Democratic Lawmakers Urge U.S. Department of Labor to Abandon Proposal to Dismantle OFCCP
On April 11, 2025, a group of forty Democratic lawmakers sent a letter to U.S. Secretary of Labor Lori Chavez-DeRemer urging her to “abandon plans to dismantle [the Office of Federal Contract Compliance Programs] and reaffirm the Department’s commitment to protecting equal employment opportunities for federal contract workers.”
Quick Hits
A group of forty lawmakers from the U.S. Senate and U.S. House of Representatives sent a letter to the U.S. Secretary of Labor urging her to abandon proposed plans to drastically reduce and restructure OFCCP.
The lawmakers raised concerns that the cuts could leave federal contractor workers vulnerable to potential discrimination.
The letter comes amidst other OFCCP-related efforts by lawmakers, including the introduction of legislation to codify now-revoked Executive Order 11246.
The April 11 letter, jointly signed by twenty members of the U.S. Senate and twenty members of the U.S. House of Representatives, raises concerns with the U.S. Department of Labor’s (DOL) proposal to reduce the Office of Federal Contract Compliance Programs (OFCCP) by approximately 90 percent through reducing the number of OFCCP personnel, offices, and regions.
Led by Senator Patty Murray (WA) and Representative Shontel Brown (OH), the legislators urged Secretary Chavez-DeRemer to “abandon” the proposed plans while touting OFCCP’s commitment to federal contract workers.
“For decades, OFCCP has worked effectively to prevent and address unlawful discrimination by investigating individual complaints from workers and by proactively reviewing federal contractors’ employment practices,” the lawmakers said in their letter. “This unique power to proactively review whether employers were complying with the law allowed OFCCP to identify discrimination that might have otherwise gone unreported or undiscovered.”
Further, the lawmakers explained that they believe “[d]rastic cuts to staff and shuttered offices in our communities would leave workers vulnerable to discrimination.”
The April 11 letter is signed by several prominent lawmakers, including Senate Minority Leader Chuck Schumer (NY) and Senator Bernie Sanders (VT), among others. Additionally, prior to leading the April 11 letter, Rep. Brown also led sixty-eight of her colleagues in the House on February 5, 2024, cosponsoring and introducing legislation, H.R. 989, that seeks to codify the now-revoked Executive Order 11246.
In early April, Secretary Chavez-DeRemer renewed offers of deferred resignation and voluntary early retirement to OFCCP personnel, after initially offering them in January 2025. These offers were available until April 14. This move comes after the DOL proposed restructuring OFCCP in late February, before the appointment of Catherine Eschbach as the OFCCP’s new director on March 24.
On April 16, 2025, OFCCP may have taken its first steps towards this proposed restructuring through placing much of OFCCP’s workforce on administrative leave.
Exactly how OFCCP may ultimately be restructured or operates in the future remains to be seen as the Department of Labor moves forward amid congressional calls to abandon those same actions.
Opposers Beware: Your Own Mark May Not Be Protectable
The US Court of Appeals for the Federal Circuit affirmed the Trademark Trial & Appeal Board’s dismissal of an opposition to the registration of the marks IVOTERS and IVOTERS.COM while also noting that the US Patent & Trademark Office (PTO) might want to reconsider whether it permits registration of those marks. Heritage Alliance v. Am. Policy Roundtable, Case No. 24-1155 (Fed. Cir. Apr. 9, 2025) (Prost, Taranto, Stark, JJ.)
American Policy Roundtable (APR), a publisher of campaign and political information since June 2010, filed applications to register the marks IVOTERS and IVOTERS.COM for “providing a web site of information on current public policy issues, political campaigns and citizen concerns related to political information” after the PTO approved the marks for publication. Heritage filed an opposition.
Since the 2008 US presidential election season, Heritage has published online voter guides under the names “iVoterGuide” and “iVoterGuide.com” (the iVoters marks). Without a valid registration but having priority of use, Heritage filed an opposition asserting its common law rights in the iVoters marks.
The Board considered Heritage’s opposition but ultimately found that Heritage’s mark was not distinctive. The Board first considered whether the iVoters marks were inherently distinctive and determined they were not just descriptive but “highly descriptive.” The Board next considered whether the iVoters marks had acquired distinctiveness through secondary meaning but found that the record evidence Heritage submitted was inadequate to support a finding that the iVoters marks had any source-identifying significance. Heritage appealed.
On appeal, Heritage argued that the Board had erred by finding the iVoters marks to have neither inherent nor acquired distinctiveness and that the Board violated the anti-dissection principle by evaluating the individual components of the marks instead of the marks as a whole. The Federal Circuit disagreed. The Court found the Board’s determination that the iVoters marks were highly descriptive to be supported by substantial evidence because the prefix “i” generally refers to something internet based. Heritage chose not to challenge the Board’s finding that “VoterGuide” and “.com” were not distinctive, a ruling the Court characterized as “facially reasonable.”
The Federal Circuit also disagreed with Heritage’s argument that the Board improperly evaluated the marks’ individual components. The Court found the Board properly considered the marks as a whole through its determination that the iVoters marks “on their face refer to online voter guides” and because no evidence demonstrated that the combination of the individual components conveyed “any distinctive source identifying impression contrary to the descriptiveness of the individual parts.”
Heritage argued that the Board had erred in its determination that notwithstanding over five years of use, the iVoters marks did not have statutory acquired distinctiveness. Under Section 2(f) of the Lanham Act, registration applicants may submit evidence that a mark has acquired distinctiveness because as a consequence of extensive use and promotion of the mark, consumers now directly associate the mark with the applicant as the source of those goods. Heritage argued that the Board should have accepted its five-plus years of continuous use as prima facie evidence of acquired distinctiveness. The Federal Circuit disagreed, explaining that Section 2(f) states that the Board “may accept” proof of substantially exclusive and continuous use of a mark for five years as evidence of distinctiveness. Because the language of the statute is discretionary, the Board was free to reject Heritage’s evidence. Federal Circuit case law “recognizes the Board’s discretion to weigh the evidence, especially for a highly descriptive mark.” The Court found no reason to disturb the Board’s decision to give little weight to the three declarations Heritage submitted as evidence of acquired distinctiveness and affirmed the Board’s determination that Heritage’s marks were highly descriptive and had not acquired distinctiveness.
