Posts with «company legal & law matters» label

Tesla wins lawsuit over Autopilot Model S crash

This week, Tesla defeated a lawsuit that blamed the company’s Autopilot for a 2019 crash, reports Reuters. On Friday, a California state court jury found the driver assistance software was not to blame for a Model S crash that left the driver of the vehicle with a fractured jaw, missing teeth and nerve damage. Justine Hsu sued Tesla in 2020 after her EV swerved into a center median on a Los Angeles city street while Autopilot was engaged. She sought more than $3 million in damages, alleging defects in the software and the design of Tesla’s airbags.

Tesla denied liability for the accident. It argued Hsu used Autopilot on a city street, a practice the company warns against in the software’s user manual. The jury awarded Hsu no damages and said the automaker did not intentionally fail to disclose facts about Autopilot. As Reuters notes, it’s believed the trial is among the first involving the driver assistance mode. While the result won’t be “legally binding in other cases,” it is expected to inform how lawyers tackle future incidents involving the technology.

The result of the case is also unlikely to ease the scrutiny Tesla already faces related to its claims around Autopilot and “Full Self-Driving” software. At the start of the year, the automaker confirmed the US Department of Justice had requested documents linked to the two features. The company is also under investigation by the US National Highway Traffic Safety Administration for Autopilot collisions involving parked emergency vehicles.

This article originally appeared on Engadget at https://www.engadget.com/tesla-wins-lawsuit-over-autopilot-model-s-crash-185405972.html?src=rss

DOJ alleges China used a troll farm to target Chinese government critics in the US

In an 89-page complaint unsealed on Monday, the Justice Department alleges 34 current and former members of China’s 912 Special Project Working Group carried out a multi-year campaign to harass critics of Xi Jinping’s regime and discredit American policies. The task force, part of China’s domestic security agency, created thousands of fake social media profiles, including on Twitter and Facebook, to target Chinese dissidents in the US.

In its attempt to disseminate official government propaganda, the group created thousands of fake online personas. Judging from screenshots shared by the Justice Department, many of the profiles did not have more than a dozen accounts following them, but a common thread among them is that they tried to pass as authentic American voices. As The Wall Street Journal points out, one account claimed to be “Susan Miller,” a woman from New York. Another said they were “Julie Torres,” a native of Wisconsin. According to the Justice Department, China’s Ministry of Public Security tracked the performance of the agents involved in the operation and rewarded those who successfully ran multiple online personas without being detected by Twitter and Facebook.

In addition to targeting Chinese dissidents, the group, taking a page from Russia’s disinformation playbook, sought to discredit the US government by exploiting divisions among the American public. For instance, it spread disinformation about George Floyd, the Black Man whose murder by Minneapolis police in 2020 sparked Black Lives Matter protests across the country. The group also amplified Russian propaganda about the war in Ukraine.

“As alleged, the PRC government deploys its national police and the 912 Special Project Working Group not as an instrument to uphold the law and protect public safety, but rather as a troll farm that attacks persons in our country for exercising free speech in a manner that the PRC government finds disagreeable, and also spreads propaganda whose sole purpose is to sow divisions within the United States,” said US attorney Breon Peace, referring to the acronym for the People’s Republic of China.

According to the Justice Department, all 34 of the agents remain at large. This isn’t the first time the US has detailed an effort by China to target overseas dissidents. At the end of last year, US Attorney General Merrick Garland detailed a case involving a multi-year campaign by Chinese operatives to force a US resident to return to China.

This article originally appeared on Engadget at https://www.engadget.com/doj-alleges-china-used-a-troll-farm-to-target-chinese-government-critics-in-the-us-201403325.html?src=rss

SEC charges crypto exchange Bittrex for violating US securities laws

The Securities and Exchange Commission has charged Bittrex and former CEO William Shihara with operating an unregistered securities exchange. In a complaint filed on Monday, the SEC alleges the crypto exchange, once one of the largest in the US, earned at least $1.3 billion in revenue between 2017 and 2022 while offering the services of a broker, exchange and clearing agency. It did so without registering with the Commission, in violation of federal law, the SEC alleges.

