Minimum Competence - Daily Legal News Podcast
Minimum Competence
Weds 10/18 - SALT Cap Political Salience, SEC Distances from ESG, Google Defends Against Web-Scraping for Bard, SBF Says he wasn't Reckless and Musk v. Wachtell Moves to Arb

Weds 10/18 - SALT Cap Political Salience, SEC Distances from ESG, Google Defends Against Web-Scraping for Bard, SBF Says he wasn't Reckless and Musk v. Wachtell Moves to Arb

SALT cap becoming an albatross, SEC shifts from ESG focus, Google says web-scraping decision would destroy generative AI, SBF says he wasn’t reckless and Musk and Wachtell move to arbitration.

A politician wearing a SALT shaker on a necklace around their neck.

On this day in legal history in 1929, the Privy Council of the United Kingdom declared women officially “persons” under the laws of Canada. Which is good, that’s a good thing to do, generally. People should be persons. 

On October 18, 1929, a landmark decision by the Privy Council of the United Kingdom fundamentally altered the legal status of women in Canada. On this day, the Privy Council overturned a ruling made by the Supreme Court of Canada in the case of Edwards v. Canada. The case was initiated by Emily Murphy, the first female magistrate in the British Empire, and four other women—Henrietta Muir Edwards, Irene Parlby, Louise McKinney, and Nellie McClung—who collectively came to be known as the Famous Five. A lawyer had challenged Murphy's right to preside over a court on the grounds that she wasn't a "person" under Canadian law, leading the Famous Five to challenge this narrow interpretation of the term "persons" as outlined in the British North America Acts, the governing laws of Canada at the time.

The Supreme Court of Canada initially ruled against the Famous Five, upholding the traditional interpretation that excluded women from the definition of "persons." This decision mirrored societal prejudices that marginalized women, relegating them to domestic roles and barring them from public life. However, the Privy Council of the United Kingdom, which served as Canada's final court of appeal at the time, reversed this ruling. They declared that the exclusion of women from public offices was a "relic of days more barbarous than ours," offering a more progressive and inclusive interpretation.

Lord Sankey, who delivered the Privy Council's judgment, questioned why the term "persons" should not include women, framing it as a matter of logical and moral imperative. This decision dramatically expanded the range of professional and public opportunities available to women in Canada and had ripple effects across the globe, inspiring movements for gender equality.

Today, October 18 is celebrated as Persons Day in Canada, marking the victory of the Famous Five and commemorating the broader fight for gender equality. The decision serves as an enduring reminder for legal scholars, activists, and students about the power of the legal system to redefine societal norms and advance human rights.

The issue of the state-and-local tax (SALT) deduction cap, instituted by the GOP in 2017, is becoming a contentious point in the upcoming elections, particularly for blue-state Republicans. The cap limited the SALT deduction to $10,000 and was initially opposed by several House Republicans from high-tax states. Although many of those opposing Republicans are no longer in office, a new batch of lawmakers from blue states is fighting to restore the full SALT deduction, albeit without success so far. This situation is giving Democrats an advantage, as candidates vow to make the removal of the SALT cap a priority if elected.

Democrats' message that Republicans are responsible for a tax hike has resonated in previous elections and appears to be effective again. Republican representatives such as Mike Garcia of California have admitted that winning would be easier if their party agreed to lift the cap. The upcoming elections are critical for future tax policy discussions, as many elements of the 2017 tax law, including the SALT cap, are set to expire in 2025.

By way of brief background, the SALT cap deduction refers to the limitation placed on the amount of state and local taxes (SALT) that can be deducted from a filer’s federal income tax. Implemented as part of the Tax Cuts and Jobs Act of 2017, the cap is currently set at $10,000 for both single filers and married couples filing jointly. The SALT cap has been a point of debate, as it disproportionately affects taxpayers in states with higher income and property taxes–those states where more folks are likely to be exceeding $10,000 in property tax.

Democrats have successfully used the SALT issue to gain an edge in previous elections, unseating Republicans who opposed the 2017 tax law due to the cap. Some candidates have characterized the 2017 law as a "weaponization of the tax code" against Democratic states. However, it's worth noting that not all Democrats are united in removing the cap. Progressive Democrats argue that the SALT deduction disproportionately benefits the wealthy and have resisted attempts to eliminate it from the Build Back Better legislation.

Even as some Republican candidates try to align their party's stance with raising or eliminating the SALT cap, they face internal resistance. The issue has even stalled GOP efforts to pass tax bills, as some refuse to vote for any package that doesn't address the SALT cap. As it stands, the SALT cap issue remains a potent weapon for Democrats, particularly in high-tax states, and could significantly influence the electoral outcomes in the 2024 elections.

SALT Cap Haunts GOP House Candidates as Democrats Turn Tables

The Securities and Exchange Commission (SEC) has notably excluded environmental, social, and governance (ESG) investing from its focus areas for 2024, a shift from previous years when it was listed as a priority. The agency's Division of Examinations priorities for the year did not make any direct mention of ESG, even though the topic was a key area of scrutiny in reports for 2021, 2022, and 2023. An SEC spokesperson clarified that the published priorities for 2024 are "not exhaustive" and other issues could still be addressed.

