SCOTUS Rules that Trademark Infringement Plaintiff Cannot Marry ‘Single’ Dewberry Defendant to Affiliates’ Profits
Go-To Guide:
Supreme Court rules trademark infringement plaintiffs can’t claim profits from defendant’s corporate affiliates.
Decision emphasizes importance of corporate separateness in trademark cases.
Trademark plaintiffs may consider broader strategies when identifying potential defendants.
Courts may still examine “economic realities” to determine a defendant’s true financial gain.
On Feb. 26, 2025, the U.S. Supreme Court issued its opinion in Dewberry Group, Inc. v. Dewberry Engineers Inc. The Court considered whether a defendant in a trademark infringement suit can be held liable for the profits its non-party corporate affiliates earn under the provisions of Lanham Act Section 35(a) that allow for recovery of “the defendant’s profits.” In a decision that may have ramifications for how future trademark infringement cases are litigated, the Supreme Court held that a court can award only profits that are properly ascribable to the defendant. Background
The case involved two companies – Dewberry Engineers and Dewberry Group – doing business in the commercial real estate sector in the southeastern United States.
Dewberry Group, owned by developer John Dewberry, provided shared legal, financial, operational, and marketing services to Mr. Dewberry’s various separately incorporated companies, each of which owned a piece of commercial property for lease. The lessors kept their rental income on their own books and paid Dewberry Group below-market services fees. As a result, shared service provider Dewberry Group operated at a loss for decades while the property-owning affiliates raked in tens of millions of dollars in profit.
For nearly two decades, Dewberry Engineers, owner of a federal trademark registration for the mark DEWBERRY, tried to enforce its rights against Dewberry Group. A 2007 settlement agreement between the parties fell apart when Dewberry Group, about a decade later, resumed using the “Dewberry” name in materials marketing its affiliates’ properties.
Dewberry Engineers sued Dewberry Group for trademark infringement under the Lanham Act and won. Finding Dewberry Group’s infringement “intentional, willful, and in bad faith,” the district court awarded Dewberry Engineers “the defendant’s profits” under Lanham Act Section 35(a). The sole named defendant in the case – Dewberry Group – reported no profits. Nonetheless, the district court, finding that the profits from Dewberry Group’s conduct “show up exclusively on the [property-owning affiliates’] books,” decided to treat Dewberry Group and its affiliates “as a single corporate entity” to reflect the “economic reality” of their relationship. The court thus totaled the profits the affiliates earned during the years of Dewberry Group’s infringement and awarded nearly $43 million to Dewberry Engineers.
On appeal, a divided Court of Appeals for the Fourth Circuit affirmed the profits award, adopting the district court’s rationale that the “economic reality” of Dewberry Group’s relationship with its affiliates mandated that all the companies be treated “as a single corporate entity.” Thereafter, the Supreme Court granted Dewberry Group’s petition for certiorari.
The Supreme Court Opinion
Justice Kagan, writing for a unanimous Court, began her analysis by examining the language of Lanham Act Section 35(a), which provides in relevant part that a prevailing plaintiff in a trademark infringement suit may recover “the defendant’s profits.” Noting that the term “defendant” is not specifically defined in the Lanham Act, Justice Kagan looked to the definition in Black’s Law Dictionary, which defines “defendant” as “the party against whom relief or recovery is sought in an action or suit.” In this case, Justice Kagan noted, the “defendant” is “Dewberry Group alone” and that Dewberry Engineers “chose not to add the Group’s property-owning affiliates as defendants.”
Justice Kagan observed that treating Dewberry Group and its affiliates as a single corporate entity ran afoul of the principle of corporate separateness. She reasoned that “if corporate law treated all affiliated companies as (in the district court’s phrase) ‘a single corporate entity,’ we might construe ‘defendant’ in the same vein” and “sweep[ ] in the named defendant’s affiliates because they lack a distinct identity.” But as Justice Kagan pointed out, “[i]t is long settled as a matter of American corporate law that separately incorporated organizations are separate legal units with distinct legal rights and obligations.” In the absence of any exception to this rule, such as piercing the corporate veil to prevent fraudulent conduct (which Dewberry Engineers neither alleged nor proved), “the demand to respect corporate formalities remains.”
Justice Kagan dispensed with Dewberry Engineers’ argument that a court may take account of an affiliate’s profits under the so-called “just sum provision” in Section 35(a). Under that provision, “[i]f the court shall find that the amount of the recovery based on profits is either inadequate or excessive, the court may in its discretion enter judgment for such sum as the court shall find to be just, according to the circumstances.” Dewberry Engineers argued that this provision entitled courts to determine that a different figure than a defendant’s profits better reflects the “defendant’s true financial gain.” But as Justice Kagan wrote, the courts below did not invoke the just sum provision and, in any event, “the fear that ‘corporate formalities’ would . . . insulate infringing conduct from any penalty . . . cannot justify ignoring the distinction between a corporate defendant and its separately incorporated affiliates.” Because the courts below approved an award including non-defendants by treating the defendant and its affiliates as a single corporate entity, their holding “went further than the Lanham Act permits.”
The Court expressed no view on Dewberry Engineers’ understanding of the just sum provision, because whether or how they could have used the provision was not properly before the Court. Importantly, the Court left open the possibility that a lower court, even without relying on the just sum provision, could “look behind a defendant’s tax or accounting records to consider ‘the economic realities of a transaction’ and identify the defendant’s ‘true financial gain.’”
In a concurring opinion, Justice Sotomayor emphasized that Section 35(a) directs courts to calculate the defendant’s profits “subject to the principles of equity.” Those principles, she wrote, “support the view that companies cannot evade accountability for wrongdoing through creative accounting.” Thus, the text of the Lanham Act “forecloses any claim that Congress looked favorably on easy evasion.”