Additionally, the SEC claims Bittrex “coordinated” with crypto issuers to delete “problematic statements” Shihara believed would prompt a regulator like the SEC to investigate the exchange. In one instance, the Commission states Shihara instructed a potential issuer to erase comments that referenced “price predictions” and “expectation of profit.”

“Today’s action, yet again, makes plain that the crypto markets suffer from a lack of regulatory compliance, not a lack of regulatory clarity,” said SEC Chair Gary Gensler. “As alleged in our complaint, Bittrex and issuers that it worked with knew the rules that applied to them but went to great lengths to evade them by directing issuer-applicants to ‘scrub’ offering materials of information indicating that certain crypto assets were securities.”

As Coindesk notes, Bittrex, citing “continued regulatory uncertainty,” announced last month it would exit the US market at the end of April. Over the weekend, the company told The Wall Street Journal it was recently notified by the SEC of potential enforcement action by the Commission. David Maria, the company’s general counsel, said Bittrex would challenge the lawsuit unless the Commission offered “a reasonable settlement offer.” Last year, the US Treasury fined Bittrex $29 million for previously failing to comply with US money laundering and sanction laws.

This article originally appeared on Engadget at https://www.engadget.com/sec-charges-crypto-exchange-bittrex-for-violating-us-securities-laws-164021896.html?src=rss

Air National Guard member arrested in connection to Discord classified documents leak

The FBI has made an arrest in connection to a recent leak of classified documents that revealed sensitive details about the war in Ukraine and other US intelligence matters, apprehending a young Massachusetts Air National Guard member on Thursday, April 13th. 21-year-old Jack Teixeira, who holds the rank of airman first class, allegedly shared the files to a Discord server primarily dedicated to Minecraft. According to The Washington Post, he first transcribed the documents manually when he started sharing them late last year before posting photos of the classified materials themselves.  

The Justice Department has arrested Jack Douglas Teixeira in connection with an investigation into “alleged unauthorized removal, retention, and transmission of classified national defense information,“ Attorney General Merrick Garland said in a statement issued by the Justice Department. As NBC News notes, public military records show that Texeira was assigned as a cyber transport systems journeyman at Otis Air National Guard Base on Cape Cod. 

FBI Statement on today's arrest of Jack Douglas Teixeira, of North Dighton, Massachusetts. pic.twitter.com/SC81ryuhRC

— FBI Boston (@FBIBoston) April 13, 2023

Based on the The Post’s investigation, Teixeira, who used the pseudonym “OG” on the Discord server, claimed he partly worked at a secure facility where phones and cameras are prohibited. That’s reportedly the reason why he originally copied the documents by hand before the lack of interaction on the server prompted him to post photographs of the original documents. Some of the photos contained random items and furniture that may have given investigators a clue on his identity. 

Despite the sensitive information contained in the documents, the suspect apparently did not intend to be a whistleblower — according to The New York Times, members of "Thug Shaker Central," the original Discord server, say the documents were never intended to be shared outside of their small group. Eventually, though, they were shared to other Discord servers before finding their way to Telegram channels, 4chan and other social media platforms.   

The documents Teixeira had leaked included large amounts of information regarding the Russian invasion of Ukraine, including detailed battlefield conditions and missile strike maps for the latter. They also reportedly showed how Egypt had planned to sell Russia tens of thousands of rockets and how Russia approached Turkey, a NATO ally, to buy weapons. In addition, the documents apparently contained information showing how the US spies on its foreign allies.  

Discord previously said that it was cooperating with authorities regarding their investigation on the leak. As for Teixeira, he will make his initial appearance in the US District Court for Massachusetts. 

