of legislation and resolutions aimed at broadening access to the materials needed to perform repairs to break the monopolistic hold manufacturers are trying to exert over routine fixes.

The Right to Repair movement is clearly gaining ground as the implications of this anticompetitive status quo in the repair and second-hand market was brought into stark relief by the strains imposed by the COVID-19 pandemic, which strained not only hospitals but agriculture, infrastructure, and day-to-day life. The impact of these restrictions on independent repair shops, farmers, consumers, patients, and do-it-yourselfers more than ever became an obvious impediment to health, safety, and a less extractive economy. And as shown in Massachusetts, voters are responding by expanding the right to repair, even in the face of expensive lobbying and advertising campaigns. Legislators should continue to bring additional bills, especially addressing the restrictions on repairs of emergency medical equipment and should enact the existing proposals in the twenty-five states currently considering them.


Decode 16 tons (of bitcoin), what do you get? Nevada considers redefining the phrase “corporate governance”

Jesse Smith, MJLST Staffer

On January 16, 2020, Nevada Governor Steve Sisolak, as part of his state of the state address, announced a new legislative proposal allowing certain types of private companies to essentially purchase the ability to govern as public entities. The proposal applies specifically to tech firms operating within the fields of blockchain, autonomous technology, the internet of things, robotics, artificial intelligence, wireless technology, biometrics, and renewable resources technology. Those that purchase or own at least 50,000 contiguous acres of undeveloped and uninhabited land within a single county can apply to create  “innovation zones” within the property, or self-governed cities structured around the technology the company develops or operates. The company must apply to Nevada’s Office of Economic Development and provide a preliminary capital investment of at least $250 million, along with an additional $1 billion invested over ten years. Upon approval by the state, the area would become an “innovation zone,” initially governed by a three-member board appointed by the governor, two members of which would be picked from a list provided by the company creating the zone. This board would be able to levy taxes and create courts, school districts, police departments, and other offices empowered to carry out various municipal government functions.

One of the main companies lobbying for the passage of the bill, and the likely its first candidate or adopter, is Blockchains LLC, a Nevada based startup that designs blockchain based software in the areas of “digital identity, digital assets, connected devices and a stable means of digital payment.” The company purchased 67,000 acres of largely undeveloped land near Reno in 2018 for $170 million, in pursuit of building what it calls a “sandbox city,.” There, the company would further develop and use its blockchain technology to store records and administer various public and private functions, including “banking and finance, supply chains, ID management, loyalty programs, digital security, medical records, real estate records, and data sharing.”

Natural and rightful criticism of the legislation has mounted since the announcement. Many pointed out that Jeffrey Berns, the founder of Blockchains LLC, is a large donor to both Sisolak and Democratic PACs in Nevada. Furthermore, months before the proposal was unveiled, Blockchains purchased water rights hundreds of miles away to divert to its Nevada land, prompting various outcries from water rights and indigenous activists. From a broader perspective, skeptics conjured up dystopian images of zone residents waking up to “focus group tested alarm[s]” in constantly monitored “corporate apartments.” Others reflected on the history of company-controlled towns in the U.S. and the various problems associated with them.

Proponents of the plan seem fixated on two particular arguments. First, they note that the bill in its current incarnation requires an innovation zone to hold elections for the offices it sets up once its population hits 100. This allegedly demonstrates that while any company behind the zone “retains significant control over the jurisdiction early on, that entity’s control quickly recedes and democratic mechanisms are introduced.” Yet this argument ignores the fact that there is no requirement that a zone ever reach 100 residents. Additionally, even where this threshold is met, the board still retains significant control over election administration, and may divide or consolidate various types of municipal offices as it sees fit, and dismiss officials for undefined “malfeasance or nonfeasance” (§ 20 para. 2). Such powers provide ripe opportunity for gaming how an innovation zone’s government operates and avoiding true democratic control through consolidation of various powers into strategic elected offices.

