Good morning. New data show that the number of new bankruptcy filings are at the lowest levels since 1985, bucking trends and predictions that the pandemic would cause them to spike. The Association of American Law Schools is wading into the culture war over critical race theory, Winston & Strawn is collecting nearly $30 million in fees for litigation against the NCAA, and Mexico is suing American gun manufacturers for $10 billion. We're so close to Friday!
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Bankruptcy filings fall as pandemic's impact shakes out
Source: The Administrative Office of the U.S. Courts
New government data reveal that personal and commercial bankruptcy filings have hit the lowest levels since 1985, a sign of the impact of COVID-19 relief programs.
Maria Chutchian reports that for the year ending June 30, the number of new bankruptcy cases is the lowest since 1985, according to the Administrative Office of the U.S. Courts. Commercial filings fell nearly 18% as compared to the previous year, while non-business filings fell nearly 33%, the data show.
The office cited eviction moratoriums and increased government benefits as factors that may have changed people’s decision-making around filing for bankruptcy. The drop follows a similar downturn in filings in 2020.
The numbers stand in contrast to the flood of bankruptcies that some experts predicted would follow the pandemic's increase in unemployment as businesses shut down. Historically, bankruptcies tend to parallel increases in unemployment and the business cycle, a relationship that proved especially clear during the last financial crisis, according to research published last year by professors at Harvard, Brigham Young and the University of Illinois.
But that relationship has been turned on its head during the coronavirus pandemic, they said. The researchers noted that the government's policy response likely played a role in the drop in filings, as did the difficulty in accessing bankruptcy courts closed during the pandemic. Learn more.
Industry buzz
- The Association of American Law Schools has taken the unusual step of issuing a public statement in defense of critical race theory and the right of educators to decide if and how it should be taught, arguing that laws that bar its teaching are setting a "dangerous precedent." (Reuters)
- Two lawyers who filed a lawsuit in Colorado alleging the 2020 presidential election was stolen from former President Donald Trump were sanctioned and ordered to pay the legal fees of companies they sued, including Facebook and voting machine company Dominion Voting Systems. U.S. Magistrate Judge N. Reid Neureiter said Gary Fielder and Ernest John Walker filed their "fantastical" lawsuit after "a woeful lack of investigation." (Reuters)
- Legal giant Dentons has sued Lucid Group in Delaware Chancery Court to force it to acknowledge the law firm’s ownership of certain shares in the electric vehicle maker after its recent merger with a special purpose acquisition company. The law firm received the shares after helping a client settle the enforcement of a Chinese arbitration award in a case unrelated to Lucid. (Reuters)
- George Mason University law professor Todd Zywicki has filed a lawsuit challenging the school's requirement that all faculty and staff members disclose their COVID-19 vaccination status as a condition to receive merit pay increases, and that those who are unvaccinated must wear masks. The conservative New Civil Liberties Alliance is throwing its support behind his case, which is pending in federal court in Alexandria, Virginia. (Reuters)
- Just days after Riley Safer Holmes & Cancila lost one of its earliest partners, the firm announced it is adding two more. Keyonn Pope, the former Reed Smith hiring partner in Chicago, and Georgia Alexakis, an appeals expert in the the Chicago U.S. attorney's office, have both joined the firm. The announcement comes after Arnold & Porter lured away Riley Safer founding partner Valarie Hays to lead its white collar defense and investigations practice. (Reuters)
Number of the day:
$35,286,893
Kirby Lee-USA TODAY Sports
That's the total amount of fees awarded to plaintiffs' attorneys who successfully challenged the NCAA’s restrictions on education-related benefits for student athletes, after U.S. Magistrate Judge Nathanael Cousins in San Jose, California, added another $3.4 million to the already mountainous pile, reports Mike Scarcella. The additional money covers the time it took for the U.S. Supreme Court to issue its ruling upholding the plaintiffs' antitrust claims against the NCAA. The bulk of the cash — more than $28 million — goes to Winston & Strawn, while the rest goes to Hagens Berman and Pearson, Simon & Warshaw.
