Keep your finger on the legal world's pulse

Two of Facebook parent company Meta’s best known executives, chief executive Mark Zuckerberg and former chief operating officer Sheryl Sandberg, are listed as witnesses in a scheduled eight-day non-jury trial starting tomorrow in Delaware centered on investor allegations of board mismanagement. Shareholders of Meta Platforms sued Zuckerberg and other current and former company leaders, claiming they continually violated a 2012 agreement between Facebook and the Federal Trade Commission to protect users' data. Zuckerberg is accused of operating Facebook as an illegal enterprise that allowed users' data to be harvested without their consent. Zuckerberg and the other defendants have dismissed the allegations in court filings as "extreme claims."

 

Financial Times

Reuters

Mississippi law firm Gore, Kilpatrick & Dambrino (GKD) has filed a lawsuit against its cyber insurer, Spinnaker Insurance Co., claiming wrongful denial of coverage for a loss of approximately £150,000 due to an elaborate email scam. The firm was tricked into wiring funds to scammers impersonating David Casteel of Brooks Machinery Inc. The lawsuit, filed on July 11 in the U.S. District Court for the Northern District of Mississippi, alleges breach of contract, bad faith denial, and gross negligence. GKD is seeking damages, interest, and punitive damages.

 

Bloomberg Law

The Supreme Court has permitted President Donald Trump to proceed with his plan to dismantle the Education Department, which includes laying off nearly 1,400 employees. The decision came after the court paused a previous order from U.S. District Judge Myong Joun, who had issued a preliminary injunction against the layoffs, saying that they “will likely cripple the department.” A federal appeals court refused to put the order on hold while the administration appealed.

 

The Southern Illinoisan

Republic Services, the second-largest trash and recycling company in the U.S., is facing a strike led by the International Brotherhood of Teamsters. Since July 1, approximately 450 workers in the Boston area have initiated a work stoppage, which has now expanded to thousands of employees nationwide, particularly affecting California cities like Santa Ana and Chula Vista. Teamsters General President Sean M. O'Brien said: “Republic Services has been threatening a war with American workers for years - and now, they've got one.” The company claims its pay proposal would increase compensation by 43% over five years, but the union argues that Republic can afford a fair contract, given its $77bn revenue. As the strike continues, cities are experiencing delays in trash collection, prompting local officials to take action.

 

Los Angeles Times

Morgan Stanley, Goldman Sachs, and Wells Fargo have agreed to pay a total of $120m to settle a lawsuit alleging they concealed conflicts of interest during the sale of ViacomCBS shares, which contributed to the collapse of Bill Hwang's Archegos Capital Management. The proposed settlement, filed in New York state court, requires judicial approval. Archegos, which once managed $36bn, collapsed in March 2021 after failing to meet margin calls on loans used for significant investments in ViacomCBS and other stocks. The settlement allocates $75m for common stock investors and $45m for preferred stock investors, with lawyers seeking 29% of the fund for fees.

 

Reuters

The 2nd U.S. Circuit Court of Appeals upheld a New York law allowing civil lawsuits against the gun industry for public nuisance related to gun violence. The law, signed by Gov. Andrew Cuomo in July 2021, permits local officials and the public to sue manufacturers, wholesalers, and dealers for endangering safety through firearm sales. Circuit Judge Eunice Lee stated that the law does not conflict with the federal Protection of Lawful Commerce in Arms Act, emphasizing that Congress intended to maintain some legal avenues for state violations. Judge Dennis Jacobs expressed concerns about the law's broad application but acknowledged its legal standing. The case is National Shooting Sports Foundation Inc et al v James, 2nd U.S. Circuit Court of Appeals, No. 22-1374.

 

Reuters

The U.S. Consumer Financial Protection Bureau (CFPB) has reached a settlement with FirstCash Inc. for alleged violations of the Military Lending Act, which requires the company to set aside $5m for affected servicemembers and their families. In addition to the restitution, FirstCash will pay a $4m fine and must comply with the Military Lending Act moving forward. The settlement is pending court approval and addresses concerns over unlawful pawn loans issued by the company.

 

Reuters

Recent regulatory changes under the Trump administration have revitalised merger and acquisition prospects for U.S. banks, particularly regional ones. James Stevens, a law partner at Troutman Pepper Locke, noted: "What we've seen from a regulatory standpoint is a lot more clarity and . . . a return to a more permissive environment," which could facilitate larger bank deals. The Federal Reserve's new criteria for 'well managed' bank status eases the path for firms to pursue acquisitions. Industry executives anticipate a rise in M&A activity, especially among regional lenders, as they seek to gain scale. However, larger banks face more scrutiny due to their market share.

 

Reuters

The Senate has passed a bipartisan bill by unanimous consent that would provide tax-filing relief for taxpayers in states that have issued state-level disaster declarations after unanimous passage earlier this year in the House, sending the bill to President Trump for his signature. The bill, known as the Filing Relief for Natural Disaster Act, authorizes the IRS to postpone federal tax deadlines for taxpayers affected by a qualified state-declared disaster once there's a declaration by the state governor.  Historically, the process of receiving tax-filing and payment relief from the IRS during a disaster is triggered by a federal disaster declaration, which can come days, weeks or months after a disaster. That means affected taxpayers may need to wait for months before knowing if they will be entitled to much-needed tax relief. The legislation promises to expedite the issuance of federal tax relief and give the IRS the authority to grant tax relief once the governor of a state declares a disaster or state of emergency.

 

Accounting Today

Tara McGrath, a former U.S. attorney for the Southern District of California, has been appointed as a litigation partner at Perkins Coie in San Diego. McGrath brings extensive experience, having supervised 330 attorneys and managed over 5,000 cases during her tenure. Frank Lopez, the firm's chair, remarked that the hire reflects Perkins Coie's strategy of acquiring “top-of-market talent at the peak of their careers.” The firm is also focused on expanding its Los Angeles office and enhancing its entertainment, sports, and media practice on the West Coast.

 

Law

China's ruling Communist Party has instructed its top judicial bodies to enhance their understanding of international and foreign laws to strengthen the nation's legal framework against foreign sanctions and jurisdiction. The judicial guidance document is part of Beijing’s overall plan to “sharpen its legal tools to protect its overall national interests,” said Deng Yuwen, former deputy editor of Study Times, the official publication of the Central Party School, the party’s top ideological training center. Similar guidance was previously issued for police in 2019 and prosecutors in 2021.

 

South China Morning Post