Minimum Competence - Daily Legal News Podcast
Minimum Competence
Weds 7/26 - North Face v. IRS, Meta Australia Fine, Musk v. SEC goes to SCOTUS

Weds 7/26 - North Face v. IRS, Meta Australia Fine, Musk v. SEC goes to SCOTUS

North Face is facing off with the IRS, Meta fined $14 million in Australia, and Elon Musk is taking his fight with the SEC to the Supreme Court.

On this day in legal history, July 26th, in 1990, President George H.W. Bush signed into law the Americans with Disabilities Act, a comprehensive civil rights law that prohibits discrimination based on disability. It covers five main areas, including employment, public services, public accommodations and commercial facilities and telecommunications.

The act mandates that employers, public services, and businesses provide reasonable accommodations for people with disabilities, ensuring equal opportunities in all facets of society. It represents a significant advancement in guaranteeing the rights of individuals with disabilities, protecting them from exclusion, segregation, and unequal treatment. In employment, the ADA makes it unlawful for any employer to discriminate against qualified individuals with disabilities in job application procedures, hiring, advancement, compensation, training, and other terms, conditions, and privileges of employment.

Public entities are required under the ADA to provide equal opportunity for individuals with disabilities to benefit from all of their programs, services, and activities. Commercial businesses that provide public accommodations must remove barriers in existing buildings where it is easy to do so without much difficulty or expense, given the businesses' resources. Finally, any violation of these requirements can lead to legal sanctions, compensations, and penalties.

TBL Licensing LLC, owner of brands like The North Face and Wrangler, is appealing against a $505 million tax bill upheld by the US Tax Court in 2022. The tax dispute stems from TBL Licensing's transfer of its property, including intangible assets, to a foreign subsidiary as part of a Section 361 corporate reorganization. This process involves one company transferring all of its assets to another company in exchange for stock, which is then distributed to its shareholders.

At the heart of the dispute is whether a lump-sum tax should be applied immediately after the transfer of assets, as argued by the IRS, or whether the income should be recognized and taxed annually, as contended by TBL Licensing. The company argues that the Tax Court's interpretation of Section 367(d) would make every Section 361 exchange subject to the immediate-gain-recognition rule, thereby eliminating the role of the annual-payments rule. TBL Licensing also asserts that Congress favored annual payments to promote accuracy and avoid disputes over valuation.The IRS argues that all outbound reorganizations should be subject to the disposition-payment rule, with exceptions carved out by the Treasury for instances where the annual-payments rule could apply without risking tax avoidance. The case, which could impact many multinationals, is currently being heard by the US Court of Appeals for the First Circuit.

North Face Maker, IRS Test $505 Million Multinational Tax Ruling

The Australian Federal Court has imposed a $14 million (A$20 million) fine on Meta Platforms, Facebook's parent company, for undisclosed data collection using the now-defunct Onavo app. Between 2016 and 2017, Meta promoted Onavo as a virtual private network (VPN) service for safeguarding personal information. VPNs function by providing a different online address to mask a user's identity. However, the court found that Meta leveraged Onavo to collect users' location data, usage patterns of other apps, and visited websites for its own advertising goals.

Judge Wendy Abraham stated this lack of sufficient disclosure could have prevented thousands of Australian consumers from making an informed decision about their data's usage prior to downloading and using Onavo Protect. This ruling, including A$400,000 in legal fees owed to the Australian Competition and Consumer Commission (ACCC), forms part of Meta's ongoing legal issues regarding its handling of user data in Australia. Despite this, the company still faces another legal challenge related to its dealings with data analytics firm Cambridge Analytica.

Australia fines Facebook owner Meta $14 mln for undisclosed data collection | Reuters

Elon Musk, the CEO of Tesla and SpaceX, and owner of Twitter, or X, or whatever he’s calling it today, plans to appeal to the U.S. Supreme Court a decision regarding a consent decree issued by the Securities and Exchange Commission (SEC). The consent decree was implemented following Musk's tweet in August 2018 claiming he had "funding secured" to take Tesla private, an action the SEC claimed defrauded investors. This decree has been upheld by the 2nd U.S. Circuit of Appeals in Manhattan.

Musk's legal team argues that the SEC overstepped its authority, alleging that the decree infringes upon Musk's free speech. The decree was part of a settlement in which Musk and Tesla each paid $20 million in fines, and Musk agreed to have some tweets pre-approved by a Tesla lawyer. Musk's legal team insists that the SEC had no right to impose an "unconstitutional gag rule" as part of the settlement.

Elon Musk to appeal loss in SEC case to Supreme Court | 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
Listen on
Substack App
Apple Podcasts
Pocket Casts
RSS Feed
Appears in episode