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REUTERS/Aly Song/File Photo
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Tesla shareholders will appear in court today to argue that an unprecedented request for more than $7 billion in attorneys’ fees from the company is “outlandish,” the latest twist in a legal showdown over Elon Musk’s $56 billion Tesla pay package, writes Tom Hals.
The record fee request was made by investor Richard Tornetta on behalf of three law firms that represented him, including Bernstein Litowitz Berger & Grossmann. Tornetta owned nine shares of Tesla when he sued over Musk’s pay package of stock options in 2018, a legal battle he ultimately won in January when the package was voided.
The fee equals around $7.2 billion based on Tesla’s Friday’s stock price and amounts to a rate of roughly $370,000 for every hour worked by the 37 lawyers, associates and paralegals, some of whom normally bill as little as $275 an hour. The lawyers say it is the largest judgment ever awarded by an American court, and argue they should receive around 11% of the stock that would have been awarded to Musk, or 29 million Tesla shares, which is arguably conservative by Delaware legal precedent.
The hearing on the fee request has been moved to the largest courtroom in the building to accommodate the 47 attorneys from 19 law firms appearing in the case, as well potential stockholders. The California Public Employees’ Retirement System and more than 8,000 Tesla stockholders have flooded the Delaware Chancery Court with some 1,500 letters and objections over the fee, according to court documents.
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- A divided Wisconsin Supreme Court cleared the way for voters to be able to return absentee ballots through drop boxes, with the court’s new liberal majority overturning a decision from just two years ago that had outlawed the practice. The April 2023 election of liberal Justice Janet Protasiewicz flipped the court to a 4-3 liberal majority after 15 years of conservative control, giving Democrats an advantage in legal battles over abortion, voting rights and electoral maps.
- Spencer Sheehan, a Great Neck, New York-based attorney known for filing hundreds of food and beverage labeling lawsuits against companies, was sanctioned by a federal judge in Florida, who said he “engaged in a concerted effort to defraud this Court and likely many, many others.” Sheehan must cover attorney fees and costs incurred by retailer Big Lots, whom Sheehan and his client accused of selling coffee with a misleading label, after a judge found he “flagrantly disregarded” the court’s rules by participating in the case without seeking permission as an out-of-state lawyer.
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“The verdict in this case is at once among the largest in American history and also among the least defensible.“
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—The National Football League, in a filing urging a judge to throw out a $4.7 billion class action jury verdict, calling the amount “nonsensical” and denying that evidence showed subscribers of its “Sunday Ticket” telecasts had been overcharged. A Los Angeles federal jury determined late last month that the NFL used agreements with broadcast partners to restrict the availability of “Sunday Ticket,” allowing DirecTV to charge artificially higher prices as its former sole distributor. The NFL asked the court to either overturn the jury’s award or grant a new trial.
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- Today, a jury in Manhattan will hear closing arguments in Sung Kook “Bill” Hwang’s criminal case tied to the 2021 collapse of his $36 billion fund, Archegos Capital Management. Separately, a jury in New Jersey will hear closing arguments in U.S. Senator Bob Menendez’ corruption trial after prosecutors accused the Democrat of accepting hundreds of thousands of dollars in bribes.
- On Tuesday, U.S. District Judge Ana Reyes is holding a hearing after the DOJ accused global lock maker Assa Abloy of violating the terms of a settlement that let it complete a $4.3 billion acquisition of Spectrum Brands’ hardware and home improvement unit last year. Justice Department lawyers said in a court filing last week that the company was failing to pay a court-appointed monitor supervising the company’s compliance with the settlement.
- Also Tuesday, actor Alec Baldwin’s manslaughter trial begins in New Mexico for the shooting of cinematographer Halyna Hutchins on the set of Baldwin’s western “Rust.” Hutchins died after the movie’s armorer Hannah Gutierrez mistakenly loaded a live round into Baldwin’s reproduction Colt .45 revolver during filming in a movie-set church near Santa Fe, New Mexico. Gutierrez in March was found guilty of involuntary manslaughter and was sentenced in April to 18 months in prison, the same term Baldwin will face if found guilty.
- On Wednesday, the Montana Supreme Court is set to hear the Republican-led state’s appeal of a landmark ruling that found the state’s policies prohibiting regulators from considering the impacts on climate change when approving fossil fuel projects violate the rights of young people. The decision last year by Judge Kathy Seeley in Helena marked a major victory in the first youth-led climate case to reach trial in the U.S.
- On Thursday, U.S. District Judge Alvin Hellerstein in Manhattan is holding a status conference in the U.S. criminal case accusing Frank founder Charlie Javice of defrauding JPMorgan Chase into buying her college financial aid startup for $175 million. Frank’s former chief growth officer Olivier Amar faces related criminal charges. Hellerstein on May 30 denied both defendants’ motions to dismiss the indictment. Javice and Amar have pleaded not guilty.
- On Friday, Medtech company AliveCor will ask the Federal Circuit to reverse a U.S. Patent and Trademark Office tribunal’s decision to invalidate the patents at the heart of a dispute with Apple over ECG technology in its Apple Watch smartwatches. AliveCor won a ruling from the U.S. International Trade Commission in 2022 that Apple Watch imports should be banned because they infringe AliveCor’s patents, but the Patent Trial and Appeal Board had earlier ruled that the patents at the heart of the dispute were invalid. The ITC placed the ban on hold pending the result of this appeal.
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Court calendars are subject to last-minute docket changes.
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- Elon Musk wants to dismiss a lawsuit by former Twitter shareholders who said he waited too long in early 2022 to reveal his large ownership stake in the social media company, saying “all indications” show his delay was a mistake. In a court filing, Musk called it implausible to believe he wanted to defraud shareholders who didn’t know he had taken a 9.2% Twitter stake and missed out on big gains because they sold their own stock.
- The D.C. Circuit vacated an EPA order requiring seven chemical manufacturers and processors to perform new tests to determine whether a petrochemical solvent is toxic to birds. A three-judge panel sided with the industry trade group Vinyl Institute in finding the EPA had failed to provide substantial evidence for why it needed the new tests.
- U.S. District Judge Manish Shah in Chicago threw out a central claim in a FTC lawsuit accusing Walmart of turning a blind eye to scam artists who used its money transfer services to fleece consumers out of hundreds of millions of dollars. Shah rejected a claim that Walmart owes monetary damages for violating the federal Telemarketing Sales Rule, saying the FTC didn’t offer enough specifics on how the world’s largest retailer and its allegedly ill-trained employees saw or consciously ignored warning signs that fraudsters used its money transfer services to break the law.
- Australia’s federal court found that PayPal’s local unit used an unfair term in its standard contracts with small business customers who overlooked errors in overcharging, the Australian Securities & Investments Commission said. The court found the term was unfair because customers who did not bring the overcharging errors to PayPal’s notice within 60 days were forced to accept the fees as accurate.
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Most criminal defense attorneys have encountered efforts by prosecutors to elicit “expert opinions” from law enforcement agents at trial that, in essence, the defendant’s actions conform to that of a person intending to commit the crime charged. The U.S. Supreme Court, in Diaz v. United States, all but gutted a protection for the admission of such testimony offered by Federal Rule of Evidence 704(b). Tama Beth Kudman of Kudman Trachten Aloe Posner maintains that though Diaz weakened that rule, practitioners can still preclude the admission of such troubling expert opinion testimony pursuant to Federal Rule of Evidence 702.
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