The U.S. Department of Justice wants to break up Google’s highly profitable advertising business, and it wants to do it fast, according to a new complaint that adds to the company’s other battles against four different and overlapping government enforcement actions.
Tuesday’s complaint, joined by a contingent of state attorneys general, is the second DOJ lawsuit after one targeting the company’s alleged monopoly over online search and the ads that accompany search results and is the most concerted effort yet to disassemble the internet giant.
It’s the second government enforcement lawsuit, following one from state attorneys general led by Texas, to accuse Google of anticompetitively amassing control over every facet of the advertising technology, or ad tech, space. And it’s just the latest government action to target various aspects of Google’s business, including a lawsuit going after its control of the Play Store on cellphones that run its Android operating system.
But the latest case also adds important new elements. It’s the first DOJ Big Tech lawsuit filed during the Biden administration. It’s the first to call for more than just vague injunctive relief, instead expressly calling for the breakup of Google’s ad tech business. And it’s the first filed in the Eastern District of Virginia, a jurisdiction known as a rocket docket where the DOJ could be hoping to get to trial much faster than the three years it took to kick off the trial for the DOJ’s October 2020 search monopolization . . .
New Venue, New Speed
A big question will be whether the case will move fast enough for any ultimate remedy to meaningfully affect the fast-moving sector.
The DOJ will be looking to dismantle the ad tech engine not in its usual home turf in D.C. federal court, where it filed the search monopoly case, but nine miles away in Alexandria, Virginia.
Despite being close in terms of distance, there’s a world of difference in the speed of the courts’ dockets.
“The big differentiator of that docket is it moves,” said Daniel McCuaig, a longtime DOJ antitrust litigator who is now a partner at Cohen Milstein Sellers & Toll PLLC.
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Time Is A Weapon
The attrition that accompanies an enforcement campaign may be part of the DOJ’s calculus in pumping the massive resources into the cases against Google, with fanfare that has gone as far as including the participation of Attorney General Merrick Garland in announcing the case that now takes the lead of the pushback against Google, Meta and other Big Tech platforms.
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Antitrust enforcers, McCuaig said, are “taking a hard soup-to-nuts look at Google’s business practices and bringing enforcement actions where they think they’re warranted.”
The Great Google Breakup
Both this case and the Texas-led action that preceded it by more than two years (filed in December 2020) call for injunctive relief. But the DOJ’s lawsuit goes a step further, seeking a long-called-for-remedy as it targets Google’s power controlling the middlemen in the space that pairs advertisers, website publishers and everyday users in high-speed auctions for specific ads to reach specific eyeballs on specific websites. If the DOJ has its way, Google will have to sell off the service that website owners use to manage their advertising space sales and the ad exchange where digital ad space is auctioned off.
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According to McCuaig, the divestiture bid amounts to an effort to unwind Google’s $3 billion 2008 purchase of DoubleClick, a deal the complaint says the FTC at the time permitted to go forward on the mistaken “assumptions” that customers could simply switch to other publisher ad servers, when Google knew at the time that switching was nigh impossible.
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A “do-over” on DoubleClick, McCuaig said, “is a pretty big ask,” one with which he asserted only the DOJ could have a chance to prevail. One challenge, McCuaig and others said, is the age of the DoubleClick deal, with Google likely to argue how difficult, and damaging to the modern internet, it would be to “unscramble the egg.”
“It can just get really hard to unscramble omelets. And typically more so as time goes on,” McCuaig said.
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Searching For More
McCuaig also noted that the complaint suggests that the DOJ may still not be done with Google. In particular, he pointed to a paragraph in which the DOJ spoke of mergers that scooped up mobile app advertising technology.
“While Google’s conduct in the distinct market for mobile app advertising is outside the scope of this complaint, Google’s anticompetitive conduct in the mobile apps market is consistent with the conduct alleged in the market for display advertising,” the complaint states.
“That’s a pretty strong statement about conduct that you’re not challenging,” McCuaig said.
Theodore Leopold spoke to Roxy Todd of Radio IQ, Virginia Public Radio about the occurrence of a chemical compound, hexafluoropropylene oxide dimer acid, better known by its trade name of GenX, in the Roanoke River.
Listen to or read the full story from NPR Radio IQ.