This article originally appeared on Engadget at https://www.engadget.com/air-national-guard-member-arrested-in-connection-to-discord-classified-documents-leak-025010308.html?src=rss

Juul will pay $462 million to 6 states in underage vaping settlement

The New York Attorney General has announced that its youth vaping lawsuit against Juul is over, ending with an agreement that distribute a $462 million settlement between six states and Washington DC. “JUUL lit a nationwide public health crisis by putting addictive products in the hands of minors and convincing them that it’s harmless," Attorney General Letitia James said in a statement. "Today they are paying the price for the harm they caused.” The settlement will be split among the states of New York, California, Colorado, Illinois, Massachusetts, New Mexico and the District of Columbia.

The 2019 lawsuit alleged that Juul engaging in deceptive marketing and illegally sold products to minors by glamorizing vaping with ads that featured "young models using fruity, sweet and minty flavors that appealed to youth." In addition to the monetary penalty, the settlement includes strict restrictions to keep Juul from marketing its products that way in the future, including a ban on showing persons under 35 years of age using its products and rules that would keep Juul product placement from appearing in movies, tv shows, video games and even virtual reality.

This is the largest multi-state settlement Juul has made yet, but it's only a small part of the total the company has paid so far. In 2022, the company agreed to pay $1.2 billion, collectively settling thousands of personal and government lawsuits.

Juul will have 8 years to pay out the $462 million settlement, and it might need it. According to a 2022 valuation based on Cigarette maker Altria's investment in the company, Juul's worth has dropped dramatically since 2018. Despite the settlement, Juul is attempting to remain optimistic. "With this settlement, we are nearing total resolution of the company's historical legal challenges and securing certainty for our future," the company told ABC News. "Since our company-wide reset in the fall of 2019, underage use of JUUL products has declined by 95% based on the National Youth Tobacco Survey."

This article originally appeared on Engadget at https://www.engadget.com/juul-will-pay-462-million-to-6-states-in-underage-vaping-settlement-211701541.html?src=rss

Judge rejects Elizabeth Holmes’ bid for freedom while awaiting appeal

A federal judge denied Holmes’s motion for release on Monday as she appealed her conviction on four counts of fraud and conspiracy, as reported by The Guardian. As a result, the Theranos founder is scheduled to report to prison on April 27th.

Holmes has appealed her conviction to the federal ninth circuit court of appeals based on questions about the “accuracy and reliability” of evidentiary and procedural issues in the trial. However, US district court judge Edward Davila ruled Monday that the appeals didn’t meet the burden of a “substantial” questioning of facts or law. According to the judge, the request didn’t address the conviction’s underlying wire-fraud issues against investors. Therefore, it wouldn’t warrant a reversal or new trial (the legal standard for remaining free pending appeal) even if the appeals court agreed with her assertions.

However, the judge ruled against prosecutors hoping to brand Holmes as a flight risk after learning that her partner bought her a one-way ticket for a flight to Mexico. Although the judge described the ticket purchase (and failure to cancel it post-conviction) as a “bold move” and “perilously careless oversight,” he gave her the benefit of the doubt, ruling she was “not likely to flee or pose a danger” to the public.

Last November, the Theranos founder was sentenced to over 11 years in prison for defrauding investors after a jury found her guilty last January. Founded in 2003, Theranos claimed to produce a long list of revealing health results using only a single drop of a patient’s blood. The company raised hundreds of millions of dollars from high-profile investors before internal whistleblowers sourced a 2015 Wall Street Journal story revealing that the startup’s underlying technology was bogus. The story has since become a cautionary tale, with podcasts, books and a recent Hulu miniseries cashing in on the one-time Silicon Valley golden child’s downfall.

This article originally appeared on Engadget at https://www.engadget.com/judge-rejects-elizabeth-holmes-bid-for-freedom-while-awaiting-appeal-191042016.html?src=rss

Former Twitter execs sue company over unpaid legal fees

Twitter faces yet another lawsuit over unpaid bills. As first reported by The New York Times, three former executives sued the company on Monday. In a complaint filed with the Delaware Chancery Court, former CEO Parag Agrawal, former CFO Ned Segal and former chief legal officer Vijaya Gadde allege Twitter owes them more than $1 million in unreimbursed legal fees.

