Good morning. Facebook is celebrating after a federal judge poured cold water on antitrust enforcers' cases against the social media giant. The first jury trial in the nationwide opioid litigation is set to begin with opening statements today in New York. Juul Labs reached the first settlement in the state lawsuits claiming it deceptively marketed e-cigarettes to teens. And industry experts say recent staffing cuts and buyouts at Fox Rothschild and Reed Smith show how the pandemic has reshaped Big Law's business model. Let's get this show going!
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Judge deals FTC, states losses in Facebook antitrust cases
In a major blow to U.S. antitrust regulators' efforts to combat Big Tech's dominance, a federal judge on Monday rejected complaints by the FTC and state attorneys general accusing Facebook of illegally maintaining a social networking monopoly, Diana Bartz and Elizabeth Culliford report.
Lawmakers are already calling for strengthened antitrust laws following the rulings in a pair of lawsuits filed in December that sought to force the social media giant to sell two prized assets it acquired years ago, WhatsApp in 2012 and Instagram in 2014, purchases Facebook was accused of making to eliminate threats.
U.S. District Judge James Boasberg in D.C. ruled the FTC, now chaired by Big Tech critic Lina Khan, will need to try to amend its complaint after failing to sufficiently allege that Facebook had monopoly power and controlled more than 60% of the personal social networking market. He said that naked figure was "too speculative."
The states suffered a potentially bigger loss as Boasberg agreed with lawyers for Facebook led by Kellogg Hansen's Mark Hansen that their claims were entirely barred because they waited too long to sue. He said the states "easily" could have challenged the Instagram and WhatsApp deals years ago but never did.
"Ultimately, this antitrust action is premised on public, high-profile conduct nearly all of which occurred over six years ago — before the launch of the Apple Watch or Alexa or Periscope, when Kevin Durant still played for the Oklahoma City Thunder, and when Ebola was the virus dominating headlines," Boasberg said. Read more.
New York takes opioid makers, distributors to trial in first jury case
Drug makers and distributors accused of fueling the nation's opioid epidemic are set to face a jury for the first time in litigation over the drug crisis as a trial gets underway in lawsuits by New York Attorney General Letitia James and two of the state's biggest counties.
Opening statements are slated to be delivered to a jury sitting in Central Islip, New York, as the state and counties seek to hold companies including Teva Pharmaceutical Industries, Endo International, McKesson Corp and Cardinal Health responsible for the deadly drug epidemic, Brendan Pierson reports.
Similar cases are on trial currently in California and West Virginia, and Oklahoma won a $465 million judgment against Johnson & Johnson in the nation's first trial. But unlike those cases, this one is being heard by six jurors, not a judge.
On the eve of trial, J&J on Saturday settled for $263 million. Pharmacy operators CVS, Rite Aid and Walmart were severed from the trial during jury selection, though only CVS has acknowledged settling with the counties, Nassau and Suffolk.
John Oleske, a lawyer in James' office, is expected, along with Jayne Conroy of Simmons Hanly Conroy and Hunter Shkolnik of Napoli Shkolnik, to deliver opening statements for the plaintiffs.
The defense lawyers include James Herschlein of Arnold & Porter for Endo; Nancy Patterson of Morgan Lewis for Teva; Paul Schmidt of Covington & Burling for McKesson; Michael Salimbene of Reed Smith for AmerisourceBergen; and Steven Pyser and J. Andrew Keyes of Williams & Connolly for Cardinal. Learn more.