Takeaways
The Court’s opinion leaves no doubt that a trademark infringement plaintiff cannot rely on the “single corporate entity” approach to capture the profits of a parent company, child company, sister company, or other affiliate. Accordingly, plaintiffs should consider casting a wide net in their initial complaints and be prepared to amend their complaints to include additional defendants as discovery progresses. In anticipation of such wider nets, both intracompany and intercompany agreements should be thoughtful and strategic in their approaches to indemnification, knowing that the likelihood of an entity having to prove its non-involvement in alleged wrongdoing may increase.
Because the Supreme Court’s ruling was narrow, in future cases, courts may face the issues of whether and how to examine the economic realities of complex corporate structures involving multiple interrelated affiliates. This may involve extensive fact discovery and expert testimony on not only the propriety of such arrangements (i.e., whether the defendant sought to divert profits through accounting sleight of hand) but also consideration of whether the profits at issue can, in Justice Kagan’s words, be “properly ascrib[ed] to the defendant itself.”
The focus on “principles of equity” Justice Sotomayor espoused may provide a more viable approach to the question of whose profits to measure than the just sum provision Dewberry Engineers advanced before the Supreme Court, which primarily asks how much, not whom. The just sum provision intends to give a district court leeway to increase or decrease an award of the defendant’s profits considering the circumstances; it is not meant to allow a plaintiff to sweep up the profits non-party affiliates earned. On the other hand, because profit disgorgement is an equitable remedy, the Supreme Court’s decision may encourage trademark infringement plaintiffs to invoke the equitable powers the Lanham Act bestows upon courts to attempt to unweave creative accounting, tax, and corporate schemes and arrive at an award that reflects the defendant’s true financial gain.
Supreme Court Expands Rule 60(b) Relief: Implications for Voluntary Dismissals and Arbitration Challenges
In Waetzig v. Halliburton Energy Services, Inc., the U.S. Supreme Court expanded the scope of Federal Rule of Civil Procedure 60(b), holding that a voluntary dismissal without prejudice under Rule 41(a) constitutes a “final proceeding” eligible for post-dismissal relief. This decision may open the door for plaintiffs to attempt to reinstate voluntarily dismissed claims, raising concerns about litigation finality and increasing risks for corporate defendants.
Case Overview
Gary Waetzig, a former Halliburton employee, sued the company for age discrimination in federal court before voluntarily dismissing his case without prejudice to pursue arbitration. After losing in arbitration, Waetzig sought to reopen his dismissed federal lawsuit and vacate the arbitration award under Rule 60(b), arguing his dismissal was filed in error. The district court granted Waetzig Rule 60(b) relief and vacated the arbitration award, but the Tenth Circuit reversed, holding that a voluntary dismissal without prejudice does not satisfy Rule 60(b)’s definition of a “final judgment, order, or proceeding.” On appeal, the Supreme Court reversed the Tenth Circuit, finding that Waetzig’s voluntary dismissal indeed qualified as a “final proceeding” eligible for Rule 60(b) relief. However, the Supreme Court declined to address whether the district court had jurisdiction over Waetzig’s motion to vacate the arbitration award or whether the district court’s decision vacating the arbitration award was otherwise proper.
Key Takeaways from the Supreme Court’s Decision
1. Voluntary Dismissals as “Final Proceedings” – The court determined that a voluntary dismissal without prejudice pursuant to Rule 41(a) is a “final proceeding” under Rule 60(b) because it removes the case from the docket and terminates active litigation. 2. General Rule for Voluntary Dismissals and Statute – When a plaintiff voluntarily dismisses a case without prejudice under Rule 41(a), the general rule is that the statute of limitations continues to run as if the case had never been filed. If the plaintiff refiles after the limitations period has expired, the claim is typically barred unless a state or federal savings statute applies. Waetzig does not alter this rule; it does not grant an automatic tolling effect to voluntary dismissals. 3. Implications for Statute of Limitations – If a court grants Rule 60(b) relief from a voluntary dismissal, the original case is reinstated rather than refiled as a new lawsuit. This could allow plaintiffs to bypass the statute of limitations issue because the original filing date remains intact. The court in Waetzig does not explicitly address this issue, but the risk arises because Rule 60(b) relief is often granted without regard to whether the statute of limitations has since expired. Defendants may now face arguments from plaintiffs that reopening a dismissed case under Rule 60(b) is permissible even if the statute of limitations would otherwise have barred refiling as a new lawsuit. 4. State “Savings Statutes” – Many states have “savings statutes” that allow a plaintiff to refile a voluntarily dismissed lawsuit within a specified period (e.g., six months or one year), even if the statute of limitations otherwise has expired. Under Waetzig, the availability of Rule 60(b) relief after a voluntary dismissal could allow plaintiffs to argue that they should not be constrained by savings statutes because they are reopening the original case rather than refiling it. Courts may need to address whether Rule 60(b) relief can extend beyond the time limits imposed by savings statutes, further complicating the statute of limitations analysis. 5. Arbitration Finality at Risk – Plaintiffs who dismiss cases without prejudice pre-arbitration may now attempt to vacate arbitration awards by moving to reopen those originally dismissed lawsuits, creating an additional avenue for challenging arbitration results. 6. Broader Interpretation of “Finality” – The Supreme Court rejected Halliburton’s argument that “final” under Rule 60(b) should align with appellate jurisdiction principles requiring a decision on the merits, broadening the interpretation of Rule 60(b).
Strategic Implications and Risk-Mitigation Considerations for Corporate Defendants
1.
