Judicial Notice: January 29, 2021

Notable legal news from the week that was.

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Last week, I conducted a reader survey about whether you’d prefer to receive Judicial Notice on Fridays or Saturdays. The winner was Saturday, by a healthy margin — but maybe including the poll in a Saturday installment ended up skewing the results. So I’m going to include the survey again, in this Friday night post, and then see how the results look. If you haven’t done so already, please take my short survey (which also asks whether Non Sequiturs, my collection of interesting legal links and recommended reads, should be published separately from Judicial Notice).

Now, on to the news.

Lawyer of the Week: Bradley Gayton.

Bradley Gayton, general counsel of The Coca-Cola Company, made headlines this week when he announced rigorous new diversity guidelines for law firms that aspire to serve Coca-Cola as outside counsel. Most notably, the guidelines require law firms to commit that at least 30 percent of billed lawyer time on new Coca-Cola matters will be from diverse attorneys, with half of that 30 percent from Black attorneys.

In his January 28 open letter, Gayton explained why Coca-Cola felt it needed to act:

For decades, our profession has had discussions about why diversity is important. We have developed score cards, held summits, established committees, and written action plans. These efforts are not working. I’m reminded of this by the alarming number of new partner headshots that continue to be proudly displayed with an obvious lack of diversity and when I read that Black equity partners will not reach parity with the Black U.S. population until 2391.

That last statistic is staggering — and throws into stark relief the diversity problem within Biglaw.

But it’s not an impossible problem to solve. Coca-Cola’s own legal department shows how employers can do better than Biglaw: 53 percent of the company’s U.S.-based in-house lawyers are women, and 51 percent are ethnically diverse — 23 percent are black, 18 percent are Asian, and 10 percent are Hispanic. Taste the Diversity!

Judge of the Week: Chief Judge Beryl Howell.

Chief Judge Beryl Howell (D.D.C.) did not mince words. On Thursday, when she ordered the detention of Richard Barnett, the Arkansas man photographed with his feet on the desk of Speaker Nancy Pelosi during the January 6 attack on the Capitol, Chief Judge Howell condemned Barnett’s actions as “brazen” and “entitled.” She added, “We’re still living here in Washington, D.C., with the consequences of the violence.”

Chief Judge Howell also had harsh words for Tony Siano, Barnett’s defense lawyer, who had written a letter to the court making what Howell viewed as “frivolous” allegations of prosecutorial misconduct: “I don’t know how you practice in other jurisdictions, but throwing around accusations of misconduct by opposing counsel is not acceptable here when it is without merit.” Ouch.

Runner-up: Chief John Roberts, for extricating himself from the duty of presiding over former President Donald Trump’s Senate impeachment trial. This hasn’t made him the most popular figure in certain circles — but it has certainly gotten him talked about, which is really what Judge of the Week is all about. (I probably would have made the Chief the Judge of the Week if not for the fact that he was Judge of the Week just a few weeks ago, and the bar is higher for a repeat win.)

Ruling of the Week: Axon Enterprise, Inc. v. Federal Trade Commission.

If you’re an aficionado of federal jurisdiction, you’ll love this case (as well as, shameless plug, my novel, Supreme Ambitions).

In Axon Enterprise, Inc. v. FTC, a divided panel of the Ninth Circuit affirmed the dismissal, for lack of jurisdiction, of an aggrieved company’s challenge to the FTC’s administrative enforcement process. It’s a weird, wonky issue, which wound up pitting two Trump appointees, Judge Kenneth K. Lee and Judge Patrick J. Bumatay, against one another.

Judge Lee wrote the elegant and engaging — remember, this is a case about administrative law and subject matter jurisdiction — majority opinion, on behalf of himself and Judge Eugene E. Siler (6th Cir.). Judge Bumatay wrote a spirited yet respectful dissent that was also a pleasure to read. Kudos to both jurists for writing such illuminating opinions about an admittedly obscure issue — but not an unimportant one, since it controls the timing and circumstances under which constitutional challenges to the administrative state can be made.

Who do I think has the better of the argument? They’re both right, in a way. I believe that Judge Lee is correct in terms of the current state of the law, but I would go with Judge Bumatay’s approach if writing on a clean slate — and I wouldn’t be surprised if, at a future point, the Supreme Court takes on this issue and adopts the Bumatay theory of jurisdiction.

