Law, disrupted

John Quinn is joined by Robert Loigman, partner in Quinn Emanuel’s New York office, and Eric Winston, partner in Quinn Emanuel’s Los Angeles office.  They discuss the extensive litigation that has followed the 2008 collapse of Bernie Madoff’s Ponzi scheme.  The litigation stems from a liquidation by a court-appointed trustee under the Securities Investor Protection Act (SIPA).  The primary goal of the liquidation was to recover assets for Madoff’s victims.  The litigation has continued for 17 years, so far, because of the number of parties involved and the multitude of proceedings and appeals in both the U.S. and foreign courts.The trustee has pursued clawback claims against “feeder funds” under fraudulent transfer theories, targeting both “net winners” who withdrew more than they invested and “net losers” who withdrew less than they invested.  After the estate recovered $7 billion recovery from one feeder fund, investors began to anticipate higher recoveries than normally occur in SIPA proceedings.  Over time, a secondary market in Madoff claims developed, with distressed asset investors buying claims at steep discounts and profiting when recoveries exceeded expectations.  The Madoff litigation has led to several significant legal developments.  One key issue involved included the safe harbor under the Bankruptcy Code for good faith conduct.  Initially, a judge in the SDNY ruled that to show a lack of good faith, a trustee must show that an investor was willfully blind to the fraud at issue.  In 2021, the Second Circuit ruled that simple inquiry notice is enough, placing a greater burden on investors to investigate irregularities.Another significant legal development was the Second Circuit’s ruling that U.S. bankruptcy law could reach transfers between foreign debtors and foreign transferees, expanding the potential reach of clawback efforts.  Finally, the Second Circuit ruled that in a Chapter 15 bankruptcy case, certain U.S. standards would apply to transactions between foreign entities even though the foreign courts with jurisdiction over the entities would apply different standards.The uniquely large and visible fraud in the Madoff litigation case may have led courts to expand legal doctrines in ways that affect bankruptcy and investor litigation more generally.Podcast Link: Law-disrupted.fmHost: John B. Quinn Producer: Alexis HydeMusic and Editing by: Alexander Rossi

John is joined by Christopher D. Kercher, a partner in Quinn Emanuel’s New York office. They discuss the recent win Chris’s team achieved in a Delaware Chancery Court trial involving a high-stakes case involving Desktop Metal and Nano Dimension. The dispute centered around a merger agreement that included a "hell or high water" clause obligating Nano, the buyer, to do whatever was necessary to secure regulatory approval from the Committee on Foreign Investment in the United States (CFIUS), with a narrow exception if required actions would result in a loss of 10% or more of the company’s revenue.After the agreement was signed, a hedge fund replaced Nano’s board and management with personnel opposed to the deal. The new board then sought ways to back out. Although CFIUS approval was near, Nano’s new leadership began stalling, making endless counterproposals, delaying communications, and attempting to trigger the revenue-loss exception by claiming that a requirement to maintain a German facility would exceed the 10% threshold.While the buyer tried to appear compliant with the contract, the evidence—particularly a 38-day gap in responding to CFIUS—revealed a pattern of bad faith and delay. Desktop Metal, struggling financially, was meticulous in adhering to operating covenants, collecting receivables and consulting Nano on business decisions, knowing any misstep could be weaponized to kill the deal. Despite pressure, the seller never received a renegotiation offer from Nano.At trial, the team presented the buyer’s conduct as a strategic “slow-walk.” The court ultimately agreed, affirming that a hell or high water clause must be honored in both letter and spirit. The case serves as a reminder that efforts to evade deal obligations—particularly those cloaked in delay or technicalities—will be exposed under judicial scrutiny, and that Delaware courts remain committed to upholding contractual integrity in complex M&A transactions.Podcast Link: Law-disrupted.fmHost: John B. Quinn Producer: Alexis HydeMusic and Editing by: Alexander Rossi

