Minimum Competence - Daily Legal News Podcast
Minimum Competence
Legal News for Tues 12/12 - Wall Street Preps for 401(k) Advice Rule, Epic Beats Google, FCC Rule on Lead Generation Forthcoming and Column Tuesday on Wealth Tax vs. Estate Tax

Legal News for Tues 12/12 - Wall Street Preps for 401(k) Advice Rule, Epic Beats Google, FCC Rule on Lead Generation Forthcoming and Column Tuesday on Wealth Tax vs. Estate Tax

Wall Street bracing for a fight against 401(k) advice rule, Epic Games wins over Google, new FCC rule on lead generation and Column Tuesday on the feasibility, or lack thereof, of a wealth tax.

Chief Justice John Jay giving a thumbs up, pencil sketch

This Day in Legal History: John Jay Born

On this day in legal history, December 12th, we celebrate the birth of John Jay, a pivotal figure in the early judicial and political history of the United States. Born in 1745 in New York City, Jay would grow to be a foundational character in the formation of the United States. He was a statesman, patriot, diplomat, and, most notably, the first Chief Justice of the United States Supreme Court, appointed by President George Washington in 1789.

Jay's legal career was marked by significant contributions, including his co-authorship of "The Federalist Papers," a series of essays advocating for the ratification of the U.S. Constitution. His essays underscored the necessity of a strong, unified federal government, a principle that would shape American governance for centuries to come.

As Chief Justice, Jay set the groundwork for the Supreme Court's authority, although he served in this role for only six years. During his tenure, the Supreme Court heard few cases, and none of Jay's decisions were particularly landmark. However, his leadership established the early functioning and dignity of the Court.

Jay was also a leading diplomat, negotiating the Jay Treaty with Britain in 1794, which averted war and facilitated ten years of peaceful trade between the U.S. and Britain. This treaty, though controversial, was pivotal in stabilizing the young nation's international standing and economy.

Beyond his public service in federal roles, John Jay was a staunch abolitionist. As governor of New York, he signed a law in 1799 that would eventually lead to the emancipation of all enslaved people in the state.

Jay's legacy as a legal and political luminary is often overshadowed by his contemporaries like Washington and Hamilton. However, his contributions were fundamental to the establishment of the U.S. legal system and the function of the Supreme Court. His efforts in shaping the early foreign policy of the United States and his commitment to abolitionism are testaments to his broad impact on the nation.

On December 12th, we remember John Jay not just as the first Chief Justice, but as a multifaceted leader whose vision and dedication played a crucial role in laying the foundations of American law and government.

The US Labor Department's proposal to impose stricter fiduciary advice standards on financial professionals is set for its first public hearing. This move by the Biden administration could impact broker-dealers and insurance agents who earn commissions from selling investment products to 401(k) participants. The proposal aims to prevent advisers with conflicts of interest from directing retirement assets into risky investments for personal gain. Critics, however, argue that this fee-only fiduciary advice model could exclude low- and moderate-income savers.

The proposed rule seeks to update a nearly 50-year-old fiduciary investment advice regulation. It focuses on whether advice is part of a trusted relationship and in the best interests of the investor. Witnesses from various organizations, including AARP, major banks, and Wall Street lobbying firms, will testify at the hearings.

Adopting fiduciary status would bring tougher reporting and disclosure requirements and potential legal risks for companies. The proposal is seen as a potential reshaper of financial markets and echoes a similar Obama-era regulation that was vacated in 2018.

The rule particularly targets rollovers from workplace retirement plans to bank or insurance products, which can be crucial financial decisions for individuals. President Biden has criticized rollovers that benefit brokers over clients as "junk fees."

EBSA aims to finalize the fiduciary rule quickly, potentially before the upcoming election, to avoid congressional or administrative revocation. Critics argue that the proposal could make fiduciary investment advice more costly for consumers and blur the line between salesmanship and financial advice, hindering financial inclusion and retirement options.

