New data from the American Bar Association reveals disparities in the allocation of law school scholarships, with white students disproportionately receiving full-tuition scholarships compared to their non-white peers.

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Scholarship Allocation Discrepancies

• White law students received 70% of full-tuition scholarships despite comprising only 61% of the national pool of full-time law students.
• Conversely, students of color, making up nearly 32% of full-time law students, received fewer than 23% of full-tuition scholarships.
• While students of color received nearly 34% of scholarships covering less than half tuition, they still faced a gap in receiving full-tuition scholarships.

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Implications and Call for Action

• This marks the first year the ABA has collected and reported data on law school scholarships by race, highlighting long-existing disparities.
• Advocates emphasize the need for law schools to reassess scholarship awarding practices to ensure equity and fairness.
• Concerns persist regarding the reliance on Law School Admission Test (LSAT) scores, which has been identified as a primary driver of scholarship disparities.
• The data underscores the need for ongoing efforts to address racial disparities in legal education and scholarship allocation practices.

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Future Considerations

• Efforts should focus on promoting equity in scholarship distribution and addressing systemic barriers that contribute to disparities.
• Continuous monitoring and evaluation of scholarship allocation practices are necessary to ensure progress towards greater inclusivity and diversity in legal education.

By addressing these issues, law schools can work towards creating a more equitable and accessible environment for all aspiring legal professionals.

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Background

A federal judge in New York City, U.S. District Judge Arun Subramanian of the Southern District of New York, has ruled that neither Boies Schiller Flexner nor the legal representatives of its adversaries are eligible for sanctions in a sex-trafficking lawsuit.

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Sanctions Motions Denied

In an order posted Tuesday evening, Judge Subramanian rejected motions for sanctions filed by both parties involved in the case, as reported by Law360.

Lawsuit Details

The lawsuit, brought forth by Boies Schiller on behalf of sex-trafficking victims, targeted a former lawyer and accountant for Jeffrey Epstein, a wealthy financier and convicted sex offender who died by suicide in prison. Boies Schiller’s chairman, David Boies, and co-managing partner, Sigrid McCawley, represented the plaintiffs, alleging that the defendants facilitated Epstein’s sex trafficking activities.

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Sanctions Requests

The defendants, lawyer Darren K. Indyke and accountant Richard D. Kahn, initially sought sanctions, contending in an April 8 motion that the lawsuit should not have been initiated because the lead plaintiff and other victims had signed comprehensive liability releases in exchange for substantial financial settlements.

Boies and McCawley countered with their own sanctions motion on April 19, asserting that the defendants’ motion was riddled with inaccuracies and deserving of sanctions itself. They argued that Indyke and Kahn were directly involved in Epstein’s criminal activities, information that was not known at the time the liability releases were signed.

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Legal Representation

Indyke and Kahn are being represented by Hughes Hubbard & Reed and Patterson Belknap Webb & Tyler.

Judge’s Decision

Judge Subramanian did not provide detailed reasoning for denying the sanctions in the brief order.

The post Judge Denies Sanctions in Boies Schiller Sex-Trafficking Suit first appeared on JDJournal Blog.

A federal appeals court judge facing questions about a potential conflict of interest regarding his son’s ownership of Citigroup stock does not need to recuse himself from hearing a lawsuit challenging a rule on credit card late fees, a judicial ethics panel has ruled.

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Background and Inquiry

U.S. Circuit Judge Don Willett of the 5th U.S. Circuit Court of Appeals sought guidance from the U.S. Judicial Conference’s Committee on Codes of Conduct following concerns raised by the Consumer Financial Protection Bureau (CFPB). The agency argued that Judge Willett’s son’s ownership of Citigroup stock might influence his decision-making in the case.

The controversy emerged shortly after Judge Willett penned a 2-1 opinion opposing the transfer of the case from Fort Worth, Texas, to Washington, D.C. Reports surfaced about Willett’s family investment in Citigroup, a major credit card issuer involved in the lawsuit.

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Advisory Opinion

In response to the inquiry, U.S. District Judge Gerald McHugh, acting as the chair of the Committee on Codes of Conduct, determined that Judge Willett’s son’s stock holdings did not necessitate recusal. McHugh emphasized that any potential impact on Citigroup’s stock due to the case outcome was indirect and contingent. He concluded that this indirect financial interest did not warrant Judge Willett’s withdrawal from the case.

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Implications and Response

Judge Willett’s participation in the case remains unchanged. He is expected to be part of the three-judge panel overseeing the related request to block the rule on credit card late fees. Recusal would have altered the composition of the panel.

