In a highly unusual grant of a second interlocutory petition for permission to appeal, the 2nd U.S. Circuit Court of Appeals agreed Tuesday to review the certification of a class of investors suing Goldman Sachs over pre-2010 assurances that the bank had in place scrupulous systems to avoid client conflicts. Shareholders claim they lost billions in the ensuing crash of Goldman’s share price when investors received definitive news that the bank sold complex, crisis-era financial instruments that favored Goldman and certain hedge fund clients over the bank’s broader client base.
The U.S. Supreme Court agreed Monday to take up an issue that seems wonky but is of overarching importance to the future of the administrative state: Should judges defer to federal agencies when it comes to their interpretation of their own ambiguous regulations?
Last week’s reports about Uber and Lyft preparing to go public in 2019 mean that it’s time to think again about whether corporations can force investors to litigate Securities Act claims in federal court via provisions in their corporate charters.
Uber fought as hard as any company in America in the past few years to assure the enforceability of its contractual arbitration provisions. When drivers who had signed contracts with Uber attempted to sue the company for wage and hour violations, Uber and its lawyers at Gibson Dunn & Crutcher won key rulings from the 9th U.S. Circuit Court of Appeals that effectively ended the drivers’ quest to litigate their claims in court – or even to arbitrate their claims as a class. For Uber drivers, the only way to go after the company for alleged state and federal employment law violations was to file an independent arbitration claim.
It’s no secret that the U.S. Chamber of Commerce believes that securities class actions – and, in particular – shareholder class actions challenging M&A transactions – are at best an inefficient way to police corporate conduct. In the view of the Chamber, securities class actions benefit lawyers, not shareholders. That’s why the business group launched a lobbying campaign in October to encourage Congress to restrict shareholder class actions by revising federal securities laws.
Last June, in a decision with important repercussions for the Federal Trade Commission’s enforcement of corporate data security, the 11th U.S. Circuit Court of Appeals tossed the FTC’s cease-and-desist order against LabMD, a Georgia cancer detection company accused of failing to safeguard patient files. The ruling came too late to save LabMD, which went out of business in the course of defending against the FTC’s allegations.
The debate over corporations imposing arbitration on shareholders through corporate charters and bylaws is still mostly in the realm of theory and academic furor. The Securities and Exchange Commission, as you know, is contemplating the issue, though SEC Chair Jay Clayton has said he’s in no rush to decide whether the commission will end its longtime policy of squelching proposed mandatory arbitration provisions for companies going public.
On this Thanksgiving eve, we should all be grateful that we are not the Justice Department lawyers attempting to defend the U.S. Commerce Department’s decision to add a question about respondents’ citizenship to the upcoming U.S. census questionnaire.
Broadly speaking, challenges to the Trump administration’s policies fall into three categories: statutory, in which critics claim Trump directives encroach on laws already enacted by Congress; procedural, citing alleged shortcomings under the Administrative Procedure Act; and constitutional, in which challengers invoke, for instance, the First Amendment, due process protections or even separation of powers doctrine.
I was planning to write today about the competition for appointment to lead consolidated price-fixing litigation against companies in control of local television stations, including Sinclair Broadcast Group, Tribune Media, Gray Television and Hearst Television. This is a hot case. Six local television station owners, as you may recall, reached a settlement last week with the Justice Department to resolve allegations that they unlawfully shared information that allowed competitors to predict one another’s spot advertising prices. So, naturally, the private antitrust bar is pretty excited about its prospects in consolidated nationwide litigation before U.S. District Judge Virginia Kendall of Chicago.