Good morning, on what for many federal employees is the first time they've ever had Juneteenth off. There was so much SCOTUS action yesterday that it's hard to keep track-- including the Obamacare ruling! New salary hike announcements by firms including Cravath, Paul Weiss and Willkie Farr are signalling that the market rate has officially been set for Big Law's junior lawyers. And federal prosecutors are pushing for a "very substantial" prison term for Michael Avenatti. Let's get going!
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SCOTUS decides Obamacare, religious rights blockbusters
It was a busy morning at the U.S. Supreme Court on Thursday, with the justices handing down some of the highly-anticipated decisions that they usually wait until the final days of the term to issue. With 15 other cases pending including one involving voting rights, the justices upheld Obamacare, ruled for Nestle and Cargill in a human rights case, and embraced religious rights over LGBT rights in a third dispute. Here's the rationale for the rulings:
- Justice Stephen Breyer wrote for the majority in the 7-2 decision rejecting several Republican-led states' challenge to Obamacare. He said the states couldn't show they'd been harmed by the law's "individual mandate" for people to obtain health insurance after Congress eliminated a financial penalty for doing so. "Unsurprisingly, the states have not demonstrated that an unenforceable mandate will cause their residents to enroll in valuable benefits programs that they would otherwise forgo," Breyer wrote. See why two conservatives dissented.
- Justice Clarence Thomas, writing for an 8-1 court, concluded that Cargill and Nestle could not under the Alien Tort Statute be sued for allegedly helping perpetuate slavery on Ivory Coast cocoa farms. The plaintiffs failed to show any relevant conduct took place within the United States and "impermissibly seek extraterritorial application of the ATS," he wrote. See why that ruling was narrower than many companies had hoped.
- Chief Justice John Roberts wrote for a 9-0 court in ruling for a Catholic Church-affiliated agency, Catholic Social Services, that had challenged Philadelphia's refusal to place children for foster care with the organization because it barred same-sex couples from applying to become foster parents. "CSS seeks only an accommodation that will allow it to continue serving the children of Philadelphia in a manner consistent with its religious beliefs; it does not seek to impose those beliefs on anyone else," Roberts wrote. Find out why religious groups are hailing the decision.
Industry buzz
- Cravath's decision to boost salaries for its current first-year associates to $205,000 helped spark a wave of similar announcements on Thursday, as rivals including Willkie Farr, Paul Weiss and Simpson Thacher moved to embrace a salary scale first adopted by Davis Polk earlier this month. That rate has quickly become the new standard for paying junior lawyers at large law firms. (Reuters)
- Some lawyers haven't seen their desks for more than a year. But for attorneys at Dallas-based Munck Wilson, not much has changed since most firms went into lockdown amid the COVID-19 pandemic. At least 95% of lawyers and staff at the firm have been working in-person since May 2020. (Reuters)
- The U.S. Senate Judiciary Committee voted 16-6 to advance Perkins Coie IP litigator Tiffany Cunningham's nomination to serve as the first Black judge on the patent-focused Federal Circuit. Six Republicans voted against her nomination. (Reuters)
- Philadelphia-based Fox Rothschild has offered around 300 legal assistants voluntary separation packages as part of a firmwide staffing realignment. The move came as many other large firms re-evaluate their administrative support staff needs after more than a year of remote work. (The American Lawyer)
- Lawyers for embattled New York real estate attorney Mitchell Kossoff in a court filing moved to quash subpoenas from the Chapter 7 trustee overseeing the liquidation of his law firm Kossoff PLLC, citing his Fifth Amendment right against self-incrimination. Defense lawyer Walter Mack of Doar Rieck Kaley & Mack argued that the trustee, Al Togut, is attempting to "strip Mr. Kossoff of his rights to assert his constitutional privileges." (Reuters)
- A former top official in the New York court system and her husband have been charged by Manhattan District Attorney Cy Vance with official misconduct. Prosecutors alleged that Melissa Ringel, a former director at the New York Appellate Division, First Department, used her position to benefit her husband Frank Esposito's law firm in a lucrative real estate deal. They have pleaded not guilty. (Reuters)
- Weil Gotshal and Davis Polk are advising on a SPAC deal involving Goldman Sachs-backed GS Acquisition Holdings. Weil is representing GS in its $2.6 billion purchase of radiation detection company Mirion Technologies. (Reuters)
Federal prosecutors in Manhattan have asked U.S. District Judge Paul Gardephe to sentence Michael Avenatti, the once high-flying celebrity lawyer and nemesis of former President Donald Trump, to a "very substantial" term of prison for trying to extort millions of dollars from Nike. As is frequently common in SDNY, prosecutors did not specify exactly what amount of time they thought he deserved. But they noted that the court's probation office had recommended he receive eight years in prison. Avenatti's lawyers, including Miami-based Scott Srebnick, have argued he should be sentenced on June 30 to no more than six months in prison, followed by 12 months of home confinement. (Reuters)
Video: Former SEC enforcement co-chief Steve Peikin on agency's future
Steven Peikin, who co-led the SEC's enforcement division during the Trump administration, shared his thoughts with Jody Godoy on what to expect from the SEC going forward with Gary Gensler at the helm as its chair. Peikin currently heads Sullivan & Cromwell's securities and commodities investigations and enforcement practice. Watch the video, or read the Q&A.
