Minimum Competence - Daily Legal News Podcast
Minimum Competence
Legal News for 12/1 - Santos Indicted and Maybe to be Expelled, Montana TikTok ban Blocked, Google Calls for Antitrust Action Against Microsoft, Meta Sues FTC and Purdue Pharma Settlement Problems

Legal News for 12/1 - Santos Indicted and Maybe to be Expelled, Montana TikTok ban Blocked, Google Calls for Antitrust Action Against Microsoft, Meta Sues FTC and Purdue Pharma Settlement Problems

Santos indicted and facing expulsion, Montana TikTok ban blocked, Google pushes for antitrust action against Microsoft, Meta lawsuit against FTC and a Purdue Pharma settlement could insulate Sacklers.

Bus boycott, pencil sketch.

On this day in legal history, December 1, 1955, Rosa Parks, a 42-year-old African American woman, sparked an inflection point in the American Civil Rights Movement. Working as a seamstress at the Montgomery Fair department store, Parks was returning home on a city bus during rush hour in Montgomery, Alabama. The buses had a segregated seating policy, reserving the front 10 seats for white passengers. Parks sat in the first row behind these reserved seats. As the bus became crowded, the driver, James Blake, ordered Parks and three other African American passengers to vacate their seats for white passengers. While the others complied, Parks refused, maintaining that she was not in a seat reserved for whites. Defying the driver's order, she was arrested for violating a city law enforcing racial segregation on public buses.

This act of nonviolent resistance by Parks, who was already actively involved with the National Association for the Advancement of Colored People (NAACP) as a secretary to E.D. Nixon, the president of its Montgomery chapter, became a catalyst for change. Her arrest and the subsequent events highlighted the injustices of Jim Crow laws, prevalent across the South, which enforced discrimination and segregation against African Americans.

Following her arrest, Parks was booked, fingerprinted, and briefly incarcerated. Charged with "refusing to obey orders of bus driver," she faced significant physical risk while in police custody, causing great concern for her family. Despite not being the first to be prosecuted for violating Montgomery's bus segregation laws, Parks' impeccable character and high esteem in her community made her case a rallying point. This led to the Montgomery Bus Boycott, a well-orchestrated, peaceful protest lasting 381 days. The boycott saw the rise of Martin Luther King, Jr., then a 26-year-old minister, who gained national fame for his eloquent oratory promoting civil rights and nonviolent protest.

Parks was fined $10, plus $4 in court fees for her act of defiance. Her arrest record from December 1, 1955, shows her seated in the non-reserved section, challenging the segregation laws not by occupying a white-only seat, but by refusing to relocate when asked.

Her conviction led to an appeal process entangled in the state court system. Meanwhile, in a related case, Browder v. Gayle, a three-judge panel of the U.S. District Court ruled on June 4, 1956, that racial segregation on public buses was unconstitutional. This decision was later upheld by the United States Supreme Court on November 13, 1956, effectively ending bus segregation and signaling a significant legal victory for the Civil Rights Movement. Rosa Parks, through her quiet yet profound act of resistance, earned the title of "Mother of the Civil Rights Movement," symbolizing the fight against racial injustice in America.

U.S. Representative George Santos (R-NY), currently facing a House expulsion vote, has been embroiled in controversy since his 2022 election. Accused of fabricating significant parts of his biography, including false claims of attending New York University, working at Goldman Sachs, and Citigroup, and even falsely claiming Jewish heritage with grandparents fleeing Nazis during World War Two, Santos faces serious allegations. He has been indicted on charges of laundering campaign funds and defrauding donors, although he pleads not guilty. Despite surviving a previous expulsion attempt, Santos' situation worsened following a bipartisan investigation revealing misuse of campaign funds for personal expenses, including spa treatments and luxury retail shopping. With the House requiring a two-thirds majority for expulsion, the decision rests on a significant number of Republicans joining all Democrats. Santos, who has refused to resign but will not run for reelection, could be the first member expelled from the House without a criminal conviction or affiliation with the Confederacy. If expelled, New York Governor Kathy Hochul will call a special election for his seat.

