Policy

elon-musk-beats-one-lawsuit-seeking-severance-for-laid-off-twitter-employees

Elon Musk beats one lawsuit seeking severance for laid-off Twitter employees

Xed out —

Losing plaintiffs may be able to join one of the other lawsuits against X Corp.

A large X placed on top of the building used by the company formerly known as Twitter.

Enlarge / An X sign at company headquarters in San Francisco.

Getty Images | Bloomberg

A federal judge yesterday granted Elon Musk’s motion to dismiss a class-action complaint alleging that laid-off Twitter employees were wrongfully denied the severance they were entitled to under the Employee Retirement Income Security Act (ERISA).

The employees may be able to latch onto another lawsuit against Twitter that alleges different severance-related violations, but their claim under ERISA was denied by US District Judge Trina Thompson in the Northern District of California.

“Plaintiffs are not without recourse,” Thompson wrote, noting that they may benefit from similar cases ongoing against the Musk-owned firm. “Indeed, there are other cases brought against Twitter for the failure to pay wages or provide employee severance benefits during the same or overlapping period that Plaintiffs allege Defendants denied them and the putative class sufficient severance benefits under the severance plan at issue here.”

The putative class action that was denied yesterday was filed last year by former Twitter employees Courtney McMillian and Ronald Cooper, who were offered one month of severance pay. They claim that the “severance Twitter has offered to date is a fraction of what employees are entitled to as Plan participants,” and they wanted to represent a class defined as all participants in the severance plan who were terminated from Twitter after Musk bought the company in October 2022. They alleged that “terminated employees remain entitled to no less than $500 million.” That would be the total amount allegedly due to thousands of ex-employees laid off after the Musk buyout.

Twitter, now X Corp., claimed that the company did not maintain a severance plan governed by ERISA. Plaintiffs claimed that for several years before the Musk takeover, there was a “formalized policy” and pointed to “documents that provide a uniform and detailed policy framework for the numerous post-termination benefits Twitter provided to employees.” Plaintiffs said employees were promised severance based on the reason of departure, length of tenure, job level, department, issuance of stock units, and other factors.

No discretion

To be governed by ERISA, a severance plan must be an “ongoing administrative program for processing claims and paying benefits.” The Twitter plan doesn’t qualify, Thompson wrote in an order granting Musk’s motion to dismiss.

A severance plan with a single lump sum payment can be governed by ERISA under certain conditions, Thompson wrote. Under a precedent cited by plaintiffs, a severance plan can be covered by ERISA if lump-sum payments are based on a discretionary analysis performed on a case-by-case basis.

“Here, by contrast, Twitter paid and offered to pay severance payments based on basic employment criteria that involved mathematical calculations, which does not involve a ‘case-by-case’ analysis or ‘discretionary application’ of the Twitter severance benefits’ terms,” Thompson wrote. “Twitter’s payments were ‘fixed, due at known times, and [did] not depend on contingencies outside the employee’s control.'”

Thompson found that the relevant severance plan is the one applied after the Musk takeover. She wrote that “the operative complaint’s facts do not show that there was any discretion required in determining which employees were eligible because all employees qualified for the severance plan upon termination due to the acquisition and subsequent merger.”

There was also no discretion in bonuses for laid-off employees “because there was a formula for calculating severance payments that staff could apply before issuing payment.” Thompson dismissed the ERISA claims and said that any attempt to amend those claims “would be futile.”

Other severance lawsuits still alive

Plaintiffs can file an amended complaint but only for non-ERISA claims, such as breach of contract or promissory estoppel. An amended complaint may “state claims based on the deficient severance benefits offered or provided to terminated employees pursuant to the severance plan that applied due to the 2022 and 2023 mass layoffs,” Thompson wrote.

If plaintiffs go that route, “this Court will consider issuing an Order finding this case related to one of the cases currently pending, such as Cornet,” Thompson wrote. If the case is found to be related to Cornet, it could be transferred to the District of Delaware, where Cornet is being heard.

The Cornet v. Twitter lawsuit alleges violations of the Worker Adjustment and Retraining Notification (WARN) Act. The lawsuit says that Twitter did not give all employees the required 60 days’ advance written notice before layoffs and that Twitter did not give payments in lieu of the notice.

Both cases concern Twitter’s allegedly “deficient severance payments following mass layoffs in November 2022, December 2022, February 2023, and September 2023,” Thompson noted.

In addition to alleged WARN Act violations, the Cornet suit claims that Twitter violated promises made during the months before Musk completed the acquisition. As Thompson wrote, the “Cornet plaintiffs assert contract-based claims for severance benefits on behalf of a nationwide putative class of X Corp employees and former employees that had been promised that ‘if there were layoffs, employees would receive benefits and severance at least as favorable as the benefits and severance that Twitter previously provided to employees.'”

In September 2023, Musk’s X Corp. agreed to settlement talks on arbitration claims from about 2,000 employees laid off after the sale. However, the talks didn’t end in a deal, and the severance lawsuits continue.

Elon Musk beats one lawsuit seeking severance for laid-off Twitter employees Read More »

users-must-prove-amazon-ripped-them-off-to-revive-buy-box-rigging-suit

Users must prove Amazon ripped them off to revive Buy Box rigging suit

Better come with receipts —

Users want Amazon held accountable for hiding cheaper items with faster delivery.

Users must prove Amazon ripped them off to revive Buy Box rigging suit

A court has dismissed a proposed class-action lawsuit alleging that Amazon’s Buy Box was rigged to rip off customers seeking the best deals on the platform.

The suit followed 2022 antitrust probes in the European Union and United Kingdom that found that Amazon’s Buy Box hid cheaper items with faster delivery times to preference Fulfilled By Amazon (FBA) sellers since at least 2016.

