Legal News for Thurs 6/13 - Tesla Shareholders Vote on Musk Pay Package, Disney 15-Year Expansion Deal With Florida and SCOTUS Reviews SEC In-house Judges

Minimum Competence

This Day in Legal History: Miranda Rights

On June 13, 1966, the U.S. Supreme Court delivered a landmark ruling in Miranda v. Arizona, fundamentally transforming the criminal justice system. The Court held that suspects must be informed of their rights prior to police interrogation, a decision aimed at protecting the Fifth Amendment right against self-incrimination. This ruling introduced what is now known as "Miranda rights," which include the right to remain silent, the right to an attorney, and the warning that anything said can be used in court. The case arose from Ernesto Miranda's conviction based on a confession obtained without these warnings, which the Court deemed unconstitutional. Chief Justice Earl Warren emphasized the necessity of procedural safeguards to ensure suspects' awareness of their rights. This decision has since become a cornerstone of American legal procedure, significantly influencing law enforcement practices nationwide. The Miranda warning aims to prevent coercion and ensure fair treatment, highlighting the importance of individual rights within the justice system.

Today, Tesla shareholders are voting to approve Elon Musk's $56 billion pay package and relocate the company's legal home to Texas. Musk announced on social media that the pay package and relocation were passing by wide margins. Approval of this substantial pay deal could alleviate investor concerns about Musk's future at Tesla and support the company's efforts to reverse a court decision that voided the pay package. However, the decision may still face challenges in the Delaware court, where a judge previously ruled that Tesla's board was too influenced by Musk. Despite the shareholder vote, legal experts, such as UC Berkeley's Adam Badawi, are uncertain if the court will uphold it.

Tesla's stock rose significantly in premarket trading following the announcement. The final voting results will be disclosed at a shareholder meeting in Texas. Major proxy firms had advised against the pay package, but a mix of institutional and retail investor votes helped secure its passage. Shareholders also voted on relocating Tesla's legal headquarters and re-electing board members Kimbal Musk and James Murdoch. This vote is seen as a test of confidence in Musk's leadership amid Tesla's recent challenges, including a significant drop in stock value since 2021 and concerns about Musk's commitments across his multiple ventures.

Musk says Tesla shareholders voting yes for his $56 billion pay package | Reuters

Disney and Florida Governor Ron DeSantis have resolved their dispute with a deal allowing Disney to develop the Walt Disney World Resort near Orlando for the next 15 years. The feud began in 2022 when former Disney CEO Bob Chapek criticized a state law limiting discussions of sexuality and gender issues in schools, known as the "Don't Say Gay" law. The new agreement, made with the Central Florida Tourism Oversight District, commits Disney to spending at least $8 billion over a decade and $17 billion over 10 to 20 years on the resort. This investment will include expanding affordable housing, ensuring 50% of the spending benefits Florida businesses, and potentially building a fifth theme park, retail and office spaces, and 14,000 additional hotel rooms. Disney President Jeff Vahle highlighted that the agreement facilitates significant investments in the resort. This deal follows a settlement in March to end a lawsuit over control of the special district encompassing Walt Disney World.

Disney, Florida's DeSantis end spat with deal on 15-year expansion plan | Reuters

The U.S. Supreme Court is set to rule on the constitutionality of the Securities and Exchange Commission's (SEC) use of in-house judges for adjudicating enforcement actions. This decision could have significant consequences for other federal agencies that employ similar systems. The SEC employs administrative law judges who handle cases referred by the agency's commissioners. These judges conduct hearings, issue subpoenas, and make initial decisions on sanctions, which are then reviewed by the commissioners. This process is generally faster and more specialized than federal court proceedings.

The challenge originates from George Jarkesy, a hedge fund manager fined by the SEC in 2013 for securities fraud. Jarkesy contested the SEC's in-house system, and the Fifth Circuit Court of Appeals ruled in 2022 that these proceedings violate the Seventh Amendment's right to a jury trial. This ruling has prompted the Supreme Court to review the case.

During a November hearing, the Supreme Court's conservative justices expressed doubts about the legality of the SEC's in-house system, particularly its exclusion of jury trials for fraud charges. Chief Justice John Roberts questioned the constitutionality of depriving individuals of a jury trial based on the government's decision.

If the Supreme Court decides to limit or abolish the SEC's in-house courts, it could affect not only the SEC but also other federal agencies like the Environmental Protection Agency, the Labor Department, and the Commodity Futures Trading Commission. These agencies might face slower enforcement actions, increased resource demands, and challenges in targeting misconduct without the use of in-house tribunals.

Explainer: What is the US SEC's in-house court under Supreme Court review? | Reuters

First, some very brief background. Qualified immunity is a legal doctrine that shields government officials, including law enforcement, from liability for civil damages unless they violated a clearly established statutory or constitutional right. It is intended to protect officials from lawsuits over actions taken in their official capacity, provided their conduct does not violate clearly established laws.

Recently, the Sixth Circuit Court of Appeals told the Ohio Attorney General (AG) to stop blocking a ballot initiative aimed at ending qualified immunity. This initiative arose from widespread public dissatisfaction with various forms of immunity that often protect government employees from lawsuits. Ohio residents have been trying to place a measure on the ballot to eliminate these immunities. However, the Ohio AG, David Yost, has repeatedly refused to certify the proposed amendment, preventing it from advancing.

We'll have to see what Ohio decides, but this development could pave the way for similar initiatives in other states. If Ohio successfully places the measure on the ballot and it gains voter approval, it may inspire activists and lawmakers in other jurisdictions to pursue comparable reforms. The outcome in Ohio could set a precedent and generate momentum for a broader movement to reassess and potentially limit qualified immunity across the United States.

Sixth Circuit Tells Ohio AG To Stop Blocking Ballot Initiative Calling For End Of Qualified Immunity | Techdirt

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