Minimum Competence - Daily Legal News Podcast
Minimum Competence
Tues 11/21 - OpenAI Implosion and Altman Ouster, Racial Discrimination Suits Harder to Bring, X/Twitter Sues Media Matters, DC Firm Offers Huge Bonuses and Column Tuesday on Wile E. Tax Policy

Tues 11/21 - OpenAI Implosion and Altman Ouster, Racial Discrimination Suits Harder to Bring, X/Twitter Sues Media Matters, DC Firm Offers Huge Bonuses and Column Tuesday on Wile E. Tax Policy

OpenAI imploding, racial discrimination suits harder to bring, X sues Media Matters, DC firm offers big bonuses and Column Tuesday on how the Wile E. Coyote movie shelving is a tax policy problem.

Abraham Lincoln pardoning a turkey, pencil sketch

On this day in legal history, November 21 we mark a significant milestone in the fight for gender equality. In 1966, the National Organization for Women (NOW) was founded in Chicago, a pivotal moment that shaped the course of women's rights in the United States. Established by a group of feminists including Betty Friedan, author of "The Feminine Mystique," NOW emerged in response to the frustration with the federal government's failure to enforce the ban on sex discrimination as part of the Civil Rights Act of 1964.

NOW's formation represented a crucial step in the second-wave feminist movement, shifting the focus towards a broader range of issues affecting women's lives. The organization quickly became a powerful force, advocating for policies that promote equality in employment, education, and reproductive rights. It played an instrumental role in the passage of landmark legislation, such as the Equal Rights Amendment, which sought constitutional equality for women.

Under NOW's guidance, important legal battles were fought and won. The organization was instrumental in challenging and changing discriminatory practices and laws that limited women's opportunities in the workplace and in society. One of its key achievements was helping to establish that sexual harassment in the workplace is a form of illegal sex discrimination under Title VII of the Civil Rights Act.

NOW also worked tirelessly to ensure reproductive rights for women, playing a significant role in the lead-up to the landmark Supreme Court decision in Roe v. Wade in 1973. This decision legalized abortion nationwide, marking a major victory for women's autonomy and reproductive freedom.

Throughout its history, NOW has not only advocated for legal changes but also raised public awareness about gender discrimination and violence against women. Its relentless efforts have helped to shape public policy and create a more equitable society.

As we reflect on this day in legal history, the founding of NOW stands as a testament to the power of collective action and the ongoing struggle for gender equality. The organization's impact on the legal landscape has been profound, paving the way for future generations to continue the fight for women's rights and equality under the law.

The ongoing crisis at OpenAI, sparked by the board's firing of CEO Sam Altman, has now escalated to include not only internal unrest but also potential legal action from investors. Following Altman's abrupt departure, a significant portion of OpenAI's staff, including its legal team, threatened to leave unless the board is replaced. This potential mass exodus of over 700 employees comes as a response to what is perceived as a breakdown in leadership and governance, further complicating the situation at one of the most prominent companies in the generative AI sector.

Investors in OpenAI are reportedly exploring legal options against the company's board, fearing substantial financial losses. Their concern centers on the risk to their investments in OpenAI, a key player in their portfolios. However, the unique structure of OpenAI, which operates as a for-profit entity under the oversight of a nonprofit parent, complicates the investors' position. Unlike typical venture capital scenarios, OpenAI's structure gives significant leverage to employees over investors in influencing board decisions.

This unique arrangement was designed to ensure that the nonprofit parent, OpenAI Nonprofit, maintained focus on its mission to benefit humanity rather than purely investor interests. This setup, which began as a nonprofit and later added a for-profit subsidiary to raise capital, was intended to preserve the core mission and governance of OpenAI.

The legal implications of this structure are significant. Nonprofit boards typically have obligations to exercise care and avoid self-dealing, but these can be interpreted flexibly, especially in a corporate framework like OpenAI's. This could further insulate the nonprofit's directors from investor litigation. Legal experts suggest that even if investors were to pursue legal action, their case might be weak due to the broad latitude companies have under the law to make business decisions.

OpenAI's crisis, therefore, presents a complex scenario. It involves not only internal governance challenges but also the intricate interplay between nonprofit and for-profit entities in a cutting-edge technology sector. The situation reflects the difficulties in balancing investor interests, employee influence, and the overarching mission of an organization operating at the forefront of artificial intelligence research and development.

If you’re interested in an at least somewhat informed discussion of the OpenAI debacle, I encourage you to listen to Esquiring Minds episode 29 with Jason Ramsland, Jake Schumer and myself. Link is in the shownotes. 

OpenAI’s Threatened Exodus Would Upend Legal Team Operation (2)

Exclusive: OpenAI investors considering suing the board after CEO's abrupt firing | Reuters

A significant legal decision by the Eighth Circuit Court of Appeals has created a substantial shift in the enforcement of the Voting Rights Act, specifically impacting the ability of Black and minority voting rights groups to file lawsuits under Section 2 of the Act. The court ruled that only the U.S. Department of Justice, not private groups or individuals, has the right to bring racial gerrymandering suits under this provision. This decision dismissed a lawsuit by Black Arkansas voters, who had a strong claim that the state's congressional map was drawn to discriminate against non-white voters.

The ruling has far-reaching implications, limiting the capacity of groups like the NAACP to bring racial gerrymandering cases in the seven states within the Eighth Circuit: Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota. Critics, including the American Civil Liberties Union, view this as a significant setback for democracy and a departure from decades of legal precedent.

