In this Law360 article on trials to watch in 2023, partner Martin Roth discussed the upcoming securities fraud trial over Elon Musk's tweets about taking Tesla private.
The coming year is set to bring trials in high-profile corruption and kickback prosecutions, first bellwethers for two notable multidistrict cases, and an airing of securities fraud claims over Elon Musk's Tesla tweets, among others.
Here, Law360 runs down what's in store.
DOJ's Next Labor Market Allocation Fight
Antitrust, health, and employment lawyers are keeping close watch on a case by federal prosecutors against UnitedHealth Group's Surgical Care Affiliates concerning alleged mutual agreements extracted by dialysis giant DaVita not to poach each other's employees. Trial has been continued from January but will most likely still be in 2023.
DaVita went on trial itself in 2022 and was acquitted, and the DOJ has had a difficult road in its initiative to prosecute these types of antitrust cases.
SCA has argued that the government can only bring criminal antitrust charges over conduct that courts have found to be automatically, or per se, illegal and that there's no such precedent for nonsolicitation agreements.
The case is U.S. v. Surgical Care Affiliates LLC et al., case number 3:21-cr-00011, in the U.S. District Court for the Northern District of Texas.
Musk Faces Angry Tesla Investors Over Take-Private Tweets
Tesla Inc. and Twitter CEO Elon Musk are facing a securities fraud trial slated to kick off Jan. 17 in San Francisco brought by Tesla investors over Musk's infamous tweets about taking the company private at $420 a share.
In the tweets, Musk wrote that he was "considering taking Tesla private at $420. Funding secured." He also tweeted, "investor support is confirmed. Only reason why this is not certain is that it's contingent on a shareholder vote."
The consolidated securities class action alleges that Musk inflated Tesla's stock price and caused billions in damages. A judge has ruled Musk's statements were inaccurate and reckless and barred defense counsel from arguing at trial that the tweets were true.
Jurors will be told there was an SEC investigation after the tweets, but will not hear about the eventual settlement with the agency since Tesla admitted no liability.
Martin Roth, a Kirkland & Ellis LLP litigation partner who is not involved in the case, said the trial will focus "on how the tweets impacted investors' decisions."
"It will be fascinating to see how both sides offer evidence on that question and how a jury evaluates that proof, especially given the many real-time skeptics about the truth of the tweets and a developing focus on securities fraud via social media platforms like Twitter," Roth said.
The case is In re: Tesla Inc. Securities Litigation, case number 3:18-cv-04865, in the U.S. District Court for the Northern District of California.
Former Ohio Speaker Defends Against Bribery Charges
Federal prosecutors will go to trial Jan. 20 against former Ohio House Speaker Larry Householder over charges he orchestrated a $60 million bribery and racketeering scheme, purportedly taking cash to pass a controversial billion-dollar bailout of a nuclear energy plant.
Prosecutors say Householder received money from electric utility FirstEnergy Corp., funneled through a nonprofit called Generation Now, for the passage of a bill known as H.B. 6.
Householder has argued the indictment is short on facts and "hangs its hat on salacious allegations." He said prosecutors must show he made a promise to perform a specific official action in exchange for money from FirstEnergy.
Householder was charged alongside Generation Now, political strategist Jeff Longstreth, and lobbyists Matthew Borges and Juan Cespedes. Cespedes, Longstreth, and Generation Now reached plea agreements.
The case is U.S. v. Householder et al., case number 1:20-cr-00077, in the U.S. District Court for the Southern District of Ohio.
Baker Donelson Lobbyist Looks To Shake Timber Fraud Case
A former Baker Donelson lobbyist charged with wire fraud in an immense timber-industry Ponzi scam will go to trial March 21 in Jackson, Mississippi.
Non-lawyer lobbyist Brent Alexander and health care partner Jon Seawright were charged with soliciting tens of millions of dollars from investors for their Alexander Seawright Timber Fund, which invested into mastermind Lamar Adams' larger scheme to procure investments by touting high returns from Adams' purported timber tract deals with lumber mills.
Prosecutors say the pair raised more than $20 million from over 50 investors, including Baker Donelson clients and others connected to the firm. Both men have pled not guilty. From the case docket, it does not appear that Seawright is going to trial alongside Alexander. His counsel did not immediately answer an inquiry.
Adams, a Mississippi businessman, has been sentenced to nearly two decades in prison.