Elon Musk fired all three execs after taking control of the company last fall. The former executives allege Twitter spent months ignoring letters they sent asking it to honor a reimbursement agreement they had in place before their termination. According to the complaint, Twitter finally acknowledged the letters last month but did little else. As of Monday, the trio was still waiting on the company to repay the fees.

The former execs say they incurred the legal fees responding to shareholder lawsuits and several government investigations, including one involving the US Department of Justice. The complaint states federal officials began sending requests to Agrawal and Segal last July. Then, late last year, the Justice Department contacted Agrawal and Segal’s lawyers to discuss multiple investigations into Twitter. As CNN notes, the Justice Department has not previously disclosed an investigation into Twitter.

The lawsuit highlights Twitter’s ongoing financial challenges. At the end of last year, the owner of the building that houses Twitter’s San Francisco headquarters sued the company for failing to pay rent. Musk has eliminated more than 75 percent of the approximately 7,500-person workforce Twitter employed under Agrawal. Last month, Musk said Twitter saw a 50 percent decline in ad revenue.

This article originally appeared on Engadget at https://www.engadget.com/former-twitter-execs-sue-company-over-unpaid-legal-fees-164002614.html?src=rss

Hitting the Books: Tech can't fix what's broken in American policing

It's never been about safety as much as it has control, serving and protecting only to the benefit of the status quo. Clearview AI, PredPol, Shotspotter, they're all Carolyn Bryant Donham's testimony behind a veneer of technological validity — a shiny black box to dazzle the masses while giving the police yet another excuse to fatally bungle their search warrants. In More than a Glitch, data journalist and New York University Associate Professor of Journalism Dr. Meredith Broussard, explores how and why we thought automating aspects of already racially-skewed legal, banking, and social systems would be a good idea. From facial recognition tech that doesn't work on dark-skinned folks to mortgage approval algorithms that don't work for dark-skinned folks, Broussard points to a dishearteningly broad array of initiatives that done more harm than good, regardless of their intention. In the excerpt below, Dr. Broussard looks at America's technochauavnistic history of predictive policing. 

MIT Press

Excerpted from More than a Glitch: Confronting Race, Gender, and Ability Bias by Meredith Broussard. Reprinted with permission from The MIT Press. Copyright 2023.


Predictive policing comes from the “broken windows” era of policing and is usually credited to William Bratton, former New York City police commissioner and LAPD chief. As NYC police commissioner, Bratton launched CompStat, which is perhaps the best-known example of data-driven policing because it appeared as an antagonist called “Comstat” on season three of HBO’s The Wire. “CompStat, a management model linking crime and enforcement statistics, is multifaceted: it serves as a crime control strategy, a personnel performance and accountability metric, and a resource management tool,” writes sociologist Sarah Brayne in her book Predict and Surveil. “Crime data is collected in real time, then mapped and analyzed in preparation for weekly crime control strategy meetings between police executives and precinct commanders.” CompStat was widely adopted by police forces in major American cities in the 1990s and 2000s. By relying heavily on crime statistics as a performance metric, the CompStat era trained police and bureaucrats to prioritize quantification over accountability. Additionally, the weekly meetings about crime statistics served as rituals of quantification that led the participants to believe in the numbers in a way that created collective solidarity and fostered what organizational behaviorists Melissa Mazmanian and Christine Beckman call “an underlying belief in the objective authority of numbers to motivate action, assess success, and drive continuous organizational growth.” In other words: technochauvinism became the culture inside departments that adopted CompStat and other such systems. Organizational processes and controls became oriented around numbers that were believed to be “objective” and “neutral.” This paved the way for the adoption of AI and computer models to intensify policing—and intensify surveillance and harassment in communities that were already over-policed.

