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Good morning. A U.S. judge’s order requiring Covington to turn over some client information opens a new door for the SEC on cyber investigations, lawyers tell Reuters. Plus, British billionaire Joe Lewis has hired a Skadden vet to fight U.S. insider-trading charges; Sam Bankman-Fried’s bail conditions are curbed; and Stroock’s departures are climbing. The JPML is meeting today, and a judge won’t halt future JetBlue-American deals. It’s Thursday, and this week is flying by!
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A federal judge’s ruling that law firm Covington & Burling must identify clients caught up in a cyberattack on the firm gives federal agencies a path to scrutinize companies by obtaining information from their law firms, attorneys told Andrew Goudsward.
U.S. District Judge Amit Mehta ruled that Covington must name seven clients that could be relevant to the SEC’s probe of insider trading and other securities violations associated with the 2020 hack. Covington had argued that clients are entitled to privacy protections under the U.S. Constitution and that the firm should not be forced to subject its own clients to government scrutiny without evidence of wrongdoing, but Mehta ruled Covington “could not promise any of its clients that their identities, which generally are not protected by privilege, would remain secret in the face of a lawfully issued administrative subpoena.”
Mehta’s holding opens a new avenue of investigation for the SEC at a time when law firms are increasingly victimized by cyberattacks. Recently, hackers with the ransomware group known as cl0p claimed to have stolen data from Kirkland & Ellis, the largest law firm in the United States, and K&L Gates. The firms have not confirmed the claims.
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- Steptoe & Johnson said it has hired 35 people — including 27 lawyers — from Stroock & Stroock & Lavan, which has seen a string of exits this year as it pursues a potential merger. (Reuters)
- A shareholder of a Chinese software company tried to “harass” global law firm DLA Piper with a failed $180 million legal malpractice lawsuit, a Manhattan magistrate judge said in a 32-page report. U.S. Magistrate Judge Valerie Figueredo said she is recommending to U.S. District Judge Victor Marrero that China AI Capital Limited be sanctioned for its lawsuit against DLA Piper and one of its lawyers. (Reuters)
- Freshfields Bruckhaus Deringer reported an 8% increase in revenue to 1.84 billion pounds ($2.38 billion). The firm’s profit per equity partner increased by 1% to 2.09 million pounds ($2.70 million) in its financial year ending April 30. Freshfields saw about an 8% rise in profit per equity partner the prior year. (Reuters)
- Rudy Giuliani, onetime attorney for Donald Trump, admitted in a court filing that he made defamatory statements about a pair of Georgia election workers who are suing him. Giuliani told U.S. District Judge Beryl Howell that he does not dispute that comments he made about Wandrea Moss and Ruby Freeman “carry meaning that is defamatory per se.” An adviser to Giuliani said he wanted “to move on to the portion of the case that will permit a motion to dismiss.” (Reuters)
- A former longtime federal prosecutor in Pensacola was sentenced to six months of probation for a felony criminal ethics violation in which authorities said she approved contracts in her office for companies that financially benefited her husband. An attorney for Kathryn Drey said she did not act intentionally to violate ethics provisions. Prosecutors had sought two years of probation. (Reuters)
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That’s the number of attorneys general who moved to block a proposed $10.3 billion settlement that would resolve claims against 3M over water pollution tied to “forever chemicals,” claiming the deal fails to adequately hold the company accountable. The 19 states and three territories, led by California, Texas and New York, said they were filing their opposition to the settlement in South Carolina federal court, where thousands of lawsuits against 3M and other companies over per- and polyfluoroalkyl substances, or PFAS, are being fought. 3M did not admit liability in the proposed settlement. The settlement must be approved by U.S. District Judge Richard Gergel, who is overseeing the cases.
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Apple, Meta and Google warned the 9th Circuit this week that if online platforms can be held liable for processing users’ purchases of virtual chips sold by casino game apps, the entire internet economy could be at risk. Alison Frankel has the details on opening briefs in an appeal with (if you’ll forgive the pun) potentially sky-high stakes.
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“The government should not dictate what is allowed in the marketplace of ideas.“
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—Lawyers at Haynes and Boone, in a lawsuit the firm filed for a coalition of booksellers, authors and publishers seeking to block a new Texas state law that bans “sexually explicit” books from public schools. The law, set to take effect in September, requires sellers to rate books based on their references to sex, and it empowers the Texas Education Agency to review those ratings. Vendors that do not participate will be barred from selling any books to Texas schools. Any books rated explicit cannot be sold to public schools and must be recalled from libraries.