Neither the CFPB nor the Chamber of Commerce, representing banking industry groups challenging the rule, immediately commented on the advisory opinion.

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Case Background

The lawsuit revolves around a CFPB rule aimed at curbing excessive late fees charged by credit card issuers. The rule limits late fees to $8 for issuers with over 1 million open accounts unless they can justify higher fees. Previously, late fees could reach up to $30 or $41 for subsequent late payments.

The case is titled Chamber of Commerce of the United States of America, et al, v. Consumer Financial Protection Bureau, pending in the 5th U.S. Circuit Court of Appeals.

• Plaintiffs’ Counsel: Michael Murray of Paul Hastings
• CFPB Counsel: Justin Sandberg of the CFPB

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Court Rejects SpaceX’s Bid

In a divided decision, the 5th U.S. Circuit Court of Appeals declined SpaceX’s latest attempt to keep its lawsuit challenging the National Labor Relations Board (NLRB) structure in Texas. The court voted 8-8, refusing to reconsider a previous ruling that denied SpaceX’s request to block the case’s transfer from Brownsville, Texas, to Los Angeles.

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Background of the Lawsuit

SpaceX filed a lawsuit in January, alleging that the NLRB’s enforcement proceedings violated its constitutional right to a jury trial. The company specifically cited limitations on the removal of board members and administrative judges. The lawsuit was filed in response to the NLRB’s complaint alleging that SpaceX unlawfully terminated eight employees for criticizing Elon Musk, the company’s CEO.

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Transfer of the Case

The NLRB urged U.S. District Judge Rolando Olvera to transfer the case to Los Angeles, arguing that the events central to the lawsuit primarily occurred in California. Despite SpaceX’s objection, the case was transferred to Los Angeles in February. The 5th Circuit initially stayed the transfer order but later upheld the decision to move the case.

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Judicial Response and Dissent

The tie in the full court vote was due to the recusal of U.S. Circuit Judge James Ho. Judge Edith Jones, along with other Republican appointees, dissented, arguing that SpaceX had the right to sue in its chosen venue. Jones criticized the NLRB’s tactics in advocating for the transfer, accusing them of “forum shopping.”

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Conclusion and Ongoing Proceedings

Despite the court’s decision, SpaceX continues to pursue its legal challenge against the NLRB in Los Angeles. Meanwhile, the NLRB attorneys involved in the case were cleared of wrongdoing in a separate order, although the court noted some errors in their actions. The case remains a focal point in the ongoing dispute over jurisdiction and venue selection.

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Case Details:

Case Name: In re: Space Exploration Technologies
Court: 5th U.S. Circuit Court of Appeals
Case Number: 24-40103
Representation:

• SpaceX: Harry Johnson, Michael Kenneally, Catherine Eschbach, and Amanda Salz of Morgan Lewis & Bockius
• NLRB: David Boehm

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A Native American group is urging a U.S. appeals court to overturn a previous ruling that granted land to Rio Tinto for a copper mine project in Arizona, arguing that the land holds sacred and cultural significance.

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Background of the Ruling

Earlier this month, a segment of the 9th U.S. Circuit Court of Appeals ruled in favor of allowing the federal government to allocate thousands of acres in Arizona to Rio Tinto and its minority partner, BHP, for the Resolution Copper project.

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Opposition from Apache Stronghold

Apache Stronghold, a nonprofit organization representing the San Carlos Apache tribe and others, has vehemently opposed the mine’s development. They argue that the proposed mine site holds historical importance, serving as a location for Indigenous ceremonies for generations. If the project proceeds, it would result in the destruction of this sacred site, with a crater measuring 2 miles wide and 1,000 feet deep.

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Legal Challenge

The Native American group, represented by attorney Luke Goodrich from Becket Law, is seeking a full-court review of the ruling, emphasizing the significance of the case.

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Industry Response

Rio Tinto acknowledged the action taken by Apache Stronghold but awaits further direction from the court. On the other hand, BHP has not provided any comments on the matter.

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Context and Implications

The court’s decision to approve the land swap reflects a previous decision made in 2014 by the U.S. Congress and former President Barack Obama. However, the move has sparked controversy, particularly during the U.S. presidential election season. Former President Donald Trump has expressed support for the mine, while President Joe Biden narrowly won Arizona in 2020, partly due to Native American votes.

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Conclusion

The legal battle surrounding the Rio Tinto copper mine project underscores the ongoing tensions between economic development and Indigenous rights, raising broader questions about environmental protection and cultural preservation.