Strengthen Language in Arbitration Agreements – Waetzig introduces a potential mechanism to challenge arbitration outcomes, requiring companies to reassess arbitration agreements and ensure dismissals are carefully structured. Defense counsel should consider insisting on stronger arbitration clauses, such as explicit waiver provisions in voluntary dismissals, to potentially limit post-dismissal challenges and reinforce that arbitration is binding and cannot be undone via procedural maneuvers. Consider updating arbitration agreements to include language such as, “Any dismissal of litigation arising from this Agreement, whether voluntary or involuntary, shall be deemed final and irrevocable, and Plaintiff waives any right to seek relief under Federal Rule of Civil Procedure 60(b) or any similar rule.”
2.
Monitor Previously Dismissed Claims – While Rule 60(b) motions generally must be filed within a “reasonable time,” motions under Rule 60(b)(1), (b)(2), and (b)(3)—based on mistake, newly discovered evidence, or fraud—must be filed within one year. Additionally, counsel may wish to argue that any attempt to reopen a dismissed case after the statute of limitations has expired is inherently unreasonable, as it causes prejudice and undue delay.
3.
Document Plaintiff Representations Regarding Dismissal – Consider documenting evidence that a plaintiff dismissed their case knowingly and voluntarily to reduce the chance of a successful Rule 60(b) motion. If a plaintiff voluntarily dismisses a case, defense counsel may request plaintiff confirm in writing that they understand the dismissal is final and that they are choosing to forgo litigation, rather than seeking a stay or alternative resolution. Additionally, in jurisdictions with savings statutes that permit refiling within a limited period (e.g., six months or one year), defendants may wish to ensure that any written acknowledgment from plaintiff explicitly states that they are aware of and voluntarily assuming the risk of any applicable statute of limitations consequences.
4.
Include Protections in Stipulation of Dismissal – To reduce the risk of plaintiffs attempting to reopen a case under Rule 60(b), counsel should consider including language in the Stipulation of Dismissal that plaintiff waives the right to reopen the case or otherwise seek relief under Federal Rule of Civil Procedure 60(b).
The Supreme Court’s decision in Waetzig expands the scope of Rule 60(b) relief, creating new risks for defendants by enabling plaintiffs to revive voluntarily dismissed claims, even in scenarios where statute-of-limitations concerns might otherwise arise. While the decision creates uncertainty, defendants can address potential exposure through updated litigation strategies, stronger arbitration agreements, and carefully structured dismissals designed to protect against future challenges.
Michigan Amends Its Minimum Wage Law With Additional Changes
On February 21, 2025, Governor Gretchen Whitmer signed Senate Bill 8, amending the Improved Workforce Opportunity Wage Act (IWOWA)—Michigan’s minimum wage law—which was set to be reinstated effective the same day. The amendments became effective upon signing. Governor Whitmer also signed House Bill 4002, amending the paid sick leave law, the same day.
The IWOWA amendment did not change the minimum wage that employers and employees expected to go into effect on February 21, 2025 (at the rate of $12.48 per hour), but did change the minimum wage rates (and effective dates) for future years, and also revised the minimum cash wage rates for tipped employees and corresponding tip credit amounts.
Quick Hits
On February 21, 2025, Governor Whitmer signed Senate Bill 8, amending Michigan’s minimum wage law, and House Bill 4002, amending the paid sick leave law, both of which became effective immediately.
The amendments to the Improved Workforce Opportunity Wage Act (IWOWA) did not alter the expected minimum wage increase to $12.48 per hour on February 21, 2025, but adjusted future minimum wage rates and timelines, as well as revised the minimum cash wage rates for tipped employees and corresponding tip credit amounts.
These changes follow a Michigan Supreme Court ruling on July 31, 2024, which reinstated the original voter initiatives for minimum wage and paid sick leave, set to take effect on February 21, 2025.
Background
In 2018, the Michigan legislature adopted two voter initiatives—one that raised the minimum wage and was to gradually eliminate the tip credit, and another that increased employees’ paid sick time rights. Before they went into effect, the legislature amended and substantially rolled back the minimum wage increases and paid sick leave entitlements, starting in 2019. There have been several developments since that time, including the following:
On July 31, 2024, the Michigan Supreme Court ruled that the amended (minimized) versions of IWOWA and the Earned Sick Time Act (ESTA) were unconstitutional and reinstated the originally adopted voter initiatives, to become effective on February 21, 2025.
On October 1, 2024, the Michigan Department of Labor and Economic Opportunity (LEO) clarified that Michigan’s minimum wage would increase twice in 2025:
first on January 1, 2025 (to $10.56), following the usual increase schedule, and
again on February 21, 2025 (to $12.48) in accordance with the July 31, 2024 decision.
Changes to Minimum Wage and Tip Credit
On February 21, 2025, the Michigan legislature approved Senate Bill 8 to amend the minimum wage and tip credit amounts, and Governor Whitmer signed the bill into law. The main changes include (a) a faster increase to a $15.00 minimum wage (which will take effect by 2027), and (b) a slower increase in the minimum cash wage for tipped employees, which will reach 50 percent of the general minimum wage by 2031 (instead of reaching 100 percent of the minimum wage by 2030)—which also means the tip credit no longer will be phased out completely by 2030, but will be reduced only to 50 percent of the minimum wage.
