Litigation

State of play.

• The Musk v. OpenAI trial has entered its evidentiary core, with Brockman's personal diary, his $30 billion stake, and undisclosed financial ties to Altman now the central battleground over whether OpenAI's nonprofit-to-for-profit conversion constituted breach of contract or fraud (→ Brockman's Diary Revealed in Musk-OpenAI Trial First Week, Musk-Altman OpenAI trial opens with statements in Oakland court, Elon Musk Testifies OpenAI Stole Charity by Going For-Profit in Lawsuit[1][2]).
• A decade-long Biglaw insider trading ring—30 defendants, 30 M&A transactions, multiple elite firms—is the most consequential professional responsibility development in years, with unnamed co-conspirators reportedly still employed at major firms as of 2026 (→ 30 Charged in Decade-Long Biglaw Insider Trading Ring Worth Tens of Millions, Ex-Wachtell lawyer in insider trading ring later joined investment bank).
• The Super Micro export control indictment has triggered a full compliance and securities litigation cascade: DOJ criminal charges against three individuals for diverting $2.5 billion in AI servers to China, parallel SEC and auditor reviews, and investor class actions—all against a company with a prior Nasdaq delisting and SEC accounting charges (→ DOJ export indictment triggers new probe of Super Micro’s controls).
• AI-generated hallucinations in court filings have crossed from cautionary tale to active contempt risk, with a New Jersey federal court moving toward contempt proceedings against counsel who failed to pay AI-related sanctions in the Combs civil litigation (→ New Jersey lawyer faces contempt over unpaid AI sanctions in Diddy case, Judge Fines Lindell Lawyer $5K for 2nd False Case Citation, Judge Leon May Impose Rule 11 Sanctions on Trump DOJ Lawyers Over Ballroom Filing).
• For counsel advising technology companies, law firms, or litigators deploying AI tools, the practical baseline is: AI governance litigation is live at trial, firm information barriers face criminal scrutiny, AI use in practice carries escalating contempt risk beyond mere sanctions, and export control enforcement on advanced AI hardware is now a securities litigation trigger.

Where things stand.

• AI privilege doctrine is unsettled and circuit-split. Judge Rakoff's SDNY ruling in United States v. Heppner holds that consumer AI platforms destroy privilege and work product protection; a Michigan magistrate reached the opposite conclusion treating AI as a neutral tool—leaving the question ripe for appellate clarification (→ SDNY Rules AI Tools Waive Privilege in US v. Heppner, Federal Court Rules AI Chatbot Communications Not Protected by Attorney-Client Privilege).
• AI sanctions for hallucinated citations are now a standard enforcement mechanism, with contempt as the next escalation. Courts in Oregon, Pennsylvania, the Seventh Circuit, and the Eastern District of North Carolina have all imposed financial penalties or required remediation; a federal prosecutor resigned over AI-generated errors; and a New Jersey court is now moving toward contempt for unpaid AI sanctions (→ Oregon Appellate Court Sanctions Lawyer with $10K Fine for AI-Hallucinated Brief Citations, New Jersey lawyer faces contempt over unpaid AI sanctions in Diddy case, Judge Fines Lindell Lawyer $5K for 2nd False Case Citation).
• BIPA damages exposure has been structurally reset. The Seventh Circuit's retroactive application of the 2024 per-person damages cap in Clay v. Union Pacific eliminates per-scan multipliers for all pending cases in Illinois, Indiana, and Wisconsin (→ Seventh Circuit Rules BIPA Damages Cap Applies to Pending Cases, 7th Circuit Rules 2024 BIPA Damages Amendment Applies Retroactively to Pending Cases).
• Privacy standing doctrine is tightening. The Central District of California dismissed all eight counts in a privacy suit against Paramount Skydance under TransUnion, requiring concrete historical harm—not statutory violation or speculative future injury (→ Federal Court Dismisses Paramount Privacy Lawsuit Over Concrete Injury Standard).
• CIPA website-tracking litigation remains a high-volume threat with unsettled doctrine. Over 4,000 suits target website pixels and analytics tools; the California Court of Appeal has a pending case that could resolve whether CIPA's pen register framework applies to routine web technologies (→ ACC Urges CA Appeals Court to Rule CIPA Doesn't Cover Website Cookies, Pixels).
• VPPA pixel class actions face a strengthened Second Circuit defense. The "ordinary person" test for personally identifiable information has now been applied to defeat multiple pixel-based claims, though plaintiffs are shifting to more favorable circuits (→ Second Circuit Affirms Dismissal of VPPA Class Action Against NBCUniversal[1][3]).
• The Seventh Amendment's reach into agency adjudication is expanding. Jarkesy challenges have migrated to state administrative proceedings in Delaware and Arizona, testing whether state constitutional jury-trial protections parallel the federal ruling . The Supreme Court has also taken up FCC penalty authority under the same constitutional framework .
• Federal contractor DEI compliance carries False Claims Act exposure. EO 14398 requires agencies to incorporate a contract compliance clause treating DEI violations as material misrepresentations under the FCA; a coalition has filed suit challenging the order as unconstitutional .
• The Supreme Court has narrowed Rule 60(b)(4) challenges to void judgments, requiring motions within a "reasonable time"—overturning the longstanding rule that such challenges could be brought at any point .
• New York's AVOID Act imposes a 90-day hard deadline for third-party impleader in cases commenced after April 18, 2026, with no post-Note of Issue impleader absent good cause—construction and premises liability practices face the sharpest immediate impact .
• Federal patent equitable estoppel now requires proof of actual reliance, not merely silence. The Federal Circuit reversed a Delaware district court's grant of equitable estoppel in Fraunhofer v. Sirius XM, holding that SXM failed to prove its technology choices were actually influenced by Fraunhofer's silence—not merely that silence occurred (→ Fed Cir Reverses Delaware Ruling on Equitable Estoppel in Fraunhofer v. SXM).