Cohen Milstein Sellers & Toll PLLC tied up one of the biggest shareholder derivative settlements on record and clinched multimillion-dollar investor deals to hold big corporate boards accountable for rooting out alleged workplace bias and abuse, landing it among Law360’s 2022 Securities Groups of the Year.
With roughly 30 attorneys in offices across the country, Cohen Milstein’s securities litigation practice has long been a core strength, distinguishing the firm over its more than four-decade history as one of the top-tier investor-side shops.
After the 2008 financial crisis, for example, Cohen Milstein’s securities litigators racked up a string of nine-figure settlements for mortgage-backed securities investors. And more recently, as the #MeToo movement brought toxic workplace concerns to the fore, the team has garnered recognition for pioneering shareholder derivative settlements that compel corporate culture reforms.
The team, co-chaired by managing partner Steven J. Toll and partner Julie G. Reiser, has burnished that track record in the past year by sewing up one of the largest-ever derivative settlements, this time in consolidated litigation tied to a costly bribery scandal involving major Ohio electric utility FirstEnergy Corp.
Cohen Milstein was one of three co-lead counsel on the case, in which its client, the Massachusetts Laborers Pension Fund, sought with other investors to hold FirstEnergy leaders liable for allegedly orchestrating bribes aimed at securing an Ohio state bailout of two nuclear plants owned by the utility.
Their settlement, approved in August by an Ohio federal judge, positioned FirstEnergy to receive a $180 million insurer-funded payout, marking the biggest derivative recovery to date in the Sixth Circuit and among the biggest nationally. The deal also provided for greater board oversight of FirstEnergy’s political spending and other governance reforms.
Toll called it an “extraordinary result” that Cohen Milstein and its co-lead counsel managed to achieve while navigating multiple complexities, including the involvement of two different judges in two different courts — one of whom proved quite tough on the plaintiffs’ side —and a special litigation committee of FirstEnergy’s board.
“In derivative cases, when a special litigation committee is appointed, sometimes they try to take the case away from you, so we had to deal with that as well as getting over demand requirements,” Toll told Law360. “Those are the types of issues you often have to confront in derivative cases; we had to overcome all of them to reach this excellent settlement. It was a real team effort.”
This conclusion came just months after Cohen Milstein wrapped up as lead counsel in two other prominent derivative settlements, one involving specialty retailer L Brands Inc. — the former parent company of lingerie brand Victoria’s Secret — and the other involving social media platform Pinterest.
The L Brands settlement, finalized in May by an Ohio federal judge, resolved multiple shareholder suits that claimed top brass damaged the company by allegedly fostering a hostile, abusive work environment and, in the case of founder Les Wexner, palled around with convicted sex offender Jeffrey Epstein.
Cohen Milstein represented an Oregon state retirement fund leading one of those suits. Under the settlement, L Brands — renamed Bath & Body Works Inc. in 2021 — and Victoria’s Secret committed to invest $90 million in a suite of internal reforms, including adopting new anti-harassment policies and training, limiting their use of nondisclosure agreements and launching diversity, equity and inclusion-focused advisory councils.
The Pinterest settlement similarly focused on corporate culture, ending a Cohen Milstein-helmed derivative action in which investors accused the social media platform’s leaders of tolerating a noxious mix of gender- and race-based discrimination at work.
Finalized in June by a California federal judge, the settlement called for Pinterest to put $50 million toward instituting regular pay equity reviews, hiring process improvements, employee resource group enhancements and other diversity and inclusion measures. Notably, it also established first-of-their-kind diversity goals for Pinterest’s platform.
Both deals underscored efforts Reiser has spearheaded at the firm to leverage derivative litigation to push companies to confront harassment and discrimination in their workplaces, an approach that blends the strengths of the firm’s securities and employment law practices.
“A derivative lawsuit is a very useful tool for investors who want to amplify the concerns of the employees within a company,” explained Reiser, who built up years of experience working on civil rights cases early in her career at the firm.
“When you see a scandal at a company like Pinterest, where there were highly successful African-American executives who felt like their voices weren’t heard, or at Victoria’s Secret, where women in high-level executive positions were treated like they were the product, you end up in a situation where a company or board can lose their talent,” Reiser said.
