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Good morning. The U.S. Supreme Court is set to hear a dispute this week over the SEC’s enforcement proceedings in a closely-watched case. Plus, the 5th Circuit unveiled a proposed rule aimed at regulating the use of generative AI tools by lawyers appearing before it, and the Biden administration defended West Point’s consideration of race in admissions. We hope you had a great Thanksgiving — now let’s get back to it!
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SEC enforcement venue faces showdown
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The U.S. Supreme Court this week is set to take up a major dispute over the lawfulness of the SEC’s in-house enforcement proceedings. The outcome of the case could broadly undercut the power of federal agencies.
The justices on Wednesday will hear the Biden administration’s appeal of a 5th Circuit decision that struck down certain SEC enforcement proceedings as unconstitutional for violating the right to a jury trial and infringing on presidential and congressional powers.
Hedge fund manager George Jarkesy, who the SEC had fined and barred from the industry after determining he had committed securities fraud, is at the center of the case. Jarkesy is represented by Texas lawyer S. Michael McColloch. U.S. Solicitor General Elizabeth Prelogar is defending the securities agency.
One legal scholar said a broad reading of the 5th Circuit’s ruling could be used to argue that agencies such as the EPA, Commodity Futures Exchange Commission and Consumer Financial Protection Bureau can only seek penalties for fraud-like violations in court.
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- The 5th Circuit unveiled a proposal that would require lawyers to certify that they either did not rely on artificial intelligence programs to draft briefs or that humans reviewed the accuracy of any text generated by AI in their court filings. The court’s proposed rule appears to be the first by any of the nation’s 13 federal appeals courts aimed at regulating the use of generative AI tools by lawyers appearing before it.
- A white, heterosexual, male law student who sued NYU claiming that its flagship law review unlawfully gives preference to women and minorities may proceed with his case anonymously. U.S. District Judge Victor Marrero in Manhattan did not explain his reasoning in his order, but noted that NYU may seek to disclose the plaintiff’s identity once the case is assigned to a judge.
- A federal judge has rejected North Carolina Supreme Court Justice Anita Earls’ bid to block a state judicial ethics commission from investigating her over comments she made about the lack of diversity in the state’s courts. Earls’ lawyer said she planned to appeal to the 4th Circuit.
- The California Supreme Court adopted a package of ethics reforms for bar officials and judges in the state, in the latest fallout from criticism over the regulatory agency’s oversight of disgraced plaintiffs’ attorney Tom Girardi.
- Plaintiffs’ firms Hausfeld, Korein Tillery and Nussbaum Law Group are among those appointed to lead antitrust litigation in New Jersey federal court accusing major fragrance makers of unlawfully conspiring to fix prices. U.S. Magistrate Judge Jessica Allen in an order spurned a leadership bid from a rival group that included Quinn Emanuel and Cohen Milstein.
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That’s how much in customer withdrawals that crypto lender Genesis Global is seeking to recover in a new lawsuit against partner Gemini Trust. Genesis in the lawsuit, filed by Cleary Gottlieb, said up to 230,000 users in the two companies’ “Earn” investing program withdrew more than half of billion dollars from the crypto lending platform in the 90 days before it filed for bankruptcy. U.S. bankruptcy law allows those withdrawals to be clawed back so Genesis can make a fairer redistribution among all of its creditors. Gemini assailed the move.
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“I have a ‘no alcohol while sitting’ rule.“
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—Judge Melissa Clarke in London’s High Court when asked by a lawyer for British cider company Thatchers to conduct a taste test to find out if Aldi’s offering could damage drinkers’ perception of Thatchers’ reputation. Thatchers accused Aldi of having “copycatted” its cloudy lemon cider, and the judge has been asked to decide whether the design of Aldi’s cider cans infringes Thatchers’ trademark. To the question about a taste test, Clarke said she was “happy to do so, but not in court.”
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- Today, a trial in Manhattan federal court is scheduled to begin in the prosecution of a Venezuelan man, Carlos Orense, who is accused of shipping tens of thousands of kilograms of cocaine. The trial, estimated to last a couple of weeks, is set to focus on alleged ties between drug traffickers and leaders of the South American country’s military, Luc Cohen reports.
- On Tuesday, the New York City Bar’s white-collar symposium will feature speakers including Manhattan U.S. Attorney Damian Williams and Marshall Miller, a top-level official at the DOJ. Panel discussions include global enforcement trends and anti-corruption developments.
- On Wednesday, the full 5th Circuit will hear arguments in a challenge to a new Texas law that limits books with sexual content in school libraries. The state has appealed a preliminary injunction against the law, which requires booksellers to rate books’ appropriateness against a set of criteria laid out in the legislation. The booksellers say the law violates their rights under the First and Fourteenth amendments because it forces them to engage in speech they disagree with.
- On Thursday, Students for Fair Admissions, a group led by affirmative action opponent Ed Blum, faces a deadline to ask a federal judge to award it legal fees and expenses for successfully challenging the University of North Carolina’s race-conscious college admissions policies at the U.S. Supreme Court. The group faces a separate deadline for fees in its case against Harvard on Friday.
- On Friday, U.S. District Judge Richard Leon in D.C. is slated to sentence Klete Keller, a swimmer and Olympic gold medalist, after he pleaded guilty to charges stemming from his involvement in the January 6 riot at the U.S. Capitol.
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Court calendars are subject to last-minute docket changes.
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- Israel-based drugmaker Teva has agreed to end a patent lawsuit over Eli Lilly’s migraine drug Emgality following a USPTO decision that invalidated the Teva patents at issue, the companies said in a court filing.
- A 5th Circuit panel struck down the Biden administration’s decision to deny small refiners “hardship waivers” that exempt them from nation’s biofuel mandates, in a win for the refining industry. The court said in its decision that the EPA’s rejection of the waiver requests was “impermissibly retroactive; contrary to law; and counter to the record evidence.”
- U.S. District Judge Donald Molloy in Missoula largely blocked Montana’s upcoming wolf trapping season over concerns that devices used by hunters could harm threatened grizzly bears, handing a win to conservation groups days before the season’s expected start. Advocates said the injunction covers crucial areas where grizzly bears live and roam.
- Kraft, General Mills and other major food giants this week will argue for damages against the country’s top egg producers. Federal jurors in Chicago last week found egg companies Cal-Maine and Rose Acre Farms conspired with industry trade groups to artificially keep the price of eggs high. Lawyers from Jenner represent the plaintiffs.
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- Law firm Paul Hastings said that longtime Skadden lawyer Anna Rips has joined its New York office as a partner. Rips will join the firm’s investment funds and private capital practice. (Reuters)
- Kirkland added Ceinwen Rees as a London-based tax partner from Macfarlanes. (Kirkland)
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As a result of recent rulemaking and regulations added to the U.S. government’s foreign export controls, foreign manufacturers that incorporate U.S. origin items into their products or production lines are facing increasing compliance burdens and uncertainty, writes Matthew Goldstein of Akerman. The changes are meant to protect U.S. technology’s dominance in semiconductors, but there are concerns they could have the opposite effect, Goldstein says.
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