New EU Regulation on Antitrust Damages

Posted on January 9, 2015 02:51 by Ana Flores

The new EU regulation on antitrust damages is in force since the 25th of December 2014; the deadline for the transposition of this Directive is December 27th, 2016. 

It is the first specific regulation on this issue within the EU, thus a big step to reinforce the effectiveness of antitrust regulation by mean of making easier to individuals (consumers and companies, especially SME) to claim compensation before national courts for the harm caused to them by an infringement of those provisions.

The main changes introduced by the new regulation are: i) clarification of the legal consequences of “passing-on” and of the terms of “passing-on defence”, a legal construction of USA Law which had been already admitted and applied by EU Courts (e.g. in Germany Case ORWI, in Spain Case Sugar Cartel); ii) final decisions of a national competition authority will constitute prima facie evidence of infringement before the Courts of other Member States; iii) explicit recognition of the right to full compensation of the harm; iv) easier access to evidence, including the possibility of a judicial order requesting to other parties or third parties disclosure of documents if they are proportionate and provided that confidential information is duly protected; v) limitation period to claim damages will be 5 years since the victims have the possibility to discover that they have suffered harm, but this period will be suspended if a competition authority starts infringement proceeding and after final infringement decision the victims will have 1 year to bring damages claims; vi) presumption that cartels cause harm if no opposing evidence is offered. 

Update: on November 24, 2014 the Brussels Commercial Court has rejected a claim of the European Commission for damages caused by four Belgian elevator cartel members due to lack of evidence. The result might have been different under the presumption that cartels causes damages according to Art.9 2 EU Directive on Antitrust Damages Claims.

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Categories: Commercial Litigation | Damages

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On April 30, 2013, the California Court of Appeal, Second Appellate District, Division Three, issued its opinion in the matter of Corenbaum v. Lampkin. The opinion addresses an evolving issue in California regarding the admissibility of medical bills when the medical provider has agreed to accept less than the full amount billed in complete payment for services.  The court categorically rejected plaintiff's arguments and held that the full amount billed for past medical services is irrelevant and therefore inadmissible to prove:

- the value of the past medical services;
- the value of past pain and suffering;
- the value of future medical expenses; -the value of future pain and suffering.

In addition, the amount actually accepted by the medical provider in satisfaction of its services is not hearsay and is admissible to prove all of the foregoing.   The court also held that expert witnesses may not rely on the full value bills as a basis for rendering opinions on the value of future medical services.  The decision is the latest and most significant to interpret the California Supreme Court's Howell decision. It is also very likely to be appealed to the California Supreme Court, but for now, it is the law in California.

For the full opinion, click here

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Categories: Court of Appeals | Damages

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Do you talk or text while driving? If so, you better check out the status of the law in your state. Here are two links that will give you important information on these laws. And local governments are getting in on the act. For example, this Wednesday Mission, Kansas, begins the process of enacting an ordinance allowing only hands-free phones while driving.

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With the preseason underway and the regular season right around the corner, football fans are gathering in front of their TVs and crowding stadiums across the country with copious amounts of food and drink watching the big game.  Legal observers will have their own action to watch although this is likely to last several seasons.    

In 2011, several former players suffering a variety of neurological disorders sued the NFL for negligence and fraud relating to whether the NFL knew and withheld that knowledge that concussions and other head injuries incurred during the playing of football could lead to long term brain damage and related side effects (no comment).  Many of these suits received class action status and were removed to the United States District Court for the Eastern District of Pennsylvania. 

On August 13, 2012, the roster of players on this legal gridiron expanded to include the NFL’s insurance companies.  Alterra America Insurance Company, an excess insurance provider, filed suit in New York State Supreme Court in Manhattan seeking a declaratory judgment stating that Alterra
1) does not have a duty to defend the NFL against player lawsuits
2) does not have a duty to indemnify the NFL against player lawsuits

Two days later, the NFL and NFL Properties filed suit against 32 insurance companies (or nearly every major insurer in the country as reported by Reuters)  including Alterra asking the Court to require these insurers to defend and indemnify the NFL from the players’ suits.  Why so many insurers?  Because the NFL sued nearly every insurer that it has ever had regardless if a current business relationship currently exists.  This is mostly a dispute about when duty to defend triggers.  The NFL in its papers argues it’s when the injury occurs. National Football League v. Fireman’s Fund Insurance, BC490342, California Superior Court, Los Angeles County at 12.  This becomes a bit of problem because different insurers insured the NFL at different times going back to 1963. Determining which injury (if only one) caused the long term damage, when that particular injury occurred and which policy was in effect at that particular time is going to be messy to say the least. 

