Keep your finger on the legal world's pulse

The Securities and Exchange Commission (SEC) has voted to reverse an unwritten policy whereby it blocked the IPOs of companies that want to ban investor class action lawsuits in their charters and bylaws. The agency said it would allow companies seeking to go public to require that shareholders resolve claims of fraud or other false statements through arbitration rather than court litigation. "The commission is not a merit regulator that decides whether a company's particular method of resolving disputes with its shareholders is good or bad," SEC Chair Paul Atkins said. CalPERS, the California public pension fund, said forced arbitration would "diminish the deterrent effect" of class actions. Ann Lipton, a former class action litigator, said the change would damage the public interest, observing that lawsuits can expose corporate misconduct among other matters.

 

Reuters

Stop Losing Billable Hours

Law firms bleed revenue when time isn’t tracked with precision. Every client call, quick follow-up, or draft review has value, yet too often those minutes slip through the cracks. Over a week, that leakage can add up to hours of unbilled time, and thousands in lost revenue.

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Clients are increasingly questioning law firms about their use of generative artificial intelligence to reduce costs. Mark Smolik, chief legal officer at DHL Supply Chain Americas, said that clients are seeking "measurable cost savings" and are no longer willing to wait for firms to adapt. The trend is evident in requests for proposals, where firms must detail their technology investments. While the billable hour remains, clients expect AI to enhance efficiency.

 

Bloomberg Law

A California judge has approved a $233m settlement between Walt Disney Co. and more than 51,000 Disneyland workers who accused the company of denying them a legally mandated living wage. The settlement brings to an end a protracted legal battle precipitated by a 2019 lawsuit filed after the entertainment giant claimed it was exempt from a local rule requiring certain companies benefiting from city incentives to pay higher minimum wages. Under the agreement, $179.6m will be paid out directly to workers, while $17.5m will go to the California Labor and Workforce Development Agency as penalties. Remaining sums will cover other costs.

 

Reuters

Starbucks employees in three states have initiated legal action against the company, claiming the company violated laws by changing its dress code without reimbursing workers for new clothing expenses. The class-action lawsuits were filed in Illinois and Colorado, with complaints also lodged in California. The new dress code, effective May 12th, mandates specific clothing requirements, including solid black shirts and compliant footwear. Brooke Allen, a worker from California, expressed her frustration, commenting: “I think it's extremely tone deaf on the company's part to expect their employees to completely redesign their wardrobe without any compensation.” The lawsuits argue that Starbucks' policy violates state laws requiring reimbursement for employer-benefiting expenses.

 

CBS News

Courthouse News Service

Families of four victims from the Air India Flight 171 crash have filed a lawsuit against Boeing and Honeywell, alleging that faulty fuel cutoff switches caused the accident, despite the Federal Aviation Administration saying these switches were not to blame. The crash, which occurred shortly after takeoff from Ahmedabad on June 12, resulted in the deaths of 260 people. The lawsuit claims that the cockpit's design made it likely for the switches to be inadvertently activated. While the preliminary investigation by Indian authorities did not implicate Boeing, legal experts suggest that targeting manufacturers is common in such cases due to their liability exposure compared to airlines.

 

Reuters

Hermès has escaped a proposed class action lawsuit in the U.S. District Court for the Northern District of California which alleges that it illegally forces customers to buy tens of thousands of dollars in merchandise before having the opportunity to buy its famous Birkin handbag. The luxury bags, which can range in price from thousands of dollars to more than $100,000 apiece, have become a symbol of wealth and exclusivity, and are not publicly displayed in-store or available to every customer for purchase. Lead plaintiff Tina Cavalleri alleged she spent thousands of dollars on the luxury brand and said she was coerced into buying ancillary products by virtue of waiting to purchase a Birkin bag. However, Judge James Donato dismissed a second amended complaint with prejudice and closed the case, saying that the renewed attempt failed to provide any new facts that might have filled in the gaps in the initial complaint or raise antitrust theories above a “purely speculative level”.

 

Bloomberg

Reuters

Disney, Universal and Warner Bros Discovery have jointly filed a lawsuit against MiniMax, a Chinese artificial intelligence company that is the owner of a popular AI video app, over what they claim is “wilful and brazen” copyright infringement. “MiniMax operates Hailuo AI, a Chinese artificial intelligence image and video generating service that pirates and plunders Plaintiffs’ copyrighted works on a massive scale,” the companies said in the lawsuit, filed Tuesday in the U.S. District Court for the Central District of California. “MiniMax markets Hailuo AI as a ‘Hollywood studio in your pocket’ - an audacious self-anointed nickname given that MiniMax built its business from intellectual property stolen from Hollywood studios like Plaintiffs.”

 

Variety

Bloomberg

Financial Times

Tesla has reached confidential settlements for two lawsuits related to fatal crashes in California in 2019 involving its Autopilot software, just weeks after a jury ordered the company to pay $243m for another crash. One case involved the death of a 15-year-old boy in a rear-end collision with a Tesla Model 3, while the other concerned a high-speed crash at a red light that resulted in two fatalities. The terms of the settlements have not been disclosed, and trials for both cases were set to begin next month before being vacated following the agreements.

 

Reuters

Three partners, David Higbee, Ben Gris, and Djordje Petkoski, have transitioned from A&O Shearman to Paul Weiss in Washington, DC, effective 15 September. This move enhances Paul Weiss's antitrust litigation capabilities: the trio brings seven years of experience from A&O's antitrust group. Their expertise includes merger control, government investigations, and internal inquiries.

 

CDR

Eddie Han has joined Orrick as a partner in its financial and securities litigation group in Silicon Valley. With a proven track record in securities, commercial, and fund litigation, Han has represented a diverse clientele, including companies, officers, and investment firms across various sectors such as tech and finance. He previously worked at Paul Hastings.

 

Bloomberg Law

Philippine President Ferdinand Marcos Jr. has announced an independent investigation into alleged corruption in infrastructure projects, saying that no one will be exempt. He has appointed a former Supreme Court justice to lead the commission, which will focus on irregularities in flood control spending amounting to 545bn pesos ($9.52bn). Marcos described the move as an "inflection point" for government accountability. He urged peaceful protests against corruption, acknowledging public frustration. "We need to find out how much public money was stolen by these crooks," he said.

 

U.S. News

International investors who are pushing companies to do more on longer-term sustainability issues have cautiously welcomed a call by Donald Trump to ditch quarterly corporate reporting. "Responsible investment people have never been advocates of quarterly reporting, since it tends to encourage a greater focus on trading and less on good ownership," observed David Pitt-Watson, corporate governance expert and Fellow at Cambridge University's Judge Business School. "We want companies to consider the material impact of their strategies on a long-term view and plan accordingly to mitigate any sustainability-related risks, so if moving away from quarterly reporting can help achieve this without impacting transparency and disclosure then it could be positive," said Nick Duncan, Sustainable Investment director at investor Aberdeen.

 

Reuters