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Appeals Court Denies “Uber” for Planes

If you want to get from Dallas to Washington, D.C. fast, wouldn’t it be nice to contact a pilot in an Uber-like plane service? Well, keep dreaming. In December 2015, the U.S. Court of Appeals for the District of Columbia Circuit struck down the idea.

Flytenow, Inc. developed a web-based service allowing private pilots to offer their planned itineraries to passengers. The itineraries were only given to passengers willing to share in the pilot’s expenses to fly to their destination. The company contacted the Federal Aviation Administration, or FAA, regarding the legal interpretation of its compliance with the Federal Aviation Act of 1958 and other FFA regulations.

A dispute arose when the FFA concluded Flytenow’s pilots needed a commercial license. Normally, pilots are considered common carriers. A common carrier offers its services to the general public. The services are offered in compensation of goods, property or messages over a defined route. Typical types of common carriers include mass transit, such as airlines, taxis, cruises, and ferries.

This means private pilots can’t use Flytenow to offer their services.

Flytenow Wanted the Court to Set Aside the FAA’s Interpretations because of Inconsistency

The company filed a lawsuit based on objections like:

  • The FFA misinterpreted its regulations when it decided passengers would be compensating the participating pilots
  • The FFA erred when it concluded pilots using would be holding out an offer transportation to the public

The Court found both objections unpersuasive.

By sharing expenses, private pilots are being compensated for their trips. If a person called a private cab service, the amount of gas is probably calculated into the amount paid to the driver. The same would have been true of Flytenow’s pilots. By getting paid a portion or half of their expenses, consumers would save money. Essentially, there’s an exchange of value.

Thus, they aren’t private pilots, but commercial pilots.  Plane

Another problem with Flytenow’s argument is trying to redefine “holding out.” According to FAA Advisory Circular, pilots are barred from advertising their services to the public. The company tried to argue its’ pilots don’t advertise to the public. They submit their flight plans to the Flytenow.

However, the FFA argued that by giving their flight plans to the company, they are advertising their services to the public. For example, an individual wanting to fly to California from Missouri could look at a flight plan on the company’s website. He could then decide to “share” the expenses of the flight with a pilot flying to California.

The Right to Sue

The court got it right. The company holding itself out as a professional service to the public does create a risk to unsuspecting passengers when its pilots are not in fact held to professional standards. Passengers are under the impression the company and its pilots are common carriers. Common carriers have the experience and credential to fly commercially. If Flytenow and its pilots were allowed to present themselves as commercial and a plane crashes, passengers and/or their family would have difficulty suing under common carrier negligence.

Negligence is the failure to act with reasonable care as another in a similar or same situation would. When transporting passengers from one area to another, common carriers have the duty to:

  • Provide reasonably safe vehicles fit for an intended purpose
  • Provide careful drivers or pilot of reasonable skill and good habits
  • Exercise all standard precautions for the safety of all passengers
  • Comply with all safety laws
  • Use vigilance and utmost care in transporting all passengers
  • Warn passengers of any potential dangers the common carrier knows about

A private pilot doesn’t have to do those things. So making the pilots commercial instead of private gives passengers more legal protection.

Maybe the public won’t have to imagine an Uber-like plane service for very long. Maybe the right company will hire commercial pilots willing to fly planes to destinations for pay. For now though, we can only dream of avoiding the long waits at airline terminals and trying to book the best flight at the best price.

Lesson From Pharmaceutical CEO Shkreli’s Outrageous Drug Price Increase

Turing Pharmaceuticals CEO, Martin Shkreli, made headlines when he raised the price of Daraprim, a prescription drug for a life-threatening parasitic infection that mainly strikes pregnant women, cancer patients and AIDS patients. Overnight, Daraprim went from $13.50 to $750 per pill, a 5000% price increase. Outrage from the public followed, making Shkreli “the most hated man in America.” Pressed with demand to lower the price, Shkreli announced that he would lower the costs. However, the flamboyant self-promoter later stated that he should have increased the price even more.

Last month, Shkreli was arrested and charged with securities fraud and wire fraud. So, the federal government is now looking into his alleged ponzi scheme. But, what about the 5000 % price gauging?

Profit-Making U.S. Health Care Industry

Shkreli’s unethical price gauging reflects the bleak truth of American health care system, so deeply rooted in capitalism. Let’s be honest. In the U.S., health is not a guaranteed right. Our country’s healthcare does not cover everybody. In most other developed countries, health care is a guaranteed right and everyone is covered. In the United States, health is a commodity for-profit private system with only limited control from the government. Martin Shkreli 2

T.R. Reid, in his comprehensive examination of the health care systems of France, Germany, Japan, the UK, and Canada comparing with the U.S. health care system, diagnosed the differences: “The United States is the only developed country that relies on profit-making health insurance companies to pay for essential and elective care. All other developed countries have decided that basic health insurance must be a nonprofit operation. In those countries, the insurance plans – sometimes run by government, sometimes private entities – exist only to pay people’s medical bills, not to provide dividends for investors.” The OECD statistics show that the U.S. is by far the world’s biggest spender on health care.