Wall Street Set to Fight 401(k) Advice Rule in Public Hearings

Epic Games has won a significant antitrust trial against Google regarding its Play app store, alleging it operated as an illegal monopoly. The jury found in favor of Epic on all counts, after a month-long trial, accusing Google of stifling competitors and imposing high fees on app developers. This ruling, if sustained, could transform the app store economy, giving developers more control over app distribution and profits.

Google plans to appeal, emphasizing its commitment to the Android ecosystem. Epic's CEO publicly hailed the verdict, denouncing the "Google Play monopoly." The allegations included Google's tying of its Play store and billing service, forcing developers to use both for app inclusion.

While the Play store is a smaller part of Google's revenue compared to its search business, it holds symbolic importance as a gateway to billions of mobile devices. The verdict could lead Google to permit more app stores on Android devices, potentially reducing its revenue from in-app purchases. Epic criticized Google's practices as illegal, accusing them of stifling competition and innovation.

Sensationally, Epic also accused Google of deleting internal messages to hide anticompetitive actions. Google, however, denied wrongdoing, arguing it competes fiercely with Apple's App Store. The outcome of this case follows Epic's similar, less successful lawsuit against Apple, with Epic continuing to challenge Apple at the U.S. Supreme Court.

Epic Games wins antitrust case against Google over Play app store | Reuters

The Federal Communications Commission (FCC) is expected to vote on a new rule that could significantly increase lawsuits against various businesses, including lenders, insurers, and law firms, over unwanted texts and calls. This rule aims to reduce the number of sales calls received by consumers and will likely pass. It introduces strict regulations on lead generators, who collect and sell consumer contact information to businesses seeking new customers. The rule opens up a broader pathway for claims under the Telephone Consumer Protection Act (TCPA), which allows individuals to sue over unwanted communications, including robocalls.

An FCC spokesperson noted this move aligns with the agency's ongoing efforts to reduce robocalls. Attorneys representing both consumers and companies foresee a surge in TCPA litigation if the rule is enacted, potentially leading to double or triple the current number of lawsuits. Lead generation, traditionally used in various industries, has expanded to include personal injury attorneys and mass litigation lawyers.

Under the proposed rule, lead generators would be restricted to offering customer information to only one business unless explicit consent is obtained for more. This change requires businesses using leads to ensure compliance with the new law, as non-compliance could lead to legal repercussions. Defense attorney Eric Troutman predicts non-compliance among some lead generators, and attorney Andrew Perrong, experienced in filing lawsuits over unwanted calls, warns against using fraudulently generated leads. Perrong emphasizes that non-compliance with the new rule could lead to significant legal challenges for businesses.

New FCC rule on lead generation expected to spur wave of lawsuits | Reuters

My column this week discusses the potential impact of Moore v. United States on wealth taxation, arguing for reforming the estate tax as a more viable alternative to address wealth inequality. The Moore case centers on the constitutionality of taxing unrealized gains, crucial to the feasibility of a wealth tax. If the Moores win, it could challenge the validity of a wealth tax and impact other tax code elements. In my column I suggest that the estate tax, weakened by the Tax Cuts and Jobs Act of 2017, could be a practical tool for tackling wealth disparity. It proposes lowering the estate tax exemption, adjusting rates, and eliminating the step-up basis to make the tax system more equitable. Additionally, I explore Lily Batchelder's idea of a true inheritance tax, taxing inherited wealth at the heir’s income tax rate plus 15%. This approach would incentivize the wealthy to distribute their estates in a way that avoids high tax brackets for beneficiaries. My column, in sum, concludes that while a wealth tax is appealing, the estate tax offers a more legally sound and pragmatic solution for addressing wealth concentration.

Reforming Estate Tax Would Pave Way for Equitable Tax Landscape

Minimum Competence - Daily Legal News Podcast
Minimum Competence
The idea is that this podcast can accompany you on your commute home and will render you minimally competent on the major legal news stories of the day. The transcript is available in the form of a newsletter at