A recent federal court ruling has determined that legal malpractice claims against Stinson LLP, including allegations of excessive billing and professional misconduct, must be resolved through arbitration rather than litigation. The decision underscores the growing weight courts give to arbitration agreements between law firms and their clients — even in complex malpractice disputes.

Case Background

The dispute stems from a contentious legal battle involving Belgravia Hartford Capital Inc. and its subsidiary, who accused Stinson LLP of “unconscionably overbilling” them for unnecessary legal services. Belgravia initially challenged Stinson’s fees and lodged claims of malpractice against the firm, asserting that it failed to deliver competent representation and engaged in questionable billing practices that inflated costs without advancing the client’s interests.

Stinson LLP denied the allegations and moved to compel arbitration, citing an arbitration clause in its engagement agreement with Belgravia. The firm argued that all disputes — including claims related to legal malpractice — fell within the scope of that clause.

Belgravia, however, opposed the move, insisting that the malpractice claims should be litigated in federal court rather than decided by an arbitrator. The plaintiffs contended that malpractice claims involve professional ethics and public policy issues that go beyond simple contract disputes and therefore should be heard before a judge.

The Court’s Decision

Judge Judith C. Herrera of the U.S. District Court for the District of New Mexico ruled in favor of Stinson LLP, compelling arbitration of the malpractice counterclaims. The court concluded that Belgravia and its subsidiary had waived their right to challenge arbitration by previously invoking the arbitration process themselves.

According to the ruling, Belgravia had already requested that its malpractice counterclaims be heard “in conjunction” with other fee-related disputes under the same arbitration agreement. This prior conduct, the court found, amounted to a tacit acknowledgment of the agreement’s validity — making it inconsistent for the plaintiffs to later oppose arbitration on the same claims.

“The plaintiffs cannot both rely on the arbitration provision to consolidate their claims and simultaneously deny its enforceability when it no longer suits their position,” the judge’s opinion stated. As a result, the court ordered that all claims — including those alleging malpractice and overbilling — proceed through arbitration.

Legal Implications

This decision has broader implications for both law firms and their clients. Arbitration clauses are increasingly common in engagement letters, often requiring clients to resolve disputes privately rather than through public court proceedings.

For law firms, the Stinson decision reinforces the strength of these clauses as a safeguard against costly and high-profile litigation. Arbitration typically provides a faster, less public resolution process — one that allows firms to protect their reputations while minimizing procedural expenses.

For clients, however, the ruling serves as a cautionary tale. Arbitration can limit discovery rights, reduce transparency, and restrict the ability to appeal unfavorable rulings. Clients signing engagement agreements with arbitration provisions should be aware that such clauses can apply not only to fee disputes but also to malpractice and ethics-related claims.

Legal experts note that Judge Herrera’s decision aligns with a broader judicial trend favoring arbitration when parties have already demonstrated an intent to arbitrate. Courts have consistently held that even sophisticated parties — such as corporate clients — are bound by the contracts they sign, including arbitration terms.

A Broader Message to the Legal Community

The outcome of the Belgravia-Stinson dispute underscores the importance of clarity and transparency in attorney-client agreements. Law firms should ensure that arbitration provisions are clearly drafted, prominently disclosed, and explained to clients before engagement. Failing to do so could lead to disputes over enforceability down the road.

At the same time, clients — particularly corporate entities — are urged to carefully review dispute resolution clauses in engagement contracts before signing. Understanding whether malpractice, fee disagreements, or other claims will be handled in arbitration or court is essential to managing risk and setting expectations.

This case also highlights the strategic considerations involved in choosing to arbitrate. While arbitration may offer privacy and efficiency, it also tends to favor procedural finality, leaving limited grounds for appeal. Once arbitration is initiated, as Belgravia’s experience shows, it can be difficult to later shift the dispute back into court.

Conclusion

The federal court’s decision directing Belgravia Hartford Capital’s malpractice claims against Stinson LLP to arbitration marks a significant win for law firms seeking to enforce arbitration clauses in client agreements. By finding that Belgravia’s own actions had effectively confirmed the validity of arbitration, the ruling emphasizes that parties cannot selectively invoke or reject arbitration based on convenience.

