FTC's bid to ban noncompete agreements rejected by federal judge in Texas

the big 'no'

In a ruling Tuesday, U.S. District Judge Ada Brown granted a motion for summary judgement filed by the U.S. Chamber of Commerce and other plaintiffs, and rejected the FTC's own petition for a judgement in its favor. Photo via Getty Images

A federal judge in Texas has blocked a new rule from the Federal Trade Commission that would have made it easier for employees to quit a job and work for a competitor.

In reaching his decision, Brown concluded that that the FTC “exceeded its statutory authority” in making the rule, which the judge called “arbitrary and capricious." The judge also concluded that the rule would cause irreparable harm.

As a result of the court's decision, the FTC won't be able to enforce its rule, which was set to go into effect on Sept. 4, according to the judge's ruling.

Still, the decision does not prevent the agency from addressing noncompete agreements through “case-by-case” enforcement actions, said Victoria Graham, an FTC spokesperson.

The FTC is also considering appealing the court’s decision, Graham said.

The FTC voted in April to prohibit employers nationwide from entering into new noncompete agreements or enforcing existing noncompetes, saying the agreements restrict workers' freedom and suppress wages.

But companies opposing the ban argue they need noncompete agreements to protect business relationships, trade secrets and investments they make to train or recruit employees.

Apart from the Texas case, companies sued the FTC in Florida and Pennsylvania to block the rule.

In the Florida lawsuit, which was brought by a retirement community, the court granted a preliminary injunction, prohibiting enforcement of the rule just for the plaintiff, but not any other company.

In the Pennsylvania lawsuit, the court concluded that the plaintiff, a tree company, failed to show it would be irreparably harmed by the ban and that the company wasn’t likely to win the case.

The divergent rulings mean the issue could end up working its way to the U.S. Supreme Court.

A handful of Houston startups will be bouncing back and forth to Austin for the second annual MassChallenge Texas accelerator. Photo via Getty Images

Meta agrees to $1.4B settlement with Texas in privacy lawsuit over facial recognition

precedent

Meta has agreed to a $1.4 billion settlement with Texas in a privacy lawsuit over allegations that the tech giant used biometric data of users without their permission, officials said Tuesday.

Texas Attorney General Ken Paxton said the settlement is the largest secured by a single state. In 2021, a judge approved a $650 million settlement with the company, formerly known as Facebook, over similar allegations of users in Illinois.

“This historic settlement demonstrates our commitment to standing up to the world’s biggest technology companies and holding them accountable for breaking the law and violating Texans’ privacy rights,” Paxton, a Republican, said in a statement.

Meta said in a statement: “We are pleased to resolve this matter, and look forward to exploring future opportunities to deepen our business investments in Texas, including potentially developing data centers.”

Filed in 2022, the Texas lawsuit said that Meta was in violation of a state law that prohibits capturing or selling a resident's biometric information, such as their face or fingerprint, without their consent.

“This is by far the biggest state governmental privacy settlement in history,” Chicago-based class action attorney Jay Edelson said in an email. Edelson's firm filed the lawsuit that settled for $650 million with Meta. The only other larger claim is the Federal Trade Commission's $5 billion settlement with the company in 2019.

To date, Meta has now paid over $2 billion in settlements for biometric privacy claims, according to Edelson. “That is a huge signal to other companies that they should be extremely careful if they want to trade in individuals' biometric information,” he said.

The company announced in 2021 that it was shutting down its face-recognition system and delete the faceprints of more than 1 billion people amid growing concerns about the technology and its misuse by governments, police and others.

At the time, more than a third of Facebook’s daily active users had opted in to have their faces recognized by the social network’s system. Facebook introduced facial recognition more than a decade earlier but gradually made it easier to opt out of the feature as it faced scrutiny from courts and regulators.

Facebook in 2019 stopped automatically recognizing people in photos and suggesting people “tag” them, and instead of making that the default, asked users to choose if they wanted to use its facial recognition feature.