As a result, Amazon had to change its Buy Box practices and earn back the trust of customers and sellers, the company said in a 2022 blog. Among changes, Amazon agreed to treat all sellers equally when featuring offers in the Buy Box and to promote a second competing offer when a comparable deal is available at either a lower price or with a faster delivery time.

Those steps apparently didn’t satisfy users who sued: Jeffrey Taylor and Robert Selway. They asked courts to find a “reasonable inference of injury” since they were Amazon customers for years while the price rigging occurred. They claimed that “but for Amazon’s deceptive conduct concerning the Buy Box algorithm, Plaintiffs and members of the Class would have purchased the lower priced offers from non-FBA sellers with equivalent or better delivery.”

But this week, a US district judge in Seattle, Marsha Pechman, told users suing that it wasn’t enough to show evidence of Amazon’s proven misconduct. To satisfy a claim under Washington’s Consumer Protection Act (CPA), they needed to provide receipts from transactions showing that Amazon charged them higher prices while cheaper items were available. Instead, their complaint seemingly contradicted their claim, only showing one example of a Buy Box screenshot that Pechman said showed a hand soap that was offered by other sellers for prices significantly higher than Amazon’s featured offer.

“Plaintiffs have not adequately shown that they made any specific transaction with Amazon, let alone one from the Buy Box,” Pechman wrote in her order. And they “do not allege any specific purchases in which they were deceived via the Buy Box, let alone provide receipts.”

This doesn’t necessarily end the fight to hold Amazon accountable, though. The judge granted leave for users to amend their complaint and either provide “information regarding specific orders (i.e., receipts)” or “make allegations regarding discrete transactions with Amazon.”

Now, the Amazon users have 30 days to track down receipts or otherwise show evidence of specific transactions where they were injured, Pechman wrote.

“Without a showing of a specific transaction, Plaintiffs cannot possibly allege that they themselves were overcharged for any particular purchase—which is the injury in dispute,” Pechman wrote.

It will likely be challenging for the Amazon users to establish that they paid higher prices for items purchased on the platform years ago, and Pechman admitted this much in her order.

“The Court recognizes that Plaintiffs may be unable to ultimately prove that they overpaid for specific purchases,” Pechman wrote, but the CPA requires more than a “mere possibility of injury.”

Ars could not immediately reach plaintiffs’ lawyers for comment. Amazon declined to comment.

Users must prove Amazon ripped them off to revive Buy Box rigging suit Read More »

fcc-to-block-phone-company-over-robocalls-pushing-scam-“tax-relief-program”

FCC to block phone company over robocalls pushing scam “Tax Relief Program”

Tax debt scam —

Veriwave Telco “identified one client as the source of all of the calls.”

A smartphone on a wooden table displaying an incoming call from an unknown phone number.

Getty Images | Diy13

The Federal Communications Commission said it is preparing to block a phone company that carried illegal robocalls pushing fake programs that promised to wipe out consumers’ tax debt. Veriwave Telco “has not complied with FCC call blocking rules for providers suspected of carrying illegal traffic” and now has two weeks to contest an order that would require all downstream voice providers to block all of the telco’s call traffic, the FCC announced yesterday.

Robocalls sent in the months before tax filing season “purported to provide information about a ‘National Tax Relief Program’ and, in some instances, also discussed a ‘Tax Dismissal Program,'” the FCC order said. “The [Enforcement] Bureau has found no evidence of the existence of either program. Many of the messages further appealed to recipients with the offer to ‘rapidly clear’ their tax debt.”

Call recipients who listened to the prerecorded message and chose to speak to an operator were then asked to provide private information. Nearly 16 million calls were sent, though it’s unclear how many went through Veriwave.

Veriwave is an “originating provider” that distributes call traffic to other phone companies before calls are delivered to landline and cellphone users. The Industry Traceback Group (ITG), which is run by the USTelecom trade association and coordinates with the FCC, conducted tracebacks on about two dozen calls and determined that Veriwave was the originating provider.

“The ITG notified Veriwave of these calls and provided the Company with supporting data identifying each call,” the FCC said in a previous order. “Veriwave did not contest it had originated the calls and identified one client as the source of all of the calls. Veriwave did not offer evidence of consent for the calls or contest the unlawful nature of the calls. Nor did Veriwave contest that any exceptions to the rules applied.”

No reply

The robocalls began, “I’ve been tasked to personally contact you and make sure that you have been provided the information about the new National Tax Relief Program. This relevant information is extremely important with helping those that owe back taxes to rapidly clear their debt.” The calls then listed eligibility requirements for the nonexistent program and instructed recipients to press 1 to speak to a person.

“If the recipient connected to a live operator, the live operator reportedly asked for personal information, including date of birth and Social Security number,” the FCC said.

The FCC said it reached out to Veriwave “about its robocall mitigation efforts, but the email was returned as undeliverable.” The FCC then sent a formal notice to the company but received no response.

The FCC on April 4 notified all US-based voice providers that they were permitted—but not required—to block calls from Veriwave. Under the FCC’s blocking procedures, yesterday’s order triggered a 14-day period in which Veriwave can respond and “demonstrate compliance” with the rules. After that, all phone companies “immediately downstream from Veriwave will then be required to block and cease accepting all traffic received directly from Veriwave beginning 30 days after release of the Final Determination Order.”

The FCC said the ITG conducted tracebacks of 23 illegal robocalls between November 30, 2023, and January 29, 2024, but the actual number of illegal robocalls is apparently much higher. “YouMail, a software app company, estimates that approximately 15.8 million calls of this nature were transmitted in the three months immediately preceding the start of the 2024 tax filing season,” the FCC said. “The Industry Traceback Group and the FCC traced a number of these calls to Veriwave as the originating provider.”