Second is the more traditional argument that these zones will attract new businesses to the state and bestow an influx of money and jobs upon the citizens of Nevada. Setting aside various studies and arguments that question this assumption, this argument is yet another tired talking point that ignores the damage large businesses already wreak on the local communities they take over. Many overuse the limited resources of various departments. Others use the “value” that big businesses supposedly bring to communities to pit local governments against each other in bidding wars to see who can offer more tax breaks and subsidies to bring the business to their town, money and revenue that could and likely should be used to fund other local programs. Thus, the ability to actually govern appears to be the logical end in a progression of demands big businesses expect from the cities they set up shop in. Perhaps the best argument in favor of innovation zones is also the saddest, in that they allow big businesses to, as is said in corporate speak, “cut out the middleman” by directly collecting the tax dollars they already consume by the billions and directly controlling the municipal resources they already monopolize.

Sisolak, Berns, and other proponents of the proposal fight back against the idea that innovation zones will become the equivalent of “company towns” and argue that it will make Nevada a tech capital of the world by attracting the businesses specified in the bill. They would be well suited to remember two maxims that summarize the criticism of their idea: that history repeats itself and the road to hell is paved with good intentions. There is a reason these phrases are overused cliches. Last week’s MJLST blog post left us with the sweet sounds of Billy Joel to close out its article. As suggested by Tony Tran of “The Byte,” I’ll end mine with the classic, yet unknowingly cyberpunk ballad “16 tons” (the Tennessee Ernie Ford version), and leave the reader thinking about the future plight of the Nevada Bitcoin miner, owing her or his uploaded cloud soul to the company store, aka Blockchains LLC, in their innovation zone job.


Robinhood Changed the Game(Stop) of Modern Day Investing but Did They Go Too Far?

Amanda Erickson, MJLST Staffer

It is likely that you have heard the video game chain, GameStop, in the news more frequently than normal. GameStop is a publicly traded company that is known for selling, trading, and purchasing gaming devices and accessories. Along with many other retailers during the COVID-19 pandemic, GameStop has been struggling. Not only did COVID-19 affect its operations, but the Internet beat the company’s outdated business model. Prior to January 2021, GameStop’s stock prices reflected the apparent new reality of gaming. In March 2015, GameStop’s closing price was around $40 a share, but at the beginning of January 2021, it was at $20 a share. With a downward trend like this, it might come as a shock to learn that on January 27, 2021, GameStop’s closing price was at $347.51 a share, with the stock briefly peaking at $483 on the following day.

This dramatic surge can be accredited to a large group of amateur traders on the Reddit forum, r/WallStreetBets, who promoted investments in the stock. This sudden surge forced large scale institutional investors, who originally bet against the stock through short positions, to buy the stock in order to hedge their positions. Short selling involves “borrowing” shares of a company, and quickly selling the borrowed shares into the market. The short seller hopes that these shares will fall in price, so that they can buy the shares back at a potentially lower price. If this happens, they can return the shares back that they “borrowed” and keep the difference as profit. The practice of short selling is controversial. Short selling can lead to stock price manipulation and can generate misinformation about a company, but it can also serve to check and balance the markets. The group on Reddit knew that short sellers had positions betting against GameStop and wanted to take advantage of these positions. This caused the stock price to soar when these short sellers had to repurchase their borrowed shares.

This historic scene intrigued many day traders to participate and place bets on GameStop, and other stocks that this Reddit group was promoting. Many chose to use Robinhood, a free online trading app, to make these trades. Robinhood introduced a radical business model in 2014 by offering consumers a platform that allowed them to trade with zero commissions, and ultimately changed the way the industry operated. That is until Robinhood issued a statement on January 28, 2021 announcing that “in light of recent volatility, we restricted transactions for certain securities,” including GameStop. Later that day, Robinhood issued another statement saying it would allow limited buying of those securities starting the next day. This came as a shock to many Robinhood users, because Robinhood’s mission is to “democratize finance for all.” These events exacerbated previous questions about the profitability model of Robinhood and ultimately left many users questioning Robinhood’s mission.

