This (Yester)Day in Legal History: The Closing of Operation Blue Book
On December 17th in legal history, we turn our attention to a unique and thought-provoking event: the closure of Project Blue Book by the U.S. Air Force in 1969. This project, initiated in 1952, represented the Air Force's systematic study of Unidentified Flying Objects (UFOs), aiming to ascertain if they posed a threat to national security and to scientifically analyze UFO-related phenomena.
The termination of Project Blue Book was influenced significantly by the findings of the Condon Committee, a group of scientists led by physicist Dr. Edward Condon. Their report, published in 1968, concluded that further UFO studies were unlikely to yield significant scientific findings, leading to the project's closure on December 17, 1969.
This decision marked a crucial moment in the realms of government transparency and public information access. It sparked ongoing debates about the government's duty to disclose potentially security-impacting information to the public. Legal scholars and advocates for government transparency have frequently cited this closure as a key example in discussions about classified information and the public's right to knowledge.
Furthermore, the end of Project Blue Book had a lasting cultural impact. It influenced the portrayal of UFOs and extraterrestrial life in popular media and shaped public perception of these phenomena. The closure also prompted the formation of private organizations dedicated to UFO research, highlighting a continuing public interest in the topic.
In legal discussions, the Project Blue Book closure continues to be a reference point concerning the declassification of government documents and the balance between national security and public transparency. This event, occurring on December 17th, 1969, remains a significant and intriguing chapter in legal history, underscoring the intersection of science, government policy, and legal principles regarding public information and national security.
In a verdict late last week, a federal jury in Washington ordered Rudy Giuliani, former top campaign lawyer for Donald Trump, to pay $148 million to two Georgia election workers, Ruby Freeman and her daughter Wandrea “Shaye” Moss. This decision followed a trial determining the damages for harm to their reputations, including lost wages and mental anguish, caused by Giuliani's promotion of conspiracy theories about them in relation to the 2020 election.
After the verdict, Moss expressed how Giuliani's lies had significantly altered their lives, and Freeman highlighted that the monetary compensation could not resolve all the issues caused, including the loss of her home and ongoing concerns for personal safety.
Initially, Freeman and Moss sought $48 million in damages, but the jury awarded them over three times this amount, making it one of the largest recent awards, though less than the amount ordered in the Alex Jones case related to Sandy Hook.
Giuliani was found liable for defamation by US District Judge Beryl Howell in August, and a jury trial followed to determine the damages. Giuliani, who plans to appeal and seek a new trial, insisted that he was fighting on principle to expose what he believes were flaws in the 2020 election, asserting its significance for American democracy.
During the damages trial, Giuliani declined to testify, despite previous public statements indicating he would. He played a central role in spreading false claims of election fraud in 2020, which Trump and his allies continue to assert.
Moss and Freeman testified about the severe impact of Giuliani's smear campaign on their lives, including fears for their safety and emotional distress. Moss also expressed her intention with the lawsuit to deter similar attacks on election workers in the future.
Giuliani's lawyer, Joseph Sibley, acknowledged the harm to Freeman and Moss but argued that others besides Giuliani were also responsible. He described the damages as the "civil equivalent of the death penalty" for Giuliani, referring to his client's financial hardships from various legal challenges.
Alex Jones, a right-wing conspiracy theorist, has proposed a bankruptcy exit plan to settle defamation judgments with families of Sandy Hook Elementary School shooting victims. He offers to pay them at least $55 million over 10 years, which is significantly less than the roughly $1.4 billion judges ruled they are owed and $30 million less than the families' proposal. Jones filed for bankruptcy protection a year ago following these judgments.
According to the plan, families choosing to settle would share a minimum of $5.5 million annually over 10 years from a Chapter 11 plan filed in the US Bankruptcy Court for the Southern District of Texas. This plan requires court approval. Additionally, settling families could receive all disposable income from Jones' bankrupt company, Free Speech System LLC, and a portion of Jones' own income over the next ten years.
The proposal suggests that settling would mean faster payments for the families but would prevent them from pursuing the full worth of their litigation claims against Jones. The plan claims that unsecured creditors would receive more than they would in a Chapter 7 liquidation.
Families who do not settle would not have a guaranteed minimum amount but could pursue claims that the court has stated cannot be forgiven in bankruptcy. Jones's plan also ensures full payment to higher priority creditors.
Avi Moshenberg, representing a group of Sandy Hook families, stated they are examining Jones's plan and will share their views in due time. The families had earlier proposed that Jones pay at least $85 million over 10 years or liquidate his assets, a proposal Jones' bankruptcy lawyer deemed unrealistic.
