Good morning. Apple is gearing up to call top executives as witnesses as it defends against Epic Games' antitrust lawsuit; State Street is once again settling DOJ charges that it overcharged clients; the trial of three police officers charged over George Floyd's death is being delayed; and more major law firms are raising associate salaries amid a competitive job market. It's Friday, let's finish this thing!
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Epic Games v. Apple becomes personal in battle of the experts
REUTERS/Stephen Lam, Dado Ruvic, Brittany Hosea-Small (clockwise)
Two economists who have written numerous books and papers together are facing off in the antitrust battle between "Fortnite" developer Epic Games and tech giant Apple.
Epic Games' lawyers at Cravath are counting on this week's testimony from star expert witness, David Evans, chairman of Global Economics Group, to make the case that Apple is an anticompetitive monopolist over app developers, Stephen Nellis and Paresh Dave report.
In a twist, Apple's lawyers at Gibson Dunn and Paul Weiss called Richard Schmalensee, an MIT economist and frequent collaborator with Evans, to counter Evans' claim that the App Store should be considered as the relevant market for the case.
Antitrust disputes turn on that question, and Apple says the relevant market is much broader than the mobile software market it's accused of abusively controlling to extract commissions for payments made inside apps.
Schmalensee testified on Wednesday that the relevant market is gaming transactions, where Apple is just one platform among many. He also accused Evans of contradicting his own research, testimony that observers say was part of Apple's strategy to undercut Evans' credibility.
The testimony comes on the second week of the closely-watched antitrust trial, which kicked off on May 3. Epic could wrap up its case today, after which Apple will start its affirmative defense. To do that, Apple will call from a list of witnesses that includes App Store Chief Phil Schiller. Apple CEO Tim Cook is likely to testify next week. See how the trial's progressing.
Industry buzz
- Holland & Knight and Womble Bond Dickinson are the latest large law firms to boost associate salaries amid an increasingly competitive job market for junior lawyers. Holland & Knight said it would increase salaries for first-year associates in all of its U.S. offices to $190,000, the prevailing market rate in New York. Womble said it would increase associate salaries by 9% on average. (Reuters)
- Don McGahn, who was White House counsel during the Trump administration and now leads Jones Day's government regulation practice group, has agreed to be interviewed by the U.S. House Judiciary Committee. The deal would resolve a long-running effort by congressional Democrats to enforce a subpoena seeking his testimony as part of its investigation into Trump's efforts to impede former Special Counsel Robert Mueller's investigation. (Reuters)
- Mitchell Kossoff, the founder of a New York real estate law firm that was forced into bankruptcy on Tuesday, disappeared last month and has not replied to the involuntary bankruptcy petition. The petition was filed by a group of creditors who claimed that Kossoff PLLC misappropriated more than $8 million that was sitting in its escrow accounts. Al Togut, a partner at Togut, Segal & Segal who advised Dewey & LeBoeuf when it filed for bankruptcy, will oversee the firm as its interim trustee. (Reuters)
- Bernie Grimm, a prominent D.C. defense attorney who was previously a shareholder at Cozen O'Connor and a legal commentator on CNN and Fox News, has consented to being disbarred. The reasons were not detailed in a report and recommendation issued by the D.C. Court of Appeals Board on Professional Responsibility. (National Law Journal)
- Kate Beale, a former associate vice president for international advocacy at the Pharmaceutical Research and Manufacturers of America, has joined Crowell & Moring as a senior policy director in the firm's government affairs department in D.C. Beale will also work as a director at Crowell & Moring International, the firm's global public policy affiliate. (Reuters)
- Baker McKenzie has named Jannan Crozier, a London-based partner who works in the firm's corporate group, as its global M&A chair. She is the first woman to hold the position and will begin on July 1. (Reuters)
Number of the day:
$115 million
State Street is once again resolving charges that the Boston-based bank overcharged its customers. The DOJ on Thursday said State Street had entered into a deferred prosecution agreement and agreed to pay $115 million to resolve charges that it engaged in a scheme to secretly overcharge clients for expenses related to the bank's custody of their assets. The bank, represented by Robert Keefe of WilmerHale, admitted to the conduct. In 2019, it agreed to pay $94.3 million to resolve related claims by the SEC and Massachusetts' attorney general. And in 2016, it agreed to pay $530 million to resolve regulatory probes and lawsuits alleging it had overcharged clients on foreign currency transactions. (Reuters)
Coming up today
- U.S. Bankruptcy Judge Harlin Hale in Dallas will hold a status conference in the National Rifle Association's Chapter 11 case to address his Tuesday ruling that the bankruptcy was filed in bad faith. The status conference was called by the organization's unsecured creditors' committee, led by Louis Strubeck at Norton Rose Fulbright, which had opposed New York Attorney General Letitia James' bid to have the bankruptcy dismissed. James has filed a lawsuit in New York seeking to dissolve the NRA.