“Talent is a big part of what creates value for an organization, so when investors have a voice and are able to ask the board for accountability with measures to hire, train, promote and retain talent, I think they’re playing a very important role,” she added.
As this kind of derivative litigation has blossomed in recent years, companies have increasingly turned to forum selection bylaws that require shareholders to pursue derivative claims in more business-friendly state courts, overriding the exclusive jurisdiction that federal courts would otherwise have.
In January 2022, Cohen Milstein’s securities team scored an important victory for shareholders on this issue at the Seventh Circuit, which ruled that the Boeing Co. could not enforce a forum bylaw restricting derivative claims to Delaware Chancery Court.
That decision came on appeal in a case that sought to hold Boeing officers and directors liable for alleged proxy misstatements in connection with their oversight of the jet manufacturer’s flawed 737 Max design. Cohen Milstein represented the union worker benefit plan behind that action, which was ultimately settled with a $6.25 million deal late last year. Boeing agreed to rewrite its forum bylaw so that shareholders would be permitted to file derivative claims in federal courts.
“The ability to bring a federal proxy claim in federal courts was, we felt, an important right for investors to get a fair shake,” Toll said, adding that the Ninth Circuit has recently split from the Seventh Circuit by upholding the enforceability of another company’s Delaware Chancery forum bylaw. “It could end up in the Supreme Court one day. We’ll see.”
But while derivative suits have yielded some of the Cohen Milstein securities practice’s highest-profile accomplishments over the past year, the team has been no slouch when it comes to securities fraud class actions. A $35 million settlement approved in July between a Miller Energy investor class and auditor KPMG offers a case in point.
The class, which Cohen Milstein represented as lead counsel, accused KPMG of helping Miller Energy Resources Inc., a now-defunct petroleum production firm, to falsify valuations of its Alaskan oil reserve assets, alleging this fraud fueled investor losses and contributed to the company’s eventual 2015 bankruptcy.
Although pleading standards for auditor liability in securities fraud cases are notoriously stringent, Cohen Milstein and the investors survived a critical motion to dismiss and received class certification in Tennessee federal court in 2021, paving the way for the settlement finalized last summer.
“Overcoming KPMG’s motion to dismiss was huge,” Toll said. “Securities fraud cases against auditors are tough, and they’re not brought very often, but we were successful with KPMG. It’s a pretty remarkable recovery, considering just how challenging these auditor defendant cases are.”
The complete article can be read on Law360.
In a lawsuit against the church, Judge Julie S. Sneed will consider arguments on whether David Miscavige can be served with papers.
For months, Church of Scientology leader David Miscavige has played “a cat and mouse game” by evading formal notices in a human trafficking lawsuit, according to Manuel Dominguez, an attorney representing three former church workers.
In a Tampa federal courtroom on Friday, Dominguez said the three attorneys in attendance representing Miscavige could “end this now” by disclosing where their client lives.
“This is just a game, and I don’t think it should be,” said Dominguez, a partner at Cohen Milstein in Palm Beach Gardens.
U.S. Magistrate Judge Julie S. Sneed tried too, asking Miscavige attorney Joseph Terry for an address, with no success.
The plaintiffs’ attorneys asked Sneed to declare Miscavige served, considering their 27 attempts between May and August to deliver court papers to the Scientology leader at 10 church locations in Clearwater and Los Angeles. After a 90-minute hearing on Friday, Sneed said she will take both sides’ arguments under advisement before issuing a ruling.
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Dominguez noted that Miscavige “is very much engaged in business here in Florida” and cited his appearance at a New Year’s event at the church’s Fort Harrison Hotel. He also referred to a Tampa Bay Times story that detailed Miscavige’s Jan. 6 phone call with Clearwater interim City Manager Jennifer Poirrier to discuss the church’s real estate plans.
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Dominguez countered that Miscavige actively manages the Freewinds and his business in Florida is incidental to his clients’ claims. He said the other church entities named in the lawsuit are located in Clearwater and that “the church itself is his agent,” Dominguez said.
“He and Scientology are the same entity, that’s the way this religion is run,” Dominguez said.
The five church entities named as co-defendants in the lawsuit already have been served and filed motions in July to push the lawsuit into internal church arbitration, where it would go before a panel of loyal church members. A judge has not yet ruled on the church’s request to divert the case out of the U.S. court system.
