The Contract’s Strict “Fine Print” Terms May Have Allowed It, But The Claim Is That It Was A “Deceptive” Trade Practice — A “Bait And Switch”… I’m Not So Sure.

Let this serve as my mid-February item on Amazon. As Mr. Bezos upped his one week’s total cash out figure to over $4 billion(!), the company he founded was hit with a federal suit in LA, seeking class action status. The suit claims it is a deceptive trade practice to now charge Prime members for movies the company advertised for years — would be “free”.

The reason I am just a lil’ skeptical of this… is prime-arily (see what I did there?) due to the fact that the company gave almost a year’s prior notice that this change was coming.

Sure, I think it is lousy customer relations, but I am unconvinced that it was unlawful. And true, it advertised the service as “free” — and ad free — movies to build millions of ordinary customers into Prime regulars, for a monthly added fee. But it has given ample advance notice of the change — and users may either opt out, or vote with their feet — en todo. In any event, here’s the story, from the venerable old Hollywood Reporter:

…[W]hen Amazon altered its terms, users who had signed up for annual subscriptions were also impacted. They allege the change is deceptive.

“Subscribers must now pay extra to get something they already paid for,” the complaint states.

In addition to being “unfair,” the suit alleges that Amazon illegally benefited by advertising Prime Video as “commercial-free” for years prior to launching its ad-supported tier, which “harms both consumers and honest competition,” according to the complaint.

The proposed class action seeks at least $5 million and a court order barring Amazon from engaging in further deceptive conduct on behalf of users who subscribed to Prime prior to Dec. 28, 2023. It brings claims for breach of contract, false advertising and unfair competition, among other alleged violations of consumer protection laws in California and Washington.

Last year, the Federal Trade Commission sued the tech giant for allegedly duping consumers into signing up for its Prime service and then impeding them from canceling their subscriptions. The suit argued Amazon employs a “manipulative” and “coercive” interface to trick users into enrolling in automatically renewing subscriptions. It also alleged that many subscribers intended to sign up solely for Prime Video, which is a lower-cost option.

Prime is considered a vital part of Amazon’s retail dominance because it keeps users locked into the company’s marketplace by offering them perks, including access to Prime Video, according to the FTC….

I would also note that Amazon avoided a class action suit a few years ago, when it cut off access to some movies that users had purchased — citing at the time that the studios themselves were changing licensing terms to the wholesalers — here, Amazon. But we will keep an eye on this, just the same.

It does (Bezos’ ~$4 billion in cash outs — while mistreating his customers) put me in mind of the old Voltaire quote: “Verily — the sharp employ the sharp. A man may be by his lawyer, known….” Be excellent to one another, today — and always!

नमस्ते

Won’t Read Too Too Much Into It, But Santos’ Long Island Seat Flips Blue…

This is sweeter than Valentine’s Godivas….

Ordinarily, I’d let a minor GOP/MAGA player’s US House seat loss, to a Democrat… slide. But not this one… his seat… flipped blue tonight.

That may be a nationwide trend come November, but it may also reflect Santos’ false, and repeated-in-writing, claims to be a direct heir to a Holocaust / survivor legacy (in a substantially Jewish district). His lies were so reprehensible — the vote is likely primarily an explicit rebuke, of him personally.

But the GOP did nothing to terminate his service for over a year… so this could be anti-MAGA voting emerging, as well.

INSANE — that GOP National did nothing about this serial pattern crook, wandering the halls of power in their name, for over a year.

Now… you know. If you live on Long Island, or in Queens, you can be proud tonight, that you forced his departure.

The Powerliners won’t say so, but these are their own chickens — coming home to roost. Update: Scott mentions it, but never assesses, let alone admits to — the fact that Santos “was the Trump BrandTM.” Hilarious.

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A Move In The US House, By One Vote… Is Silly Grandstanding. Zero Actual Meaning.

Even Hinderaker well-knows… the motion will die in the Senate. There will be no hearings; nothing.

And for this, the taxpayers pay the GOP loons’ salaries and eventual pensions?!

Hilarious.

And hilariously… sad.

There’s far more interesting drama… in the NJ area behemoth facilities / corporate real estate moves, than this.

That’s… truly hilarious. See… below. [Grow up John.]

Yet Another Effort To Repurpose The White Elephant HQ In Kenilworth Gets Underway… “Old Fast Fred”… [Legacy SGP]

As Fred Hassan was ushered off-stage, about 13 years ago — it became clear that Kenilworth would never be bought by another major pharma player — as a whole. [It was over two million square feet, after all.] So the proposal was to split it up and create “R&D incubators” — but that never got off the ground. So “New Merck” moved back in. Then last year, HQ was moved… W A Y back — to Rahway, under Mr. Davis. [That’s a 1960s throwback move, BTW.]

And so, once again, Onyx and another firm are being tasked with trying to turn Kenilworth into small incubators of R&D, leased to independents… over time. Same old. . . same old. Here’s the story — from 13 years ago, now — from first time around, at legacy Schering-Plough:

…Anonymous said…

The way it was explained to us (1 of the 580 being let go) They are closing every building on site, except one research building that they are dumping the $120 million into, and selling off the rest of the space.

