Commercial Litigation Update

Since the U.S. Supreme Court’s landmark Loper[1] decision, which overturned the longstanding precedent of the Chevron doctrine for agency deference, it was anticipated that lower courts, as well as the Supreme Court, would begin to decide whether specific deference to agency interpretation and power was appropriate, likely on a policy-by-policy and agency-by-agency basis. As expected, in the few short months since the Loper decision, the SEC and FINRA’s administrative power to seek and award civil penalties in their in-house disciplinary function has been called into question.

Specifically, alongside and in the same term as Loper, the Supreme Court decided SEC v. Jarksey, which reviewed whether the Seventh Amendment entitles a defendant to a jury trial when the SEC seeks civil penalties for securities fraud.  In Jarksey, the Supreme Court held that, “[w]hen the SEC seeks civil penalties against a defendant for securities fraud, the Seventh Amendment entitles the defendant to a jury trial.”

Mistakes sometimes happen. One of the most serious mistakes attorneys can make is to inadvertently disclose privileged or otherwise protected information during discovery. This may sound easy, but in the electronic era, where electronic documents with metadata are the norm, this creates special difficulties.

On January 9, 2023, the Supreme Court held oral arguments on a significant issue regarding the application of the attorney-client privilege in a case called In re Grand Jury, Docket No. 21-1397, 598 U.S. ___ (2023). In re Grand Jury was appealed to the Supreme Court from the Ninth Circuit. The issue before the Supreme Court was which test should apply to a “dual-purpose” communication. A dual-purpose communication occurs when a communication may have a business purpose, but also asks for legal advice. This type of communication is typical between lawyers providing both legal and business advice to employers, and it is very common for lawyers in an in-house counsel role to frequently have dual-purpose communications with their employers. Although the Supreme Court decided to dismiss the writ of certiorari after oral arguments occurred in this case, it is important to understand why this test would have been significant to all different types of attorneys, especially because it is becoming increasingly more common for attorneys to wear “two hats” by providing both business advice and legal advice regularly to clients.