While the official amendment contains additional details, here are the rate and datechanges in the minimum wage, tipped minimum wage, and tip credit:
Provision
Previous Schedule (Based on July 31, 2024 Ruling Reinstating IWOWA)
New Schedule (Based on February 21, 2025 Amendments)
Minimum Wage
February 21, 2025: $12.48 February 21, 2026: $13.29 February 21, 2027: $14.16 February 21, 2028: $14.97 2029-2030: TBD
February 21, 2025: $12.48 January 1, 2026: $13.73 January 1, 2027: $15.00 January 1, 2028: TBD (adjusted for inflation) January 1, 2029: TBD January 1, 2030: TBD January 1, 2031: TBD
Minimum Wage for Tipped Employees (And Percentage of Minimum Wage)
February 21, 2025: $5.99 (48%of minimum wage (MW)) February 21, 2026: $7.97 (60% of MW) February 21, 2027: $9.91 (70% of MW) February 21, 2028: $11.98 (80% of MW) February 21, 2029: TBD (90% of MW) February 21, 2030: TBD (100% of MW)
February 21, 2025: $4.74 (38% of minimum wage (MW)) January 1, 2026: $5.49 (40% of MW) January 1, 2027: $6.30 (42% of MW) January 1, 2028: TBD (44% of MW) January 1, 2029: TBD (46% of MW) January 1, 2030: TBD (48% of MW) January 1, 2031: TBD (50% of MW)
Maximum Tip Credit
February 21, 2025: $6.49 February 21, 2026: $5.32 February 21, 2027: $4.25 February 21, 2028: $2.99 February 21, 2029: TBD (based on MW) February 21, 2030: none
February 21, 2025: $7.74 January 1, 2026: $8.24 January 1, 2027: $8.70 January 1, 2028: TBD (based on MW) January 1, 2029: TBD January 1, 2030: TBD January 1, 2031: TBD
BETO Postpones 2025 Project Peer Review
The U.S. Department of Energy’s (DOE) Bioenergy Technologies Office (BETO) announced on February 7, 2025, that its 2025 Project Peer Review, initially planned for April 22-25, 2025, is postponed until a future, yet to be determined, date. According to BETO, approximately 200 projects in its research, development, and demonstration portfolio “will be presented to the public and systematically reviewed by experts from industry, academia, and federal agencies.” BETO notes that the 2025 Project Peer Review will have several simultaneous review sessions of projects within BETO’s program areas, including renewable carbon resources, conversion technologies, systems development and integration, and data, modeling, and analysis.
New Lawsuit Challenges Trump Administration’s Termination of TPS for Haiti and Venezuela
Haitian-Americans United, Inc., Venezuelan Association of Massachusetts, UndocuBlack Network, Inc., and four individual Haitian and Venezuelan migrants residing in Boston filed a lawsuit in U.S. District Court for the District of Massachusetts on March 3, 2025, challenging the Department of Homeland Security’s (DHS’s) decision to terminate Haitian and Venezuelan Temporary Protected Status (TPS). Haitian-Americans United Inc., et al. v. Trump, No. 1:25-cv-10498.
The latest lawsuit joins two existing suits filed in the U.S. District Court for the Northern District of California and the U.S. District Court for the District of Maryland on Feb. 20, 2025, challenging the termination of Venezuela TPS.
The suit alleges that DHS Secretary Kristi Noem lacked legal authority to vacate former DHS Secretary Alejandro Mayorkas’ July 1, 2024, decision to grant an 18-month extension of TPS for Haiti, and his Jan. 17, 2025, decision to grant an 18-month extension of TPS for Venezuela.
The complaint cites “dehumanizing and disparaging statements” that President Donald Trump has made against Haitian and Venezuelan migrants, including the claim that Haitians in Springfield, Ohio, were eating dogs and cats.
The suit further contends that the Trump Administration is discriminating against both groups of migrants based on race, ethnicity, or national origin in violation of the Fifth Amendment’s Equal Protection Clause.
In addition to violations of the Equal Protection Clause, the suit cites violations of the Administrative Procedure Act. It asks the court to declare that former DHS Secretary Mayorkas’ 18-month extensions of Haiti and Venezuela TPS remain in effect and to enjoin enforcement of Secretary Noem’s decisions to terminate Haiti and Venezuela TPS.
The plaintiffs request that the court issue an injunction “preliminarily and permanently” precluding DHS from implementing or enforcing the 2025 Haiti Vacatur, the 2025 Venezuela Vacatur, and the 2025 Venezuela Termination.
Mass. Appeals Court Clarifies Chapter 93A Application in Landlord-Tenant Disputes
In another appeal of a summary process action, the Massachusetts Appeals Court addressed two questions related to Chapter 93A on appeal in 133 W. Main St. Realty, LLC v. Kimball. First, whether the landlord was engaged in trade or commerce when renting a residential property to the tenants, and second, whether a technical violation of the state sanitary code warranted actual damages under Chapter 93A, as opposed to statutory damages.
After trial, the Housing Court issued judgment in the landlord’s favor for unpaid rent and costs but awarded the tenants possession of the property along with damages for the Chapter 93A violation. The Appeals Court agreed with the Housing Court that a personal decision to allow an acquaintance to reside at the recently purchased property to help him get on his feet “morphed into” a transaction occurring in a business context such that Chapter 93A applied. The Appeals Court concluded that the “totality of facts” sufficiently supported the Housing Court’s conclusion. Amongst those facts were that (1) the premises was owned by an LLC without evidence the LLC managers ever lived there; (2) the rental was not an isolated rental property for the LLC, as it managed other residential and commercial properties; (3) one of the LLC managers worked with the tenants to resolve issues, pay bills, and co-managed the premises and other properties owned or operated through another LLC manager; and (4) other tenants previously resided at the premises.