Arkansas Attorney General Tim Griffin hailed the decision as a victory for the rule of law, arguing that enforcement of the Voting Rights Act should be the responsibility of politically accountable officials rather than outside groups.

The ruling also creates a circuit split, as the Fifth Circuit Court of Appeals recently ruled that private parties do have an implied right to bring such actions. This disagreement among circuits over a major election law issue increases the likelihood of the U.S. Supreme Court addressing the matter. However, the Arkansas voters involved in the case have yet to decide their next steps, which could include seeking a broader review by the Eighth Circuit or petitioning the Supreme Court.

This decision could potentially change the landscape of election law litigation, as private parties have historically brought about ten times as many voting rights cases as federal litigators. The ruling's restriction on who can enforce Section 2 of the Voting Rights Act could significantly alter the protection of voting rights in the United States.

Legal ‘Seachange’ Blocks Voters’ Racial Discrimination Suits (2)

US appeals court ruling strikes at core of landmark voting rights law | Reuters

Social media company X, previously known as Twitter, has filed a lawsuit against the media watchdog group Media Matters. This legal action comes in response to a report by Media Matters stating that ads for major brands were displayed next to posts promoting Adolf Hitler and the Nazi party. Following the publication of this report, several advertisers, including IBM and Comcast, withdrew their ads from the platform.

X claims in its lawsuit, filed in a U.S. District Court in Texas, that Media Matters manipulated its platform to create a misleading narrative. According to X, Media Matters used accounts that followed only major brands or users posting extremist content and engaged in persistent scrolling to find ads adjacent to such posts. X argues that this misrepresents the typical user experience on the platform, alleging that the report was intended to harm the company's business.

Media Matters President Angelo Carusone has dismissed the lawsuit as frivolous, asserting that the organization stands by its reporting and is prepared to defend its findings in court. Carusone highlighted the contradiction between X's claims of safety protections to prevent ads from appearing next to harmful content and the reality demonstrated by the report.

The lawsuit's filing comes amid broader concerns about X's content moderation policies, especially since Elon Musk's acquisition of the company in October 2022. This period has seen a significant drop in advertising revenue and a departure of several advertisers, partly due to worries about Musk's controversial posts and the reduction of content moderation staff.

Texas Attorney General Ken Paxton has also announced an investigation into Media Matters, citing concerns about the group's alleged data manipulation on X. In the midst of these developments, X's CEO Linda Yaccarino has urged people to stand with the company, emphasizing reliance on data over allegations or manipulation.

X sues Media Matters after report about ads next to antisemitic content | Reuters

Washington, D.C.-based litigation firm Wilkinson Stekloff is set to award substantial annual seniority-based bonuses to its associates, with the highest amount reaching $201,250. This announcement stands out as most larger U.S. law firms have not yet disclosed their bonus plans. Wilkinson Stekloff, categorized as a "boutique" law firm, typically offers higher bonuses compared to bigger firms. In contrast, New York law firm Milbank, the only large U.S. firm to announce annual bonus figures so far, has declared bonuses ranging from $15,000 to $115,000 based on seniority.

The bonuses at Wilkinson Stekloff will start at $26,250 for first-year associates and increase with each class year, with payments scheduled for December 15. The firm, which lists 23 associates on its website, has acknowledged these bonuses as a recognition of the significant contributions their associates make.

This decision comes after a particularly notable year for Wilkinson Stekloff, marked by a record number of cases going to trial. Meanwhile, Milbank has also revised its base salary scale, now ranging from $225,000 for junior lawyers to $425,000 for eighth-year associates, with bonus amounts consistent with the previous year.

The trend in the legal industry shows that the country's largest law firms often quickly adjust their salary scales to stay competitive, generally following the lead of their peers. So far, no other large firm has publicly matched or exceeded Milbank's salary scale, indicating a cautious approach as they wait to see how other firms respond.

D.C. litigation firm offers $201K bonuses as bigger law firms show caution | Reuters

My column this week discusses the increasing practice of movie studios using tax write-downs and write-offs, such as Warner Bros. shelving a completed film, as a means to profit at the expense of public funds. This practice involves receiving state and federal tax incentives for film production, only to later write down or off these productions, essentially using public money to generate tax losses rather than producing movies. This undermines the policy rationale for incentivizing film production, which is meant to foster cultural production and stimulate the arts.

Tax breaks for movie studios are common in over 40 states, but they are criticized for being inefficient at job creation and stimulating local economies. Studios often receive substantial reimbursements through tax credits, which they can sell at a discount. Georgia is highlighted as a prime example of this, offering up to 30% of qualified expenses back in tax credits. However, the economic benefits for the state are minimal, especially when movies are shelved and not released.

The column also touches on federal tax policies, such as Section 181, which allows substantial tax savings for film and television production. This further emphasizes the burden placed on taxpayers for these incentives.

The practice of writing down movies has become more common, especially with the rise of streaming services. Instances such as Disney removing content from Disney+ and recording impairment charges illustrate how the value of completed works can be manipulated for tax benefits.

I suggest solutions, including expanding the federal credit with a reduction for state incentives, thus pressuring states to attract studios through means other than tax dollars. Increased scrutiny and auditing of production write-downs and write-offs are also recommended, along with a reevaluation of the carrying costs associated with productions, as these can be inflated for tax purposes.

Overall, the column criticizes the exploitation of taxpayer funds through the practice of movie and television write-downs, highlighting it as a significant issue in the intersection of public funding and entertainment industry practices.

Movie Tax Write-Downs Help Studios Profit at Public’s Expense

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