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Good morning. Elon Musk’s lawsuit against Wachtell offers a peek inside a Wall Street legal powerhouse, and it extends his rocky tensions with law firms and lawyering. Plus, a key gun control measure is in focus at the U.S. Supreme Court; Twitter could face some challenges in any legal action against Meta over its Threads app; and performer Sarah Silverman just hit Meta and OpenAI for alleged copyright infringement. Scroll down for our calendars, and have a great week ahead!
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Elon Musk’s X Corp turned to Austin, Texas-based firm Reid Collins & Tsai to sue Wachtell, marking Musk’s latest skirmish over corporate attorneys and offering a rare and detailed public glimpse inside one of the country’s elite law firms.
Musk sued Wachtell last week in San Francisco Superior Court, seeking to recover most of a $90 million fee the firm received in defeating Musk’s bid to abandon his $44 billion purchase of Twitter, our colleague Jon Stempel reports. “Wachtell arranged to effectively line its pockets with funds from the company cash register while the keys were being handed over” to Musk, the complaint said.
Business litigator Bill Reid, among the lawyers who filed the complaint, is senior founding partner of litigation-focused, 38-lawyer Reid Collins. Wachtell did not respond to messages seeking comment from Reuters.
Musk’s suit came teeming with emails, memos and billing records as attached exhibits, providing a behind-the-scenes glimpse of Wachtell, known for its mergers and acquisitions work. In one memo, Wachtell provided examples to Twitter of legal services that earned the firm between $33 million and $134 million in recent years. Wachtell’s litigation co-chair, William Savitt, was shown in another exhibit to bill at $1,850 an hour.
Musk’s bashing of Wachtell on Twitter follows his public derision of firms Perkins Coie and Cooley. His rocky history with lawyers long has generated headlines.
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- New York-founded Stroock & Stroock & Lavan and Boston-founded Nixon Peabody called off talks to merge. Stroock said “together we decided that further talks are not in the best interests of either firm.” Stroock has seen a wave of partner exits in recent months across various practice groups and geographies. (Reuters)
- An attorney disciplinary action against former DOJ lawyer Jeffrey Clark is moving ahead over his objections that it should be paused while he pursues an appeal to halt the proceeding. Clark is facing disciplinary charges over his efforts to help Donald Trump overturn his 2020 presidential election loss while working in the DOJ. A D.C. professional responsibility board will convene on Wednesday to set a hearing schedule in the case. Clark has denied wrongdoing. (Reuters)
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That’s the number of jobs the U.S. legal services sector added in June, making it the second-best month ever in terms of the number of people employed, according to new Labor Department data. Legal sector jobs totaled 1,185,100 last month, according to preliminary seasonally adjusted data released by the U.S. Bureau of Labor Statistics. The count includes a variety of legal workers, such as paralegals and judges, but the majority are lawyers, the Labor Department says. The numbers could be revised downwards by BLS.
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More than seven years after Delaware Chancery Court clamped down on fees for plaintiffs lawyers in immaterial M&A challenges, Chancery’s top judge has issued a new ruling that is explicitly intended to discourage unwarranted “merger tax” suits. Those cases, wrote Chancellor Kathaleen McCormick in Anderson v. Magellan, are “still a problem.” Resolving deal tax cases isn’t as costly a proposition as it once was for corporations, McCormick said, and the litigation isn’t as big of a scourge for Chancery Court as it was before the court’s landmark Trulia ruling. But merger tax litigation, she wrote, “continues to plague Delaware corporations.” McCormick’s quick fix: a tightened test for fees for the lawyers who file these cases. Alison Frankel has the details.
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“The misconduct here sadly transcends all his past accomplishments.“
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- In Boston federal court, U.S. District Judge Allison Burroughs will hold a scheduling conference in an intellectual property lawsuit that SharkNinja filed against rival Dyson over a hair care product. Dyson’s lawyers at DLA Piper have filed a counterclaim alleging patent infringement. Attorneys from WilmerHale and Gibson Dunn represent SharkNinja.
- “Jesus Christ Superstar” Broadway actor James Beeks is scheduled to stand trial in D.C. for his alleged participation in the Jan. 6, 2021, attack on the U.S. Capitol. U.S. District Judge Amit Mehta is set to preside at the “stipulated” bench trial, where Beeks will agree to certain facts. In court papers, prosecutors said Beeks “conspired with others known and unknown to forcibly enter the Capitol.” Beeks, who is representing himself, missed a recent court hearing, prompting Mehta to declare that if he “is not present for the start of trial, the court may take steps to compel his appearance.” The U.S. was ordered to pay for Beeks’ travel from Orlando to D.C. for the trial, which is anticipated to last a day. Beeks has pleaded not guilty.
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Court calendars are subject to last-minute docket changes.