Coming up today
- Many courts nationally moved to cancel or delay proceedings after President Joe Biden on Thursday signed a bill into law to make Juneteenth a federal holiday commemorating the emancipation of enslaved Black Americans. Federal employees are observing the holiday today since Juneteenth actually falls on Saturday.
- Many major law firms including Debevoise & Plimpton, Dechert, Akin Gump, Hogan Lovells and Paul Weiss had already planned to observe Juneteenth this year. See what other firms had by May confirmed they planned to recognize the holiday.
- Not everything in court is canceled, though. U.S. District Judge Jed Rakoff in Manhattan is scheduled to sentence two consultants who worked with the online marijuana delivery company Eaze Technologies. They were convicted of participating in a scheme to facilitate getting banks to process $150 million in marijuana payments by keeping the financial institutions in the dark about what their cardholders were ordering. Hamid Akhavan and Ruben Weigand are being defended by William Burck of Quinn Emanuel and Michael Gilbert of Dechert, respectively.
What to catch up on this weekend
- More than 270 associates this year said goodbye to top New York firms by May as competition for early-career talent increased, Caroline Spezio reports. Firms including Cravath, Sullivan & Cromwell, Davis Polk and Paul Weiss were among those who lost associates.
- Mohamed Sidibay's road to becoming a Covington & Burling associate has been anything but easy. Sidibay, who spent his early years as a child soldier in Sierra Leone, spoke with Jenna Greene about the journey from his homeland to Fordham University School of Law and one of the top U.S. law firms.
- A number of law firms are pushing for their lawyers and staff to return to the office by this fall, but Silicon Valley's Wilson Sonsini is telling its attorneys not to rush. David Thomas spoke with Chris Boyd, Wilson Sonsini's chief operating officer, about how the firm is easing lawyers back into its offices and the firm's future plans.
- The DOJ last year launched at least five visa fraud prosecutions of university researchers as part of its "China Initiative," a three-year-old effort aimed at preventing the transfer of U.S. technology to China. But Jane Lee reports that civil liberties groups including the ACLU are increasingly concerned about the cases, which they say reflect anti-China bias.
- The COVID-19 pandemic has had a long-lasting impact on U.S. jurisprudence with the Supreme Court leading the shift in religious freedom cases, Brendan Pierson reports. A number of restrictions on religious gatherings during the pandemic have been overturned by SCOTUS, because secular venues didn't have similar limitations.
- The cannabis industry has grown by "leaps and bounds," according to Christian Sederberg, the founding partner of Denver-based Vicente Sederberg. Alison Frankel spoke with Sederberg about the opportunities he sees for the business of marijuana and how federal regulations could change the industry's landscape.
- O'Melveny & Myers special counsel Jeffrey Fisher is no stranger to the U.S. Supreme Court, where he’s argued over 40 times. Sara Merken spoke with Fisher, who is also a professor at Stanford Law School, about juggling his roles in private practice and academia.
- There's a different set of struggles that come with consumer bankruptcy cases compared to corporate disputes. Chief Judge Cecelia Morris of the U.S. Bankruptcy Court for the Southern District of New York spoke with Maria Chutchian about how she tries to "get it right" in one of the country’s busiest bankruptcy courts.
"The majority's opinion can thus only result in greater extremism in environmental policy. Our political branches could of course choose that path for themselves. But it was not for us to impose it on them."
