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Good morning. A U.S. bankruptcy judge in Houston, considered the busiest in the country, didn’t disclose his relationship with a lawyer – and it’s raising questions among ethics attorneys. Plus, an NYU law student has lost a law firm job offer after making anti-Israel comments; the plaintiffs’ attorneys who sued Facebook over privacy claims will take home $181 million in legal fees; and the U.S. Supreme Court sounds like it’s not inclined to set a high bar for whistleblower suits. Coming up today, the justices will hear a dispute over a South Carolina voting map deemed racially biased.
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The revelation that a leading U.S. bankruptcy judge in Houston – the busiest bankruptcy judge in the country – was living with a lawyer whose former firm had major cases before him is spurring ethical questions, reports Dietrich Knauth.
Four legal ethics experts told Knauth that U.S. Bankruptcy Judge David Jones should have disclosed the relationship or recused himself from the cases. Jones told the Wall Street Journal over the weekend that he for years has shared a home with now-former Jackson Walker bankruptcy attorney Elizabeth Freeman, saying he was not required to disclose the relationship to litigants because she did not appear in his courtroom, there was no economic benefit to him from her legal work and the two are not married.
The issue of Jones’ relationship was raised in a lawsuit filed last week by a former shareholder of energy company McDermott International, which went through a Chapter 11 restructuring approved by Jones in 2020. Jones has been the busiest bankruptcy judge in the U.S. since January 2016, overseeing 11% of all Chapter 11 bankruptcies involving more than $100 million in liabilities, according to data from Debtwire. Jones did not respond to Reuters requests for comment. Freeman, through her attorney, declined to comment.
“It shouldn’t be a hard call,” said Adam Levitin, a bankruptcy professor at Georgetown Law. “If anyone could reasonably question your impartiality, you shouldn’t be involved.”
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- Perkins Coie urged a Texas federal judge to find that a nonprofit challenging the law firm’s diversity fellowship program was not a genuine membership organization with standing to sue but instead “one man’s anti-affirmative action crusade.” The firm opposed a bid by Edward Blum’s American Alliance for Equal Rights to block the program as racially biased. Perkins Coie said the request was moot after it altered the criteria for who could apply. (Reuters)
- Federal prosecutors in Sacramento accused Ari Lauer, outside counsel for a California solar company, of helping run a $912 million fraud scheme. A grand jury indicted Lauer last week. Lauer did not immediately respond to a request for comment. (Reuters)
- Boies Schiller and another firm face opposition for their bid for more than $19 million in fees and expenses for client LoanCare, a subsidiary of Fidelity National Financial. Freedom Mortgage, which sued LoanCare in 2016 but largely lost at trial this summer, said LoanCare was not owed fees. Freedom’s attorneys at firms including Duane Morris also called LoanCare’s fees and hours “bloated.” (Reuters)
- Akerman said it set up a new team focused on Japan and Japanese business with the hiring of a leading Japan dealmaker from Orrick. Hiroshi Sarumida has joined Akerman’s New York office as the co-leader of the firm’s Japan transactional team. (Reuters)
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That’s how many hours plaintiffs’ lawyers devoted as of May to a privacy class action accusing Meta’s Facebook of unlawfully sharing user information with third parties. U.S. District Judge Vince Chhabria spurned objections and awarded the class attorneys $180,449,782.62 in legal fees for their work on the case, which resulted in a $725 million settlement. Facebook and its lawyers at Gibson Dunn denied liability. Co-lead counsel at plaintiffs law firms Keller Rohrback and Bleichmar Fonti & Auld said their fee bid, 25% of the settlement fund, was within a range that courts have approved for similarly sized settlements. The plaintiffs’ lawyers have called the settlement the largest data-privacy recovery in history.
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COVID vaccine ‘black hole’ for injury claims is unconstitutional, lawsuit says
Kangaroo court. Star chamber. Potemkin Village. That’s how plaintiffs lawyers in a federal lawsuit filed on Tuesday describe the obscure U.S. government tribunal charged with adjudicating claims by thousands of people who say they suffered serious injuries from COVID-19 vaccines. The Countermeasures Injury Compensation Program is unconstitutional, the suit alleges, because it fails to provide basic due process protections. In her latest column, Jenna Greene looks at the lawsuit and how the forum might be fixed.
Messy Wells Fargo lead-counsel fight poses question: How much do books and records matter?
When Alison Frankel first reported in September on a contest to lead a federal-court shareholder derivative case accusing Wells Fargo directors of failing to avert regulatory lapses, it was messy. Now, Frankel says, it’s even messier. She explains why the leadership tussle casts a spotlight on a frequent issue: How much credit should courts give to lead plaintiff candidates that demand to see corporate books and records before filing their complaints?
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“You’re asking me to read things into the statute that aren’t there.”
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— U.S. Supreme Court Justice Neil Gorsuch, addressing Gibson Dunn’s Eugene Scalia, at an argument at the high court over the scope of the Sarbanes-Oxley federal whistleblower law. Gorsuch and the court’s three liberal justices did not seem to back the high bar adopted by the 2nd Circuit and pushed by Scalia’s client UBS. Reporter Daniel Wiessner writes that the court’s resolution of the case could have a major impact on whistleblower litigation. A ruling in favor of UBS could significantly curtail whistleblower lawsuits.