Texas filed a similar lawsuit against Google in 2022. Paxton’s lawsuit says the search giant collected millions of biometric identifiers, including voiceprints and records of face geometry, through its products and services like Google Photos, Google Assistant, and Nest Hub Max. That lawsuit is still pending.

The $1.4 billion is unlikely to make a dent in Meta’s business. The Menlo Park, California-based tech made a profit of $12.37 billion in the first three months of this year, Its revenue was $36.46 billion, an increase of 27% from a year earlier. Meta is scheduled to report its second-quarter earnings results on Wednesday.

Meta’s stock slipped $4.06 to $461.65 Tuesday, a decline of less than 1%.

You are more vulnerable to financial cyber threats in a crisis. Here are some tips for staying safe. Getty Images

Houston banking exec shares tips for keeping online information secure amid coronavirus threats

Guest column

While Houston residents are aware of the health and financial impacts of COVID-19, the threat to individual security due to the rise in online scams has only just begun.

Scammers have already started to prey on the unsuspecting victims who are now working, shopping and banking almost entirely online. A recent report by the Federal Trade Commission stated that due to the rise in online hacking and phishing scams, coronavirus-related frauds have already reached nearly $12 million in losses, impacting more than 15,000 Americans.

As individuals continue to become more and more dependent on technology during this extended time at home, it is important to be cautious and knowledgeable to avoid possible scams. Below are tips to consider when navigating coronavirus-related security threats.

Verify the URL

When dealing with financial matters, it is important to check the URL to ensure the site is secure and legitimate before clicking on a link provided by a third-party source or found within an email thread. Scan the link for misspellings and other abnormalities that appear to be out of place. It may also be helpful to visit the original website in a separate browser to compare the web addresses side by side. Illegitimate website links can lead to unsecure sites, viruses, and possible identity theft.

Check donation sources

Especially during this time, many Houstonians are donating to relief organizations working to fight the impacts of the coronavirus. Unfortunately, there are several faux fundraising campaigns claiming to support disaster relief, and the scammers behind these sites are preying on the goodwill of unsuspecting donors.

Consider supporting a charity that is well-known, transparent, and established, rather than a new organization with little history or information. Red flags may include sources requesting wire transfer information or a social security number, or charities applying pressure to donate immediately.

Guard financial information

It is especially important to guard financial information during this time to prevent identity theft. Many false stimulus check portals have surfaced online, encouraging visitors to provide personal information such as checking account details or credit card numbers.

The IRS encourages individuals to practice due-diligence and to be wary of details that may identify a scam. For example, noticing key words such as "Stimulus Check" or "Stimulus Payment" in place of the official term of economic impact payment.

If you have filed your taxes electronically, this payment will automatically be deposited into your bank account. For those who receive a check for the impact payment, it is important to remember that one of the best ways to protect financial assets is to be sure they are deposited in a reliable, federally insured bank account. Accounts are insured by the FDIC up to $250,000 per depositor, per insured bank, for each account ownership category, ensuring that your money is safe and protected.

Monitor accounts regularly

With the rise of online payments, it is important that individuals examine their accounts regularly to verify spending activity. While many assume that a scammer will take a large amount from a bank account, immediately triggering security functions and resulting in a text message to the account holder, this is not always the case.

Oftentimes, scammers will begin with smaller purchases, testing limits before stealing more. Additionally, it is important to check credit activity during this time to monitor for possible identity theft.

When it comes to making purchases and payments online, it is important to practice caution, even with sites that may appear to be trustworthy. By paying attention to the details and red flags that may signify a fraudulent site, individuals may be able to avoid online scams.

This is a time of great need. Unfortunately, it is also a time of great opportunity for criminals. As Houstonians respond, as they always do, be sure to protect yourself while you are helping our community.

------

Jay Rogers is the chairman and CEO of IBC Bank.