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In a recent development, U.S. District Judge Jeffrey S. White of the Northern District of California has upheld a substantial sanction against Seattle lawyer Edward C. Chung. The judge has ordered Chung to pay $251,000 in attorney fees and nearly $17,000 in interest for submitting a fraudulent news article to the federal appeals court in San Francisco.

The Unraveling Saga

The controversy stems from Chung’s attempt to bolster his case for enforcing an $18 billion arbitration award against Chevron Corp. and other entities. In July 2021, Chung sought to introduce a purported news article titled “Saudi Sun” as a “supplemental exhibit” for “demonstrative purposes.” The article was submitted alongside a motion filed with the 9th U.S. Circuit Court of Appeals in San Francisco.

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A Hypothetical Paper or a Fraudulent Act?

In August 2022, Chung defended the move, claiming that the article was merely a “hypothetical paper” intended to summarize the court record, with the court being duly informed of its purpose. However, in his letter to the 9th Circuit, he accused two judges of “an obvious abuse of judicial authority, corruption, and collusion” with Chevron Corporation and its counsel.

Remarkably, Chung did not appear for the sanctions hearing in August 2022. Subsequently, in June 2023, the 9th Circuit declared the article a “fraud upon the court” and referred the matter to Judge White to determine the appropriate sanction.

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Rejected Requests and Accusations

Despite the seriousness of the allegations against him, Chung’s request for a hearing on the matter was rejected by Judge White. In a Jan. 8 judgment, the judge ordered Chung to pay the total attorney fees sought by Chevron Corp., coupled with interest.

Chung, however, continued to contest the legitimacy of the proceedings. In an October 2023 letter, he doubted the authenticity of Judge White’s signature on the sanctions order. He stated, “Please understand there have been so many profound oddities, threats, and misrepresentations made in this case by Chevron and their counsels. We have good reason to believe it is necessary to ensure the legitimacy of the court orders being executed.”

The Lawyer’s Response

Chung, affiliated with Chung Malhas & Mantel, responded to inquiries from the ABA Journal, stating that he was unavailable for immediate comments due to a deposition. He assured me that he would address the questions by the end of the day, later pushing the response timeline to Wednesday morning.

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In a recent ruling on December 1, the Kansas Supreme Court found that a part-time lawyer did not violate disciplinary rules despite accusations of posting copied material on her website along with statements that raised ethical concerns. While acknowledging certain discrepancies, the court concluded that the lawyer’s actions did not amount to false or misleading communication.

Background

The subject of the ruling, Tarishawn D.D. Morton faced allegations related to her website content and statements. The court’s findings revealed that Morton had incorporated material from another lawyer’s website, displayed bar association logos despite her lapsed membership, and made assertions about her experience in the legal field.

Ethics Evaluation

Censure for Admissions Applications

While the Kansas Supreme Court did not identify ethics violations concerning Morton’s website content, it did criticize her for false statements or omissions in her admissions applications to both the Kansas and Colorado bars. The court found discrepancies in Morton’s disclosure of her professional history, leading to the censure.

Website Content Scrutiny

The court addressed specific issues with Morton’s website, such as using material from another lawyer, bar association logos, and statements about her experience. The copied material included summaries of caselaw, insights into Kansas domestic relations law, and details about the criminal trial process.

Statements About Experience

Despite assertions like “experience counts” and claims of being an “experienced legal counsel,” the Kansas Supreme Court ruled that these statements were not demonstrably false under the given circumstances. Morton’s law practice during evenings and weekends did not automatically render her claims misleading.

Use of Copied Material and Bar Association Logos

The court clarified that while copying material could potentially violate ethical bans, there was no conclusive evidence that Morton’s actions were intentional. Moreover, the inclusion of bar association logos was deemed not to be a material misrepresentation.

Practice Areas Listing

Morton’s website listed her practice areas as “criminal defense” and “personal injury,” specifying various case types within these categories. The court found no issue with this, stating that Morton was communicating the kinds of cases she was willing to accept and not claiming to be a specialist in a particular field.

Censure Reasons

The censure imposed on Morton was related to her failure to disclose a previous job termination in her 2016 application to the Kansas bar and falsely claiming voluntary resignation in her 2019 application to the Colorado bar. The court also noted that she should have updated her pending Colorado application to include information about the disciplinary complaint in Kansas.

Response from Morton

As of now, Tarishawn, D.D. Morton has not responded to requests for comment on the ruling.

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Ernst & Young LLP (EY), a prominent global professional services firm, is currently considering a significant governance overhaul aimed at granting more authority to its partners and principals. This transformative initiative is designed to be implemented through a trio of distinct entities, which will collectively steer the massive $21.5 billion U.S. branch of the firm.

