Good morning. We’re still keeping tabs on the FTX situation, which is likely to spur a wave of lawsuits – and lots of legal questions. Plus, Elizabeth Holmes is scheduled for sentencing today, and Berkeley has bowed out of U.S. News & World Report’s law school rankings. Here it is: Friday.
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The headline-grabbing lawsuit brought by FTX account holders in the U.S. against the company and celebrity endorsers like Tom Brady and Shaquille O’Neal is likely just the first of many that will follow the crypto exchange’s collapse. But legal questions around how U.S. securities law applies to FTX's products could pose a problem for the litigants, experts told Jody Godoy.
Yuliya Guseva, a professor who heads the fintech and blockchain research program at Rutgers Law School, said a "wave" of litigation is the "expected result of a large debacle like this." But the law isn’t settled on whether cryptocurrency can fit the legal definition of securities. And cases against FTX, which is based in the Bahamas, get an extra boost of complexity from the fact that U.S. securities laws generally apply only to domestic transactions, Guseva said.
Things are murky in bankruptcy court, too. FTX's new CEO, John J. Ray III, said in bankruptcy filings that the company's situation was "unprecedented" and involved a "complete failure of corporate controls."
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Berkeley’s law school joined its rivals at Yale and Harvard to boycott U.S. News & World Report’s influential law school rankings. Berkeley Law Dean Erwin Chemerinsky said the rankings penalize schools whose students pursue public interest careers and advanced degrees, while rewarding spending that drives up tuition. (Reuters)
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Patent-holding company Nimitz Technologies wants the Federal Circuit to overturn a Delaware federal judge's order to disclose details about the funding of its litigation that it says should be kept secret. Nimitz called Chief U.S. District Judge Colm Connolly's request to turn over correspondence, bank statements, and other documents related to litigation funding an "inquisition." (Reuters)
- Davis Wright moved to a new space in San Francisco that cuts its footprint in the city by 40%. Law firms have been looking to reduce square feet per lawyer for years, and the trend accelerated during the pandemic. (Reuters)
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Faegre Drinker elected a new firm chair, Gina Kastel, the same week law firms Kelley Drye and Blank Rome announced changes in leadership. Kastel will succeed co-chairs Tom Froehle and Andrew Kassner, who led the 2020 merger between Faegre Baker Daniels and Drinker Biddle & Reath. (Reuters)
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That’s how much Christopher Kamon, former Girardi Keese chief financial officer, dropped last month on a house in New Providence, Bahamas, according to newly released information in a federal wire fraud prosecution. Kamon’s purchase of the home there was part of an attempt to avoid being implicated in the client fund embezzlement scandal that sunk plaintiffs attorney Tom Girardi's legal career, according to prosecutors. A federal magistrate has ordered Kamon held without bail. Kamon has not yet entered a plea. His lawyer, Skadden partner Jessie Liu, did not respond to a request for comment. Here’s how Kamon allegedly spent law firm funds.
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"The First Amendment does not permit the State of Florida to muzzle its university professors, impose its own orthodoxy of viewpoints, and cast us all into the dark." |
—Chief U.S. District Judge Mark Walker in Tallahassee, Florida, federal court, striking down key provisions of a state law that imposed curbs on what information public university teachers could present in their classrooms. A professor, for instance, under the law would no longer be able to "express approval of affirmative action as an idea worthy of merit" during class instruction, the court said. Attorneys for Florida had argued that the state had full power to restrict what public university professors, as state employees, could say in their classrooms. Walker said the challenged law “cast a leaden pall of orthodoxy over Florida’s state universities.”
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Theranos founder Elizabeth Holmes will be sentenced in San Jose, California, federal court for defrauding investors in her blood testing startup. Prosecutors want Holmes to spend 15 years in prison, calling her "remorseless" and arguing she lied in circumstances "where everyone needed her to tell the truth." Holmes, represented by Williams & Connolly and Seattle lawyer John Cline, urged U.S. District Judge Edward Davila not to send her to prison. In their sentencing filing, lawyers for Holmes asked that she receive 18 months in home confinement, followed by community service. A jury convicted Holmes in January on four counts of wire fraud and conspiracy. Each count carries a maximum 20-year prison term. Any sentence would likely be served concurrently.
