🗞️ SPACs are getting sued


This week: Trouble comes for Bill Ackman’s SPAC, and Sonos scores a court victory against Google. Plus: what does airplane seating have to do with the legal concept of ownership?

🧞‍♀️ What makes a SPAC a SPAC?

Famed investor Bill Ackman’s SPAC is getting sued because its detractors say it might not actually be a SPAC.

It’s the latest in a string of class-action lawsuits against the hyped blank check companies that help startups go public and could have wide-reaching impacts.   

  • Ackman’s SPAC, Pershing Square Tontine Holdings, hasn’t acquired anything: And that’s, obviously, what SPACs are supposed to do. The closest it has come was a business deal with Universal Music Company, according to the lawsuit. The deal was not an acquisition and was eventually shelved by PSTH. 

  • So what has PSTH been doing?: The lawsuit, from a former SEC commissioner and a Yale law prof, states the company has been investing in securities and little else. They say that should place PSTH under regulation of the Investment Company Act of 1940 and require greater legal oversight.    

This lawsuit could disrupt SPACs all over

Plenty of investment funds, similar to Ackman’s, have gotten involved in SPACs. They could all face more questions about their involvements, according to the NYT. 

The Verdict

IPOs via SPAC were already cooling off, and SPACs have been facing greater legal issues. Per CNBC, 15 lawsuits had been filed against SPACs as of early August, compared to five lawsuits in 2020. 

🛫 How airline seating explains legal battles over ownership 

Here’s a fun one for your Wednesday, courtesy of a Slate Q&A featuring Dahlia Lithwick and law professor Michael Heller: What are the legal ramifications of seat reclining on airplanes? 

  • You’re either one of two people: Somebody who reclines on planes because the option is available, or someone who gets furious when the person in front of you leans back and makes it very difficult for you to do anything on your laptop.

  • The fight is about space: There’s a limited amount of it on airplanes, and both the reclining passenger and the person sitting behind the reclining passenger can argue they have a claim to the disputed space.  

But here’s the kicker

As Heller explains, “that little conflict on the airplane seat is not just an accident, it turns out. It’s deliberately engineered by the airlines so they can sell that same space twice.”

  • There are all kinds of similar examples in the world. Typically, people interact politely and solve their problems, so we don’t tend to see them as legal ownership disputes. 

The Verdict

Read the full Q&A or listen to the podcast to learn more about other fascinating legal questions over ownership.    

🔊 Sonos wins against Google in copyright infringement case 

It may be a lot harder to find Google voice-controlled speakers after a judge ruled against the search engine in a lawsuit started by Sonos. 

  • Sonos is the originator of internet-connected speakers: It claimed in a lawsuit Google used its speaker technology in the Nest Audio, Pixel and Chromecast. On Monday a federal judge ruled in favor of Sonos, saying Google had infringed on five patents. 

  • Google may face serious consequences: The judge believes Google should be barred from importing those products from China. 

The decision isn’t final

In December, the US International Trade Commission will hear the case.   

The Verdict 

Big Tech better be on the lookout for Sonos. The company claims Amazon has infringed on its patents, too, and the only thing that prevented it from filing a lawsuit was a lack of clarity on whether it could sue two tech giants at once.

💌 What else we're forwarding

Still very little diversity in Big Law: A new survey indicates diversity statistics at big firms barely changed between 2019 and 2020 and have only gone up slightly in the last several years. Of course, we at Lawtrades have a more diverse pool of lawyers than the average for Big Law and the industry as a whole.

Deloitte is 'monitoring' whether it should get into law: New legislation in a few states makes it easier for accounting firms to own law firms, but that doesn’t mean Deloitte is ready.

🎧 Music we’re working to

Today we’re listening to Azu Tiwaline, a dance music producer hailing from the Ivory Coast. Her music is heavily influenced by the French rave scene, and the landscape of her current home in the Tunisian desert. Her debut album, Draw Me a Silence, mainly features percussion inspired by the Berber culture…enjoy!

Draw Me a Silence - Azu Tiwaline (60m, no vocals)
Spotify / Apple Music / YouTube Music / Amazon Music 

💬 What we’re discussing

​Is your company going through hypergrowth? Not sure how to build a legal team to keep up?

​Join our workshop to hear from Milana McCullagh, VP & Deputy GC at Coinbase, and Iris Chen, Deputy GC at Airbnb who will talk you through their experiences of building world-class legal teams under time constraints and their top tips for legal professionals in the same situation/

​​It's an open discussion and attendees are more than welcome to participate in the conversation via Zoom. RSVP here to join the discussion tomorrow at 12pm PT / 3pm EST.

See you there!

✌🏽 Raad