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Theranos Threatens Bankruptcy; Judge Stops Proposed Deal

Theranos played the bankruptcy card in a class-action against the company, but it was a bad play that derailed a proposed deal.

In documents unsealed in Delaware Chancery Court, investors said the company threatened to file for bankruptcy protection if they didn't accept a deal to dismiss their claims. A Theranos lawyer tried to pressure Partner Investments LP and two other funds, which invested more than $96 million in the company, to accept more equity instead.

According to reports, the plaintiffs said Theranos' attorney "sent the unmistakable message" that the company would declare bankruptcy if the investors turned down the deal. The plaintiffs then discovered that Theranos engineered the deal to make it impossible for the funds to obtain "any recovery."

Judge Travis Laster has stopped the proposed deal for now and set a hearing on the matter for June 26.

When Litigation Financing Makes No Cents

Mark Herrmann, a veteran of BigLaw litigation, says that litigation financing makes no sense for rich companies.

They can afford the attorneys fees to litigate, but they borrow the money and lose more even if they win. In a $20 million fee case, for example, they will pay twice that for borrowing. So even if they win $100 million, they will pay $40 million for financing when they could have paid only $20 million out-of-pocket.

Now why would they do that? For once, let's not blame the lawyers. It's the stock analysts.

In January, the Department of Labor sued Google, accusing it of withholding information on pay disparities from federal regulators. Then, last Friday, the DOL accused Google of "systemic compensation disparities against women pretty much across the entire workforce."

Now, Google is pushing back, arguing that its internal analyses ensure that "our pay practices remain aligned with our commitment to equal pay."

Saying your class-action is largely settled is like saying you're a little pregnant.

But that's the status in the proposed settlement of a high-profile invasion of privacy case. Twitter, Yelp, Instagram and others have agreed to pay $5.3 million to people who used their apps only to discover that their contacts had been uploaded through "Find Friends" and similar features.

Only problem is, "Find Friends" is a feature on iPhones as well, and Apple is not settling. The battle began in 2012, but the war may just be getting started.

SCOTUS to Decide If U.S. Corporations Can Be Liable for Overseas Terrorism

Arab Bank in New York thought it couldn't be held liable for customers overseas -- even those who were known terrorists.

After all, the U.S. Supreme Court had ruled that liability presumptively does not reach corporations in America for human rights violations committed in other countries. Moreover, the U.S. Second Circuit Court of Appeals had thrown out the cases against Arab Bank based on that ruling.

But that was then, and this is now.

"[T]his case presents the issue in as gripping a context as this Court is likely to see: proven corporate financing of terrorism, partly from a perch in the United States that was indispensable to the terrorist scheme," the petitioners said in urging the Supreme Court to hear Jesner v. Arab Bank.

Tech Companies Still Hopeful SCOTUS Will End Patent-Troll Venue

It is too early to tell how the U.S. Supreme Court will rule on patent trolling in a closely watched case, but the justices didn't seem especially interested in arguments from 32 internet companies that filed as amicus curiae in the case.

The companies want the Court to cut off "patent trolls," who use venue to channel patent litigation to forum-friendly courts -- primarily in Texas. But some justices seemed tired of hearing about it.

"What's that go to do with this?" Justice Stephen Breyer asked the petitioner's attorney. "Is there some relevance to it?"

Justice Ruth Bade Ginsburg joined in, seemingly unemphathetic to the complaints about shopping for friendlier forums. "Many corporations are incorporated in Delaware," she said. "That's also said to be a friendly forum."

A Primer on Relevance and Proportionality

Rodney King, that unexpected voice of reason in a wilderness of social chaos, put it this way: "Can't we all just get along?"

It's a catchphrase that can serve in the most complex situations, including discovery disputes. A judge may not quote Rodney, but the admonition still rings true and lawyers should take note.

When the federal discovery rules changed in 2015 to deal with the potential for massive eDiscovery disputes -- from the "reasonably calculated" standard to a "relevance and proportionality" standard -- one thing did not change: judges want lawyers to sort out their own discovery disputes.

Here are some pointers for in-house counsel, who have the bottom-line responsibility for limiting expensive and time-consuming waste of legal resources in discovery:

Facebook Changes Business Practices to Settle Privacy Lawsuit

To settle a class action lawsuit alleging privacy violations, Facebook has agreed to change its method of sharing information that the company gleans from users' messages.

Facebook agreed to stop using data from links sent in messages to target advertising, and it will not share user data with third parties, or boost "likes" on third-party websites with that information, according to the proposed settlement.

In their complaint, the plaintiffs had alleged that "private" Facebook messages are systematically intercepted by the Company in an effort to learn the contents of the users' communications."

"This practice is not done to facilitate the transmission of users' communications via Facebook, but because it enables Facebook to mine user data and profit from those data by sharing them with third parties -- namely, advertisers, marketers, and other data aggregators," the lawsuit claimed.

Facebook's VR Future Under Threat From Possible Court Order

It's hard to read the future in tea leaves, especially if you don't believe in them -- except for an occasional sip of herbal tea.

So predicting the future of Facebook's legal battle over its virtual reality headset is, well, certainly not our cup of Nostradamus. We're just lawyers, not soothsayers. Like that's going to stop us ...

Anyway, Facebook is going to settle or lose. We can say that with some confidence because a jury already decided that Facebook infringed on a copyright for the VR technology in the case.

Going From Government to In-House: Tips and Warnings

If you are looking to leave a government job to work for a corporation, here's a tip: maybe you should look elsewhere.

Literally, you may have to change your search parameters because the Google results for "government lawyers leaving for corporate work" is not very encouraging. Even Corporate Counsel, a top-tier result for anything related to corporate counsel, makes it look like a daunting task.

It might take searching for "how to use government experience in the private sector" or "how lawyers can make more money without losing government benefits" to get better results. With that in mind, here are some tips -- and warnings -- about leaving government work: