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After a Delaware court threw out Elon Musk’s $56 billion pay package, the Tesla chief executive and a board seen as captive to him must find a way to negotiate a replacement contract. It will not be easy, Hyunjoo Jin and Tom Hals report.
The ruling is spurring on investors who for years have raised concerns about Tesla board independence, and it could be a turning point for Musk, who recently said he was uncomfortable transforming Tesla into an artificial intelligence leader if his control did not rise with a new pay package.
“This throws Tesla into a complete sort of tailspin from an executive perspective,” said Tesla shareholder Ross Gerber, who said the court decision essentially required new independent board members who would provide CEO oversight. “Then it gets real messy because Elon — it’s either his way or the highway,” said Gerber, who last year publicly considered a board run as an independent.
Musk has not said what he will do, though an appeal is almost certain.
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- A Pennsylvania lawyer who challenged the state’s anti-harassment and anti-discrimination professional rule for lawyers asked the U.S. Supreme Court to weigh in on the case. The 3rd Circuit in August said Zachary Greenberg had not shown that the professional conduct rule threatened his constitutional free speech rights.
- The revamped bar exam set to debut in July 2026 won’t rely on ExamSoft — the testing platform that has suffered a series of tech problems over the years. The National Conference of Bar Examiners said it switched to Surpass Assessment software for the NextGen bar exam.
- Quinn Emanuel beat a bid from major health insurers seeking an accounting of how the firm distributed $185 million in legal fees from an award prior to it being overturned. A group of insurers that are part of a class action in the case contend the firm should receive $8 million for its work on a $3.7 billion settlement. Quinn Emanuel has asked the court anew to award $185 million in fees.
- Husch Blackwell elected St. Louis-based labor and employment lawyer Joe Glynias to be its next executive board chair effective April 1, as the firm gains new leadership for two top roles. Jamie Lawless will officially start as the firm’s chief executive today.
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That is the amount that eBay agreed to pay to resolve DOJ allegations that it did not try hard enough to stop criminals from buying devices for making counterfeit drugs, including pills laced with fentanyl. The deal is the DOJ’s first settlement with an e-commerce company for violating the federal Controlled Substances Act, which governs the manufacturing and distribution of drugs. EBay also must upgrade compliance measures.
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Facing $9 billion in exposure in three antitrust class actions over ATM fees, Visa and Mastercard have asked the U.S. Supreme Court to tighten the standard for trial courts weighing whether to certify plaintiffs to sue as a class. Alison Frankel explains why the credit card companies contend there’s a split among the federal circuits on the degree of scrutiny that trial judges must use to evaluate plaintiffs’ assertions of classwide injury.
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“The costs and risks of creating a viable exchange from what Mr. Bankman-Fried left in a dumpster were simply too high.“
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— Sullivan & Cromwell’s Andy Dietderich, a lawyer for FTX, on the company’s decision to ditch efforts to restart its crypto exchange and instead opt to liquidate all assets and return funds to customers. Failed negotiations with potential bidders and investors underscored the fact that FTX was never what it appeared to be, and founder Sam Bankman-Fried never built the underlying technology or administration necessary to run the company as a viable business, Dietderich said at a bankruptcy court hearing.
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- The state of Tennessee will urge a federal appeals court to overturn a judge’s decision holding that a state law restricting drag performances in public or where children were present was unconstitutional. The case is before the 6th Circuit and was brought by Friends of George’s, a Memphis-based LGBTQ theater group. Tennessee’s bid to ban the performances was part of a Republican-led effort to limit drag in at least 15 states.
- The 2nd Circuit will take up a dismissed $180 million malpractice lawsuit against DLA Piper from its ex-client Link Motion. A Manhattan judge last May dismissed Link Motion’s case, ruling that it was filed too late. U.S. District Judge Victor Marrero found that a three-year statute of limitations expired in January 2022, eight months before the Chinese software company sued. Link Motion’s allegations stemmed from a shareholder suit that forced the company into receivership.