Computer models are only the latest trend in a long history of people imagining that software applied to crime will make us safer. In Black Software, Charlton McIlwain traced the history of police imagining that software equals salvation as far back as the 1960s, the dawn of the computational era. Back then, Thomas J. Watson, Jr., the head of IBM, was trying to popularize computers so more people would buy them. Watson had also committed (financially and existentially) to the War on Poverty declared by President Lyndon Johnson upon his election in 1964. “Watson searched for opportunities to be relevant,” McIlwain writes. “He said he wanted to help address the social ills that plagued society, particularly the plight of America’s urban poor... He didn’t know what he was doing.”6 Watson wanted to sell computers and software, so he offered his company’s computational expertise for an area that he knew nothing about, in order to solve a social problem that he didn’t understand using tools that the social problem experts didn’t understand. He succeeded, and it set up a dynamic between Big Tech and policing that still persists. Software firms like Palantir, Clearview AI, and PredPol create biased targeting software that they label “predictive policing,” as if it were a positive innovation. They convince police departments to spend taxpayer dollars on biased software that ends up making citizens’ lives worse. In the previous chapter, we saw how facial recognition technology leads police to persecute innocent people after a crime has been committed. Predictive policing technology leads police to pursue innocent people before a crime even takes place.

It’s trIcky to write about specific policing software because what Chicago’s police department does is not exactly the same as what LAPD or NYPD does. It is hard to say exactly what is happening in each police agency because the technology is changing constantly and is being deployed in different ways. The exact specifications tend to be buried in vendor contracts. Even if a police department buys software, it is not necessarily being used, nor is it being used in precisely the way it was intended. Context matters, and so does the exact implementation of technology, as well as the people who use it. Consider license plate readers, which are used to collect tolls or to conduct surveillance. Automated license plate readers used by a state transportation authority to automatically collect tolls is probably an acceptable use of AI and automated license plate reader technology—if the data is not stored for a long time. The same license plate reader tech used by police as part of dragnet surveillance, with data stored indefinitely, is problematic.

Every time the public has become aware of some predictive policing measure, controversy has erupted. Consider the person-based predictive policing enacted by the Pasco County Sheriff’s Office in Florida, which created a watchlist of people it considered future criminals. Tampa Bay Times reporters Kathleen McGrory and Neil Bedi won a Pulitzer for their story about how the Pasco County Sheriff’s Office generated lists of people it considered likely to break the law. The list was compiled by using data on arrest histories and unspecified intelligence, coupled with arbitrary decisions by police analysts. The sheriff’s department sent deputies to monitor and harass the people on the watchlist. Often, the deputies lacked probable cause, search warrants, or evidence of a crime. In five years, almost 1,000 people were caught up in the systematic harassment labeled “Intelligence-Led Policing.” Notably, a large percentage of the people on the watchlist were BIPOC.

The Pasco program started in 2011, shortly after Chris Nocco took office as sheriff. Nocco came up with the idea to “reform” the department with data-driven initiatives. “For 10 years, nobody really understood how this worked, and the public wasn’t aware of what was going on,” said Bedi, explaining the reporting project.8 The sheriff built a “controversial data-driven approach to policing. He also built a wide circle of powerful friends,” including local and national politicians, who didn’t question his actions.

The harassment didn’t stop there, however. Separately, the Sheriff’s Office created a list of schoolchildren it considered likely to become future criminals. The office gathered data from local schools, including protected information like children’s grades, school attendance records, and child welfare histories. Parents and teachers were not told that children were designated as future criminals, nor did they understand that the students’ private data was being weaponized. The school system’s superintendent initially didn’t realize the police had access to student data, said Kathleen McGrory.

Once the investigation was published, civil liberties groups denounced the intelligence programs. Thirty groups formed a coalition to protest, and four of the targeted people brought lawsuits against the agency. Two bills were proposed to prevent this kind of invasion and misuse in the future. The federal Department of Education opened an investigation into the data sharing between the Sheriff’s Office and the local school district. Fortunately, as a result, police analysts will no longer have access to student grades.

