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Wake Up Call: Class Action Targets JPMorgan on Covid Relief Loans

April 27, 2020, 12:36 PM

In today’s column, more law firms announced Covid-19 austerity moves; a Brazilian aircraft maker is vowing to sue Boeing Co. after the U.S. giant abandoned their proposed $4.2 billion tie-up; Boeing is also combining its legal and compliance functions; Massachusetts said it will offer its own online bar exam in September, if Covid-19 makes it impossible to hold a traditional exam; Armstrong Teasdale launched an office in Salt Lake City, Utah; and a Washington judge okayed the FTC’s Facebook’s record $5 billion privacy settlement; Celgene’s former corporate transactions senior counsel joined Lowenstein Sandler.

  • Leading off, Chicago-based Edelson PC, best known for privacy class actions against major tech companies, filed a proposed class action accusing JPMorgan Chase Bank of favoring big corporations over small companies in efforts to get loans from the $349 billion Paycheck Protection Program, part of the Coronavirus Aid, Relief and Economic Security Act. Edelson filed the suit in Chicago federal court on behalf of Sha-Poppin Gourmet Popcorn. The suit also names two of Chase’s largest clients, Ruth’s Chris and Phunware Inc. and seeks to recruit a potentially large class of affected businesses. (Crain’s Chicago Business) (Law.com)

  • In the early phase of the Covid-19 shut-down, Big Law firms have sought to protect themselves from the economic impact of the pandemic by temporarily cutting equity partner draws, reducing pay for associates and staff, making staff furloughs and layoffs, and downsizing summer associate programs. But if the crisis goes on longer than expected, law firm leaders may have to cut their lawyer head count in more permanent ways, writes a former chief of Allen & Overy. (Legalbusiness.co.uk)

  • Recent firms making Covid-19 cuts, are Shearman & Sterling, which offered staff and attorneys “sabbaticals” on 30% pay; and Reed Smith, which after previous cuts, said it is deferring equity partner profit distributions. (Law.com International) Nelson Mullins said it’s temporarily cutting associates’ pay by 9% on a yearly basis. It also announced staff furloughs. (Above the Law) Akerman announced paycuts ranging 35% for partner draws; 25% for nonequity partners, of counsel, and consultants making over $150,000. Associates and staff making over $150,000 are getting a 15 percent pay cut; and other staff, a 10 percent cut.. (Above the Law)

  • The crisis could also be a big test of whether firms will stick with diversity efforts or repeat errors they made in the 2008 financial crisis, when cuts disproportionately fell on women and minorities. (BLAW)

  • Boeing Co. is walking away from its proposed $4.2 billion combination with Embraer SA’s commercial-aircraft business, ending years of talks, as Covid-19 forces planemakers to brace for a far smaller jetliner market. (Bloomberg News via BLAW)

  • As Big Law corporate departments are hit by a drop in M&A activity because of Covid-19, some of the biggest of them are pivoting to work that’s now in demand, such as negotiating new credit, restructuring existing debt, and advising on a range of offerings and refinancings. (American Lawyer)

  • Amazon.com is still closed in France after losing its court appeal in its fight to be able to sell the full range of its products in France. Amazon’s lawyers couldn’t convince French judges that the company has taken measures to protect workers from the coronavirus. According to French reports, Amazon is represented by Clifford Chance in the appeal. (Bloomberg News)

Lawyers, Law Firms

  • A former Delaware Supreme Court chief justice, Leo Strine, joined Wachtell as a partner. Among other things, he’s known for being a critic of investor-driven corporate actions. (BN via BLAW)

  • Several current and former Big Law attorneys are advising in negotiations that could decide the future of minor league baseball. (BLAW)

  • The former general counsel of a Texas commercial real estate development firm is suing the company for allegedly firing her because she insisted on working remotely as required by a local stay-at-home order. (Corporate Counsel)

  • St Louis-based Armstrong Teasdale is the latest Big Law firm to open an office in Salt Lake City, Utah, which has been growing as hub for tech and other business. (American Lawyer)

Pro Bono

  • A Michigan federal appeals court ruled that students in the low-performing Detroit school system have a constitutional right to literacy. Sidley Austin argued for plaintiffs. Several other Big Law firms participated pro bono in the case. (WaPo)

  • The Asian American Bar Association of New York, with Simpson Thacher & Bartlett, published a list of Covid-19 related resources and information, on issues including anti-Asian harassment and violence, immigration, housing, unemployment and small business assistance, among others. (AABANY.org)

Laterals, Moves

  • Former Celgene Corp. vice president and senior counsel of corporate transactions, Mary Storella, joined Lowenstein Sandler in Madison, New Jersey, as senior counsel, vice chair of the firm’s life sciences group and head of life sciences transactions. At Celgene, Storella played a leading role in the company’s $67 billion sale to Bristol Myers Squib. She previously spent a dozen years in-house at Merck & Co. (Lowenstein.com)

  • DLA Piper said veteran in-house health care and industrial products lawyer Daniel Garen joined the firm’s litigation and regulatory practice as a partner in Washington. According to his LinkedIn, he was most recently a principal at Pivot Point Compliance Management. (DLAPiper.com)

Technology

  • Two Alston & Bird partners launched Women In Cyber, a network to introduce female in-house and private practice lawyers to cybersecurity female professionals to discuss cybersecurity’s enterprise risks. (Legaltech News)

  • Facebook Inc.'s record $5 billion settlement with the Federal Trade Commission over data-sharing practices won court approval in Washington. (BLAW)

Legal Education

  • Massachusetts is the first jurisdiction to say it will offer its own online bar exam in September, if that is necessary because of Covid-19. (Law.com)

To contact the correspondent on this story: Rick Mitchell in Paris at rMitchell@correspondent.bloomberglaw.com

To contact the editors responsible for this story: Rebekah Mintzer at rmintzer@bloomberglaw.com; Darren Bowman at dbowman@bloomberglaw.com

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