Industry buzz
- As lawyers begin to put the pandemic behind them and return to the office, some firms including Fox Rothschild and Reed Smith are offering voluntary buyouts to its staffers and forging new professional staffing models. Citing the pandemic, over half a dozen major law firms including Squire Patton Boggs and Davis Wright Tremaine laid off professional staffers in 2020 to save costs, which is forcing them to do away with traditional staffing structures. (Reuters)
- Holland & Knight and Thompson & Knight said their planned merger is on track for completion on Aug. 1. Dallas-based Thompson & Knight has continued to shed partners since it announced in April that it was in merger talks with Miami-based Holland & Knight. On Monday, corporate partner Stephen Grant became at least the 13th to say he was leaving, in this case to join Haynes and Boone. (Reuters)
- Roger Williams University School of Law in Rhode Island is set to become one of the few U.S. law schools to require students take classes about race and the law. The course, "Race & the Foundations of American Law," in the coming school year will be a requirement for second year students. (Boston Globe)
- Former FBI lawyer Kevin Clinesmith has agreed to a one-year suspension of his law license in D.C. after he pleaded guilty to falsifying a document as part of the bureau’s early-stage probe into whether former President Donald Trump's 2016 campaign colluded with the Russian government. The agreement was negotiated by his lawyers, Eric Yaffe and Frank Sciremammano of Lathrop GPM. (Reuters)
- Over in the UK, major law firms including Freshfields, Mishcon de Reya and Simmons & Simmons are pledging to reduce the environmental impact of their litigation practice in the country by limiting travel and paper use. The pledge came after many law firms globally during the COVID-19 pandemic came to realize that much of their litigation work could be handled online. (Reuters)
- Neil Gerrard, a former top Dechert lawyer, during testimony in a London High Court trial dismissed allegations that he conspired with officials in the UK Serious Fraud Office to damage his former client, mining company ENRC, by milking it for unnecessary fees and leaking privileged material. He called those allegations "bonkers." (Reuters)
- Reed Smith is eliminating regional pay differences for U.S. associates, which have become a point of discussion in law firms more broadly amid heightened competition for junior talent and pandemic-prompted remote work. The firm said the change will come as it boosts salaries for current first-year associates to $205,000, the new going market rate in Big Law. (The American Lawyer)
- Ellenoff Grossman & Schole, a midsized New York-based law firm that last year advised on more SPAC deals than any other other firm, has opened its first West Coast office. Its brought on securities litigators Eric Landau and Travis Biffar from Thomas Whitelaw. (Reuters)
Number of the day:
$40,000,000
Juul Labs has agreed to pay $40 million in the first settlement with a state attorney general resolving claims that the e-cigarette manufacturer helped fuel an epidemic of youth vaping and teen nicotine addiction through deceptive and misleading marketing of its products. North Carolina Attorney General Josh Stein in 2019 launched the first of what became 15 such lawsuits by attorneys general in 14 states and the District of Columbia. Juul, which was represented by Andrew McGann of Kirkland & Ellis, is facing thousands of similar cases. It called the settlement "consistent with our ongoing effort to reset our company and its relationship with our stakeholders." (Reuters)
Coming up today
- U.S. Supreme Court justices have five rulings left to issue this term, including a major voting rights case out of Arizona and a challenge by two conservative groups to a California charity donor disclosure requirement. They're expected to issue some of those decisions today.
- Lawyers for Google, the DOJ and various state attorneys general will appear before U.S. District Judge Amit Mehta in D.C. for a status conference in blockbuster antitrust lawsuits accusing the company of abusing its power to maintain a monopoly in the search and search advertising markets. One of the topics the lawyers are expected to discuss is the state of discovery. Google is defended by lawyers who include John Schmidtlein of Williams & Connolly, Susan Creighton of Wilson Sonsini and Mark Popofsky of Ropes & Gray.
- New Corp faces trial in a lawsuit brought by Valassis Communications alleging that it used unethical, unfair and anticompetitive strategies to prevent its smaller rival from gaining a foothold in the market for in-store advertising and promotions. U.S. District Judge P. Kevin Castel in Manhattan is presiding. Michael Shuster of Holwell Shuster & Goldberg represents Valassis, and Kenneth Gallo of Paul Weiss is on the team for News Corp.
- The 9th Circuit will consider whether individuals remain eligible for deportation even after their state criminal records are expunged. Lawyers for a Mexican national including Benjamin Chagnon of Orrick argue that the Board of Immigration Appeals was wrong to find that her expunged conviction for conspiring to transport a controlled substance still counted as a "conviction" under the Immigration and Nationality Act. The appeal by Aracely Marinelarena has garnered amicus support from a coalition of advocacy groups and immigration law professors. Tim Ramnitz of the DOJ will argue for the government.