FCC records show that Veriwave, based in Delaware, testified under penalty of perjury in November 2023 that it completed implementation of the STIR/SHAKEN technology that inhibits robocalls by authenticating Caller ID information.

FCC to block phone company over robocalls pushing scam “Tax Relief Program” Read More »

report:-z-library-admins-on-the-lam-ahead-of-us-extradition;-officials-shocked

Report: Z-Library admins on the lam ahead of US extradition; officials shocked

Report: Z-Library admins on the lam ahead of US extradition; officials shocked

Two Russian citizens arrested for running the pirate e-book site Z-Library have reportedly escaped house arrest in Argentina and vanished after a court approved their extradition to the United States.

Accused by the US of criminal copyright infringement, wire fraud, and money laundering, Anton Napolsky and Valeriia Ermakova were arrested in 2022. Until last May, they were being detained in Argentina while a court mulled the Department of Justice’s extradition request, and the US quickly moved to seize Z-Library domains.

But according to a translated article from a local publication called La Voz, the pair suddenly disappeared after submitting a request “to be considered political refugees” in order to “avoid being sent to the US.” Napolsky and Ermakova had long denied wrongdoing, and apparently they “ran away” after giving up on the legal process. They reportedly even stopped talking to their defense lawyer.

Ars was not immediately able to reach the DOJ or the Patronato del Liberado—the agency in Argentina that confirmed to La Voz that the couple had escaped—to verify the report.

Officials told La Voz that the Patronato del Liberado was charged with monitoring the Z-Library admins’ house arrest and “were surprised to find that there was no trace of them” during a routine check-in last May.

According to La Voz, officials believed at that point that Napolsky and Ermakova were still in Argentina. However, after the courts were informed of their escape, a judge ordered their international arrest, suggesting that the court suspected they may have planned to leave the country. There have been no reports since indicating that the couple has resurfaced. TorrentFreak, which has been closely monitoring the case, opined that “the pair could be anywhere by now.”

Z-Library defends admins

The court process leading up to the extradition order was tense, TorrentFreak reported, with Napolsky and Ermakova partly arguing that extradition was inappropriate because the US had never specified “which copyrighted works had allegedly been infringed.”

The pair succeeded in removing the original judge from the case after proving he was biased to the US. But the replacement judge, Abel Sánchez Torres, ultimately ordered their extradition “on five charges classified as illegal copyright, conspiracy to commit electronic fraud, electronic fraud, and conspiracy to launder money,” La Voz reported. At that point, Sánchez Torres also ordered that Napolsky and Ermakova remain under house arrest.

Ars could not immediately reach the Z-Library team to comment on the admins’ reported escape, but Z-Library has long defended Napolsky and Ermakova as innocent. In a Change.org petition, the Z-Library team wrote that both were “project participants who ensure the operation of the platform” and were “not involved in uploading files” the US considered copyright-infringing, calling their detention “unfair and unacceptable.”

“Their detention occurred without compliance with legal norms and with numerous procedural violations, and the FBI request contained knowingly false data on the existence of a court sanction for arrest,” the Z-Library team wrote, clarifying that “a court sanction for arrest has been issued after the arrest” but not before.

The petition is addressed to US Attorney General Merrick Garland and Argentine officials, requesting access to seized Z-Library domains to be restored. It currently has 146,000 out of 150,000 signatures sought, with Z-Library fans defending the platform as providing critical access for people without financial means to knowledge and diverse educational resources.

“Without a doubt, blocking Z-Library seriously hinders academic activity and impedes scientific development,” the petition said, insisting that the US has ignored that “Z-Library contains many unique books and documents that may become inaccessible to the public. This would be a serious blow to the cultural and scientific heritage of humankind.”

The Z-Library team thinks that the US should be pursuing each copyright infringement case on its site separately, rather than targeting the whole platform for takedown.

“We call for the restoration of Z-Library and for a fair solution that takes into account both the rights of authors and the need for people to have free access to educational resources,” the petition said.

Report: Z-Library admins on the lam ahead of US extradition; officials shocked Read More »

first-known-tiktok-mob-attack-led-by-middle-schoolers-tormenting-teachers

First-known TikTok mob attack led by middle schoolers tormenting teachers

First-known TikTok mob attack led by middle schoolers tormenting teachers

A bunch of eighth graders in a “wealthy Philadelphia suburb” recently targeted teachers with an extreme online harassment campaign that The New York Times reported was “the first known group TikTok attack of its kind by middle schoolers on their teachers in the United States.”

According to The Times, the Great Valley Middle School students created at least 22 fake accounts impersonating about 20 teachers in offensive ways. The fake accounts portrayed long-time, dedicated teachers sharing “pedophilia innuendo, racist memes,” and homophobic posts, as well as posts fabricating “sexual hookups among teachers.”

The Pennsylvania middle school’s principal, Edward Souders, told parents in an email that the number of students creating the fake accounts was likely “small,” but that hundreds of students piled on, leaving comments and following the fake accounts. Other students responsibly rushed to report the misconduct, though, Souders said.

“I applaud the vast number of our students who have had the courage to come forward and report this behavior,” Souders said, urging parents to “please take the time to engage your child in a conversation about the responsible use of social media and encourage them to report any instances of online impersonation or cyberbullying.”

Some students claimed that the group attack was a joke that went too far. Certain accounts impersonating teachers made benign posts, The Times reported, but other accounts risked harming respected teachers’ reputations. When creating fake accounts, students sometimes used family photos that teachers had brought into their classrooms or scoured the Internet for photos shared online.

Following The Times’ reporting, the superintendent of the Great Valley School District (GVSD), Daniel Goffredo, posted a message to the community describing the impact on teachers as “profound.” One teacher told The Times that she felt “kicked in the stomach” by the students’ “savage” behavior, while another accused students of slander and character assassination. Both were portrayed in fake posts with pedophilia innuendo.