The first lawsuit was filed by a Robinhood user on January 28, 2021, alleging that Robinhood blocked its users from purchasing any of GameStop’s stock “in the midst of an unprecedented stock rise thereby depriv[ing] retail investors of the ability to invest in the open-market and manipulating the open market.” Robinhood is now facing over 30 lawsuits, with that number only rising. The chaos surrounding GameStop stock has caught lawmakers’ attention, and they are now calling for congressional action. On January 29, 2021, the Securities and Exchange Commission issued a statement informing that it is “closely monitoring and evaluating the extreme price volatility of certain stocks’ trading prices” and expressed that it will “closely review actions taken by regulated entities that may disadvantage investors.” Robinhood issued another statement on January 29, 2021, stating they did not want to stop people from buying these stocks, but that they had to take these steps to conform with their regulatory capital requirements.

The frenzy has since calmed down but left many Americans with questions surrounding the legality of Robinhood’s actions. While it may seem like Robinhood went against everything the free market has to offer, legal experts disagree, and it all boils down to the contract. The Robinhood contract states “I understand Robinhood may at any time, in its sole discretion and without prior notice to Me, prohibit or restrict My ability to trade securities.” Just how broad is that discretion, though? The issue now is if Robinhood treated some users differently than others. Columbia Law School professor, Joshua Mitts, said, “when hedge funds are going to lose from a trading suspension, they don’t face any lockup like this, any suspension, any halt at the retail level, but when retail investors find themselves locked in, they find themselves unable to exit the trade.” This protective action by Robinhood directly contradicts the language in the Robinhood contract that states that the user agrees Robinhood does not “provide investment advice in connection with this Account.” The language in this contract may seem clear separately, but when examining Robinhood’s restrictions, it leaves room to question what constitutes advice when restricting retail investors’ trades.

Robinhood’s practices are now under scrutiny by retail investors who question the priority of the company. The current lawsuits against Robinhood could potentially impact how fintech companies are able to generate profits and what federal oversight they might have moving forward. This instance of confusion between retail investors and their platform choice points to the potential weaknesses in this new form of trading. While GameStop’s stock price may have declined since January 28, the events that unfolded will likely change the guidelines of retail investing in the future.

 


“Football is a Microcosm of America”

Emily Moss, MJLST Staffer

Sunday’s Super Bowl LV had a notably different tone than in any other year. Cardboard cutouts and masked fans filled the stadium, there was no audience on the field during The Weeknd’s halftime performance, and the NFL aired an anti-racism commercial that opened with the line “football is a microcosm of America.” This commercial, which NPR dubbed the “worst hypocrisy from a sports league,” is the most recent in the NFL’s string of racial justice focused actions. Yet the league where Colin Kaepernick has not played since he knelt in protest of police brutality and racial inequality is unwilling to reckon with its own racial injustices. Days before this year’s atypical Super Bowl aired, ABC News reported on emails it obtained, suggesting that clinicians doing evaluations as part of the NFL’s concussion settlement program were required to use different cognitive scales for Black and White players.

Th ABC News report stemmed from a long line of litigation over NFL players’ head injuries. In 2014, faced with growing research about the effects of professional football on players’ brains and a long list of players who committed suicide in a pattern related to brain injuries, the NFL and a class of “roughly 18,000 retired players and their beneficiaries” entered into a settlement agreement. Plaintiffs’ attorneys Sol Weiss and Christopher Seeger stated that the agreement was “an extraordinary settlement for retired NFL players and their families—from those who suffer with neurocognitive illnesses today, to those who are currently healthy but fear they may develop symptoms decades into the future.” Some plaintiffs, however, expressed concern, calling the settlement a “lousy deal” for players whose symptoms would not meet the compensation requirements.

