Connect with us

Tech

Facebook, Gibson Dunn sanction order is light on dollars, heavy on message

Published

on

Facebook, Gibson Dunn sanction order is light on dollars, heavy on message

To Facebook parent Meta Platforms Inc (META.O) and its lawyers at Gibson, Dunn & Crutcher, $925,000 isn’t a whole lot of money.

You might even say that a million bucks, give or take, is nothing more than “loose change” to a company whose annual earnings topped $115 billion last year and to a law firm that reportedly grosses more than $2 billion annually.

“Loose change,” in fact, is how US District Judge Vince Chhabria of San Francisco described the $925,000 sanction he levied against Meta and Gibson Dunn on Thursday in a class action accusing the social media company of harvesting and sharing users’ personal data without their knowledge or consent. Chhabria, as you’ve probably heard, ordered Facebook and its lawyers to pay that sum to plaintiffs’ lawyers as recompense for their bad-faith litigation tactics.

Even in the context of just this case, which Facebook agreed late last year to settle for $725 million, a $925,000 sanction – which is less than half of the $2 million requested by plaintiffs’ lawyers — hardly rates an asterisk.

Advertisement

But money wasn’t the point of Chhabria’s order.

The judge wanted to make an example of Facebook and its law firm to draw attention to what he considers to be a frequent problem in big cases: corporations and their lawyers using delay and obfuscation to wear down plaintiffs’ lawyers on the other side.

Chhabria’s message comes through most clearly near the end of the opinion, after the judge expended pages and pages detailing the many ways in which Facebook contested discovery requests from lead plaintiffs’ lawyers at Keller Rohrback and Bleichmar Fonti & Auld.

“Does anyone really think that Facebook was planning on taking this case to trial?” the judge wrote. “Or was Facebook, with the assistance of its lawyers, executing a different play from the playbook: resist discovery as long as possible, make things increasingly difficult and expensive and frustrating for the opposition, and hope that would drive down the case’s settlement value? This is, by far, the most likely explanation for Facebook and Gibson Dunn’s conduct.”

Some context is in order. Discovery in the case was so complex and contentious that the US magistrate judge who oversaw it urged both sides to engage a special master. And as I’ve previously told you during the year-long sanctions saga, after Chhabria first threatened Facebook and Gibson Dunn last February, the law firm has offered rationales and justifications for all of the discovery disputes in case. Gibson Dunn has insisted throughout that although the firm and its client litigated “zealously” as plaintiffs fished for a viable theory, they never violated a discovery order or failed to abide by instructions from the magistrate and special master. (It’s also worth pointing out that discovery had not yet closed when the two sides announced their settlement last year.)

Advertisement

Chhabria noted those arguments by Facebook and its lawyers, even acknowledging a ruling from the magistrate judge that rejected plaintiffs’ accusations of bad faith litigation to prolong one of many discovery fights. But the judge also stepped back from the minutiae of the battles over particular categories of evidence to look more broadly at Facebook’s litigation strategy.

What he saw, he said, was all too familiar: A big corporation and its high-priced lawyers pushed the outer limits of the discovery process with the goal of forcing plaintiffs’ lawyers to accept a discounted settlement offer just to end the misery of fighting endless discovery disputes.

“This is not to suggest that there necessarily was some back-room meeting at which Facebook and its lawyers said, ‘Ok, here’s the plan, let’s be as unreasonable and obstructionist as possible in the hope that we’ll frustrate the plaintiffs into settling for less than they could get if we were cooperative in discovery,’” Chhabria wrote. “Unfortunately, this approach to litigation is common enough that no such meeting was necessary. Facebook and its lawyers fell into their roles with ease, and then they took things way too far.”

Gibson Dunn and Meta both declined to provide a statement on Chhabria’s order.

Chhabria took pains to emphasize that the problem in this case was not thoughtless or incompetent advocacy. Quite to the contrary. In his view, Facebook and Gibson Dunn’s self-described zealousness was instead “a sustained, concerted, bad-faith effort to throw obstacle after obstacle in front of the plaintiffs—all in an attempt to push the plaintiffs into settling the case for less than they would have gotten otherwise.”

Advertisement

Chhabria delivered his reprimand on corporate litigation tactics with writing that’s irresistibly quotable, accusing Facebook and Gibson Dunn in the very first sentence of the order of “using delay, misdirection, and frivolous arguments to make litigation unfairly difficult and expensive for their opponents.”