As arbitration continues to play a growing role in resolving disputes between attorneys and clients, this case serves as a reminder of the binding power of engagement terms and the importance of understanding their full implications before a conflict arises.

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In a major legal development shaking the artificial intelligence industry, a group of AI users has filed a class action lawsuit against Microsoft, accusing the tech giant of engaging in anti-competitive behavior through its multibillion-dollar partnership with OpenAI. The lawsuit, lodged in the U.S. District Court for the Northern District of California, claims Microsoft’s exclusive agreements and investments in OpenAI have unfairly restricted market access and inflated prices for generative AI services.

Background: A Powerful Alliance Under Scrutiny

Microsoft’s partnership with OpenAI has been one of the most influential alliances in the AI era. Since 2019, Microsoft has invested over $13 billion in OpenAI, securing a significant stake in the company and exclusive access to its cutting-edge language models — including ChatGPT and GPT-4 — through Microsoft’s Azure cloud infrastructure.

The plaintiffs allege that this partnership granted Microsoft undue control over AI computing resources and pricing structures. According to the complaint, Microsoft and OpenAI entered into a cloud exclusivity deal that forced OpenAI to rely solely on Microsoft Azure for computational power. This, the plaintiffs claim, artificially inflated costs for users, restricted competitors’ access to essential AI tools, and undermined the overall quality of AI services available to the public.

Plaintiffs’ Core Allegations

The lawsuit, titled Samuel Bryant et al. v. Microsoft Corp. (Case No. 3:25-cv-08733), contends that Microsoft leveraged its investment to monopolize the AI ecosystem, using OpenAI’s resources to promote its own suite of products — such as Copilot and Bing Chat — while simultaneously limiting access for rival developers and researchers.

The complaint further asserts that Microsoft’s exclusive control over OpenAI’s compute capacity distorted the AI market, allowing Microsoft to charge higher fees and reduce service options for consumers and developers alike. Users claim they have faced higher subscription prices and limited alternatives since ChatGPT’s public launch in late 2022.

Even though OpenAI reportedly began purchasing cloud computing services from Google Cloud earlier this year — suggesting some loosening of Microsoft’s grip — the plaintiffs argue that Microsoft still retains structural control and could reinstate restrictive terms at any time.

What the Lawsuit Seeks

The plaintiffs are asking the court to award monetary damages to AI users who were allegedly overcharged since the debut of ChatGPT. The lawsuit also seeks injunctive relief to prevent Microsoft from re-establishing exclusive or restrictive arrangements with OpenAI or any similar entities in the future.

At the heart of the case is a broader concern about competition and innovation. The lawsuit argues that Microsoft’s dominance threatens to create a “bottleneck” in the generative AI space — a situation where only a few major players control access to the tools and infrastructure that power AI development globally.

Microsoft’s Response

In response to the lawsuit, a Microsoft spokesperson stated that the company is reviewing the complaint but emphasized that its partnership with OpenAI has been pro-competitive rather than anti-competitive. Microsoft insists that its collaboration has accelerated innovation, expanded access to generative AI tools, and empowered developers and businesses worldwide.

The company highlighted its efforts to integrate OpenAI technology into widely used products like Microsoft 365, Azure AI Studio, and GitHub Copilot, which it claims have democratized access to AI and enhanced productivity for millions of users.

OpenAI’s Position

OpenAI, which is not named as a defendant in the lawsuit, declined to comment publicly on the ongoing litigation. The company has faced its own series of challenges in recent months, including regulatory scrutiny over its partnership structure, safety practices, and corporate governance following leadership changes in late 2024.

While OpenAI maintains that it operates independently of Microsoft, critics argue that Microsoft’s deep financial involvement — coupled with its Azure exclusivity deal — effectively gives the tech giant controlling influence over one of the world’s leading AI firms.