The Federal Circuit further suggested that in view of the Board’s rulings, the PTO might reconsider its decision to approve APR’s marks for registration. Although registration should generally follow when an opposition fails, “the stated precondition is that the mark at issue be a ‘mark entitled to registration,’…which might allow the PTO, after an opposition fails, to reconsider the examiner’s pre-opposition allowance.” The Court also suggested the possibility that Heritage could now consider cancellation of APR’s marks.
The Missing Piece to Your Business’ Litigation Team: Using A National Coordinating Counsel to Manage Your Mass Tort Litigation
Businesses, large and small, can find themselves overwhelmed by litigation quickly, if and when they find themselves in the crosshairs of a developing litigation. For years, the best example of these crosshairs was those focused mainly on asbestos and those entities that either supplied or manufactured with asbestos. However, over recent years we have seen that focus shift to other types of litigation, including cosmetic and pharmaceutical talc, industrial talc, crystalline silica, benzene, PFAS, pharmaceuticals, and many others. With most of these developing litigations, there are plaintiff firms that specialize in investigating entities involved with the products or activities at issue, and then bringing an onslaught of suits against those entities. Once an alleged tie is found between any mass litigation and an entity, the entity can find themselves named in almost every suit filed across the nation by national plaintiff firms. This often happens before an entity can truly appreciate the magnitude of the impact of these lawsuits.
Many entities attempt to manage this litigation in-house, not knowing that they have options on how best to manage their entity’s litigation issues. However, many times a better alternative is to hire a National Coordinating Counsel (“NCC”) to assist in managing the litigation for the entity. The NCC’s job is to manage every aspect of an entity’s litigation across jurisdictions relating to a specific topic or topics. The use of an NCC allows for streamlined work, implementation of national litigation strategies, and better and more predictable litigation outcomes.
In particular, there are advantages to hiring an NCC at every level of litigation. Below we will outline the basics of why hiring an NCC can benefit your entity at different levels of litigation. We will be publishing a series of follow-up articles on each specific aspect of litigation mentioned below and how hiring an NCC can assist in bringing more value to your entity as compared to attempting to manage the litigation in-house.
Case Management
The NCC’s main role is to manage your entity’s litigation across jurisdictions. This will include tracking all of the relevant deadlines in your cases, including trial dates, expert discovery deadlines, written discovery deadlines, depositions, and motion practice. The NCC tracks this information in real time by having open lines of communication with local counsel in each jurisdiction and creating reports based on that communication so that the information can be presented in a quick and easily digestible manner to your entity. However, this role goes well beyond just tracking relevant events in cases. The NCC is able to report trends involving different plaintiff firms, experts, product identification, and strategies for defenses. The NCC will use these trends and information from across jurisdictions to help develop and implement defense strategies.
For example, Personal Jurisdiction and Forum Non-Conveniens defenses can be suggested based on not only the facts of a case, but also the knowledge of different jurisdictions case specific laws regarding causation, available defenses, damages, as well as others. The NCC is also able to track litigation in each jurisdiction to determine which jurisdictions are more likely to go to trial, jurisdictions with higher settlement values, and jurisdictions that plaintiffs are likely to refile cases against your entity as the sole defendant after a successful Personal Jurisdiction or Forum Non-Conveniens motion. The NCC is able to communicate with local counsels to determine all the facts so your entity can be confronted with only issues and possible solutions rather than having to find those solutions yourselves. This case management also branches out too many other aspects of the case, including discovery, corporate representatives, experts, and trials, as mentioned below.
Discovery
Perhaps one of the biggest roles an NCC can play to ease the burden of litigation on an entity is to manage written discovery. When responding to discovery across cases and across jurisdictions, a national strategy is required. This strategy will ensure that responses are uniform across cases and that your entity is not committing discovery fraud. An NCC can draft all discovery responses across jurisdictions to ensure that all objections and responses are phrased the same way nationwide. However, it is also possible to have local counsel draft your responses and to have the NCC review these responses to ensure similar objections and responses. Either way, the NCC ensures that each inquiry made to your entity is responded to in a uniform way. It avoids contradictions that, when discovered by plaintiff firms, can lead to motion practice and accusations of discovery fraud, which can lead to hefty and punitive penalties.
An NCC ensures that document productions are consistent nationwide to similar requests. When a plaintiff firm is filing cases against your entity in multiple jurisdictions, they are expecting to receive the same documents in response to their requests regardless of the jurisdiction. Without an NCC providing oversight, it is possible that documents can be omitted from disclosure or that documents can be accidentally produced. Either way, this can lead to discovery motions and/or sanctions for discovery fraud. Discovery fraud is a serious risk if your discovery responses and document productions are not managed at a national level, the consequences of which can plague your entity for the rest of its life in the litigation.
Furthermore, an NCC can assist in the drafting and use of confidentiality orders to protect your documents. This needs to be done on a national level, as disclosure in one jurisdiction would require disclosure in all jurisdictions. Tracking your documents and protecting your interests on a national level requires a national strategy that would need to be micromanaged by your entity’s legal department if your entity is not using an NCC.
Beyond written discovery, having an NCC can help ensure that a national strategy is undertaken for gathering discovery in cases. This includes the use of subpoenas for records, the use of private investigators, and the use of other resources. Additionally, having an NCC can assist in gathering discovery across states, as they can link local counsel across jurisdictions for more efficient use of interstate discovery subpoenas or Freedom of Information/Open Public Records Act requests. Overall, they implement a strategy across jurisdictions with the local counsels so that your entity can leave no stone unturned while not having to dedicate resources within your entity to do so.