In the meantime, Dominguez argued his legal team has gone to extensive lengths to serve Miscavige, including hiring a private investigator, researching public records and asking the attorneys representing the five church entities for Miscavige’s mailing address.
As President Joe Biden begins his third year in office on Friday, the U.S. Department of Labor’s Wage and Hour Division remains without a Senate-confirmed leader, despite the president’s having put forward two nominees for the role.
Though the DOL’s Wage and Hour Division has operated effectively without a Senate-confirmed leader under Biden, a confirmed head can accomplish more than a temporary one can, observers say. (Liu Jie/Xinhua via Getty Images)
On the two-year anniversary of Biden’s inauguration, the Wage and Hour Division administrator post remains vacant. As of Thursday evening, no nomination was pending, after the Senate blocked attempts to vote on two nominees, David Weil and Jessica Looman, and returned the Looman nomination when its session ended in early January.
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Confirmed Officials Have ‘Gravitas’
The Wage and Hour Division, which dates to 1938, has often operated without a Senate-confirmed leader, and there have been just three in the past 21 years. Legal and political observers and agency veterans attribute that to strong opposition either from worker advocates or the business community, depending on the president’s party.
Having to function without someone who’s made it through the Senate process has “become the norm,” said D. Michael Hancock, a former assistant administrator for the Wage and Hour Division under Obama.
“Whether it’s Republican or Democrat in the White House, the Senate is reluctant for a variety of reasons, largely policy-based, I think, to confirm an administrator,” said Hancock, who is now of counsel at worker-side firm Cohen Milstein Sellers & Toll PLLC.
Though the agency can function day to day without a Senate-confirmed administrator, someone lawmakers have approved can better advocate for bigger-picture policy and budgetary issues, Hancock said.
“Part of this is atmospheric, that it’s somebody that’s gone through the process, has been confirmed, is fully vested with the powers of the administrator, and their voice takes on a certain heft that it may not have otherwise,” Hancock said. “If you’re Senate-confirmed, your voice is taken more seriously and is heard by more people.”
Read the article on Law360.
The Tenth Circuit appeared skeptical Tuesday of a radiology company’s argument that ex-workers alleging the company mismanaged their employee stock ownership plan should be booted to individual arbitration, citing language in the Employee Retirement Income Security Act allowing workers to seek plan-wide relief.
A three-judge panel during oral arguments quickly focused on whether workers’ rights to plan-wide relief under ERISA would be illegally cut off if the arbitration provision from Envision Management Holding Inc.’s ESOP was enforced as written. That’s because Envision’s ESOP specified that plan participants couldn’t sue in court and that any arbitration had to be brought individually.
Within minutes of arguments beginning, Senior Circuit Judge Mary Beck Briscoe zeroed in on whether the proposed class led by ex-imaging technician Robert Harrison could obtain the relief they were seeking under ERISA given the arbitration clause at issue.
That was key to the reasoning behind District Judge Regina M. Rodriguez’s denial of the motion to compel from Envision and plan trustee Argent Trust Co. in March, when she held the arbitration agreement conflicted with an individual’s rights under ERISA to seek relief on behalf of the entire plan under Section 502(a)(2). Judge Rodriguez cited the effective vindication doctrine, an exception to the Federal Arbitration Act that permits a court to overrule an arbitration agreement if it blocks a party from being able to bring claims under federal law.
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Kai Richter, attorney for Harrison and the proposed class, said during a brief interview following the argument that “we’re pleased with the way that the argument went. We think the arguments reflect why the district court decision was properly decided.”
“The arbitration provision here — it’s really a misnomer that it’s even an arbitration provision. They did the one thing that you absolutely cannot do, and in that provision, it literally cited provisions of the United States Code with respect to statutory remedies under ERISA, and says ‘you can’t have that.’ And that is obviously not lawful,” Richter said.
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Robert Harrison and the proposed class are represented by Rachana Pathak, John Stokes and Peter K. Stris of Stris and Maher LLP and Ryan Wheeler, Michelle C. Yau and Kai H. Richter of Cohen Milstein Sellers & Toll PLLC.