In an ongoing civil action, a court-appointed receiver has also accused Baker Donelson of aiding the scam. The firm says it has produced nearly 14,000 documents to the receiver, which "fully substantiate Baker Donelson's defense that it did not know about or authorize" the activity. Another firm has settled.
The case is U.S. v. Alexander et al., case number 3:20-cr-00031, in the U.S. District Court for the Southern District of Mississippi.
TenetHealth Execs Fight Maternity Kickbacks Prosecution
Jurors in Atlanta will begin weighing charges April 10 over an alleged $400 million kickback scheme centered around maternity treatment for predominantly undocumented Latina women.
Former Tenet Healthcare Corp. hospital executives John Holland and William Moore and former Clinica de la Mama CEO Edmundo Cota are accused of fraudulently billing federal health programs for at least $400 million and fraudulently receiving at least $127 million.
Prosecutors allege Tenet paid more than $12 million in bribes to Clinica de la Mama to ensure patients gave birth at Tenet hospitals in Georgia and South Carolina from 2000 to 2013.
Cota's ex-wife, who co-owned Mama, and another former Tenet hospital CEO pled guilty in 2014. In 2016, Tenet and subsidiaries that operated Atlanta hospitals run by Holland and Moore settled for more than $500 million.
A judge has denied the DOJ's bid to introduce testimony in this trial from more than 50 alleged unindicted co-conspirators. U.S. District Judge Amy Totenberg has also called it one of the most complex criminal cases she's ever dealt with.
The case is USA v. Holland et al., case number 1:17-cr-00234, in the U.S. District Court for the Northern District of Georgia.
Dershowitz Sues CNN For Defamation Linked To First Trump Impeachment
Former Harvard scholar Alan Dershowitz is set for trial May 8 in his defamation lawsuit against CNN over the network's coverage of Dershowitz as he defended then-President Donald Trump during Trump's first Senate impeachment trial.
Dershowitz said the broadcaster smeared him in the context of his response to a question from Sen. Ted Cruz, R-Texas, during the impeachment trial. The broadcaster misrepresented his arguments, Dershowitz has said, and made him look like he "had lost his mind" by snipping a long answer into a sound bite that made it look as if Dershowitz argued the president could break the law as part of his reelection campaign.
CNN wants to know who is funding the suit and says it has reason to believe the suit is intended to "inflict harm" on the cable news company.
Trump was eventually acquitted. He was impeached a second time after the Jan. 6, 2021, Capitol occupation and then acquitted again.
The case is Dershowitz v. Cable News Network Inc., case number 0:20-cv-61872, in the U.S. District Court for the Southern District of Florida.
First Bellwether Set For PFAS Firefighting Foam MDL
The Florida city of Stuart will be the very first water provider to go to trial in a massive MDL against DuPont, 3M and others concerning firefighting foam laden with PFAS, the long-chain "forever chemical" surfactants.
Stuart, like the other water provider plaintiffs, alleges the company contaminated its wells with the chemicals. DuPont has argued it didn't produce the substance in question and that the city can't prove it was the source of the contamination.
The plaintiffs say DuPont and other companies knew the "aqueous film-forming foam" contained per- and polyfluoroalkyl substances, or PFAS, which can damage the environment and cause health issues.
A judge, however, has cited internal emails showing executives had a "common understanding" by 2001 that telomer firefighting foam degrades and produces PFAS.
DuPont and spinoff Chemours agreed in 2017 to pay $670 million to settle personal injury MDL cases over a type of PFAS known as PFOA after several bellwether trials.
The cases are City of Stuart, Florida v. The 3M Co. et al., case number 2:18-cv-3487, in the U.S. District Court for the District of South Carolina and In Re: Aqueous Film-Forming Foams Products Liability Litigation, case number 2:18-mn-02873, in the U.S. District Court for the District of South Carolina.
Okla. Vegan Food Labeling Law Goes On Trial
A vegan food trade association will head to trial against the state of Oklahoma on Sept. 12 over a state law that requires plant-based food companies to include disclaimers if they use meat terms on their products. Industry group Plant Based Foods Association will spearhead the trial on behalf of its 165 members.
A judge had previously decided that the speech at issue was potentially misleading to a reasonable customer. One of the trade association's members and an original plaintiff, Upton's Naturals, uses packaging that includes terms like "bacon," "hot dog," "jerky" and "meatballs."
