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Good morning. Law firms and the U.S. government are gearing up for a surge in sanctions enforcement, and Andrew Goudsward dives into some of what’s going on behind the scenes. Plus, Tesla owners are suing the electric vehicle maker over fraud claims tied to software updates; the ABA is walking back a push to drop the LSAT requirement; and the 5th Circuit this week takes up the FDA’s effort to preserve broad access to the abortion pill mifepristone. More news, and our weekly calendar snapshot below. Let’s dive in.
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U.S. government and private lawyers are preparing for a surge in sanctions and export control enforcement, as the Biden administration leans on economic tools to counter global adversaries like Russia and China, reports Andrew Goudsward.
U.S. agencies are increasing their staff numbers to enforce sanctions compliance across the private sector, beyond traditional areas like financial services and defense. Among the moves: The DOJ plans to add about 25 prosecutors to its National Security Division, and the Commerce Department has added more than 50 enforcement staffers focused on export controls in the last year.
“The toolkit has slowly grown, and the government has become increasingly emboldened to use it,” said Brandon Van Grack, a former DOJ official who co-chairs the national security practice at Morrison & Foerster.
Lawyers in government and in the private sector said companies in every industry should already be paying attention. “There’s no sector that necessarily is not going to be of interest to the U.S. government,” said Melissa Mannino, an international trade and national security practice leader at BakerHostetler.
Read more about the crackdown.
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- The American Bar Association is walking back a controversial plan to allow law schools to go fully test-optional for admissions by 2025. An ABA council focused on legal education and admissions will reconsider the elimination of a longstanding rule that requires schools to use the LSAT. The council might not ask the ABA’s House of Delegates to approve that change in August as planned, a reversal from the position the council has taken since voting to drop the rule in November. (Reuters)
- The arm of the ABA that accredits law schools voted to increase its limit on online courses from one-third of a student’s total credits to half. It also eliminated the rule that students take no more than 10 credit hours of distance education classes during their first year of law school. (Reuters)
- Jones Day’s Noel Francisco is representing the U.S. Chamber in a new case against the SEC in the 5th Circuit over a regulation requiring publicly traded companies to disclose more information about share buyback programs. SEC commissioners last week approved the new requirements, which the chamber said will hurt public companies and their investors. The group accused the SEC of failing to properly consider the costs and benefits of the plan. (Reuters)
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U.S. District Judge Richard Scola of Miami is so committed to the rules of class action procedure that he has refused to certify a class of investors in an alleged $75 million foreign exchange scam — even though he has already entered judgment on the defendants’ liability and none of the accused fraudsters showed up in court to argue against class certification. Alison Frankel explains why Scola denied certification of a class of investors represented by Holland & Knight. And no, you didn’t read that law firm name wrong.
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“I looked at my wife, and I said, ‘I want to make toys.’“
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—Judd Zebersky, who left a career in the law years ago to start Jazwares, the company behind the viral plush toy Squishmallows. Zebersky, chief executive of Jazwares, and his wife Laura, who is the company’s president, met 33 years ago at University of Miami Law School. Our colleague Jonathan Stempel chronicles the history of the company, and ultimately how the TikTok sensation toy found Warren Buffett. In a message to Reuters, Buffett called Jazwares a “gem.”
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- Lawyers for Hughes Hubbard will face off in Manhattan federal court against one of the firm’s former partners, James Dabney, in his dispute with the firm over employment benefits. Dabney said in a January filing at the EEOC that after he retired in 2022, Hughes Hubbard slashed his monthly pension benefit before suspending it altogether. The law firm is currently in arbitration with Dabney over his pension benefits. Dabney is seeking an injunction in court prohibiting the firm from suspending his email account, phone number and access to client files. The firm said recently that it was “committed to resolving the issues with Jim.”
- EU antitrust regulators are set to approve Microsoft’s $69 billion acquisition of Activision by as early as today. The European Commission’s imminent clearance comes nearly three weeks after the UK competition authority blocked the deal, the biggest-ever deal in gaming. A U.S. judge in California last week weighed a request from private video game plaintiffs to preliminarily enjoin the deal. Microsoft and its lawyers have defended the acquisition, calling it beneficial to gamers.
