Legal News for Mon 10/28 - Apple Wins $250 from Masimo, Alibaba $433m Antitrust Settlement, Republican Election Setbacks and Musk's NLRB Court Win

Minimum Competence

This Day in Legal History: Volstead Act Signed

On October 28, 1919, the United States Congress passed the Volstead Act, formally known as the National Prohibition Act, over President Woodrow Wilson's veto. Named after Congressman Andrew Volstead, who championed it, the Act provided the legal framework to enforce the 18th Amendment, which had been ratified earlier that year. This amendment prohibited the manufacture, sale, and transportation of intoxicating liquors, marking the start of the Prohibition era in the United States.

The Volstead Act defined "intoxicating liquor" as any beverage containing more than 0.5% alcohol, which was stricter than many Americans had anticipated. Though the Act aimed to curb alcoholism and reduce crime by eliminating the consumption of alcohol, it had some unintended consequences. A significant black market for alcohol quickly emerged, and illegal establishments known as "speakeasies" flourished in cities nationwide. Organized crime syndicates, most notably those led by figures like Al Capone, capitalized on the demand for alcohol, leading to a rise in criminal enterprises.

Law enforcement agencies found it challenging to control the widespread defiance of Prohibition, and corruption among officials became rampant as many officers accepted bribes to look the other way. Public sentiment gradually turned against Prohibition as the social costs, including loss of tax revenue and an overwhelmed criminal justice system, began to outweigh the intended benefits. By 1933, the 21st Amendment was ratified, effectively repealing the 18th Amendment and ending Prohibition. The Volstead Act remains a critical historical example of how complex societal problems cannot always be resolved through restrictive legislation alone, highlighting the challenges of enforcing morality laws on a resistant population.

A federal jury in Delaware awarded Apple $250 in damages, ruling that Masimo Corp.’s original smartwatch designs infringed on Apple’s patents for the Apple Watch. The verdict reflects a limited win for Apple, as the jury found that only Masimo’s discontinued designs—not its current products—infringed Apple’s design patents. Apple’s minimal damages request was a strategic move to secure a jury trial rather than a bench trial, emphasizing its desire to stop Masimo’s alleged copying of Apple Watch features, not to seek financial compensation. Apple’s legal team highlighted its innovation in smartwatch design, while Masimo’s attorneys argued that Masimo’s products were built around its pulse-oximetry technology, unrelated to the design patents at issue.

Masimo countered Apple’s claims by defending the novelty of its blood-oxygen measurement features and asserting that its designs prioritize functionality over aesthetics, unlike Apple’s approach. Masimo attempted to avoid a jury trial by offering Apple a $900 cash payment, which Apple rejected, and the court ruled the case must proceed. The jury ultimately found that Masimo intentionally infringed two Apple design patents related to earlier product models but ruled out any infringement related to Masimo’s current items, undermining Apple’s case for an injunction.

Apple Wins $250, But Little Else, at Trial on Watch Patents (2)

Alibaba Group has agreed to pay $433.5 million to settle a securities fraud class action filed by investors in Manhattan federal court. The lawsuit, which began in 2020, accused Alibaba of misleading shareholders about its competitive practices and the failed initial public offering (IPO) of Ant Group, its financial technology affiliate known for the digital payment platform Alipay. Shareholders claimed Alibaba misrepresented its business practices and failed to disclose that it faced a significant $2.8 billion antitrust fine from Chinese regulators for allegedly pressuring merchants to sell exclusively on its platform.

Though Judge George B. Daniels previously dismissed the claims related to the Ant IPO, he allowed the antitrust allegations to proceed. The $433.5 million settlement ranks among the largest 50 securities class-action settlements in U.S. history under the Private Securities Litigation Reform Act of 1995. Alibaba maintains its denial of wrongdoing, stating it settled to avoid the costs and burdens of prolonged litigation. The settlement requires court approval, with Glancy Prongay & Murray LLP representing the shareholders and Simpson Thacher & Bartlett LLP defending Alibaba.

Alibaba to Pay $433 Million to Settle Antitrust Investor Suit

Alibaba to pay $433.5 million to settle shareholder lawsuit over monopoly claims | Reuters

As the U.S. presidential election nears, Republicans aligned with Donald Trump have faced multiple legal setbacks in battleground states, hindering their push for tighter election restrictions. Over the past three weeks, courts in Georgia, Virginia, Arizona, Nevada, North Carolina, and Michigan have blocked Republican-backed initiatives, such as attempts to purge voter rolls and mandate hand-counting ballots. Notably, a Georgia judge invalidated seven rule changes proposed by Trump’s allies, ruling them unlawful and too close to Election Day to implement. Virginia also halted the removal of allegedly non-citizen voters, with the judge citing federal laws against voter roll purges within 90 days of an election.

In contrast, Republicans recently succeeded in enforcing stricter mail-in ballot deadlines in Mississippi. Despite setbacks, the party maintains its legal strategy aims to ensure election integrity, though experts suggest these efforts might instead be designed to spread doubts about the election's legitimacy. Analysts speculate that if Trump loses, these legal actions could fuel claims of fraud, casting doubt on the outcome.

Republican battleground-state legal blitz falters ahead of election | Reuters

A divided 5th U.S. Circuit Court of Appeals ruled that the National Labor Relations Board (NLRB) overreached by ordering Tesla CEO Elon Musk to delete a 2018 tweet about unionization. The tweet implied Tesla employees could lose stock options if they unionized, which the NLRB previously determined was an unlawful threat. However, the court’s 9-8 decision held that Musk’s tweet was protected under the First Amendment, as it was “speech on a topic of public concern,” making the NLRB’s deletion order excessive.

The majority opinion, supported by Republican-appointed judges, did not address whether Musk’s tweet itself violated labor law, focusing instead on free speech rights. The ruling also instructed the NLRB to reconsider its mandate that Tesla reinstate a pro-union employee who was terminated. In a dissent, Judge James Dennis, joined by Democratic-appointed judges, criticized the decision as lacking substantial legal and factual grounding.

Tesla Wins Challenge to NLRB Decision on Musk Union Tweet (1)

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