- Arbitration clause limits remedies provided by statute
- Company urges court to focus on ‘effective’ vindication
Envision Management Holding Inc.’s effort to force arbitration in a dispute over its employee stock ownership plan appeared to be in jeopardy on Tuesday, when a panel of Tenth Circuit judges had tough questions for the company’s lawyer.
Judge Mary Beck Briscoe honed in on a perceived mismatch between the type of relief authorized by the Envison plan’s arbitration provision and the remedies available under the Employee Retirement Income Security Act. She appeared skeptical of whether an arbitration provision that only allows a participant to get their “little tiny bit of money back” is sufficient under ERISA, which authorizes participants to file lawsuits seeking the removal of plan fiduciaries.
Envison’s attorney, Barbara A. Smith with Bryan Cave Leighton Paisner LLP, urged the court to focus on whether the arbitration clause allows participants to effectively vindicate their “core” ERISA right to protect their own plan benefits. The Envision plan allows any participant to seek their own alleged damages, and the Labor Department is authorized to seek other remedies, like removal of fiduciaries, she said.
Briscoe appeared unpersuaded, calling Smith’s response a concession that fiduciary removal is an effective remedy that plan participants should be able to pursue.
Judge Robert E. Bacharach pushed back on the idea that participants who can seek individual damages but not fiduciary removal have been allowed to exercise their core ERISA rights. His questions suggested he saw Envison’s argument as improperly weighing one ERISA remedy as more important than others.
Growing Debate
The case gives the US Court of Appeals for the Tenth Circuit an opportunity to weigh in on the growing debate over whether employers can force class litigation over their retirement plans into arbitration by pointing to such clauses in either plan documents or individual employment contracts. The Second, Sixth, Seventh, and Ninth Circuits have issued varying rulings on these questions over the past few years, and the US Supreme Court recently declined to hear a petition seeking arbitration in an ERISA dispute involving Cintas Corp.’s 401(k) plan, despite initially expressing some interest in the topic.
The lawsuit against Envision targets a 2017 transaction in which the company’s former owners sold their shares in the company to a newly created employee stock ownership plan for $164 million—a price plan participants say was significantly inflated. Envision sought to have the lawsuit sent to arbitration, pointing to a provision in the plan document requiring that disputes involving the plan be resolved through individual, binding arbitration.
A Colorado federal court denied the request in 2022, ruling that the provision is invalid because it acts as a prospective waiver of plan participants’ right to seek statutory remedies that are guaranteed by ERISA, including the right to seek relief on behalf of the entire plan.
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Envision is also represented by Groom Law Group. The plan participants are also represented by Cohen Milstein Sellers & Toll PLLC.
Read the article on Bloomberg Law.
US Attorney says algorithms are susceptible to human biases
Two Black Women from Massachusetts are at the center of what could become a landmark federal case about whether software that screens potential tenants is illegally biased against Black and Hispanic applicants.
Rachael Rollins, the US attorney for Massachusetts, weighed in on the case, Louis vs. SafeRent Solutions, in a court brief this week, arguing that the technology used by tenant screening companies must comply with anti-discrimination rules. “Algorithms are written by people. As such, they are susceptible to all of the biases, implicit or explicit, of the people that create them,” Rollins said in a statement. Rollins said her filing “recognizes that our 20th century civil rights laws apply to 21st century innovations.”
SafeRent Solutions is a company used by landlords to screen potential tenants. SafeRent gives rental applicants a risk score based on their credit history, other credit-related information including non-tenancy debts, and eviction history.
Mary Louis, 54, of Malden, and Monica Douglas, 65, of Canton, both Black women with subsidized housing vouchers, are the plaintiffs, along with the Community Action Agency of Somerville, which helps people with vouchers find housing. They sued SafeRent and Metropolitan Management Group, a Boston-based apartment management company, in August in US District Court in Massachusetts. Both women were denied apartments by Metropolitan because of SafeRent scores. The plaintiffs are represented by attorneys from Greater Boston Legal Services, Washington, DC-based firm Cohen, Milstein, Sellers & Toll, and the Boston-based National Consumer Law Center.
The lawsuit alleges that SafeRent “assigns disproportionately lower SafeRent Scores to Black and Hispanic rental applicants compared to White rental applicants,” partly because it measures credit history, which includes non-tenant-related debt.