- The 11th Circuit will hear a challenge by a group of landlords represented by the conservative New Civil Liberties Alliance to the U.S. Centers for Disease Control and Prevention's nationwide moratorium on evictions, days after a federal judge in D.C. said it should be struck down. That ruling has been temporarily stayed, but other cases challenging the coronavirus-prompted moratorium are pending. Caleb Kruckenberg of NCLA and Alisa Klein of the DOJ will argue the 11th Circuit case.
- Lawyers for offshore driller Seadrill Partners LLC led by Brian Schartz of Kirkland & Ellis will ask U.S. Bankruptcy Judge David Jones in Houston to approve its proposed reorganization plan, which would swap $2.7 billion in loan debt for equity. Seadrill Partners is a subsidiary of Seadrill Ltd, which is in the midst of its own Chapter 11 proceeding.
- U.S. District Judge Raymond Dearie in Brooklyn will hold a status conference in the case of a doctor and surgical funding consultant facing federal charges that they defrauded women into having unnecessary surgeries to remove transvaginal mesh implants. Prosecutors said they profited from settlements paid to the women by mesh manufacturers. Florida urogynecologist Christopher Walker and Michigan surgical funding consultant Wesley Barber have pleaded not guilty to wire fraud and conspiracy charges. Cadwalader's Jodi Avergun and Joseph Flynn of NeJame Law are defending Walker and Barber, respectively.
- The city of Pasadena, California, will urge U.S. District Judge Andre Birotte in Los Angeles to dismiss trademark claims filed by the Pasadena Tournament of Roses Association over rights to the "Rose Bowl" name. The association, which hosts the historic college football game, argues that it's the sole owner of trademark rights in the name. Its lawyers, led by Mayer Brown’s John Nadolenco, claim the city infringed its trademark by using a Rose Bowl hashtag. Sheppard Mullin’s Kent Raygor is defending the city.
- The National Labor Relations Board will ask the D.C. Circuit to reverse a judge's decision blocking 2019 rules designed to slow down the union election process. The NLRB says the judge lacked jurisdiction over the AFL-CIO's challenge to the rules and that she was wrong to find that the board was required to seek public comment before adopting the rules, which are favored by business groups.
- Gibson Dunn's Theane Evangelis will argue for Wal-Mart and urge the 9th Circuit to overturn a ruling that the retail giant's mandatory unpaid security check process unlawfully discouraged warehouse employees in California from taking off-site lunch breaks. The plaintiffs in the class action represented by Kenneth Yoon are appealing the dismissal of a related claim for failure to pay overtime wages.
What we learned this week
- A report from Thomson Reuters Peer Monitor Index showed that big law firms are finding their footing during the first quarter of 2021. While firms saw a three-year low in demand growth, corporate work surged in the first quarter. Firms continued to benefit from a reduction in overhead expenses due to remote work, though that could change as more workers are vaccinated and return to the office.
- The former president of United Auto Workers was sentenced to 21 months in prison and fined $10,000 after admitting he tried to embezzle funds. Prosecutors said Dennis Williams spent money meant for the union on vacations, liquor and golf. Latham & Watkins' Sean Berkowitz and Terra Reynolds have been repping him.
- Women are considering leaving the legal profession in droves, according to a new study from the open-access journal PLOS ONE. The study found that 25% of women surveyed said they were thinking about exiting the profession due to mental health stress and burnout. Patrick Krill, one of the study's authors, said the number had reached a "crisis level."
- During the criminal contempt trial for disbarred lawyer Steven Donziger, who has been in a long-running battle with Chevron over pollution in Ecuador, court-appointed prosecutors alleged that he had refused to turn over his computer, phones and other electronic devices. The trial began in Manhattan this week.
- Dechert has partnered with "Silicon Valley's most influential design firm," to launch a new program aimed at innovating the firm's culture and changing ingrained habits. A skeptical Jenna Greene took a look at the pilot program.
"Bostock defined sex discrimination to encompass sexual orientation and gender identity discrimination. But it did not alter the meaning of discrimination itself."