The Broader Implications for the AI Industry

This lawsuit could have far-reaching consequences for the rapidly evolving AI sector. Regulators in both the United States and European Union have already expressed concerns over potential market concentration in AI infrastructure, where a handful of companies — notably Microsoft, Google, Amazon, and NVIDIA — dominate the resources needed to train and deploy large-scale models.

If the plaintiffs prevail, it could reshape how cloud providers and AI developers structure their partnerships. It might also influence future antitrust enforcement in emerging technology markets, echoing earlier cases against major tech companies for monopolistic practices in search, mobile, and digital advertising.

Legal experts note that this case mirrors concerns voiced by lawmakers and competition authorities that Big Tech’s influence in AI could replicate the monopolistic patterns seen in earlier digital markets. The central question will be whether Microsoft’s partnership with OpenAI represents innovation through collaboration — or market domination through control.

What’s Next

As the case proceeds, it is expected to draw intense scrutiny from the Department of Justice, the Federal Trade Commission, and international regulatory bodies monitoring AI competition. The outcome could serve as a precedent for defining the legal boundaries of AI partnerships and investments in the years ahead.

For now, Microsoft’s relationship with OpenAI remains a cornerstone of the company’s AI strategy — and a lightning rod for critics concerned about fairness, transparency, and consumer rights in the age of artificial intelligence.

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How the Dispute Began

The controversy erupted earlier this year when federal agencies, under direction from the Trump administration, suddenly halted billions of dollars in research grants earmarked for Harvard. The official justification centered on claims that Harvard had failed to adequately confront antisemitism on campus and had fostered what the administration described as a “radical left environment.”

However, Harvard argued in its lawsuit that the funding freeze was not about antisemitism but rather about political retaliation. The university pointed to repeated demands from the administration that it overhaul policies related to faculty hiring, diversity and inclusion initiatives, student admissions, and governance. When Harvard resisted these changes, the lawsuit alleged, the funding cuts followed.

This legal battle quickly drew national attention, not only because of the financial stakes but also because it touched on sensitive issues of academic freedom, free speech, and federal authority over higher education.

Judge Burroughs’ Findings

Judge Burroughs ruled decisively in Harvard’s favor, stressing that while combating antisemitism is a legitimate government objective, the funding cuts were “a pretext for impermissible political coercion.”

Her opinion underscored three major points:

1. First Amendment Protections – Universities, like individuals, cannot be forced to adopt specific political viewpoints as a condition of receiving public funds. The court concluded that Harvard was targeted for refusing to align itself with the administration’s preferred ideological positions.
2. Administrative Procedure Act Violations – Federal agencies are required to act in a non-arbitrary and transparent manner. Burroughs noted that there was little evidence or procedural rigor behind the decision to terminate Harvard’s grants.
3. Civil Rights Safeguards – The judge emphasized that Title VI of the Civil Rights Act requires proper procedures before funding tied to discrimination issues can be withdrawn. None of those protections were followed in this case.

Burroughs described the cuts as “arbitrary and capricious,” warning that permitting such actions would open the door to future administrations wielding funding as a political weapon against universities.

Immediate Impact and White House Response

The ruling includes a permanent injunction preventing the administration from cutting current or future research grants to Harvard. Federal agencies must also restore funding already withheld, ensuring that major research projects—from medical studies to climate science—can continue without disruption.

The Trump administration responded sharply. A White House spokesperson criticized Judge Burroughs as an “activist Obama-appointed judge” and vowed to appeal the decision, maintaining that Harvard remains ineligible for federal research grants pending review. The administration framed the ruling as judicial overreach, claiming the cuts were necessary to hold elite institutions accountable.

Harvard’s Stance

Harvard leadership welcomed the ruling as a resounding affirmation of academic independence. The university’s legal team, bolstered by support from the American Association of University Professors (AAUP), argued that capitulating to political demands would have undermined not just Harvard but higher education nationwide.

Faculty members stressed that billions in federal grants are not just financial lifelines but also critical for advancing groundbreaking research. Cutting those funds, they argued, would have jeopardized public health initiatives, technological innovation, and international academic partnerships.

