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Good morning. A Reuters special investigation examines how the preemption doctrine has become one of corporate America’s strongest tools in the courtroom. Plus, Fenwick & West doesn’t have to hand over documents from its FTX work, and “MetaBirkin” NFTs get a permanent ban. All that, and a peek at what’s coming up this week in the courts. Stick with us!
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Nicholas England, a healthy 22-year-old from Virginia, fatally shot himself in the head less than two weeks after he started taking a generic version of Singulair, an allergy medicine that had been linked for years to episodes of depression and suicidal thinking.
His parents explored a lawsuit against Merck, the developer of Singulair, but they were shocked to learn from legal advisers that they had no case. Like countless other potential plaintiffs, they had run into one of corporate America’s most effective liability shields: the legal doctrine of preemption, the principle that federal law supersedes state law.
Armed with U.S. Supreme Court rulings on preemption starting in the 1990s, companies increasingly argue federally regulated products or services should be immune from lawsuits alleging state-law violations. In a new reading of an old constitutional principle, judges have held that federal law, including the decisions of U.S. regulatory agencies, should preempt, or override, state statutes that seek to hold companies accountable for consumer harms.
Corporate preemption defenses have proved broadly effective, according to a Reuters analysis of court cases and dozens of interviews with attorneys, legal scholars and plaintiffs or potential plaintiffs affected by preemption rulings. The analysis of federal appeals and Supreme Court rulings involving preemption found that judges ruled two-thirds of the time to weaken or kill lawsuits alleging deaths or injuries caused by corporate negligence or defective products.
Merck declined to comment and referred questions to Organon & Co, a Merck spinoff that now markets Singulair. Organon said in a statement that it is confident doctors and patients have gotten “complete and appropriate information” on Singulair’s safety.
Read more about how preemption has protected companies like Merck.
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- Rudy Giuliani, the former New York mayor and a one-time personal lawyer to Donald Trump, was ordered to pay legal fees associated with the plaintiffs’ effort to force Giuliani to search for and turn over records in a defamation lawsuit brought by former Georgia election workers. U.S. District Judge Beryl Howell previously said Giuliani must produce nearly all records requested by the election workers by June 30. (Reuters)
- The 6th Circuit mostly upheld the sanctions imposed on Sidney Powell and other lawyers over their “frivolous” lawsuits aimed at overturning President Joe Biden’s 2020 victory in Michigan. The appeals court found that the lawyers’ allegations of electoral fraud were baseless, frivolous or even refuted by their own filings, but partially reduced the $175,000 penalty initially imposed on Powell and five other lawyers to about $152,000. (Reuters)
- The Texas Supreme Court agreed to hear arguments on whether to revive a state judge’s lawsuit against a judicial ethics panel that sanctioned her in 2019 over her refusal to officiate at same-sex marriage ceremonies. Dianne Hensley, a Texas justice of the peace in Waco, said her “sincerely held religious belief as a Christian” prevented her from performing the weddings. The judge’s legal team is led by Jonathan Mitchell, an architect of anti-abortion legislative efforts in Texas. (Reuters)
- U.S. District Judge Lewis Kaplan denied Sam Bankman-Fried’s push to get law firm Fenwick & West, which advised now-bankrupt FTX, to hand over documents he says can help him beat fraud charges. Bankman-Fried had said the documents could prove he relied on legal advice from the law firm and did not believe he was breaking the law. Kaplan called the subpoena request a “fishing expedition.” (Reuters)
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Difficult decision. Economic headwinds. Right-size. Announcing workforce cuts is never easy, so perhaps it’s not surprising that law firms tend to fall back on similar platitudes in delivering the news. Still, Jenna Greene in her latest column sees both subtle and telling differences in how Big Law leaders from firms including Orrick, Cooley and Goodwin have handled the process — as well as those like Kirkland that say any cuts are strictly performance-related.
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“Now, any defendant that devises a non-frivolous argument for arbitration can not only appeal, but also press pause on the case — leaving plaintiffs to suffer harm, lose evidence and bleed dry their patience and funding in the meantime.“
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- U.S. District Judge Jed Rakoff is set to hold a hearing in Manhattan to consider the proposed $290 million settlement of a civil lawsuit brought by women who say they were victims of Jeffrey Epstein’s sex trafficking against JPMorgan Chase. The settlement covers women who were sexually abused or trafficked by Epstein from Jan. 1, 1998, until his death on Aug. 10, 2019, in a Manhattan jail cell. Victims led by a former ballet dancer known as Jane Doe 1 said the bank missed red flags of Epstein’s abuses and stayed in touch with him long after his official departure.
- U.S. District Judge Elizabeth Hanes in Norfolk, Virginia, will hold day three of a four-day hearing on Centripetal Networks’ patent lawsuit against Cisco Systems. Centripetal was previously awarded over $2.7 billion in damages by U.S. District Judge Henry Morgan. But the Federal Circuit vacated and remanded the case after finding Morgan should have recused himself from the case once he learned that his wife owned 100 Cisco shares worth $4,688. The court ordered the case reassigned to another judge, because letting Morgan stay on risked undermining public confidence in the judicial process.