On August 25, 2020, Black NFL retirees Kevin Henry and Najeh Davenport, on behalf of themselves and all others similarly situated, sued the NFL. The complaint claims that “the [NFL concussion] Settlement Agreement is marred by an unacceptable flaw: the National Football League and NFL Properties, LLC (collectively, ‘the NFL’) have been avoiding paying head-injury claims under the Settlement Agreement based on a formula for identifying qualifying diagnoses that explicitly and deliberately discriminates on the basis of race.” Pursuant to the settlement, in order to establish a player’s cognitive function decline, clinicians compare players to a baseline. When determining the baseline, doctors can consider a number of factors, including age, education, and, significantly, race. A scale that uses such “race-norming” assumes that Black players start out with a lower cognitive function baseline than White players. The result is that a Black player may be denied compensation for the same cognitive function that would trigger compensation for a White player. This scheme “is particularly insidious because it presumes Black retirees to be less intelligent than their non-Black fellow retirees.” The complaint thus alleges deprivation of equal rights under 42 U.S.C. § 1981.

The NFL moved to dismiss for failure to state a claim on November 2, 2020. The motion argues that (1) the use of “race-norming” is contemplated by the 2014 judicially-approved settlement to which the plaintiffs were given notice and an opportunity to object, (2) the plaintiffs failed to establish intent to discriminate as required by § 1981, and (3) the plaintiffs failed to establish but-for causation as required by § 1981. The plaintiffs filed a reply in December but the judge has yet not ruled.

In a statement responding to Henry and Davenport’s suit, NFL commissioner Roger Goodell claimed that “[t]he federal court is overseeing the operation and implementation of that settlement, and we are not part of selecting the clinicians, the medical experts, who are making decisions on a day-to-day basis.” However, when Davenport applied for compensation based on a determination from a clinician who did not apply race-norming standards, the NFL appealed his application, claiming “his neuropsychological test scores may have been calculated with improper demographic norm adjustments.” And while the NFL maintains that the settlement program does not require race-norming, according to a recent ABC News report, a neuropsychologist who evaluated NFL players for the settlement program claimed that, in his experience, “when clinicians deviate from the algorithm, there are multiple inquiries levied at them.” Another clinician stated that assessment was “right on target.”

The ABC News investigation supports the lawsuit’s claim that the NFL compensates White and Black players based on different standards. As one clinician put it “[b]ottom line is that the norms do discriminate against Black players . . . [s]o now what? In this time of reckoning, like many professions, I think we need to look closely at the expected and unexpected ramifications of our practices.” While the NFL has not released its settlement statistics, the ramifications of this practice is clear. Black retirees will be denied compensation more than White retirees. In a country where medical racism is prevalent, the NFL is indeed a “microcosm of America.”


Nineteen Eighty Fortnite

Valerie Eliasen, MJLST Staffer

The Sixth and Seventh Amendments affords people the right to a trial by jury. Impartiality is an essential element of a jury in both criminal and civil cases. That impartiality is lost if a juror’s decision is “likely to be influenced by self-interest, prejudice, or information obtained extrajudicially.” There are many ways by which a juror’s impartiality may become questionable. Media attention, for example, has influenced the jury’s impartiality in high-profile criminal cases.

In cases involving large companies, advertising is another way to appeal to jurors. It is easy to understand why: humans are emotional. Because both advertisement perception and jury decisions are influenced by emotions, it comes as no surprise that some parties have been “accused of launching image advertising campaigns just before jury selection began.” Others have been accused of advertising heavily in litigation “hot spots,” where many cases of a certain type, like patent law, are brought and heard.

A recent example of advertising launched by a party to a lawsuit comes from the emerging dispute between Apple Inc. and Epic Games Inc. Epic is responsible for the game Fortnite, an online “Battle-Royale” game, which some call the “biggest game in the world.” Epic sued Apple in August for violation of the Sherman Antitrust Act of 1980 and several other laws in reference to Apple’s practice of collecting 30 percent of every App and in-App purchase made on Apple products. When Epic began allowing Fortnite users to pay Epic directly on Apple products, Apple responded by removing Fortnite from the App Store. The App Store is the only platform where users can purchase and download applications, such as Fortnite, for their Apple products. In conjunction with the lawsuit, Epic released a video titled Nineteen Eighty Fortnite – #FreeFortnite. The video portrays Apple as the all-knowing, all-controlling “Big Brother” figure from George Orwell’s 1984. The ad was a play on Apple’s nearly identical commercial introducing the Macintosh computer in 1984. This was an interesting tactic given the majority of Fortnite users were born after 1994.