However, the more interesting story here takes place nearly a week later.  On August 21, Travelers’ Insurance followed “suit” and filed its own action against the NFL and the other insurance companies seeking a declaratory judgment with roughly the same arguments as Alterra.  What makes this interesting is the fine distinction that Travelers’ makes in its papers which is how the other insurance companies become involved.  

Travelers' argues that its only obligation is to NFL Properties and not to the NFL itself (both the NFL and NFL Properties have been parties to these suits).   Travelers’ argues that it never insured the NFL (whom we guess Travelers’ believes is going to take the brunt of any payout either in the form of a judgment or settlement) and therefore shouldn’t have to bear any of the NFL’s costs. Traveler’s suit against the other insurance companies is a pre-emptive strike against its peers who “may dispute Travelers’ position with respect to some or all of the foregoing matters, and make seek contribution from Travelers’ with respect to defense costs and/or indemnity paid under the policies they issued to the NFL and/or NFL Properties with respect [to the players’ law suits].” Discovery Property & Casualty Co. v. National Football League, 652933/2012, New York State Supreme Court, New York County (Manhattan) at 19.

It looks like all the players are in their respective formations… and there’s the kickoff.

[1] Ben Berkowitz, “NFL Sues Dozens of Insurers Over Player Injury Claims.“ Reuters.  08/16/12.  Accessed on 08/28/12.  Available at:

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In the wake of the recent tragedy in Aurora, Colorado, retailers, restaurants and other establishments open to the public must be ever vigilant to the actions of “third-parties” to ensure, first and foremost, the safety of their patrons, as well as protect themselves from potential liability stemming from such actions.

In most states, New York included, businesses have a duty to maintain their premises in a reasonably safe condition, which includes taking minimal precautions to protect members of the public from the reasonably foreseeable criminal acts of third-persons.  Often in cases a plaintiff will allege that the proprietor should have anticipated the criminal actions of a third-party due to some advanced notice, such as specific comments or threats made, a highly publicized event, the expectation of an excessive number of people attending an event, and so on.  While many such lawsuits are typically broadly worded so as to “state a cause of action” and pass any initial dismissal challenges, few make it to a jury due to the difficult burden of establishing that a third-party’s criminal actions were or should have been anticipated.

With the horrible set of circumstances that are coming to light in Colorado, which seem too frequent lately, one must ask the question, will Courts eventually require proprietors to expect the unexpected?  For now, it is wise for proprietors to take any information they perceive or receive seriously to prevent such tragedies and avoid the legal system.


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Two recent rulings denying motions to remand in chemical exposure cases by demonstrate that a complaint must contain sufficient facts to show legitimate claims against all parties.  A failure to properly plead causes of action allows a federal court to conclude a claim does not exist and therefore maintain jurisdiction over the case under the doctrine of fraudulent joinder.  

Bayer CropScience LP was sued by two individuals who live near the Institute, West Virginia, plant and who claim illness as a result of exposures during a ten day period in 2009. Sue Ferguson Davis v. Bayer AG, et al., Civil Action No. 2:11-cv-00879 and Donna Willis v. Bayer AG, et al., Civil Action No. 2:22-cv-00880.  Both filed virtually identical complaints in state court naming Bayer CropScience and others, including West Virginia Paving, Inc., a West Virginia corporation, as defendants.  The plaintiffs claimed exposure to toxic fumes “negligently released into the atmosphere..." caused a variety of personal injuries.  Bayer CropScience removed the cases to federal court arguing that both Complaints did not contain particular factual allegations justifying claims against the non-diverse party, West Virginia Paving.  Inclusion of that company as a defendant destroyed diversity, precluding removal to federal court.  Both plaintiffs filed motions to remand.