The size of the site will be about 1/4 what it is now. Fred’s old office building will be gone by 2013; a few other buildings are already vacant. That nj.com story makes this seem like a good thing.

January 7, 2011 3:06 PM….

I’d expect about the same level of… non-success, this time around — in all honesty. The real estate needs of big companies are smaller, now — post COVID, and pro- tele-work. Smile — happy V-day, to all. . . .

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I Expect USDC Judge Ezra Will Grant Only A Short Extension, Since We Are Now Reading Of Live-Streamed Armed Vigilante “Hunting Parties” In Del Rio.

This is a very volatile — and evolving — situatiuon along the Rio Grande at Eagle Pass, Texas. Apparently, heavily armed bands of roving vigilantes are selling online access to live-cam streamed “Huntin’ Parties” (per Wired.com) — each night, down there.

Gov. Abbott will be personally liable for any subsequent bloodshed, there — as he is the whole reason these embittered loons are roving about — with AR-15s on their backs. So the able USDC Judge Ezra in San Antonio cannot get a trial and decision entered quickly enough. He will jump on it, we predict. Here’s the latest motion, now that online docket access has been restored this afternoon:

…The United States and Texas request that the Court vacate the current case schedule and order the parties to meet and confer on a new discovery and pretrial schedule….

Several of the deadlines set forth at the January 19 status conference and in the Court’s subsequent orders, see ECF 69, 73, 75, will pass in the near future, including the close of all fact discovery (February 16) and disclosure of expert reports (February 22). Vacating those deadlines would provide certainty regarding the Parties’ obligations until such time as the Parties are able to confer regarding a new schedule and the Court is able to enter an updated scheduling order in light of the Fifth Circuit’s temporary administrative stay and subsequent order denying Texas’s stay motion….

The idea that Texas wants lawless, heavily-armed liquored up bands of dead-enders roving its scrub brush terrain in SUVs at night… is hard to stomach. But here we are. Onward. Who are… these people?!

नमस्ते

In Tuesday Trivia™, We Get A Chuckle Out Of Poorly Thought Out “Investment Advice” — On Merck.

From time to time, Yahoo’s biz news section runs supposed investment advice columns that frankly look like they are generated by AI over templates, without any human review. This below is one of those. It is laughably… bad.

The claim is that Merck cannot afford to pay its dividend, over time. The further claim is that its return on equity(!) is… poor. Uh-huh.

As we all now well-know, Merck now has the world’s highest revenue drug franchise, in Keytruda®, and is generating a staggering ~$20 billion in operating income, on sales of over $60 billion a year — which deliver over $5.70 a share in EPS. Its dividend is a tiny obligation compared to those earnings. Oh, and it generates free cash flow of over $15 billion (with a “b”!) a year. Hilarious. [This is why Bernie is angry about its pricing hubris, for life-saving medicines.] And so, Yahoo needs some human editors, for this drivel:

…Merck has a three-year median payout ratio as high as 110% meaning that the company is paying a dividend which is beyond its means. The absence of growth in Merck’s earnings therefore, doesn’t come as a surprise. Paying a dividend higher than reported profits is not a sustainable move. That’s a huge risk in our books…. [Ed. Note: Merck intentionally “reports” very low net US profits, to minimize its tax burden. The relevant metric for dividend coverage is free cash flow. See above — not to mention that a dividend is a permissive, not mandatory, payment. Cash here is what matters; and Rahway generates truckloads of it.]

Additionally, Merck has paid dividends over a period of at least ten years [Ed. Note: for over seven decades — but why quibble, right?], which means that the company’s management is determined to pay dividends even if it means little to no earnings growth. Our latest analyst data shows that the future payout ratio of the company is expected to drop to 37% over the next three years. As a result, the expected drop in Merck’s payout ratio explains the anticipated rise in the company’s future ROE to 38%, over the same period….

In total, we would have a hard think [Ed. Nota bene: SIC; as in original] before deciding on any investment action concerning Merck. Specifically, it has shown quite an unsatisfactory performance as far as earnings growth is concerned….

In truth, I felt like some fair balance was needed, given how viciously we’ve savaged Mr. Davis’ specious suit prospects — against his largest customer. Smile — onward, to a happy V-Day — for one, and all!

नमस्ते

A Small Technical Matter: USDC Chief Judge Alia Moses’s Court Docket Is Offline This Morning — Entire Western District Of Texas Federal PACER Link / Account Is… Down.

It seems to be limited only to the Western District of Texas — which is also USDC Judge Ezra’s docket, in San Antonio, BTW — the jurist who just dumped PhRMA out of court, as we noted last night.

[A vast delivery of a trove of both sides’ private emails, unredacted — is due in Judge Moses’ chambers by February 21, 2024 — in the land razor wire barrier cases. We are preparing a “press access rights” filing, in that one, for some pro bono clients.]

