Legal News for Tues 6/16 - Fisker Inc. Bankruptcy, Amazon Union Allies with Teamsters, New EPA PFAS Regs, J&J Talc Battle Rages on and IRS Needs to go Remote-First

Minimum Competence

This Day in Legal History: Posse Comitatus Act Passed

On June 18, 1878, the U.S. Congress passed the Posse Comitatus Act, a significant piece of legislation that shaped the relationship between the military and civil authorities. The Act made it a felony to use the Army to enforce domestic policies without explicit authorization from Congress or the Constitution. This law emerged from the Reconstruction era's complexities, particularly the federal military's role in enforcing laws in the Southern states post-Civil War. The term "posse comitatus" translates to "power of the county," and the Act aimed to reinforce the principle that civil authorities should maintain law and order without military involvement. The Posse Comitatus Act reflected a commitment to preventing military overreach in civilian matters and preserving democratic governance structures. This principle has influenced various legal and military policies over the years, including modern discussions on the military's role in domestic security. The Act underscores the balance between maintaining national security and protecting civil liberties, a balance that remains a cornerstone of American legal and political thought.

Fisker Inc., an electric-vehicle startup, filed for bankruptcy after halting production of its problematic Ocean SUV. The company's filing in Delaware lists assets between $500 million and $1 billion and liabilities between $100 million and $500 million. This bankruptcy protects Fisker from creditors while it plans repayment.

Henrik Fisker, known for designing BMW and Aston Martin cars, founded Fisker Inc., his second EV venture to face bankruptcy. His previous company, Fisker Automotive, also went bankrupt in 2013. Fisker Inc. went public in 2020 through a SPAC merger, raising roughly $1 billion and partnering with Magna International Inc. for vehicle manufacturing.

Production of the Fisker Ocean SUV began in November 2022 but was plagued by missing features and software bugs. Influential YouTuber Marques Brownlee's negative review in February further damaged the company's reputation. Fisker produced over 10,000 vehicles but delivered fewer than 5,000 to customers.

The company tried partnering with franchised dealers but faced significant financial difficulties, warning in February about its uncertain future. Although it secured $150 million from a lender, a potential deal with an automaker fell through. Magna International, a partner, halted further production of the Ocean SUV. Fisker's bankruptcy highlights broader challenges in the EV market, with several other startups also filing for bankruptcy amid slowing sales in the U.S. and Europe.

Troubled Electric Vehicle Maker Fisker Files for Bankruptcy

Union members at Amazon.com Inc. have voted overwhelmingly to align with the International Brotherhood of Teamsters, a major U.S. labor organization, in a move that could significantly impact staff contract negotiations. About 98% of the Amazon Labor Union (ALU) members supported this partnership, aimed at securing better jobs and working conditions for Amazon employees.

The ALU, which achieved a historic win in 2022 by organizing workers at an Amazon facility in Staten Island, faced setbacks in subsequent elections and internal conflicts. The union struggled to bring Amazon to the negotiating table. However, ALU President Chris Smalls and 15 other officials reached an agreement with Teamsters President Sean O’Brien and his team in Washington. The Teamsters represent approximately 1.3 million people.

This collaboration between the ALU and the Teamsters signals a significant step forward in labor organizing efforts at Amazon, potentially increasing pressure on the company to engage in meaningful negotiations with its workers. Amazon did not immediately respond to requests for comment outside normal business hours.

Amazon Union Allies With Teamsters in Big Labor Advance

The EPA's new limits on PFAS in drinking water are a positive step but more comprehensive regulations are needed to manage the release and disposal of these harmful chemicals. At a recent conference, stakeholders including parents, firefighters, and farmers discussed the need for broader measures to eliminate nonessential PFAS uses and enforce stricter waste management practices.

CDC data shows that reducing PFAS in drinking water correlates with lower blood levels of the chemicals in residents, validating the EPA's efforts. However, the current rules do not prevent the release of PFAS into water or apply to private wells, affecting millions of people.