- The U.S. arm of British fund Greensill Capital will ask U.S. Bankruptcy Judge Michael Wiles in Manhattan to approve the sale of its subsidiary, Finacity Corporation. The bankruptcy case stemmed from the global firm's high-profile collapse. Greensill, represented by Kyle Ortiz of Togut Segal & Segal, lined up a lead bid from Finacity’s own chief executive, Adrian Katz, to acquire the asset-backed working capital funding servicer for $24 million.
- U.S. District Judge Rodney Gilstrap in Marshall, Texas, will preside over the third day of a final pretrial conference in a patent dispute between telecom giants Huawei and Verizon. China’s Huawei, represented by lawyers including David Barkan of Fish & Richardson, accused Verizon last year of infringing five patents related to network communications. Verizon’s lawyers led by Charles Verhoeven and Deepa Acharya of Quinn Emanuel countered that Huawei "is using Verizon's technology -- not the other way around." Huawei also sued Verizon in West Texas last year for allegedly infringing additional patents.
Video: Operators navigate legal risks as cruises resume from U.S.
After idling at anchor for more than a year due to the pandemic, the cruise industry is eager to get its ships back on the open water this summer. But in the wake of last year's on-board COVID-19 outbreaks, it’ll have to navigate a host of sometimes conflicting state and federal rules and guidelines. Video journalist Tom Rowe explores the issues. Watch the video.
"A prohibition on interstate use or cultivation of marijuana may no longer be necessary or proper to support the federal government's piecemeal approach."
Justice Clarence Thomas, who in response to the U.S. Supreme Court's decision to not take up a Colorado medical marijuana dispensary's appeal of its denial of federal tax breaks that other businesses enjoy questioned whether the top court could still justify upholding the federal government's prohibition on local cultivation and use of marijuana. He said the federal government's once comprehensive approach to regulating marijuana had become "a half-in, half-out regime that simultaneously tolerates and forbids local use of marijuana." (Reuters)
In the courts
- Lawyers for the Trump Organization met again on Monday with prosecutors under Manhattan Cyrus Vance in a last-ditch bid to avoid the indictment of former President Donald Trump's family business. Defense lawyer Ron Fischetti said that based on discussions with prosecutors he expects "no charges" will be brought against Trump himself in the initial round of indictments, which are expected this week. (Reuters, AP)
- The U.S. Supreme Court declined to take up a host of cases, including a closely-watched appeal by a Virginia public school board of a ruling holding it acted unlawfully in preventing a transgender student named Gavin Grimm from using a bathroom at his high school that corresponded with his gender identity. (Reuters)
- The justices also declined to take up three cases that relate to constitutional requirements for U.S. border searches of electronic devices like laptops and cell phones. Those cases included an appeal pursued by the ACLU and the Electronic Frontier Foundation of a 1st Circuit ruling holding that border agents don't need warrants to search travelers' smartphones and laptops at airports and other ports of entry. (Reuters)
- But don't fret, the justices didn't only reject cases on Monday. They took up an Indian national's appeal of an 11th Circuit ruling holding courts lack authority to review non-discretionary Board of Immigration Appeals orders. And they also agreed to hear a First Amendment challenge to an ordinance by the city of Austin, Texas, barring some types of digital billboards. (SCOTUSblog)
- Goldman Sachs and former CEO Lloyd Blankfein lost a bid to convince U.S. District Judge Vernon Broderick in Manhattan to dismiss a lawsuit accusing them of misleading shareholders about the bank's work for 1MDB, the Malaysian fund that became embroiled in a corruption scandal. Andrew Zivitz of Kessler Topaz Meltzer & Check and Sharon Nelles of Sullivan & Cromwell represent the plaintiffs and bank, respectively. (Reuters)
- Nine Point Energy Holdings' lenders must put up cash or a letter of credit to protect a midstream services provider's interests in certain assets before it can move forward with a proposed $250 million purchase of the bankrupt energy company, U.S. Bankruptcy Judge Mary Walrath in Wilmington, Delaware, ruled. Nine Point and its lawyers at Latham & Watkins are facing a July 8 deadline to sell its assets under its loan agreement with the lenders. (Reuters)