Shkreli’s action presents an example of manipulating the legal loopholes of the U.S. health care system. By charging an enormous price on a drug his company did not invent and unscrupulously profiting at the cost of those who need the drug, his gigantic price hike harms the public, providers, and the overall U.S. health care industry.

Unethical Drug Pricing

Surprisingly, Shkreli’s price gauging was legal. Shkreli defends himself, stating that he has a sworn duty to make profits for his shareholders and tells New York Times, “It really doesn’t make sense to get any criticism for this.” Granted, as a CEO for a for-profit corporation, he owes a fiduciary duty of care to his company and shareholders.

However, his fiduciary duty alone does not justify his outrageous actions. It’s because he shamelessly maximized profits while failing to uphold his ethical obligations. We are not talking about some price increase on a latest model of a smart phone. We are talking about treating sick patients and preventing life threatening diseases.

It’s disturbing to learn that his action is not an isolated incident. Other pharmaceutical companies have been engaging in the same type of hundred fold price hike. A news analysis by Hedge Clippers shows that at least 19 other drugs have experienced stunning price hikes of between 300% and 1,200% in the past two years. Rising cost of medicines raises insurance costs, medical bills, and the government expenditure that ultimately impact every one of us.

Why Isn’t a Price Increase from $13.50 to $750 Not Illegal?

People wonder how such gigantic price increase was possible without violating any laws or free of regulations. That’s because for profit U.S. health care industry has limited the government’s regulation over the industry. Unlike most of other developed countries, the U.S. government can neither set a standard fee schedule for medical care nor tightly regulates prices of drugs and medical devices. However, to ensure safe drugs on the market, FDA restricts its approval process and then only allows the approved manufacturers make the drugs.

Shkreli knew how to get around FDA rules. Usually, once the drug is approved, the drug price increases until the drug’s patent expires. After the expiration of the patent, the drug becomes generic drugs and any companies can make the drug leading the price to drop. But the government has placed restrictions on distributing some drugs that are dangerous if abused. Federal regulators approve only if the drugmaker agrees to tightly control their distribution — providing them only for hospital use, for instance.

As an old drug, Daraprim’s patent had expired decades ago. Shkreli’s strategy was to buy old neglected drugs and turn them into high-priced “specialty drugs.” There was hardly any R&D cost because Turing did not invent Daraprim. Turing bought rights to sell Daraprim and secured controlled distribution. Although anybody could conceivably make generic copies since the patent expired, Shkreli effectively foreclosed competition through controlled distribution. His controlled distribution prevented other manufacturers from obtaining sufficient supplies of samples for required testing to make copies. This allowed Turing to practically monopolize the market, discouraging other companies from manufacturing and going through FDA approval process.

His business maneuver of exploiting the loophole of the system legitimized his 5000% price increase without violating any antitrust law.

Government Should Regulate Drug Pricing

Americans seem to believe that the private sector can manage any type of business better than government can. For health care though, the government has an important role to watch for the common good thereby the public do not become the victims of capitalism. While allowing free competitions among insurers, health providers, and pharmaceutical companies, the government should be able to negotiate the cost and enforce cost control measures.  Shkreli’s case shows that a for-profit entity can raise prices of health care without limits. The recent debate over prescription drug pricing and pharmaceutical’s unethical price increase prompt the need for appropriate regulation. Had there been the government’s oversight over the price of prescription drug, Shkreli would not have been able to increase prices in the manner he did.

What we are not exactly aware, but is well known to the rest of the world, is that the U.S. health care is behind in many levels such as coverage, quality, and cost. The U.S. health care system is too complex and too fragmented. There is no price transparency and added administrative costs. We do not have a standard fee for a certain procedure or medicine where everyone pays the same price for the same treatment and same drug. Germany and Japan provide one of the world’s best health care. Their system resembles ours in that it is a multi-payer system where a number of providers compete for services and individuals are insured through private insurers. The difference is that, while private insurers freely compete against each other, the government tightly regulates cost.

The burden of health expenditure is on everyone in one way or the other, as patients, employers, hospitals, insurance companies, Medicaid (the government) and Medicare. Drug companies should continue to compete for business and should be held publicly accountable when prices increase a hundredfold with minimal R&D. To sustain a health care industry that is based on capitalism and motivated by greed, competition and control must coexist. Otherwise, our health care spending will continue to produce millionaires with no ethical principles while sick patients become sicker because they can’t afford the drug any more.