Corporate Representative Depositions and Trial Testimony
Corporate Representative depositions and trial testimony are another opportunity for an NCC to provide your entity value. First, if your entity is new to the litigation, an NCC can assist in determining the best person or persons to serve as a corporate representative. They can assist in the search by interviewing possible candidates and providing your entity with the pros and cons of each candidate. Once a corporate representative is established, the use of an NCC allows for consistent preparation of your corporate representative for all depositions and trial testimony to ensure that the testimony given on behalf of your entity is consistent. Part of this preparation is the development of a corporate story, for which your corporate representative will be the mouthpiece. This is of the upmost importance, as this will be how your entity is represented to a jury at trial. A compelling corporate story can be the difference between a large plaintiff verdict and a defense verdict.
The preparation of your entity’s corporate story, as well as your corporate representative, can include mock depositions, document reviews, and review of written discovery. This implementation of a consistent strategy across cases and jurisdictions avoids the issues presented when each local counsel is responsible for preparing a corporate representative. This also saves time and resources that would be required if each local counsel had to prepare for each corporate representative deposition by reviewing transcripts and discovery from other jurisdictions. An NCC can constantly be up-to-date without constant review of what has previously happened with a corporate representative. This makes your corporate representative testimony consistent for the witness, the client, and for plaintiff counsel. This leads to positive and predictable outcomes.
Experts
An NCC team allows for efficient management of experts and expert discovery across cases and jurisdictions. An NCC team allows for each expert to have a specific point of contact. This creates a consistent relationship and avoids issues with ensuring the experts are provided with materials and payments consistently. It allows for consistent reports and more involved strategy development across cases. It also allows for a better relationship to develop, which often allows for experts to be more forgiving if issues to arise and reports are needed on an expedited basis. In-house management or management by local counsels of these issues may not result in as favorable outcomes.
Further, as a part of an overall expert strategy, having an NCC allows for a more tactical approach to retaining experts. This includes using multiple experts from the same field across different cases so that that your entity is not reliant on one expert in case there is conflicting trial dates, a conflict with a co-defendant, or an issue with retention in any particular case. Further, this allows for more in-depth management of costs. This also allows for experts to better manage their time while your entity’s entire case load is getting the full attention it deserves. This level of management is possible with an NCC because they are able to dedicate the time and their expertise in a way that local counsel and in-house attorneys cannot.
Further, an NCC team allows for consistent expert depositions, Daubert hearings, and trial testimony from your experts. This is similar to corporate representatives, discussed above. The consistent time spent in preparation for depositions and reviewing reports allows for a direct relationship on behalf of your entity with the expert, as well as a consistent strategy that builds and adapts over time. Further, this facilitates inclusion of cutting edge science and publications within your experts opinions, which substantially supplements your entity’s defenses. This is just another way an NCC team adds value to your entity.
Trial Teams
While no entity wants to find itself at trial, the fact of the matter is that every entity named in a lawsuit must prepare as if a trial is inevitable. This ensures that the entity is prepared in the unlikely event that a matter goes to trial. An NCC team is your entity’s insurance policy that a trial team will be prepared under those circumstances. An NCC team helps create consistent work product for both pre-trial filings and trial itself. This stems from having developed a trial strategy that can be used as a basis for every case. Different elements of this strategy would include development of a corporate story, development of defenses such as expert defenses or state-of-the-art defenses, development of cross-examinations of plaintiff’s experts, and more. An NCC team will constantly be developing and perfecting motions in limine, openings and closings, and cross-examinations that will come together to form a trial handbook. This will allow trial counsel to have a step-by-step plan of how your entity should be defended at trial.
Moreover, this NCC work helps lead to a more consistent and predictable defense, which helps manage outcomes. The NCC team manages trial dates across jurisdictions so that an entity can ensure it is prepared for any trial issues that may come up in any of their cases. This also allows for the entity to have better forecasting of what cases will go to trial, which cases will resolve, and what issues may arise at any time. Due to this, an entity can be better prepared for outcomes and can prepare for what can be expected during any particular time period.
Case Resolution
Resolving cases outside of trial is also the job of your NCC. An NCC can more effectively resolve cases than individual local counsel because they can do so on a larger scale. Further, an NCC can devote more resources and time to forming the relationships with plaintiff firms that allow for these resolutions. Your NCC team can create value when negotiating by creating group settlements across jurisdictions, but your NCC can also create value by producing creative solutions when negotiating with plaintiff firms. They can take advantage of early settlement opportunities or could develop different frameworks depending on your entity’s circumstances.
It is easier for your NCC team to develop creative deals as compared to local counsels or in-house counsel because they will be dedicating more time and resources to building a relationship with the different plaintiffs’ firms on behalf of your entity. Further, they will spend more time on behalf of your client developing relationships with co-defendants on behalf of your entity. This can help develop your defenses, which will impact the overall outcomes of your cases.
Your NCC team will also be tracking different points of data regarding the outcomes in your cases to allow for better projections for future matters. This includes the past history of cases with each plaintiff firm, past history of cases with each product, past history of cases with product use during different time periods, past history in each jurisdiction, as well as many other data points. All of this combines for more information so that your entity can be better prepared to handle the litigation it faces and can navigate a future given its involvement in the litigation.
Overall, an NCC team is the missing piece to your business’ litigation team. An NCC team manages your litigation, but more importantly, they add value to produce better and more predictable outcomes. For your organization to continue to succeed, it should be proactive regarding the possibility of mass litigation. This includes involving an NCC as soon as possible, as it allows your NCC to provide as much value as possible by preparing as much as they can before the cases start rolling in.
ERISA Fiduciary Duties: Compliance Remains Essential
The Employee Retirement Income Security Act of 1974 (ERISA) establishes a comprehensive framework of fiduciary duties for many involved with employee benefit plans. Failure to comply with these strict fiduciary standards can expose fiduciaries to personal and professional liability and penalties. With ERISA litigation on the rise, a new administration, and recent news that the Department of Labor (DOL) is sharing data with ERISA-plaintiff firms, a refresher on fiduciary duty compliance is necessary.
What Plans Are Covered?
ERISA’s fiduciary requirements apply to all ERISA-covered employee benefit plans. This generally includes all employer-sponsored group benefit plans unless an exemption applies, such as governmental and church plans, as well as plans solely maintained to comply with workers’ compensation, unemployment compensation, or disability insurance laws.
