Judicial Notice (03.02.24): Big Tech, Bigger Questions

Elon Musk sues Sam Altman and Open AI, the social-media cases hit SCOTUS, Paul Hastings strikes again, and other legal news from the week that was.

Morgan Chu of Irell & Manella aka The $5 Billion Man (photo by Robin L. Marshall via Getty Images).

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I had a great time at the University of Louisville Brandeis School of Law, where I had a conversation with my former Above the Law colleague, New York Times journalist Kashmir Hill, about her great new book, Your Face Belongs to Us: A Secretive Startup’s Quest to End Privacy as We Know It. Thanks to Kashmir for joining me, and thanks to our hosts for the warm Kentucky welcome (including bourbon, of course).

Speaking of events, later this month I’ll be joining Adam Stofsky, CEO of Briefly, for a free webinar, “Creating Human Content in an AI-Driven World.” You can sign up here.

Do you speak (or want to brush up on) your Portuguese? I spoke with Brazilian television journalist Pedro Paiva about Donald Trump’s money troubles arising out of his legal difficulties, and you can watch our interview at this link.

If you watched the Supreme Court oral arguments in the big NetChoice cases (discussed below), you heard a few shoutouts to Professor Eugene Volokh, one of the nation’s leading First Amendment scholars. He’s the source of this week’s testimonial for Original Jurisdiction: “Thoughtful, fair-minded, and beautifully written—one of the very few newsletters that I consistently read, and always enjoy.” I’d say the exact same thing about the Volokh Conspiracy—one of the very first legal blogs, and an inspiration to me when I entered the field 20 years ago this summer.

Speaking of landmark SCOTUS cases, you might want to hop onto the Supreme Court website tomorrow morning at 10 o’clock. Steve Vladeck and Josh Blackman predict that the Colorado decision is coming down tomorrow, just in time for the Colorado primary on Tuesday, and I’m inclined to agree.

Now, on to the news.

Lawyer of the Week: Alexandra (Lexie) White.

Congratulations to Alexandra (Lexie) White, who won a $287 million jury verdict in a patent case for Koninklijke KPN N.V., a Dutch telecommunications company. Kudos also to the other members of the Susman Godfrey trial team—Tamar Lusztig, Hunter Vance, Eliza Finley, Andres Healy—and local counsel Kurt Truelove. In light of the nine-figure fee the firm secured from the Dominion v. Fox settlement, Susman may have a hard time topping its 2023 financial performance this year—but White’s win should help, especially if the case was taken on contingency.

The case wasn’t your typical IP litigation, as noted by Ross Todd of the American Lawyer: “This isn’t a patent infringement verdict coming out of the federal courthouse in Marshall…. This is a patent pool-related verdict coming out of the state courthouse in Marshall.” And so, as White explained to Todd, the biggest challenge faced by her team was “ha[ving] to explain a lot of (boring) background material [about patent pools and joint licensing], in order to properly contextualize the dispute, before we could even begin to explain what Samsung had done wrong here.”

It’s a good reminder that trial work isn’t always glamorous and sexy; sometimes it can be a bit of a slog. Great trial lawyers need to be not only eloquent and quick on their feet, but also resilient and strong. As White told Todd, what she’ll remember most about this trial is pulling two all-nighters in one week—”but achieving this result for such a great client was worth every bit of the struggle.”

Speaking of lawyers in line of big paydays, here’s an update on Greg Varallo, Jeroen van Kwawegen, and David Tejtel, who recently won Lawyer of the Week honors for getting Elon Musk’s $56 billion pay package rescinded: they’re now seeking $5.6 billion in legal fees, payable in Tesla stock. Elon Musk is not happy.

In memoriam:

• Charles Ferris, chair of the Federal Communications Commission during the Carter Administration, passed away at 90.

• Paul Gioia—who served as a Manhattan assistant district attorney, counsel to three governors of New York State, and head of the New York Public Service Commission, regulator of the state’s utilities—passed away at 81.

• Richard Hibey—a high-profile D.C. defense lawyer who represented clients like former Philippine president Ferdinand Marcos and Jonathan Pollard, the Navy intelligence analyst convicted of spying for Israel—passed away at 82.

