Good morning. Members of the wealthy Sackler family behind OxyContin maker Purdue Pharma are upping how much they're offering to pay to escape opioid epidemic lawsuits, Georgetown has fired a law professor following her "reprehensible" comments about Black students, and jury selection is moving forward in Derek Chauvin's case after a third-degree murder charge was added. The weekend is just about here, and it's going to be an hour shorter than usual, but we'll make do!
Our guest contributor today is Nimitt Dixit. Were you forwarded this email? Subscribe here.
Sacklers up opioid settlement offer to nearly $4.3 billion - sources
Members of the Sackler family who own OxyContin maker Purdue Pharma have offered to increase their potential contribution to a settlement resolving thousands of opioid lawsuits from $3 billion to $4.275 billion, Mike Spector reports, citing people familiar with the matter.
The settlement's details could be outlined in a reorganization plan lawyers for Purdue led by Davis Polk's Marshall Huebner are due to submit to a federal bankruptcy judge in White Plains, New York, next week. Purdue filed for Chapter 11 bankruptcy protection in 2019 in order to resolve lawsuits alleging it helped fuel the opioid epidemic.
The Sacklers' initial $3 billion contribution was part of an earlier settlement proposal that Purdue valued at about $10 billion that would have also provided additional funds from family members contingent on sales of other businesses. They could still use business sales to fund the new payout amount but would be on the hook regardless.
Purdue is also being pressured by some litigants to explore a sale instead of a current proposal to dissolve itself and shift assets to an entity run on behalf of the plaintiffs, which include states and local governments, two people familiar with the matter said. Several attorneys general have said such a plan would entangle them in the ongoing sales of the addictive painkiller. Read more.
Industry buzz
- Georgetown University Law Center fired a white adjunct professor and placed another faculty member on leave after a Zoom video surfaced that included what the school's dean, William Treanor, said were "reprehensible statements" related to the evaluation of Black students. "I end up having this angst every semester that a lot of my lower ones are Blacks. Happens almost every semester," Sandra Sellers, who was fired, said on the video. "It's some really good ones, but there are also usually some that are just plain at the bottom, it drives me crazy." (Reuters)
- On his first day in office, U.S. Attorney General Merrick Garland pledged that the DOJ would adhere to “norms” that "require that like cases be treated alike," in an effort to retain the trust of the public. Garland later in the day participated in briefings with FBI Director Christopher Wray on the deadly Jan. 6 riot at the U.S. Capitol by a pro-Trump mob. (Reuters)
- Indiana Attorney General Todd Rokita is earning $25,000 a year for advising a drug company and is also being compensated by at least one other company, the Indianapolis Star reported, citing financial disclosure and corporate filings. The Indiana Democratic Party in response to the reporting called Rokita, a Republican, a "walking conflict of interest." (Indianapolis Star)
- Silicon Valley law firm Wilson Sonsini didn't just have a good profit year despite the pandemic like many law firms. It had a great year. Its net income leapt a staggering 42% in 2020, and its profits per partner in turn climbed 26.2% to $3.05 million. Work for tech and life sciences clients helped the firm's revenue cross the billion-dollar mark to $1.1 billion. (The American Lawyer)
- Five out of the six former female Jones Day associates dropped their gender discrimination claims against the firm, leaving Katrina Henderson as the sole plaintiff in a lawsuit in D.C. federal court that took aim at the law firm’s centralized “black box” compensation system. The withdrawing plaintiffs, represented by Sanford Heisler Sharp, did not indicate whether they settled. (Reuters)
- U.S. Circuit Judge Peter Hall of the 2nd Circuit died on Thursday at the age of 73. Hall, a onetime U.S. attorney in Vermont who was appointed to the appeals court by former President George W. Bush, recently took senior status. Among the notable opinions he authored was the decision upholding the 2004 perjury conviction of Martha Stewart. (VTDigger)
- Heath Eskalyo, a partner and CFO of the Florida-based midsize law firm Kelley Kronenberg, is keeping busy not just by presiding over an expansion of the firm's office footprint, revenue and headcount. He's also been competing in triathlons for about three decades and this month launched an app whose promotional materials say it will "revolutionize triathlon preparation." (Reuters)
