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The Morning Risk Report: Amazon Faced 75,000 Arbitration Demands. Now It Says: Fine, Sue Us
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Amazon recently changed its terms of service to allow customers to file lawsuits.
PHOTO: JOHANNES EISELE/AGENCE FRANCE-PRESSE/GETTY IMAGES
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Companies have spent more than a decade forcing employees and customers to resolve disputes outside the traditional court system, using secretive arbitration proceedings that typically don’t allow plaintiffs to team up and extract big-money payments akin to a class action.
Now, Amazon.com Inc. is bucking that trend. With no announcement, the company recently changed its terms of service to allow customers to file lawsuits. Already, it faces at least three proposed class actions, including one brought May 18 alleging the company’s Alexa-powered Echo devices recorded people without permission, The Wall Street Journal's Sara Randazzo reports.
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The retail giant made the change after plaintiffs’ lawyers flooded Amazon with more than 75,000 individual arbitration demands on behalf of Echo users. That move triggered a bill for tens of millions of dollars in filing fees, according to lawyers involved, payable by Amazon under its own policies.
Amazon’s decision to drop its arbitration requirement is the starkest example yet of how companies are responding to plaintiffs’ lawyers pushing the arbitration system to its limits.
Arbitration agreements are buried in the contracts consumers sign to do everything from buying a cellphone to using a ride-hailing app. Many employers also require arbitration for adjudicating issues like pay disputes or discrimination claims. The U.S. Supreme Court has repeatedly upheld and strengthened the rights of companies to mandate arbitration.
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From Risk & Compliance Journal
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Senate Passes Bill to Fund CFTC Whistleblower Program
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A newly passed Senate bill would temporarily create a separate account to pay for the operation of the Commodity Futures Trading Commission’s whistleblower program as the agency confronts a funding crisis over a large potential payout.
Currently, the CFTC’s Customer Protection Fund, which is funded by money the agency collects in enforcement penalties, is used to pay successful whistleblowers as well as for operating expenses and educational initiatives associated with the whistleblower office. The bipartisan legislation proposes the establishment of a separate account at the U.S. Treasury Department until Oct. 1, 2022, to ensure that the CFTC’s whistleblower office will be able to continue operations even if the amount in the fund drops to a critical level.
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Tesla CEO Elon Musk publicly mocked the SEC even after settling fraud claims with the agency.
PHOTO: JAVIER ROJAS/ZUMA PRESS
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Securities regulators told Tesla Inc. last year that Chief Executive Elon Musk’s use of Twitter had twice violated a court-ordered policy requiring his tweets to be preapproved by company lawyers, according to records obtained by The Wall Street Journal.
Tesla and the Securities and Exchange Commission settled an enforcement action in 2018 alleging that Mr. Musk had committed fraud by tweeting about a potential buyout of his company. Mr. Musk paid $20 million to settle that case—Tesla also paid $20 million—and agreed to have his public statements on social media overseen by Tesla lawyers.
In correspondence sent to Tesla in 2019 and 2020, the SEC said tweets Mr. Musk wrote about Tesla’s solar roof production volumes and its stock price hadn’t undergone the required preapproval by Tesla’s lawyers. The communications, which haven’t been previously reported, spotlight the running tension between the nation’s top corporate regulator and Mr. Musk, who publicly mocked the SEC even after settling fraud claims with the agency.
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The Supreme Court on Tuesday declined to consider a Johnson & Johnson appeal challenging a $2.1 billion civil judgment awarded to 20 women who alleged the company’s talcum baby powder caused ovarian cancer. The court rejected the J&J appeal in a brief written order, effectively ending the case and leaving in place a Missouri appeals-court ruling against the company.
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West Virginia Gov. Jim Justice said he is personally liable for debt arranged by now-collapsed Greensill Capital, highlighting the pressure his family faces in turning around their sprawling coal-mining operations. They were Mr. Justice’s first comments about the nearly $700 million in loans, which were the subject of a Wall Street Journal article on Monday.
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JBS said the attack didn’t reach its backup servers but warned of possible delays in its dealings with meat buyers and cattle feedlots. PHOTO: LUKE SHARRETT/BLOOMBERG NEWS
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Meatpacker JBS SA was hit by a ransomware attack that took a big chunk of U.S. beef-and-pork processing offline, sending buyers scrambling for alternatives and raising pressure on meat supplies.