Comparisons with Other Universities

This case stood out because other Ivy League institutions facing similar scrutiny took different approaches. Columbia University entered into a $220 million settlement to regain lost federal support, while Brown University agreed to modify admissions practices and scale back diversity, equity, and inclusion (DEI) programs in exchange for restored funding.

Harvard, by contrast, chose to fight in court rather than compromise. That choice appears to have paid off, at least in the short term, as it secured not only the restoration of funds but also a precedent-setting judgment affirming the constitutional protections of academic institutions.

Broader Implications for Academic Freedom

The ruling is being hailed as one of the most important legal victories for academic freedom in recent decades. Legal scholars note that the decision sends a strong message: the federal government cannot use its financial leverage to compel universities to adopt specific ideological stances.

If upheld on appeal, the judgment could provide a blueprint for other institutions facing political pressure. It may also serve as a cautionary tale for policymakers seeking to tie federal research dollars to ideological or cultural battles.

For universities, the case reaffirms the principle that research funding is meant to advance knowledge and innovation—not to serve as a bargaining chip in partisan disputes.

Looking Ahead

While Harvard celebrates this victory, the legal fight is far from over. The Trump administration’s planned appeal could bring the case before the First Circuit Court of Appeals and potentially the U.S. Supreme Court. The outcome there will be closely watched by the academic community, lawmakers, and civil rights advocates.

For now, however, Judge Burroughs’ ruling secures a major win for Harvard and sets a powerful precedent in the ongoing struggle over the role of politics in American higher education.

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The post Federal Court Rules Trump Administration’s Harvard Funding Cuts Unlawful first appeared on JDJournal Blog.

An Arkansas-based lawyer, Jody Shackelford, has initiated legal action against the well-known national plaintiffs law firm Morgan & Morgan. Shackelford’s lawsuit, filed in an Arkansas federal court, accuses the firm of engaging in unfair and deceptive advertising practices that he claims harm his business.

Allegations of Misleading Advertisements

Shackelford, a personal injury attorney, asserts that Morgan & Morgan’s television advertisements violate state attorney professional conduct rules. The ads, which feature dramatizations and client testimonials, include disclaimers such as “DRAMATIZATION” and “ACTUAL CLIENT.” However, Shackelford argues that these disclaimers are misleading and falsely suggest compliance with local regulations.

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Violation of FCC Rules

In addition to state conduct rules, the complaint alleges that Morgan & Morgan’s commercials breach Federal Communications Commission (FCC) rules by presenting false or misleading information. Shackelford claims that these advertisements have allowed Morgan & Morgan to attract Arkansas clients, diverting potential clients from local attorneys and giving the firm an unfair competitive edge.

Response from Morgan & Morgan

Dave Falkenstein, a spokesperson for Morgan & Morgan, has dismissed the lawsuit as baseless, stating that it “is meritless and will be dismissed.”

Impact on Local Law Firms

Shackelford, who operates a small two-lawyer firm, highlighted the challenges of competing with a large national firm. He mentioned that Morgan & Morgan’s aggressive marketing strategies, backed by substantial advertising budgets, put smaller firms at a significant disadvantage. According to the U.S. Chamber of Commerce Institute for Legal Reform, Morgan & Morgan spent nearly $240 million on TV ads and $40.3 million on digital ads in 2023 alone.

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Previous Legal Challenges

This is not the first time Morgan & Morgan’s advertising practices have come under scrutiny. In 2017, a personal injury firm in Pennsylvania filed a lawsuit against Morgan & Morgan, alleging that its local ads misled consumers about the firm’s operations in the state. Morgan & Morgan requested the court to dismiss the lawsuit, and the case was subsequently dropped in 2018.

Broader Implications

Micah Buchdahl, a New Jersey-based ethics attorney specializing in law firm marketing, noted that Morgan & Morgan’s marketing approach has significantly impacted personal injury and other law firms nationwide. Many firms have had to increase their advertising efforts to compete with Morgan & Morgan’s extensive media presence.

The outcome of Shackelford’s lawsuit remains to be seen, but it underscores the ongoing tension between large national firms and smaller local practices over advertising practices and client competition.