“I implore you also to use the summer to have conversations with your children about the responsible use of technology, especially social media,” Goffredo said. “What seemingly feels like a joke has deep and long-lasting impacts, not just for the targeted person but for the students themselves. Our best defense is a collaborative one.”

Goffredo confirmed that the school district had explored legal responses to the group attack. But ultimately the district found that they were “limited” because “courts generally protect students’ rights to off-campus free speech, including parodying or disparaging educators online—unless the students’ posts threaten others or disrupt school,” The Times reported.

Instead, the middle school “briefly suspended several students,” teachers told The Times, and held an eighth-grade assembly raising awareness of harms of cyberbullying, inviting parents to join.

Becky Pringle, the president of the National Education Association—which is the largest US teachers’ union—told The Times that teachers have never dealt with such harassment on this scale. Typically, The Times reported, students would target a single educator at a time. Pringle said teachers risk online harassment being increasingly normalized. That “could push educators to question” leaving the profession, Pringle said, at a time when the US Department of Education is already combating a teacher shortage.

While Goffredo said teachers had few options to fight back, he also told parents in an email that the district is “committed to working with law enforcement to support teachers who may pursue legal action.”

“I reiterate my disappointment and sadness that our students’ behavior has caused such duress for our staff,” Goffredo’s message to the community said. “Seeing GVSD in such a prominent place in the news for behavior like this is also disheartening.”

First-known TikTok mob attack led by middle schoolers tormenting teachers Read More »

boeing-to-plead-guilty-to-conspiracy-to-defraud-faa-aircraft-evaluation-group

Boeing to plead guilty to conspiracy to defraud FAA Aircraft Evaluation Group

Boeing guilty plea —

Families say deal with US “fails to hold Boeing accountable” for 346 crash deaths.

An American Airlines plane just before making a landing with a body of water in the background

Enlarge / An American Airlines Boeing 737 MAX 8 aircraft approaches San Diego International Airport for a landing on June 28, 2024.

Getty Images | Kevin Carter

Boeing has agreed to plead guilty to a criminal charge and pay $243.6 million for violating a 2021 agreement that was spurred by two fatal crashes. The US government notified a judge of Boeing’s plea agreement in a July 7 filing in US District Court for the Northern District of Texas.

“The parties have agreed that Boeing will plead guilty to the most serious readily provable offense,” the Department of Justice said. If accepted by the court, the deal would allow Boeing to avoid a trial.

Families of victims said in a filing yesterday that they will urge the court to reject the deal at a plea hearing. “The families intend to argue that the plea deal with Boeing unfairly makes concessions to Boeing that other criminal defendants would never receive and fails to hold Boeing accountable for the deaths of 346 persons,” their lawyers wrote.

The deal stems from Boeing 737 Max crashes in 2018 and 2019 in Indonesia and Ethiopia. After the crashes, Boeing was charged with conspiracy to defraud the Federal Aviation Administration in connection with the agency’s evaluation of the 737 Max.

Conspiracy to defraud FAA

“Boeing will plead guilty to the offense charged in the pending one-count Criminal Information, conspiracy to defraud the United States, specifically, the lawful function of the Federal Aviation Administration Aircraft Evaluation Group,” the US government filing said.

In January 2021, Boeing signed a deferred prosecution agreement and agreed to pay $2.5 billion in penalties and compensation to airline customers and the victims’ families. In May 2024, the Justice Department said it determined that Boeing violated the deferred prosecution agreement “by failing to design, implement, and enforce a compliance and ethics program to prevent and detect violations of the US fraud laws throughout its operations.”

The DOJ determined that Boeing violated the 2021 agreement several months after the January 2024 incident in which a 737 Max 9 used by Alaska Airlines made an emergency landing because a door plug blew off during a flight. Boeing initially said it believed that it honored the terms of the agreement but ultimately agreed to plead guilty to the charge for conspiracy to defraud the FAA.

“The parties have agreed in principle to the material terms of a plea agreement that would, among other things, hold Boeing accountable for its material misstatements to the Federal Aviation Administration, require Boeing to pay the statutory maximum fine, require Boeing to invest at least $455 million in its compliance and safety programs, impose an independent compliance monitor, and allow the Court to determine the restitution amount for the families in its discretion, consistent with applicable law,” the DOJ court filing said.

Boeing will agree to a fine of $243.6 million, which will be doubled to $487.2 million, and is “the maximum criminal fine for the charged offense,” the DOJ said. But “the new plea agreement will recommend that when imposing the sentence, the Court credit the $243.6 million criminal monetary penalty Boeing previously paid pursuant to the [deferred prosecution agreement], with the net result being that Boeing will have to pay another $243.6 million fine.”

Boeing hasn’t agreed on further restitution to victims’ families, but the court could order an additional payment. Boeing agreed to be subject to an independent compliance monitor for three years.

Victims’ families oppose plea deal

Families of the victims of Lion Air Flight 610 and Ethiopian Airlines Flight 302 crashes “have expressed their intention to oppose this (or any) plea agreement,” the DOJ noted. The government said it “conferred with the families, airline customers, and their representatives” and “formulated the plea offer based in part on the feedback” it received.

The DOJ court filing said Boeing will not receive immunity for any other “conduct that may be the subject of any ongoing or future Government investigation of the Company.”

There could also be prosecutions of individuals at Boeing. “DOJ is resolving only with the company—and providing no immunity to any individual employees, including corporate executives, for any conduct,” the agency said in a statement quoted by CNN.

Under the plea agreement, restitution for families would be determined by the court. “The plea agreement will allow the Court to determine the restitution amount for the families in its discretion, consistent with applicable legal principles… Boeing will retain the right to appeal any restitution order it believes was not legally imposed,” the government said.

