Weekly Legal Update: October 30, 2026.

In Wasserman v. Beggs, the Sixth Circuit affirmed a dismissal with prejudice and a vexatious litigator designation. The plaintiff attempted to dismiss her own case by filing a notice of voluntary dismissal, but the defendants had already answered. The panel held that the district court correctly applied Federal Rule of Civil Procedure 41(a)(2), which requires a court order and permits the court to attach conditions, rather than Rule 41(a)(1), which allows unilateral dismissal only before an answer. The court also upheld prefiling restrictions imposed under Rule 11 and the court's inherent powers, finding adequate notice and a narrowly tailored order. The opinion is published and therefore binding in Michigan federal courts.

In E'Mation Controls and Engineering Inc v DeJong, the Court of Appeals affirmed sanctions against a former employer and its law firm under MCL 600.2591(3)(a)(ii). The employee had resigned after roughly nine years and joined a competitor. The trial court had read the non-compete to reach only terminations initiated by the company, so a voluntary resignation fell outside it, and that ruling was not challenged on appeal. The employer then amended its complaint to allege misuse of confidential information, resting on two publicly available internet photographs it found only after filing suit, and its principal could not say who took them, when, or whether the employee had any role. The Court of Appeals held that a speculative belief supplies no reasonable basis for a claim, measured as of the time the claim was asserted, and affirmed attorney fees of $63,446.25 and costs of $1,717.90 assessed jointly and severally against the company and its law firm.

In Schanz v Pine Creek Farms, Inc, the Court of Appeals affirmed summary disposition against a buyer in a real estate purchase dispute. The agreement fixed a firm deadline for a supplemental earnest money payment and a final closing date, and the court held that the record amply supported the finding that time was of the essence. The buyer argued that the seller had orally agreed to extend, but the agreement contained a written modification clause, and the court held that any alleged oral agreement would not be binding under its terms. The court further held that a substitute check drawn on an account held by a person who was not a party to the contract would not have constituted a valid tender of payment. A promissory estoppel theory failed for the same reasons.

In Jarrett v. Archibald, the Sixth Circuit affirmed the dismissal with prejudice of claims for breach of contract, unjust enrichment, conspiracy, breach of implied contract and related relief. Applying Michigan choice of law principles, the court held that Michigan substantive law governed because the contract was formed and executed in Detroit. The panel concluded that the complaint failed to state a plausible claim and, having resolved the appeal on that ground, declined to reach the district court's alternative claim preclusion holding. It also found no abuse of discretion in dismissing with prejudice, noting the plaintiff's failure to seek amendment, his access to the relevant facts, and duplicative litigation across multiple forums.

Revenue Administrative Bulletin 2026-11 explains which trade-in amounts a seller may exclude from sales price under the General Sales Tax Act and from purchase price under the Use Tax Act, and it replaces Revenue Administrative Bulletin 2022-17. The bulletin poses and answers nine questions concerning motor vehicles, recreational vehicles and titled watercraft. The Department concludes that only one trade-in qualifies per transaction, stating that the language of the statute limits the exclusion to the value of a single trade-in. It further concludes that the exclusion does not apply to leases or rentals. Negative equity does not defeat the exclusion, but the dealer may claim it only up to the agreed upon value of the trade-in and not for any loan payoff beyond that value, and the invoice or similar document must clearly state that agreed value.

Rev. Rul. 2026-21 provides the prescribed rates for federal income tax purposes for November 2026. The section 7520 rate, which governs the valuation of annuities, life estates, remainders and reversions, is 6.20 percent. The annual applicable federal rates are 4.67 percent short term, 5.08 percent mid term and 5.52 percent long term. The Internal Revenue Service section 7520 page lists the October 2026 rate as 5.6 percent under Rev. Rul. 2026-19, so the November figure represents a 60 basis point increase month over month.

Rev. Rul. 2026-22 addresses section 401(h) accounts, which hold assets inside a pension plan that are earmarked for retiree medical benefits. The issue was whether using those assets to pay medical benefits for participants who have not separated from employment, but who are eligible to take in-service distributions upon reaching age 59 and one half under section 401(a)(36), violates section 401(h) or Treasury Regulation section 1.401-14, or affects the plan's qualified status under section 401(a). The Service held that it does not. This is the only item of new substantive federal tax guidance posted during the week.

