Minding Your Business

Proskauer’s perspective on developments and trends in commercial litigation.

Blockchain Service: In an Apparent First, Lawyers Serve Legal Papers Using an NFT

Fundamental to the due process of law is notice—a requirement that all parties are made aware that a lawsuit could alter their legal rights or duties.  Most defendants will be served in person by a process server.  But when the defendant is unreachable this way, some creativity may be required, especially when the defendants are only traceable through their actions on the blockchain, an instrument famous in part for its ability to keep its users private.  After a hack of almost $8,000,000 of its funds, Liechtenstein-based cryptocurrency exchange LCX AG allegedly traced some of its stolen digital assets to different digital wallets.  LCX AG was able to freeze the funds, but with no name stitched into the digital wallet, it still lacked a name and place to pursue legal action.  At least, it lacked a physical place.  But if LCX AG knew the location of the wallet, then perhaps it could serve the virtual place.

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Amendment to Rule 7.1 Seeks to Resolve Federal Court Diversity Issues at the Outset of Cases But It May Not Achieve Its Goal

A proposed amendment to Federal Rule of Civil Procedure 7.1, which had previously required information so judges could determine if they had a conflict of interest, would require a party in a diversity action to name and disclose the citizenship of every individual or entity whose citizenship is attributed to that party. Chief Justice Roberts submitted the proposed amendment on April 11, 2022. The amended Rule 7.1 takes effect December 1, 2022, unless Congress acts.

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Florida’s High Court Clarifies that Incorporating AAA Rules into an Arbitration Provision Delegates Arbitrability to Arbitrator

When a litigant seeks to compel arbitration pursuant to the Federal Arbitration Act (“FAA”), there are two issues that must be resolved: (1) whether there is an agreement to arbitrate; and, if so, (2) whether the dispute at issue falls within the scope of the arbitration agreement.  The Florida Supreme Court’s recent decision in Airbnb, Inc. v. Doe, deals with who decides this second issue—the court or an arbitrator.

In Airbnb, a couple sued Airbnb and Wayne Natt (the property owner) for issues arising out of their stay at Natt’s condominium, which was listed for rent on Airbnb’s website.  Airbnb moved to compel arbitration, arguing that the couple was required to arbitrate their claims because Airbnb’s Terms of Service included an arbitration provision that integrated the AAA Rules.  All parties agreed that the couple was bound by the arbitration agreement—the issue then became whether the court or the arbitrator should decide if the couple’s claims against Airbnb were arbitrable.

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FTC Announces Inquiry into the Infant Formula Shortage

On May 24, 2022, the FTC announced a widespread inquiry into the ongoing infant formula shortage. The agency had been tasked by the White House with investigating any price gouging or unfair market practices in the industry. The agency is seeking public comments on “various factors that may have contributed to the infant formula shortage…as well as its impact on families and retailers.”

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From Cryptic to (Some) Clarity: English Law and Policy Rising to the Challenge of Cryptoassets (Part 3)

In the first two instalments of our series we examined the progress of English law to provide a secure and certain legal infrastructure for cryptoasset investment and management. In particular, we looked at how recent English case law has addressed the following questions:

(1) Are cryptoassets property and (2) Can cryptoassets be held on trust? (see Part 1 here)  (3) Where are cryptoassets located for the purposes of securing jurisdiction over claims and remedies? (see Part 2 here).

In this third (and final) part of the series, we preview potential legal initiatives which are designed to continue building the legal infrastructure for digital assets in the UK, including initiatives such as the UK Law Commission’s Digital Assets Project and the UK Jurisdictional Taskforce’s (UKJT) Digital Dispute Resolution Rules. Read the third part of the series on our Blockchain and the Law blog.

Price Gouging Updates: Federal Price Gouging Legislation; Addressing Infant Formula Shortages; Resolution of Online Merchants Guild

Two federal price gouging bills were recently introduced in Congress. Senator Elizabeth Warren led the introduction of the Price Gouging Prevention Act of 2022. The bill prohibits “unconscionably excessive price[s]” at any point in a supply chain or distribution network during an “exceptional market shock” triggered by a range of events – including public health emergencies. The law would apply to any good or service offered in commerce, and would authorize the Federal Trade Commission and State Attorneys General to enforce the prohibition.  Additionally, during “exceptional market shocks,” the law would require public companies to disclose and explain changes in pricing and gross margins in quarterly SEC filings—raising the specter of SEC enforcement with respect to those disclosures.

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The Sound of “Silent Attorneys”: DOJ Alleges Google Fakes Attorney-Client Privilege by CCing Lawyers Who Never Respond

If a request for legal advice goes unanswered, is it really a request for legal advice?  According to the U.S. Department of Justice and several state attorneys general (“DOJ Plaintiffs”) in an antitrust action against Google, United States, et. al. v. Google, in the U.S. District Court for the District of Columbia, the answer to this question should be “no,” at least where the unanswered request for legal advice is part of an internal company practice intended to conceal sensitive, non-privileged documents from discovery.

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