Legal News for Thurs 7/15 - FTC New Rule on Fake Reviews, US Drug Price Negotiations Save $7.5b, Big Attorney Fees in DE, Google App Store Monopoly and Chevron $550m CA Settlement

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This Day in Legal History: “Starve or Sell”

On August 15, 1876, the U.S. Congress passed a "starve or sell" bill, a genocidal piece of legislation aimed at coercing the Sioux Nation into surrendering their sacred Black Hills. The bill was passed just two months after the Battle of Little Bighorn, where Sioux and Cheyenne warriors achieved a significant victory against General George Custer’s forces. The Black Hills had become a target for American expansion after Custer's 1874 expedition discovered gold there, sparking a rush of settlers. Rather than respecting existing treaties, which guaranteed the Black Hills to the Sioux, Congress chose to use starvation as a tool of negotiation. The bill stipulated that no further appropriations for the Sioux's subsistence would be made unless they relinquished the Black Hills, leaving the Sioux with little choice but to sign away their land. This event is a dark chapter in American history, reflecting the broader pattern of exploitation and broken promises that characterized the United States' treatment of Native American tribes. The "starve or sell" bill stands as a stark reminder of the lengths to which the government would go to seize indigenous lands.

The FTC has issued its Final Rule on fake reviews, following a Notice of Proposed Rulemaking in July 2023. The Rule targets unfair or deceptive practices in consumer reviews, such as fake reviews, undisclosed company insiders writing reviews, and the sale of fake social media influence. Key provisions include prohibiting businesses from buying reviews that express a particular sentiment and requiring clear and conspicuous disclosures in reviews.

The Rule also addresses review suppression, ensuring that businesses cannot hide negative reviews through intimidation or selective publication. Notably, the Final Rule excludes a proposed prohibition on "review hijacking," where existing reviews are repurposed for different products. Violations of the Rule could result in significant civil penalties, underscoring the importance of compliance for businesses that rely on customer reviews. The Rule will go into effect 60 days after its publication in the Federal Register. The complex and fact-specific nature of the Rule means businesses must carefully assess their practices to avoid potential penalties.

End of “Fake Reviews”? — FTC Issues the Final Rule

The Biden administration announced that the U.S. government's first drug price negotiations under the Inflation Reduction Act will save Americans $7.5 billion in 2026. These savings will benefit senior citizens, who will see $1.5 billion less in out-of-pocket costs for ten key medications, and the government, which will reduce its Medicare spending by $6 billion.

The policy, long sought by Democrats, allows Medicare to use its purchasing power to negotiate lower drug prices, a move that could cut the federal deficit by $237 billion over a decade. The newly negotiated prices are expected to be made public by September 1, and the policy will initially affect ten drugs, including treatments for diabetes and heart conditions. While the pharmaceutical industry has opposed the policy, claiming it effectively lets the government set prices, the administration views it as a historic step toward lowering healthcare costs.

US Drug Price Negotiations Cut Costs $7.5 Billion in First Year

The Delaware Supreme Court upheld a $267 million fee award for attorneys who secured a $1 billion settlement with Dell Technologies Inc., reinforcing Delaware’s precedent of substantial payouts in high-risk corporate litigation. Chief Justice Collins J. Seitz Jr., writing for the court, affirmed that the Chancery Court acted within its discretion, emphasizing that the case was complex and contentious, involving nearly 100 defense lawyers.

This decision, which aligns with Delaware’s long-standing multi-factor approach to fee awards, rejects Pentwater Capital Management LP’s challenge for a lower fee based on federal court standards. The ruling underscores Delaware’s reluctance to adopt rigid rules for fee awards, maintaining the court's discretion to consider case-specific factors like complexity, attorney experience, and the risk of non-payment. The decision comes as Tesla faces similar large fee requests in ongoing litigation, raising concerns about public perception of such massive legal fees. The court acknowledged that while these fees are intended to motivate attorneys to take on challenging cases, there is a risk they could be seen as excessive.

​​Big Lawyer Paydays in Risky Cases Affirmed by Delaware Court (2)

A U.S. judge signaled plans to issue an order requiring Google to give Android users more options for downloading apps, following a jury's finding that Google monopolized app distribution on its platform. Judge James Donato expressed frustration with Google's resistance to implementing reforms proposed by Epic Games, which sued Google for stifling competition.

Donato indicated that his ruling will prioritize user and developer flexibility outside the Google Play store, aiming to open up the market after years of Google's dominance. He also mentioned setting up a compliance committee to oversee the changes. Despite Google's concerns about the impact on competition and security, Donato emphasized that Google must pay the price for its monopolistic behavior. This case adds to Google's legal challenges, as it also faces a separate government lawsuit over its search engine practices.

US judge says 'monopolist' Google can't avoid app store reforms | Reuters

Chevron Corp has agreed to pay $550 million to the city of Richmond, California, over a decade as part of a settlement that led the city to drop a proposed tax on Chevron's local refinery. The settlement, approved by the Richmond City Council, will be paid in annual installments from July 2025 to June 2035. Richmond had planned to seek voter approval for a tax on the refinery, arguing that Chevron should contribute more to the community where it has operated for over a century. The settlement avoids the need for a ballot measure and resolves the dispute.

Chevron to pay $550 million settlement to Richmond, California | Reuters

Cipher Challenge

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