(And there’s reason to believe that this issue, or even this very case, could end up before the Supreme Court someday. Look at footnote 6 of Judge Bumatay’s dissent, which points out that the Fifth Circuit just granted rehearing en banc in a case raising essentially the same issue. If the en banc Fifth Circuit comes out the other way from the Ninth — which seems likely, since they just vacated the panel opinion taking the approach of Judge Lee — then we’ll have a circuit split on an interesting and important issue, one that lies squarely at the intersection of administrative law, constitutional law, and civil procedure. I think SCOTUS will find this hard to resist — and not just because of the chance to reverse the Ninth Circuit.)

Litigation of the Week: the flurry of litigation filed against Robinhood in the wake of the GameStop craziness.

If you haven’t been following the insane gyrations in the stock price of GameStop — yes, GameStop, the video game retailer that’s a strip-mall staple — stop reading this post and catch up on the GameStop situation. It’s a real David versus Goliath story, fun and fascinating, a magnificent mess.

Okay, back now? Good. So Robinhood, the popular trading platform and app offering commission-free stock trading, implemented various restrictions on trading in the shares of GameStop and certain other companies. This did not sit well with the retail investors who make up Robinhood’s customer base, who have filed at least 18 lawsuits against Robinhood, a mix of individual and class actions, in at least eight different states. The core claims tend to be breach of contract, although other causes of action have surfaced too, including negligence and breach of fiduciary duty.

These lawsuits will be fun to follow. And they’ll go on for years, long after trading in GameStop has returned to something resembling normalcy (assuming it does, but who knows). To paraphrase Casablanca, “We’ll always have GameStop.”

Runner-up: Dominion Voting Systems, Inc. v. Giuliani. This defamation lawsuit, brought by Tom Clare of Clare Locke LLP, is not the first lawsuit the company has filed against conspiracy theorists like Rudy Giuliani — Dominion previously sued Sidney Powell — and I have a feeling it won’t be the last.

And Giuliani should be afraid, be very afraid. As I said on Twitter:

Deals of the Week: GameStop-related bailouts.

Sorry, GameStop, I can’t quit you — which is why I’m naming the series of GameStop-related bailouts the deals of the week.

The GameStop saga has produced some big losers, with short sellers of GameStop sustaining an estimated $20 billion in losses. Melvin Capital, the hedge fund that had a massive short position in GameStop, had to take $2.75 billion in rescue capital from two outside investors. One of those investors was Point72, the celebrated hedge fund run by Steve Cohen — which is reportedly down by 15 percent this year, thanks in part to all the money it had invested with Melvin Capital.

Robinhood, the trading platform and app that was so heavily affected by GameStop trading, also needed to shore up its cash position. It raised more than $1 billion in a matter of days, some from its banks and some from its investors.

The winners? The lawyers, of course — or at least their law firms. I’m not sure of which firms worked on these different deals, but I am sure that many all-nighters were pulled in Biglaw this week — thanks, once again, to GameStop.

Law Firm of the Week: Davis Wright Tremaine.

On Thursday, Davis Wright Tremaine became the first Am Law 200 firm to announce that it will require its attorneys and staff to be vaccinated in order to return to the office. Good for DWT.

As managing partner Jeff Gray explained, “DWT continues to place the health and safety of all of our lawyers and staff as our highest priority. As vaccines against COVID-19 become increasingly available, we are adopting a policy to safeguard the health of our employees and their families, our clients and visitors, and our communities.”

This isn’t the only positive policy that DWT has announced recently. Earlier this month, the firm announced that it will count up to 50 hours of eligible activities focused on Diversity, Equity, and Inclusion (DEI) toward the billable-hour requirements for attorneys. This is just one of several steps the firm is taking to further strengthen its commitment to diversity and inclusion, as its new Chief Diversity and Inclusion Officer, Yusuf Zakir, explained to me in a recent interview.

Lateral Move of the Week: Skadden Arps hiring Cody Carper away from Willkie Farr.

We’re still in January, so lateral movement remains high. This past week witnessed many noteworthy moves, including Krishna Veeraraghavan leaving Sullivan & Cromwell for Paul Weiss and Pillsbury hiring former Associate Deputy Attorney General Patrick Hovakimian out of the Justice Department. Meanwhile, going in the other direction, Nicholas McQuaid of Latham & Watkins, Matthew Axelrod of Linklaters, John Carlin and David Newman of Morrison & Foerster, and Todd Kim of Reed Smith all went into the Biden Administration.

But for Lateral move of the Week, I’m selecting Cody Carper joining the Houston office of Skadden Arps. Carper, a rising star in the energy transactional space, was previously a partner at Willkie Farr & Gallagher and Kirkland & Ellis. His hiring could be a sign that the energy sector, which had an ugly 2020, is starting to turn the corner — and when it does, Skadden wants to be ready to get in on the action.

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