Who Is A Fiduciary?
A fiduciary is any individual or entity that does any of the following:
Exercises authority over the management of a plan or the disposition of assets.
Provides investment advice regarding plan assets for a fee.
Has any discretionary authority in the administration of the plan.
Note that fiduciary status is determined by function, what duties an individual performs or has the right to perform, rather than an individual’s title or how they are described in a service agreement. Fiduciaries include named fiduciaries. Those specified in the plan documents are plan trustees, plan administrators, investment committee members, investment managers, and other persons or entities that fall under the functional definition. When determining whether a third-party administrator is a fiduciary, it is important to identify whether their administrative functions are solely ministerial or directed or whether the administrator has discretionary authority.
What Rules Must Fiduciaries Follow?
Fiduciaries must understand and follow the four main fiduciary duties:
Duty of Loyalty: Known as the exclusive benefit rule, fiduciaries are obligated to discharge their duties solely in the interest of plan participants and beneficiaries. Fiduciaries must act to provide benefits to participants and use plan assets only to pay for benefits and reasonable administrative costs.
Duty of Prudence: A fiduciary must act with the same care, skill, prudence, and diligence that a prudent fiduciary would use in similar circumstances. Even when considering experts’ advice, hiring an investment manager, or working with a service provider, a fiduciary must exercise prudence in their selection, evaluation, and monitoring of those functions and providers. This duty extends to procedural policies and plan investment and asset allocation, including evaluation of risk and return.
Duty of Diversification: Fiduciaries must diversify plan investments to minimize the risk of large losses, with limited exceptions for ESOPs.
Duty to Follow Plan Documents and Applicable Law: Fiduciaries must act in accordance with plan documents and ERISA. Plans must be in writing, and a summary plan description of the key plan terms must be provided to participants.
Fiduciaries also have a duty to avoid causing the plan to engage in any prohibited transactions. Prohibited transactions include most transactions between the plan and individuals and entities with a relationship to the plan. Several exceptions exist, including one that permits ongoing provision of reasonable and necessary services.
Liabilities and Penalties
An individual or entity that breaches fiduciary duties and causes a plan to incur losses may be personally liable for undoing the transaction or making the plan whole. Additional penalties, often at a rate of 20% of the amount involved in the violation, may also apply. While criminal penalties are rare, are possible when violations of ERISA are intentional. Causing the plan to engage in prohibited transactions may also result in excise taxes established by the Internal Revenue Code.
To limit potential liability, plan sponsors and fiduciaries should ensure the appropriate allocation of fiduciary responsibilities, develop adequate plan governance policies, and participate in regular training. Plan sponsors may purchase fiduciary liability insurance to cover liability or losses arising under ERISA. In addition, the DOL has established the Voluntary Fiduciary Correction Program (VFCP), which can provide relief from civil liability and excise taxes if ERISA fiduciaries voluntarily report and correct certain transactions that breach their fiduciary duties. The VFCP program was recently updated with expanded provisions for self-correction of errors, which are addressed in a previous advisory.
New Rx for High Drug Prices? Senate Judiciary Committee Advances Six Bills With Heavy Dose of Options
The US Senate Judiciary Committee advanced to the full Senate six bills intended to reduce pharmaceutical prices and enhance market competitiveness. The package collectively targets several aspects of the pharmaceutical landscape, including pharmaceutical benefit manager (PBM) pricing practices, next-generation drug releases, patent portfolio assertions, and use of US Food and Drug Administration (FDA) regulatory mechanisms. Many of the bills’ proposals have been proposed before, but it is significant that the six bills were moved to the full Senate with bipartisan support.
The Affordable Prescriptions for Patients Act, if passed, would limit how many patents a reference product sponsor can assert in a Biologics Price Competition and Innovation Act (BPCIA) litigation against a biosimilar applicant, although such limits could be surpassed with court approval. A biologics license holder could assert up to 20 patents in a BPCIA case. Certain patents, such as method of treatment patents, would fall outside the limitation.
Against the backdrop of the Supreme Court’s 2013 holding in FTC v. Watson that certain “pay for delay” agreements are prohibited as anticompetitive, the Preserve Access to Affordable Generics and Biosimilars Act would add precision to the boundaries of permissible settlements in the pharmaceutical industry. The Federal Trade Commission (FTC) would have specific authority to institute a civil action to recover penalties, and certain presumptions would apply. For example, any agreement providing a generic or biosimilar applicant with “anything of value, including an exclusive license,” would be presumptively anticompetitive, with certain exceptions and exclusions. Terms that would remain permissible include a pre-expiration launch date, reasonable litigation expenses, and covenants not to sue for patent infringement.
Targeting the concern that branded small molecule and biologics drug manufacturers release new products with patent protection and withdraw or unfairly disincentivize older products to avoid generic competition, the Drug Competition Enhancement Act would deem the alleged practice of “product hopping” unfair competition subject to enforcement actions. The bill would define a hard switch as when a branded or biologics manufacturer discontinues or withdraws an application and introduces a follow-on product within a certain period relative to generic or biosimilar approval. It would define a soft switch as when the brand manufacturer took actions that “that unfairly disadvantage the listed drug or reference product relative to [a] follow-on product.” The bill would provide specific exclusions and justifications for branded manufacturer actions that would otherwise constitute a hard or soft switch.
Seeking to curb perceived abuses of the FDA citizen petition process, the Stop Significant and Time-Wasting Abuse Limiting Legitimate Innovation of New Generics (Stop STALLING) Act would grant the FTC the authority to bring a civil action against those filing “sham petitions” with the FDA, with penalties up to $50,000 per calendar day of review or the revenue earned by the seller of the branded product, whichever is greater. A petition could be classified as a sham based on its own objective unreasonableness, an intention to delay approval of a generic or biosimilar product, or as part of a series of covered petitions.