On the issue of diversity jurisdiction the Court found all of the defendants except West Virginia Paving were from different states or countries than the two West Virginia plaintiffs.  Only if West Virginia Paving was fraudulently joined to prevent federal jurisdiction, could the case remain in federal court.

Recognizing well-settled law, Judge Joseph R. Goodwin explained that the doctrine of fraudulent joinder allows federal courts to disregard the citizenship of non-diverse defendants for jurisdictional purposes.  A heavy burden is placed on parties who seek federal jurisdiction, as they must demonstrate there is “no possibility” that plaintiff can establish a case against the in-state defendant or there is outright fraud in the facts pled in the complaint.  

The judge concluded the complaints lacked even a “glimmer of hope” of establishing claims against West Virginia Paving and denied remand in both cases.  He found the complaints simply did not link West Virginia Paving to the specific chemical leak described in both complaints, and concluded (as admitted by plaintiffs) that “West Virginia Paving’s conduct could not have caused the plaintiff’s injuries, ….because [it] was not operating a chemical facility at any point around that date.” Without West Virginia Paving as a defendant, there was complete diversity between the parties, and the court therefore denied plaintiffs’ motion to remand.

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Massachusetts is one of a handful of states that allow third party claimants to sue liability insurers for failing to promptly settle their claims.  It is unique in allowing tort claimants to recover punitive damages in such cases.   In the wake of the Supreme Judicial Court's ruling this week in Rhodes v. AIG Domestic Claims it is evident that the price of failing to settle claims in which liability is reasonably clear can be high indeed.

In 1989, the Massachusetts legislature amended two sections of the state Consumer Protection Act (G.L. c. 93A) to read: "For the purposes of this chapter, the amount of actual damages to be multiplied by the court shall be the amount of the judgment on all claims arising out of the same and underlying transaction or occurrence, regardless of the existence or nonexistence of insurance coverage available in payment of the claim."

As these amendments were prompted by a series of case in which 93A awards against first party insurers were based on the insured's lost interest on the amount owed, it has been unclear ever since whether this language was also meant to apply to claims against liability insurers, who may be subject to 93A liability in Massachusetts if they fail to make a reasonable offer of settlement in a case in which their insured's liability is reasonably clear.  In such cases, should the doubled or trebled award be based on the damage caused by the insurer's delay in effectuating a settlement or did these statutory amendments mandate that the insurer's liability reflect the injuries suffered by the tort claimant as the result of the insured's actions?

Marcia Rhodes had become a paraplegic after her vehicle was rear-ended by an 18 wheel truck.  The truck was owned by Penske and leased to GAF, which had a $2 million primary policy with Zurich and a $50 million excess policy with National Union.  Nearly two years after the accident, a representative of Zurich asked for permission to offer its full policy limit.  Even so, settlement discussions dragged on, due in part to the positions adopted by National Union.

After efforts at mediation collapsed, the case went to trial and resulted in a $7.4 million verdict against GAF.  A few months later, the carriers $9.4 million to settle, leaving open their claimed 93A exposure for not settling once the liability of GAF had become reasonably clear.

In the ensuing bench trial, the Superior Court found Zurich blameless but concluded that National Union had failed to make a timely offer of settlement.  Nevertheless, the Superior Court declined to award damages as the plaintiff had testified that he never would accepted anything less than $8 million, more than what the court had deemed to be a reasonable offer.

