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Good morning. A federal judge dealt a setback to efforts challenging corporate diversity programs, saying a lawsuit against Starbucks was “wasting” the court’s time. Plus, a Los Angeles court questioned the fairness of “mass” arbitration; Sam Bankman-Fried will be detained pending trial; and Fox’s Viet Dinh is stepping down. Scroll for our week-ahead calendar, and thanks for reading!
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REUTERS/Anushree Fadnavis
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The conservative movement confronting diversity and equity policies at major corporations hit a setback in a U.S. court, as a judge called a case against Starbucks’ board frivolous and dismissed it. The lawsuit was similar to those recently by conservative activist groups opposing corporate diversity and inclusion efforts in the wake of a U.S. Supreme Court ruling against affirmative action, Jody Godoy reports.
Chief U.S. District Judge Stanley Bastian in Spokane, Washington, rejected allegations from the National Center for Public Policy Research, saying the public policy questions in its lawsuit were for lawmakers and corporations, not courts, to decide. The center, represented by the American Civil Rights Project, sued Starbucks last year over policies it said required the company to make race-baced decisions that violate federal and state civil rights laws. “If the plaintiff doesn’t want to be invested in woke corporate America, perhaps it should seek other investment opportunities rather than wasting this court’s time,” Bastian said at the hearing.
More courts in the coming months will confront other cases challenging diversity programs. This month, the group founded by conservative activist Ed Blum, instrumental in the justices’ decision rejecting affirmative action in collegiate admissions, sued an Atlanta-based venture capital fund that supports Black women who own small businesses. Blum said the lawsuit was the first of many he hopes to pursue through the American Alliance for Equal Rights. The Fearless Fund’s leaders and its lawyers last week defended their work and pledged to fight the lawsuit.
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- Viet Dinh will step down from his role as chief legal officer at Fox Corp and become a special adviser to the company, effective Dec. 31. Dinh’s departure comes after Fox paid $787.5 million in a defamation settlement this year with Dominion Voting Systems. (Reuters)
- Live Nation lost its effort to force a prospective consumer antitrust class action into “mass” arbitration at New Era ADR, after U.S. District Judge George Wu in Los Angeles questioned the fairness of the rules and procedure. The ticket industry giant’s lawyers at Latham did not say whether they’d appeal to the 9th Circuit. Quinn Emanuel and Keller Postman represent the plaintiffs. (Reuters)
- The SEC is investigating Illumina’s $7.1 billion acquisition of cancer detection test maker Grail, the gene sequencing company said in a regulatory filing. The agency requested documents and communications related to the acquisition along with certain statements and disclosures about the “conduct and compensation” of certain members of the companies’ management. (Reuters)
- A New York man, Robert Wilson, was sentenced to 1-1/2 years in prison for attacking a court security officer in an elevator and two others who responded to the scene after he was prevented from seeing U.S. District Judge Gary Brown, whom Wilson had threatened to detain with “armed troops.” (Reuters)
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That’s the number of inmates at a Brooklyn jail where convicted sex trafficker Ghislaine Maxwell, Honduras’ former president Juan Orlando Hernandez — and now Sam Bankman-Fried — have faced detention in criminal prosecutions. U.S. District Judge Lewis Kaplan last week revoked Bankman-Fried’s bail, after finding probable cause that the indicted founder of the bankrupt FTX cryptocurrency exchange tampered with witnesses at least twice. Bankman-Fried had denied those allegations. He had been free, until now, on a $250 million bond at his parents’ home in Palo Alto, California. Kaplan refused to pause his detention order pending Bankman-Fried’s appeal.
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After 13 years of litigation, three trips to the 2nd Circuit and one ballyhooed U.S. Supreme Court case, Goldman Sachs has finally given the securities defense bar a way to squelch shareholder class actions based on non-specific corporate statements. Alison Frankel explains why a new 2nd Circuit ruling decertifying a shareholder class in a $13 billion case against Goldman should help other defendants in so-called event-driven securities fraud cases.
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“The fact the defendant is engaged in a political campaign is not going to allow him any greater or lesser latitude than any defendant in a criminal case.“
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—U.S. District Judge Tanya Chutkan, who said at a hearing in the election interference case against former President Donald Trump that he could publicly share some non-sensitive evidence that will be used in his trial. Chutkan rejected prosecutors’ request that all evidence in the case be subjected to a protective order, but barred Trump from sharing snippets of the hundreds of transcripts of witness interviews and recordings. She also warned Trump to tread carefully before making inflammatory public statements about the case.
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- Sam Bankman-Fried’s defense lawyers and U.S. prosecutors face a deadline to file motions in Manhattan federal court regarding evidence that can be used in the FTX founder’s Oct. 2 trial. U.S. District Judge Lewis Kaplan in June rejected Bankman-Fried’s bid to throw out most of the criminal case accusing him of orchestrating a multibillion-dollar fraud. Bankman-Fried has pleaded not guilty and denied stealing funds, while acknowledging that FTX had inadequate risk management.
