This Day in Legal History: Gong Lum v. Rice
On November 21, 1927, the U.S. Supreme Court issued its decision in Gong Lum v. Rice, a landmark case concerning racial segregation in public education. The case arose when Martha Lum, a nine-year-old Chinese American girl, was denied entry to a school for white children in Mississippi. Local authorities directed her to attend a school designated for Black students under the state's racially segregated education system. Her father, Gong Lum, challenged the decision, arguing that such segregation violated the Equal Protection Clause of the Fourteenth Amendment.
The Supreme Court, however, ruled unanimously that Mississippi's actions were constitutional. It extended the "separate but equal" doctrine established in Plessy v. Ferguson (1896) to include Asian Americans, thereby reinforcing the legality of segregated schools. The Court maintained that states had the authority to classify students by race and assign them to separate schools, as long as the facilities were deemed equal. This decision effectively placed Chinese Americans and other non-White groups under the same discriminatory segregation laws applied to African Americans in the Jim Crow South.
The ruling was a significant blow to the Lum family and a stark reminder of the pervasive racial hierarchies embedded in U.S. law at the time. It also illustrated how the "separate but equal" doctrine legitimized widespread exclusion and inequality, beyond Black and White racial dynamics. The precedent set by Gong Lum v. Rice remained unchallenged for decades, contributing to the entrenchment of racially segregated education across the United States.
This decision underscored the systemic nature of racial discrimination in early 20th-century America. It wasn't until Brown v. Board of Education in 1954 that the Supreme Court overruled the doctrine of "separate but equal," marking a pivotal shift toward dismantling segregation in public education. Gong Lum v. Rice remains a critical case in the history of American civil rights law, reflecting the broader struggles of minority groups against institutionalized racism.
The latest round of year-end bonuses at major law firms reflects a cautious approach to associate compensation as firms prioritize protecting partner profits amid rising revenues. Milbank LLP initiated the bonus announcements, offering payments up to $140,000, including special bonuses introduced earlier in the year. At least five firms have matched Milbank’s bonus structure, with others expected to follow. However, the stagnant bonus scale, unchanged since 2021, indicates a broader effort to manage costs while maintaining profitability.
This year, firms are separating special bonuses from regular ones to avoid setting new precedents for higher compensation scales. Recruiters note that Milbank’s early announcements help attract associate attention, a valuable branding strategy. The firm’s financial success, with $1.5 billion in gross revenue and over $5.1 million in profits per equity partner last year, underscores its robust position, even as it faces some high-profile departures and lateral hires.
Despite the cautious bonus adjustments, top law firms are thriving. A Wells Fargo survey revealed a 15% revenue increase and a 25% net income rise among the 50 largest firms, driven by higher demand, productivity, and billing rates. Still, associate productivity has only slightly improved from record lows, and firms are increasingly focusing on partner-level recruitment to sustain profitability. Traditional leaders like Cravath remain influential in finalizing bonus decisions, reinforcing long-standing industry customs.
Big Law Hedges Associate Bonuses to Protect Partner Profits
Indian billionaire Gautam Adani has been charged by U.S. prosecutors in a $265 million bribery scheme involving payments to Indian officials to secure power contracts and develop India’s largest solar power project. The indictment, which includes securities fraud and conspiracy charges, also implicates Adani’s nephew, Sagar Adani, and former Adani Green Energy CEO Vneet Jaain. The scheme allegedly defrauded American investors by concealing corruption in financial materials for bond offerings, including one that raised $750 million in 2021.
The U.S. has issued arrest warrants for Gautam and Sagar Adani, intending to involve foreign authorities under an extradition treaty with India. Adani’s conglomerate, already under scrutiny after a critical report by Hindenburg Research in 2023, saw its market value plunge by $20 billion following the indictment. Adani Green Energy canceled a $600 million bond sale, and shares of Adani-related firms dropped sharply.
Indian regulators, including SEBI, have yet to comment on the U.S. charges, while opposition parties in India demand further investigations into the group. The Adani Group denies the allegations and plans to challenge the charges, but the scandal has intensified scrutiny over the company’s operations and political connections.
Indian tycoon Gautam Adani charged in US over $265 million bribery scheme | Reuters
The U.S. Department of Justice (DOJ) has proposed sweeping measures to address what it calls Google’s illegal monopoly in online search and related advertising. Prosecutors argue that Google must divest its Chrome browser, share search data with competitors, and potentially sell its Android operating system to restore competition. The proposals aim to dismantle Google's dominant market position, as it processes 90% of U.S. searches.
Other recommendations include banning Google from exclusive agreements with device makers like Apple, ending its preference for its search engine on Chrome and Android, and restricting acquisitions of search rivals or AI products. A five-member technical committee would oversee compliance for up to a decade, with powers to review documents, interview staff, and inspect software code.
Chrome and Android are central to Google’s business, as they collect user data crucial for targeted advertising. Prosecutors claim these platforms unfairly entrench Google’s dominance by limiting rivals’ market access. The DOJ also proposes mandatory licensing of search results to competitors at low cost and unrestricted data-sharing unless privacy laws prevent it.Â
Google opposes the measures, calling them government overreach that would harm consumers and innovation. A trial is scheduled for April 2025, during which Google can present alternative proposals. These measures could reshape the digital landscape and are being closely watched by competitors like DuckDuckGo, which supports the DOJ’s initiatives.
Google must divest Chrome to restore competition in online search, DOJ says | Reuters
The U.S. Consumer Financial Protection Bureau (CFPB) has finalized a rule to regulate major technology firms like Apple Inc. that offer digital wallets and payment apps. Companies processing more than 50 million U.S.-dollar transactions annually will now face oversight similar to banks. This rule significantly raises the initial threshold of 5 million transactions proposed last year. It empowers the CFPB to supervise these firms regularly, not just when legal violations occur, as digital payments become increasingly essential to consumers.
CFPB Director Rohit Chopra emphasized that digital payments are now a necessity, warranting heightened oversight. The shift comes as digital wallet usage in the U.S. surged to 62% in 2023, up from 47% the previous year, with Apple Pay maintaining dominance in the sector.
The new regulatory environment follows global scrutiny of tech firms. Apple recently agreed with European regulators to open its near-field communication technology to competitors, a notable change in its approach. Other firms, like PayPal, are also cooperating with the CFPB on compliance questions regarding digital wallet features.
The rule, set to take effect 30 days after its publication, introduces a significant shift in how large tech firms are governed. However, it remains an open question how these regulations will fare under the Trump administration, given the potential for policy shifts in the new political climate.
Apple Pay, Other Tech Firms Come Under CFPB Regulatory Oversight
Share this post