There is no news announcement related to the outage, but standing orders over all district courts provide that all deadlines become the next day the system is back up, as other federal rules do not permit filing on paper — the filings must be PDFs.

As as of this morning, even case authorized lawyers cannot log in to file, in Del Rio — or San Antonio. Onward.

नमस्ते

As We’ve Long Said — Both The Merck Strike Suit, And The PhRMA One Are… Poorly Reasoned. Now They Are Falling — Out Of Bed.

An able USDC Judge In Del Rio, Texas has tossed the PhRMA strike suit against the federal agencies HHS and CMS, primarily. His name is Judge David Allen Ezra — and his name will be familiar to regular readers (see my concluding footnote, below).

But tonight, we are seeing the first proof that these suits were a silly exercise. . . and in many ways, immaturely petulant — as some of the titans in pharma stamped their feet, about having to play by the same free market rules the rest of us play by. Here’s the 14 page opinion — and the money bit of it. Um. . . told ‘ya! [Of course, PhRMA may re-file outside of Texas, but it will face even more hostile review in its home jurisdiction — of DC.] Here’s the bit:

…The Supreme Court and the Fifth Circuit have held that federal question jurisdiction bars claims that “arise under” the Medicare Act, even when the claim is for reimbursement or is a constitutional challenge. Ill. Council, 529 U.S. at 13, Physician Hosps., 691 F.3d at 659. In Ill. Council, the Supreme Court determined that a constitutional challenge to Medicare regulations that affected future reimbursement still “arises under” the Medicare Act. 529 U.S. at 10–13 (finding that the jurisdictional bar applied when plaintiffs “needing advance knowledge for planning purposes, together bring a § 1331 action challenging such a rule or regulation on general legal grounds). Similarly, in Physician Hosps., a trade group and a hospital sought declaratory and injunctive relief on the basis that a provision of the Patient Protection and Affordable Care Act that limited Medicare reimbursements was unconstitutional. 691 F.3d at 659. There, the Fifth Circuit also found that the claims arose under the Medicare Act, even though the challenges were constitutional, because the Act still provided “both the standing and substantive basis for the presentation of the constitutional contentions….”

“The term ‘arising under’ is broadly construed to encompass all claims for relief, regardless of whether the claimant seeks benefits, or declaratory or injunctive relief”. Ultimately, a claim arises under the Medicare Act if the Act provides the “standing and substantive basis for the presentation of the constitutional contentions.” Physician Hosps., 691 F.3d at 656 (quoting Salfi, 422 U.S. at 760–61). Here, just like the plaintiffs in Ill. Council and Physician Hosps., Plaintiffs ask the Court to hold that a law affecting future reimbursements is unconstitutional. These claims arise under the Medicare Act….

Plaintiffs would not have standing or a substantive basis for a claim for reimbursement without the Medicare Act. Therefore, these claims arise under the Medicare Act and Section 405(h) channeling applies….

These people did not exhaust their remedies in the administrative systems under federal law — so they’ve been tossed out of court. [Obviously, this is a problem for Merck’s claims as well.]

As a footnote, I personally deeply respect this jurist — he’s the same one in West Texas who’s held that Abbott’s floating barriers violate federal law, and he is proceeding to trial — where Gov. Abbott will lose. Onward.

नमस्ते

Just For The Sake Of A Complete Record: What The Supremes Do — To Dump It, And Him — Remains To Be Seen.

But I predict they will dump Trump’s request for a stay. [This is on his silly argument that he cannot be prosecuted for any crime, post his term of office.]

There is simply no plausible argument here. None. So feel free to ignore his burpings.

The American Revolution was all about ending the Lex Regis, or the “Law of the King”. We the people no longer must suffer any tyrant who claims to be above the law — immune to it.

So ends this sad little crook’s tale… even if it will take quite a few more drum beats — to get there. Onward.

नमस्ते

Good News — But Unsurprising. Health Canada Approves Yet Another Indication For Merck’s Keytruda®, As A Combo-Therapy.

We won’t run our immateriality graphic, here — as this is very much a largish piece of good news — Canada is a vast market. However, this is likely mostly already “priced in” to Merck’s NYSE trading, as it was always (for the last two years, at least) seen as largely inevitable.

Even so, here’s the latest, from SA:

…Merck has received approval from Health Canada for a combination therapy for patients with advanced gastric and gastroesophageal junction adenocarcinoma.

The regulator approved Merck’s (MRK) anti-PD-1 therapy, Keytruda (pembrolizumab), in combination with trastuzumab, fluoropyrimidine- and platinum-containing chemotherapy, for the first-line treatment of adult patients with locally advanced unresectable or metastatic HER2 positive gastric or gastroesophageal junction adenocarcinoma whose tumors express PD-L1.

This approval is based on the results from the Phase 3 KEYNOTE-811 trial, which demonstrated a statistically significant improvement in progression-free survival compared to placebo in combination with trastuzumab and chemotherapy in the intention-to-treat study population….

Onward — to warmer and sunnier days… with dreams of Cynthia Erivo as Elphaba dancing in my head, for a Thanksgiving theatrical release, later this year. Grin.

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