John is joined by Spencer Collins, Executive Vice President and Chief Legal Officer of Arm Holdings, the UK-based semiconductor design firm known for powering over 99% of smartphones globally with its energy-efficient CPU designs.  They discuss the legal challenges that arise from Arm’s unique position in the semiconductor industry. Arm has a unique business model, centered on licensing intellectual property rather than manufacturing processors. This model is evolving as Arm considers moving “up the stack,” potentially entering into processor production to compete more directly in the AI hardware space.  Since its $31 billion acquisition by SoftBank in 2016, Arm has seen tremendous growth, culminating in an IPO in 2023 at a $54 billion valuation and its market value nearly doubling since.AI is a major strategic focus for Arm, as its CPUs are increasingly central to AI processing in cloud and edge environments.  Arm’s high-profile AI projects include Nvidia’s Grace Hopper superchip and Microsoft’s new AI server chips, both of which rely heavily on Arm CPU cores.   Arm is positioned to be a key infrastructure player in AI’s future based on its broad customer base, the low power consumption of its semiconductors, and their extensive security features. Nvidia’s proposed $40 billion acquisition of ARM collapsed due to regulatory pushback in the U.S., Europe, and China.  This led SoftBank to pivot to taking 10% of Arm public.  Arm is now aggressively strengthening its intellectual property strategy, expanding patent filings, and upgrading legal operations to better protect its innovations in the AI space.Spencer describes his own career path—from law firm M&A work to a leadership role at SoftBank’s Vision Fund, where he worked on deals like the $7.7 billion Uber investment—culminating in his current post.   He suggests that general counsel for major tech firms must be intellectually agile, invest in best-in-class advisors, and maintain geopolitical awareness to navigate today’s rapidly changing legal and regulatory landscape.Podcast Link: Law-disrupted.fmHost: John B. Quinn Producer: Alexis HydeMusic and Editing by: Alexander Rossi

Caleb Harris, Co-Founder and CEO of &AI, discusses how his startup is revolutionizing patent litigation with artificial intelligence. They delve into AI's role in tasks like invalidity analysis and infringement assessment, significantly cutting down on time and costs. &AI harnesses publicly available data to rapidly generate legal documents, geared for accuracy while minimizing errors. The conversation also explores the challenges of courtroom dynamics and the ongoing need for human expertise in navigating this groundbreaking landscape.

John is joined by Maaren A. Shah and Luke Nikas, both partners in Quinn Emanuel’s New York office.  Maaren and Luke have the top art disputes practice in the world.   They discuss Maaren and Luke’s recent victory in the multi-front litigation concerning the legacy of American pop artist Robert Indiana, best known for his iconic LOVE sculpture. The case began when Indiana’s longtime advisor, who held exclusive rights to fabricate Indiana’s works, discovered that Michael McKenzie was creating and selling unauthorized artworks.  This led to a copyright and trademark infringement lawsuit.At the time, Indiana was elderly, isolated on an island off the coast of Maine, and physically deteriorating.  Indiana’s situation was worsened by a coordinated effort by several individuals to cut him off from his longtime supporters and assume control over his name, artwork, and brand. The day after the initial lawsuit was filed, Indiana passed away, causing further complications.  His estate sought to terminate contracts with the advisor and seize control of its intellectual property rights and valuable inventory of Robert Indiana artworks.  The legal fight quickly expanded into multiple jurisdictions with overlapping lawsuits involving McKenzie, the advisor, the estate, and the sole beneficiary of the estate, a charitable foundation called the Star of Hope.  Maaren and Luke formed an alliance with the Star of Hope and the Maine Attorney General’s office, which regulated the foundation.  They secured an agreement with the foundation ensuring the advisor would retain its rights, inventory, and business role regardless of the outcome of the litigation with the estate, rendering that litigation moot.  The Estate quickly buckled and ended its pursuit of the advisor.With the advisor’s rights and assets secured, the team turned back to McKenzie, who had previously misrepresented the number of Indiana works in his possession.  After the team uncovered numerous hidden artworks and secured devastating testimony from McKenzie’s former associate, among others, the court imposed terminating sanctions, including dismissing McKenzie’s claims and awarding the advisor its attorney’s fees.  The victory ultimately protects Indiana’s legacy and ensures stability in the market for his art.Podcast Link: Law-disrupted.fmHost: John B. Quinn Producer: Alexis HydeMusic and Editing by: Alexander Rossi

John is joined by Samuel L. Bray, the John N. Matthews Professor of Law at Notre Dame Law School.  They discuss the increasing—and controversial— use of universal (often called “nationwide”) injunctions.  Universal injunctions are court orders that block government policies not just for the parties to a case, but for everyone, including nonparties to the litigation.  The term “nationwide injunctions” suggests that the controversy over them stems from the geographic scope of the injunctions.  However, federal district courts have long issued nationwide and international injunctions in many fields, including patent enforcement.  The issue raised by universal injunctions is that they regulate the government’s behavior toward non-parties.Universal injunctions have proliferated in the past ten years, with nearly every major presidential initiative—regardless of administration—being halted by a single district court judge somewhere in the country.  Historically, such sweeping injunctions were virtually nonexistent until the 1960s.  Injunctions would apply only to the parties in a case, allowing the legal issues to percolate through multiple appellate courts before potentially reaching the Supreme Court for definitive resolution.Proponents argue that universal injunctions ensure equality and efficiency by preventing unconstitutional policies from being applied to anyone, not just the plaintiffs in the case at hand.  Critics argue universal injunctions undermine democratic governance, short-circuit legal development, and encourage forum shopping and rushed decision-making.  These injunctions may also produce class action outcomes without meeting the legal requirements for a class.The Supreme Court is now poised to address the issues posed by universal injunctions, in a case involving birthright citizenship.  Professor Bray believes the Court will limit universal injunctions using the equitable tradition codified in the Judiciary Act, which did not historically allow such remedies.  He expects the Court to reaffirm that injunctions should provide relief only to the parties in the case unless a class is certified.Podcast Link: Law-disrupted.fmHost: John B. Quinn Producer: Alexis HydeMusic and Editing by: Alexander Rossi

