California

The Justice Department sued California on Thursday over a list of more than 20,000 registered voters it says are likely noncitizens. The complaint, led by Attorney General Todd Blanche, asks the court to bar California from tabulating mail-in ballots cast by those individuals until their citizenship status is effectively determined. Defendants include Secretary of State Shirley Weber and Los Angeles Registrar-Recorder Dean Logan. The list draws on an analysis by Homeland Security Investigations, which reviewed publicly available voter-registration records for indicators that noncitizens had registered, voted or received election mail. Before filing, DOJ sent letters on Tuesday to the state and local election officials, threatening legal action unless they cross-referenced the data. Governor Gavin Newsom criticized the suit as conflicting with election procedures that restrict changes in the weeks before an election, and California officials dispute the claims.

Governor Gavin Newsom signed SB 947 and SB 951 on September 30, 2026, making AI oversight in discipline, termination, and layoffs binding California law. SB 947, authored by state Senator Jerry McNerney, bars employers from relying solely on automated decision systems to discipline or terminate workers starting July 1, 2027. A human must check the system's output against supporting data and give the worker written notice. The bill is a revised version of SB 7, which Newsom vetoed in October 2025 over concerns that its notice requirements were overly broad. The signed version narrows its scope to discipline and termination. SB 951 requires employers to disclose when AI or automation drives a mass layoff, relocation, or termination, effective January 1, 2027. A third law, AB 1883, bars certain AI workplace surveillance, including tools that try to read emotional state or collect neural data, also effective January 1, 2027.

Federal prosecutors have charged Abdulrahman Alfozan, a 35-year-old Saudi national and former engineering lead on OpenAI's product team, with attempting to intercept oral communications using a concealed device. Prosecutors say he hid a recorder behind a television in a conference room at OpenAI's San Francisco headquarters, and that a camera the company installed later captured him checking that spot. He was arrested October 9 and remains in federal custody. The charge carries a maximum of five years in prison and a $250,000 fine. The case is being prosecuted by the U.S. Attorney's Office for the Northern District of California, with the FBI involved. FBI Director Kash Patel called it a counterintelligence priority, and Attorney General Todd Blanche said on X that theft of intellectual property involving advanced AI technology threatens national security. The case was unsealed October 13.

California Attorney General Rob Bonta's office on Monday, October 19, 2026, released consumer guidance on cryptocurrency fraud and steps victims can take to recover lost money. The alert warns residents to avoid crypto ATMs entirely and to report any scam involving them. It highlights generative AI, voice clones, and deepfake videos used to impersonate relatives or public figures, as well as "liquidity mining" schemes in which a malicious smart contract drains a victim's real wallet. It also flags a follow-on risk: people already robbed may be targeted by impostors posing as "blockchain recovery experts" or law enforcement who demand an upfront fee to retrieve the money.

Governor Gavin Newsom signed SB 947 and SB 951 on September 30, 2026. SB 947 bars employers from disciplining or firing workers based solely on an automated decision system. When an employer relies primarily on such a system, a human reviewer must corroborate the decision with other records, such as managerial evaluations or personnel files. SB 951 requires any Cal-WARN layoff notice to disclose when artificial intelligence or automation caused the job losses. Newsom also signed AB 1883 the same day, which restricts AI tools that infer workers' emotional states or collect neural data, so the package is broader than the two-bill headline suggests.

A October 2026 National Law Review article identifies seven employment-law risks of AI smart glasses in the workplace. The core concerns are covert recording, confidentiality, and biometric data. The devices can quietly capture audio and video, along with biometric identifiers such as facial geometry and voiceprints, often without notice to the people being recorded. Illinois's Biometric Information Privacy Act (BIPA) imposes $1,000 to $5,000 in statutory damages per violation when consent is not obtained in writing. Texas's Capture or Use of Biometric Identifier Act (CUBI) carries fines of up to $25,000 per violation. The article also flags narrowly tailored restrictions that must still comply with labor law, ADA accommodation obligations, proprietary processes visible on manufacturing floors, customer data displayed on screens, sensitive witness identities in HR investigations, and attorney-client communications that could raise privilege waiver issues if routed to a third-party AI platform. Employers must engage in the interactive process to determine whether smart glasses may be a reasonable accommodation.

Federal prosecutors have charged Abdulrahman Alfozan, a 35-year-old Saudi national and OpenAI engineer, with attempting to use a device to intercept oral communications. He was arrested October 9, and the Justice Department announced the case October 13. According to an FBI complaint, Alfozan hid a thumb-sized recorder with a microphone, wrapped in toilet paper and plugged into a USB port behind a television in an executive conference room at OpenAI's San Francisco office. Staff found it September 30 during a routine sweep. Its stored data was encrypted and inaccessible. Investigators later found a similar customized device in Alfozan's personal bag. OpenAI says it fired him, referred the matter to the FBI, and found no evidence that he reached model weights, source code, or customer data. The case is before the U.S. District Court for the Northern District of California, where Alfozan made his initial appearance Tuesday.