US lawmaker George Santos, indicted on fraud charges, faces House expulsion vote

A U.S. District Judge, Donald Molloy, blocked Montana's ban on the short-video sharing app TikTok, which was set to take effect on January 1. The judge ruled that the ban violated the free speech rights of users and overstepped state power, labeling it as unconstitutional. TikTok, owned by China's ByteDance, had sued Montana to prevent the ban, asserting that it infringed upon the First Amendment rights of both the company and its users. Montana users of TikTok had also filed a lawsuit against the state legislature-approved ban, which was grounded in concerns over personal data security and potential Chinese espionage.

TikTok expressed satisfaction with the ruling, emphasizing the platform's importance for self-expression, earning a living, and community building for Montanans. Meanwhile, a spokesperson for Montana Attorney General Austin Knudsen, who defended the ban, noted that the ruling was preliminary and the legal analysis might evolve as the case progresses. Knudsen's office is considering further actions to defend the law, which they argue protects Montanans from the misuse of their data by the Chinese Communist Party.

In previous court filings, TikTok has consistently denied sharing U.S. user data with the Chinese government and highlighted its substantial measures to safeguard user privacy and security. Judge Molloy, appointed by President Bill Clinton, found TikTok's arguments persuasive and noted an anti-Chinese sentiment underlying Montana's legal stance and legislation.

The blocked state law could have imposed fines of $10,000 for each TikTok violation in Montana but did not penalize individual users. Molloy criticized Montana's attempt to exercise foreign policy authority, a domain reserved for the federal government, and deemed the state's action as excessively broad. While many states and the U.S. government have restricted TikTok on government devices, Montana's attempt to completely ban the app's use was unique. Efforts to nationally ban TikTok or restrict foreign-owned apps have been proposed in Congress but have not progressed. This decision follows a trend of courts blocking similar bans, including former President Donald Trump's 2020 attempt to bar new downloads of TikTok and WeChat.

US judge blocks Montana from banning TikTok use in state | Reuters

TikTok Ban in Montana Blocked by Court as Free Speech Threat (2)

Google has urged the UK's Competition and Markets Authority (CMA) to take action against Microsoft, alleging that Microsoft's business practices are disadvantaging competitors in the cloud computing market. This follows a broader scrutiny by regulators in the UK, EU, and US of the cloud computing industry, particularly focusing on the market dominance of Microsoft and Amazon. In 2022, Amazon Web Services (AWS) and Microsoft's Azure controlled a substantial 70-80% of the UK's public cloud infrastructure services market, with Google's cloud division trailing at 5-10%.

Google's primary concern, as expressed in a letter to the CMA, is Microsoft's licensing practices. These practices, according to Google, effectively compel customers to choose Azure as their primary cloud services provider, hindering competition and harming customers. Microsoft, in response, stated that it had updated its licensing rules to address these concerns and promote competition, although these changes have not appeased rivals.

Microsoft spokesperson highlighted that the competition between cloud hyperscalers remains healthy and that independent data shows both Microsoft and Google gaining ground on AWS. Google Cloud Vice President Amit Zavery criticized Microsoft's approach to cloud services, emphasizing Google's commitment to a multi-cloud strategy that allows customers flexibility in choosing providers. He pointed out that Microsoft's licensing terms effectively increase costs for customers using cloud services from Google or AWS instead of Azure.

Zavery also differentiated Microsoft's market behavior from that of AWS, noting that AWS customers don't face similar restrictive practices. Google's recommendations to the CMA include compelling Microsoft to improve interoperability and banning it from withholding security updates to customers who switch providers. The CMA has yet to comment on Google's allegations and recommendations.

Exclusive: Google pushes for antitrust action against Microsoft in UK cloud market | Reuters

Meta Platforms Inc. has filed a lawsuit against the U.S. Federal Trade Commission (FTC), challenging the constitutionality of the agency's structure and its authority. This legal action seeks an immediate halt to the FTC's efforts to modify their 2020 privacy settlement, claiming the agency's in-house process violates the U.S. Constitution. The central argument of Meta's complaint is that the FTC's administrative process is unfairly biased in favor of its commissioners, contrasting with the impartiality expected in an independent court's proceedings.