Because families intend to oppose the plea agreement, the government said it will “meet and confer with all stakeholders on a briefing schedule.” A lawyer for victims’ families asked “that the Court schedule a plea hearing no sooner than late July to allow adequate time for the families to make travel arrangements to attend in person,” the DOJ said.

“This sweetheart deal fails to recognize that because of Boeing’s conspiracy, 346 people died. Through crafty lawyering between Boeing and DOJ, the deadly consequences of Boeing’s crime are being hidden,” Paul Cassell, a lawyer for the families, said.

Boeing did not comment on the specifics of the plea deal. “We can confirm that we have reached an agreement in principle on terms of a resolution with the Justice Department, subject to the memorialization and approval of specific terms,” the company said in a statement provided to Ars.

Boeing to plead guilty to conspiracy to defraud FAA Aircraft Evaluation Group Read More »

elon-musk-denies-tweets-misled-twitter-investors-ahead-of-purchase

Elon Musk denies tweets misled Twitter investors ahead of purchase

Elon Musk denies tweets misled Twitter investors ahead of purchase

Just before the Fourth of July holiday, Elon Musk moved to dismiss a lawsuit alleging that he intentionally misled Twitter investors in 2022 by failing to disclose his growing stake in Twitter while tweeting about potentially starting his own social network in the weeks ahead of announcing his plan to buy Twitter.

Allegedly, Musk devised this fraudulent scheme to reduce the Twitter purchase price by $200 million, a proposed class action filed by an Oklahoma Firefighters pension fund on behalf of all Twitter investors allegedly harmed claimed. But in another court filing this week, Musk insisted that “all indications”—including those referenced in the firefighters’ complaint—”point to mistake,” not fraud.

According to Musk, evidence showed that he simply misunderstood the Securities Exchange Act when he delayed filing a Rule 13 disclosure of his nearly 10 percent ownership stake in Twitter in March 2022. Musk argued that he believed he was required to disclose this stake at the end of the year, rather than within 10 days after the month in which he amassed a 5 percent stake. He said that previously he’d only filed Rule 13 disclosures as the owner of a company—not as someone suddenly acquiring 5 percent stake.

Musk claimed that as soon as his understanding of the law was corrected—on April 1, when he’d already missed the deadline by about seven days—he promptly stopped trading and filed the disclosure on the next trading day.

“Such prompt and corrective disclosure—within seven trading days of the purported deadline—is not the stuff of a fraudulent scheme to manipulate the market,” Musk’s court filing said.

As Musk sees it, the firefighters’ suit “makes no sense” because it basically alleged that Musk always intended to disclose the supposedly fraudulent scheme, which in the context of his extraordinary wealth, barely saved him any meaningful amount of money when purchasing Twitter.

The idea that Musk “engaged in intentional securities fraud in order to save $200 million is illogical in light of Musk’s eventual $44 billion purchase of Twitter,” Musk’s court filing said. “It defies logic that Musk would commit fraud to save less than 0.5 percent of Twitter’s total purchase price, and 0.1 percent of his net worth, all while knowing that there would be ‘an inevitable day of reckoning’ when he would disclose the truth—which was always his intent.”

It’s much more likely, Musk argued, that “Musk’s acknowledgement of his tardiness is that he was expressly acknowledging a mistake, not publicly conceding a purportedly days-old fraudulent scheme.”

Arguing that all firefighters showed was “enough to adequately plead a material omission and misstatement”—which he said would not be an actionable claim under the Securities Exchange Act—Musk has asked for the lawsuit to be dismissed with prejudice. At most, Musk is guilty of neglect, his court filing said, not deception. Allegedly Musk never “had any intention of avoiding reporting requirements,” his court filing said.

The firefighters pension fund has until August 12 to defend its claims and keep the suit alive, Musk’s court filing noted. In their complaint, the fighterfighteres had asked the court to award damages covering losses, plus interest, for all Twitter shareholders determined to be “cheated out of the true value of their securities” by Musk’s alleged scheme.

Ars could not immediately reach lawyers for Musk or the firefighters pension fund for comment.

Elon Musk denies tweets misled Twitter investors ahead of purchase Read More »

the-“netflix-of-anime”-piracy-site-abruptly-shuts-down,-shocking-users

The “Netflix of anime” piracy site abruptly shuts down, shocking users

Disney+ promotional art for <em>The Fable</em>, an anime series that triggered Animeflix takedown notices.” src=”https://cdn.arstechnica.net/wp-content/uploads/2024/07/The-Fable-press-image-800×450.jpeg”></img><figcaption>
<p><a data-height=Enlarge / Disney+ promotional art for The Fable, an anime series that triggered Animeflix takedown notices.

Disney+

Thousands of anime fans were shocked Thursday when the popular piracy site Animeflix voluntarily shut down without explaining why, TorrentFreak reported.

“It is with a heavy heart that we announce the closure of Animeflix,” the site’s operators told users in a Discord with 35,000 members. “After careful consideration, we have decided to shut down our service effective immediately. We deeply appreciate your support and enthusiasm over the years.”

Prior to its shutdown, Animeflix attracted millions of monthly visits, TorrentFreak reported. It was preferred by some anime fans for its clean interface, with one fan on Reddit describing Animeflix as the “Netflix of anime.”

“Deadass this site was clean,” one Reddit user wrote. “The best I’ve ever seen. Sad to see it go.”

Although Animeflix operators did not connect the dots for users, TorrentFreak suggested that the piracy site chose to shut down after facing “considerable legal pressure in recent months.”

Back in December, an anti-piracy group, Alliance for Creativity and Entertainment (ACE), sought to shut down Animeflix. Then in mid-May, rightsholders—including Netflix, Disney, Universal, Paramount, and Warner Bros.—won an injunction through the High Court of India against several piracy sites, including Animeflix. This briefly caused Animeflix to be unavailable until Animeflix simply switched to another domain and continued serving users, TorrentFreak reported.

