Legal News for Weds 7/24 - Attorneys for Harris, Trump Complains About Harris Taking Biden Funds, Tesla vs. Rivian, FTC Noncompete Ban Upheld and Texas 2-step Ending?

Minimum Competence

This Day in Legal History: Scopes Monkey Trial

On July 24, 1925, John Scopes, a high school teacher in Dayton, Tennessee, was found guilty of teaching evolution, a violation of the Butler Act. This state law prohibited the teaching of any theory that denied the divine creation of man as taught in the Bible, specifically targeting Charles Darwin's theory of evolution. The trial, famously known as the Scopes Monkey Trial, became a focal point for the intense debate between modern science and religious fundamentalism. Scopes was represented by the prominent attorney Clarence Darrow, while William Jennings Bryan, a three-time presidential candidate, argued for the prosecution.

The courtroom drama was a media sensation, highlighting the cultural clash of the Roaring Twenties. Although Scopes was found guilty and fined $100, the trial's significance extended far beyond the verdict. It sparked national discussion on academic freedom, the separation of church and state, and the role of science in education. The conviction was later overturned on a technicality, but the Butler Act remained in force until 1967. The trial's legacy endures, symbolizing the ongoing struggle between progressive and conservative values in American society.

Attorneys are rallying behind Vice President Kamala Harris as she ascends to the top of the Democratic ticket following President Joe Biden's decision to step down. Around 100 law firm partners showed interest in fundraising for Harris right after Biden's announcement. Jon Henes, a former Kirkland & Ellis partner, is organizing a significant event for her campaign, highlighting a vigorous four-month effort to the election.

Harris has a history of strong support from the legal community, with lawyers contributing over $5 million to her previous campaigns. Notable attorneys like David Frederick and Roberta Kaplan have pledged their support, emphasizing the importance of defeating the former president and preserving the rule of law. The legal sector has proven to be a reliable fundraising source for Harris, with her receiving substantial donations from firms such as Paul Weiss and Kirkland.

Prominent figures like Brad Karp and Brian Mathis are mobilizing Democratic supporters, while liberal mega-donors have already begun to contribute significantly. The Biden campaign infrastructure has transitioned to support Harris, with key leaders and an experienced legal team staying in place. Former US Attorney General Eric Holder and his firm are assisting in vetting potential running mates for Harris.

Big Law Donors Jump to Pad Harris’ War Chest for White House Bid

Top Industries, federal election data for Kamala Harris, 2020 cycle • OpenSecrets

Donald Trump's campaign filed a complaint with the Federal Election Commission (FEC), contesting Vice President Kamala Harris's takeover of funds raised by President Joe Biden's reelection campaign. After Biden, who was competing closely with Trump, endorsed Harris and ended his bid for reelection, Harris assumed control of Biden's campaign accounts. The Trump campaign accused Harris of committing a significant campaign finance violation, describing it as a "brazen money grab."

David Warrington, Trump's campaign general counsel, asserted that Harris's actions represented the largest campaign finance violation in American history. However, Saurav Ghosh from the Campaign Legal Center stated that Harris, as the vice presidential candidate, should legally have access to the funds. The FEC has not commented on the unresolved matter and is unlikely to settle the dispute before the November 5 presidential election.

Meanwhile, Harris's campaign has dismissed the complaint, emphasizing their strong fundraising success, having raised $100 million since Biden's endorsement. Harris campaign spokesperson Charles Kretchmer Lutvak criticized the complaint as a baseless legal tactic by Republicans to distract from their efforts to mobilize voters and win the election.

Trump campaign files complaint against Harris taking over Biden war chest | Reuters

Trump Files Complaint Over Biden Giving Harris $96 Million

Electric vehicle manufacturer Rivian Automotive will face trial over allegations that it encouraged employees who left Tesla to steal trade secrets. This decision follows a tentative ruling by Judge Theodore C. Zayner of the Santa Clara County Superior Court, who denied Rivian's motion to dismiss the lawsuit. The judge determined that Tesla had provided sufficient evidence to proceed to trial, citing that some Rivian employees were not thoroughly investigated or disciplined regarding the alleged thefts.

The dispute began in 2020 when Tesla accused Rivian of systematically poaching its employees and misappropriating confidential information. Although Rivian presented evidence of its internal investigation into the allegations, the judge found it insufficient to conclusively prove the adequacy of their efforts. Rivian has consistently denied the accusations, while Tesla has yet to comment on the recent ruling. A final hearing on the matter is scheduled for Wednesday in Santa Clara court.

Rivian to face trial in Tesla trade secrets theft case, judge says | Reuters

A federal judge has upheld the Federal Trade Commission's (FTC) ban on noncompete agreements, rejecting a challenge by ATS Tree Services, a small Pennsylvania company. Judge Kelley Brisbon Hodge ruled that the FTC has clear authority to issue rules to prevent unfair competition methods. ATS Tree Services, which employs about 12 people, failed to show it would suffer irreparable harm if the ban took effect and could not prove the FTC lacked authority.

This ruling contrasts with a July 3 decision by Judge Ada Brown in Texas, who sided with a Texas tax firm and the U.S. Chamber of Commerce, arguing the FTC lacks the authority to enforce such rules. The White House praised Hodge’s decision as a victory for workers and small businesses, while the FTC spokesperson highlighted that the ruling supports the FTC’s role in banning noncompete clauses.

ATS Tree Services argued that banning noncompete agreements would harm its business by undermining employee training investments, but the judge found insufficient evidence to support this claim. The case reflects a judicial split, with another final ruling on the challenge due by August 30, potentially impacting the rule set to go into effect on September 4.

FTC Gets Win on Noncompete Ban After Loss in Another Court (3)

A bipartisan group of Congress members introduced the Ending Corporate Bankruptcy Abuse Act to target the "Texas Two-Step" bankruptcy tactic used by companies like Johnson & Johnson to manage mass liabilities. The tactic involves placing an affiliate into bankruptcy to evade responsibility and delay justice for consumers. The proposed legislation aims to prevent such maneuvers by presuming bad faith in bankruptcies with clear signs of being a Texas Two-Step.

Indicators of bad faith include manufacturing a connection to the bankruptcy venue, gaining a litigation advantage, prearranged deals capping liability funds, recent formation through divisional mergers, fraudulent transfers, or lack of valid reorganization purpose. The bill seeks to standardize federal rules for dismissing such bankruptcies across circuit courts. Additionally, it prohibits litigation pauses for nonbankrupt affiliates involved in a Texas Two-Step within the past four years, specifically targeting cases with over 100 tort claims.

Sen. Sheldon Whitehouse (D-R.I.), a co-sponsor, emphasized that the bill ensures victims get their day in court. Rep. Lance Gooden (R-Texas) criticized corporations for using the tactic to avoid accountability. The bill is also backed by Sen. Josh Hawley (R-Mo.) and Rep. Emilia Sykes (D-Ohio).

Bipartisan Bill Aims to Deter ‘Texas Two-Step’ Bankruptcy Tactic

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