This lawsuit is the latest in a series of corporate challenges to federal agencies' enforcement actions, particularly after the U.S. Supreme Court's ruling in Axon Enterprise v. FTC and SEC v. Cochran, which allows FTC and Securities and Exchange Commission enforcement targets to contest the constitutionality of agency actions without awaiting an administrative law judge’s decision. Meta's contention centers on the argument that the FTC's structure does not conform with due process standards.

The case, filed in the U.S. District Court for the District of Columbia, follows a broader trend of scrutinizing administrative agency power at the Supreme Court level. This scrutiny includes cases like SEC v. Jarkesy, West Virginia v. EPA, and Seila Law LLC v. CFPB, which question the extent of agency powers and their constitutional validity. A ruling against the FTC could have significant implications, potentially curtailing the agency's consumer protection and privacy enforcement capabilities.

Privacy advocates and legislators have criticized Meta's lawsuit as an attempt to evade accountability, particularly concerning the company's handling of children's data and online safety. The lawsuit could also slow down the FTC's proposed updates to the agreement with Meta, which includes limiting facial recognition use and banning profit from children's data, potentially impacting Meta's business model. Sen. Edward Markey, author of the Children’s Online Privacy Protection Act, condemned Meta's legal action, seeing it as a move to avoid scrutiny.

Meta Lawsuit a ‘Serious Attack’ on FTC Enforcement Authority

The U.S. Supreme Court is set to review a $6 billion settlement involving Purdue Pharma LP and its owners, the Sackler family, which may significantly impact the conduct of bankruptcy settlements in the U.S. The settlement, intended to protect the Sacklers from future opioid lawsuits, utilizes a legal mechanism that grants immunity to third parties like the Sackler family, who are not directly bankrupt but are connected to the bankruptcy case. This mechanism has been used in various cases, including mass litigation over dangerous products and sex abuse claims against organizations like Catholic dioceses and the Boy Scouts of America. However, its legality is now under question.

Critics of the settlement argue that it unfairly strips victims of their right to a jury trial and extends beyond the powers granted to bankruptcy courts by Congress. On the other hand, industry groups and some bankruptcy scholars argue that such deals are necessary for fair and efficient distribution of a bankrupt company’s limited assets. The central issue in the case is whether provisions called non-consensual third-party releases, which are a key part of these agreements, are lawful.

By way of very brief background, in bankruptcy law, a non-consensual third-party release is a controversial and complex provision often included in reorganization plans. This release discharges certain non-debtor parties, typically corporate affiliates, officers, or directors, from liabilities related to the debtor's obligations, without the explicit consent of the affected creditors. These releases are designed to facilitate the restructuring process by protecting key stakeholders who might otherwise face legal action. However, they are contentious as they can potentially infringe upon creditors' rights to seek full redress from parties other than the debtor. The legality and enforceability of such releases vary significantly across jurisdictions, reflecting differing views on balancing debtor relief with creditor rights.

The Biden administration's Solicitor General, Elizabeth Prelogar, has suggested that if the Sacklers are forced back into the civil justice system, they could end up paying more than the $6 billion currently offered. The settlement has also been criticized for potentially leaving the Sackler family wealthier after all payments are made. The Sackler family, however, disputes allegations of wrongdoing and asserts that the settlement avoids prolonged and uncertain civil litigation.

This case also encompasses a related proposal to transform Purdue into a public benefit corporation focused on developing and distributing medications for overdose reversal and opioid addiction treatment. Members of the Sackler family have not faced criminal charges, although they agreed to a $225 million settlement with the Justice Department in 2020 for civil claims, while Purdue pleaded guilty to federal felonies related to OxyContin marketing. The outcome of the Supreme Court's review could have broad implications for future bankruptcy settlements and the rights of victims in similar cases.

A $6 Billion Settlement Threatens to Upend US Bankruptcy Deals

Minimum Competence - Daily Legal News Podcast
Minimum Competence
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