• John Kuhn, a leading media lawyer and former Williams & Connolly partner, passed away at 77.

• Lew Rose, former managing partner of Kelley Drye & Warren, passed away at 66.

May they rest in peace.

Judge of the Week: Justice Brett Kavanaugh.

On Monday, the Supreme Court heard oral argument in two major free-speech cases, Moody v. NetChoice, LLC and NetChoice, LLC v. Paxton—First Amendment challenges to laws passed by Florida and Texas, respectively, that would dramatically curtail the ability of large social-media companies to regulate what appears on their platforms.

The arguments wound up being a bit muddled, as noted by David French on Advisory Opinions, and it’s not clear how the Court will rule. Part of the problem is that these are facial challenges to laws that have not yet been allowed to take effect, so there are many complex questions about how they’d actually work in the real world.

I agree with the commentator consensus that a majority of the justices will find some First Amendment problems with certain aspects of the laws—but what happens next, as a practical matter, is unclear. If the Court concludes that further proceedings are needed to develop more of a factual record, will it allow either or both laws to take effect, in whole or in part?

On this question, prognosticators disagree. Adam Liptak of the New York Times wrote that “a majority seemed inclined to keep [the laws] on hold while the litigation moves forward.” On the other hand, Ian Millhiser of Vox predicted that the Court “appears inclined to reinstate Texas and Florida laws seizing control of much of the internet”—because even though they have lots of constitutional problems, the statutes “sweep so broadly that they may have some ancillary effects that are permitted by the First Amendment.”

I agree with David French and Ian Millhiser that the arguments were… messy. This wasn’t, in my opinion, the fault of the advocates—Paul Clement for NetChoice, Henry Whitaker for Florida, Aaron Nielson for Texas, and Elizabeth Prelogar for the federal government (siding with NetChoice)—but the fault of the laws.

Finally, I agree with Mark Joseph Stern of Slate and Ilya Somin of the Volokh Conspiracy that the MVP of these arguments, a voice of clarity amid a lot of haziness, was Justice Brett Kavanaugh. Somin highlighted how Justice Kavanaugh “effectively responded to this trope” of content moderation as “censorship”:

When the government censors, when the government excludes speech from the public square, that is obviously a violation of the First Amendment. When a private individual or private entity makes decisions about what to include and what to exclude, that’s protected generally editorial discretion, even though you could view the private entity's decision to exclude something as “private censorship.”

As Stern put it, “at the end of the day, Kavanaugh’s straightforward view of this dispute is clearly correct…. The Constitution prohibits the states from censoring speech; it doesn’t give them license to tell private companies what speech they’re obligated to host.”

Justice Kavanaugh is the closest thing the Court has these days to a “swing justice”—he’s the justice most often in the majority—so hopefully his views will carry the day here as well. I’d love to see a SCOTUS opinion similar to the one that Judge Kevin Newsom wrote for the Eleventh Circuit in the Florida case (which repeatedly cited Kavanaugh opinions recognizing the constitutional right of companies to exercise editorial discretion). Fingers crossed.

In nominations news, the Senate confirmed four Floridians to district-court judgeships: Magistrate Judges Jacqueline Becerra (S.D. Fla.), Melissa Damian (S.D. Fla.), and Julie Sneed (M.D. Fla.), and in-house lawyer David Leibowitz (S.D. Fla.).

Speaking of the nominations process, are you a fan or a critic of the “pop quizzes” that Senator John Kennedy (R-La.) springs on nominees? To learn more about them, check out Tiana Headley’s Bloomberg Law article—which includes not just an interview of Senator Kennedy, but a TikTok video of some of his “greatest hits.”

Ruling of the Week: United States v. Brock.

The events of January 6 continue to generate lots of new law. The latest notable ruling is United States v. Brock, a case involving a January 6 rioter from Texas, in which the D.C. Circuit held that the district court improperly applied a three-level sentencing enhancement for “substantial interference with the administration of justice[.]” The ruling could lead to the resentencing of more than 100 January 6 defendants.