On October 15, 2026, DeviantArt asked a federal judge in Los Angeles to disqualify Crowell & Moring as counsel for Evox Productions, an automotive photography company. DeviantArt argues the firm previously advised it and is now suing a former client on behalf of another client. According to the filing, Crowell advised Wix.com and its subsidiaries from 2022 through 2026 on AI litigation, regulation and copyright, and advised DeviantArt on its DreamUp image-generation service. DeviantArt says that work gave the firm access to material confidential information and that Crowell never formally or informally ended its relationship with Wix. Crowell's general counsel disputes this. In a September letter cited in the filing, the general counsel said the firm has done no work for Wix or its subsidiaries since 2024 and has no conflict of interest.

California Attorney General Rob Bonta announced a $6 million settlement with Chrome Holding Co., the corporate successor to 23andMe, resolving two state actions. One covers the company's 2023 data breach. The other covers the 2025 transfer of genetic data and samples during bankruptcy. The stipulation was filed this week in the U.S. Bankruptcy Court for the Eastern District of Missouri. Chrome will pay $6.01 million to the California Attorney General's Office for relief to affected residents under a joint stipulation executed Oct. 16. Neither party admitted liability. Consumers keep the right to demand deletion of their data and destruction of their samples.

Generative AI is creating new ways for entertainment companies to lose confidential material, including unreleased scripts and business plans, according to a new advisory from Jackson Lewis attorneys Steven M. Zimmerman and Jiyoon Yoon, published on NatLawReview on October 13, 2026. The authors recommend updating confidentiality agreements, tightening access controls, expanding employee training, and adopting formal AI governance policies. The piece describes exposure risk in general terms and does not report a specific leak or name a company that has suffered one.

On October 13, 2026, U.S. District Judge Beth Labson Freeman of the Northern District of California granted final approval to a $68 million settlement resolving a class action against Google LLC and Alphabet Inc. The suit, filed in 2019, alleged that Google Assistant devices recorded private communications through "false accepts," where recording began without a user's intentional hot word, and that some of those recordings were disclosed to outside platforms. The court awarded class counsel the full one-third fee they requested, about $22.7 million, well above the Ninth Circuit's 25% benchmark. It also halved the four named plaintiffs' service awards and overruled all seven objections. Google denies wrongdoing. The fund is non-reversionary, so none of it returns to the company.

Gartner released a survey on October 19, 2026, at its IT Symposium/Xpo in Orlando. It found that only 13% of CIOs say their enterprise has gained significant or transformational value from AI so far. The survey covered 2,002 CIOs and technology executives, fielded from May to July 2026. Gartner analyst Alicia Mullery argued that spending and adoption are not the same as results. Only 17% of respondents have rules for abandoning low-value AI projects already in production, and 31% have criteria for halting pilots before they reach production. Separately, Abu Dhabi-based CNTXT AI announced its first U.S. office, in Milpitas, California, which it describes as part of Silicon Valley.

California's Public Employment Relations Board certified the California Gig Workers Union on Sept. 9, 2026, making it the statewide bargaining representative for Uber and Lyft drivers. The board had confirmed on Aug. 7 that the union held at least 30% support among active drivers, and no rival group challenged the result during the 30-day window that followed. The union is backed by the Service Employees International Union, with locals 521, 721 and 1021 supporting the drive. Drivers remain classified as independent contractors. The certification follows AB 1340, which Gov. Gavin Newsom signed in October 2025, and SB 371, which reduced required insurance coverage. Uber and Lyft dropped their opposition to the bills after a deal with lawmakers and have said they will bargain in good faith. Estimates put the active driver pool at about 350,000, out of more than 800,000 registered drivers.

U.S. District Judge Beth Labson Freeman in San Jose approved the $68 million settlement of the Google Assistant privacy case on October 13, 2026. The suit, In re Google Assistant Privacy Litigation (No. 5:19-cv-04286-BLF), alleges that Google Assistant recorded and shared conversations after accidental activations, and that the data was used for targeted advertising. Google denied wrongdoing and settled to avoid the cost and risk of litigation. The class covers people who used the products between May 2016 and March 2026. Freeman also approved about $22.67 million in attorneys' fees, one-third of the fund, and about $1.02 million in expenses. She called the proposed $3,000 hourly rate for David Scott of Scott+Scott "patently unreasonable," cut it to $1,600 for the fee calculation, and still approved the one-third fee as reasonable against market rates. She praised counsel's work and said they achieved an "excellent" settlement.

Gov. Gavin Newsom (D) vetoed AB 1940 on September 30, 2026. The bill would have expanded California's definition of sex discrimination to cover perimenopause, menopause, and related conditions. Newsom said he supported the goal but warned that the bill would substantially increase litigation risk without meaningfully expanding protections. The veto is the latest in a state-by-state push that began in Rhode Island, which in July 2025 became the first state to extend its pregnancy-accommodation framework to menopause-related conditions. Illinois followed with the Menopause Equity and Care Act, which amends the Illinois Human Rights Act to name menopause-related conditions as a protected status. Philadelphia has passed an ordinance effective January 1, 2027. Virginia Gov. Abigail Spanberger vetoed a similar bill on May 19, 2026. At the federal level, Reps. Debbie Dingell (D-Mich.) and Yvette Clarke (D-N.Y.) introduced the Menopausal Workers' Fairness Act (H.R. 9671) on July 14, 2026. It has been referred to the Committee on Education and Workforce and other committees but has not been enacted.