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- On Tuesday, two PGA Tour officials will testify before a U.S. Senate panel about the tour’s merger with Saudi-backed LIV Golf, but LIV officials have declined to appear. Ron Price, chief operating officer of the PGA Tour, and board member Jimmy Dunne have agreed to testify before the Senate Permanent Subcommittee on Investigations, said Senator Richard Blumenthal, chair of the committee, and Senator Ron Johnson, the top Republican. The PGA Tour, DP World Tour and LIV, which had been involved in a bitter fight that split the sport, announced an agreement in early June to merge and form a unified commercial entity.
- Also on Tuesday, U.S. District Judge Yvonne Gonzalez Rogers in Oakland will hear arguments from Apple in its bid to dismiss a lawsuit from French app developers that accused the iPhone maker of violating U.S. antitrust law by overcharging them to use its app store. The plaintiffs in the proposed class action include Société du Figaro, which develops the Figaro news app, L’Équipe 24/24, which develops the L’Équipe sports news and streaming app, and Le Geste, an association of French content providers. A team from plaintiffs firm Hagens Berman represents the developers, and lawyers from Gibson Dunn will appear for Apple.
- On Wednesday, the U.S. Senate Commerce Committee plans to vote on FCC nominee Anna Gomez, a Democratic telecommunications attorney who is now serving as a senior adviser for the State Department’s Bureau of Cyberspace and Digital Policy. Democrats have been stymied since 2021 from gaining a majority on the five-member telecommunications regulator.
- On Thursday, U.S. District Judge Edward Davila in San Jose will weigh claims that Disney’s business contracts have artificially driven up the cost of video streaming services such as YouTube TV and DirecTV Stream in violation of U.S. antitrust law. Consumers alleged in a pair of lawsuits that Disney’s ownership of the sports TV programmer ESPN — part of the base package for a YouTube TV subscription — has allowed the company to “set a price floor” in the market for TV streaming. The plaintiffs claimed they are paying more for their subscriptions than they would if ESPN were not part of the minimum service. Disney’s attorneys at Farella Braun and Cravath argue that plaintiffs “misconstrue basic antitrust and economic concepts.”
- On Friday, U.S. District Judge Aileen Cannon is scheduled to hold a hearing in Miami to determine how to handle classified information in the criminal case against Donald Trump over his retention of government materials. Legal experts have said the complexities surrounding the use of highly classified documents as evidence are likely to delay Trump’s Aug. 14 trial. Trump and an aide who was also charged have pleaded not guilty.
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Court calendars are subject to last-minute docket changes.
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- Comedian Sarah Silverman and two authors filed copyright infringement lawsuits against Meta and OpenAI for allegedly using their content without permission to train artificial intelligence language models. The proposed class actions in San Francisco federal court alleged Facebook parent company Meta and ChatGPT maker OpenAI used copyrighted material to train chatbots. Meta and OpenAI did not immediately respond to requests for comment. (Reuters)
- A Tennessee law prohibiting doctors from providing medical care such as puberty-blockers and gender affirming surgery for transgender minors can go into effect immediately, a divided 6th Circuit panel ruled. The appeals court said advocacy groups that had challenged Tennessee’s law could not show they were likely to prevail on their claims it violated the U.S. Constitution. The panel order reversed a lower court’s decision that had blocked Tennessee from enforcing the law while it was being challenged. Kentucky has asked the appeals court to let a state law banning puberty-blockers to take effect. (Reuters)
- The family of a transgender middle school student sued to block an Idaho law requiring public school students to use the restroom corresponding to their sex assigned at birth, the latest in a series of legal fights over state laws targeting transgender youth. The Boise federal court lawsuit, filed by Munger Tolles and Lambda Legal, said the law discriminates on the basis of gender identity and violates students’ right to privacy. (Reuters)
- Footwear makers Crocs and rival Joybees filed competing claims against each other in Colorado federal court, as the companies clash over corporate secrets, intellectual property and competition. Crocs filed a second lawsuit against Joybees, alleging trade secret theft and other claims. Joybees is accusing Crocs of abusing its monopoly power in violation of U.S. antitrust law. (Reuters)
- A 3rd Circuit panel rejected Venezuela’s bid to prevent six companies from joining a proposed court auction of shares in a Citgo Petroleum parent to enforce judgments for past expropriation of assets. The decision allows the six to move ahead with their nearly $3 billion in combined claims against Venezuela state oil firm PDVSA in a Delaware federal court. (Reuters)
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The U.S. Supreme Court ruling in United States ex. rel. Schutte v. Supervalu resolved a split among U.S. appeals courts over the intent standard for False Claims Act violations, write Tanisha Palvia and Alexandra Davidson of Moore & Van Allen. The law’s intent element, the authors write, refers to a defendant’s knowledge and subjective belief, not what an objectively reasonable person may have known or believed. Establishing a defendant’s subjective state of mind will be a top focus of discovery.
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