Later in the opinion, in addressing Gibson Dunn’s assertion that class counsel were to blame for discovery delays, the judge offered a seething refutation: “No matter the conduct of the opposing party, counsel cannot twist their words—not to mention the words of the court—in support of frivolous arguments. They cannot resist the disclosure of obviously discoverable information. They cannot ignore potential sources of evidence, only for opposing counsel to learn about those sources at a … deposition near the close of discovery. They cannot treat depositions like fighting matches. And they cannot encourage their client’s obstinance.”

A relatively small monetary sanction is no salve for the sting of language like that – as Chhabria surely knows. If you are a corporate defendant or defense lawyer appearing in his courtroom, consider yourself warned. 

Advertisement

Tech

Australian lethal mushroom mystery survivor leaves hospital

Published

on

By

Australian lethal mushroom mystery survivor leaves hospital

A survivor of a lethal mushroom poisoning that has gripped Australia has been released from hospital, his family say.

Ian Wilkinson had been left in a critical condition after eating a beef Wellington cooked by Erin Patterson.

Three people, including Mr Wilkinson’s wife, died after the meal, which police believe contained death cap mushrooms, which are lethal if ingested.

Ms Patterson, who is not facing charges, has said it was an accident.

Advertisement

Mr Wilkinson left hospital on Friday after almost two months of treatment, according to his family.

“This milestone marks a moment of immense relief and gratitude for Ian and the entire Wilkinson family,” they said in a statement.

It is not yet clear if Mr Wilkinson, a Baptist church pastor, has already spoken to police in hospital or whether he can now shed new light on the case.

The fatal lunch was held in Ms Patterson’s home in the small town of Leongatha, Victoria on 29 July.

Ms Patterson had invited her former in-laws Gail and Don Patterson, along with Gail’s sister Heather Wilkinson and Heather’s husband Ian. Ms Patterson’s estranged husband could not attend at the last minute.

Advertisement

Hours after the meal, all four guests fell ill with what they initially thought was severe food poisoning.

Within days, Heather, 66, Gail, 70, and Don, 70, had died, while Ian, 68, was hospitalised in a critical condition.

Suspicion fell on Ms Patterson because she appeared to remain in good health despite her four guests falling gravely ill.

“I am now devastated to think that these mushrooms may have contributed to the illness suffered by my loved ones,” the 48-year-old said last month.
“I really want to repeat that I had absolutely no reason to hurt these people, whom I loved.”

Advertisement
Continue Reading

Tech

OpenAI’s ChatGPT will ‘see, hear and speak’ in major update

Published

on

By

OpenAI's ChatGPT will 'see, hear and speak' in major update

OpenAI’s ChatGPT is getting a major update that will enable the viral chatbot to have voice conversations with users and interact using images, moving it closer to popular artificial intelligence (AI) assistants like Apple’s Siri.

The voice feature “opens doors to many creative and accessibility-focused applications”, OpenAI said in a blog post on Monday.

Similar AI services like Siri, Google (GOOGL.O) voice assistant and Amazon.com’s (AMZN.O) Alexa are integrated with the devices they run on and are often used to set alarms and reminders, and deliver information off the internet.

Since its debut last year, ChatGPT has been adopted by companies for a wide range of tasks from summarizing documents to writing computer code, setting off a race amongst Big Tech companies to launch their own offerings based on generative AI.

Advertisement

ChatGPT’s new voice feature can also narrate bedtime stories, settle debates at the dinner table, and speak out loud text input from users.

The technology behind it is being used by Spotify (SPOT.N) for the platform’s podcasters to translate their content in different languages, OpenAI said.

With images support, users can take pictures of things around them and ask the chatbot to “troubleshoot why your grill won’t start, explore the contents of your fridge to plan a meal, or analyze a complex graph for work-related data”.

Alphabet’s Google Lens is currently the popular choice to gain information on images.

The new ChatGPT features will be released for subscribers of its Plus and Enterprise plans over the next two weeks.

Advertisement

Continue Reading

Tech

SEC collects Wall Street’s private messages as WhatsApp probe escalates

Published

on

By

SEC collects Wall Street's private messages as WhatsApp probe escalates

The U.S. securities regulator has collected thousands of staff messages from more than a dozen major investment companies, escalating its probe into Wall Street’s use of private messaging apps, said four people with direct knowledge of the matter.

Previously, the Securities and Exchange Commission (SEC) had asked the companies to internally review the messages in its investigation of Wall Street’s use of WhatsApp, Signal and other unapproved messaging apps to discuss work.