- Damian Williams, the U.S. attorney for the Southern District of New York, is set to speak at Columbia Law’s graduation. Williams, a Yale Law alum, has led the Manhattan federal prosecutors’ office since 2021, when he was elevated from his post as leading the office’s securities task force. Williams’ office is widely known for its investigations and prosecutions of cases involving insider trading, securities fraud, public corruption and terrorism. Many law schools have so far secured an eclectic mix of speakers, many of them women. Justice Ketanji Brown Jackson is due to deliver remarks to graduates of American University Washington College of Law on May 20 and of Boston University School of Law the following day.
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Court calendars are subject to last-minute docket changes.
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REUTERS/Michelle McLoughlin
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- On Wednesday, conservative 5th Circuit Judges James Ho (pictured above), Jennifer Walker Elrod and Cory Wilson will hear the Biden administration’s bid to overturn a Texas federal judge’s court order that suspended the federal government’s approval of the abortion pill mifepristone. U.S. District Judge Matthew Kacsmaryk’s order is on hold pending the appeal. The DOJ has told the court that mifepristone’s safety is “amply supported by a record developed over decades of safe and effective use” around the world. Erin Hawley of Alliance Defending Freedom will argue for plaintiffs including Alliance for Hippocratic Medicine, and will go up against Sarah Harrington of the DOJ.
- On Thursday, the FTC will meet in an open-session to discuss topics including whether companies collecting biometric information are complying with a legal provision that prohibits unfair or deceptive trade practices. The commission expects to vote on issuing a policy statement that will detail some practices the commission said it will look at in weighing compliance.
- On Friday in Manhattan federal court, U.S. District Judge Jed Rakoff is expected to hear oral arguments on Jes Staley’s bid to dismiss JPMorgan’s lawsuit over his relationship with the bank’s former client Jeffrey Epstein. Staley said the bank was trying to use him as a “public relations shield by asserting claims that lack any legal (or factual) basis.” JPMorgan wants Staley to forfeit eight years of compensation and cover its losses in two lawsuits: one by women who claim Epstein abused them, and another by the U.S. Virgin Islands, where Epstein had a home.
- Also on Friday, a 2nd Circuit panel will take up an employment lawsuit filed by the white woman who falsely told police she was threatened by a Black bird-watcher in New York City’s Central Park. In September, U.S. District Judge Ronnie Abrams rejected Amy Cooper’s claim that she was defamed when her employer Franklin Templeton and its chief executive Jenny Johnson referred on three occasions to the incident and said they did not tolerate racism. A video of the incident went viral. Franklin Templeton has said it “responded appropriately” to the incident involving Cooper.
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- The FTC hit XCast Labs with a lawsuit in California federal court alleging the voice-over-internet service provider helped telemarketers deliver “billions of illegal robocalls.” XCast helped its customers place telemarketing calls to numbers that were listed on the Do Not Call registry, the lawsuit said. XCast and a lawyer for the company did not respond to messages seeking comment. (Reuters)
- New York Attorney General Letitia James’ office is arguing that the U.S. Supreme Court’s ruling upholding a California law banning the sale of inhumanely-raised pork knocks down the gun industry’s challenge to New York’s novel law expanding gun industry liability. The constitutionality of the law, which is being copied in states across the country, is before the 2nd Circuit. (Reuters)
- Former Argentine businessman Alejandro Burzaco, who pleaded guilty in the sprawling FIFA corruption probe, will not have to spend time in prison, after his testimony contributed to the U.S. convictions of South American soccer officials and a television executive. Burzaco, former head of Argentine sports marketing company Torneos y Competencias, was sentenced to time served by U.S. District Judge Pamela Chen in Brooklyn federal court. (Reuters)
- Republican U.S. congressman George Santos agreed to pay about $4,800 to settle a lawsuit in which he was accused of bouncing checks to buy clothes in a Rio de Janeiro clothing store over a decade ago, a court in Rio said. The Brazil case was shelved in 2011, as the Brazilian courts were unable to reach Santos, but it reopened after Santos was elected and the courts located him. (Reuters)
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- Schulte Roth hired partner Julia Beskin in the firm’s New York office from Quinn Emanuel, where she focused on commercial disputes. (Reuters)
- Cooley hired former Covington attorney Simon Amies as a London-based life sciences partner focused on M&A work and IPOs. (Reuters)
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