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- U.S. District Judge William Young will oversee a final pretrial conference in a lawsuit brought by a former federal public defender in North Carolina who is suing the judiciary for violating her constitutional rights by being deliberately indifferent to her complaints of sexual harassment. Caryn Strickland alleges she was sexually harassed by a superior and stonewalled in her efforts to have the judiciary address her complaint. The trial is scheduled for September.
- The Judicial Panel on Multidistrict Litigation, meeting in San Francisco, will take up venue disputes in cases that include insulin pricing and catheter products liability. The panel also will consider Google’s effort to pause a prior order that said Texas can return to its home state to pursue a digital ads antitrust case against the company. Lawyers for Texas had asked for the lawsuit to be moved from Manhattan to Texas after the U.S. Congress passed the Venue Act in 2022 that grants state attorneys general the right to choose where an antitrust lawsuit will be litigated. Google’s attorneys want the case to be a part of multidistrict litigation in Manhattan.
- Prince Harry will learn whether his lawsuit can go to trial against Rupert Murdoch’s British newspaper group, which he accuses of phone-hacking and other unlawful activities. Harry, the younger son of King Charles, is suing News Group Newspapers at the High Court in London over multiple alleged unlawful acts he says were carried out on behalf of its tabloids, the Sun and the now-defunct News of the World, from the mid-1990s until 2016. News Group has sought to have the lawsuit thrown out, arguing the case should have been brought sooner.
- U.S. Magistrate Judge Thomas Hixson in San Francisco will hear a dispute over subpoenas that Kirkland has issued as part of a lawsuit filed by a former associate at the firm alleging workplace bias. Former Kirkland associate Zoya Kovalenko said in a letter filed in Oakland federal court this week that Kirkland’s subpoenas seeking employment records from law firms Paul Hastings and Fish & Richardson are “invasive and harassing” in nature. Kirkland has called her objections to the subpoenas “meritless.” The firm said Kovalenko’s “reduced privacy interest is outweighed by K&E’s significant need for the subpoenaed documents.”
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Court calendars are subject to last-minute docket changes.
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- The Biden administration asked the 5th Circuit to lift an order sharply curbing government officials’ communications with social media companies as a lawsuit accusing U.S. officials of seeking to censor certain views about COVID-19 and other topics online makes its way through the courts. The DOJ’s brief argued that a lower court judge’s decision was overly broad and would hurt the government’s ability to fight misinformation on platforms in a crisis. (Reuters)
- Bankrupt drugmaker Endo International said that the U.S. government’s opposition to its bankruptcy sale threatened to undo nearly $600 million in opioid settlements reached with states and individuals impacted by the opioid crisis. Endo’s top lenders, owed nearly $6 billion, are planning to acquire the company and fund the opioid settlements, but the government argues that the deal violates U.S. bankruptcy law because it would pay some creditors while leaving nothing for other creditors including federal government agencies. (Reuters)
- U.S. District Judge Leo Sorokin in Boston rejected the DOJ’s bid to restrict JetBlue and American Airlines from entering into any partnerships with other carriers akin to their now-scrapped Northeast Alliance, which the court found anticompetitive. Sorokin in May ruled for the DOJ and six states in a lawsuit challenging the partnership, finding that it violated federal antitrust law. (Reuters)
- A London jury found actor Kevin Spacey not guilty of carrying out multiple sex assaults on four men. After more than 12 hours of deliberation, the jury acquitted the Oscar-winning actor by a majority on nine charges, which he was accused of committing between 2004 and 2013 at a time when he was working at London’s Old Vic theater. During the four-week trial, prosecutors described the actor as a “sexual bully.” Spacey said he was “humbled” after the verdict. (Reuters)
- A 2nd Circuit panel said a Manhattan federal judge who sentenced prosecutors’ star cooperating witness in a series of high-profile New York political corruption trials to five months in prison should have recused himself. The appeals court threw out the original sentence imposed on Jona Rechnitz and ordered a new one. In its ruling, the circuit panel said U.S. District Judge Alvin Hellerstein’s relationship with a witness in a related case called his impartiality into question. (Reuters)
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- Venable added Philip Sheng as a San Francisco-based intellectual property litigation partner from Davis Polk. (Venable)
- Dentons hired commercial litigation partner Sulema Medrano in the firm’s Chicago office. Medrano previously was at Faegre Drinker. (Dentons)
- Womble Bond Dickinson added New York-based bankruptcy partners Edward Schnitzer, David Banker, and Wojciech Jung. Schnitzer and Banker join the firm from Montgomery McCracken, and Jung was previously at Lowenstein Sandler. (Womble)
- Quarles & Brady added Robert Browning as a San Diego-based tax partner in the business law practice. He was previously at Armstrong Teasdale. (Quarles)
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