Although Animeflix is not telling users why it’s choosing to shut down now, TorrentFreak—which, as its name suggests, focuses much of its coverage on copyright issues impacting file sharing online—noted that “when a pirate site shuts down, voluntarily or not, copyright issues typically play a role.”

For anime fans, the abrupt closure was disappointing because of difficulty accessing the hottest new anime titles and delays as studios work to offer translations to various regions. The delays are so bad that some studios are considering combating piracy by using AI to push out translated versions more quickly. But fans fear this will only result in low-quality subtitles, CBR reported.

On Reddit, some fans also complained after relying exclusively on Animeflix to keep track of where they left off on anime shows that often span hundreds of episodes.

Others begged to be turned onto other anime piracy sites, while some speculated whether Animeflix might eventually pop up at a new domain. TorrentFreak noted that Animeflix shut down once previously several years ago but ultimately came back. One Redditor wrote, “another hero has passed away but the will, will be passed.” On another Reddit thread asking “will Animeflix be gone forever or maybe create a new site,” one commenter commiserated, writing, “We don’t know for sure. Only time will tell.”

It’s also possible that someone else may pick up the torch and operate a new piracy site under the same name. According to TorrentFreak, this is “likely.”

Animeflix did not reassure users that it may be back, instead urging them to find other sources for their favorite shows and movies.

“We hope the joy and excitement of anime continue to brighten your days through other wonderful platforms,” Animeflix’s Discord message said.

ACE did not immediately respond to Ars’ request for comment.

The “Netflix of anime” piracy site abruptly shuts down, shocking users Read More »

judge-says-ftc-lacks-authority-to-issue-rule-banning-noncompete-agreements

Judge says FTC lacks authority to issue rule banning noncompete agreements

Noncompete ban —

Authority cited by FTC just a “housekeeping statute,” US judge in Texas rules.

FTC Chair Lina Khan sitting at a Congressional hearing

Enlarge / FTC Chair Lina Khan testifies before the House Appropriations Subcommittee on May 15, 2024, in Washington, DC.

Getty Images | Kevin Dietsch

A US judge ruled against the Federal Trade Commission in a challenge to its rule banning noncompete agreements, saying the FTC lacks “substantive” rulemaking authority.

The preliminary ruling only blocks enforcement of the noncompete ban against the plaintiff and other groups that intervened in the case, but it signals that the judge believes the FTC cannot enforce the rule. The case is in US District Court for the Northern District of Texas, so appeals would be heard in the US Court of Appeals for the 5th Circuit—which is generally regarded as one of the most conservative appeals courts in the country.

In April, the FTC issued a rule that would render the vast majority of current noncompete clauses unenforceable and ban future ones. The agency said that noncompete clauses are “an unfair method of competition and therefore a violation of Section 5 of the FTC Act,” calling them “a widespread and often exploitative practice imposing contractual conditions that prevent workers from taking a new job or starting a new business.”

A tax services firm called Ryan, LLC sued the FTC in an attempt to block the rule. The lawsuit was joined by the US Chamber of Commerce, two Texas business groups, and a lobbyist association that represents chief executive officers at US businesses.

In a ruling on Wednesday, US District Judge Ada Brown granted a preliminary injunction and postponed the effective date of the rule as it applies to the plaintiffs. The rule is scheduled to take effect on September 4, 2024. As of now, the FTC’s ban on noncompetes is slated to apply to everyone except the entities involved in the lawsuit.

“FTC lacks substantive rulemaking authority”

“The issue presented is whether the FTC’s ability to promulgate rules concerning unfair methods of competition include the authority to create substantive rules regarding unfair methods of competition,” Brown, a Trump appointee, wrote.

Brown acknowledged that “the FTC has some authority to promulgate rules to preclude unfair methods of competition.” But “the text, structure, and history of the FTC Act reveal that the FTC lacks substantive rulemaking authority with respect to unfair methods of competition under Section 6(g),” she wrote.

The FTC has argued it can impose the rule using authority under sections 5 and 6(g) of the FTC Act. “Alongside section 5, Congress adopted section 6(g) of the Act, in which it authorized the Commission to ‘make rules and regulations for the purpose of carrying out the provisions of’ the FTC Act, which include the Act’s prohibition of unfair methods of competition,” the FTC said when it issued the rule.

“The FTC stands by our clear authority, supported by statute and precedent, to issue this rule,” an FTC spokesperson told Ars today. “We will keep fighting to free hardworking Americans from unlawful noncompetes, which reduce innovation, inhibit economic growth, trap workers, and undermine Americans’ economic liberty.”

Consumer advocacy group Public Knowledge called Brown’s ruling “the latest in a series of attacks on the administrative state, which only further embolden judges without subject matter expertise to seize power from federal agencies and prevent them from effectively serving the American people.”

The Supreme Court last week overturned the 40-year-old Chevron precedent, which gave agencies leeway to interpret ambiguous laws as long as the agency’s conclusion was reasonable. The SCOTUS ruling effectively gives courts more power to block federal rules.

FTC’s cited authority just a “housekeeping statute”

Brown concluded that section 6(g) is merely a “housekeeping statute,” authorizing “rules of agency organization procedure or practice” but not “substantive rules.”

“Plaintiffs next contend the lack of a statutory penalty for violating rules promulgated under Section 6(g) demonstrates its lack of substantive rulemaking power. The Court agrees,” Brown wrote. “When authorizing legislative rulemaking, Congress also historically prescribes sanctions for violations of the agency’s rules—confirming that those rules create substantive obligations for regulated parties.”

The judge said the plaintiffs are likely to succeed on the merits and would be harmed if the rule takes effect. Brown intends to issue a ruling on the merits by August 30.