This finding was reversed by the Appeals Court of Massachusetts in 2010.  Although the trial judge had declined to find c. 176D liability on the part of the insurer for its failure to make a reasonable offer of settlement until the very eve of trial, given testimony by the plaintiff that he never would have accepted anything less than $8 million anyway, the Appeals Court found that this testimony was not dispositive, declaring that, "The causal link between AIGDC's unfair settlement practices and injury to the plaintiffs was sufficiently established by showing that the insurer failed to initiate the settlement process once the merits of the plaintiffs' claims were clear, thus depriving the plaintiffs of the opportunity to engage in a timely settlement process, and thereby forcing them to pursue recovery through the courts."
The Appeals Court also awarded double damages based on AIGDC's initial failure to make a reasonable offer of settlement after the jury awarded $9.4 million to the plaintiff, rejecting the insurer's argument that the issues in the case and its grounds for appealing the verdict were so complex that the plaintiff should have been required to present expert testimony to support its extra-contractual argument. However, the court declined to base this doubled award on the $9 million settlement and limited the award to 1% for each of the five months in which AIGDC had delayed in settling post-verdict.
AIGDC appealed from these findings.  The plaintiffs cross-appealed from the holding that they could only recover lost interest on the value of the settlement.  Although the Supreme Judicial Court accepts very few requests for further appellate review, it took this case, setting the stage for a final clarification of the rules governing how damages should be awarded in such cases.
In its February 10, 2012 opinion, the SJC agreed that National Union had acted in bad faith in failing to settle the case before trial.  The court refused to find that the insurer's failure to make a reasonable offer of settlement was excused by the apparent futility of such an offer, declaring that:
the plaintiffs need only prove that they suffered a loss, or an adverse consequence, due to the insurer's failure to make a timely, reasonable offer; the plaintiffs need not speculate about what they would have done with a hypothetical offer that the insurers might have, but in fact did not, make on a timely basis

Further, the SJC ruled that the Appeals Court had erred in refusing to give literal effect to the 1989 amendments to 93A, ruling that the double damages owed by AIGDC should be based on the multi-million dollar award rendered by the jury against GAF, not based on the loss of use of these settlement funds for a few months.  The court rejected AIGDC's distinction between first and third party cases, declaring that 93A "does not require a causal relationship between the unfair practice and the underlying judgment itself; rather, the statutory causation requirement focuses on the relationship between the unfair practice and injury to the plaintiff."  Similarly, the court rejected AIGDC's argument that the accident caused by its insured involved a different transaction or occurrence than that resulting in its 93A liability for failing to settle.
The court also declined to find that an award of damages in this manner exceed the due process standards for punitive damages awards enunciated by the U.S. Supreme Court in State Farm v. Campbell and other recent cases.  The SJC questioned whether Campbell even applied to cases where judges issued awards (runaway judges are presumed not to be a concern) and declared that, in any event, the award in this case was two times the actual damages and therefore well within the Supreme Court's dicta concerning ratios.  (This particular issue was highlighted in the amicus brief that our law firm filed on behalf of the American Insurance Association in support of AIGDC's position).

Although 93A claims have been a ubiquitous feature of insurance litigation in the Commonwealth of Massachusetts since the 1980s, cases such as Rhodes illustrate the extent to which the liabilities that insurers may face in such cases are not limited to coverage disputes with policyholders.
The SJC declined to impose liability on Zurich, however, declaring that it had acted properly in tendering its limits to the excess insurer once liability became clear.  This holding was of interest since at least one judge had suggested at oral argument that Zurich had an independent duty to offer its limits directly to the plaintiffs and could not merely tender to the excess insurer.  In this case, however, the SJC took note of the grievous injuries suffered by Rhodes and opined that Zurich's primary limit was clearly not enough to effect a complete settlement.
In the wake of Rhodes, liability insurers face heightened risk if they dare to take severe injury cases to trial.  While the SJC has doubtless acted with the best of intentions in creating such severe penalties for failing to settle, it is unclear whether the Court has thought through the long-term consequences of its ruling on the insurance marketplace or the cost of such rulings to policyholders, both in terms of increased costs of insurance and sums that insureds may now be forced to pay through self-insured retentions, deductibles and retro-rated premiums. 
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Categories: Damages

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In its 2011 legislative session, the Alabama Legislature made significant changes affecting the construction industry, specifically relating to the Prompt Payment Act and the Statute of Repose.  This article provides practitioners with an update on those amendments.

A. Prompt Payment Act

Since 1995, Alabama law has provided a Prompt Payment Act, Ala. Code § 8-29-1 et seq., to assist contractors and subcontractors with recovering prompt payment for their services on construction jobs.  The 2011 amendments modified the maximum retainage provisions included in the Act.  These amendments went into effect on September 1, 2011, and apply to contracts entered into on or after that date. 