Brazil-based JBS, the world’s biggest meat company by sales, told the Biden administration that it was the victim of a ransomware attack, White House principal deputy press secretary Karine Jean-Pierre said on Tuesday. She said JBS reported that the attack originated from a criminal group likely based in Russia.
The attack halted operations at JBS plants across the U.S. that are among the country’s largest, according to worker representatives and notices shared with JBS employees.
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The Canning River forms the northwestern border of the Arctic National Wildlife Refuge, and runs through the 1.5-million-acre coastal plain. PHOTO: LISA HUPP/USFWS
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The Biden administration suspended oil leases in the Arctic National Wildlife Refuge in Alaska, the latest move in its effort to block plans to begin the first-ever drilling program in the pristine 19-million-acre wilderness. The Interior Department said on Tuesday the program will be on hold until it completes a “comprehensive analysis” under the National Environmental Policy Act.
Tuesday’s decision follows a series of court arguments this spring in which the Biden administration supported oil and mining projects on federal land.
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A group of oil producers led by Saudi Arabia and Russia agreed to continue unwinding steep cuts they made at the start of the pandemic as an economic reawakening around the world boosts demand for crude and other commodities.
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The global oil-price benchmark closed above $70 a barrel for the first time in two years Tuesday on investors’ optimism that improving demand and a dwindling supply glut may mean the market can absorb any additional production from OPEC and its allies.
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Starbucks has said it would give top executives more shares if the coffee chain’s managerial ranks grow more diverse over three years. PHOTO: DAVID PAUL MORRIS/BLOOMBERG NEWS
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The killing of George Floyd in police custody a year ago and the subsequent protests prompted pledges from U.S. business leaders: They would fight racism and work to recruit and promote Black and other minority employees.
Now, more companies are putting money behind those pledges by tying executive compensation to specific goals.
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Median pay reached $13.4 million for chief executives of the biggest U.S. companies in 2020, setting a fifth straight annual record in a year when businesses and their leaders battled a global pandemic.
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Robinhood Markets Inc. named three new directors to its board on Tuesday, as the stock-trading startup laid more of the groundwork for what is expected to be one of the year’s most eagerly awaited initial public offerings.
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A worker welds a steel bicycle rim at a factory in Hangzhou, China, in September.
PHOTO: CHINA DAILY CDIC/REUTERS
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Buffeted by rising costs, some Chinese manufacturers are refusing to accept new orders or are even considering shutting down operations temporarily—moves that could put more strain on global supply chains and cause more inflation.
Surging raw-material prices and a shortage of workers have pinched smaller Chinese manufacturers, including many that sell their products to the U.S. and other Western markets. While many have passed their higher costs on to overseas buyers, the pain is so severe at some manufacturers that they are finding it hard to raise prices enough to make up the difference. Others don’t want to risk losing business to competitors. Many are now looking for other solutions to avoid losing money.
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Viewers tried out Huawei's Mate X2 at the Mobile World Congress in Shanghai Feb. 23.
PHOTO: /ASSOCIATED PRESS
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Huawei Technologies Co. on Wednesday launches its self-developed operating system for mobile phones, the company’s latest bid to break free of U.S. suppliers and an attempt to challenge Google’s dominance in smartphone software.
The Chinese tech giant plans to launch its new operating system, known as Harmony OS, across a large number of its smartphones during an online-only event, as well as unveil smart devices that will also run the company’s latest homemade software.
Huawei gadgets have been cut off from updating Google’s Android operating system since August, following a series of U.S. sanctions against the Shenzhen-based company. The ban also cost Huawei access to the U.S. company’s package of smartphone software known as Google Mobile Services, used widely across the industry.
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Instituting the updated penal code, Pope Francis wrote that the proper remedy for immoral behavior “is not only exhortations or suggestions.” PHOTO: FILIPPO MONTEFORTE/POOL/SHUTTERSTOCK
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The Vatican on Tuesday unveiled an updated version of the Catholic Church’s penal code to reflect scandals over clerical sex abuse and financial corruption that have shaken the church in recent years, expanding the types of offenses as well as potential culprits and victims.
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The editor in chief of the Journal of the American Medical Association, one of the country’s pre-eminent medical research journals, is stepping down after the publication produced a podcast episode and a tweet that questioned the existence of racism in medicine.
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