Transgender Laws in the United States

U.S. History has been marked by continual efforts to expand the inclusiveness of civil rights. While we have made strides in gender equality and gay rights, we have a long ways to go. Presently, transgender rights are at the forefront, with celebrities like Caitlyn Jenner and Laverne Cox who have brought transgender issues to the collective consciousness like never before.

Even though we are beginning to recognize the transgender community, we are far from recognizing broad legal rights for those who identify as transgender.

The United States is behind three European countries that not only recognize transgender issues as the next civil rights movement, but also provide comprehensive legal rights for those who identify as transgender. Denmark, Malta, and now Ireland allow transgender people over the age of 18 to change their legal gender without medical or state intervention. Changing one’s legal gender is a huge progress for the majority of European countries, many of whom require transgender individuals to undergo surgery and sterilization, or be diagnosed with a mental disorder, and get divorced if married, to have their desired gender recognized legally.

Who Is Transgender?

A transgender person is a person whose internal sense of him or herself is different than the gender assigned at birth. It is different than one’s sexual orientation, or who a person is attracted to. In that regard, sexual orientation relates to whether a person is gay, lesbian, heterosexual, or bisexual. Just because a person is transgender does not also mean that he or she is gay or lesbian.  LGBT Flag

Approximately seven-hundred thousand people identify as transgender in the United States. A recent study showed that a staggering 41% of transgender people in the United States have attempted to commit suicide, compared with 4.6% of the general public.

How Does the United States’ Transgender Laws Compare?

Eighteen states and the District of Columbia have protections for transgender people, but their protections vary. For instance, Colorado, Illinois, and Minnesota ban discrimination based on sexual orientation, and defines “sexual orientation” to include gender identity. A number of states protect transgender students from discrimination or harassment in public schools. Nevada bans discrimination in employment, housing, and public accommodations such as retail stores, restaurants, and hospitals.

Additionally, there are federal laws which protect transgender people against housing and employment discrimination. In 2012, the U.S. Equal Employment Opportunity Commission ruled that discriminating against someone because that person is transgender is a Title VII violation. Similarly, the U.S. Department of Housing and Urban Development finds discrimination against transgender tenants or home buyers illegal sex discrimination under the Fair Housing Act.

While there are laws which protect transgender people from discrimination, there is no current law similar to Denmark, Malta and Ireland’s that allow transgender people to change their legal identification without intervention. Although one can easily change his or her name in any state, it is much more difficult to change the name on one’s birth certificate, which requires a court order. Changing the gender marker on one’s birth certificate is even more difficult. In the majority of states, it requires proof of surgical treatment to change one’s sex. Some states, including California, Oregon, New York, and Washington, allow one to change the gender marker on their birth certificate with proof of appropriate clinical treatment, even if no surgical treatment is sought.

Even if one changes their gender marker on their birth certificate, it does not mean that one’s sex is legally changed. There are some cases involving marriages in the United States before same-sex marriage was legalized where the court ignored the corrected birth certificate and decided the marriage was invalid. Now that same-sex marriage is legal, the gender marker on one’s birth certificate for these cases is immaterial.

The United States does not allow transgender people the same opportunity to change their legal identity without medical intervention. Ireland’s bill that afforded the transgender community this legal right was passed months after Ireland legalized same-sex marriage by popular vote. It stands to reason that because same-sex marriage is now legal in the United States, we may soon be following suit to expand transgender rights.

The Price For Privacy

Privacy has been a growing concern for everyone online. A recent Pew Research study found that 93% of the adults they surveyed said that being in control of who can get information about them is important.

However, most companies sell user data to third parties, who then use that data to create targeted ads. Although companies disclose that they engage in this practice in their privacy policies, most users are unaware of what specific groups have access to their information.

One remedy that companies may start using is the pay for privacy model. Since companies are paid by third parties for this data, the pay for privacy model would reimburse a company for the approximate difference if the company didn’t sell the consumer’s data. Consumers would instead pay a subscription fee for websites to ensure that companies won’t sell their information.

What Is Behavioral Targeting?

Many of the ads we see online today are placed through a technique called behavioral targeting. Advertisers work with companies to use technologies like clear gifs and cookies to track your web surfing behaviors online.  Chained Laptop

The data that is collected for behavioral targeting is not necessarily personally identifiable data such as your name or social security number. Instead, behavioral targeting focuses on data like the news articles you click on or the specific product you stare at while shopping on Amazon. The advertisers can then take this information and direct specific ads to you as an individual.

Would Paying for Privacy Work?

In early 2015, AT&T attempted to roll out a pay for privacy program with its high speed gigabit internet service. Users could either receive individually targeted ads or pay an extra $29 per month for a service with ads that don’t use behavioral targeting.

AT&T went under heavy criticism for this option, but it is not illegal. They make no promises that the number of ads would be reduced regardless of what choice consumers make. Moreover, to avoid liability of any state or federal privacy laws, AT&T’s website makes clear exactly what users are paying for if they choose to sign up for the premium option. AT&T continues to offer this option to their GigaPower subscribers.