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Court calendars are subject to last-minute docket changes.
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- On Tuesday, U.S. District Judge Alvin Hellerstein is holding a hearing on Donald Trump’s effort to move his criminal case from Manhattan state court to federal court. Trump, who is charged with falsifying business records connected to a hush money payment allegedly made to porn star Stormy Daniels prior to the 2016 election, is not expected to attend the hearing. Manhattan District Attorney Alvin Bragg has pushed back against moving the case, arguing that Trump is not entitled to the change in venue because he is not a federal officer.
- On Wednesday, the Federal Circuit Bar Association’s Bench and Bar Conference kicks off in Colorado Springs, Colorado. Colorado Attorney General Phil Weiser is listed as one of the event’s speakers, as is Federal Circuit Judge Tiffany Cunningham.
- Also Wednesday, U.S. District Judge Catherine Eagles is holding a hearing on Planned Parenthood’s bid to temporarily block North Carolina’s law banning abortions after 12 weeks of pregnancy as unconstitutional. Republicans Phil Berger, president pro tem of the state Senate, and North Carolina House Speaker Timothy Moore have asked to intervene in the lawsuit to defend the law. The ACLU is representing Planned Parenthood.
- On Thursday, U.S. prosecutors face a deadline in the 2nd Circuit to file their brief as Ghislaine Maxwell appeals her conviction and 20-year prison sentence for helping Jeffrey Epstein sexually abuse teenage girls. Maxwell, who is currently in federal prison in Florida, has said her conviction should be tossed because a slew of errors marred her trial and because prosecutors made her a scapegoat.
- On Friday, U.S. District Judge Joanna Seybert is holding a status hearing in indicted U.S. Rep. George Santos’ case. Santos has pleaded not guilty to 13 criminal charges including fraud, money laundering and theft of public funds.
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- U.S. District Judge Jed Rakoff granted Hermes’ request to permanently block artist Mason Rothschild’s sales of “MetaBirkin” non-fungible tokens following a jury’s verdict that found they violated the French luxury house’s trademark rights in its famed Birkin handbags. Rakoff said the permanent injunction was justified because Rothschild’s continued marketing of the NFTs would likely confuse consumers and irreparably harm the company. (Reuters)
- Donald Trump will deposit $5.55 million with a federal court as security while the former U.S. president appeals a $5 million jury verdict that found he sexually abused and defamed the writer E. Jean Carroll. U.S. District Judge Lewis Kaplan, who oversaw the trial, agreed to the deposit proposed by Trump’s lawyer Joseph Tacopina, whose law firm has been holding the $5.55 million. Courts often require 111% of a judgment to be deposited during appeals. (Reuters)
- A group of media organizations, including Bloomberg, Dow Jones & Company, The New York Times Company and the Financial Times, appealed a court decision that allows FTX to keep customer names secret during its bankruptcy case. Their attorneys have argued that FTX is not entitled to a “novel and sweeping exception” to bankruptcy’s typical disclosure requirements simply because its customers used cryptocurrency. (Reuters)
- The U.S. is not liable for clean up costs for World War ll-era pollution at 12 refineries now owned by Valero Energy and its subsidiaries, the 6th Circuit said. The appellate panel said heavy federal regulation of refineries during the war wasn’t enough to qualify the U.S. as an operator that is liable for a share of the cleanup costs under the nation’s Superfund law. (Reuters)
- British drugmaker GSK reached a confidential settlement with California resident James Goetz, who says he developed bladder cancer from taking its discontinued heartburn drug Zantac, in a case that was due to go to trial on July 24. GSK said it did not admit any liability. (Reuters)
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- Husch Blackwell hired energy-focused partner Sara Bergan in Minneapolis, the latest addition from Portland-based litigation firm Stoel Rives. (Reuters)
- Fox Rothschild hired Kevin Peters as a partner in its litigation practice in Boston. Peters was a partner at Gesmer Updegrove. (Fox Rothschild)
- Baker Botts added Shane Wilson to its global projects group as a partner. Wilson joins the firm’s Dubai office from Squire Patton Boggs. (Baker Botts)
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The U.S. Supreme Court earlier this month decided two consolidated cases raising critical questions about the scope of the False Claims Act, which allows private-citizen whistleblowers — called relators in court — to file claims against individuals or entities alleging they have defrauded the government by submitting false claims. The high court reversed a 7th Circuit ruling that had evoked a bipartisan group of 32 state attorneys general to file an amicus brief in support of relators, who, when such actions are successful, share in the government’s recovery. Martine Cicconi and Mark Herring of Akin Gump discuss the importance of the decision.
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Correction: Friday’s edition of the Daily Docket misspelled Hillary Clinton’s first name in the newsletter’s introduction.
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