The Federal Trade Commission and 12 state attorneys general, including California's Rob Bonta, sued on October 19, 2026, to block PlayPower from acquiring rival BCI Burke. The complaint, filed in the U.S. District Court for the Northern District of California, argues the deal would combine two of the five largest U.S. suppliers of commercial playground equipment and likely raise prices while reducing quality, innovation and service. The FTC commission authorized the action by a 2-0 vote. PlayPower, owned by Platinum Equity, called the challenge disappointing and said the merger would increase competition in a fragmented market. Burke is being sold by Bertram Capital.

CNTXT AI, a UAE data and AI company founded in 2024, has announced its first U.S. office in Milpitas, California. The company is targeting AI developers and large enterprises with its Arabic-language models and data products. CEO Mohammad Abu Sheikh, who is leading the expansion, told the Wall Street Journal that about 90% of clients are based in Silicon Valley. CNTXT says it has more than $300 million in committed revenue, mostly from American clients, and plans to hire 15 to 25 commercial staff in its first year. The company's flagship product, Munsit, is an Arabic speech platform whose speech-to-text and text-to-speech models rank first on Hugging Face's Arabic speech leaderboard. In June 2026, CNTXT closed a $60 million Series A co-led by AI71 and BlueFive Capital and acquired enterprise AI company Actualize. Its technology partners include Oracle, NVIDIA, and AWS.

Florida Attorney General James Uthmeier filed a civil suit against Discord on October 15, 2026, in Glades County, accusing the chat platform of misleading families about child safety. The 65-page complaint says Discord's sign-up asks only for an email address and birthdate with no real age check, letting adults pose as minors. It also says default settings for years allowed strangers to send children friend requests and direct messages, and that Discord does not scan all private chats for rule violations. The claims rest on the Florida Deceptive and Unfair Trade Practices Act, a state online child-protection law, negligence, negligent misrepresentation, and public nuisance. Uthmeier asks a court to permanently bar Discord from operating without real age verification and from collecting children's data without parental consent. He seeks civil penalties of up to $10,000 per willful violation of the deceptive practices act and $50,000 per violation of the online child-protection law, plus further relief.

The California Office of Tax Appeals ruled for nonresident taxpayers in Appeals of Burch and Carden (2026-OTA-527P). Writing for a unanimous panel, Administrative Law Judge Kenneth Gast held that IRC §751(a) is an anti-abuse characterization rule that converts capital gain to ordinary income. It is not a sourcing provision. The ordinary-income portion of a partnership-interest sale therefore remains part of an intangible sale, and under R&TC §17952 the gain is sourced to the seller's state of domicile unless the partnership interest acquired a California business situs. The panel expressly declined to follow FTB Legal Ruling 2022-02, which had treated the hot-asset portion of the gain as a deemed sale of the partnership's underlying property, apportioned by the entity's California factors. The case arose from indirect gains realized by Tory Burch LLC co-founder J. Christopher Burch when an investment entity sold partnership interests in the fashion brand. The operating partnership did business in California.

California Attorney General Rob Bonta has joined a multistate coalition asking the bankruptcy court to write child safety and privacy protections into any sale of Character Technologies, Inc., the company behind Character.AI. The filing, made in the company's Chapter 11 case, seeks safeguards that would bind a future buyer of the business or its assets. Bonta said his office and a bipartisan group of states found potential consumer protection and privacy violations. Colorado's attorney general led the coalition, and Delaware, Massachusetts, Michigan, Connecticut, Pennsylvania, and Virginia also issued their own statements. Reports disagree on the coalition's size, citing either 23 states or roughly 40. Virginia's filing names the joining states.

Federal prosecutors in Northern California have charged Abdulrahman Alfozan, a 35-year-old Saudi national and former OpenAI engineer, with attempting to use a device to intercept oral communications. Prosecutors say the device was hidden in a USB port on the back of a television in OpenAI's San Francisco office, and the FBI says a small piece of toilet paper concealed it. OpenAI's internal countermeasures team found a recording device on Sept. 30 during a sweep of a conference room. Alfozan was arrested on Oct. 9 and fired. He is in federal custody and has a detention hearing on Oct. 19. If convicted, he faces up to five years in prison, a $250,000 fine, and three years of supervised release. FBI Director Kash Patel said the device was meant to secretly capture sensitive communications about OpenAI's superintelligence work. Prosecutors also allege that Alfozan, an engineer at the company since July 2025, used an AI productivity agent to seek information about meeting-room calendars and capabilities for about a month, through Sept. 16. OpenAI says it has no indication that he accessed or exfiltrated model weights, source code, or customer data, and it says it will support the FBI's investigation.