At Reed Smith, the firm's lawyers in January and February clocked more than 1,300 billable hour credits for diversity-related work. Spurred in part by protests last year over the death of George Floyd, several large law firms looking for ways to signal a commitment to diversity have announced they will provide lawyers credit toward their billable hours requirements for time they devote to diversity and inclusion activities. In January, Reed Smith, Hogan Lovells and Ogletree Deakins each announced they are allocating 50 billable hours credits for firm and client-related diversity matters. Locke Lord followed with an up to 75 hour credit. Daniel Winterfeldt, a Reed Smith capital markets partner, at a virtual roundtable this week said that Big Law needs "an extreme makeover" to achieve greater equity. (Reuters)
Coming up today
- Irving Picard, the trustee liquidating the former Bernard L. Madoff Investment Securities LLC, will urge the 2nd Circuit in New York to overturn lower court decisions that prevented him from recovering $343 million that he says was fraudulently transferred by a feeder fund to Citigroup. Attorneys for the trustee including Robbins Russell's Roy Englert and David Sheehan of Baker & Hostetler argue Citigroup was on notice of Bernard Madoff's Ponzi scheme, but the bank, repped by Cleary Gottlieb's Carmine Boccuzzi, says it accepted the transfers in good faith. Lower courts held that a transferee acts in good faith unless it willfully blinds itself to a fraud and declined to allow Picard to amend a complaint to allege Citi was willfully blind.
- Justice Jerry Garguilo in Suffolk County, New York, will hold a hearing on objections by several local counties to consulting firm McKinsey & Co's agreement to pay $32 million to the state to resolve allegations that it contributed to the opioid crisis by advising drug manufacturers including Purdue Pharma on "turbocharging" painkiller sales. The money is part of the nearly $600 million that McKinsey has agreed to pay to resolve opioid claims by most U.S. states. The counties, repped by Simmons Hanly Conroy's Jayne Conroy and Napoli Shkolnik's Paul Napoli, call the $32 million inadequate. McKinsey's attorney, James Bernard of Stroock & Stroock & Lavan, says the counties are simply trying to pressure it to waive its arguments that the state's deal bars claims by its political subdivisions.
- U.S. District Judge Edward Chen in San Francisco will consider whether to certify four more classes of General Motors truck and SUV drivers who accuse the car manufacturer of producing vehicles that suffer premature engine failure from excessive oil consumption. Attorneys at Beasley Allen, DiCello Levitt Gutzler and Andrus Anderson want the judge to certify classes of vehicle owners and leases in Tennessee, Pennsylvania, Arkansas and Idaho, after previously granting class action status to drivers in California, Texas and North Carolina. GM’s lawyers led by Crowell & Moring’s Kathleen Taylor Sooy are challenging claims by plaintiffs in various states.
- The 11th Circuit in Jacksonville, Florida, will consider whether an award of treble damages and civil penalties under the False Claims Act is subject to the Eighth Amendment's excessive fines clause, in a whistleblower lawsuit against a Florida medical group by a former employee alleging that the company submitted false claims to government health insurance programs. A jury found just $755 in false billings - an amount that Pinellas Hematology and Oncology attributes to human error - but the trial court ended up imposing nearly $1.2 million in treble damages and civil penalties. Its attorney, Shyamie Dixit of Dixit Law Firm, argues the amount is unconstitutionally excessive. He will face Christopher Gray of Florin Gray Bouzas Owens for the whistleblower, Michele Yates, who sued on the government's behalf.
What we learned this week
Seth Wenig/Pool via REUTERS
- A year into the COVID-19 pandemic, the legal sector is coming to realize that virtual work will stick around in some form even post-crisis. With employees now accustomed to remote working, Jenner & Block andFox Rothschild are among the Big Law firms signing leases for smaller office space. The American Bar Association even came out with an ethics opinion advising lawyers working virtually.
- Embattled plaintiffs’ attorney Tom Girardi can no longer practice law in California, not it appears because of the Los Angeles Times' investigation into how bar officials failed to discipline him following years of misconduct allegations but because a court had appointed his brother to manage his legal and personal affairs. A psychiatrist in a court filing said Girardi is suffering from Alzheimer's disease. Class action lawyer Jay Edelson, who accused Girardi of misappropriating Lion Air crash settlement funds, said the debacle is proof that "the plaintiffs' bar is broken.”
