CTA Drastically Pared Back
As promised by the US Department of Treasury in early March, the Financial Crimes Enforcement Network (FinCEN) issued an interim final rule removing the requirement for US companies, their beneficial owners, and US persons to report beneficial ownership information (BOI) to FinCEN under the Corporate Transparency Act (CTA).
Now, only non-US entities that have registered to do business in the United States are subject to the CTA.
See our prior alert on Treasury’s March 2 announcement here.
Only Non-US Entities Subject to the CTA
The interim final rule, issued by FinCEN on March 21 and published on March 26, amends the BOI reporting rule to revise the definition of “reporting company” to extend only to entities formed under the law of a foreign country that have registered to do business in any US state or tribal jurisdiction by filing a document with a secretary of state or similar office. This category of entities under the original rule was termed “foreign reporting companies.” And, in a related move, the interim final rule also formally exempts domestic entities (formerly known as “domestic reporting companies”) from the CTA’s requirements.
No BOI Reporting of US Persons Is Required
Furthermore, reporting companies are not required to report the BOI of any US persons who are beneficial owners, and US persons are exempt from having to provide BOI with respect to any reporting company for which they are a beneficial owner.
Company Applicant Reporting Is Still Required
The concept of a “company applicant” has been retained for the foreign entities still subject to the CTA, but it applies only to the individual who directly files the document that first registers the reporting company with a state or tribal jurisdiction and to the individual (if different from the direct filer) who is primarily responsible for directing or controlling that filing. A company applicant may be a US person and is not exempted from being reported as a company applicant by virtue of being a US person.
New Initial Reporting Deadlines
Foreign entities that are “reporting companies” under the interim final rule and do not qualify for an exemption from reporting under the CTA are subject to new deadlines:
Reporting companies registered to do business in the United States before March 26 must file BOI reports by April 25.
Reporting companies registered to do business in the United States on or after March 26 have 30 calendar days to file an initial BOI report after receiving notice that their registration is effective (or public notice has been provided, such as through a publicly accessible registry).
Having filed an initial BOI report, a foreign entity that is a reporting company is subject to the 30-day deadline after March 26 to file an updated or corrected report as needed.
Next Steps
FinCEN is accepting comments on the interim final rule until May 27 and intends to finalize it later this year.
There are certain special cases that remain ambiguous under the interim final rule, such as that of a company that has been formed and exists simultaneously in the United States and in a foreign country. Based on the text of the interim final rule, such a company appears to not be a “reporting company,” as it presumably would fall within the new regulatory exemption for an entity that has been created by the filing of a document with a secretary of state or similar office under the law of a US state or tribal jurisdiction. But, as of now, the matter is not entirely clear.
With the changes wrought by the interim final rule, most companies are no longer subject to the CTA. For various reasons, the number of foreign entities that have registered to do business in the United States is small, and those companies may wish to consider restructuring their US activities to avoid a continued CTA obligation (although they may still need to file an initial report with FinCEN), such as by creating a US operating subsidiary.
KEYS TO THE CASTLE: Castle Credit Stuck in TCPA Class Action Over Debt Collection Calls
TCPA class actions can be incredibly scary and pose a massive risk to callers of all sorts.
While the statute has generally been enforced against marketers as of late, servicers and collectors or debts may also find themselves in TCPA hot water, particularly if they are using prerecorded calls or ringless voicemail.
This is true even when a calling party originally has consent–that consent can burst like a bubble anytime a consumer asks for calls to stop. And it can be VERY difficult to prove a negative unless every call is recorded.
For instance in Cannon v. Castle Credit, 2025 WL 975805 (N.D. Ill April 1, 2025) a Defendant’s motion for summary judgment was denied–i.e. the collector must face trial–because the plaintiff claims he revoked his consent.
In Cannon Castle allegedly called Plaintif hundreds of times, including through the use of a ringless voicemail system (VoApps.)
Plaintiff claimed that he asked not to be called on several of those calls. However the Defendant’s records did not reflect the do not call request and calls continued.
Defendant moved for summary judgment arguing the Plaintiff’s inability to provide the specifics around his revocation coupled with the numerous call recordings of calls in which Plaintiff did not revoke consent demonstrated he never actually revoked as he claimed.
But the Court sided with Plaintiff finding his testimony that he revoked consent was sufficient admissible evidence to require a jury to figure out what really happened.
Making matters worse, although Defendant argued it had not used an ATDS the Court determined that did not matter– Castle’s concession it had used VoApps (a prerecorded RVM) meant it was potentially liable under 227(b) regardless of whether an ATDS was ued.