Coming up today
- AbbVie Inc faces trial in federal court in Chicago in a lawsuit by a man who alleges that he had a heart attack as a result of using the drugmaker's testosterone replacement drug AndroGel. Brad Martin is one of fewer than 100 plaintiffs remaining in a multidistrict litigation before U.S. District Judge Matthew Kennelly over testosterone replacement products allegedly linked to cardiovascular problems. AbbVie settled more than 4,000 cases in 2018. The drugmaker has won several previous bellwether trials in the litigation and gotten two large verdicts against it overturned. It’s being represented by Jeffrey Peck of Ulmer & Berne who will face James O'Brien of O'Brien Law.
- The 9th Circuit will hear oral arguments in a copyright dispute between two meditation centers over a painting of 19th century spiritual philosopher Dasira Narada. Divine Dharma Meditation International is seeking to overturn a jury verdict clearing the Institute of Latent Energy Studies of allegations that it unlawfully copied DDMI’s drawing of Narada in the painting. Eric Boorstin of Horvitz & Levy and Thomas Shambaugh of the Law Offices of Kenneth Gross & Associates will argue for DDMI and Latent, respectively.
- Following a delay, barge operator Bouchard Transportation, represented by Christine Okike of Kirkland & Ellis, will ask U.S. Bankruptcy Judge David Jones in Houston to OK the sale of its assets in a deal valued at $245 million. Rose Cay GP and JMB Capital Lending Partners are the buyers for the company's vessels, although the sales process has drawn objections from Bouchard's owner and the committee of unsecured creditors.
- Groups including the Alaska Public Interest Research Group will go before the 9th Circuit to appeal a judge’s decision allowing officials in Alaska to mail absentee ballot applications to voters 65 and older before the 2020 general election but not to other voters.
Video: The rise of AI in sentencing raises caution flags
The growing use of algorithmic programs to help judges decide on the length of jail sentences is coming under new scrutiny amid a national debate over fairness and equality in the criminal justice system. Video reporter Tom Rowe explores. Watch the video.
Reporter's notebook: Financial industry awaits rulings on rules
Securities and banking litigation reporter Jody Godoy on the regulatory litigation waiting game.
 In the game of consumer finance, regulators make the rules. But judges sometimes dictate whether and when they take effect.
Jason Cover, a Ballard Spahr partner who represents consumer finance companies, has been watching a lawsuit over payday lending regulations the CFPB issued in 2017. "We expected there would be some ruling or opinion in the spring," he told me recently. "So far, it's been silence."
A payday lending group sued three years ago to block the Obama-era rule, part of which the Trump administration subsequently repealed. The piece left in place would regulate lenders withdrawing payments from borrowers' bank accounts.
The CFPB recently asked U.S. District Judge Lee Yeakel in Austin to let the rule take effect. The agency noted it had been four years since Obama appointee Richard Cordray announced the rule, three since Trump appointee Mick Mulvaney passed on revising the payment piece, and more than a year since the U.S. Supreme Court decided a constitutional question the agency said was the sole remaining legal issue in the case.
Yeakel recently asked both sides for suggestions on when the rule should take effect if he decides the case in favor of the CFPB. It looks like the wait is almost over, at least in this case, though finance attorneys have their eyes on another lending rules lawsuit in California that they expect to be appealed "all the way up."
"By requiring women to cover up, such laws heighten the 'feminine mystique' and all the baggage that it forces women to carry."
U.S. Circuit Judge Roger Gregory, who concurred with a 4th Circuit panel’s decision to uphold a prohibition on public nudity adopted by Ocean City, Maryland, that barred only women from publicly showing their bare breasts. Gregory said an earlier 1991 decision upholding gender-based distinctions in nudity laws barred him from ruling for the women who challenged the ordinance. But he said that earlier ruling was inconsistent with equal protection principles and that such laws "reproduce the Victorian-era belief that women should be seen but not heard." Read the opinion.