This change comes as the SEC seems to be distancing itself from the ESG label in the context of corporate disclosures. An agency official mentioned that the commission is focusing more on "emergent risks" rather than using the ESG terminology. The label itself has come under scrutiny and has been politicized, leading companies like BlackRock and McDonald's to drop or downplay the term.

For 2024, the SEC has shifted its focus to anti-money laundering controls, cryptocurrency, and cybersecurity. Despite this shift, it's worth noting that the SEC's Climate and ESG Task Force has been active in enforcement, settling cases with Goldman Sachs, Bank of New York Mellon, and Deutsche Bank over allegations of improper ESG investment claims and procedural failures. The SEC's deprioritizing of ESG in its 2024 exam priorities does not necessarily signal an abandonment of oversight in this area but indicates a shift in the regulatory landscape.

SEC Drops ESG From List of Compliance Priorities in 2024

Google has requested a California federal court to dismiss a proposed class-action lawsuit alleging that the tech giant's data scraping activities for training its AI systems violate people's privacy and property rights. The company argues that using public data is essential for training AI technologies like its chatbot Bard. Google contends that the lawsuit could significantly harm not just its services but also the development of generative AI as a whole. The lawsuit, filed in San Francisco by eight unnamed individuals, accuses Google of improperly using content from social media and other Google platforms for AI training.

The suit is part of a broader trend of legal complaints against tech companies for allegedly misusing various types of content, such as books, visual art, and personal data, for AI training without permission. Google's general counsel, Halimah DeLaine Prado, dismissed the lawsuit as "baseless," stating that U.S. law permits the use of public information to create new beneficial uses. She also refuted allegations that the company uses non-public information from services like Gmail for AI training without consent.

The lawsuit covers a wide array of content, from photos on dating websites to Spotify playlists and TikTok videos. One plaintiff, described as a best-selling author and investigative journalist, claimed Google copied her book to train its chatbot. Google responded that such use falls under the fair use doctrine of copyright law and criticized the lawsuit for lacking specific details on how the plaintiffs were harmed.

Google says data-scraping lawsuit would take 'sledgehammer' to generative AI | Reuters

In the ongoing fraud trial of Sam Bankman-Fried, founder of the now-bankrupt cryptocurrency exchange FTX, defense lawyers are challenging the portrayal of the company's investments as "reckless and frivolous." This comes after testimony from Nishad Singh, FTX's former engineering chief, who described the company's spending on marketing and celebrity endorsements as excessive. Singh, who has pleaded guilty to fraud and is cooperating with prosecutors, testified that he thought FTX could survive despite a $13 billion shortfall in customer funds, a point that could support Bankman-Fried's defense.

Bankman-Fried is in his third trial week, facing charges related to allegedly looting billions from FTX customer funds for various investments and political donations. He has pleaded not guilty. His lawyer, Mark Cohen, pressed Singh on the business benefits of marketing expenditures, potentially framing them as good-faith business decisions rather than fraud.

Singh also testified about a deal FTX had with investment firm K5, which he had previously described as "toxic" for the company's culture. Cohen pointed out that K5 helped with more than just celebrity endorsements; it also assisted in investing in a tequila brand run by a celebrity. A lawsuit against K5 alleges that a Bankman-Fried-controlled company used $214 million in FTX funds to buy a stake in celebrity Kendall Jenner's 818 Tequila brand, valued at just $2.94 million at the time.

Bankman-Fried's defense maintains that while he made mistakes in running FTX, he never intended to defraud anyone. Jurors have also heard from other former executives who have pleaded guilty to fraud and are cooperating with the prosecution. One significant point came when Singh acknowledged buying a $3.7 million home using FTX customer funds, stating he was "ashamed" and had agreed to forfeit the property as part of his plea agreement.

Sam Bankman-Fried's lawyer says FTX investments were not 'reckless' | Reuters

A California state judge has ruled that the $90 million legal dispute between Elon Musk and law firm Wachtell, Lipton, Rosen & Katz should go to arbitration rather than be settled in court. Judge Richard Ulmer agreed with Wachtell's argument that both parties had "clearly and unmistakably" agreed to let an arbitrator decide on the claims subject to arbitration. Elon Musk, who renamed Twitter to X after acquiring it, had filed a lawsuit against Wachtell to recover $90 million in fees, accusing the law firm of receiving an "improper bonus payment" that violated its fiduciary and ethical duties.

The judge's decision to compel arbitration was made without objection from either party, and the merits of Musk's claims were not addressed in this ruling. Wachtell, which represented Twitter in the acquisition deal, has denied Musk's allegations. A spokesperson for Wachtell declined to comment on the ruling, and attorneys for Musk did not immediately respond to requests for comment.

In the lawsuit, Musk claimed that Twitter executives "ran up the tab" by designating large amounts of money as "success" or "project" fees for law firms involved in the deal. Musk argued that Wachtell unfairly profited from the transaction. In response, Wachtell stated that Twitter's board had approved their fee, arguing that they had facilitated a deal ensuring "billions in value for Twitter's stockholders." The case is known as X Corp v Wachtell, Lipton, Rosen & Katz in the San Francisco Superior Court.

Elon Musk's Twitter fee fight with law firm Wachtell belongs in arbitration, judge says | Reuters

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