Most companies that have been accused of using advertisements to influence jurors have used advertisements to help improve the company image. With Epic, the advertisement blatantly points a finger at Apple, the defendant. Should an issue arise, a court will have an easy time finding that the purpose of the ad was to bolster support for Epic’s claims. But, opponents will most likely not raise a case regarding jury impartiality because this advertisement was released so far in advance of jury selection and the trial. Problems could arise, however, if Epic Games continues its public assault on Apple.

Epic’s ad also reminds us of large tech companies’ power to influence users. The explosion of social media and the development of machine learning over the past 10 years have yielded a powerful creature: personalization. Social media and web platforms are constantly adjusting content and advertisements to account for the location and the behavior of users. These tech giants have the means to control and tailor the content that every user sees. Many of these tech giants, like Google and Facebook, have often been and currently are involved in major litigation.

The impartial jury essential to our legal system cannot exist when their decisions are influenced by outside sources. Advertisements exist for the purpose of influencing decisions. For this reason, Courts should be wary the advertising abilities and propensities of parties and must take action to prevent and control advertisements that specifically relate to or may influence a jury. A threat to the impartial jury is a threat we must take seriously.

 

 

 

 

 


Corporate Cheat Codes: When Does Video Game Hype Become Securities Fraud?

By: Alex Karnopp

As production consolidates around a few key players, larger economic growth in the video game industry masks underlying corporate concerns of securities fraud. Last year, the video game industry reached an important milestone, earning the title of “world’s favorite form of entertainment.” In 2017, the video game industry generated $108.1 billion, more than TV, movies, and music. While other entertainment industries saw revenue decline, the game industry increased 10.7%. This drastic jump in revenue has made investors happy. In 2017, most companies producing hardware or software for the industry easily beat the broader market. NVIDIA, a popular graphic card producer, jumped up 80% over the year. Nintendo, similarly, saw an 86% increase. Even more drastically, Take-Two Interactive shot up 117%.

Red flags in the industry, however, indicate changes are needed to sustain growth. For one, production costs and technological innovations hinder profitability as games take longer and cost more to bring to market. Making matters worse, game fatigue remains high, meaning an audience remains focused on a game only for a small window. High development risk has led to a pattern of mergers and acquisitions – large, publicly traded companies either acquire publishing rights or development teams altogether to diversify holdings and increase profitability.

This consolidation has had interesting impacts on video game development. Publicly traded companies face tremendous pressure from investors to uphold profitability – to the frustration of developers. Developers are constantly faced with unrealistic deadlines from executives looking to maximize profit, ultimately leading to the release of low-quality games. As large game publishers learn to deal with the interplay between profit and content, they may also face legal consequences.

What may seem like “corporate optimism” to some, looks more like fraudulent misstatements to investors. In 2014, the “disastrous launch” of Battlefield 4 (which was rushed to hit the release of the PS4 and Xbox One) sent Electronic Art’s stock plummeting. As both executives and producers claimed the title would be a success, investors brought lawsuits, claiming they relied on these false statements. Similarly, the recent split between developer Bungie and Activision has led to rumors of lawsuits. Constant frustrations over sales and content finally led to a split, dropping Activision stock by more than 10%. Investors claim Activision committed federal securities law by failing to “disclose that the termination of Activision-Blizzard and Bungie Inc.’s partnership … was imminent.” As large, publicly traded publishers begin dealing with the effects of a consolidated market on content and profits, it will be interesting how courts interpret executive actions trying to mitigate missteps.


Tesla: Can the Electric Car Company Overcome its CEO’s Erratic (and sometimes illegal) Behavior?

Joe Hallman, MJLST Staffer 

Elon Musk, the ingenious and at times controversial CEO of Tesla, Inc., has been a fixture in the national news cycle of late with many questioning his erratic behavior. Musk has garnered negative attention recently for incidents ranging from publicly smoking marijuana to hurling wild accusations against critics on Twitter. However, Musk’s most significant faux pas in recent months was likely a tweet that resulted in him being charged with securities fraud by the Securities and Exchange Commission (“SEC”).