Based on the belief that FDA applications may include information relevant to patentability but not presented to patent examiners, the Interagency Patent Coordination and Improvement Act would create an FDA-US Patent & Trademark Office task force to establish processes for sharing submitted information. The goal would be for patent examiners to be able to access and review FDA applications where appropriate, subject to confidentiality restrictions. One area expressly identified for use is the public availability of inventions (i.e., whether subject matter in patent applications was on sale before the relevant effective date).
Finally, the Prescription Pricing for the People Act, if enacted, would require the FTC to publish a report analyzing the pharmaceutical supply chain, with specific inquiries about PBM pricing practices. The bill also calls for the report to describe FTC complaints received about, and authority to act against, sole-source drug manufacturers.
AIFMD 2.0 – Draft RTS and Final Guidelines Published on Liquidity Management Tools
On 15 April 2025, the European Securities and Markets Authority (“ESMA”) published draft regulatory technical standards (the “Draft RTS”) and final guidelines (the “Guidelines”) on Liquidity Management Tools (“LMTs”), as required under the revised Alternative Investment Fund Managers Directive (EU/2024/927) (“AIFMD 2.0”).
Under AIFMD 2.0, ESMA is required to develop:
regulatory technical standards to specify the characteristics of the liquidity management tools set out in Annex V of AIFMD 2.0; and
guidelines on the selection and calibration of liquidity management tools by alternative investment fund managers (“AIFMs”) for liquidity risk management and mitigating financial stability risk.
The Draft RTS and Guidelines have been published following a consultation period by ESMA. The amendments introduced following the consultation are broadly seen as positive developments from ESMA, introducing greater flexibility for alternative investment funds (“AIFs”) in several cases.
Draft RTS
Some of the key provisions set out in the RTS include:
Redemption Gates
Redemption gates must have an activation threshold and apply to all investors. In the Draft RTS, ESMA has introduced flexibility in expressing activation thresholds for redemption gates. For AIFs, thresholds can be expressed in a percentage of the net asset value (“NAV”), in a monetary value (or a combination of both), or in a percentage of liquid assets. In addition, either net or gross redemption orders shall be considered for the determination of the activation threshold.
ESMA has also introduced a new alternative method for the application of redemption gates – redemption orders below or equal to a certain pre-determined redemption amount can be fully executed while orders above this amount are subject to the redemption gate. The purpose of this mechanism is to avoid small redemption orders being affected by larger redemption orders, that drive the amount of orders above the activation threshold.
Side Pockets
ESMA did not include any provisions in the Draft RTS relating to the management of side pockets, as ESMA concluded there was no mandate within the empowerment of the Draft RTS to allow them to do so.
Applicability of LMTs to Share Classes
The previously published version of the Draft RTS included provisions on the application of LMTs to share classes, requiring the same level of LMTs to be applied to all share classes (e.g. when AIFMs extend the notice period of a fund, the same extension of notice period shall apply to all share classes). ESMA has removed these provisions from the Draft RTS.
Use of other LMTs
Recital 25 of the Draft RTS clarifies that additional LMTs not selected in Annex V of AIFMD 2.0 may be used. These may include, for example, “soft closures” that consist of suspending only subscriptions, only repurchases or redemptions of the AIF.
Other Provisions
Other topics covered in the Draft RTS include swing pricing, dual pricing and anti-dilution levies, as well as redemptions in kind.
Guidelines
Some of the key provisions set out in the Guidelines include:
Selection of LMTs
In the selection of the two minimum mandatory LMTs in accordance with AIFMD 2.0 (set out in Annex V of AIFMD 2.0), ESMA states that AIFMs should consider, where appropriate, the merit of selecting at least one quantitative-based LMT (i.e. redemption gates, extension of notice period) and at least one anti-dilution tool (i.e. redemption fees, swing pricing, dual pricing, anti-dilution levies), taking into consideration the investment strategy, redemption policy and liquidity profile of the fund and the market conditions under which the LMT could be activated.
Governance Principles
AIFMs should develop an LMT policy, which should form part of the broader fund liquidity risk management process policy document, and should document the conditions for the selection, activation and calibration of LMTs. AIFMs also should develop an LMT plan, that should be in line with the LMT policy, prior to or immediately after the activation of suspensions of subscriptions, repurchases and redemptions and prior to the activation of a side pocket.
Disclosure to investors
AIFMs should provide disclosures to investors on the selection, activation and calibration of LMTs in the fund documentation, rules or instruments of incorporation, prospectus and/or periodic reports.
Depositaries
Depositaries should set up appropriate verification procedures to check that AIFMs have in place documented procedures for LMTs.
Other Provisions
The Guidelines also include certain other provisions that impose restrictive obligations on the selection, activation and calibration of LMTs (for example, preventing the systematic activation of redemption gates for funds marketed to retail investors).
Next Steps
The European Commission has three months (i.e. until 15 July 2025) to adopt the Draft RTS, although this period can be extended by one month. The European Commission also has the ability to amend the Draft RTS as required.
Once adopted by the European Commission, the Draft RTS will come into force 20 days following publication in the Official Journal of the European Union.
The Guidelines will be applicable from the day after the Draft RTS comes into force, although AIFMs of funds existing before the date of application of the Guidelines will have a 12-month grace period.
Preparing for a “Common-Sense” FAR: What Federal Contractors Need to Know About the Trump Administration’s Plans to Streamline the Federal Acquisition Regulation
In a new Executive Order issued on April 15, 2025 titled, “Restoring Common Sense to Federal Procurement,” President Trump has directed his Administration to make major revisions to the Federal Acquisition Regulation (FAR)—the voluminous set of rules governing the U.S. Government’s acquisition of products and services—with the stated purpose of making the federal procurement process more “agile, effective, and efficient.” As with many recent executive actions, the instructions to government officials are to undertake dramatic reforms at a breakneck pace, with a significant impact on the rules of the road for companies doing business or seeking to do business with the federal government. In this alert, Foley’s Federal Government Contracts team provides a summary of the key takeaways for government contractors from this latest Executive Order and the Trump Administration’s initiative to produce a streamlined version of the FAR.