U.S. Circuit Judge James Ho, writing for a 5th Circuit panel that rejected arguments by a transgender former T-Mobile USA Inc retail worker who argued the U.S. Supreme Court's broad reading of anti-discrimination law in the landmark 2020 case Bostock v. Clayton County lowered the bar for plaintiffs alleging bias based on gender identity and sexual orientation. The three-judge panel sided with defense lawyer Micah Prude of Thompson & Knight in upholding the dismissal of the ex-employee's claim under Title VII of the Civil Rights Act of 1964. (Reuters)
In the courts
- Hennepin County District Judge Peter Cahill postponed the trial of three former Minneapolis policemen accused of aiding and abetting the death of George Floyd to March 2022, citing the expected publicity surrounding former officer Derek Chauvin's sentencing in June and new federal charges against all four ex-officers. Lawyers for the officers also raised concerns about "damning" leaks to the media. (Minneapolis Star Tribune, Reuters)
- A three-judge D.C. Circuit panel rejected a request by the operators of the Dakota Access oil pipeline to freeze a mandate throwing out a key permit it needs to keep the line running. The operators, led by Energy Transfer LP, have been locked in a legal battle with Native American tribes over the fate of the crude oil pipeline. Defense lawyer Miguel Estrada of Gibson Dunn argued that staying the mandate would allow the panel to retain jurisdiction over the case while it pursues an appeal to the U.S. Supreme Court. (Reuters)
- Joel Greenberg, a former tax collector in Florida's Seminole County who has become central to the federal investigation into Republican U.S. Representative Matt Gaetz for possible sex trafficking of a minor, is slated to plead guilty on Monday. Greenberg had been facing federal charges in Orlando of sex trafficking a child, aggravated identity theft and wire fraud. Asked by reporters last month whether Gaetz should be worried about a potential plea, Greenberg's attorney Fritz Scheller replied, "I'm sure Matt Gaetz is not feeling very comfortable today." Gaetz denies wrongdoing. (Reuters)
- In one of the first major decisions in a series of antitrust lawsuits against Google, U.S. District Judge Beth Labson Freeman in San Jose, California, dismissed a lawsuit by a group of advertisers who alleged the tech giant abuses its dominance in digital advertising. Freeman said the plaintiffs did not sufficiently allege which market they thought Google monopolized. Williams & Connolly's John Schmidtlein is defending Google along with lawyers at Wilson Sonsini. (Reuters)
- The 1st Circuit cleared the way for construction to proceed on an electric transmission power corridor in Maine that is part of a $1 billion project that would provide a means for Canadian hydropower to reach the New England grid. The ruling marked a loss for three conservation groups including the Sierra Club, which challenged a key permit the U.S. Army Corps of Engineers issued for the project. Central Maine Power, repped by Joshua Dunlap of Pierce Atwood, argued the agency sufficiently reviewed it. (AP)
- Certain Boy Scouts of America insurers as well as groups representing former Scouts who say they were sexually abused by scout leaders are challenging the youth organization's efforts to push through a reorganization plan by summer's end. The objections come ahead of a hearing next week in which U.S. Bankruptcy Judge Laurie Selber Silverstein in Wilmington, Delaware, will determine whether the BSA, represented by White & Case, can begin soliciting creditor votes for its proposed reorganization plan. (Reuters)
- A data analytics company lost a bid at the 9th Circuit to revive a False Claims Act whistleblower lawsuit accusing Washington-based healthcare system Providence Health & Services and its clinical documentation contractor Nuance Communications of overbilling Medicare. Nuance's lawyer, Jessica Ellsworth of Hogan Lovells, called the ruling "warranted." (Reuters)
Industry moves
- IP litigator Courtland Merrill, who was a shareholder at Anthony Ostlund Baer & Louwagie, has joined Saul Ewing Arnstein & Lehr as managing partner of the firm’s Minneapolis office and a member of the firm’s executive committee. (Saul Ewing)
- John Glassgow, former partner at Winston & Strawn, has joined Sheppard Mullin's corporate practice group and healthcare industry team as a partner in the firm’s Chicago office. (Sheppard Mullin)
Rule 11 sanctions decision against Paul Weiss, Alex Oh rests on unsettled ground. U.S. District Judge Royce Lamberth in D.C. was clearly disturbed that Paul Weiss and former partner Alex Oh cast unwarranted aspersions on a plaintiffs lawyer from Cohen Milstein in a brief requesting discovery sanctions in a long-running human rights case against Exxon Mobil. On Wednesday, Lamberth formally admonished the firm and Oh – who abruptly resigned last month from the SEC after serving less than two weeks as the director of enforcement – under Rule 11. Lamberth broke new judicial ground to get there. Alison Frankel's latest column explains the judge’s novel determination that a Rule 11 exemption for discovery-related motions does not extend to briefs in support of those motions. See why even Lamberth acknowledged that he’s bucking precedent.
When playing a lawyer on TV is no substitute for an actual JD. "Students for Trump" co-founder John Lambert was just sentenced to 13 months in prison following charges that he ripped off dozens of clients by posing as a fake lawyer – but blaming the television show "Suits" did nothing to get the 25-year-old off the hook. Sentenced to 13 months in prison, Lambert held himself out as NYU Law grad Eric Pope, who (per his fake law firm bio) was “sought after for his experience with financial and corporate matters.” Lambert’s lawyer said his client was inspired by "Suits" lead character Mike Ross—though as Jenna Greene notes, in season five of the show, Mike gets sent to prison for impersonating an attorney. Greene looks at how Lambert managed to attract and fool clients, and the online marketplaces where you can hire purported lawyers for about as much as you’d pay a teenage babysitter. Learn more here.
Lawyer speak: Can ransomware insurance protect businesses and individuals?
Ransomware attacks continue to hit businesses that frequently wind up paying hackers who steal their information. The average ransomware attack costs more than $130,000, and the healthcare industry reportedly lost over $25 billion due to ransomware attacks in 2019. Ransomware insurance is often covered under cyber insurance policies, but can be included in other general insurance policies. Pasich's Peter Halprin and Nicholas Pappas outline the precautions that both insurers and the insured need to take to cope with ransomware attacks. Read more.
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