As to the second issue, the Massachusetts state sanitary code seeks to protect the health, safety, and well-being of occupants and the general public by requiring that the owner of a dwelling provide water, sewer, and electricity absent a written agreement for them to be provided by a dwelling occupant. Here, the landlord and tenant had a verbal agreement that the tenant was responsible for utilities. The failure to reduce the agreement to writing, according to the Appeals Court, amounted to technical state sanitary code and Chapter 93A violations. The Housing Court awarded the tenants the exact amount that they paid for water and sewer utilities. However, since the violation was only a technical one, the tenants had affirmatively agreed to pay for utilities since the tenancy’s inception, and the Housing Court made explicit and repeated findings that the violation did not constitute a breach of the covenant of quiet enjoyment, the Housing Court erred in awarding actual rather than nominal damages. As such, the Appeals Court upheld the liability determination but vacated and remanded the amount of those damages to the Housing Court for recalculation.
It does not appear that the Appeals Court properly considered and applied the injury requirement under Chapter 93A, § 9 when reaching the second conclusion. Although the Appeals Court correctly cited Tyler v. Michaels Stores, Inc., 464 Mass. 492, 502 (2013) and noted that a plaintiff must allege and ultimately prove a separate and distinct injury that arose from the Section 2 violation, it does not appear the Appeals Court required a separate and distinct injury. Instead, it appears that the Appeals Court relied solely on violation of the State Sanitary Code (which it concluded automatically violated 940 Code Mass. Regs. § 3.16(3) and amounted to a per se Section 2 violation). According to the Massachusetts Supreme Judicial Court in Klairmont v. Gainsboro Restaurant, Inc., 465 Mass. 165, 174 (2013), however, not every violation of the law violates 940 Mass. Code Regs. § 3.16(3) and, in turn, Section 2. Rather, code violations run afoul of Section 2 when “the conduct leading up to the violation is both unfair or deceptive.” In Klairmont, the SJC dealt with a building code violation and the argument that the code violation also violated 940 C.M. R. § 3.16(3), which triggered a per se Section 2 violation. The SJC, however, rejected the argument and, when doing so, concisely explained that the fact that a building code may qualify as a regulation “meant for the protection of the public’s health, safety, or welfare” (940 Mass. Code Regs. § 3.16(3)), does not mean that a violation of the building code necessarily qualifies as a violation of c. 93A, § 2. Section 2(a) proscribes unfair or deceptive acts or practices in the conduct of trade or commerce. Although the language of 940 Code Mass. Regs. § 3.16(3) “is unquestionably broad, by its terms it imposes the substantive limitation that the law or regulation at issue must be intended to protect consumers, and we further read the regulation as being bound by the scope of c. 93A, § 2(a).” As such, under 940 Code Mass. Regs. § 3.16(3), a violation of a law or regulation, including a building code violation, would violate Section 2 “only if the conduct leading to the violation is both unfair or deceptive and occurs in trade or commerce.”
Finally, the SJC recognized that whether a particular violation or violations qualify as unfair or deceptive conduct “is best discerned ‘from the circumstances of each case.’” It appears, however, that the Appeals Court adopted the more lenient per se violation without further analysis of Klairmont’s requirements.
Client Alert: The Uncertainty Continues – Another Major Update to The Corporate Transparency Act
As reported in our Client Alert dated Feb. 20, 2025, the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) issued guidance on Feb. 19, 2025, stating that the requirement to file beneficial ownership interest reports (“BOIR”) under the Corporate Transparency Act (“CTA”) is once again in effect. This guidance impacted deadlines to file BOIRs as follows:
Entities in existence as of Dec. 31, 2023, had until March 21, 2025, to file their BOIRs.
Entities that were created or registered between Jan. 1, 2024, and Dec. 31, 2024, originally had 90 days from the date of creation or registration to file their BOIRs. They had until March 21, 2025, to file BOIRs.
Reporting companies that were previously given a reporting deadline later than the March 21, 2025, deadline had to file their initial BOIR by that later deadline. For example, if an entity’s reporting deadline was in April 2025 because it qualified for certain disaster relief extensions, it was to follow the April deadline, not the March deadline.
Entities that were created or registered on or after Jan. 1, 2025, had until the later of March 21, 2025, or 30 days after their creation or formation, to file their BOIRs.
The past tense is intentionally used with respect to the deadlines specified above because on Feb. 27, 2025, FinCEN announced that it will not issue any fines or penalties or take any other enforcement actions against any companies based on failure to file or update BOIRs by the current deadlines. No fines or penalties will be issued, and no enforcement actions will be taken, until a forthcoming interim final rule becomes effective and the new relevant due dates in the interim final rule have passed. FinCEN stated that no later than March 21, 2025, FinCEN intends to issue an interim final rule extending BOIR deadlines. Recognizing the need to provide new guidance and clarity as quickly as possible, the rule must ensure that beneficial ownership interest information that is highly useful to important national security, intelligence, and law enforcement activities is reported.
Then, on March 2, 2025, the U.S. Treasury Department issued the following announcement:
“The Treasury Department is announcing today that, with respect to the Corporate Transparency Act, not only will it not enforce any penalties or fines associated with the beneficial ownership information reporting rule under the existing regulatory deadlines, but it will further not enforce any penalties or fines against U.S. citizens or domestic reporting companies or their beneficial owners after the forthcoming rule changes take effect either. The Treasury Department will further be issuing a proposed rulemaking that will narrow the scope of the rule to foreign reporting companies only. Treasury takes this step in the interest of supporting hard-working American taxpayers and small businesses and ensuring that the rule is appropriately tailored to advance the public interest.”
During the past several months, with respect to filing BOIRs, entities were vacillating between taking take a “wait and see approach” and incurring the risk of having to make a filing quickly. Other entities were more proactive and made a voluntary filing. Now, with FinCEN’s March 2, 2025 announcement, and presuming that the Treasury Department does not change course again, domestic entities will not need to file BOIRs; only foreign entities will need to file BOIRs in accordance with a rule to be promulgated at some point by the Treasury Department.