On August 7, 2018, Musk tweeted “Am considering taking Tesla private at $420. Funding secured.” The SEC sued Musk in federal court on September 27 for misleading investors with his tweet. Musk settled with the SEC two days later on September 29. The terms of the settlement required Musk to pay a $20 million personal fine and step down as chairman for three years, although he was allowed to remain CEO of the company. Although not charged with fraud, Tesla also settled with the SEC for $20 million.

Tesla’s stock price plummeted shortly after the SEC’s lawsuit was filed. Tesla shares were trading at about $305 prior to the lawsuit and on September 28, the day after the SEC filed suit, Tesla’s shares dropped to about $269. However, after that initial dip Tesla’s stock rebounded, eventually closing at $341.06 on November 6.

Many have questioned Tesla’s viability as a company over the years and it has been a common short sell among investors. However, considering Musk’s curious recent behavior, the stock price has been resilient. Meanwhile, on October 24, Tesla released its 2018 third-quarter earnings report showing surprise profits and positive cash flow. The earnings report is good news for shareholders who eagerly wait to see if Musk’s electric car company can eventually turn the corner and achieve a significantly higher market cap as Musk has promised.

Although Tesla seems to have been largely unaffected by the SEC’s lawsuit and other strange behavior by Musk, other top executives of publicly traded companies will likely take notice and learn from Tesla’s tumultuous past few months. Going forward, I would expect CEO’s of high-profile companies like Tesla to be careful about Twitter usage and seek to avoid negative attention in the press.


In Space We Trust: Regulate the Race

By: Hannah Payne, MJLST Staffer

In 1999, the UN General Assembly launched “World Space Week,” an annual celebration observed from October 4th (the date of Sputnik’s launch in 1957) to October 10th (the day The Outer Space Treaty entered into force in 1967). This year’s theme was “Space Unites the World.” The UN said the theme “celebrates the role of space in bringing the world closer together.” Unfortunately, the words ring hollow in light of the U.S.’s Space Force plans, as well as the recent escalation of inter-planetary militarization by China, Russia and the EU. Additionally, activities of SpaceX and others raise concerns about privatization, space pollution and the plans of the uber-wealthy to leave the world behind. These forces threaten to marginalize the awe-inspiring exploration of space into a scheme concerned only with war, profit, and advancing inequality. The dominance of such interests calls for a coherent system of global space regulation.

Some have observed that many recent activities violate the 1967 Outer Space Treaty, which declared: “The exploration and use of outer space . . . shall be carried out for the benefit and in the interests of all countries, irrespective of their degree of economic or scientific development, and shall be the province of all mankind.” The treaty also states that space and all celestial bodies are unowned and open to exploration by all. The U.S. and over 100 countries signed and ratified it, and America did not reserve the right to alter its obligations, as it often does in agreements. However, with no real international enforcement mechanism and our ceaseless profit-seeking, countries have—and will continue to—disregard the goals of the 1967 agreement. Last year, Ted Cruz expressed excitement that “the first trillionaire will be made in space.” He proposed amending the treaty to foster commercialization – and correct its erroneous assumption that worthy goals exist besides wealth and power. His motive seems to be formalistic, as was Congress’ in 2015 when it declared in the Commercial Space Launch Competitiveness Act that “the United States does not, by enactment of this Act, assert sovereignty . . . exclusive rights . . . or ownership of, any celestial body[,]” but in the same act granted U.S. citizens the right to own and sell any “space resource.” Though the U.S. track record of treaty violations makes their disregard of the agreement perhaps unsurprising, the serious consequences of space militarization and privatization call for critical advancement in space regulation.