Background:
On January 31, 2025, President Trump issued Executive Order 14192, “Unleashing Prosperity Through Deregulation,” which announced his Administration’s policy of alleviating unnecessary regulatory burdens. This recent Executive Order issued on April 15, 2025 extends the Trump Administration’s deregulatory initiative to the government contracting sector by directing the most significant overhaul of the FAR in more than four decades.
This move represents a dramatic shift in federal procurement policy—one aimed at streamlining the acquisition process, reducing regulatory burdens, and encouraging broader participation in the federal marketplace.
Key Takeaways for Contractors:
A Mandate for FAR Simplification—Fast. The Order establishes an aggressive timetable for the proposed revisions to the FAR. As the Order notes, the FAR now fills more than 2,000 pages, and the Order directs the Office of Federal Procurement Policy (OFPP) Administrator, working with the FAR Council and agency heads, to amend the FAR within 180 days. The objective is to retain only provisions that are statutorilyrequired or “otherwise necessary to support simplicity and usability, strengthen the efficacy of the procurement system, or protect economic or national security interests.”
Agency FAR Supplements Are Also Under Review. Each agency must designate a senior acquisition official within 15 days of the Order to work with the OFPP Administrator and FAR Council to provide recommendations regarding their agency-specific FAR supplements and identify FAR provisions that are inconsistent with the Order’s objective to streamline the FAR by removing unnecessary regulations.
Internal Guidance Issued to Agencies. Within 20 days of the Order, the Director of the Office of Management and Budget (OMB), with the OFPP Administrator, shall issue a memorandum that provides guidance regarding implementation of these reforms and proposes new agency supplemental regulations that are aligned with the new policy objectives. That guidance from OMB may provide important signals to contractors regarding the portions of the FAR and federal procurement policy most likely to change as part of this reform effort.
Regulatory Sunset for Non-Statutory FAR Clauses. The Order directs the OFPP Administrator and FAR Council to consider amending the FAR to include a regulatory sunset mechanism that would apply to any non-statutory FAR provision retained after this reform—or added in the future. As proposed in the Order, any non-statutory FAR provision would automatically expire after four years, unless renewed by the FAR Council. This sunset mechanism, if ultimately adopted in the revised FAR, would, at a minimum, require a significant amount of periodic review by the FAR Council of existing regulations, and it could introduce uncertainty regarding the long-term status of certain FAR provisions, complicating contractor compliance planning.
Interim Guidance and Deviations Expected. To avoid delays, the FAR Council is empowered to issue deviation and interim guidance as needed during the rulemaking process, suggesting that significant FAR changes could begin impacting procurements well before final rules are issued or the government contracting community is given the opportunity to weigh in on those revisions.
Implementation Uncertainty. While the policy objective of the Order is clear—to simplify the FAR by removing “unnecessary regulations”—it remains to be seen how the FAR Council will execute that objective. The Order allows for retention of some FAR provisions that cannot be tied back to a specific statutory basis, if such provisions are determined “necessary to support simplicity and usability, strengthen the efficacy of the procurement system, or protect economic or national security interests.” Given these subjective considerations, it will bear monitoring to see how the Administrator and the FAR Council interpret those concepts in determining which FAR provisions to keep or cut.
What This Means for Federal Contractors:
This Executive Order has potentially far-reaching implications:
Reduced Complexity: Contractors may soon face fewer compliance hurdles, especially in acquisitions of commercial products or commercial services.
Opportunities for Commercial Vendors: By directing the elimination of regulatory burdens and requirements, the Order may lead to reduced barriers to entry for new commercial contractors looking to do business with the Federal Government.
Uncertainty During Transition: Contractors should prepare for a period of regulatory uncertainty, as interim guidance may vary across agencies.
Concrete Steps Contractors Can Take:
Monitor FAR-Related Rulemakings: Contractors should closely track upcoming Federal Register notices, and deviation and interim guidance for indications as to how the FAR Council is carrying out the Order’s instructions to streamline the FAR.
Engage in Public Comment Opportunities: When proposed FAR rule changes are released for public comment, consider submitting comments to influence the final rulemaking.
Be on the Lookout for Agency-Level Changes: Agency supplements to the FAR are also being reviewed. Contractors should monitor changes to agency-specific procurement regulations that may impact contracting opportunities with those agencies.
We will continue to monitor developments and provide updates as additional guidance is released and implementation proceeds.
Munich Court Addresses Implementer’s Obligation To Provide Security in FRAND Negotiations
The Munich Higher Regional Court issued a decision concerning the fair, reasonable, and nondiscriminatory (FRAND) negotiation process and an implementer’s obligation to provide security if a license offer for standard essential patents (SEPs) is rejected. HMD Global v. VoiceAge, Case No. 6 U 3824/22 Kart, (Judgment of 20 March 2025).
In this case, the Munich Higher Regional Court attempted to fill a gap left by the Court of Justice of the European Union (CJEU) in Huawei v. ZTE regarding an implementer’s obligation to provide adequate security for royalties. This obligation arises when an implementer rejects a SEP holder’s license offer and the SEP holder rejects the implementer’s counteroffer, so there is no agreement on a license.
The Munich Court found that the implementer, HMD Global, provided an inadequate security that was based on HMD Global’s lower counteroffer. The Court explained that it is the SEP holder’s, here VoiceAges, final offer (i.e., the requested royalty) that is determinative for calculating the security amount that an implementer should provide. This is because a willing licensee must accept the SEP holder’s offer if a court declares it to be FRAND and the royalties subject to this offer must be covered by the security. The Court emphasized that an implementer can only establish that it is a willing licensee by making a counteroffer and providing adequate security after rejecting the offer.
However, the Munich Court left open the issue of whether security must be provided if the SEP holder’s final offer is obviously not FRAND, noting that there may be “special cases” where the SEP holder’s final offer may not be determinative of the security without further defining those cases.