Judge Christopher M. Lopez previously found that Jones is still liable for about $1.1 billion of the $1.4 billion in debts from defamation judgments, despite his bankruptcy. The court is yet to decide on the remaining $300 million.
Additionally, the court allowed Jones to sell personal items on his Infowars shows to pay for legal fees and creditor payments as part of his Chapter 11 plan. Free Speech System LLC, Infowars' parent company, also filed for Chapter 11 relief last year in response to state defamation judgments. Jones' attorneys have not commented on the recent plan filing.
Coinbase Global Inc. is challenging the Securities and Exchange Commission's (SEC) refusal to establish new rules for trading digital assets. The company filed a petition with the US Court of Appeals for the Third Circuit, requesting the SEC to initiate rulemaking. This action came hours after the SEC denied Coinbase's request for clarification on standards to determine if digital assets are securities.
Coinbase alleges that the SEC's denial of its request is arbitrary, capricious, and an abuse of discretion, violating the Administrative Procedure Act. The exchange asserts that the SEC's approach to regulation by enforcement, without clear rules, is unfair. SEC Chair Gary Gensler views most digital assets as securities and believes crypto exchanges should be registered with the agency. However, the SEC has not formally identified which digital assets meet the security definition, leading Coinbase to criticize the current legal framework as unworkable.
The SEC, on the other hand, maintains that existing federal securities laws are sufficient for digital assets. The agency relies on the Howey Test, derived from a 1946 Supreme Court ruling, to determine if an asset is a security. Gensler asserts that this test has been adequately applied to crypto assets.
By way of very brief background, the Howey Test is a legal criterion established by the U.S. Supreme Court in 1946 in the case of SEC v. W.J. Howey Co. to determine whether a transaction qualifies as an "investment contract," and thus would be subject to securities laws. Under the Howey Test, a transaction is considered an investment contract if it involves an investment of money in a common enterprise, with the expectation of profit derived primarily from the efforts of others. This test has become a cornerstone in U.S. securities law, particularly in evaluating various investment schemes, including more modern applications like ICOs (Initial Coin Offerings) in the cryptocurrency market. Essentially, if an arrangement meets the criteria set forth in the Howey Test, it must comply with federal securities regulations, including registration and disclosure requirements. These requirements are expensive, expansive, and potentially onerous–especially for cryptocurrency exchanges that may not possess the requisite infrastructure and procedures to comply.
Republican SEC commissioners Hester Peirce and Mark Uyeda disagreed with the decision to deny Coinbase's petition, emphasizing the need for open conversations with market participants. The SEC took action 17 months after Coinbase's initial request, which the exchange claimed was intentionally delayed to frustrate judicial review.
Activision Blizzard Inc., a major video game company, has reached a settlement to resolve a workplace harassment lawsuit with the state of California. The company will pay nearly $55 million, with about $45.75 million dedicated to a settlement fund for compensating workers. This resolution comes after allegations that Activision allowed a 'frat boy culture', leading to unequal pay, sexual harassment, and retaliation against women.
The lawsuit, involving both federal and state courts in California since 2021, was part of broader litigation that included the U.S. Equal Employment Opportunity Commission (EEOC). The comprehensive settlement and proposed consent decree will withdraw the state's claims and resolve all open regulatory investigations or complaints related to employee workplace conduct.
Activision stated that neither courts nor independent investigations, including the CRD's (Civil Rights Department, formerly the Fair Employment and Housing Department) own investigation, substantiated claims of systemic or widespread sexual harassment at the company. Similarly, it was not proven that the company’s Board or CEO acted improperly in handling workplace misconduct.
Women who worked for Activision in California as employees or contract workers between October 12, 2015, and December 31, 2020, may be eligible for compensation. The state will also drop its appeal of a federal judge’s decision preventing it from intervening in Activision’s court-approved consent decree with the EEOC, where Activision agreed to pay $18 million to resolve similar allegations.
Activision and the CRD have also agreed to address unproven claims of unequal compensation and promotion practices from 2015-2020. The company denies any inequities in pay or promotions. An independent consultant will be hired to evaluate and recommend changes to Activision Blizzard’s compensation, promotion policies, and training materials. The legal representation in these cases includes Paul Hastings LLP for Activision and Outten & Golden LLP for the state, with EEOC counsel representing the agency. The cases are noted under specific court and appellate numbers, with the most recent actions taken on December 15, 2023.