Nov 9 • 19M

🗞️ MoviePass 2: The Return Of Legal Trouble, TikTok Confirms EU's Worst Fears, & Junior Galette Fumbles His Lawsuit

 
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Matt Margolis
Oren Peleg
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This Week: MoviePass gets a sequel to its legal troubles, TikTok's privacy policy confirms data sharing, and the NFL hopes to intercept Junior Galette's lawsuit. Plus, a freeze is descending on Silicon Valley, and Fox Corp's Chief Legal Officer has his own licensing issues.


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🍿 MoviePass Gets A Double-Feature With Regulators

From afar, it didn’t seem like MoviePass could turn a profit for anyone involved. As it turns out, according to several government agencies, the heads of the company knew it too and lied to investors. On Friday, the Department of Justice filed charges against Helios and Matheson Analytics (HMNY), MoviePass's parent company, for securities and wire fraud, notes The Verge

  • The DOJ is claiming that both Mitch Lowe and Ted Farnsworth, the former heads of MoviePass and HMNY respectively, made false claims regarding the company's profitability.

  • Representatives for Ted Farnsworth told The Verge in a statement, "As with the SEC filing, Mr. Farnsworth is confident that the facts will demonstrate that he has acted in good faith, and his legal team intends to contest the allegations in the indictment until his vindication is achieved."

Ongoing Troubles

The DOJ case is not the first legal fight the notorious ticketing service has faced. Last year, the FTC accused the company not only of knowingly deceiving customers and of making the service hard to use, but of exposing personal data too. HMNY settled the claims, writes The New York Times. Furthermore, as the DOJ is bringing charges against HMNY/Movie Pass, the company is embroiled in a lawsuit with the SEC, who claims the heads of the service lied about planned profitability and used "fraudulent tactics to prevent MoviePass’s heavy users from using the [unlimited subscription service]," adds TechCrunch.

The Verdict

It's one thing to be sued/charged by a single federal agency, but the FTC, SEC, and DOJ? Not a good sign for the former team at HMNY. And now with MoviePass back as a service, it'll be interesting how new management separates themselves from past messes.


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📵 TikTok's Viral Backlash

Social media king TikTok has confirmed that user data across the globe can be accessed by the platform's staff in countries across the globe as well—including China. The confirmation comes in the latest privacy policy update to European users, says The Guardian, thus confirming privacy regulators' worst fears.

  • "Based on a demonstrated need to do their job, subject to a series of robust security controls and approval protocols, and by way of methods that are recognized under the GDPR [the EU’s general data protection regulation], we allow certain employees within our corporate group located in Brazil, Canada, China, Israel, Japan, Malaysia, Philippines, Singapore, South Korea, and the United States, remote access to TikTok European user data," Elaine Fox, head of privacy for TikTok in Europe said in a statement.

  • In July, TikTok's CEO Shou Zi Chew told Republican Senators a similar thing: a "narrow set of non-sensitive" American user data could be accessed by Chinese employees if an internal review merited it, but that the data would not be shared with Chinese government officials.

Party Ties

As digital security expert Isaac Stone Fish said on Twitter, "Every Chinese company with at least three Party members must have a Party cell," and TikTok likely has hundreds, if not thousands, or employed Chinese Communist Party (CCP) members. He added that "That's not even to mention Chinese data laws, which require sharing certain data with the government, or Chinese norms, that companies will share data with the government/Party when it asks (and won't fight back if it takes without asking.)" Such national security and data harvesting concerns are at the core US and EU opposition to TikTok's privacy guidelines.

The Verdict

The question here shouldn't be if TikTok or any other social media company is collecting data on users or not. Of course they are. And of course they're sharing it. The question is whether that poses a safety risk on either the personal and/or national level. Politicians in the US seem to believe so, but is that just political posturing?


📝 What Should Our Next Whitepaper Be?

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🏈 NFL Players Association Wants Off The Field

Over the summer, former NFL edge-rusher Junior Galette filed a lawsuit against the NFL, the NFL Players Association, multiple NFL teams, and others for $300 million, claiming he was blackballed by the league after a 2018 post he made on SnapChat claiming that he wasn't going to play for "no slave deals I'll die before I play for more slave deals" [sic]. As The Bleacher Report states, Galette claims that he has suffered since with lower-pay contracts and other issues. Now, the NFL Players Association is asking the federal judge overseeing the case to free the organization from the defendants as the case doesn't prove any wrongdoing on their part. Moreover, the NFLPA claims the matter was already settled in earlier arbitration between Galette and the NFL itself.

  • According to ProFootballTalk, when Galette met with the Raiders after his post, he was allegedly told by coach Jon Gruden that he is "one of the best pass rushers I have ever seen but all we have for you is veteran’s minimum 660k."

Jon Gruden

Meanwhile, Jon Gruden is locked in his own trial against the NFL. Late last year, emails from the Raiders' head coach revealing homophobic, sexist, racist, and other problematic slurs led to his ouster, reports Sporting News. But Gruden quickly filed a suit against the NFL and its commissioner Roger Goodell stating that the league "held the emails for months until they were leaked to the national media in the middle of the Raiders' season in order to cause maximum damage to Gruden."

The Verdict

Yes, the NFL has faced several allegations of racist behavior over the last few years. That being said, Galette's claims against the NFL Players Association do seem unfounded. Any good lawyer will attempt to sweep as many people and organizations into a lawsuit as possible, but it shouldn't come as a surprise if some of those groups end up being immaterial to the case.


📤 What Else We’re Forwarding

Layoff Season: Winter has descended upon Silicon Valley and it could be brutal. As Law.com details, the industry is going through a historic round of layoffs and that means among legal too. 

Licensing Dispute: Viet Dinh, the Chief Legal Officer for Fox News parent Fox Corp., has lived and worked in Los Angeles—the company's headquarters—since 2018. But, as Law.com explains, Dinh hasn't been licensed by the California Bar association until June of 2022, which could make the Dominion Voting System's lawsuit against the company, well…interesting.


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