Latest Update on Per- and Polyfluorinated Substances (PFAS) in Europe
European Union
Universal Restriction of PFAS – The European Chemicals Agency’s (ECHA) Committee for Risk Assessment (RAC) is scheduled to meet from March 3-7, 2025, for its 72nd session. During this meeting, the Committee will discuss the proposed restriction on PFAS, focusing on their use in fluorinated gases, transport, and energy sectors. The discussions will address the current status of the proposal, next steps, and the general approach for evaluating the restriction.
In the main two strategic documents released earlier this month. A Competitiveness Compass for the EU and the Clean Industrial Deal (CID), no express reference is made to the universal PFAS restriction proposal. However, both strategies mention the adoption of a Chemicals Industry Package in late 2025 without releasing more specific details.
EU Member States
France
National law proposing PFAS ban approved – On February 20, the French National Assembly passed the country’s first law regulating PFAS. The bill was approved in its Senate version and is now considered definitively adopted.
Effective January 1, 2026, the law bans the manufacture, import, export, and marketing of products containing PFAS in items such as clothing, footwear, cosmetics, and ski wax. The ban will be extended to all textile products by 2030, unless deemed “necessary for essential uses.” The law also includes a “polluter pays” provision, requiring companies to pay €100 for every 100 grams of PFAS released into the environment. Cookware, initially included in the scope of the ban, was ultimately excluded.
With this adoption, France joins Denmark in taking action on PFAS ahead of the proposed EU-wide restriction.
Measurement of PFAS in the air – On February 5, a regional environmental monitoring association revealed the first-ever measurements of PFAS in the air in France, detecting concentrations of 22-38 PFAS substances in urban areas. The findings show that PFAS levels range from a few picograms per cubic meter in Lyon to higher concentrations near factories in Pierre-Bénite. Despite the presence of substances such as PFOA and PFOS, the study suggests that these airborne pollutants are not linked to previously stored soil contamination.
Other Developments
PFAS pesticide fluopyram – 29 NGOs have called for a ban on the PFAS pesticide fluopyram, which degrades into the toxic compound TFA, harmful to aquatic environments, particularly groundwater. The European Commission has recently extended fluopyram’s approval until June 2026.
Peter Sellar contributed to this article
Year in Review: Top Insurance Cases of 2024
Still feeling the love from Valentine’s Day, this 2024 Year in Review highlights the most swoon-worthy coverage decisions of 2024 and offers a glimpse of the future of insurance coverage litigation in 2025 and beyond.
In 2024, D&O coverage and core insurance law principles were the true heartthrobs of the year, while rulings on environmental, social, and governance (ESG) issues showed that insurance disputes can arise in any situation. But the real cupid’s arrow? Policy interpretation—still the key to unlocking these cases. As we reflect on the year, this edition of our Year in Review highlights the most love-worthy coverage decisions of 2024 and examines the evolving landscape of insurance coverage litigation heading into 2025.
Read More Here
Captive Power Projects: A Summary of the Western Africa Regulatory Environment
Recent increases in construction and financing costs are directly affecting the development of energy projects across Africa. Captive power projects (CPPs) offer the possibility of mitigating this challenging landscape for both the developers themselves and those funding them. For those unfamiliar with the concept, CPPs are a type of power plant which provide a localised source of power to the end consumer. They are typically used in power-intensive industries for which a continual and consistent energy supply is paramount. In West Africa, CPPs are of particular interest to mining companies looking for reliable sources of energy. However, the successful development of CPPs in the region will be largely determined by the level of liberalisation in the country’s energy sector, and the right of non-state entities to develop, construct, operate and maintain these projects.
The energy sector across Western Africa has traditionally been restricted to a public monopoly closely associated with the sovereignty of a country, designed to protect the national utility company. When this type of regulatory framework prohibits or inhibits the production, transport and supply of electricity, two structures are usually considered:
where the development, construction, operation, and maintenance of a CPP serves the company’s own needs and this is permitted by the state’s regulation, the project falls under the self-production model (SPM) and the company can, as is often the case, subcontract with energy companies to ensure the supply of energy; or
where the relevant regulation permits development, construction, operation, and maintenance of a CPP for the purpose of supplying electricity to a separate private company, the project falls under the independent producer model (IPM) and can supply energy via off-grid infrastructure.
Bracewell has prepared a report summarising the applicable regulations for the two models outlined above which covers the following 11 countries: Benin, Burkina Faso, Cameroon, Chad, Côte d’Ivoire, Democratic Republic of Congo, Guinea (Conakry), Mali, Mauritania, Sénégal and Togo.
This report provides a high-level overview of existing and proposed regulation based on available sources. It is not a substitute for bespoke legal advice from lawyers in the jurisdictions concerned. Due to the nature of the region, the relatively recent development of the CPP landscape, and the inherent uncertainty in the interpretation of these regulations, we recommend a thorough technical and legal analysis of projects which should consider specific location and bankability issues prior to committing to a CPP project.
As the report illustrates, the energy sector of several countries — such as Burkina Faso, Mali and Togo — remains largely monopolised by the national electricity company, even where the company’s monopoly has been officially terminated by new legislation. In other counties — such as the Republic of Guinea — the legislation remains under development, so while the current framework gives limited guidance, there are no prohibitions laid down either. In contrast, many regions in West Africa have renovated the structure and essence of their energy legislation, demonstrating an intentional and welcome movement away from state-governed monopolies. Countries including Mauritania, Benin, Cameroon and Côte d’Ivoire have all implemented (to varying degrees) a legal framework or, as often called, electricity or energy codes, that allow freedom of energy production. These enable the development of CPPs via either of the two models outlined above. However, it is worth noting that the transmission (rather than production) of the electricity is often still state-regulated. In some countries, such as Chad, while the transmission is under state monopoly, the distribution and construction of CPPs can be carried out by private actors.
