Legal News for Mon 6/10 - Cities Grapple with EPA Lead Pipe Mandate, Musk Seeks Small Shareholder Support, Law Firm Defense for $5.6b Fee Case and Federal Data Privacy Law News

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This Day in Legal History: Discriminatory Districting

On June 10, 1946, the US Supreme Court rendered a pivotal decision in Colegrove v. Green, which upheld the validity of uneven congressional districting plans. The case involved a challenge to Illinois' districting plan that disproportionately concentrated voters into large districts in the central part of the state, failing to balance districts according to population. The plaintiffs argued that this uneven distribution diluted their voting power, violating the principle of equal representation.

However, the Supreme Court, led by Justice Felix Frankfurter, ruled against the plaintiffs. The Court held that issues of districting were "political questions" not subject to judicial review, thereby placing the responsibility for fair districting on state legislatures and Congress. Justice Frankfurter famously stated that courts should not "enter the political thicket," emphasizing the separation of powers and judicial restraint.

This ruling had significant implications for the future of electoral fairness, as it effectively removed federal judicial oversight from the districting process. Nevertheless, the decision in Colegrove was short-lived. Less than two decades later, the Supreme Court reversed its stance in the landmark case of Baker v. Carr (1962). In Baker, the Court established judicial standards for addressing political questions, paving the way for greater judicial intervention in ensuring equitable districting practices.

The evolution from Colegrove v. Green to Baker v. Carr marked a transformative shift in the judicial approach to electoral districting, underscoring the dynamic nature of constitutional interpretation and the judiciary's role in safeguarding democratic principles. The concept of the political question doctrine, pivotal in these cases, defines the limits of judicial intervention in matters deemed more appropriately addressed by other branches of government.

Cities across the U.S. are grappling with an October deadline to inventory their lead drinking water pipes, a precursor to the EPA's proposed mandate for full replacement within ten years. Charleston, S.C., for example, faces a daunting task with its 6,100 lead pipes, estimating a cost of $100 million for complete removal. The city's water system, like many others, is concerned about the financial burden on utilities and customers.

To comply with the Environmental Protection Agency's (EPA) proposed Lead and Copper Rule Improvements (LCRI), water systems would need to replace 10% of their lead pipes annually from 2027 to 2037, a significant increase from the current requirement of 3% per year. This expedited timeline aims to reduce the risk of lead poisoning from drinking water, a priority for the Biden administration. Despite the 1986 ban on lead service lines, approximately 9.2 million remain in the U.S., primarily in states like Florida, Illinois, Ohio, Pennsylvania, and Texas.

The initial step is to identify all lead service lines by October 16, using historical records, excavation, and computer modeling. Cities like Chicago, Cleveland, and New York have significant numbers of lead pipes, while Philadelphia and Baltimore report many service lines of unknown material. Some smaller systems, particularly in Ohio, struggle with the manpower and funding to meet this deadline.

While cities such as Denver and Milwaukee are ahead in their inventories, many others argue that full replacement within a decade is unrealistic without additional federal funding. The Philadelphia Water Department and Baltimore's Bureau of Water and Wastewater have requested more flexible timelines or replacement criteria based on lead levels in water.

Charleston, alongside other cities, urges the EPA to reconsider the stringent mandates, highlighting the substantial cost and resource challenges. The debate continues as the EPA reviews feedback and prepares to finalize the LCRI regulations.

Cities Face ‘Impossible’ Deadline to Remove 9 Million Lead Pipes

Tesla is seeking support from its large base of small shareholders to endorse Elon Musk's $56 billion pay package, as major institutional investors remain divided. The company's June 13 annual meeting will focus on this issue, following a Delaware court's ruling against the package. Tesla is campaigning to secure votes from retail investors, who tend to favor management but often don't vote.

Big investors have shown mixed reactions; T. Rowe Price supports the package, while others like the California Public Employees' Retirement System and Norway's sovereign wealth fund oppose it. Despite this, Tesla's retail investors, who make up a significant portion of the company’s ownership, might help pass the pay package. So far, around 90% of retail voters have backed Musk's compensation.

Tesla also proposes reincorporating in Texas and re-electing two directors, including Musk's brother. The outcome of these votes will indicate the level of confidence in Musk’s leadership. Proxy advisors Institutional Shareholder Services and Glass Lewis recommend voting against the pay package, citing its excessiveness. Historically, pay packages have a lower approval rate when both advisors oppose them.

Additionally, Tesla's outreach includes engaging with online influencers and offering factory tours to motivate shareholders to vote. Influential supporters like Omar Qazi and Alexandra Merz actively encourage voting on social media, highlighting the unique grassroots effort among Tesla's retail investors. This unprecedented mobilization reflects the strong community backing for Musk despite the contentious pay package.

Focus: Tesla turns to Musk's small shareholder fans to back $56 billion payday | Reuters

A law firm involved in a $5.6 billion settlement with Visa and MasterCard defended its role after disclosing it unknowingly submitted fake claims. Milberg Coleman Bryson Phillips Grossman informed a U.S. judge that other parties also submitted fraudulent material in the antitrust case. The firm, which terminated its relationship with nearly 2,000 merchant plaintiffs, claims it is being unfairly singled out.

Visa and MasterCard settled in 2018 to resolve overcharge claims from millions of merchants. Milberg, which did not help craft the settlement, sought funds for its clients but recently revealed withdrawing dozens of false claims due to a third-party referral source. The class attorneys suggested punishing Milberg or referring it to the U.S. Justice Department. Milberg countered that it is cooperating fully and called potential penalties "absurd."

Law firm defends work in $5.6 bln card fee case after disclosing fake claims | Reuters

A coalition of over 20 lobbying groups, led by TechNet, is urging Congress to amend the draft American Privacy Rights Act (APRA) to ensure it establishes a uniform national data privacy standard that preempts state laws. The coalition argues that the current draft perpetuates a "patchwork" of state regulations, causing confusion for consumers and hindering economic growth.

In a letter to House Energy and Commerce Chairwoman Cathy McMorris Rodgers and Ranking Member Frank Pallone, the coalition stressed the need for broader preemption to override state laws like California's Consumer Privacy Act and Illinois's Biometric Information Privacy Act. TechNet, representing major tech companies like Apple and Google, as well as smaller firms like Etsy and Instacart, expressed concern that limited preemption would result in significant compliance burdens.

The draft bill has not yet been formally introduced in either the House or the Senate. The coalition remains in discussions with some lawmakers to push for amendments that would ensure full preemption of state laws, aiming for a more streamlined federal standard. However, the path to passing federal privacy legislation remains uncertain.

Trade Groups Urge Congress to Beef Up Federal Data Privacy Power

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