Latest developments.

• DOJ indicts three individuals tied to Super Micro for diverting $2.5 billion in AI servers to China; investor class actions filed; SEC and BDO USA conducting parallel reviews against a company with prior Nasdaq delisting and accounting violations (→ DOJ export indictment triggers new probe of Super Micro’s controls).
• Greg Brockman's personal diary and undisclosed financial ties to Altman emerge as central evidence in the Musk v. OpenAI trial; Musk's texts threatening to make Brockman and Altman "the most hated men in America" also entered into evidence (→ Brockman's Diary Revealed in Musk-OpenAI Trial First Week).
• New Jersey federal court moves toward contempt proceedings against counsel who failed to pay $6,000 in AI-citation sanctions in the Combs civil litigation—signaling escalation beyond monetary penalties (→ New Jersey lawyer faces contempt over unpaid AI sanctions in Diddy case).
• Judge Wang imposes second Rule 11 sanction on Lindell's attorney for materially incorrect citation, rejecting the human error explanation; the pattern of defective filings and contradictory excuses is now documented across multiple cases (→ Judge Fines Lindell Lawyer $5K for 2nd False Case Citation).
• Judge Mehta signals Rule 11 sanctions against top DOJ lawyers for filing a motion in the White House ballroom case that substituted political rhetoric for legal argument (→ Judge Leon May Impose Rule 11 Sanctions on Trump DOJ Lawyers Over Ballroom Filing).
• Thirty defendants charged in decade-long Biglaw M&A insider trading ring spanning Sidley, Latham, Cleary, Goodwin, Weil, Willkie, and Wachtell; unnamed co-conspirators reportedly still active at major firms (→ 30 Charged in Decade-Long Biglaw Insider Trading Ring Worth Tens of Millions, Ex-Wachtell lawyer in insider trading ring later joined investment bank).
• DOJ's lead attorney on law firm executive order appeals departs end of May, leaving D.C. Circuit appeals in an unclear posture after conflicting dismissal and withdrawal filings (→ DOJ's Lead Prosecutor on Law Firm Appeals to Exit Role End of May).
• Court of International Trade invalidates Trump's Section 122 replacement tariffs as lacking statutory authority; injunction applies narrowly to three plaintiffs; Federal Circuit appeal filed immediately .
• SDNY judge declines to rubber-stamp Musk's $1.5 million SEC settlement over late Twitter stock disclosures, keeping the case active .
• SDNY blocks DHS termination of Yemen TPS, finding failure to review country conditions and consult agencies—potential template for other TPS challenges .
• Malicious prosecution complaint filed against DLA Piper alleging firm pursued a meritless CFAA suit to retain Chipotle as a client; $1.8 million in defense costs sought (→ Nonprofit Volunteer Sues DLA Piper for Malicious Prosecution in Chipotle-Referred Fraud Case).
• DOJ indicts the Southern Poverty Law Center on 11 federal counts including wire fraud and money laundering, alleging $3 million in donor funds funneled to paid informants in extremist groups .
• Federal court blocks Arizona from enforcing gambling laws against prediction markets, finding CFTC exclusive jurisdiction preempts state criminal enforcement; similar litigation pending in multiple states .
• Federal Circuit reverses equitable estoppel ruling in Fraunhofer v. Sirius XM, tightening the standard to require proof that patentee's silence actually influenced defendant's business decisions (→ Fed Cir Reverses Delaware Ruling on Equitable Estoppel in Fraunhofer v. SXM).
• Southern District of Florida dismisses DPPA class action against parking enforcement company for lack of Article III standing, requiring tangible injury beyond data misuse—but parallel DPPA cases continue surviving dismissal (→ Florida court tosses DPPA parking citation lawsuit over lack of injury).
• First Circuit holds PIP placement is not an adverse employment action absent material changes to compensation, title, or duties .
• Jarkesy challenges reach state administrative proceedings in Delaware and Arizona .
• Environmental groups sue to block Trump administration's coal mine oversight rollback, seeking to restore Biden-era Ten-Day Notice process .
• Federal court rejects Lincoln National's broad intoxication exclusion in AD&D claim, requiring proof that intoxication was the efficient proximate cause of death rather than merely a detectable presence .