Background: Reform in the Wake of Leadership U-turn

This proposed governance overhaul is the latest in a series of reform initiatives that EY has undertaken in the aftermath of an abrupt change in direction. Earlier, the leadership team of the U.S. branch withdrew its support for a planned spin-off of EY’s global consulting business and a substantial portion of its tax practice. This reversal thwarted efforts to break up the network and prompted the exploration of alternative governance structures.

Structural Transformation: The New Vision for EY US

The draft plan envisions a comprehensive restructuring of the EY U.S. entity, focusing on redefining its governance structure. Key elements of this proposed transformation include:

1. Management Committee: EY US intends to establish a dedicated management committee defining the firm’s overarching strategy.
2. Advisory Group: An advisory group will be formed to represent the perspectives and insights of partners and principals effectively.
3. Governing Board: The cornerstone of the proposed governance overhaul is the creation of a governing board, composed of ten elected members and the managing partner. This board is envisaged as a pivotal decision-making body.

A Shift towards Modernization and Accountability

The drive to modernize the governance of EY U.S. has been underway for over two years, as part of the firm’s ongoing commitment to staying aligned with the best practices in professional services firms’ governance. According to Brendan Mullin, a spokesperson for EY, this endeavor reflects the firm’s proactive approach to periodically reviewing and enhancing its governance protocols.

Responding to Shifting Dynamics

Following the disbandment of EY’s initial breakup strategy in April, Julie Boland, the U.S. managing partner, undertook a leadership revamp, appointing key individuals to streamline the firm’s operations. Additionally, the firm responded to changes in service demand by eliminating approximately 3,000 jobs.

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The Proposed Governance Framework: Key Features

Under the proposed governance structure:

• Partners and principals will play a pivotal role in electing members of the governing board, with a majority expected to be Certified Public Accountants (CPAs). This board will be entrusted with risk management, audit quality, regulatory compliance, and assessing the firm’s financial performance.
• The governing board retains the option to incorporate independent members in the future.
• A five-person nominating committee will propose candidates for the governing board, subject to ratification through a partnership-wide vote.

A Transition from Corporate to Partnership-Led Approach

EY’s contemplated shift towards a partnership-led approach, characterized by consensus-building, marks a departure from its previous corporate and management-oriented style. This shift is seen as a response to partner concerns arising from feeling sidelined in previous pivotal decisions within the firm.

Balancing Accountability and Efficiency

Although this transformation aims to address partner concerns, some industry experts express concerns that slower decision-making may potentially place the firm at a competitive disadvantage. Allan Koltin, an advisor to leading accounting firms on governance and leadership issues, points out that highly successful professional and financial services firms need to prioritize efficiency and speed.

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EY’s Vision for Improved Decision-Making

However, EY expects that these proposed changes will lead to enhanced decision-making and accountability. The firm anticipates that this shift in governance structure will contribute positively to its overall operations and adaptability.

Challenges and the Road Ahead

EY has faced several challenges recently, including the collapse of its audit client, Wirecard, and a $100 million penalty for ethics violations in the United States. As partners prepare to select a new global chairman to succeed Carmine Di Sibio, who championed the firm’s previous breakup strategy and is set to retire next year, EY’s governance overhaul represents a pivotal juncture in the firm’s ongoing evolution and response to a changing business landscape.

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PhRMA CEO Stephen Ubl Anticipates Renewed Legal Offensive

In a recent discussion with Bloomberg Law, the CEO of the Pharmaceutical Research and Manufacturers of America (PhRMA), Stephen Ubl, hinted at the likelihood of a new wave of legal challenges against the Biden administration’s Medicare drug pricing negotiation process. Pharmaceutical giants are preparing to intensify their legal assault on the Health and Human Services Department (HHS) over the program.

The Ongoing Battle

As it stands, the HHS is currently facing nine lawsuits related to the drug price negotiation program. Various entities have filed these lawsuits, including Merck & Co., Bristol-Myers Squibb Co., various other drug manufacturers, and industry associations. Notably, PhRMA itself is part of this legal crusade against the HHS.

Challenging Constitutionality

Until now, the legal challenges have predominantly centered on the assertion that Medicare negotiations violate the U.S. Constitution, specifically the First, Fifth, and Eighth Amendments.

A New Phase of Legal Action

Stephen Ubl shed light on what might be expected in the next phase of these legal battles. He suggested that upcoming attacks on the program might take the form of “applied challenges.” In other words, companies could challenge specific aspects of the drug pricing law’s application, such as fines imposed or other elements of the negotiation process.