Whether or not you like the outcome as a policy matter, it’s hard to argue with the well-written opinion of Judge Patricia Millett (who was joined by two fellow Democratic appointees, Judges Judith Rogers and Nina Pillard). The opinion carefully explains why, “for purposes of Sentencing Guideline 2J1.2, the phrase ‘administration of justice’ does not encompass Congress’s role in the electoral certification process,” which is what the January 6 rioters tried to disrupt. Instead, the provision’s “text, context, and commentary show that ‘administration of justice’ refers to judicial, quasi-judicial, and adjunct investigative proceedings, but does not extend to the unique congressional function of certifying electoral college votes.”

Other newsworthy decisions and dispositions:

• Judge David Ezra (W.D. Tex.) rejected the argument that illegal migration constitutes an “invasion” under the Constitution, in what Professor Ilya Somin commended as “by far the most thorough judicial analysis of this important issue.”

• Judge Christopher Cooper (D.D.C.) ruled that journalist Catherine Herridge, formerly of CBS News and Fox News, must pay $800 a day in civil-contempt fines until she divulges information about the sources she relied upon for her articles about a Chinese-American scientist who was investigated by the FBI. But Judge Cooper stayed his ruling for 30 days so that Herridge—represented by former deputy White House counsel Pat Philbin, now at Torridon Law—can appeal.

And here’s an update on last week’s Ruling of the Week, LePage v. Center for Reproductive Medicine, P.C., aka the Alabama Supreme Court’s big decision about in vitro fertilization (IVF): it’s about to be superseded by legislation. Both chambers of the Alabama legislature passed bills that would give IVF clinics sweeping protection from both criminal prosecutions and civil lawsuits. The bills just need to be reconciled—which shouldn’t be hard because they’re very similar—and the final bill needs to be signed by Governor Kay Ivey (R-Ala.), who supports the legislation.

Litigation of the Week: Musk v. Altman.

Yes, the NetChoice arguments and the Supreme Court’s decision to hear Trump’s appeal of the D.C. Circuit’s immunity denial were the big news of the week. But both cases have been Litigations of the Week in the past, and as my regular readers know, I disfavor repeat winners.

So instead I’m going to discuss Musk v. Altman. In a 35-page complaint filed in San Francisco Superior Court, Elon Musk accuses Sam Altman and OpenAI of breach of contract, breach of fiduciary duty, and unfair competition. Here’s the gist of the lawsuit, per the Times:

Mr. Musk sued OpenAI and its chief executive, Sam Altman, accusing them of breaching a contract by putting profits and commercial interests in developing artificial intelligence ahead of the public good. A multibillion-dollar partnership that OpenAI developed with Microsoft, Mr. Musk said, represented an abandonment of a founding pledge to carefully develop A.I. and make the technology publicly available….

Mr. Musk helped found OpenAI in 2015 as a response to A.I. work being done at the time by Google. Mr. Musk believed Google and its co-founder, Larry Page, were dismissive of the risks A.I. presented to humanity.

Mr. Musk left OpenAI’s board during a power struggle in 2018. The company went on to become a leader in the field of generative A.I. and created ChatGPT, a chatbot that can produce text and respond to queries in humanlike prose. Mr. Musk, who founded his own A.I. company last year called xAI, said OpenAI was not focused enough on the technology’s risks.

And it appears that Musk—the second-richest man in the world, with a fortune of more than $200 billion—is serious about this case. If he weren’t, he wouldn’t have hired Biglaw’s “$5 Billion Man”—superstar tech litigator Morgan Chu of Irell & Manella, so nicknamed for his success in obtaining nine- and ten-figure judgments for his clients. Also on the complaint are Irell litigation partners Alan Heinrich and Iian Jablon, plus associates Abigail Sellers, Justin Koo, and Henry “Hank” White.

Does Musk have a good case? This is definitely out of my wheelhouse; if you’re more knowledgeable, please opine in the comments or email me. Professor Brian Quinn told the Times that Musk might have a standing issue: “If he were a member of the board of directors, I would say, ‘Ooh, strong case.’ If this was filed by the Delaware secretary of state, I would say, ‘Ooh they’re in trouble.’ But he doesn’t have standing. He doesn’t have a case.”