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Urooj Rahman, one of two New York lawyers who pleaded guilty to throwing a Molotov cocktail at an empty city police car during protests over George Floyd's death in 2020, will be sentenced in Brooklyn federal district court. Prosecutors have recommended a sentence of 18 to 24 months for Rahman and co-defendant Colinford Mattis, who have agreed to each pay $30,137 in restitution to New York City. A New York state appeals court said Mattis and Rahman qualified for automatic disbarment based on their guilty pleas. Rahman represented tenants in the Bronx as a public interest lawyer. Mattis worked as an associate at Pryor Cashman but was furloughed in April 2020 due to the COVID-19 pandemic. The firm suspended him after his arrest.
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U.S. District Judge Leo Sorokin in Boston will hear closing arguments in an antitrust case challenging a Northeast corridor partnership between American Airlines and JetBlue. The U.S. Justice Department, six states and the District of Columbia have urged Sorokin, presiding at the bench trial, to force the two carriers to scrap their alliance, calling it a "de facto merger" of their Boston and New York operations in which they coordinate flights and pool revenue to the detriment of travelers, who face $700 million in extra annual costs. Lawyers for the airlines have denied the allegations and argued travelers benefit from the arrangement. William Jones II is on the trial team for the DOJ, and Latham’s Daniel Wall represents American Airlines. Shearman & Sterling has advised JetBlue.
Court calendars are subject to last-minute docket changes.
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What to catch up on this weekend |
The National Shooting Sports Foundation is suing New Jersey and Delaware in federal court to block recently passed state laws creating a new right to bring legal cases against gun manufacturers and sellers over gun violence. The New Jersey lawsuit and the Delaware lawsuit, both filed by the new appellate boutique Clement & Murphy, call the laws "breathtaking in scope." (Reuters)
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The full 9th Circuit will weigh whether the federal government improperly gave Rio Tinto thousands of acres in Arizona for its Resolution Copper mining project in a case that saw the appellate court side with the government just a few months ago. The dispute centers on the federally owned Oak Flat Campground, which some Apache consider home to deities and which sits atop a reserve of more than 40 billion pounds of copper. Congress and then-President Barack Obama gave it to Rio in 2014. (Reuters)
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Alphabet’s Google has struck deals with at least 24 big app developers to stop them from competing with its Play Store, including an agreement to pay Activision Blizzard about $360 million over three years, according to a court filing in antitrust litigation in California. The details emerged in a newly unredacted copy of a lawsuit "Fortnite" video game maker Epic Games first filed against Google in 2020 over allegedly anticompetitive practices related to the search giant's Android and Play Store businesses. (Reuters)
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Twitter owner Elon Musk's mandate that employees stop working remotely and put in "long hours at high intensity" discriminates against workers with disabilities, according to a proposed class action filed in San Francisco federal court. Dmitry Borodaenko, a California-based engineering manager represented by Shannon Liss-Riordan of Lichten & Liss-Riordan, said Twitter fired him this week when he refused to report to the office. (Reuters)
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A divided 6th Circuit upheld an award of more than $800,000 in legal fees to lawyers who successfully challenged Tennessee’s effort to more tightly regulate voting registration activities. The panel, divided 2-1, said the League of Women Voters, Tennessee conference of the NAACP and other groups were the “prevailing” parties and entitled to fees. (Reuters)
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Fox Rothschild added labor and employment partner Nicholas Walker to its Kansas City office. He was previously at Davis George Mook. (Fox Rothschild)
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Freeborn & Peters added corporate partner Robyn Davis as a partner in its New York office. She was previously at Dunnington, Bartholow & Miller. (Freeborn)
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David Cameron joined Hanson Bridgett’s Sacramento office, where he’ll be a partner in its government section and water law practice group. Cameron was previously a partner at Atkinson, Andelson, Loya, Ruud & Romo. (Hanson Bridgett)
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Patrick Bernal joined Holland & Hart as partner in its Boulder, Colorado, office. He was previously at Michael Best. (Holland & Hart)
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