The maximum retainage allowed to be withheld by the owner is 10% of the estimated amount of work properly done and the value of materials stored onsite or suitably stored and insured offsite.  Ala. Code § 8-29-3(i).  After 50% project completion has been accomplished, no further retainage may be withheld.  Id.

In practical terms, therefore, an owner is limited to retaining 5% of the total contract sum as security for proper completion of the job (10% of earned payments for the first half of the job). 

Contractors and subcontractors are limited by the same caps.  Any retainage withheld in excess of the allowable amount will accrue interest at the rate of 1% per month (12% per annum).

The owner is required to release and pay retainage to the contractor for work completed on any construction contract no later than sixty (60) days after completion of the contractor's work as defined in its contract or "substantial completion" of the project, whichever occurs first.  Ala. Code § 8-29-3(l)(1).  "Substantial completion" means "the stage in the progress of the project when the project or designated portion thereof is sufficiently complete in accordance with the contract documents with all necessary certificates of occupancy having been issued so that the owner may occupy or use the project for its intended purpose."  Ala. Code § 8-29-3(l)(2).

The contractor is required to release and pay retainage to its subcontractors for work completed in accordance with the payment terms agreed to in the parties' contract, but if payment terms are not agreed to, then within seven (7) days of receipt of payment from the owner.  Ala. Code § 8-29-3(l)(1); Ala. Code § 8-29-3(b).  Owners, contractors, and subcontractors may condition payment on the receipt of a full release of any lien of the contractor, subcontractor, or sub-subcontractor for the amount of work being paid.  Ala. Code § 8-29-3(n).

The Prompt Payment Act does not apply to:  (1) residential home builders; (2) improvements to real property intended for residential purposes which consist of 16 or fewer residential units; (3) contracts, subcontracts, or sub-subcontracts in the amount of $10,000.00 or less; or (4) contracts with state or local governments (although these contracts do have the benefit of payment bonds under Alabama's Little Miller Act, Ala. Code § 39-1-1 et seq.).  Ala. Code § 8-29-7. 

In addition, the Prompt Payment Act is not applicable in civil actions to enforce mechanics' or materialmen's liens under Ala. Code § 35-11-210 et seq.  Ala. Code § 8-29-8.  Finally, the retainage caps and 60-day rule do not apply to construction projects for or by an electric utility regulated by the Public Service Commission.  Ala. Code § 8-29-3(m).

B. Statute of Repose.

The 2011 legislative session also saw amendments to the Statute of Repose that significantly limit the potential liability of architects, engineers, and general contractors for damages relating to their work on construction projects.  Ala. Code § 6-5-220 et seq.

The amendments provide that no lawsuit may be filed against any architect, engineer, or licensed general contractor for any cause of action (whether in contract, tort, or otherwise) which arises more than seven (7) years after substantial completion of the construction project.  Ala. Code § 6-5-221(a).  (Formerly, lawsuits could be filed up to thirteen (13) years after substantial completion of a project.) 

Under the statute, a cause of action "arises" at the time of injury or, where the injury is latent in nature, at the time the injury should reasonably be discovered.  Ala. Code § 6-5-220(e).  In general, a lawsuit must be brought within two (2) years after the cause of action arises, Ala. Code § 6-5-221(a), but a latent defect may not cause any actual injury or be discovered for many years after the project has been completed. 

Before the current legislation, a latent defect could create a situation where potential liability could go on almost indefinitely.  Under the amended Statute of Repose, however, if the cause of action does not arise within seven (7) years of substantial completion of the project, then the injured party is forever barred from filing a lawsuit against the architect, engineer, and general contractor on the project. 

The amendments are not retroactive, so the new time limits will only apply to projects that are substantially completed on or after September 1, 2011.