From an environmental law perspective, the language of the 1967 treaty evokes the seldom-used Public Trust Doctrine (PTD). Traced back to the Roman era, the Public Trust Doctrine is described as “requir[ing] government stewardship of the natural resources upon which society . . . depends for continued existence.” The PTD places the government/sovereign as the trustee, obligated to protect the rights of the public/beneficiary in the trust, which is comprised of things like navigable waterways. It has mostly been applied to water rights, and successfully reclaimed property for the “public good” in Illinois and California. However, in 2012 the Supreme Court suggested that the PTD is no stronger than state common law. Even so, the doctrine should be remembered by those who think the privileged cannot, by right, hoard or destroy resources – including those in space. In the 1970s, Joseph Sax argued for the PTD’s use as sweeping environmental common law. Some have since theorized about the extension of the PTD to space. These scholars identify issues such as the lack of a sovereign to act as trustee. That problem would not likely be solved by allowing every country to exert self-interested sovereignty in space. At least no one has been so bold as to outright claim the moon – yet.

The PTD is just one tool that may be useful in designing a peaceful move forward. The Expanse, a near-future science fiction series in which humanity has colonized the solar system, offers a thought-provoking look ahead. Earth and the moon are governed by the UN. Mars is a sovereign as well, and the asteroid belt a colonial structure with fractured governance. Space is highly commercialized and militarized, and personal opportunity is hard to come by – but humanity has avoided self-destruction. Their global governance allows for some cooperation between Earth and Mars in space. Depending on one’s dreams of the future, the situation represents an overpopulated, inefficiently run hellscape – or a less-bad option out of the possibilities that now seem likely. It begs the question – how do we expand while avoiding astronomical inequality and self-destruction?

Perhaps it is nearly impossible, but Earth needs real, global regulation of outer space. A weak U.N. cannot do it; private companies and wealthy countries should not be given free reign to try. Last month, the U.N. held the First United Nations Conference on Space Law and Policy.  It’s good to see the international community ramping up these discussions. Hopefully, the PTD’s underlying philosophy of equitable preservation will be central to the conversation. Done right, the exploration of space could be the most inspiring, community-building, and even profitable experience for humanity. If approached thoughtfully, inclusively, carefully –  we could have much more than just a Space Force.


“Juuling”: Gen Z’s Alleged Addiction May Mean Major Legal Problems for E-Cigarette Companies

By: Jack Kall, Minnesota Journal of Law, Science & Technology Vol. 20 Staffer

With every new week comes new headlines regarding Gen Z and their latest craze. After years of Millennials being cast as the generation responsible for everything wrong in the world, (Business Insider’s list of 19 things Millennials are killing, including everything from homeownership, banks, football, and oil to beer, napkins, cereal, and bars of soap; NPR describing how Millennials are killing Applebee’s; Forbes claiming Millennials might kill home-cooked meals and kitchens) it seems the media has found a new culprit, Gen Z! Gen Z’s supposed addiction to e-cigarettes, specifically to the JUUL brand, is common among the headlines.

Depending on how you define the generation, Gen Z includes anyone born in the years starting with 1995–2000 and ending between 2014–25. Pew Research has yet to name or define the end date of Gen Z, but it defines the “Post-Millennial generation” as those born 1997 and later.

No matter how you define Gen Z, it includes high school students, many of whom are under the legal tobacco consumption age of 18. High schoolers have been a major reason for both the rise of e-cig popularity and for giving JUUL Labs major market share in the e-cig industry. Browse through social media pages popular within the Gen Z community and you’ll inevitably see numerous posts about “Juuling.” However, Gen Z isn’t alone in its supposed obsession with e-cigs, as Leonardo DiCaprio (a member of Gen X) has long been known to appreciate vaping (e.g., 1, 2, 3).

JUUL Labs, which launched in 2015, has been repeatedly investigated for targeting minors through its advertising and sued for targeting teens with false claims of product safety. In 2017, Consumer Reports found that teens who vape are seven times more likely to turn to regular cigarettes. Additionally, the CDC has declared e-cig use among young people a public health concern.