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Introduction

The University of California at Berkeley has once again requested a federal judge to dismiss a lawsuit alleging campus antisemitism. In a filing made on Monday, the university argued that new claims regarding its handling of recent pro-Palestine protests are premature since these incidents are still under investigation.

Background of the Lawsuit

The lawsuit, initiated by the nonprofit Louis D. Brandeis Center for Human Rights Under Law and its affiliate Jewish American for Fairness in Education, was filed in November. The plaintiffs contend that UC Berkeley officials have ignored longstanding issues of antisemitism on campus.

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Initial Allegations and First Amendment Defense

The initial complaint focused on the law school, alleging that 23 law student groups had adopted anti-Zionism bylaws. The university defended these actions, asserting that they are protected under the First Amendment.

Expanded Claims and Recent Incidents

In an amended complaint filed in May, the plaintiffs expanded their allegations to include the university’s handling of campus protests. These incidents involved a footpath blockade by pro-Palestine students in February and the disruption of a dinner hosted by Law Dean Erwin Chemerinsky in April.

University’s Motion to Dismiss

The university’s motion to dismiss, filed in San Francisco federal court, argues that the plaintiffs are attempting to shift the focus of the lawsuit from student organization bylaws to recent campus unrest. The university asserts that it can only be held liable for its response to student misconduct, not the misconduct itself and that the judicial process cannot proceed until the university’s investigations and disciplinary actions are concluded.

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Administrative Procedures and Delays

UC Berkeley spokesperson Dan Mogulof noted that student conduct procedures at public universities involve multiple layers of appeals and can take several months to complete. He emphasized that the university is committed to enforcing rules and imposing appropriate consequences if violations are confirmed.

Legal Representation

The Brandeis Center is represented by Kenneth Marcus and L. Rachel Lerman from the Louis D. Brandeis Center for Human Rights Under Law, along with Eric George and David Carroll from Ellis George LLP, and John Coghlan and Tara Helfman from Torridon Law PLLC. UC Berkeley is represented by Hailyn Chen and Bryan Heckenlively from Munger, Tolles & Olson LLP.

Conclusion

The case is currently before Judge James Donato of the U.S. District Court for the District of Northern California. A U.S. congressional committee has also accused major Wall Street firms of collaborating with advocacy groups to pressure companies into reducing greenhouse gas emissions, adding another layer of complexity to the unfolding legal and political landscape.

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The post UC Berkeley Seeks Dismissal of Antisemitism Lawsuit for Second Time first appeared on JDJournal Blog.

OHIO- A federal judge has halted the implementation of a new Ohio law aimed at regulating minors’ access to social media platforms. The legislation mandated that social media companies obtain parental consent for users under the age of 16. The decision, made by Chief U.S. District Judge Algenon Marbley, comes in response to a lawsuit filed by NetChoice, a tech industry trade group, which argued that the law infringed upon minors’ First Amendment rights.

Background and Legal Challenge

Ohio’s Social Media Parental Notification Act passed in July, sought to address growing concerns about the impact of social media on children’s mental health and vulnerability to online predators. However, Marbley sided with NetChoice, which represents major platforms like TikTok, YouTube, and Facebook, stating that the law was overly broad and not appropriately tailored to achieve its objectives.

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Judicial Ruling and Implications

Judge Marbley’s ruling effectively puts Ohio’s law on hold indefinitely, pending further litigation. This decision marks another instance of courts intervening in state-level attempts to regulate online platforms in the interest of protecting minors. Marbley emphasized that while addressing the risks associated with social media is crucial, the methods employed must respect constitutional rights.

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Reaction and Call for Congressional Action

Ohio Governor Mike DeWine expressed disappointment with the ruling, highlighting concerns about the negative impact of social media on minors’ mental health. He called for federal intervention, suggesting that Congress should take action to safeguard children nationwide. This case underscores the ongoing debate over the appropriate balance between protecting minors online and upholding free speech principles.

NetChoice’s Legal Challenges

NetChoice has been at the forefront of legal battles against similar legislation in other states, successfully challenging laws in Arkansas and California. The organization continues to contest restrictions on social media in various jurisdictions, including Utah.