Ad Placement 300x100

Ad Placement 300x600

CultureMap Emails are Awesome

Property Showcase

Biosciences startup becomes Texas' first decacorn after latest funding

A Dallas-based biosciences startup whose backers include millionaire investors from Austin and Dallas has reached decacorn status — a valuation of at least $10 billion — after hauling in a series C funding round of $200 million, the company announced this month. Colossal Biosciences is reportedly the first Texas startup to rise to the decacorn level.

Colossal, which specializes in genetic engineering technology designed to bring back or protect various species, received the $200 million from TWG Global, an investment conglomerate led by billionaire investors Mark Walter and Thomas Tull. Walter is part owner of Major League Baseball’s Los Angeles Dodgers, and Tull is part owner of the NFL’s Pittsburgh Steelers.

Among the projects Colossal is tackling is the resurrection of three extinct animals — the dodo bird, Tasmanian tiger and woolly mammoth — through the use of DNA and genomics.

The latest round of funding values Colossal at $10.2 billion. Since launching in 2021, the startup has raised $435 million in venture capital.

In addition to Walter and Tull, Colossal’s investors include prominent video game developer Richard Garriott of Austin and private equity veteran Victor Vescov of Dallas. The two millionaires are known for their exploits as undersea explorers and tourist astronauts.

Aside from Colossal’s ties to Dallas and Austin, the startup has a Houston connection.

The company teamed up with Baylor College of Medicine researcher Paul Ling to develop a vaccine for elephant endotheliotropic herpesvirus (EEHV), the deadliest disease among young elephants. In partnership with the Houston Zoo, Ling’s lab at the Baylor College of Medicine has set up a research program that focuses on diagnosing and treating EEHV, and on coming up with a vaccine to protect elephants against the disease. Ling and the BCMe are members of the North American EEHV Advisory Group.

Colossal operates research labs Dallas, Boston and Melbourne, Australia.

“Colossal is the leading company working at the intersection of AI, computational biology, and genetic engineering for both de-extinction and species preservation,” Walter, CEO of TWG Globa, said in a news release. “Colossal has assembled a world-class team that has already driven, in a short period of time, significant technology innovations and impact in advancing conservation, which is a core value of TWG Global.”

Well-known genetics researcher George Church, co-founder of Colossal, calls the startup “a revolutionary genetics company making science fiction into science fact.”

“We are creating the technology to build de-extinction science and scale conservation biology,” he added, “particularly for endangered and at-risk species.”

Houston investment firm names tech exec as new partner

new hire

Houston tech executive Robert Kester has joined Houston-based Veriten, an energy-focused research, investment and strategy firm, as technology and innovation partner.

Kester most recently served as chief technology officer for emissions solutions at Honeywell Process Solutions, where he worked for five years. Honeywell International acquired Houston-based oil and gas technology company Rebellion Photonics, where Kester was co-founder and CEO, in 2019.

Honeywell Process Solutions shares offices in Houston with the global headquarters of Honeywell Performance Materials and Technologies. Honeywell, a Fortune 100 conglomerate, employs more than 850 people in Houston.

“We are thrilled to welcome Robert to the Veriten team,” founder and CEO Maynard Holt said in a statement, “and are confident that his technical expertise and skills will make a big contribution to Veriten’s partner and investor community. He will [oversee] every aspect of what we do, with the use case for AI in energy high on the 2025 priority list.”

Kester earned a doctoral degree in bioengineering from Rice University, a master’s degree in optical sciences from the University of Arizona and a bachelor’s degree in laser optical engineering technology from the Oregon Institute of Technology. He holds 25 patents and has more than 25 patents pending.

Veriten celebrated its third anniversary on January 10, the day that the hiring of Kester was announced. The startup launched with seven employees.

“With the addition of Dr. Kester, we are a 26-person team and are as enthusiastic as ever about improving the energy dialogue and researching the future paths for energy,” Holt added.

Kester spoke on the Houston Innovators Podcast in 2021. Listen here

Startup funding, sportstech win and more trending innovation news for January

INNOVATIONMAP EMAILS ARE AWESOME