For other potential problems with Musk’s lawsuit, including whether there’s even a contract to enforce, see this DealBook article, which quotes additional experts like Professors Noah Feldman, Eric Talley, and Peter Molk. Regardless of its merits, though, it’s fair to say that the lawsuit raises fascinating and important questions about the future of artificial intelligence.

In Trump-related litigation news (yes, it gets its own section this week):

• Why did the Supreme Court agree to hear Donald Trump’s appeal of the D.C. Circuit ruling that rejected his claim of “absolute immunity”? Its general subject matter of presidential immunity, a critical topic with a paucity of case law, made it “objectively cert worthy,” in the words of Professor Jonathan Adler of the Volokh Conspiracy. And there’s an argument that the D.C. Circuit opinion, even if its bottom-line outcome is correct, wasn’t careful enough in its reasoning—and “opened the door to all manner of constitutional crises,” according to David Rivkin Jr. and Elizabeth Foley of the Wall Street Journal.

• On Friday, Fulton County Superior Court Judge Scott McAfee heard final arguments in the effort to disqualify District Attorney Fani Willis from the Georgia election-interference case—and said to expect a decision within two weeks. For more, listen to Serious Trouble, where Josh Barro and Ken White took a deep dive into the proceedings with Georgia criminal-defense attorney Andrew Fleischman.

• Also on Friday, Judge Aileen Cannon (S.D. Fla.) held a hearing to address the timetable and trial date in the classified-documents case. Trump’s lawyers argued for a trial after Election Day, but also said that they could live with an August trial date. That might seem surprising—but it’s possible that they picked August with an eye to preventing the D.C. election-interference case from going to trial before the election. If the D.C. case is frozen until the Supreme Court decides the immunity case, and SCOTUS doesn’t issue an opinion until June, there wouldn’t be enough time to try the D.C. case before a documents trial starting in August. And being convicted of election interference, in the middle of an election, would be more harmful to Trump’s electoral prospects than being convicted of document-related offenses.

• New York state courts rejected Trump’s efforts to (1) temporarily delay payment of the state’s $454 million verdict against him or (2) post a $100 million bond backed by some of his biggest assets, in lieu of the full $454 million. In light of these developments, plus the $83.3 million judgment in the E. Jean Carroll case, Trump still faces a cash crunch.

Finally, two non-Trump litigation developments worth noting:

• The Supreme Court heard oral argument in Garland v. Cargill, concerning the legality of a 2018 regulation banning “bump stock” rifle attachments. Both Amy Howe of SCOTUSblog and Abbie VanSickle of the Times described the justices as “split,” largely along ideological lines.

• Jose Uribe, one of the co-defendants in the corruption case against Senator Robert Menendez (D-N.J.) and his wife, pleaded guilty and is cooperating.

Deal of the Week: MNC Capital’s $2.9 billion bid for Vista Outdoor.

MNC Capital Partners, a Texas-based investment firm, made an unsolicited $2.9 billion bid for Vista Outdoor, a maker of sporting goods such as Remington ammunition and outdoor products like CamelBak water bottles.

Vista is in the process of selling its sporting-goods business to a Czech defense company for $1.9 billion, but that deal is stuck in review by the Committee on Foreign Investment in the United States (CFIUS). Because MNC is a U.S. company, its purchase of Vista wouldn’t require CFIUS review.

MNC is being advised by Kirkland & Ellis (because of course it is). Vista is represented by Cravath Swaine & Moore, while Vista’s independent directors are being counseled by Gibson Dunn & Crutcher.

Law Firm of the Week: Gupta Wessler.

Not many firms outside the Am Law 100 have won Law Firm of the Week more than once. But not many non-Biglaw firms can claim two Supreme Court oral arguments in the span of one week, which Gupta Wessler proudly can. On February 20, Jennifer Bennett argued on behalf of Wonder Bread truck drivers opposing forced arbitration in Bissonette v. LePage Bakeries. Then on February 27, Jon Taylor argued for bank customers opposing federal preemption of state consumer-protection laws in Cantero v. Bank of America.

