Federal Judge Approves SEC’s Settlement with Tesla CEO Elon Musk.
On Tuesday, October 16, 2018, U.S. District Court Judge Alison Nathan approved Elon Musk and Tesla’s securities fraud settlement with the SEC. As part of the settlement, Musk and Tesla will each pay $20 million in civil penalties. Musk must also step down as chairman of the board within 45 days for at least 3 years. The SEC sued Musk on September 27, 2018 alleging that Musk’s tweet that funding had been secured to take Tesla private was “false and misleading and impacted the price of Tesla’s stock.” The settlement was reached on September 29, 2018.
ABA Issues Ethics Guidance on Data Breaches
On Tuesday, October 16, 2018, the ABA issued Formal Opinion 483 providing guidance on how attorneys should carry out their ethical obligations after data breaches that involve client information. In order to comply with Model Rule 1.1 (competence), lawyers are required to act reasonably and promptly to stop suspected or detected breaches and to mitigate damages. Lawyers also have an obligation to safeguard and monitor client data, a reaffirmation of last year’s Formal Opinion 477R that laid out lawyers’ ethical duty to secure protected client information when communicating digitally. The standing committee’s opinion also discusses additional duties under Model Rules 1.4 (communications), 1.6 (confidentiality of information), 1.15 (safekeeping property), 5.1 (responsibilities of a partner or supervisory lawyer), and 5.3 (responsibilities regarding nonlawyer assistance).
President Trump Signs the Patient Right to Know Drug Prices Act
On Wednesday, October 12, 2018, President Trump signed the Patient Right to Know Drug Prices Act as well as the Know the Lowest Price Act. Both bills received overwhelming bipartisan support in Congress and are intended to eliminate the drug industry’s use of “gag” clauses that prevent pharmacists from informing patients whether a drug would be cheaper if purchased out-of-pocket than through the patient’s health insurance plan. In addition, the Patient’s Right to Know Drug Prices Act also requires manufacturers of biologic and biosimilar drugs to report patent settlement agreement to the Federal Trade Commission in an effort to lower drug costs by cutting down on “pay-for-delay” deals in which brand-name patent owners pay generic competitors to delay bringing their drugs to market.
Justice Department Sues California Over the State’s New Net Neutrality Law
On Sunday, September 30, 2018, just hours after California Governor Jerry Brown signed SB822, the country’s toughest state-level net neutrality law to date, the Department of Justice sued to demand a preliminary injunction against the law from taking effect on January 1, 2019. Although telecommunication service providers had successfully lobbied the Federal Communications Commission (FCC) last year to include preemption language in repealing net neutrality, legal experts argue that, as a result of other actions, the FCC has abrogated its authority over broadband ISPs and is now without power to preempt state law.