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- The U.S. Supreme Court will hear arguments in a bid by South Carolina officials to revive a Republican-crafted voting map that a lower court said had unconstitutionally “exiled” 30,000 Black voters from a closely contested congressional district. Jones Day’s John Gore will argue for the president of the South Carolina Senate, and Legal Defense and Educational Fund senior counsel Leah Aden will argue for the South Carolina State Conference of the NAACP. Reporter John Kruzel looks at the stakes at issue in the case.
- In Philadelphia federal court, U.S. District Judge Kelley Brisbon Hodge will hear arguments from Mariner Finance in its effort to dismiss a lawsuit from several U.S. states accusing it of charging borrowers hundreds of millions of dollars for “hidden” add-on products that they never agreed to buy. Mariner, owned by private equity firm Warburg Pincus, has denied engaging in what the state plaintiffs said was the sale of costly policies and other products without telling borrowers.
- U.S. Magistrate Judge John Docherty in Minnesota will hear a request from attorneys for Donald Trump ally Mike Lindell to stop defending him in a lawsuit filed by voting equipment company Smartmatic. Lawyers for the My Pillow chief executive last week sought permission to quit representing him in defamation lawsuits brought by Dominion Voting Systems and Smartmatic, alleging he owes the attorneys “millions of dollars” in unpaid legal fees. Lindell is fighting claims that he spread false conspiracy theories that Dominion and Smartmatic voting machines were used to rig the 2020 U.S. presidential election for Joe Biden.
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Court calendars are subject to last-minute docket changes.
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- Former West Virginia mining company executive Donald Blankenship lost his bid at the U.S. Supreme Court to make it easier for public figures to sue for defamation. The justices turned away the former Massey Energy chief executive’s appeal of a lower court’s decision throwing out his lawsuit. Justice Clarence Thomas in the high court’s order reiterated his view that the justices should reconsider a key media-protection ruling in an “appropriate case.” (Reuters)
- A 9th Circuit order temporarily limited Idaho’s ability to enforce its near-total abortion ban in medical emergencies, as the appeals court weighs the Biden administration’s legal challenge to the ban. The circuit panel last month allowed the state to enforce its ban, reversing a lower court order that had partially blocked it. But the full 9th Circuit said it will rehear the case with 11 of its judges, automatically voiding the panel’s order for now. (Reuters)
- Caroline Ellison, the former CEO of Sam Bankman-Fried’s hedge fund, testified that the crypto mogul directed her and others to defraud customers of his FTX exchange by taking their money without their knowledge. Ellison, prosecutors’ key witness in the case against Bankman-Fried, depicted her former boss as an ambitious young man who had no qualms about sharing misleading financial information with lenders, grew preoccupied with a rivalry with the Binance crypto exchange, and thought he could one day become U.S. president. (Reuters)
- Drugmaker Mallinckrodt won court approval at a hearing before U.S. Bankruptcy Judge John Dorsey for a bankruptcy plan that cuts $1 billion from what it must pay opioid crisis victims, cancels existing equity shares, and trims nearly $2 billion in other debt. The Ireland-based company reached a relatively swift conclusion to its second Chapter 11, which began just 14 months after its previous bankruptcy concluded. (Reuters)
- A woman is suing Hulu, ABC News and production company Glass Entertainment Group in Georgia federal court over Hulu’s docuseries “Betrayal,” which she says uses footage of her without her consent. The series tells the story of Georgia teacher Spencer Herron, who was convicted of sexually abusing the woman. Hulu, ABC, Glass Entertainment and an attorney for Herron did not respond to requests for comment. (Reuters)
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- Paul Hastings hired insurance mergers and acquisitions partners Kirk Lipsey in New York and Chad Vance in Chicago. Both were previously at Sidley. The firm also added Sanjiv Tata, a New York-based insurance regulatory partner who arrives from Mayer Brown. (Reuters)
- BakerHostetler brought on Houston-based business practice partner Cleve Glenn, who focuses on M&A and energy. Glenn was previously at Frost Brown Todd. (BakerHostetler)
- Norton Rose Fulbright added labor and employment partner Debbie Birndorf to the firm’s Los Angeles office from Birndorf Law Offices. (Norton Rose)
- Desmarais added San Francisco-based IP trial partner Betty Chen, who was previously at Fish & Richardson. (Desmarais)
- Paul Weiss added private funds partner Brad Brown in New York from investment manager 3G Capital, where he was general counsel. (Paul Weiss)
- Quarles & Brady added real estate partner Amanda Barritt in Naples, Florida. Barritt was previously at Henderson Franklin Starnes & Holt. (Quarles)
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There’s no one-size-fits-all approach to navigating protected workplace activity and performance management, write Mark Goldstein and Alexandra Manfredi of Reed Smith. Employers should address protected activity and performance issues separately and in real time, the authors write. Here are a few best practices.
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