Bulletin 2026-44 is the only Internal Revenue Bulletin issued during the week. It carries T.D. 10056 at page 573, temporary regulations addressing general requirements for Trump Accounts, the establishment of an initial account including automatic enrollment by the Secretary of the Treasury, and qualified general contributions including qualified stock contributions. A parallel notice of proposed rulemaking on Trump Accounts appears at page 645. The bulletin also carries Rev. Proc. 2026-31 at page 601, which sets the general rules and specifications for substitute forms and schedules, and T.D. 10055 at page 571, addressed separately in the estates section below.

For the quarter beginning October 1, 2026, the underpayment rate is 7 percent for both corporate and non-corporate taxpayers. The overpayment rate is 7 percent for non-corporate taxpayers and 6 percent for corporations. The large corporate underpayment rate is 9 percent, and the rate applicable to the portion of a corporate overpayment exceeding $10,000 is 4.5 percent. These rates are unchanged from the third quarter. No announcement setting rates for the first quarter of 2027 had been issued as of the date of this update.

A trust held S corporation stock and was an eligible shareholder while the grantor was treated as its owner. After the grantor died, separate shares were created for two beneficiaries, and the trust remained eligible for the limited period allowed under section 1361(c)(2)(A)(ii). When that period expired, neither beneficiary filed a qualified subchapter S trust election, and the corporation's S election terminated. The Service concluded that the termination was inadvertent within the meaning of section 1362(f) and will treat the company as continuing to be an S corporation, contingent on each beneficiary filing a QSST election for the respective separate share within 120 days of the letter. The ruling expressly expresses no opinion on the validity of the separate shares or on whether either share qualifies as a QSST.

An estate that was not required to file a federal estate tax return under section 6018(a) sought an extension to make the portability election under section 2010(c)(5)(A), so that the surviving spouse could use the decedent's unused exclusion amount. Relying on Treasury Regulation section 301.9100-3, the Service granted an extension of 120 days from the date of the letter in which to make the portability election. Relief is conditioned on filing a complete and properly prepared estate tax return with a copy of the letter attached, and it is void if the estate is later determined to have been required to file. The Service expressly stated that it expresses no opinion as to the amount of unused exclusion to be taken into account by the surviving spouse. The same weekly batch of rulings contained additional portability and generation-skipping transfer tax relief requests, which indicates a steady stream of missed elections.

A decedent's revocable trust became irrevocable at death, giving the surviving spouse all income for life with discretionary principal distributions. The estate fell below the federal exclusion amount but exceeded the applicable state exclusion, so the trustees funded a marital trust with the excess in order to defer estate tax until the surviving spouse's death. The tax professional filed the estate tax return but omitted the marital trust from the schedule used to claim the marital deduction, then filed a supplemental return listing it as qualified terminable interest property. The Service granted an extension of time to make the QTIP election under section 2056(b)(7), relying on Treasury Regulation section 301.9100-3(b)(1)(v) on the basis that the taxpayer reasonably relied on a tax professional who failed to make or advise the election.

T.D. 10055, titled Estate Tax Closing Letter User Fee Update, contains final regulations amending 26 CFR 300.12, the user fee for issuing an estate tax closing letter. The fee increases from $56 to $76. The Service calculated its cost of providing the closing letter under the guidelines in Office of Management and Budget Circular A-25. The date on which the increased fee applies is set by 26 CFR 300.12(d).

The Financial Crimes Enforcement Network's beneficial ownership information page states that United States companies are exempt from the beneficial ownership information reporting requirements and are no longer required to file such reports. The page states that the final rule became effective on August 14, 2026. Entities formed under the law of a foreign country that meet the revised definition of reporting company, and that do not qualify for an exemption, remain subject to the regime. No new Corporate Transparency Act rule, frequently asked question or enforcement announcement was issued during the week covered by this update. The agency's page itself cautions that earlier guidance posted below the current alert has not been fully updated.

In In re R1 RCM Inc. Merger Litigation, the Court of Chancery construed the controlling stockholder definition added to Delaware General Corporation Law section 144(e)(2). The court rejected the argument that a private equity holder cleared the one third ownership threshold, holding that unexercised warrants do not confer ownership or control of voting power. It held, however, that the investor qualified under the board majority trigger, concluding that a majority nomination right combined with an efforts obligation satisfied the statutory election requirement. The court held that all three statutory triggers operate as toggle switches, meaning that satisfying any one of them establishes controlling stockholder status without a separate showing of actual control. On that basis the claim moved past the pleading stage.