As further research is published, JUUL should expect be the main target of continued legal action. One current case, a nationwide class action with ten named plaintiffs aged above 13, alleges in part that JUUL’s decision to market through social media was aimed at soliciting those under the legal smoking age. Another case, filed on behalf of a high school sophomore, alleges that JUUL is commonplace among his school, including use “on the school bus, in the bathrooms, outside of school and even in class.”

JUUL Labs will hope to continue to have success while under major legal scrutiny for its marketing practices. JUUL, importantly, hopes it can continue to show growth following its impressive financial valuation (most recently raising $1.2 billion in a financing round that valued the company at over $15 billion).


The Data Dilemma for Cell Phone Carriers: To Throttle or Not to Throttle? FTC Seeks to Answer by Suing AT&T Over Speed Limitations for Wireless Customers

Benjamin Borden, MJLST Staff Member

Connecting to the Internet from a mobile device is an invaluable freedom in the modern age. That essential BuzzFeed quiz, artsy instagram picture, or new request on Friendster are all available in an instant. But suddenly, and often without warning, nothing is loading, everything is buffering, and your once treasured piece of hand-held computing brilliance is no better than a cordless phone. Is it broken? Did the satellites fall from the sky? Did I accidentally pick up my friend’s blackberry? All appropriate questions. The explanation behind these dreadfully slow speeds, however, is more often than not a result of data throttling courtesy of wireless service providers. This phenomenon arises from the use of unlimited data plans on the nation’s largest cell phone carriers. Carriers such as AT&T and Verizon phased out their unlimited data plans in 2010 and 2011, respectively. This came just a few years after requiring unlimited data plans for new smartphone purchases. Wireless companies argue that tiered data plans offer more flexibility and better value for consumers, while others suggest that the refusal to offer unlimited data plans is motivated by a desire to increase revenue by selling to data hungry consumers.

Despite no longer offering unlimited data plans to new customers, AT&T has allowed customers who previously signed up for these plans to continue that service. Verizon also allows users to continue, but refuses to offer discounts on new phones if they keep unlimited plans. Grandfathering these users into unlimited data plans, however, meant that wireless companies had millions of customers able to stream movies, download music, and post to social media without restraint, and more importantly, without a surcharge. Naturally, this was deemed to be too much freedom. So, data throttling was born. Once a user of an unlimited data plan goes over a certain download size, 3-5GB for AT&T in a billable month, their speeds are lowered by 80-90% (to 0.15 mbps in my experience). This speed limit makes even the simplest of smartphone functions an exercise in patience.

I experienced this data throttling firsthand and found myself consistently questioning where my so-called unlimited data had escaped to. Things I took for granted, like using Google Maps to find the closest ice cream shop, were suddenly ordeals taking minutes rather than seconds. Searching Wikipedia to settle that argument with a friend about the plot of Home Alone 4? Minutes. Requesting an Uber? Minutes. Downloading the new Taylor Swift album? Forget about it.

The Federal Trade Commission (FTC) understands this pain and wants to recoup the losses of consumers who were allegedly duped by the promise of unlimited data, only to have their usage capped. As a result, the FTC is suing AT&T for misleading millions of consumers about unlimited data plans. After recently consulting with the Federal Communications Commission (FCC), Verizon decided to abandon its data throttling plans. AT&T and Verizon argue that data throttling is a necessary component of network management. The companies suggest that without throttling, carrier service might become interrupted because of heavy data usage by a small group of customers.
AT&T had the opportunity to settle with the FTC, but indicated that it had done nothing wrong and would fight the case in court. AT&T contends that its wireless service contracts clearly informed consumers of the data throttling policy and those customers still signed up for the service. Furthermore, there are other cellular service options for consumers that are dissatisfied with AT&T’s terms. These arguments are unlikely to provide much solace to wireless customers shackled to dial-up level speeds.
If there is a silver lining though, it is this: with my phone acting as a paperweight, I asked those around me for restaurant recommendations rather than turning to yelp, I got a better understanding of my neighborhood by finding my way rather than following the blue dot on my screen, and didn’t think about looking at my phone when having dinner with someone. I was proud. Part of me even wanted to thank AT&T. The only problem? I couldn’t tweet @ATT to send my thanks.