- New York Attorney General Andrew Cuomo was the only of the so-called "three men in a room" that former Manhattan U.S. Attorney Preet Bharara never prosecuted. Now his former deputy, Joon Kim, who went on to become the acting U.S. attorney before joining Cleary Gottlieb, has been tapped by Attorney General Letitia James to help lead the investigation into the sexual harassment allegations against Cuomo.
- The partnership brawl at a Boies Schiller spinoff that has its co-founders suing each got uglier. After the firm formerly known as Roche Cyrulnik Freedman sued Jason Cyrulnik to ensure his removal for engaging in "abusive, destructive, erratic, and obstructive behavior," he shot back, alleging his co-name partners were trying to seize his cut of a cryptocurrency asset worth more than $250 million.
- Gunmaker Remington Outdoor Co was directed by a federal bankruptcy judge to modify its proposed liquidation plan to make it easier for families of Sandy Hook Elementary School shooting victims to sue its estate. The judge said he was concerned tort claimants would face “roadblocks” before being able to pursue their litigation against Remington.
- And Twitter isn't happy with Texas Attorney General Ken Paxton and his investigation into its content moderation policies. The social media company’s lawyers at WilmerHale sued to block the probe, which came after Twitter banned former President Donald Trump from its platform.
Video: Amid Cuomo allegations, a surge in state laws to fight sexual harassment
Allegations of sexual misconduct by New York Governor Andrew Cuomo, which he denies, come amid a raft of new state laws - in New York and around the nation - meant to rein in workplace sexual harassment. According to the National Women's Law Center, some 19 states have added or tightened harassment statutes since the start of the global #MeToo movement in 2017, but advocates say more work needs to be done. Watch the video.
"I have to follow the rule that the court of appeals has put in place."
Hennepin County District Court Judge Peter Cahill, in granting a request by prosecutors on Thursday to reinstate a charge of third-degree murder against Derek Chauvin, the former Minneapolis police officer who is on trial already facing second-degree murder and manslaughter charges over the death of George Floyd last year. Lawyers for Chauvin led by Eric Nelson had successfully argued the third-degree murder charge should be dropped because the statute requires the "death-causing act" not be directed at a single individual. But the Minnesota Court of Appeals recently ruled in a separate case that third-degree murder could be applied even if the "death-causing act" is directed at a specific person and last Friday said that precedent binds Cahill. (Reuters)
In the courts
- The U.S. Supreme Court at the request of the Biden administration canceled the upcoming March 29 oral argument on a Trump-era policy backing work requirements for people who receive healthcare under the Medicaid program. The case concerned pilot programs adopted by the states of Arkansas and New Hampshire. Republican Arkansas Attorney General Leslie Rutledge had opposed the Biden administration’s request to dump the case, which was based on its launching a review of the policy. (Reuters)
- The U.S. Department of Labor under the Biden administration proposed to withdraw a pair of Trump-era rules that reflected key priorities for business groups, including one that made it easier to classify workers as independent contractors rather than employees under the federal Fair Labor Standards Act. That rule touched on a major issue for "gig economy" companies, who have faced lawsuits claiming they misclassified workers as independent contractors. (Reuters)
- A New Jersey appeals court rejected a bid by Peter Max, the pop artist whose psychedelic style embodied the wild spirit of the 1960s, to overturn an arbitrator's $48 million award in an insurance dispute with Great American Security and Lloyds that he said was too low to compensate for works damaged during 2012's Superstorm Sandy. Bradley Nash, his attorney at Schlam Stone & Dolan, said he may appeal to the New Jersey Supreme Court. (AP)
- Real estate and co-working startup Knotel won the approval of U.S. Bankruptcy Judge Mary Walrath in Wilmington, Delaware of a settlement that will secure up to $6.2 million for unsecured creditors if the company’s lender Digiatech wins an auction to buy the We-Work competitor. The proposed sale would close Chapter 11 proceedings that Knotel, represented by Mark Shinderman of Milbank, initiated in January. (Reuters)