The progressive, plaintiff-side boutique now boasts six attorneys with Supreme Court arguments under their belts, according to Kimberly Strawbridge Robinson of Bloomberg Law. Gupta Wessler has around 18 lawyers, so a third of the firm has experience arguing at One First Street. This fact speaks well of name partners Deepak Gupta and Matthew Wessler, who aren’t hogging all the high-court arguments for themselves. The only other firm I can think of with more than a dozen lawyers and a similarly high percentage of attorneys with SCOTUS arguments is Consovoy McCarthy, where the late Will Consovoy set a great example. (I add the “more than a dozen lawyers” qualifier because it’s easy to have a high percentage if you’re a two-lawyer Supreme Court and appellate shop, like Goldstein Russell & Woofter, or a solo, like Howard Bashman.)

Other law firms in the news:

• The merger of Allen & Overy and Shearman & Sterling will take effect on May 1, and we’re learning more about the leadership team at the future A&O Shearman. It’s dominated by A&O partners—not surprisingly, given A&O’s dominant position when the deal was struck—but Shearman senior partner Adam Hakki will serve as co-chair of the global A&O Shearman board and executive committee.

• According to a court filing by the U.S. Bankruptcy Trustee, the Texas-based firm of Jackson Walker was told nearly two years ago to disclose that then-partner Elizabeth Freeman was in a romantic relationship with then-bankruptcy judge David Jones—who oversaw many cases in which Jackson Walker appeared. And now Jackson Walker and Kirkland & Ellis, its co-counsel in some of these cases, are facing multiple lawsuits over the mess.

Move of the Week: Paul Hastings hiring eight finance partners from Vinson & Elkins.

One of the most active players in the lateral market over the past two years has been Paul Hastings. And its aggressive hiring already seems to be paying off, reflected in how it managed to grow both its partnership and its profits per partner in 2023.

The firm’s acquisitive streak continues into 2024: Paul Hastings is picking up an eight-partner finance team from Vinson & Elkins. The partners are Brian Moss, Guy Gribov, James Longhofer, and Alex Cross, who are based in Houston, and Erec Winandy, Christopher Dewar, Bailey Pham, and Rafael Alvarado, who are based in Dallas (where Paul Hastings will be opening an office). Some associates are expected to follow them, and the entire team moving to Paul Hastings could end up reaching two dozen lawyers when all is said and done.

Here are other noteworthy moves in Biglaw:

• Speaking of Dallas, King & Spalding, another firm that has been on a hiring spree as of late, hired business litigator Veronica Moyé from Gibson Dunn & Crutcher, where she previously co-chaired the global litigation practice group and served on the executive committee.

• Meanwhile, in New York, Sidley Austin hired Randi Singer from Weil Gotshal & Manges, where she led the privacy and cybersecurity group.

And there was some notable personnel news outside the law-firm world:

• Hampton Dellinger was confirmed to lead the U.S. Office of Special Counsel (OSC), which is charged with “safeguard[ing] the mer​it system by protecting federal employees and applicants from prohibited personnel practices, especially reprisal for whistleblowing.”

• William Birdthistle, Director of the Division of Investment Management at the Securities and Exchange Commission (SEC), is returning to academia after two-plus years of service. He’ll be succeeded by Natasha Vij Greiner, a 22-year veteran of the SEC.

• Harvard Law School Dean John Manning—a leading right-of-center legal academic and former clerk to Judge Robert Bork (D.C. Cir.) and Justice Antonin Scalia, who has won praise for leading HLS through the extremely polarized past few years—was appointed to serve as interim provost of Harvard University. I view the selection of Dean Manning for this important role as a very good sign; Harvard knows it needs to turn things around, so it’s bringing in a seasoned administrator who’s also a conservative. (Professor John C.P. Goldberg, who previously served as deputy dean at HLS, will serve as interim dean while Dean Manning serves as provost.)

Thanks for making it to the end of another edition of Judicial Notice. It looks like the coming week will bring us lovely spring weather, at least here in the northeast; enjoy it!

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