In several regions, the relevant authorisations, concessions and/or licences for off-grid production in relation to IPMs are dependent on power purchase agreements being entered into with entities that constitute “Eligible Clients,” a term usually defined in the relevant energy code which shows a maintained, albeit reduced, level of control on the part of the state. The authorisation of SPMs is largely dependent on the installed capacity of the CPP, where sale of surplus is authorised, but the amount is capped by reference to a restricted percentage of the project’s installed capacity. The identity of the buyer is also often restricted, as above, to an entity constituting an “Eligible Client” or, in some jurisdictions, such as Togo, the grid operator. The various authorisations and concessions are granted by the relevant ministerial committees responsible for the state’s energy sector.
For the sake of comprehensiveness, references in the report are occasionally made to regimes with installed capacity thresholds that are likely too low to support the development of a CPP project.
While the report has outlined some of the trends we are seeing as regulations develop, the details for each state vary, with some requiring further investigation with the relevant administration. It is therefore important to ensure that each CPP proposal is tailored and considered in line with the relevant state’s particular legislation and restrictions.
Flick the Switch Board: Get Plugged into the Latest UK Guidance on EEE and WEEE
Waste treatment, recycling and take back obligations in relation to electrical and electronic equipment (EEE) and waste of such electrical and electronic equipment (WEEE) have long been a focus area for EU regulators, and now we are seeing increased enforcement in the United Kingdom. Although the European Union and United Kingdom are largely aligned in some intention behind the reuse, recycling and recovery obligations applicable to electronic brands, there are also notable differences in implementation which companies should be alive to when operating across both jurisdictions.
To assist with this, the Environment Agency of the United Kingdom recently published four sets of guidance on EEE and WEEE, namely:
Guidance on when EEE becomes WEEE for the purposes of the UK WEEE regulations, to properly classify and manage waste;
Guidance for waste operators and exporters on how to classify some items of WEEE, waste components and wastes from their treatment in England, focusing on identifying hazardous chemicals and persistent organic pollutants;
Guidance on shipping WEEE into and out of England from 1 January 2025; and
Guidance on reporting the placing of EEE on the UK market.
We highlight some key points for consumer electronics brands in this alert.
WHAT PRODUCTS DOES THE NEW GUIDANCE APPLY TO?
EEE is broadly defined as any product that is dependent on electric currents or electromagnetic fields to work properly, and which is designed for use with a voltage rating of 1,000 volts or less for alternating current and 1,500 volts or less for direct current.
This definition therefore includes a wide variety of consumer products, such as large and small household appliances, information technology and telecommunications equipment, lighting, tools, toys, leisure and sports equipment, medical devices and many others. The most recent guidance notes are therefore relevant to many consumer products. For the latest UK guidance on what qualifies as EEE under the regulations, see here.
1. Guidance on When EEE Becomes WEEE
The primary aim of this guidance is to help companies, that hold EEE they no longer need, to prevent that EEE from inadvertently becoming WEEE. These parties include EEE producers as well as treatment facilities, collection facilities, producer compliance schemes and waste carriers. According to the legal definition of WEEE, any EEE which the holder discards, intends to discard or is required to discard becomes WEEE.
However, the guidance provides that EEE intended to be reused can avoid becoming WEEE if all the reuse conditions as described in the latest guidance are satisfied. This is relevant as it could potentially avoid triggering WEEE obligations in some cases (such as registering and reporting the EEE as WEEE, organising or financing its collection, treatment and recycling and so forth).The reuse requirements for this exemption are:
The EEE is reused for the same purpose for which it was designed (the use must not be subordinate or incidental to the original use);
The previous holder intended for it to be reused;
No repair, or no more than minor repair, is required to it when it is transferred from the previous holder to the new holder, and the previous holder knows this;
Any necessary repair is going to be done;
Its use is lawful; and
It is not managed in a way that indicates that it is waste, for example, it is not transported or stored in a way that could cause it to be damaged.
Ultimately, the assessment of whether a substance or object is waste should be made by taking into account all the relevant circumstances.
2. Guidance on How to Classify Some Items of WEEE, Waste Components and Wastes From Their Treatment in England, Focusing on Identifying Hazardous Chemicals and Persistent Organic Pollutants
This guidance is relevant to waste operators and exporters who must classify all the WEEE leaving their premises by way of a waste transfer note or a consignment note.
Certain types of WEEE are known to include hazardous chemicals or persistent organic pollutants, and guidance on classifying such waste has already been produced by the UK Environment Agency previously.
However, there are certain items of WEEE which require the producer or distributor to carry out a self-assessment, for which guidance is provided. These include:
Office equipment – non-household types such as photocopiers and printers;
Medical devices – Category 8;
Monitoring and control instruments – Category 9; and
Automatic dispensers – Category 10.
3. Guidance for Importing and Exporting WEEE
This third guidance, which is intended to ensure compliance with environmental regulations and proper waste management practices, requires companies that are exporting or importing WEEE into or from England, to notify all WEEE shipments for recovery in the European Union and Organisation for Economic Co-operation and Development (OECD) countries using new codes for hazardous and non-hazardous WEEE. Some of the existing waste shipment classification codes will cease to exist from the beginning of 2025. In addition, the guidance reiterates that hazardous WEEE and wastes must not be shipped to non-OECD countries. It is also noted that if any EEE is being exported with a purpose of reusing it, such EEE should not be classified as waste. For any WEEE to be exported out of the United Kingdom, the import requirements of a destination country should also be carefully considered.