The CJEU’s Guidelines to FRAND Negotiations Are Not a Rigid Set of Rules
The Munich Court also took a critical stance in response to the European Commission’s amicus curiae brief and found that the FRAND guidelines set by the CJEU in Huawei v. ZTE are not to be viewed as a rigid set of rules but rather as a “dynamic concept for negotiation.” A court is not limited to assessing the FRAND defense by strictly examining in sequence each step of the CJEU’s guidelines, which includes the following:
The SEP holder must send a notice of infringement to the implementer.
The implementer must declare to be a willing licensee.
The SEP holder must make a FRAND offer.
If the offer is not FRAND, the implementer is allowed to reject it but must make a counteroffer.
The implementer must provide adequate security for royalties if the SEP holder rejects the implementer’s counteroffer.
The European Commission argued that a court must examine each step before moving on to the next one. This means that, for example, once a court has found that the implementer is a willing licensee, the court must leave the implementer’s subsequent (possibly non-FRAND) conduct out of consideration and cannot undermine the implementer’s established willingness to take a license. A court must then assess whether the SEP holder’s offer was FRAND.
Instead, in view of the Munich Court (a view that is also shared by the Unified Patent Court (Local Division Munich, judgment of 18 December 2024, Case No. ACT_459771/2023, UPC_CFI_9/2023)), a court may consider the entirety of the parties’ conduct, including subsequent conduct, during FRAND negotiations. Therefore, a party may not rely on a formal omission by the other party, such as the absence (or inadequacy) of an infringement notice or a declaration to be a willing licensee in the early stages of negotiations, if the omission was remedied by the party’s subsequent conduct and the parties continued to negotiate with the goal of concluding a license. On the other hand, the implementer’s subsequent non-FRAND conduct may undermine its established willingness to take a license.
No Review of the SEP Holder’s Final Offer if the Implementer Fails to Comply With Its FRAND Obligations After Rejecting the Offer
The Munich Court found that it need not review whether the SEP holder’s final offer was FRAND before assessing the implementer’s conduct after rejecting the offer.
The Munich Court explained that in general, whether a SEP holder’s final offer is FRAND is not decisive to the success of a FRAND defense because even if a SEP holder’s offer is not FRAND, the implementer cannot simply walk away from the negotiations. Instead, to comply with its CJEU negotiation obligations, the implementer must take further action, such as making a counteroffer and providing adequate security, to maintain a FRAND defense against a SEP holder’s injunction claim. In other words, the implementer will lose its FRAND defense anyway if it does not comply with its own FRAND obligations. Therefore, a court is only required to perform the time-consuming examination of whether the SEP holder’s final offer is FRAND if the implementer has complied with its own CJEU FRAND obligations.
Practice Notes
This judgment by the Munich Court strengthens the position of SEP holders. Implementers should consider providing security for royalties in the amount of the SEP holder’s final offer even if the relevant royalties seem to slightly exceed what might be considered as FRAND. Otherwise, an implementer risks a finding that it is an unwilling licensee, thus losing its FRAND defense.
It is also noteworthy that the Munich Court expressly allowed an appeal to the German Federal Court of Justice. This is rare in German case law and shows that the Munich Court is aware that its decision touches on a fundamental issue of FRAND law that still needs to be clarified by the German Federal Court of Justice. The appeal has already been filed (Case No. KZR 10/25).
EU Deforestation-Free Products Regulation (EUDR): Simplification is Taking Shape in EU Commission’s Guidance
On 15 April 2025, the European Commission issued a series of documents with a view to simplifying and amending Regulation (EU) 2023/1115 on deforestation-free products (‘EUDR’).
In line with the broader simplification trend that marks the beginning of the second Von der Leyen Commission, the documents bring about an easing in reporting requirements as well as clarification. They are expected to bring about together a 30% reduction of administrative costs, and considerably reduce the number of due diligence statements that companies need to file.
The initiative follows a period of high uncertainty in the end of 2024, during which discussions on the postponement of the EUDR’s application by one year were associated with a strong push for a reopening of discussions on the substance of the EUDR obligations. To avoid lengthy discussions, the Council and the European Parliament had at the time decided to only amend EUDR provisions setting out delays.
The updated EUDR Guidance and FAQ seem to aim to remedy certain concerns raised since, notably by the conservative majority at the Parliament (EPP), by introducing the following simplification elements:
Companies can reuse existing due diligence statements when goods, that had been previously placed on the market are reimported;
An authorised representative can now submit a due diligence statement on behalf of members of company groups;
Companies may submit their due diligence statements annually instead of a batch-specific declaration;
Non-SME operators and traders can now fulfill their duty to ‘ascertain upstream due diligence’ by collecting and referencing their direct suppliers’ DDS numbers, without systematically checking every single statement or being required to collect information included under Article 9
They are accompanied by a Draft delegated Act submitted for consultation until 13 May 2025, providing further precisions to the list of products included under Annex I of the EUDR (e.g. that are subject to the due diligence requirements), notably considering the exemption of certain packaging elements from the EUDR requirements.
While the above simplifications appear to remedy certain concerns of the industry, the choice of non-binding guidance ensures an efficient decision-making process but leaves some uncertainties in the implementation of the EUDR requirements. Ultimately, clarification by way of an amendment to the text of the EUDR itself could be required to bring about further clarity.
Nayelly Landeros Rivera contributed to this article
To AI or Not to AI? The Use of AI in Employment Decisions
Even just a few years ago, the concept of using artificial intelligence (AI) in everyday life was a novel, if somewhat intimidating, concept. But from Google’s AI overview to Microsoft’s Copilot, many of us use AI daily to help increase efficiency and streamline certain processes. If you are an employer using AI to sort through job applications and resumes, to make decisions based on background check information, or to sort through criteria for promotion or termination decisions, you need to consider the legal ramifications, which increasingly involve federal and state laws.
The State and Local Legal Landscape
Some state legislatures and local governments, in attempting to get ahead of any issues, have started considering or issuing guidance or legislation aimed at preventing employment discrimination resulting from the use of AI tools. For example, New Jersey has issued guidance indicating that the use of AI in employment decisions will be subject to the same antidiscrimination laws as non-AI decisions and that employers will be liable for discrimination caused by AI tools they did not design. Both Colorado and Illinois have passed laws, effective in 2026, prohibiting employers from using AI in a discriminatory manner and requiring certain disclosures when using AI in certain employment decisions. New York City passed a local law, effective July 2023, that regulates the use of AI in employment decisions. Maryland and California have proposed but have not yet passed AI legislation, and even more states are in the early stages of considering laws regulating employer use of AI in employment decisions.