In the courts
- Mexico sued several gun makers including Smith & Wasson, Glock Inc and Sturm, Ruger & Co in federal court in Boston, seeking $10 billion damages over allegations that their negligent business practices generated illegal arms trafficking, which led to deaths in the country. The lawsuit was filed by Jonathan Lowy of the gun control group Brady and Steve Shadowen of Shadowen Pllc. (Reuters)
- Landlord groups, including the Alabama Association of Realtors and Georgia Association of Realtors, filed an emergency motion asking U.S. District Judge Dabney Friedrich in D.C. to immediately block the new eviction moratorium that the CDC recently put in place in response to the COVID-19 pandemic. The groups and their attorneys, led by Jones Day's Brett Shumate, had in May convinced Dabney to strike down the earlier eviction ban, but ultimately the U.S. Supreme Court agreed to allow it to remain in effect after the CDC announced it would allow the ban to expire on July 31. (Reuters)
- Elizabeth Holmes has lost a bid to keep complaints by customers of her blood testing company Theranos out of her upcoming fraud trial. Holmes' defense lawyers, Lance Wade, Kevin Downey and Amy Saharia of Williams & Connolly, failed to convince U.S. District Judge Edward Davila in San Jose, California, to conclude that prosecutors should be barred from using the complaints because the lawyers failed to preserve a more comprehensive database of test results. (Reuters)
- Two former traders with Bank of America’s Merrill Lynch unit were convicted by a federal jury in Chicago on charges that they engaged in multi-year "spoofing" schemes aimed at misleading the market for precious metals futures traded on the Commodity Exchange. Both traders, John Pacilio and Edward Bases, denied wrongdoing. Sean Buckley and David McGill of Kobre & Kim defended Pacilio, while Alfred Pavlis of Salvatore Prescott Porter & Porter and Andrew Calamari of Finn Dixon & Herling represented Bases. (Wall Street Journal)
- The 4th Circuit decertified a class of direct purchasers of Merck & Co Inc's cholesterol drug Zetia who accused the company of entering into an illegal pay-for-delay deal with generic drugmaker Glenmark Pharmaceuticals to push back the release of a cheaper, generic version. The ruling was a victory for Gibson Dunn’s Theodore Boutrous Jr., who argued the case for the defense against Thomas Sobol of Hagens Berman. (Reuters)
- A California-based fintech company with an app aimed at "under-banked" communities has agreed along with its two founders to pay a combined $543,000 to resolve claims by the SEC that they engaged in a fraudulent and unregistered sale of digital tokens. The SEC said Uulala Inc and founders Oscar Garcia and Matthew Loughran raised $9 million from investors through an initial coin offering. The defendants, who were repped separately by Stanley Morris of Corrigan & Morris and David Kaminski of Carlson & Messer, did not admit wrongdoing. (Reuters)
Industry moves
- Cross-border commercial real estate lawyer Kwon Lee has joined Bryan Cave Leighton Paisner in New York as a partner and global head of the firm’s Korea practice. He was previously the co-head of Mayer Brown’s U.S. Asia real estate practice and global head of its Korea practice. (Reuters)
- Technology transactions and outsourcing lawyer Sarvesh Mahajan has joined Crowell & Moring as a partner in New York from Wiggin and Dana. (Crowell)
- Equipment leasing and finance attorney Chris Orozco-Wallraff has joined Rimon as a partner in Los Angeles. He was previously at Holland & Knight. (Rimon)
- Patent attorney Jeff Giering has joined Greenberg Traurig as a shareholder in its Orange County, California, office from Mintz. (Greenberg Traurig)
- Mintz meanwhile has brought on renewables tax attorney Anne Levin-Nussbaum as a member in New York. She was previously senior counsel at Norton Rose Fulbright. (Mintz)
- Speaking of Norton Rose, the firm has recruited partner Chris Pelham, a Los Angeles-based lawyer who counsels international clients with regulatory, litigation and internal investigation issues in Asia. He was previously with Jones Day. (Norton Rose)
Columnist spotlight: En banc 9th Circuit will look at certification of classes with uninjured plaintiffs
Lawyer speak: Sign at the DM -- The enforceability of text message agreements
As text messages and social media direct messages become ever more ubiquitous, they’re also becoming more common sources of court disputes. While the law is still developing, several courts have held that agreements reached in texts, DMs and instant messages are enforceable -- a trend that could gain traction as messaging plays an even bigger role in our interactions, writes Anthony Dreyer of Skadden. Read more.
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