- The Texas Fourth Court of Appeals upheld a decision that said a San Antonio ordinance requiring employers to provide paid sick leave is preempted by state wage law. The decision was the latest blow to Texas cities' attempts to mandate paid sick leave for workers, with rules in Dallas and Austin being knocked down. The law was challenged by Republican Attorney General Ken Paxton and a coalition of business groups and staffing agencies, represented by Robert Henneke of the conservative Texas Public Policy Foundation. (Reuters)
- U.S. District Judge Susan Illston in San Francisco blocked a DOJ rule that made sweeping changes to immigration court procedures that advocacy groups, represented by Naomi Igra of Sidley Austin, argued would disadvantage individuals facing deportation. The judge found that the DOJ's Executive Office of Immigration Review had likely violated the Administrative Procedure Act by allowing only 30 days for public comment before adopting the rule, which came into effect on Jan. 15. (Reuters)
- Rahn+Bodmer, the oldest private bank in Zurich, agreed to pay $22 million to resolve U.S. charges that it helped U.S. taxpayers defraud the IRS by hiding hundreds of millions of dollars in offshore bank accounts. The deferred prosecution agreement announced by federal prosecutors in Manhattan and negotiated by defense lawyer Benjamin Gruenstein of Cravath was the latest to result from years of DOJ scrutiny of Swiss banks. (Reuters)
- A Bank of America executive told a Manhattan federal jury weighing the case of two men accused of tricking banks into handling $150 million in consumer cannabis purchases from delivery site operator Eaze Technologies that the bank does no business with marijuana companies. But Dechert's Michael Gilbert and Quinn Emanuel's William Burck, the respective attorneys for Hamid Akhavan and Ruben Weigand, during their cross-examinations sought to show the reality was hazier. (Reuters)
Industry moves
- Mayer Brown has added Jason Quintana as a partner in its mergers and acquisitions practice in Chicago. Quintana joins from Perkins Coie. Before working at Perkins, he was senior counsel at Boeing, which he expects to continue to representat his new firm. (Reuters)
- Former Apple attorney Jillian Raines has joined New York-based insurance recovery law firm Cohen Ziffer as a partner. She is the latest in a string of hires, including insurance litigator Andrew Bourne as partner and Nicholas Maxwell as counsel, following the firm’s launch in January. (Cohen Ziffer)
- Michelle Quijano, the former vice president of legal affairs at NBC, has joined Davis Wright Tremaine's entertainment practice in Los Angeles as of counsel. (DWT)
Unlikely bedfellows in TransUnion SCOTUS case: Justice Thomas and class action fans. As the U.S. Supreme Court gets ready in a closely watched case to revisit the vexing question of constitutional standing for class action plaintiffs alleging statutory violations, Justice Clarence Thomas may have provided class action proponents with the key to victory. Alison Frankel looks at the conservative justice’s lenient view of Article III, which class action plaintiff Sergio Ramirez and some of his amici have cited in their briefs in TransUnion v. Ramirez. The credit reporting agency TransUnion and groups such as the Chamber of Commerce are hoping the Supreme Court uses the case to rein in class actions by "uninjured" class members. Ramirez and his backers argue that all 8,100 class members were injured because they were falsely flagged as terrorists in credit reports – and that Thomas' theory explains why. Get the details here.
Arizona case shows how hard it is to (almost) prove bias in jury selection. The Arizona Court of Appeals, Division One granted a new trial to Jermon Ross, a Black 16-year-old who was convicted for an attempted armed robbery that resulted in the shooting of another 16-year-old. Though Ross won his appeal, Hassan Kanu points out that the court issued a significant ruling on jury selection. The court rejected Ross’ argument that the lone prospective Black juror’s exclusion by prosecutors citing baseless explanations amounted to race-based discrimination. This was despite explicit findings that the prosecutors' stated reasons were “unsupported.” In his latest column, Kanu analyzes how the decision, based on the U.S. Supreme Court's Batson ruling, makes it even harder to prove race or sex discrimination in jury selection. Read his column.
Check out other recent pieces from all our columnists: Alison Frankel, Jenna Greene and Hassan Kanu.
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