Many people imagine that using more technology will make things “fairer.” This is behind the idea of using machines instead of judges, an idea that surfaces periodically among lawyers and computer scientists. We see it in the adoption of body-worn cameras, an initiative that has been growing since LAPD officers brutally assaulted Rodney King in 1991 and the attack was captured on a home camcorder. There’s an imaginary world where everything is captured on video, there are perfectly fair and objective algorithms that adjudicate what happens in the video feed, facial recognition identifies bad actors, and the heroic police officers go in and save the day and capture the bad guys. This fantasy is taken to its logical conclusion in the film Minority Report, where Tom Cruise plays a police officer who arrests people before they commit crimes, on the recommendation of some teenagers with precognition who are held captive in a swimming pool full of goo. “It’s just like Minority Report,” a police officer marveled to sociologist Sarah Brayne, when the two were discussing Palantir’s policing software.

What makes this situation additionally difficult is the fact that many of the people involved in the chain are not malevolent. For example, my cousin, who is white, was a state police officer for years. He’s wonderful and kind and honest and upstanding and exactly the person I would call on if I were in trouble. He and his family are very dear to me and I to them. I believe in the law, and I believe in law enforcement in the abstract, in the way that many people do when they have the privilege of not interacting with or being targeted by law enforcement or the courts.

But the origins of policing are problematic for Black people like me, and the frequency of egregious abuses by police is out of control in today’s United States. Police technology and machine fairness are the reasons why we need to pause and fix the human system before implementing any kind of digital system in policing.

The current system of policing in the United States, with the Fraternal Order of Police and the uniforms and so on, began in South Carolina. Specifically, it emerged in the 1700s in Charleston, South Carolina, as a slave patrol. “It was quite literally a professional force of white free people who came together to maintain social control of black, enslaved people living inside the city of Charleston,” said ACLU Policing Policy Director Paige Fernandez in a 2021 podcast. “They came together for the sole purpose of ensuring that enslaved black people did not organize and revolt and push back on slavery. That is the first example of a modern police department in the United States.” In her book Dark Matters: Surveillance of Blackness, scholar Simone Brown connects modern surveillance of Black bodies to chattel slavery via lantern laws, which were eighteenth-century laws in New York City requiring Black or mixed-race people to carry a lantern if out at night unaccompanied by a white person. Scholar Josh Scannell sees lantern laws as the precedent for today’s policy of police using floodlights to illuminate high-crime areas all night long. People who live in heavily policed neighborhoods never get the peaceful cloak of darkness, as floodlights make it artificially light all night long and the loud drone of the generators for the lights makes the neighborhood noisier.

The ACLU’s Fernandez draws a line from slave patrols maintaining control over Black people to the development of police departments to the implementation of Jim Crow–era rules and laws to police enforcing segregation during the civil rights era and inciting violence against peaceful protestors to escalating police violence against Black and Brown people and leading to the Black Lives Matter movement. Fernandez points out that the police tear-gassed and pepper-sprayed peaceful protestors in the summer of 2020, fired rubber bullets at protestors, charged at protestors, and used techniques like kettling to corner protestors into closed spaces where violence could be inflicted more easily.

The statistics paint a grim picture. “Black people are 3.5 times more likely than white people to be killed by police when Blacks are not attacking or do not have a weapon. George Floyd is an example,” writes sociologist Rashawn Ray in a 2020 Brookings Institute policy brief about police accountability.14 “Black teenagers are 21 times more likely than white teenagers to be killed by police. That’s Tamir Rice and Antwon Rose. A Black person is killed about every 40 hours in the United States. That’s Jonathan Ferrell and Korryn Gaines. One out of every one thousand Black men can expect to be killed by police violence over the life course. This is Tamir Rice and Philando Castile.” When Derek Chauvin, the police officer who killed George Floyd, was found guilty, it was remarkable because police are so rarely held accountable for violence against Black and Brown bodies.

Reform is needed. That reform, however, will not be found in machines.