Jaime W. Betbeze
Hand Arendall LLC
Mobile, AL

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On June 20, the U.S. Supreme Court issued its much-anticipated Wal-Mart Stores, Inc. v. Dukes decision in which the Court held that the nationwide class certification approved by the lower courts was not consistent with Federal Rule of Civil Procedure 23(a) governing class actions. The class of plaintiffs consisted of some 1.5 million women who worked at Wal-Mart throughout the U.S. and allegedly suffered discriminatory pay and promotion practices at any point during or after December 1998.  Writing for the Court, Justice Antonin Scalia concluded that the millions of plaintiffs and their claims did not have enough in common: “Without some glue holding the alleged reasons for all those decisions together, it will be impossible to say that examination of all the class members’ claims for relief will produce a common answer to the crucial question why I was disfavored.”

As was reported this week, plaintiffs’ counsel have now move the fight to the states, amending their original complaint filed in federal district in California to limit the class to female Wal-Mart employees in California and filing a new action on behalf of Texas Sam’s Club and Wal-Mart female employees.  It is anticipated that these represent the first of many additional class-action lawsuits to be filed against Wal-Mart on the state or regional level.

At first blush, these state and regional actions appear to suffer from some of the same defects as the action rejected by the U.S. Supreme Court.  Among other things, it remains undisputed that Wal-Mart store supervisors retained discretion over promotion and pay policies, making challenges on anything above the store-level problematic.  In addition, the proposed classes appear to include female associates as well as the female supervisors who may have supervised them and made the very promotion and pay decisions they deem objectionable. 

What’s the likely outcome of the state/regional Wal-Mart class actions?  If you were representing Wal-Mart, what would you argue?  What are the chances one of these “Daughter of Dukes” cases ends up back before the nation’s high court?

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This past summer, the University of North Carolina was hit with a bevy of NCAA sanctions stemming from several members of its football team having received improper benefits from sports agents in violation of the NCAA’s amateurism rules.  Scandals like the one that hit UNC are nothing new to college football, as the University of Southern California, the University of Miami, the Ohio State University and others have likewise faced the wrath of NCAA sanctions for their student-athletes’ impermissible relationship with agents and receipt of money, cars, houses…you name it.  What’s notable about the UNC scandal is the role that social media played in the whole fiasco.  In its Notice of Allegations, the NCAA cited UNC for its failure to properly monitor the social media activity of its football players.  One player in particular had several Twitter posts that indicated that he was receiving impermissible benefits, to which the UNC athletic department was oblivious and which reportedly initiated the investigation.  

In light of the NCAA’s decision in the UNC case, it is clear that NCAA member institutions bear considerable risk to their reputations and good-standing with the NCAA if student-athletes’ social media use is not addressed in some manner.  But what are schools to do?  

Some schools have chosen to allow student-athletes to continue to use social media sites, subject to monitoring by the school’s athletic department.  To assist with this task, a number of schools have turned to third-parties whose business platform is based on monitoring student-athletes social media use.  One site, Udiligence, describes itself as “the industry leading social network monitoring service that helps collegiate athletic departments protect against damaging posts made by student athletes.”  Potential First Amendment and privacy issues are largely avoided in this realm in that student-athletes must consent to being monitored by taking the affirmative step of downloading an application that monitors their use.  Still, when schools make submission to monitoring a condition of participating in athletics, one could argue that such consent is not freely given.  

Other schools have taken a more radical approach to mitigating the potentially damaging effects of unbridled social media use by banning student-athletes from using it altogether.  While the risk of NCAA violations and damage to a school’s reputation is diminished, if not altogether extinguished, by this approach, a public university that institutes a complete ban of social media use could potentially face a legal challenge from a student athlete on First Amendment grounds.  The Supreme Court has held that university students are afforded the same First Amendment protections as the general population of adults.  When a university institutes a total ban for the use of social media for student-athletes, the act is tantamount to a prior restraint on speech.  According to Black’s Law dictionary, a prior restraint is defined as “any scheme which gives public officials the power to deny use of a forum in advance of [the] actual expression.”  Under prior restraint analysis, the public university defendant faces a steep burden in proving the need for such a restraint on speech and must meet certain constitutional requirements mandated by the Court.  

In light of the potential for litigation that exists with a total ban, and the inherent creepiness/Big Brother aspect of using a site like Udiligence, the most sensible approach to student-athletes’ and social media involves educating student-athletes on the risks of social media use and distributing guidelines about what constitutes acceptable usage.    
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