John is joined by Jesse Bernstein, Partner in Quinn Emanuel’s New York Office and Co-Chair of the Securities Litigation Practice.  Jesse explains that the term “securities” applies not only to stocks and bonds, but arguably to any situation where a group of investors place their resources into a common entity where they expect to make profits from the efforts of others.  He describes the sources of securities law, including state blue sky laws, the Securities Act of 1933 (which focuses on initial issuances), the Securities Exchange Act of 1934 (which focuses on intentional misrepresentations in securities transactions and the Private Securities Litigation Reform Act of 1995 (which sought to curb perceived abuses in securities litigation by raising the pleading standards required to establish scienter and creating a safe harbor for forward looking statements).  They discuss the Supreme Court’s recent ruling in Moab Partners v. Macquarie Infrastructure that pure omissions of material fact are not actionable under Rule 10(b)(5) because the rule only covers affirmative misstatements.  Jesse then explains how a Quinn Emanuel team obtained a jury verdict last year in Elon Musk’s favor in a rare securities class action trial on a $12 billion claim based on Mr. Musk’s tweet about taking Tesla private.  He describes the arguments made concerning materiality and loss causation that ultimately led to the victory.  Finally, they discuss upcoming issues in securities law including how the Macquarie decision will impact cases. Podcast Link: Law-disrupted.fmHost: John B. Quinn Producer: Alexis HydeMusic and Editing by: Alexander Rossi

Michael Barlow, Managing Partner at Quinn Emanuel’s Wilmington office, delves into the shifting landscape of Delaware corporate law. He highlights the growing dissatisfaction with legal treatments involving conflicted transactions and discusses the MFW framework's limitations. Barlow shares insights from a rare case where his team achieved a complete dismissal regarding a preferred stock transaction. The conversation also explores the implications of new definitions around controlling shareholders and legislative changes aimed at enhancing corporate governance.

Christopher Padilla, Senior Advisor at the Brunswick Group and former Under Secretary of Commerce for International Trade, delves into the legal storm surrounding President Trump’s tariffs. He explains the unusual application of the International Emergency Economic Powers Act to impose tariffs, which traditionally doesn't mention them. Padilla discusses ongoing lawsuits questioning this authority, exploring arguments about congressional approval, separation of powers, and the implications for future executive power. The conversation sheds light on a pivotal moment in U.S. trade law.

John is joined by Christopher Kercher, partner in Quinn Emanuel’s New York office, and Jeffrey Chivers, co-founder of litigation AI company Syllo AI.  They discuss the transformative role artificial intelligence played in a recent Quinn Emanuel trial victory in Delaware Chancery Court.  The case involved Desktop Metal's attempt to force Nano Dimension to complete a $183 million merger, where Nano tried to stall the deal by slow-walking regulatory approvals by the Committee on Foreign Investment in the United States until the drop-dead date for the transaction had passed.  Quinn Emanuel was hired to represent Desktop Metal only six weeks before trial, requiring an accelerated approach to discovery and case preparation.  The team used Syllo AI, a litigation focused product that allowed them to review and organize massive volumes of documents through natural language prompts, create timelines, tag relevant material, and identify patterns much faster than traditional methods.  The Syllo platform also integrates multiple AI models that cross-check each other’s outputs while following built-in mental models of legal reasoning.  During the trial, Syllo customized its tools to provide rapid privilege log and document production deficiency analysis, helping to identify gaps in the opposing side’s discovery.  The team also worked with Claude, a large language model developed by Anthropic to test ideas, explore potential legal theories, and brainstorm approaches to witness examinations.  Syllo and Claude helped attorneys identify relevant evidence for use in expedited post-trial briefs and suggested potential lines of questioning for depositions.  Attorneys directed all AI usage, with Claude serving as a cognitive tool that amplified the legal team’s capabilities while the attorneys maintained full responsibility for all work product.  AI did not displace anyone on the trial team. Instead, it complemented the attorneys' expertise, enhancing their ability to deliver strategic insights and respond effectively to case developments.  It may soon become malpractice not to use AI in trial preparation.Podcast Link: Law-disrupted.fmHost: John B. Quinn Producer: Alexis HydeMusic and Editing by: Alexander Rossi