The preliminary injunction does not apply nationwide, as Brown chose to limit “the scope of the injunctive relief herein to named Plaintiff Ryan, LLC and Plaintiff-Intervenors Chamber of Commerce of the United States of America; Business Roundtable; Texas Association of Business; and Longview Chamber of Commerce.”

The business trade groups wanted the injunction to apply to all of their member entities but could not convince Brown to extend the injunction that far. “Plaintiff-Intervenors have directed the Court to neither sufficient evidence of their respective associational member(s) for which they seek standing, nor any of the three elements that must be met regarding associational standing. Without such developed briefing, the Court declines to extend injunctive relief to members of Plaintiff-Intervenors,” Brown wrote.

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tool-preventing-ai-mimicry-cracked;-artists-wonder-what’s-next

Tool preventing AI mimicry cracked; artists wonder what’s next

Tool preventing AI mimicry cracked; artists wonder what’s next

Aurich Lawson | Getty Images

For many artists, it’s a precarious time to post art online. AI image generators keep getting better at cheaply replicating a wider range of unique styles, and basically every popular platform is rushing to update user terms to seize permissions to scrape as much data as possible for AI training.

Defenses against AI training exist—like Glaze, a tool that adds a small amount of imperceptible-to-humans noise to images to stop image generators from copying artists’ styles. But they don’t provide a permanent solution at a time when tech companies appear determined to chase profits by building ever-more-sophisticated AI models that increasingly threaten to dilute artists’ brands and replace them in the market.

In one high-profile example just last month, the estate of Ansel Adams condemned Adobe for selling AI images stealing the famous photographer’s style, Smithsonian reported. Adobe quickly responded and removed the AI copycats. But it’s not just famous artists who risk being ripped off, and lesser-known artists may struggle to prove AI models are referencing their works. In this largely lawless world, every image uploaded risks contributing to an artist’s downfall, potentially watering down demand for their own work each time they promote new pieces online.

Unsurprisingly, artists have increasingly sought protections to diminish or dodge these AI risks. As tech companies update their products’ terms—like when Meta suddenly announced that it was training AI on a billion Facebook and Instagram user photos last December—artists frantically survey the landscape for new defenses. That’s why, counting among those offering scarce AI protections available today, The Glaze Project recently reported a dramatic surge in requests for its free tools.

Designed to help prevent style mimicry and even poison AI models to discourage data scraping without an artist’s consent or compensation, The Glaze Project’s tools are now in higher demand than ever. University of Chicago professor Ben Zhao, who created the tools, told Ars that the backlog for approving a “skyrocketing” number of requests for access is “bad.” And as he recently posted on X (formerly Twitter), an “explosion in demand” in June is only likely to be sustained as AI threats continue to evolve. For the foreseeable future, that means artists searching for protections against AI will have to wait.

Even if Zhao’s team did nothing but approve requests for WebGlaze, its invite-only web-based version of Glaze, “we probably still won’t keep up,” Zhao said. He’s warned artists on X to expect delays.

Compounding artists’ struggles, at the same time as demand for Glaze is spiking, the tool has come under attack by security researchers who claimed it was not only possible but easy to bypass Glaze’s protections. For security researchers and some artists, this attack calls into question whether Glaze can truly protect artists in these embattled times. But for thousands of artists joining the Glaze queue, the long-term future looks so bleak that any promise of protections against mimicry seems worth the wait.

Attack cracking Glaze sparks debate

Millions have downloaded Glaze already, and many artists are waiting weeks or even months for access to WebGlaze, mostly submitting requests for invites on social media. The Glaze Project vets every request to verify that each user is human and ensure bad actors don’t abuse the tools, so the process can take a while.

The team is currently struggling to approve hundreds of requests submitted daily through direct messages on Instagram and Twitter in the order they are received, and artists requesting access must be patient through prolonged delays. Because these platforms’ inboxes aren’t designed to sort messages easily, any artist who follows up on a request gets bumped to the back of the line—as their message bounces to the top of the inbox and Zhao’s team, largely volunteers, continues approving requests from the bottom up.

“This is obviously a problem,” Zhao wrote on X while discouraging artists from sending any follow-ups unless they’ve already gotten an invite. “We might have to change the way we do invites and rethink the future of WebGlaze to keep it sustainable enough to support a large and growing user base.”

Glaze interest is likely also spiking due to word of mouth. Reid Southen, a freelance concept artist for major movies, is advocating for all artists to use Glaze. Reid told Ars that WebGlaze is especially “nice” because it’s “available for free for people who don’t have the GPU power to run the program on their home machine.”

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apple-vision-pro,-new-cameras-fail-user-repairability-analysis

Apple Vision Pro, new cameras fail user-repairability analysis

Apple's Vision Pro scored 0 points in US PIRG's self-repairability analysis.

Enlarge / Apple’s Vision Pro scored 0 points in US PIRG’s self-repairability analysis.

Kyle Orland

In December, New York became the first state to enact a “Right to Repair” law for electronics. Since then, other states, including Oregon and Minnesota, have passed similar laws. However, a recent analysis of some recently released gadgets shows that self-repair still has a long way to go before it becomes ubiquitous.

On Monday, the US Public Interest Research Group (PIRG) released its Leaders and Laggards report that examined user repairability of 21 devices subject to New York’s electronics Right to Repair law. The nonprofit graded devices “based on the quality and accessibility of repair manuals, spare parts, and other critical repair materials.”

Nathan Proctor, one of the report’s authors and senior director for the Campaign for the Right to Repair for the US PIRG Education Fund, told Ars Technica via email that PIRG focused on new models since the law only applies to new products, adding that PIRG “tried to include a range of covered devices from well-known brands.”

While all four smartphones included on the list received an A-minus or A, many other types of devices got disappointing grades. The HP Spectre Fold foldable laptop, for example, received a D-minus due to low parts (2 out of 10) and manual (4 out of 10) scores.

