Remember the shocking ruling a couple of years ago by U.S. Bankruptcy Court Judge Mary Walrath in the bankruptcy of Washington Mutual Inc? In September 2011, Walrath refused to approve a hard-fought $7 billion reorganization plan for WMI because of concerns that four distressed debt hedge funds might have traded WaMu notes based on confidential information they or their lawyers obtained in negotiations to resolve the bankruptcy. The hedge funds were outraged by Walrath’s decision, which they said was wrong on both the facts and the law. Ultimately, however, they agreed to make the whole mess go away by kicking about $30 million of their expected recovery to WMI shareholders, who had first raised the insider trading accusations.
Well, that didn’t take long.
Two weeks ago, the U.S. Supreme Court held in Hollingsworth v. Perry that an advocacy group opposing same-sex marriage could not stand in the shoes of California officials to appeal a trial court ruling that the state’s ban was unconstitutional. Yesterday, the firm that argued in the Supreme Court for same-sex couples, Gibson, Dunn & Crutcher, filed a letter brief at the 4th Circuit, arguing that under Perry, three public interest groups do not have standing to appeal a trial court ruling against the Consumer Products Safety Commission.
The oil giant BP has recently done a very good job of casting itself as the victim of greedy plaintiffs lawyers looking to get rich by submitting unwarranted claims for businesses that weren’t actually harmed by the Deepwater Horizon oil spill. Did you see the company’s full-page advertisements to that effect in The Wall Street Journal and The New York Times? Or maybe you read smart pieces by Paul Barrett of BloombergBusinessweek (“How BP Got Screwed on Gulf Oil Spill Claims”) or Joe Nocera of the Times (“Justice, Louisiana Style”), who both pointed out that the court-appointed lawyer serving as the administrator of BP’s multibillion-dollar class action settlement is himself a onetime plaintiffs lawyer – as is the New Orleans federal judge overseeing the deal. (Lawyers representing BP claimants, I should note, dispute just about everything BP says about the judge and the administrator.)
In August of 2012, the U.S. Treasury and the Federal Housing Finance Agency announced that they had amended the terms of Treasury’s investment in Fannie Mae and Freddie Mac, the government-sponsored mortgage lenders under FHFA’s conservatorship. After Fannie and Freddie went into conservatorship in the economic crisis of 2008, Treasury invested more than $100 billion in a new class of senior preferred stock that guaranteed the government first dibs on a percentage of Fannie or Freddie profits. Those seemed like a distant hope in 2008, but by 2012, Fannie and Freddie were, in fact, making money. Preferred shareholders junior to the government believed the mortgage lenders were generating enough profits to pay Treasury’s dividend and leave something for them as well. But in August, FHFA and the government – without consulting Fannie and Freddie junior preferred shareholders – disclosed that under a newly executed “net worth sweep,” Treasury would be receiving all of the profits kicked out by Fannie Mae and Freddie Mac, then and in the future.
Until fate, in the person of a private investigator, brought her together with a Mississippi whistle-blower lawyer named Timothy Matusheski, Debra Leveski didn’t even know she could sue her former employer, the for-profit university ITT Educational Services, for supposedly duping the federal government. Leveski spent about 10 years working at ITT’s campus in Troy, Michigan, first as a recruitment officer, then in the financial aid office. She left the company in 2006 as part of the settlement of a sexual harassment suit she brought against ITT. Less than six months later, Leveski received a letter from an investigator working for Matusheski, who at the time specialized in False Claims Act suits against for-profit universities, which had come under scrutiny for allegedly enrolling students simply to receive federal student aid funding. Intrigued, Leveski called the investigator and eventually met with Matusheski.
The more we find out about the mostly secret inner workings of the U.S. Foreign Intelligence Surveillance Court, the more questions we should all have about the intersection of national security and Fourth Amendment restrictions on unreasonable searches by government authorities. Based on recent comments by U.S. Supreme Court Justices Elena Kagan and Stephen Breyer, the court is primed for an inevitable constitutional review of the National Security Agency’s program of gathering phone and Internet data from foreign suspects and U.S. citizens alike under provisions of the Patriot Act and the Foreign Intelligence Surveillance Act. That debate will surely center on the Fourth Amendment, but a lesser-known argument that has popped up in some cases challenging FISA wiretaps raises different constitutional objections to the NSA’s widespread data collection. And just as it was in California’s ban on gay marriage, Article III of the Constitution could be the linchpin of any Supreme Court decision on the legality of the NSA program.
You might not expect Dr. Seuss and Jekyll & Hyde to be invoked in oral arguments before the Delaware Supreme Court on the question of whether shareholder derivative breach-of-duty claims against corporate directors can survive a merger when that merger is allegedly the result of the directors’ misconduct. But indeed they were, amid discussion of slippery, transmogrified claims that left four Delaware justices (as well as lawyers on both sides) searching for analogies.
Is the statute of repose – the once obscure cousin of the statute of limitations that burst into prominence as a defense in litigation over mortgage-backed securities – coming to the U.S. Supreme Court?
On Friday, two days after the U.S. Supreme Court announced its ruling in Hollingsworth v. Perry, marriage equality came back to California. Governor Jerry Brown, who had refused to appeal U.S. District Judge Vaughn Walker’s beautiful 2010 decision that the state’s bar on same-sex marriage was unconstitutional, ordered county clerks to begin issuing licenses to gay and lesbian couples. California Attorney General Kamala Harris performed the first wedding under the new regime, the San Francisco marriage of Kristin Perry and Sandy Stier, whose challenge to California’s ballot-initiative ban on same-sex marriage led to the Supreme Court’s decision last Wednesday. In Los Angeles, Mayor Antonio Villaraigosa married the other plaintiffs in the original case, Paul Katami and Jeff Zarrillo. Opponents of same-sex marriage filed an emergency petition at the U.S. Supreme Court over the weekend, seeking a temporary halt to the weddings, but Justice Anthony Kennedy, who oversees the 9th Circuit, denied it on Sunday. Marriage equality is now officially the law in California.
Speaking late Saturday afternoon at the Aspen Ideas Festival, U.S Supreme Court Justice Elena Kagan was every bit as diplomatic as you would expect a woman who has survived the Senate confirmation process to be. Chief Justice John Roberts? “A great chief justice,” who faces the “tall order (of) trying to forge agreement” on a court whose members traditionally treasure the right to go their own way. Justice Clarence Thomas? “I enjoy him enormously. He’s a justice with incredible integrity and a very principled one,” Kagan said. “We disagree on a lot of stuff and we’re going to disagree on a lot of stuff but I enjoy every moment I spend with him.”