Legal Landscape

AstraZeneca PLC and Boehringer Ingelheim have already launched lawsuits against the HHS, arguing that the agency’s implementation of the drug pricing program through guidance instead of the formal regulatory process violated the Administrative Procedure Act.

The pharmaceutical industry has recruited prominent law firms to lead the charge against the HHS. These firms include legal heavyweights like King & Spalding and Jones Day. Some attorneys involved in these cases have previously served as Supreme Court clerks, Justice Department officials, and a former solicitor general.

Potential Supreme Court Involvement

The ongoing litigation is scattered across various federal courts, and there is a growing likelihood of a circuit split. This situation could ultimately push the United States Supreme Court to take up the case.

A Changing Landscape

Ubl underscored that, unless there are significant alterations or legal resolutions, the pharmaceutical industry is moving into a phase where the HHS is poised to play a much more substantial role in the pricing of pharmaceutical products. In response to this evolving landscape, PhRMA plans to assemble both in-house and external legal expertise to navigate the intricacies of the HHS and the Centers for Medicare & Medicaid Services as they gear up to implement the drug pricing law.

The Health and Human Services Department has not responded immediately to requests for comment regarding these legal challenges.

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The sudden resignation of a prominent Houston judge has cast a shadow of uncertainty over the city’s status as a favored destination for corporate bankruptcy filings. The departure of Judge David R. Jones, who was instrumental in establishing the reputation of the US Bankruptcy Court for the Southern District of Texas, has prompted questions about the future of Chapter 11 filings in the region.

The Jones Scandal

The US Bankruptcy Court for the Southern District of Texas found itself at the center of controversy following the resignation of Judge David R. Jones. Jones departed after revelations that he had concealed a romantic relationship with a local attorney from Jackson Walker LLP, a law firm frequently representing large corporations in his courtroom. This relationship raised concerns about potential bias in his rulings.

Creating the Complex Case Panel

Judge Jones played a pivotal role in implementing the complex case panel in 2016, a system designed to assign significant Chapter 11 cases to either Jones himself or another Houston-based judge. This arrangement offered predictability and efficiency that attracted high-dollar cases to the region.

Reassignment of Caseload

Following Judge Jones’s resignation, his enormous caseload of approximately 4,200 cases was reassigned. The new complex case panel consists of Judges Marvin Isgur and Christopher Lopez.

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Potential Implications for Corporate Filings

While it remains too early to gauge the full impact of Judge Jones’s resignation, corporate bankruptcy attorneys may now consider alternative venues for filing Chapter 11 cases due to the loose federal rules governing venue selection. Judge Isgur boasts 19 years of experience, while Judge Lopez is relatively junior, with four years in the field. Popular venues like Delaware and New York may become more attractive options for filers.

The Kirkland Effect

Kirkland & Ellis LLP, a major law firm, has significantly boosted Houston’s reputation as a corporate bankruptcy hub by filing numerous large Chapter 11 cases in the region. However, the firm has also been filing cases in the US Bankruptcy Court for the District of New Jersey, leading to the possibility of cases shifting away from Texas, a development that could impact Houston’s appeal.

Historical Surge in Filings

The Southern District of Texas saw a surge in significant corporate bankruptcy cases, particularly in the oil and gas industry, during a prolonged period of low commodity prices starting around 2015. Implementing the two-judge complex case order 2016 streamlined the adjudication process, attracting more high-profile cases to the district. The Southern District of Texas overtook New York in 2020, becoming the second most popular megacase venue, trailing only Delaware.

Jones’s Unprecedented Influence

Over the past decade, Judge Jones presided over more corporate debtors with over $1 billion in assets and liabilities than any other judge in the country, solidifying his status as a prominent figure in the bankruptcy world.

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The Unfolding Fallout

Jones’s concealed relationship with attorney Elizabeth Freeman has had ripple effects, with parties now scrutinizing his neutrality in Jackson Walker cases. These developments have raised questions about the future of the district’s reputation as a bustling magnet court.

Uncertainty Looms

With Judge Jones stepping down, Judges Isgur and Lopez now occupy the complex case panel. The Southern District of Texas is working to fill the vacancy left by Judge Jones’s resignation, which could take several months. The court’s ability to maintain its appeal to debtors’ counsel will depend on its willingness to continue handling large and complex cases efficiently.

Potential Rival Courts

The emergence of other courts seeking to replicate the Southern District of Texas’s efficient procedures, like the Northern District of Texas, could further challenge Houston’s status as a corporate bankruptcy hub. As attorneys explore alternative options, the landscape of Chapter 11 filings may undergo a significant transformation.

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