The Meat Consumer Protection Act, which took effect in November 2020, bars such labeling without a disclaimer. That disclaimer must be the size of the product's name even if accompanied by the words "meatless," "vegan" or "plant-based," according to court records. A lawyer for the plaintiffs told Law360 that the law is nonsensical and an affront to free speech since its members "already proudly tell customers that their products are plant-based."
The case is Plant Based Food Association v. Stitt, case number 5:20-cv-00938, in the U.S. District Court for the Western District of Oklahoma.
First Bellwether Claiming Paraquat-Parkinson's Connection
A first bellwether trial will begin Oct. 16 in a multidistrict litigation over the pesticide Paraquat. The specific case to be tried is yet to be chosen, but the judge intends this as a firm trial date after numerous postponements.
Syngenta and other companies, including Chevron, face claims they gave consumers Parkinson's disease due to exposure to the herbicide. The companies continued to sell the weedkiller despite being aware of a link to the condition, the plaintiffs say.
Paraquat is banned in many European countries. Its use is restricted in the U.S. due to its high toxicity, but it is still one of the most widely used herbicides in the country, sold by Syngenta to licensed applicators under the brand name Gramoxone. Chevron was Syngenta's U.S. distributor of Paraquat until 1986.
"When an MDL reaches the bellwether trial stage, the stakes change overnight," said Simmons Hanly Conroy LLC name partner Jayne Conroy, who is not involved in the case. "The trial puts the human tragedy caused by defendant front and center. Trials make everything public — witness testimony, never-before-seen corporate emails and memos, as well as the risk of a jury verdict. For both Paraquat and [the] Aqueous Foam [MDL], reaching the trial stage is a huge milestone because now the world will see the tangible evidence of defendants' liability."
The case is In Re: Paraquat Products Liability Litigation v. Syngenta Crop Protection LLC et al., case number 3:21-md-03004, in the U.S. District Court for the Southern District of Illinois.
Powerful Chicago Alderman Faces Jury In Corruption Case
Trial is set for Nov. 6 in a sprawling case accusing longtime Chicago Alderman Edward Burke of racketeering, attempted extortion and bribery. Burke, a powerful city alderman, tax attorney and husband of Illinois Supreme Court Chief Justice Anne Burke, is accused of attempting to extort tax business for his personal law firm, Klafter & Burke. Others were indicted as well.
Burke allegedly solicited property tax work from developers planning to renovate and redevelop the city's historic Old Main Post Office and facilitated the project's access to nearby land owned by Amtrak. Burke argues the allegations about Amtrak fail to correspond to any "official act" under bribery law and precedent, as he used a personal contact with an Amtrak executive.
A judge has refused to suppress evidence obtained from wiretaps of Burke's personal cell phone.
Richard Donoghue of Pillsbury Winthrop Shaw Pittman LLP, an expert on public corruption, called it an important case for prosecutors looking to meet the high standards for proving such crimes.
"While federal courts have emphasized the need to prove that steps taken by public officials were 'official acts' and the importance of proving clear quid-pro-quo agreements, what the government alleges in the current indictment positions them to do just that," said Donoghue, who is not involved in the case. "The case highlights the pitfalls that exist when elected or appointed officials maintain personal businesses that can be used as vehicles for bribes."
The case is USA v. Burke et al., case number 1:19-cr-00322, in the U.S. District Court for the Northern District of Illinois.
Wash. 'Patent Troll' Law To Be Tested By Prolific Assertion Co.
The state of Washington is set for trial Nov. 27 in a lawsuit targeting a patent-assertion company under a 2015 law intended to stop "patent trolls" from trying to extort settlements from small businesses.
Washington's Patent Troll Protection Act outlaws the sending of patent licensing demand letters that contain deceptive information or fail to detail the alleged infringement.
Washington said Landmark Technology A LLC sent identical demand letters to nearly 1,200 small businesses in 48 states, each demanding $65,000 in licensing fees. Landmark allegedly zeroed in on commonly used features on business websites, like login pages and shopping carts.
When five Washington businesses refused to pay, Landmark sued them, and each business paid up to $20,000 to settle, the state said.
A Seattle federal judge rejected assertions by the North Carolina company that the law violates its right to free speech, agreeing with the state that the PTPA prohibits only bad-faith demands, which are not covered by the First Amendment's petition clause.
The case is State of Washington v. Landmark Technology A LLC, case number 2:21-cv-00728, in the U.S. District Court for the Western District of Washington.