According to the Environmental Protection Agency (EPA), Volkswagen installed “defeat devices,” designed to cheat emissions tests, in 11 million diesel cars worldwide. VW’s “diesel dupe” has already caused the company considerable financial damage, as it has set aside $7.39 billion to cover recall costs in the U.S. alone. In addition, VW may now face civil and criminal charges for violations of the Clean Air Act (CAA) as well as class action lawsuits from private individuals.
Under the CAA, an automaker can be fined up to $37,500 for every noncompliant vehicle. The EPA could impose a total civil fine of more than $18 billion on Volkswagen for its approximately 500,000 noncompliant cars in the U.S, though allegations of violated environmental rules are often settled for much less than the maximum fine.
With a docket already filled with politically charged and highly contentious issues, the U.S. Supreme Court hopes to also address the reach of U.S. law overseas, specifically as it pertains to the Racketeer Influenced and Corrupt Organizations Act. Commonly referred to as RICO, the law was designed to combat organized crime by allowing for the criminal prosecution of “patterns of racketeering activity in an enterprise,” which may include money laundering, bribery, embezzlement, drug trafficking, and a number of other questionable activities.
A few days prior to the start of its new term beginning October 2015, the highest court in the land granted a writ of certiorari to hear the case RJR Nabisco, Inc., et al. v. European Community, et al, in order to resolve the question of whether RICO applies extraterritorially and if so, to what extent. The petition, filed by counsel at Jones Day representing R.J. Reynolds, questioned the reversing of the lower court’s dismissal of the case in the Eastern District of New York by the sharply divided 2nd U.S. Circuit Court of Appeals Court of Appeals, which held that because the scope of RICO encompassed activities that apply to overseas conduct, claims filed based on these activities can proceed in a U.S. federal court.
On September 29, 2015, the Consumer Financial Protection Bureau (“Consumer Protection Bureau”) released a report urging reform in student loan servicing. The report acknowledged poor servicing of student loans and requested that new rules be put in place to protect borrowers. The report said student loan servicing is currently plagued by problems such as inaccurate loan statements, delays in refinancing, surprise late fees, and mislaid payments.
This directive to regulate the student loan servicer market comes out of President Obama’s Student Aid Bill of Rights statement from March of this year. The stated goal is to “help make paying for higher education an easier and fairer experience for millions of Americans.” In conjunction with the Departments of Education and the Treasury, the Consumer Protection Bureau urged student loan servicers to be consistent, accurate, actionable, accountable, and transparent. Together, they have laid out a framework for the student loan market, which has recently surged to $1.2 trillion (as of the writing of this article) from $600 billion just a decade ago.
On September 29, 2015, the U.S. Court of Appeals for the Second Circuit upheld New York General Business Law §518, effectively reviving a ban on retailer-imposed surcharges against credit card users. In a 3-0 decision, the appellate court judges overturned a ruling from the Southern District of New York that described the law as “incomprehensible,” determining that it violated neither the First Amendment nor the Due Process Clause of the Fourteenth Amendment.
Barring an effective appeal to the U.S. Supreme Court, retailers will now be subject to criminal penalties if they attempt to impose surcharges on customers paying with plastic. The maximum penalties include up to one year in prison and a $500 fine for merchants found to be in violation of the law.
After rejecting two private proposals, SABMiller snubbed Anheuser Busch InBev’s first publicized bid of $104 billion on Wednesday. SABMiller, the world’s No.2 brewer, cited AB’s substantial undervaluation of the company as their continued reason for rejection. SABMiller’s board of directors, excluding directors nominated by its largest shareholder, Altria Group, dismissed the price as too low.
However, Altria, maker of Marlboro cigarettes, owns more than 25% of the brewer and has urged the board to engage in talks with AB. The tobacco giant has said that it would accept a deal at or above AB’s proposed price of £42.15 ($64.2) a share. This offer would net SABMiller a 44% premium over their closing price the day media began to speculate about a potential takeover. The Santo Domingo family, which owns around 15% of the giant brewer through BevCo Limited, stuck with the board in rejecting the first public price.
