The Supreme Court's December argument cycle, which began in November (don't ask) resumes today with a key securities fraud case, as well as a state tax case that will be argued by two former Gibson, Dunn & Crutcher associates on opposite sides. That's not all. Court practitioners are unhappy with the court's proposal to limit the length of briefs. But the court has the final word, so remember what Chief Justice John Roberts Jr. has said more than once: “I have yet to put down a brief and say, 'I wish that had been longer.'” We hope our 'brief' is not too long! Thanks for reading. Contact us at [email protected] and [email protected].

Kavanaugh's Recused In Securities Fraud Case

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A closely watched securities case set for argument this morning may be a nail-biter, because one of the nine justices will be absent. The case is Lorenzo v. Securities Exchange Commission, one of three cases in which new Justice Brett Kavanaugh announced in October that he would recuse himself.

The reason? Kavanaugh was on the panel of the U.S. Court of Appeals for the D.C. Circuit that decided the Lorenzo case before it was appealed to the high court.

The circuit decision, from which Kavanaugh dissented, took an expansive view of how many ways the SEC can go after securities fraudsters. The 2011 Supreme Court decision Janus Capital Group v. First Derivative Traders ruled that only the “maker”—the person with ultimate authority—of the false statements can be liable for the statements under Rule 10b-5(b).

The D.C. Circuit agreed, but said an underling—like Francis Lorenzo, in this case—could be held liable under two other adjacent rules dealing with fraudulent schemes. The SEC agreed.

This kind of repackaging of allegations to get around the Janus decision is giving business indigestion.Sidley Austin partner Kwaku Akowuah wrote in a brief for the Securities Industry and Financial Markets Association and the U.S. Chamber of Commerce:

“Civil litigation brought in pursuit of damages, in particular, imposes enormous burdens, including disruption of business, litigation costs, and settlement expenses. Enforcement actions brought by the government add the prospect of sanctions that can end an individual's career or criminal penalties that can include incarceration.”

Kavanaugh's dissent slammed the SEC for its “persistent efforts to end-run the Supreme Court,” and he would have erased scheme liability for Lorenzo altogether. So his absence won't help the securities industry.

A Cleary Gottlieb alert put it this way: Without Kavanaugh, “any attempt to limit the ability of the SEC or private plaintiffs to bring scheme liability claims could meet resistance from the court's four more liberal Justices, each of whom dissented from Janus, potentially resulting in a 4-4 split that would in effect affirm the D.C. Circuit's decision below.”

Representing Lorenzo will be Robert Heim of Meyers & Heim. Defending the SEC will be assistant to the solicitor general Christopher Michel, appearing pro hac vice.

Two Ex-Gibson Dunn Associates Face Off

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Meanwhile, in the other Monday argument, two former associates at the Gibson, Dunn & Crutcher's D.C. office will face off against each other in Dawson v. Steager, West Virginia State Tax Commissioner, a case that involves state taxing power.

Lindsay See, the new solicitor general of West Virginia, worked at Gibson Dunn from 2012 to 2017. She will defend the state's tax policy toward federal employees like James Dawson, a retired U.S. marshal.

On the other side supporting Dawson as an amicus curiae will be Michael Huston, an assistant to the U.S. solicitor general since last year. He worked at Gibson Dunn from 2014 to 2017, and clerked for Chief Justice John Roberts Jr. in 2013 and 2014. (A third lawyer will also argue: Jones Day partner Lawrence Rosenberg, who represents Dawson.)

The two Big Law alums could not be reached for comment, but Supreme Court veteran and Gibson Dunn partner Theodore Olson said he was happy See and Huston will be arguing in the same case.

“I think the world of both of them,” Olson said. “Fabulous lawyers, extremely wonderful to work with and very, very lovely people. I worked quite a bit with both of them. We miss them, and we're proud of them. I can't be there Monday as I have a First Circuit argument in Boston that day, but I would have made it otherwise.”

Ted Talk: Gibson's Boutrous on 'Legal Speak'

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Gibson Dunn appellate veteran Ted Boutrous (above right), who successfully challenged the White House's revocation of CNN reporter Jim Acosta's press credentials, speaks with our colleague C. Ryan Barber in Washington on Law.com's latest Legal Speak podcast.

Boutrous talks about going up against the Trump White House, and he shares how he juggles myriad high profile cases. He had this to say about Chief Justice Roberts's recent rebuke of Trump over his latest dig at federal judges:

“I was very glad to see his statement. As lawyers and judges, we depend on the notion that the rule of law will govern. Different judges may have different approaches to interpreting a statute in a particular case. But we all agree on a set of rules, and the rules are supposed to be applied equally and fairly to everyone.”

Boutrous continued: “Everybody who's part of the process—lawyers and judges—that's our guiding light. For President Trump to denigrate the independence of the judiciary—to suggest that it's just another political horse-trading sort of thing—really is dangerous for our judicial system and for checks and balances. I was very glad Chief Justice Roberts responded. I think he's done an excellent in terms of seeking to protect the court as an institution.”

Listen to the full conversation, and find our previous episodes at Law.com.

What We're Reading: Supreme Court Headlines

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>> In memoriam: Current and former Justices, including David Souter (above, left) reflect on George H.W. Bush's legacy. “He was an extraordinary American patriot and fundamentally decent man. I extend my heartfelt condolences to the Bush family,” Chief Justice John Roberts Jr. said. [NLJ]

>> Cut it out: Supreme Court advocates push back on “harmful” proposed word limits. “It can be challenging in cases of even moderate complexity to recite the relevant facts, argue the issues raised, and include all required parts of the brief within the currently allotted 15,000 words.” [NLJ]

>> No, really: “Here we are in 2018 still litigating incorporation of the Bill of Rights. Really?” Justice Neil Gorsuch said at one point during argument in a civil forfeiture case about applying the Constitution's ban on “excessive” fines to the states. [NLJ]

>> Surprised himself: “As I thought about it more and more, it seemed wrong to say over 100,000 adopted children of gay parents could not have their parents married. I struggled with it and wrote the case over the weekend,” now retired Justice Anthony Kennedy said in a recent interview, explaining his opinion in Obergefell v. Hodges. [NLJ]

>> Now hear this: Challengers to the Trump administration's appointment of Matthew Whitaker as the acting U.S. attorney general are asking the U.S. Supreme Court justices to do something they almost never do: hear oral argument on a court motion.[NLJ]