4. Guidance on Reporting the Placing of EEE on the UK Market
This guidance details the duty to report how much EEE you place on the market either to your producer compliance scheme or on the WEEE online service if you are a small producer. Placing on the market refers to when EEE becomes available for supply or sale in the United Kingdom. This occurs by sale, loan, hire, lease or gifting of EEE by UK manufacturers, UK distributors, importers and customers. It is important to understand the regulatory obligations at each level of the supply chain and to what extent those can be transferred by way of contractual clauses. This does not encompass EEE products which are made or imported in the United Kingdom and then exported without being placed on the UK market.
If you have placed EEE on the UK market, you must keep accurate records to report the amount of EEE tonnage you placed on the market and exported. Evidence can be taken in the form of invoices, delivery notes and export documentation like bills of lading, customs documents and receipts. You must report your business-to-consumer (B2C) EEE quarterly, and your business-to-business (B2B) EEE annually.
PRACTICAL TIPS
The recent UK guidance on EEE and WEEE is helpful in clarifying certain aspects of its reuse, classification and associated export and import requirements. EEE brands or companies dealing with such equipment should familiarise themselves with these latest rules to ensure compliance, at the risk of prosecution and an unlimited fine from a magistrates’ court or Crown Court. As a first step, producers should consider:
If anticipating the reuse of EEE, make sure they satisfy all of the reuse conditions to avoid it becoming WEEE;
Reviewing their current processes for classifying and handling EEE and WEEE;
Specific classification lists and guidance applicable to the particular WEEE they have or handle;
Before exporting or importing WEEE or its components, verify the requirements for notification of transit and destination countries; and
Keep accurate records of the amount of EEE placed on the UK market and report quarterly for B2C or annually for B2B.
A Brief Reminder About the Florida Information Protection Act
According to one survey, Florida is fourth on the list of states with the most reported data breaches. No doubt, data breaches continue to be a significant risk for all business, large and small, across the U.S., including the Sunshine State. Perhaps more troubling is that class action litigation is more likely to follow a data breach. A common claim in those cases – the business did not do enough to safeguard personal information from the attack. So, Florida businesses need to know about the Florida Information Protection Act (FIPA) which mandates that certain entities implement reasonable measures to protect electronic data containing personal information.
According to a Law.com article:
The monthly average of 2023 data breach class actions was 44.5 through the end of August, up from 20.6 in 2022.
While a business may not be able to completely prevent a data breach, adopting reasonable safeguards can minimize the risk of one occurring, as well as the severity of an attack. Additionally, maintaining reasonable safeguards to protect personal information strengthens the businesses’ defensible position should it face an government agency investigation or lawsuit after an attack.
Entities Subject to FIPA
FIPA applies to a broad range of organizations, including:
• Covered Entities: This encompasses any sole proprietorship, partnership, corporation, or other legal entity that acquires, maintains, stores, or uses personal information…so, just about any business in the state. There are no exceptions for small businesses.
• Governmental Entities: Any state department, division, bureau, commission, regional planning agency, board, district, authority, agency, or other instrumentality that handles personal information.
• Third-Party Agents: Entities contracted to maintain, store, or process personal information on behalf of a covered entity or governmental entity. This means that just about any vendor or third party service provider that maintains, stores, or processes personal information for a covered entity is also covered by FIPA.
Defining “Reasonable Measures” in Florida
FIPA requires:
Each covered entity, governmental entity, or third-party agent shall take reasonable measures to protect and secure data in electronic form containing personal information.
While FIPA mandates the implementation of “reasonable measures” to protect personal information, it does not provide a specific definition, leaving room for interpretation. However, guidance can be drawn from various sources:
Industry Standards: Adhering to established cybersecurity frameworks, such as the Center for Internet Security’s Critical Security Controls, can demonstrate reasonable security practices.
Regulatory Guidance: For businesses that are more heavily regulated, such as healthcare entities, they can looked to federal and state frameworks that apply to them, such as the Health Insurance Portability and Accountability Act (HIPAA). Entities in the financial sector may be subject to both federal regulations, like the Gramm-Leach-Bliley Act, and state-imposed data protection requirements. The Florida Attorney General’s office may offer insights or recommendations on what constitutes reasonable measures. Here is one example, albeit not comprehensive.
Standards in Other States: Several other states have outlined more specific requirements for protecting personal information. Examples include New York and Massachusetts.
Best Practices for Implementing Reasonable Safeguards
Very often, various data security frameworks have several overlapping provisions. With that in mind, covered businesses might consider the following nonexhaustive list of best practices toward FIPA compliance. Many of the items on this list will seem obvious, even basic. But in many cases, these measures either simply have not been implemented or are not covered in written policies and procedures.
Conduct Regular Risk Assessments: Identify and evaluate potential vulnerabilities within your information systems to address emerging threats proactively.
Implement Access Controls: Restrict access to personal information to authorized personnel only, ensuring that employees have access solely to the data necessary for their roles.
Encrypt Sensitive Data: Utilize strong encryption methods for personal information both at rest and during transmission to prevent unauthorized access.
Develop and Enforce Written Data Security Policies, and Create Awareness: Establish comprehensive data protection policies and maintain them in writing. Once completed, information about relevant policies and procedures need to shared with employees, along with creating awareness about the changing risk landscape.
Maintain and Practice Incident Response Plans: Prepare and regularly update a response plan to address potential data breaches promptly and effectively, minimizing potential damages. Letting this plan sit on the shelf will have minimal impact on preparedness when facing a real data breach. It is critical to conduct tabletop and similar exercises with key members of leadership.
Regularly Update and Patch Systems: Keep all software and systems current with the latest security patches to protect against known vulnerabilities.
By diligently implementing these practices, entities can better protect personal information, comply with Florida’s legal requirements, and minimize risk.