Some consumers found a workaround through the use of other technologies like Virtual Private Networks. Others argue that as long as companies are transparent regarding their use of data, consumers are willing to make such exchanges for their data privacy.

In 2014, performance artist Risa Puno showed that people were willing to provide her with personal information like their social security number in exchange for a homemade cinnamon cookie.

Although many people have concerns over who has access to their private information, they may be more than willing to trade it for goods or services if presented the opportunity.

Should Companies Use the Pay for Privacy Model?

Pay for privacy models are new for social media websites, but exchanging your personal data for a benefit has been around for a long time. For example, grocery membership cards provide consumers a discount in exchange for personal information. In addition to the information you entered to sign up for the membership, grocery stores can also track and sell your purchase data to provide you with targeted ads at the checkout line.

When companies are earning additional revenue through the sale of consumer data (as well as the resulting targeted ads), pay for privacy may be the only solution companies are willing to try. With low subscription fees or an exchange of goods or services, consumers can agree to pay for their privacy now.

However, the slippery slope of pay for privacy is that privacy may become a luxury that can only be afforded by people who are able to pay. Consumers who are not able to afford an additional $29 per month charge to ensure their informational privacy may be stuck with directed advertisements and other intrusions into their privacy.

California Requires Warrants to Search Emails

There’s no denying that we live in a digital era, a time where people prefer email and text messaging to telephone and in-person communication.

In the past, government agents were able to search people’s text messages, emails, and GPS data without a warrant. That all changed on October 8, 2015, when Governor Jerry Brown signed the Electronic Communications Privacy Act (S.B. 178), which requires law enforcement to obtain a search warrant before looking at private emails, text messages and GPS data stored in smartphones, laptops and the cloud. It also requires that whenever a warrant is executed, notice must be served upon the targets of the warrant.

California is the only state in the nation that requires warrants to access this type of information.

What is the Basis of Search Warrants?

The Fourth Amendment guarantees people’s right to be free from unreasonable searches and seizures. This often means that government agents must have a warrant to search and seize your person and property. Search warrants may be issued where a person has a reasonable expectation of privacy.

So where does one have a reasonable expectation of privacy? The Supreme Court established that law enforcement must obtain a search warrant to search a suspect’s home where one has the greatest and most reasonable expectation of privacy. Conversely, one does not have an expectation of privacy over things left out in public, like trash in the garbage. Email

The California Constitution gives each citizen an “inalienable right” to pursue and obtain privacy. A judge can only issue a search warrant if there is probable cause.

Is Requiring Search Warrants a Good Idea?

People depend on technology like they never did before. A recent study showed that 86% of people aged 18 to 29 and 84% of individuals between the ages of 30 and 49 have a smartphone. Smartphones equip consumers with access to emails and text messages at all hours of the day with just the click of a button. People nowadays prefer to email or text personal, private messages to one another because of the convenience. With the invention of the smartphone, people believe all their emails, text messages, and GPS data will remain private so long as their phone remains in their possession. Most businesses also use emails and text messages to sustain their business.

Because so much private information is transmitted electronically and people reasonably believe such information will remain private, law enforcement should not be able a search it without first obtaining a warrant. With the accessibility of emails and text messaging to the average person and its increased use over the past several years, search warrants for such information is necessary to protect Californian’s heightened right to privacy.

Will Search Warrants Make it Harder to Combat Child Exploitation and Human Trafficking?

The Electronic Communications Privacy Act has its fair share of critics. The National Association to Protect Children contends that requiring government agents to notify targets of criminal investigation when they obtain warrants could put children in danger or result in destruction of evidence. Their main concern is child sexual exploitation and human trafficking.

Their fears are well founded. S.B. 178 requires that notice must be served upon or delivered to the targets of the warrant whenever a warrant is issued. The notice must be provided to the target at the same time the warrant is issued. For example, police must notify child pornography suspects they are coming and will conduct a search. The notification requirement may be delayed if law enforcement proves destruction of evidence is likely, but it is not assumed and must be demonstrated through additional court proceedings.

In special emergency cases, notice can be postponed until three days after the data is collected. A situation is considered an emergency if law enforcement can prove a child is in danger of death or “serious physical injury.” The problem is that California distinguishes between rape or sexual abuse and serious physical injury, as rape or sexual abuse rarely cause “serious physical injury.” If law enforcement cannot prove the child was in danger of serious physical injury after obtaining digital data without first notifying the target, all evidence obtained therefrom may be destroyed, essentially ending the case.

Although S.B. 178 is a major advance for privacy, it must be amended to help California combat child sexual exploitation.

Seeking Legal Help

If you believe you been searched illegally, a qualified criminal lawyer can help evaluate the legality of the search.