U.S. Circuit Judge Daniel Bress, who wrote a dissenting opinion in the 9th Circuit's 2-1 ruling on Thursday holding that the EPA's 2019 decision to remove protections for the Bristol Bay watershed in Alaska and allow construction of the Pebble Mine could be judicially reviewed. Bress, a Trump appointee, said he would have held that the EPA's decision to reverse a wholly discretionary course of action was not subject to judicial review. Environmentalists who would applaud the majority’s ruling "will surely be displeased" if an EPA "less inclined toward their views" pursues a different course, he wrote. (Reuters)
In the courts
- The DOJ made its most forceful statement against a wave of Republican-backed state laws that restrict transgender rights, filing "statements of interest" in a pair of cases in West Virginia and Arkansas arguing that measures enacted in those states should be struck down. (Reuters)
- Lawyers for cities and counties suing drugmakers, distributors and pharmacies over their roles in the nationwide opioid epidemic can depose Walmart CEO Doug McMillon over the company's objection, a court-appointed special master ruled. Walmart, represented by lawyers at Jones Day, could seek to appeal that decision to U.S. District Judge Dan Polster, the Cleveland-based judge who oversees the litigation. (Reuters)
- A federal jury in Oakland, California, awarded conversation software company LivePerson Inc more than $30 million after finding that competitor [24]7.ai Inc's misused trade secrets related to its clients Optus, Capital One and Sears. LivePerson counsel Adam Alper of Kirkland & Ellis said he was happy for LivePerson, a "tech leader that was fundamentally wronged." [24]7, which denied wrongdoing, was repped by Darin Snyder and Luann Simmons of O'Melveny & Myers. (Reuters)
- Coca-Cola Company is facing lawsuits in San Francisco federal court by California consumers and the Sierra Club who say the company falsely claimed its bottled water containers were "100% recyclable." Marie McCrary and Seth Safier of Gutride Safier are pursuing both cases. Coca-Cola had no comment on the claims. (Reuters)
- O'Reilly Auto Enterprises has been hit with a proposed nationwide class action alleging the retailer should have paid workers at its 28 U.S. distribution centers for time they spent each day in COVID-19 screenings and security checks. The lawsuit, which was filed in San Diego federal court, is the latest against a company over employee security screenings and, more recently, COVID-19 screenings such as temperature checks. (Reuters)
- Nine Point Energy Holdings' proposed sale to its lenders has been delayed after U.S. Bankruptcy Judge Mary Walrath in Wilmington, Delaware said that she needs more information about the company's dispute over contracts and liens with a former business partner. The Denver-based oil and gas company, represented by Caroline Reckler of Latham & Watkins, is seeking to have the judge sign-off on a $250 million sale to the lenders. (Reuters)
- In a first-of-its-kind ruling in New York, Manhattan Supreme Court Justice Arthur Engoron ruled that Liberty Mutual must pay the entire amount of an asbestos settlement it negotiated on behalf of a defunct New Jersey valve manufacturer it once insured. The judge rejected Liberty's bid to reduce its liability based on the years for which it provided coverage. Robin Cohen, Kenneth Frenchman and Alexander Sugzda of Cohen Ziffer Frenchman & McKenna represented the asbestos victims who pursued the case. (Reuters)
Industry moves
- D.C. litigators are on the move. Privacy attorney Antony "Tony" Kim is leaving Orrick to join Latham & Watkins as a partner in its litigation and trial department. Kim will be a member of the firm's connectivity, privacy and information practice. (Reuters)
- Commercial litigator Liz Cassady is heading to Steptoe & Johnson LLP's D.C. office. Cassady, who spent more than a decade at Sullivan & Cromwell, will be a partner in Steptoe’s complex commercial disputes group. (Steptoe)
- Alston & Bird has snagged former DOJ national security prosecutor Kellen Dwyer for its D.C. office. Dwyer will be a partner in the firm's privacy and cybersecurity litigation team. (Reuters)
- McGregor "Greg" Scott, who most recently served as the U.S. attorney for the Eastern District of California, has joined King & Spalding as a partner in the firm's special matters and government investigations team. Scott will split his time between San Francisco and Sacramento. (King & Spalding)
How to slay 'trolls': a 7th Circuit copyright story. Design Basics had a good thing going for a while. The company, which used to make money from licensing simple housing floor plans to home builders, got new owners in 2009, just as its revenue was tanking. Their strategy: aggressive copyright enforcement. Alison Frankel writes that Design Basics filed nearly 150 lawsuits between 2009 and 2019. Its new owners reaped $5 million in settlements in 2016 and 2017 alone. Then things took a turn. A few defendants balked at settlement demands and insisted on litigating. Trial judges granted judgments against Design Basics. The 7th Circuit affirmed the judgments three times, most recently on Wednesday, and called Design Basics a copyright troll to boot. And that’s not all: The company has been socked with more than $900,000 in fee awards to the lawyers for those defendants. Read here to see why one defendant's lawyer told Frankel, "In the end, they just got too greedy."
'This is a contact sport': Reed Smith's Sandy Thomas on effective Big Law leadership. To Alexander "Sandy" Thomas, who was just elected to his third term as global managing partner and executive committee chair of 1,600-lawyer Reed Smith, leadership isn’t about hogging the spotlight. It’s about helping his fellow lawyers shine. "You have to be in the practice of putting other people in front. Clients and colleagues deserve the credit," he told Jenna Greene. Thomas discussed how the firm will concentrate on what he calls its “talent, time and treasure,” as it embarks on a new four-year plan, as well as its new diversity initiatives and how it’s planning to reopen its 17 U.S. offices. Read here for more on what Thomas sees as "the best part" of his job as global managing partner.
Lawyer speak: Federal-state divide on cannabis still makes for risky business
The cannabis industry has made strides this year thanks to states decriminalizing the use of pot and expanding medical marijuana programs. Carter Ledyard & Milburn’s cannabis, hemp and CBD industry practice chair Alex Malyshev and associate Sarah Ganley explain how federal regulations could be tricky for medical cannabis cultivators, distributors, and retailers to navigate. Read more.
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