In GI DI Rushmore Parent LP v. Stoops, the Delaware Supreme Court affirmed the dismissal of a case for lack of personal jurisdiction and the denial of a preliminary injunction. The employer sought to enforce in Delaware a forum selection clause contained in a limited partnership agreement and incorporated by reference into an incentive unit grant held by an Oklahoma resident. The court held that Oklahoma law governed the clause, that Oklahoma will not enforce a forum selection clause that was not specifically negotiated or discussed, and that the clause was therefore unenforceable. Without the clause, Delaware had no personal jurisdiction over the former employee. The judgment below was affirmed.

In Mudrick Capital Management L.P. v. QuarterNorth Energy Inc., the court found a partial breach of warrant agreements. It held that the board acted in subjective good faith in adopting a $1.7 billion aggregate equity valuation and that rejecting stale, thinly traded quotes was commercially reasonable. The breach lay in the mechanics: the company divided that valuation by an undiluted share count that disregarded in the money warrants, and accounting for them reduced the relevant per share figure to $190.93. The plaintiffs recovered expectation damages of approximately $3 million plus pre-judgment and post-judgment interest. On the counterclaim, the court found that the counterclaim defendants breached a drag along provision but awarded only $1 in nominal damages.

The Commission accepted for public comment a proposed consent order addressing the acquisition of LiveRamp Holdings by Publicis Groupe. The agency alleges likely competitive harm in media agency services and audience data services, on the theory that the acquirer could misuse competitively sensitive data or degrade service to rival audience data providers. For five years the order would require non-discriminatory supply of LiveRamp data connectivity services, firewalls barring access to or commingling of customer data, employee training, and independent compliance audits every six months for two years after closing and annually thereafter. Customers may request an audit once each year, and third-party mediation is available for compliance disputes. The notice states that comments must be received on or before November 23, 2026.

The Director of the Bureau of Competition issued a statement after Platinum Equity and its portfolio company PlayPower abandoned their proposed acquisition of BCI Burke. The abandonment followed a suit by the Commission and a dozen states to block the merger, which the statement describes as filed the week before. The statement asserts that the top five manufacturers control 85 to 90 percent of the commercial outdoor playground equipment market, that the deal would have cut the number of major competitors from five to four, and that it would have given PlayPower's owners control over more than 30 percent of the relevant market. The statement also notes that the remaining small manufacturers often lack the resources to replace the competition the merger would have eliminated.

The Commission issued special orders to study whether companies use personal data to set individualized consumer prices and individualized worker compensation. Recipients must document the factors and methods behind those decisions, including the role of loyalty program participation and algorithmic analysis. Nine companies received orders: Delta, United, JetBlue, Lyft, Uber, DoorDash, Instacart, Target and Walmart. The recipients have 45 days from the date they receive the orders to respond. The Commission vote to approve issuing the special orders was 2-0.

The Division of Examinations published its priorities for fiscal year 2027. Named focus areas include investment adviser fiduciary obligations, conflicts of interest and compliance programs; retail investor protection in complex, higher risk and illiquid products; private funds, private credit and other complex investment strategies; broker-dealer financial responsibility, trading practices, supervision and anti-money laundering compliance; operational resiliency, cybersecurity and protection of customer information; emerging technologies; evolving market infrastructure including Treasury clearing reforms and tokenization; and oversight of self-regulatory organizations. The Division emphasized that the priorities are not an exhaustive list of the matters that examiners will review during fiscal year 2027.

In Sjunde AP-Fonden v. Activision Blizzard, Inc., the Chancellor approved a $250 million settlement of litigation over the Microsoft acquisition, certified a non-opt-out settlement class, and awarded $60 million in attorneys' fees together with $447,680.66 in expenses. The contested question was whether a Delaware court may approve a settlement that releases federal securities claims held by former stockholders without giving them a right to opt out. The court overruled the objection, holding that approving the release does not violate due process because notice rather than an opt-out right is what due process requires. The court assessed the federal claims as having little or no value, citing limitations and loss causation weaknesses, and concluded that releasing them was appropriate.