The report examined four camera models—Canon’s EOS r100, Fujifilm’s GFX 100 ii, Nikon’s Zf, and Sony’s Alpha 6700—and all but one received an F. The outlier, the Sony camera, managed a D-plus.

Two VR headsets were also among the losers. US PIRG gave Apple’s Vision Pro and Meta’s Quest 3 an F.

You can see PIRG’s full score breakdown below:

Repair manuals are still hard to access

New York’s Digital Fair Repair Act requires consumer electronics brands to allow consumers access to the same diagnostic tools, parts, and repair manuals that its own repair technicians use. However, the PIRG organization struggled to access manuals for some recently released tech that’s subject to the law.

For example, Sony’s PlayStation 5 Slim received a 1/10 score. PIRG’s report includes an apparent screenshot of an online chat with Sony customer support, where a rep said that the company doesn’t have a copy of the console’s service manual available and that “if the unit needs repair, we recommend/refer customers to the service center.”

Apple’s Vision Pro, meanwhile, got a 0/10 manual score, while the Meta Quest 3 got a 1/10.

According to the report, “only 12 of 21 products provided replacement procedures, and 11 listed which tools are required to disassemble the product.”

The report suggests difficulties in easily accessing repair manuals, with the report’s authors stating that reaching out to customer service representatives “often” proved “unhelpful.” The group also pointed to a potential lack of communication between customer service reps and the company’s repairability efforts.

For example, Apple launched its Self Service Repair Store in April 2022. But PIRG’s report said:

 … our interaction with their customer service team seemed to imply that there was no self-repair option for [Apple] phones. We were told by an Apple support representative that ‘only trained Apple Technician[s]’ would be able to replace our phone screen or battery, despite a full repair manual and robust parts selection available on the Apple website.

Apple didn’t immediately respond to Ars Technica’s request for comment.

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“everything’s-frozen”:-ransomware-locks-credit-union-users-out-of-bank-accounts

“Everything’s frozen”: Ransomware locks credit union users out of bank accounts

Ransomware attack —

Patelco Credit Union in Calif. shut down numerous banking services after attack.

An automated teller machine with a logo for Patelco Credit Union.

Enlarge / ATM at a Patelco Credit Union branch in Dublin, California, on July 23, 2018.

Getty Images | Smith Collection/Gado

A California-based credit union with over 450,000 members said it suffered a ransomware attack that is disrupting account services and could take weeks to recover from.

“The next few days—and coming weeks—may present challenges for our members, as we continue to navigate around the limited functionality we are experiencing due to this incident,” Patelco Credit Union CEO Erin Mendez told members in a July 1 message that said the security problem was caused by a ransomware attack. Online banking and several other services are unavailable, while several other services and types of transactions have limited functionality.

Patelco Credit Union was hit by the attack on June 29 and has been posting updates on this page, which says the credit union “proactively shut down some of our day-to-day banking systems to contain and remediate the issue… As a result of our proactive measures, transactions, transfers, payments, and deposits are unavailable at this time. Debit and credit cards are working with limited functionality.”

Patelco Credit Union is a nonprofit cooperative in Northern California with $9 billion in assets and 37 local branches. “Our priority is the safe and secure restoration of our banking systems,” a July 2 update said. “We continue to work alongside leading third-party cybersecurity experts in support of this effort. We have also been cooperating with regulators and law enforcement.”

“Everything’s frozen”

Patelco member Enrique Juarez said he was having trouble accessing his Social Security payment, according to the Mercury News. “I’ve never had a problem before,” Juarez told the news organization. “Everything’s frozen, I can’t even check my balance until this is resolved—and they don’t know [when that will happen].”

Patelco says that check and cash deposits should be working, but direct deposits have limited functionality.

Security expert Ahmed Banafa “said Tuesday that it looks likely that hackers infiltrated the bank’s internal databases via a phishing email and encrypted its contents, locking out the bank from its own systems,” the Mercury News reported. Banafa was paraphrased as saying that it is “likely the hackers will demand an amount of money from the credit union to restore its systems back to normal, and will continue to hold the bank’s accounts hostage until either the bank finds a way around the hack or until the hackers are paid.”

Change Healthcare, a health payment processing company hit by ransomware this year, told lawmakers that it paid a ransom of $22 million in bitcoin. Change Healthcare owner UnitedHealth failed to use multifactor authentication on critical systems.

Patelco hasn’t revealed details about how it will recover from the ransomware attack but acknowledged to customers that their personal information could be at risk. “The investigation into the nature and scope of the incident is ongoing,” the credit union said. “If the investigation determines that individuals’ information is involved as a result of this incident, we will of course notify those individuals and provide resources to help protect their information in accordance with applicable laws.”

Patelco waives fees, warns of more outages

Patelco said it is waiving overdraft, late payment, and ATM fees “until we are back up and running.” Members who need to access funds from direct deposits can do so by writing a check, using an ATM card to get cash, or by making a purchase, Patelco said.

As of yesterday, members could expect to “experience short, intermittent outages at Patelco ATMs,” the organization said. “This is normal and to be expected during our recovery process. Access to shared ATMs will not be interrupted as part of this process and they remain available for cash withdrawals and deposits.”

A chart on the security update page says the services that remain unavailable include online banking, the mobile app, outgoing wire transfers, monthly statements, Zelle, balance inquiries, and online bill payments.

Patelco branches, call center services, and live chats have “limited functionality,” as do debit card transactions, credit card transactions, and direct deposits, according to the chart. Services that are listed as available include check and cash deposits, ATM withdrawals, ACH transfers, ACH for bill payments, and in-branch loan payments.

“Everything’s frozen”: Ransomware locks credit union users out of bank accounts Read More »