- Proskauer Rose was due to update a Manhattan federal judge on finalizing a settlement with its former chief operating officer, whom it accused of stealing a trove of confidential information and trying to recruit other firm employees to a competitor. A settlement would end Proskauer’s lawsuit against Jonathan O’Brien, who was fired as he was poised to join rival firm Paul Hastings. O’Brien has denied Proskauer’s claims that he planned to take its secrets to another employer.
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Court calendars are subject to last-minute docket changes.
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- Fearless Fund, an Atlanta-based venture capital fund, urged the 11th Circuit to allow it to resume a grant program that awards funding to businesses run by Black women and to reject an anti-affirmative action group’s claim that it discriminates based on race. A Fearless Fund lawyer said the group had a constitutional right that trumped claims by Edward Blum’s American Alliance for Equal Rights that the program’s criteria violated a Civil War-era law barring racial discrimination in contracting.
- Boeing was sued by shareholders who said the company prioritized profit over safety and misled them about its commitment to making safe aircraft, prior to the Jan. 5 mid-air cabin panel blowout on an Alaskan Airlines 737 MAX 9. Shareholders said Boeing’s statements about safety were false and misleading because they concealed the “poor quality control” on its assembly line, and caused its stock price to be inflated. A company spokesperson declined to comment.
- Cybersecurity company Centripetal Networks won a Virginia federal jury verdict of $151.5 million in damages after arguing that rival Palo Alto Networks violated the company’s patent rights. The jury agreed with Centripetal that Palo Alto’s security software infringed four patents related to Centripetal’s “threat intelligence gateway” network-security technology.
- Computer networking company Netgear in a new lawsuit accused Chinese tech giant Huawei of breaking U.S. antitrust law by refusing to license its patents on reasonable terms. The complaint follows infringement lawsuits filed by Huawei against Netgear in Germany and China. Huawei did not immediately respond to a request for comment.
- Tennessee and Virginia sued the NCAA in federal court over the curbs imposed on student-athlete pay. The lawsuit adds to a growing number of cases from current and former athletes who contend they are owed billions of dollars for the commercial use of their name, image and likeness.
- Major generic drug makers lost their effort to stop Connecticut and a coalition of states from leaving a price-fixing antitrust MDL in Pennsylvania and returning to home turf where the cases began years ago. The pharma companies argued that breaking up the MDL would cause “chaos.”
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- Former FTC commissioner Christine Wilson is joining Freshfields as a D.C.-based senior adviser and member of its antitrust practice. (Reuters)
- Paul Weiss hired corporate partner Dan Schuster-Woldan in London as head of European public M&A. He most recently was at Linklaters. (Paul Weiss)
- Crowell brought on D.C.-based aviation partner Amna Arshad. She arrives from Freshfields, where she was head of the U.S. aviation regulatory practice. (Crowell)
- Greenberg Traurig added partner Lisa Lanham as a financial regulatory and compliance partner in the firm’s New York and Miami offices. She previously was a co-leader of the fintech team at Ballard Spahr. (Greenberg Traurig)
- Orrick added partner David Sharrow to its life sciences and tech transactions team in Boston. He arrives from Gunderson, where he led the licensing, strategic partnering and commercial transactions group. (Orrick)
- Haynes and Boone hired transactional partner Joe Sarcinella in New York. He most recently was chair of Reed Smith’s real estate practice. (Haynes and Boone)
- Barnes & Thornburg hired a five-lawyer commercial finance team from Morris, Manning & Martin in Atlanta, including partners Rick Boyd and Tyler Wolf. (Barnes & Thornburg)
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Several key items should be on the radar of private equity and venture capital funds and their portfolio companies for 2024 and beyond, including changes in the law relating to enforceability of restrictive covenants and legal issues surrounding artificial intelligence. Lori Smith and Evan Poulgrain of Stradley Ronon discuss issues that will require a change in the level and scope of due diligence and reexamination of the documentation used in investments, as well as more vigilance in oversight.
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