- Wells Fargo's former retail banking head lost a bid to dismiss claims by the SEC that she misled investors about the widespread sales practice problems at the bank. U.S. District Judge Jon Tigar in Oakland, California, rejected arguments by Carrie Tolstedt's lawyer, Williams & Connolly’s Enu Mainigi, that the securities fraud statute she was accused of violating only covered misrepresentations made during a securities transaction. (Reuters)
- A 9th Circuit panel on a 2-1 vote held that an export terminal operator in Oregon must arbitrate racketeering claims alleging that the International Longshore and Warehouse Union conspired with dozens of its members to submit fraudulent time sheets and overbill the company by more than $5 million. Pursuing those claims are Columbia Export Terminal's lawyers including Christopher McCracken of Ogletree Deakins. (Reuters)
Industry moves
- As the life sciences industry continues to boom, Goodwin Procter has brought on William Jackson, a litigator whose practice has focused on representing companies in that sector. Jackson previously headed the D.C. office of Boies Schiller Flexner, which has lost dozens of lawyers since 2020. Goodwin also is bringing on Matt Wetzel, a former associate general counsel and chief compliance officer at GRAIL Inc, in its its healthcare and life sciences practice. (Reuters)
- Squire Patton Boggs has brought aboard the former global director of business management at Baker McKenzie, D. Michael Kaye, as a partner in its international trade practice and commodities and shipping industry group in D.C. (Squire Patton Boggs)
- Trial lawyer David Lesser has left WilmerHale to join King & Spalding as a partner in its trial and global disputes practice group based in New York. (K&S)
- Morgan Lewis is continuing its West Coast expansion with the addition of employment litigator Michael Weil from Orrick. Weil joins Morgan Lewis' employment practice in San Francisco and Silicon Valley. (Morgan Lewis)
- Tax attorney Linda Pfatteicher has joined Dentons' tax practice as a partner in San Francisco. Pfatteicher was previously a partner in Squire Patton Boggs’ tax strategy and benefits practice. (Dentons)
- Tax attorney Gregg Larson has joined Ropes & Gray as a counsel in New York. Larson was previously a managing director of tax at global real estate investment company Tishman Speyer Properties. (Ropes & Gray)
- Former federal prosecutor Naana Frimpong has joined DLA Piper's litigation and regulatory practice as a partner in Atlanta. Frimpong, who served as an assistant U.S. attorney general in Chicago from 2011 to 2015, was previously at King & Spalding. (DLA Piper)
Columnist spotlight: State court will be next frontier for consumer class actions under federal law
In his dissent in the U.S. Supreme Court ruling on Friday in TransUnion v. Ramirez, Justice Clarence Thomas warned that the win for class action defendants could turn out to be a mirage. The Supreme Court tightened the constitutional rules for class action plaintiffs to sue in federal court for violations of federal consumer protection statutes. But Thomas warned that the decision may simply divert the class actions to state court – a "pyrrhic victory," he said, for class action defendants. In Alison Frankel's latest column, three defense lawyers, a class action lawyer and a law prof who has studied the issue agree that class action lawyers are likely to migrate to state court. But they’re split on whether the trend will actually help plaintiffs with claims for statutory violations. Read here to find out why defendants aren't worried.
Lawyer speak: Analyzing COVID-19 claims under the Longshore and Harbor Workers' Compensation Act
Among the thousands of U.S. workers who lost time due to illness from the coronavirus are traditional longshoremen, off-shore oil workers and overseas defense-base contractors, covered under the Longshore and Harbor Workers' Compensation Act. As these workers begin to make COVID-19 claims for wage benefits and medical benefits under the act, Alan Brackett and Daniel Sullivan of Mouledoux, Bland, Legrand & Brackett analyze these claims. They look closely at issues relating to claim valuation and the risk of significant exposure to insurance companies, medical providers and employers. Read more.
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