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A New Hampshire resident, William Giordani, confessed on Wednesday to his involvement in a plot last year where he unwittingly planted a fake bomb on Harvard University’s campus. This scheme aimed to extort bitcoin from the prestigious Ivy League institution. In a federal court in Boston, Giordani, aged 55, admitted to a single charge related to the incident, specifically for failing to inform authorities about the crime promptly.

Background of the Incident

The incident unfolded when Giordani responded to a Craigslist advertisement posted by an individual claiming to be a Harvard student’s father. The ad offered $300 to Giordani for delivering the necessary materials for a supposed science project. Unbeknownst to Giordani, this marked the beginning of a convoluted plan that would lead to a fake bomb being placed on Harvard’s campus in Cambridge, Massachusetts.

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The Hoax Unveiled

According to prosecutors, Giordani, motivated by a drug habit, informed his drug dealer that the materials he was tasked to deliver sounded suspiciously like components for a bomb. Despite this realization, Giordani proceeded with the plan, leaving a bag containing fireworks, a metal safe, and wires on a bench at Harvard on April 13, as instructed by the Craigslist poster.

Shortly after, Harvard’s police department received alarming calls from a “computer-generated male voice” claiming that three bombs had been strategically planted on campus. The caller threatened that these devices would detonate unless the university paid a substantial amount in Bitcoin. In response, a bomb squad from the Cambridge police executed a controlled destruction of the bag using a robotic device, prompting an evacuation of the area.

Motivations Behind the Scheme

In court, Assistant U.S. Attorney John McNeil revealed that Giordani’s criminal actions were primarily driven by his drug addiction. McNeil stated that Giordani had informed his drug dealer about the suspicious nature of the materials yet proceeded with the delivery as instructed.

According to court documents, the Craigslist poster later revealed to Giordani that the intention behind the hoax was to “cause a panic.” The individual, as described by Giordani, also made disturbing statements that included “racist things about Blacks and Jews.”

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Legal Proceedings and Plea Deal

Giordani was apprehended in May, and as part of a plea deal, prosecutors agreed to drop one of the two counts against him. The guilty plea was for a single count related to not promptly reporting the bomb hoax. While this charge could lead to a maximum of three years in prison, McNeil stated that prosecutors plan to recommend three years of probation during sentencing, scheduled for April 25. This recommendation is based on Giordani’s progress in intensive drug treatment. Significantly, no additional individuals have been charged with the elaborate hoax.

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The post Man Pleads Guilty in Harvard Bomb Hoax Bitcoin Extortion Scheme first appeared on JDJournal Blog.

In a recent legal development, a federal court in Washington DC has refused to intervene in a disciplinary hearing involving Jeffrey Clark, a former Department of Justice (DOJ) official with ties to the Trump administration. The hearing pertains to Clark’s alleged participation in an effort to overturn the 2020 US presidential election results. The US District Court for the District of Columbia stated that it lacks jurisdiction over the proceedings conducted by the DC Board on Professional Responsibility Office of Disciplinary Counsel (ODC).

The ODC initiated its investigation into Clark after it was revealed that he had actively participated in and furthered former President Donald Trump’s attempts to overturn the election results. In July 2022, the board found Clark to be dishonest and guilty of attempting to interfere with justice, violating his professional responsibilities as a licensed lawyer in Washington DC. Consequently, the board recommended disciplinary action against him.

Following the ODC’s proceedings, Clark filed a request with the District Court of DC, seeking federal oversight of the case instead of ODC officials. However, the court rejected his request, citing a lack of subject-matter jurisdiction over the disciplinary proceedings. Clark argued that the court could oversee the case due to the “hybrid nature of Bar disciplinary proceedings,” claiming similarities to both civil and criminal proceedings. The court disagreed, clarifying that since the proceedings did not fall under either category, Clark could not transfer them to federal court.

Additionally, Clark asserted that the court should have jurisdiction over the proceedings based on the presence of a federal question. However, the court dismissed this argument, stating that it lacked merit. The court deemed Clark’s use of outdated precedent irrelevant, emphasizing that because the proceedings did not arise under federal law, there was no federal question jurisdiction.