Environmental advocates emphasized the necessity of treating PFAS as hazardous wastes under the Resource Conservation and Recovery Act (RCRA). The EPA's recent designation of certain PFAS as hazardous under the Superfund law aids cleanup efforts but falls short of comprehensive waste regulation. Proper disposal methods are critical to prevent further contamination, yet data on PFAS waste disposal is limited due to insufficient regulation.

Participants called for more stringent discharge permits under the Clean Water Act and quicker implementation of hazardous waste rules. PFAS, widely used in industries like semiconductors and battery production due to their stability and resistance to damage, require robust management to prevent environmental and health risks.

Examples of contamination were highlighted, including high PFAS levels from military bases causing serious health issues. The EPA's database on waste transfers shows significant amounts of PFAS-contaminated materials being sent to incinerators and other facilities, underscoring the need for better waste tracking and management.

Advocates stress that eliminating unnecessary PFAS uses and implementing strong regulatory measures are essential steps to protect communities and the environment from long-term PFAS contamination.

PFAS Drinking Water Limits Praised but More Regulations Sought

In the ongoing litigation over Johnson & Johnson’s (J&J) allegedly cancer-causing baby powders, a new legal battle has emerged over attorney-client privilege. Plaintiffs' lawyers accuse J&J of misusing the bankruptcy process to evade liability and are pushing for the crime-fraud exception to force the company to disclose internal communications. This could reveal J&J’s strategies to limit liability in around 61,000 talc-related cases.

The litigation involves J&J's use of the "Texas Two-Step," where it transfers liabilities to a subsidiary, which then files for bankruptcy. This maneuver has been met with controversy and legal challenges. Plaintiffs' attorneys argue that J&J’s actions are fraudulent attempts to avoid liability and are calling for these communications to be made public to bolster their case.

In a recent development, the plaintiffs are also seeking to disqualify some lawyers representing J&J and to prevent the company from proceeding with an $11 billion global settlement plan. This settlement, which requires approval from 75% of the plaintiffs, has faced opposition from some plaintiffs' firms.

Despite J&J's efforts to resolve the litigation, the plaintiffs’ legal team argues that more needs to be done to ensure justice for those affected by the contaminated talc products. They are also challenging J&J’s use of bankruptcy as a tactic to force settlements and are pushing for the court to invalidate J&J’s attorney-client privilege in this context.

The outcome of this legal battle could significantly impact the strategies used in large-scale product liability cases, particularly those involving mass torts and bankruptcy.

J&J’s Talc Litigation Saga Gets Attorney-Client Privilege Twist

The IRS should adopt a remote-first work model to attract top talent and enhance operational efficiency. The COVID-19 pandemic proved that remote work is not only viable but also desirable for many employees, particularly in the tech sector. As the IRS continues to modernize with advanced technologies like AI and machine learning, it needs to recruit top-tier tech talent. Offering remote work can help attract this talent by allowing employees to work from anywhere, increasing job satisfaction and expanding the pool of potential applicants.

The Treasury Department has found that job postings highlighting flexible working arrangements attract more applicants. Additionally, the IRS can save on overhead costs by reducing its physical office footprint, which remains significant despite many employees working remotely part-time.

A remote-first approach would also help the IRS compete with private sector tech firms, which have successfully used remote work to attract employees despite offering lower salaries. This flexibility would enable the IRS to draw a diverse workforce, fostering a variety of perspectives and ideas. Existing policies limiting remote work to within 200 miles of an office need reform to maximize employee flexibility.

Security is a critical concern, given the sensitive nature of taxpayer information the IRS handles. However, research indicates remote workers are often more aware of cybersecurity practices. To support a remote-first model, the IRS would need to invest in tech infrastructure and rework management and accountability measures to focus on outcomes rather than hours worked. Embracing remote work is essential for the IRS to continue modernizing and improving taxpayer interactions.

IRS Should Embrace Remote-First Culture to Recruit Top Talent

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