The two-year crackdown into potential breaches of record-keeping rules initially targeted broker dealers, netting regulators over $2 billion in fines.

While Reuters and other media have reported that the SEC’s “off-channel” communication probe has expanded to investment advisers, its move to review thousands of their staff messages has not previously been reported. It marks an escalation of the investigation and raises the stakes for the companies and the executives concerned by exposing their conduct to SEC scrutiny.

Advertisement

“It increases risk,” one source said. “The more information you give the SEC, the more you fuel the beast.”

In the latest phase of the probe of more than a dozen investment advisers, the SEC has in recent months asked for messages on personal devices or applications during the first half of 2021 that discuss business, the sources said. It has targeted a selection of employees, in some cases as many as a dozen, including senior executives.

The firms include Carlyle Group (CG.O), Apollo Global Management (APO.N), KKR & Co (KKR.N), TPG (TPG.O), and Blackstone (BX.N), according to three people with direct knowledge of the matter, as well as some hedge funds, including Citadel, said a different person with direct knowledge.

The executives gave their personal phones and other devices to their employers or lawyers to be copied, and messages discussing business have been handed to the SEC, three people said.

That is in contrast to the broker-dealer probes. In those cases, the SEC asked companies to review staff messages and report to the agency how many discussed work. SEC staff reviewed only a sample of messages themselves, according to three sources with knowledge of the previous investigations.

Advertisement

The sources spoke on the condition of anonymity because SEC investigations are confidential.

At least 16 firms including Carlyle, Apollo, KKR, TPG, and Blackstone, have disclosed that the SEC is probing their communications. The firms did not provide further details and did not comment for this story. A spokesperson for Citadel declined to comment.

Government investigations are not evidence of wrongdoing and do not necessarily lead to charges.

An SEC spokesperson declined to comment. Chair Gary Gensler has defended the communications scrutiny, saying record-keeping rules are critical in helping the SEC guard against wrongdoing.

“Now that they have all that data – it is very possible that the SEC will find compliance failures in there somewhere that have nothing to do with the off-channel communications record-keeping issues,” said Jaclyn Grodin, a lawyer at Goulston & Storrs who is not involved in the investigation.

Advertisement

Private fund fees and expenses, conflicts of interest and preferential treatment of investors are issues the SEC is increasingly focusing on, she noted.

‘SHOOTING FISH’
The problem of keeping tabs on staff communications has dogged Wall Street compliance departments for years. Because companies do not surveil personal messaging channels, using them to discuss business puts SEC-regulated employers in breach of requirements to record all business communications.

The SEC began to home in on Wall Street’s record-keeping problem when JPMorgan Chase (JPM.N) failed to provide documents from at least 2018 pertaining to an unrelated probe, according to a 2021 settlement in which the bank agreed to pay the SEC $125 million to resolve charges over record-keeping lapses.

Suspecting that off-channel chat about deals, trades and other business was rife on Wall Street, the SEC in 2021 opened an inquiry into other broker-dealers’ communications, said two sources. The misconduct proved so pervasive that the agency has been “shooting fish in a barrel,” one said.

The probe is shaping up to be Gensler’s signature Wall Street enforcement initiative, netting multiple big names including Wells Fargo (WFC.N), Bank of America (BAC.N), Goldman Sachs (GS.N) and Morgan Stanley .

Advertisement

It has generated millions in fees for attorneys, with firms hiring dozens of lawyers to represent both the company and executives worried about their exposure, according to several sources.

‘INVASIVE’
The SEC began approaching investment advisers in October 2022, Reuters previously reported. As with broker-dealers, the SEC initially sought details on investment advisers’ record-keeping policies. It then identified a group of executives and asked the firms to search their devices and report back on what they found.

But the firms resisted, arguing their record-keeping requirements are narrower than broker-dealers’.

In a January letter led by the Managed Funds Association, the industry said the SEC’s request was “invasive” and raised privacy issues. Bloomberg previously reported the letter.

The SEC later demanded that the investment advisers hand over the messages, the sources said.

Advertisement

The agency is ignoring important differences in investment advisers’ recordkeeping requirements, said Jennifer Han, the MFA’s executive vice president and chief counsel.

“Unilaterally expanding the rules by enforcement actions sidesteps due process and creates a dangerous precedent,” she said in a statement.
 

Continue Reading

Trending

Copyright © GLOBAL TIMES PAKISTAN