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As a result of the court’s decision, Clark will now face ODC proceedings before a quasi-judicial body known as a hearing committee. The ODC alleges that Clark violated Rules 8.4(a), (c), and (d) of the DC Rules of Professional Conduct, which prohibit lawyers barred from practicing in DC from engaging in dishonest conduct or interfering in the administration of justice.

The allegations against Clark initially came to light when a group of 34 attorneys filed a 15-page complaint with the board in October 2021. They accused Clark of violating the DC Rules of Professional Conduct by attempting to persuade the DOJ to invalidate the 2020 presidential election results in multiple states.

The public became aware of these allegations during proceedings before the US House Select Committee to Investigate the January 6th Attack on the United States Capitol. In a June 2022 hearing, former DOJ officials who served during the Trump administration testified about Clark’s involvement. They disclosed that Clark had written a letter on behalf of Trump, falsely claiming that Georgia’s election integrity was compromised. Trump had made these baseless claims in an effort to overturn the election results in Georgia, where President Joe Biden had garnered a majority of the votes. Furthermore, Trump had attempted to install Clark as acting Attorney General of the United States, but this endeavor, like the letter, ultimately failed.

With the federal court’s decision, the disciplinary proceedings against Clark will proceed within the ODC system, specifically before a hearing committee. The outcome of these proceedings will shed light on the potential consequences Clark may face for his alleged professional misconduct, as outlined by the DC Rules of Professional Conduct.

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On April 16, 2023, the US Supreme Court issued a unanimous decision in Axon Enterprise, Inc. v. Federal Trade Commission, holding that challenges to the structure of the Securities and Exchange Commission (SEC) and the Federal Trade Commission (FTC) may proceed in federal court. This decision confirms that district courts retain federal question jurisdiction over constitutional challenges, despite the agency’s statutory scheme allowing the commission to handle its adjudication process. The opinion, written by Justice Elena Kagan, clarified that constitutional questions are beyond the expertise of both agencies.

The plaintiffs in the cases before the court argued that the agencies’ adjudication processes were unconstitutional due to the insufficiency of political accountability of the pseudo-judicial officers who oversee the agency adjudications to the US president. They contended that this structure violated the separation of powers under the US Constitution. As a result, they argued that the adjudication process against them was unconstitutional and had to be blocked. However, the Supreme Court did not rule on the constitutionality of the agencies, only that the claims – initially dismissed in federal district court – may proceed.

The SEC and FTC’s statutory scheme allows each commission to handle violations by filing a civil suit in a federal district court or instituting administrative proceedings. In the cases before the court, the commission chose the latter. However, the plaintiffs in the two suits bypassed the adjudication process by bringing their claims to the federal district court. The plaintiffs argued that the agencies’ adjudication processes were unconstitutional and could not stand under the US Constitution’s separation of powers doctrine.

When reviewing a case involving an agency’s ability to adjudicate claims, the Supreme Court uses a three-factor test from Thunder Basin Coal Co. v. Reich to determine if the claims brought are “of the type Congress intended to be reviewed within this statutory scheme.” First, the court asks if precluding district court jurisdiction closes all meaningful judicial review of the claim. Second, the court asks if the claim is “wholly collateral to [the] statute’s review provisions.” Lastly, the court asks if the claim is outside the agency’s expertise. The majority found that constitutional interpretation fell outside both agencies’ expertise.

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Justice Clarence Thomas filed a concurring opinion, and Justice Neil Gorsuch filed an opinion concurring with the judgment but criticizing the majority’s reasoning. The Court’s decision reaffirms that constitutional questions are best decided by the federal judiciary rather than the agencies themselves.

In conclusion, the Supreme Court’s unanimous decision in Axon Enterprise, Inc. v. Federal Trade Commission clarifies that constitutional challenges to agency structures can proceed in federal court. This decision confirms that district courts retain federal question jurisdiction over such challenges, even when the agency’s statutory scheme allows for self-adjudication. However, the Court did not rule on the constitutionality of the SEC or FTC but instead allowed the claims to proceed in district court. The decision reaffirms the federal judiciary’s role in deciding constitutional questions, as they fall outside the agencies’ expertise.