Where Is the Federal Government on This Issue?
It is currently unlikely that federal legislation is forthcoming, although that could change in the years to come. In 2023 and 2024, the Equal Employment Opportunity Commission and the Department of Labor issued guidance on the use of AI in employment decisions. That guidance was rescinded following President Trump’s January 2025 executive order revoking policies and directives acting as “barriers” to “AI innovation.”
Now What?
While this is an evolving area, employers, especially those with remote employees across the United States, must keep up to date on state or local laws on the use of AI in employment decisions. As a general rule, make sure that any AI you are using complies with federal anti-discrimination laws. Other best practices include:
Have a policy on if and how you are going to use AI;
Vet your AI vendors and make sure they have considered the potential adverse impact of their products;
Notify employees or prospective employees that you are using AI in employment decision- making;
Regularly audit AI results to see if protected groups are being disproportionately impacted;
Ensure employees responsible for implementing AI tools have the proper training and are using such tools appropriately; and
Consult with subject matter experts and legal counsel as necessary.
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CMS Releases Final Rate Announcement for 2026 MA, Part D Payment Rates and Policies
The Centers for Medicare & Medicaid Services (CMS) recently finalized the 2026 Medicare Advantage (MA) and Part D Payment Rates and Policies, including a net 5.06% increase in payments to MA plans before accounting for coding trends. The overall increase reflects an average county benchmark growth rate of 9.04% along with continued phase-in of changes to the MA risk model and rebasing of county benchmark amounts. The updates and changes to payment policies are important for plans in preparing offerings and bids for 2026, as well as providers and others who do business with MA plans or are thinking about engaging with MA.
Read on as we explore the final rate notice summary and its implications for stakeholders.
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Germany’s Supply Chain Law at a Crossroads: The Implications of the Proposed Shift to the CSDDD
In April 2025, CDU, CSU, and SPD – the coalition parties almost certainly forming Germany’s next federal government – announced their intention to repeal the German Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz (LkSG)) as part of a broader initiative to reduce administrative and economic burdens. According to the coalition agreement, the LkSG shall be replaced with legislation implementing the EU Corporate Sustainability Due Diligence Directive (CSDDD) in a bureaucracy-light and enforcement-friendly manner. The reporting obligations under the LkSG shall be abolished immediately, and enforcement of existing obligations shall be suspended, except in cases of grave human rights violations, until the new EU-aligned framework enters into force and is implemented in German law.
This legislative shift is causing widespread uncertainty among companies, many of which have already undertaken significant efforts to implement the LkSG since it came into force in January 2023. The law currently obliges large enterprises with more than 1,000 employees since 2024 onwards to establish comprehensive due diligence mechanisms, including annual risk assessments, grievance mechanisms, and supply chain monitoring, with potential fines reaching up to 2% of global turnover in the event of non-compliance.
While some industry associations have welcomed the repeal as a step toward deregulation, the announcement has also raised significant concerns within the business and legal communities. Numerous companies have already made considerable investments to comply with the LkSG, establishing compliance systems, internal governance structures, and supplier monitoring mechanisms. The prospect of a repeal, especially after only a short period of application, has introduced legal uncertainty and operational ambiguity, particularly with respect to future compliance expectations.
From a legal perspective, the formal abolition of the LkSG would require a new act adopted by the parliament. Earlier attempts to initiate such a legislative reversal failed due to insufficient parliamentary support. Nevertheless, the linkage of national legislation with the EU’s CSDDD offers a feasible path for reform by way of harmonized substitution rather than outright repeal. The CSDDD covers both human rights and environmental obligations and applies not only to direct suppliers but, under certain conditions, also to indirect supply chain actors. Notably, the CSDDD introduces civil liability provisions and imposes obligations on a broader spectrum of business activities, including downstream operations such as recycling and distribution.
The EU Commission’s Omnibus proposals aim to address some of the implementation challenges previously identified under the LkSG. Proposed key modifications include limiting the scope of due diligence to direct business partners unless specific risks are identified further down the supply chain, reducing the frequency of effectiveness monitoring from annually to once every five years, and restricting the information that can be demanded from SMEs. These reforms are intended to strike a balance between ensuring substantive sustainability commitments and preserving economic viability, particularly for companies operating within complex global value chains.
Despite these developments, civil society organizations have strongly opposed the dismantling of the LkSG. The “Initiative Lieferkettengesetz”, a coalition of over 140 NGOs, religious institutions, and trade unions, has described the planned repeal as a serious regression in the protection of human rights and environmental standards. They argue that the LkSG has already led to tangible structural improvements and that weakening it sends the wrong signal to companies that have acted in good faith.
Meanwhile, supervisory authorities such as the Federal Office for Economic Affairs and Export Control (BAFA) have begun to enforce the LkSG with targeted inquiries and audits, particularly in high-risk sectors. These enforcement activities prompted many companies to accelerate their compliance efforts, contributing to the establishment of internal processes that may now remain relevant under the forthcoming CSDDD regime.
Considering the transitional phase between the phasing out of the LkSG and the implementation of the CSDDD, companies are advised to avoid dismantling existing due diligence systems prematurely. While certain regulatory relief may be on the horizon, reputational and legal risks remain, particularly in the event of adverse public exposure or litigation. Moreover, the CSDDD will introduce new obligations concerning environmental risks, for which most businesses will need to gather additional information and develop appropriate compliance tools.
In conclusion, the repeal of the LkSG marks a turning point in Germany’s supply chain regulation. While the transition to EU-level harmonization promises simplification in some areas, it also brings new challenges and legal uncertainties. Companies are well advised to maintain a forward-looking compliance posture, preparing not only for reduced national reporting burdens but also for the broader and more integrated responsibilities under the CSDDD.