The U.S District Court for the Northern District of California set up a high-stakes legal battle for Uber that might erode the unicorn’s $50 billion valuation.
In his September 1decision, Judge Edward M. Chen granted class-action status to a lawsuit brought by two Uber drivers seeking reclassification as employees to obtain reimbursement for expenses and tips. He ordered that the suit applies to all drivers in California who didn’t waive their right to the class action.
Despite the fact that Judge Chen had previously approved the arbitration clause stated in Uber’s drivers contracts in O’Connor v. Uber Technologies, Inc., he recently denied Uber’s motion to compel arbitration finding the arbitration clauses entered into with Uber drivers to be unenforceable.
Bitcoin, the peer-to-peer payment system first published in 2009, has opened a monetary Pandora’s Box since day one. The system was created by an unknown individual or group with the name Satoshi Nakamoto. With no central authority, the system enables decentralized, irreversible and non-freezable money transfer with a completely digital currency. Such innovation gradually attracted enormous attention and the Bitcoin prices have been volatile, with a notable increase in 2013 and a subsequent downtrend in 2014.
People who are not familiar with Bitcoin may wonder how the system is connected with the existing currency system. Online Bitcoin exchanges are the marketplace for both individuals and institutional investors to buy or sell bitcoins using multiple currencies, and vice versa. Mt. Gox used to be the largest bitcoin exchange in the world before its dramatic bankruptcy in March 2014, with $460 million stolen by hackers and another $27.4 million missing from its bank accounts. There are a variety of exchanges available on the market nowadays, including but not limited to: ItBit, Coinsetter, Coinbase, Bitstamp, BTC-e and Cryptsy.
How does a Berkeley Law graduate end up as the General Counsel of one of Silicon Valley’s top venture capital firms? What does a day in the life of a General Counsel look like and what are the best steps to take to reach a similar prestigious career?
On September 29, Stephanie Brecher, a 1993 U.C. Berkeley Law graduate and General Counsel of New Enterprise Associates (“NEA”), addressed these questions and others to a group of law students in Boalt Hall on the U.C. Berkeley campus.
Ms. Brecher discussed her path from Berkeley Law to NEA. In the start of her career, she described herself as an “accidental tourist” in corporate law. After graduation, Ms. Brecher held a clerkship in the Central District of California. Upon completion of her clerkship, she decided not to take the position she had initially planned on, and instead she accepted a position as an associate at Steptoe & Johnson in Washington, D.C., where she hoped to work in international law, but was placed on the corporate team. After this position she worked as in-house counsel in Silicon Valley and spent nearly a decade at Nortel. Following her time at Nortel, Ms. Brecher returned to work at a law firm and became a partner at Sheppard Mullin Richter & Hampton before she acquired her position at NEA.
In what could be the tip of a legal iceberg, the Securities Exchange Commission (“SEC”) filed proceedings on September 21st against First Eagle Investment Management, a $100 billion asset manager. The SEC alleged that First Eagle illicitly charged its investors nearly $25 million more in marketing fees beyond the limits allowed by the firm’s 12b-1 plan. The action against First Eagle is the first case of its kind arising under the SEC’s “Distribution-in-Guise Initiative,” an investigation into whether mutual fund managers are improperly disguising certain expenses as those that should be borne by investors and not the funds themselves. First Eagle reached a settlement with the SEC for over $40 million without admitting or denying the findings and will be returning the unlawfully charged fees to affected investors.
Nearly one week after the Federal Reserve, once again, declined to raise its benchmark interest rate, Chairwoman Janet Yellen reiterated her expectation that the Fed would raise interest rates by the end of the calendar year. Speaking at the University of Massachusetts, Amherst, Yellen sought to quell lingering unease within the financial markets by underscoring her commitment to a timely departure from the present near-zero interest rate environment. Yellen conceded that unmet expectations for economic growth could delay the Fed’s long-planned increase until 2016, but indicated that domestic economic indicators, rather than market turmoil abroad, would dictate their timeline.