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The 5th U.S. Circuit Court of Appeals in New Orleans has ruled that federal law that authorizes sanctions for multiplying legal proceedings “unreasonably and vexatiously” applies to lawyers but not their law firms. This decision has reversed an award of nearly $50,000 in attorney fees to a Texas school district defending a voting rights lawsuit. The appeals court cited the plain text of the law, Section 1927 of Title 28, which states that the sanction can be assessed against “any attorney or other person admitted to conduct cases in any court of the United States or any territory thereof.” The 5th Circuit Court of Appeals ruled that courts do not admit law firms to conduct cases but individual attorneys.

The plaintiff, Frank Vaughan, was represented by the Brewer Storefront firm, the legal community service affiliate of Brewer, Attorneys & Counselors. Vaughan had sued the Lewisville Independent School District in Texas under Section 2 of the Voting Rights Act, which prohibits voting practices or procedures that discriminate based on race, color, or language. The suit had alleged that the district’s at-large election system diluted minority votes.

U.S. District Judge Sean D. Jordan of the Eastern District of Texas ruled that the plaintiff was not standing because he was white, and the suit was frivolous. In a Dec. 28, 2021 opinion, Jordan found that the plaintiff, his attorneys, and their firm were jointly and severally liable for nearly $50,000 in fees under Section 1927 and a separate fee-shifting provision for parties in the Voting Rights Act.

Jordan had reasoned that the lawyers for the plaintiff had “unreasonably and vexatiously” multiplied the proceedings by filing the suit and by pursuing irrelevant lines of questioning during depositions. The plaintiff had argued that he had standing because he resided in a district affected by vote dilution.

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On appeal, the 5th Circuit said Vaughan’s argument was not frivolous because it sought to extend existing law. As a result, the appeals court vacated the sanction of nearly $50,000.

Although the plaintiff’s lawyers could not be sanctioned under Section 1927 for filing the suit, they could be sanctioned for their deposition conduct, the 5th Circuit said. “The attorneys questioned school board members on a range of topics that bear little relevance to a voting rights lawsuit,” the appeals court said. Those topics included “a separate Title IX suit against the school district, claims of sexual harassment at a school, state standardized testing, mental health accommodations for students during standardized testing, and board members’ individual views on policy topics such as allowing teachers to carry guns on campus.”

On remand, the 5th Circuit said, the district court should determine what, if any, costs and fees were incurred by the school district because the plaintiff’s attorneys pursued unrelated deposition topics.

Brewer’s name partner William Brewer III has previously defended the National Rifle Association. In a statement, he told Reuters that the decision “confirms that any sanctions previously awarded were unwarranted.” In the press release, Brewer said the firm “achieved a primary goal in this case: to unsettle the view on standing adopted by the trial court, which denied a citizen the right to pursue a Voting Rights Act case.”

“The 5th Circuit wisely left the door open for future plaintiffs—of any ethnicity—to carry on this type of pursuit,” Brewer said in the press release. “We believe voting systems work best when they are more inclusive, giving everyone a voice in the electoral process.”

In conclusion, the 5th Circuit Court of Appeals’ ruling that federal law authorizing sanctions for multiplying legal proceedings “unreasonably and vexatiously” applies to lawyers but not their law firms has reversed an award of nearly $50,000 in attorney fees to a Texas school district defending a voting rights lawsuit. While the plaintiff’s lawyers could not be sanctioned for filing the suit, they could be sanctioned for their deposition conduct. The decision has also established that any attorney or other person admitted to conducting cases in any court of the United States or any territory can be assessed a sanction under Section 1927 of Title 28. Overall, the ruling is significant for clarifying the application of sanctions for multiplying legal proceedings and setting a precedent for future voting rights cases.

The post Federal Court Allows Law Firms to Multiply Cases Without Penalty first appeared on JDJournal Blog.