Active questions and open splits.

• AI privilege: tool or third party? Heppner (SDNY) and Warner v. Gilbarco (Michigan) reached opposite conclusions within days of each other. Whether inputting privileged information into a consumer AI platform destroys privilege is unresolved at the appellate level—the question is ripe for circuit intervention (→ SDNY Rules AI Tools Waive Privilege in US v. Heppner).
• AI sanctions to contempt: where does the enforcement escalation stop? The New Jersey contempt proceeding against the Combs civil counsel signals courts are no longer treating unpaid AI sanctions as a cost of doing business. Whether contempt becomes the standard response to non-compliance—and what due process protections attach—is unresolved (→ New Jersey lawyer faces contempt over unpaid AI sanctions in Diddy case).
• Musk v. OpenAI: what legal weight do founder agreements carry? The trial tests whether informal commitments at founding can support breach of contract or fraud claims when a company converts from nonprofit to for-profit. Brockman's financial entanglements with Altman add a fiduciary duty overlay that could reshape governance expectations for dual-structure AI entities (→ Musk-Altman OpenAI trial opens with statements in Oakland court, Brockman's Diary Revealed in Musk-OpenAI Trial First Week).
• Biglaw information barriers: what compliance standard survives the insider trading ring? The decade-long conspiracy across multiple elite firms—with unnamed co-conspirators reportedly still employed—raises the question of whether existing wall procedures are legally adequate or whether regulators will demand structural changes. Parallel civil FCA or breach-of-fiduciary-duty claims against the firms themselves remain a live possibility (→ 30 Charged in Decade-Long Biglaw Insider Trading Ring Worth Tens of Millions, Ex-Wachtell lawyer in insider trading ring later joined investment bank).
• Export control enforcement as a securities litigation trigger. The Super Micro indictment—against a company with prior compliance failures—raises the question of what disclosure obligations attach when a company is aware of export control vulnerabilities but has not yet been charged. The intersection of DOJ criminal enforcement, SEC review, and investor class actions is becoming a standard cascade (→ DOJ export indictment triggers new probe of Super Micro’s controls).
• DPPA standing: what injury is sufficient? The Southern District of Florida dismissed for lack of concrete injury while parallel DPPA cases in Maryland survive dismissal. Courts are distinguishing between different data commercialization models, but the circuit-level standard for what constitutes a cognizable DPPA injury remains unsettled (→ Florida court tosses DPPA parking citation lawsuit over lack of injury).
• Prediction market preemption: federal commodity law versus state gambling statutes. The Third Circuit backed federal preemption; a Maryland federal court went the other way; Arizona has been enjoined from prosecuting Kalshi; and the CFTC is suing Wisconsin. A circuit split is forming that may require Supreme Court resolution .
• California's "duty to innovate" in product liability. The California Supreme Court has heard oral argument in Gilead Sciences v. Superior Court on whether manufacturers face negligence liability for failing to bring a safer drug to market quickly enough. A ruling for plaintiffs would create a novel liability theory applicable across innovation-driven industries .

What to watch.

• Musk v. OpenAI jury deliberations targeted for mid-May; remedies phase begins May 18—watch for findings on whether Brockman's financial ties to Altman constitute a disqualifying conflict of interest and whether the advisory jury's liability finding shapes the remedies phase (→ Musk-Altman OpenAI trial opens with statements in Oakland court, Brockman's Diary Revealed in Musk-OpenAI Trial First Week).
• Colorado legislature adjourns May 13—whether it enacts successor AI legislation before adjournment will determine whether the federal stay becomes permanent or the underlying constitutional claims proceed to merits (→ DOJ Intervenes in xAI Lawsuit to Block Colorado's AI Discrimination Law[1][2][3], Federal Court Halts Colorado AI Law Enforcement Days Before June Deadline).
• Anthropic's copyright settlement fairness hearing scheduled for May 14 in San Francisco—approval could establish the first damages framework for AI training data disputes (→ Anthropic argues Claude's copyright use is transformative fair use in CA court).
• Federal Circuit appeal of the Section 122 tariff ruling—outcome will determine whether the administration has any remaining statutory authority for global tariffs after the IEEPA invalidation .
• D.C. Circuit docket on law firm executive order appeals—Kambli's departure and the DOJ's conflicting dismissal/withdrawal filings leave the constitutional questions unresolved; watch for any new briefing schedule or government action (→ DOJ's Lead Prosecutor on Law Firm Appeals to Exit Role End of May).
• Super Micro independent investigation by Munger Tolles and AlixPartners—scope and findings will determine whether management knowledge allegations escalate into corporate-level charges and whether BDO's adverse internal controls opinion triggers further SEC action (→ DOJ export indictment triggers new probe of Super Micro’s controls).