Read the article on CommonWealth.
The U.S. government told a Massachusetts federal court that tenant-screening firm SafeRent Solutions is subject to the Fair Housing Act, giving a boost to claims by two would-be renters that the company’s algorithm was unfairly used against them.
In a brief filed Monday, the U.S. Department of Justice and attorneys at the U.S. Department of Housing and Urban Development said previous court cases, including an active one in Connecticut involving SafeRent Solutions LLC, support its position that the company can be liable for discrimination even if it is not a direct housing provider.
“The language of the FHA plainly focuses on prohibited acts, not specific actors,” according to the government’s brief.
Since SafeRent, formerly known as CoreLogic Rental Property Solutions, does not share details about its algorithm, housing providers effectively have to rely on the tenant-screening firm to decide whether to approve or deny a rental application, the brief said.
The two women who sued SafeRent and Metropolitan Management Group said their applications for apartments in the Boston area were denied because of their credit history. They said the defendants’ reliance on “SafeRent scores” for tenants derived from the algorithm had a disparate impact on Black, Hispanic and low-income people, who tend to have lower credit scores than white applicants.
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The plaintiffs are represented by Todd S. Kaplan and Nadine Cohen of Greater Boston Legal Services; Christine E. Webber and Samantha N. Gerleman of Cohen Milstein Sellers & Toll PLLC; and Stuart T. Rossman, Charles M. Delbaum and Ariel C. Nelson of the National Consumer Law Center.
Read the article on Law360.
The recent explosion of litigation accusing a wide range of companies of violating wiretap and video privacy laws through the technology they deploy on their websites will continue to proliferate in 2023, joining robocall and biometric privacy disputes that have long plagued businesses and also show no signs of abating.
Here, Law360 looks at the privacy litigation and trends that bear watching this year.
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Meta Pixel Takes Center Stage
Meta Pixel, a code snippet and user tracking tool embedded in many websites, has also prompted a wave of litigation against both the companies that use the code and Meta Platforms Inc. itself.
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The Meta Pixel is also at the heart of separate litigation that the social media giant is currently embroiled in over its alleged collection of confidential patient information and tax filing data.
An anonymous Maryland hospital patient launched a putative class action in June accusing Meta of violating the medical privacy of millions of Americans through the Pixel tool. The lawsuit claimed that the company knows — or should have known — that the web tracker is being improperly used on hospital websites, resulting in Facebook receiving such data as when a person registers as a patient, signs in to a patient portal or sets an appointment, among other information.
Meta has countered that while its Pixel tool is offered as a code that allows website developers to gather analytics information about people who visit their websites, it tells health care providers not to send Meta sensitive data.
More recently, two anonymous Facebook users hit Meta with another suit in December accusing the company of breaking privacy and taxpayer protection laws by collecting sensitive information from popular tax filing websites H&R Block, TaxAct and TaxSlayer through its Pixel tool.
These disputes, particularly the one related to the transfer of health care information, have “opened up a Pandora’s box of data privacy issues,” according to Aloke Chakravarty, a partner at Snell & Wilmer LLP.
“They’ve added scrutiny as to what data is made available to web beacons, how they are configured and who configures them, and the specter that more data than expected may have been incidentally captured from health care providers and more than consumers and clients may have expected,” Chakravarty said.
A bulletin about online tracking technologies released by the U.S. Department of Health and Human Services’ Office for Civil Rights on Dec. 1 is also poised to fan the flames of this fight, according to attorneys.
The guidance lays out the obligations of entities covered by the Health Insurance Portability and Accountability Act when using online tracking technologies like Meta Pixel or Google Analytics that collect and analyze information about how internet users interact with a regulated health provider’s website or mobile app.
According to HHS, “regulated entities are not permitted to use tracking technologies in a manner that would result in impermissible disclosures of [electronic protected health information] to tracking technology vendors,” an assertion that plaintiffs are likely to seize on in litigation challenging technology like the Meta Pixel on hospital websites, attorneys say.
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The cases are In Re Meta Pixel Healthcare Litigation, case number 3:22-cv-03580, and Doe et al. v. Meta Platforms Inc., case number 3:22-cv-07557, both in the U.S. District Court for the Northern District of California.
Read the complete article on Law360 (subscription required).