This article originally appeared on Engadget at https://www.engadget.com/hitting-the-books-more-than-a-glitch-meredith-broussard-mit-press-143009017.html?src=rss

Jury reduces Tesla's $137 million racism lawsuit penalty to $3.2 million

Back in 2021, a San Francisco court ordered Tesla to pay Owen Diaz, a former Black contract worker who accused the company of enabling a racist workplace, $137 million in damages. It was one of the highest amounts awarded to an individual suing on the basis of discrimination, but the appeals that followed had lowered it significantly. While US District Judge William Orrick affirmed the jury's original verdict, he found the original damages awarded to Diaz "excessive" and lowered the total to $15 million. Now, a San Francisco federal jury has reduced the amount even further and has ordered Tesla to pay Diaz $3.2 million only. 

The former elevator operator at Tesla’s Fremont assembly plant rejected the $15 million award Orrick had proposed and instead sought for a retrial. In the latest hearing, Diaz again recounted his experiences working for Tesla, where he said he and his fellow Black workers were subjected to racial slurs. He also said that he was made to feel unsafe at work and that other workers left drawings of swastika and racist graffiti, such as Inki the Caveman, in his workspace and the company restrooms. 

Diaz's lawyers urged the jury to penalize Tesla, a company currently worth over $600 billion, an amount that will get its attention. But Tesla's lawyer Alex Spiro reportedly argued that Diaz should only be awarded half his salary. He apparently characterized Diaz as a liar in court, who misstated how long he worked at the automaker and who exaggerated his testimonies and the abuse he suffered to gain a bigger payout. 

We may not be seeing the end to this case, though. According to the Los Angeles Times, Diaz's lawyer believes the jury decided on awarding him only $3 million in punitive damages and $175,000 in non-economic damages because he was wrongly attacked by the defense. He said Tesla's strategy to "minimize and sanitize" worked and that he has already filed a request for a new trial due to "misconduct."

This article originally appeared on Engadget at https://www.engadget.com/jury-reduces-teslas-137-million-racism-lawsuit-penalty-to-32-million-060414307.html?src=rss

Activision Blizzard settles DOJ lawsuit over eSports wage suppression

The US Department of Justice has settled a lawsuit it filed Monday with Activision Blizzard over suppressed eSports wages, according toReuters. The case, submitted in the US District Court for the District of Columbia, focuses on a rule that required independently owned teams to effectively pay double if they passed a soft salary cap. A federal judge will still need to approve the settlement.

The complaint, the fruit of an investigation first reported in 2021, said that in Activision’s Overwatch and Call of Duty leagues, the “competitive balance tax” was structured to penalize teams if their compensation exceeded a threshold set by Activision. “While players in other professional sports leagues have agreed to salary restrictions as part of collective bargaining agreements, the players in Activision’s esports leagues are not members of a union and never negotiated or bargained for these rules,” the DOJ clarified in the filing.

The case states that Activision would fine teams one dollar for every dollar that exceeded the cap — and redistribute the collected fees among all non-offending teams. For example, the filing says that “if Activision set a Competitive Balance Tax threshold of $1 million, a team that spent $1.2 million on player compensation in a season would pay a $200,000 fine, which would be distributed to the other teams.”

Additionally, the Antitrust Division filed a proposed consent decree that would bar Activision from imposing any further rules that would penalize a team for exceeding a set amount of compensation. It would also require the company to certify that “it has ended all Competitive Balance Taxes in its professional esports leagues, to implement revised antitrust compliance and whistleblower protection policies, and to provide notice and an explanation of the final judgment to teams and players in its professional esports leagues.” 

According to the DOJ, the Overwatch and Call of Duty leagues have generated millions of dollars. Microsoft is trying to clear regulatory hurdles to move forward with its planned purchase of Activision Blizzard.

“Video games and esports are among the most popular and fastest growing forms of entertainment in the world today, and professional esports players—like all workers—deserve the benefits of competition for their services. Activision’s conduct prevented that from happening,” said Assistant Attorney General Jonathan Kanter from the DOJ’s Antitrust Division. “Today’s lawsuit makes clear that the Antitrust Division remains committed to protecting workers across all types of industries from anticompetitive conduct.”

This article originally appeared on Engadget at https://www.engadget.com/activision-blizzard-settles-doj-lawsuit-over-esports-wage-suppression-202452240.html?src=rss