- A hearing begins today as a panel of three judges considers whether the Alabama legislature’s redrawn congressional districting map meets the requirements set out by the Voting Rights Act. The hearing follows the U.S. Supreme Court’s surprise June ruling holding that a Republican-drawn electoral map in Alabama weakened the clout of Black voters in violation of the Voting Rights Act. After the high court’s ruling, the three-judge court overseeing three consolidated cases involving the map gave the legislature a chance to redraw the districts. The Alabama citizens that challenged the original map say the new one still disenfranchises minority voters.
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Court calendars are subject to last-minute docket changes.
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- On Tuesday, U.S. District Judge Jennifer Rearden in Manhattan will hold a plea proceeding in the prosecution of a former top FBI official who was charged with working for sanctioned Russian oligarch Oleg Deripaska. Charles McGonigal, who led the FBI’s counterintelligence division in New York before retiring in 2018, has pleaded not guilty to four criminal counts including sanctions violations and money laundering. But he has indicated he may wish to change his plea, Rearden said in a recent order. McGonigal is represented by lawyers from Bracewell.
- On Wednesday, 3M and a group of plaintiffs lawyers have a South Carolina federal court deadline to respond to nearly 24 states and U.S. territories that moved to block a proposed $10.3 billion settlement to resolve claims against the company over water pollution tied to “forever chemicals.” The states asserted that the deal, pending before U.S. District Judge Richard Gergel in Charleston, fails to adequately hold the company accountable. 3M, which is facing thousands of lawsuits over PFAS contamination, did not admit liability in the proposed settlement. Mayer Brown’s Daniel Ring is defending 3M, and the class is represented by plaintiffs’ firms Douglas and London, Napoli Shkolnik, Baron & Budd and Fegan Scott.
- On Thursday, Donald Trump’s lawyers face a deadline to propose a trial date in the criminal case charging the former president with plotting to overturn his 2020 U.S. election loss. Federal prosecutors last week asked U.S. District Judge Tanya Chutkan to begin Trump’s trial on Jan. 2, 2024. That date would have the trial get under way just two weeks before the first votes are cast in the 2024 Republican presidential primary, a race in which Trump is the front-runner.
- On Friday, Montana officials are due to respond to an effort by TikTok and some of its users to block enforcement of a Montana state ban on use of the app before it takes effect on Jan. 1. TikTok, owned by China’s ByteDance, filed suit in May. The company’s lawyers at Covington have asked U.S. District Judge Donald Molloy to issue a preliminary injunction to block the first-of-its-kind U.S. state ban on several grounds, arguing it violates the First Amendment free speech rights of the company and users. Tech groups have filed friend-of-the-court briefs backing TikTok in its lawsuit.
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- The Internet Archive and a group of leading book publishers said that they have struck a deal resolving aspects of their legal battle over the Archive’s digital lending of their scanned books. The proposed consent judgment settles questions involving potential money damages and the scope of a ban on the Archive’s lending. If approved, the deal would pin the future of the Archive’s lending on its appeal of a ruling that found it infringed the publishers’ copyrights. (Reuters)
- Separately, the Internet Archive was sued by Universal Music Group, Sony Music Entertainment and others over claims its digitized record collection functions as an “illegal record store” for songs by musicians like Frank Sinatra, Ella Fitzgerald, Miles Davis and Billie Holiday. The complaint, filed by Oppenheim + Zebrak in Manhattan federal court, claims the Internet Archive has infringed more than 2,700 sound recording copyrights and that damages could be as high as $412 million. The Internet Archive did not immediately respond to a request for comment. (Reuters)
- U.S. District Judge David Nye blocked an Idaho law requiring public school students to use the restroom corresponding to their assigned sex at birth, in a lawsuit brought by the family of a transgender middle school student and Lambda Legal. Nye said his temporary restraining order did not weigh on the merits of the case, but said that preserving the status quo until he could fully consider it was “the most fitting approach at the current juncture.” (Reuters)
- A federal judge rejected HP’s bid to dismiss a proposed class action brought by customers who say HP concealed how its printers enter an “error state” when low on ink, disabling scanning and faxing functions that do not require ink and forcing them to buy unnecessary, high-margin ink cartridges. U.S. District Judge Beth Labson Freeman found sufficient allegations that HP knew about the defect, citing a message board post where a support agent told a customer that his printer “will not function” without ink. (Reuters)
- The 4th Circuit rejected a challenge to federal approvals for the Mountain Valley Pipeline, in a decision that likely ends legal fights over the construction of the $6.6 billion natural gas project led by Equitrans Midstream. The court said, “There is no longer a live controversy” to consider after Congress in May passed a law expressly ratifying approvals for the 303-mile pipeline running through West Virginia and Virginia. (Reuters)
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