This last point is an important one to drive home. Even if calls are placed manually leaving a prerecorded voicemail will automatically trigger the TCPA. So be careful!
Also worth noting, this case arises out of a REVOCATION that allegedly went unheeded. Will in just 9 days the scope of revocation rules is about to EXPLODE. If you’re not ready for this you need to be! (The FCC has taken no action to stay the rule as of yet, although many are hoping it will.)
Wyoming Enacts Law to Restrict the Use of Noncompete Agreements
Employers in Wyoming will soon be limited in their use of noncompete agreements under a newly enacted law that makes the state the latest of a growing number of states to restrict noncompete agreements in the employment context.
Quick Hits
Wyoming enacted legislation that will void noncompete agreements with employees with limited exceptions.
Noncompete agreements will remain permissible in certain contexts, such as the sale of a business, the protection of trade secrets, the recovery of employers’ costs to relocate or train employees, and to restrict post-employment activity of executive or managerial personnel and their key staff.
The law also prohibits noncompete clauses in agreements involving physicians and will allow them to inform patients with certain rare disorders of their new practice without facing liability.
The law only applies to contracts entered into on or after July 1, 2025.
On March 19, 2025, Governor Mark Gordon signed Senate File 107 into law, which will significantly limit the enforceability of noncompete covenants in employment contracts. The new legislation, which will take effect on July 1, 2025, applies to contracts entered into on or after that date. Employers that use restrictive covenants will have to rethink how they protect their business interests and manage their workforce.
In enacting the new noncompete prohibitions, Wyoming joins a growing list of states, which includes California, Minnesota, and Oklahoma, to impose significant restrictions or completely ban employee noncompete agreements. Ohio is also considering a bill that would ban noncompete agreements for workers or prospective workers this legislative session.
Here is what employers need to know about the new Wyoming law and its implications.
Employee Noncompete Agreements Are Void
The law declares that as of July 1, 2025, “[a]ny covenant not to compete that restricts the right of any person to receive compensation for performance of skilled or unskilled labor” is void. The law applies prospectively to contracts entered into on or after July 1, 2025, specifically stating that “[n]othing in this act shall be construed to alter, amend or impair any contract or agreement entered into before July 1, 2025.”
Key Exceptions to the Ban
While Senate File 107 broadly invalidates noncompete agreements, the law contains some notable exceptions:
Sale of Business—Under the law, noncompete clauses remain enforceable in contracts related to the purchase and sale of a business or its assets.
Protection of Trade Secrets—The law will permit the use of noncompete agreements or clauses “to the extent the covenant provides for the protection of trade secrets” as they are defined under state law.
Recovery of Training Expenses—The law permits employers to include provisions in employment contracts allowing them to recover relocation, education, and training expenses, with recovery amounts decreasing based on the length of the employee’s service. (Up to 100 percent for service less than two years, up to 66 percent for between two and less than three years, and up to 33 percent for between three and less than four years.)
Executive and Management Personnel—The law exempts the noncompete ban for agreements involving “[e]xecutive and management personnel and officers and employees who constitute professional staff to executive and management personnel.”
Although not defined, the “executive and managerial personnel” restriction substantially mirrors a prior version of Colorado’s noncompete statute. Cases interpreting the Colorado statute recognized that the issue would typically be a question of fact. However, courts routinely recognized that restrictive covenants could be applied to both key personnel who are “in charge” and individuals who conduct or supervise a business, often including various levels of management.
Special Considerations for Physicians
Senate File 107 specifically declares void “[a]ny covenant not to compete provision of an employment, partnership or corporate agreement between physicians that restricts the right of a physician to practice medicine … upon termination of the physician’s employment, partnership or corporate affiliation.” The law will further allow physicians, upon termination of their employment, the partnership, or corporate affiliation, to inform patients with certain “rare disorders[s]” about their new practice and provide their contact information without facing liability.
Next Steps
Wyoming’s new noncompete law marks a significant shift in the state, reflecting a broader national trend. That trend could continue, particularly after a 2024 Federal Trade Commission (FTC) rule that sought to ban nearly all noncompete agreements in employment was struck down in court. The government had appealed but the Trump administration has halted those appeals while it considers the FTC’s rule.
In light of the changes, employers in Wyoming may want to consider reviewing and revising any new employment contracts and evaluating alternative strategies for protecting their business interests. Employers using noncompete agreements may want to consider whether those provisions are being applied in one of the specifically enumerated exceptions. Employers may also want to ensure that noncompete agreements that fall into one of the permissible categories have reasonable geographic and temporal limitations. Wyoming courts will not blue pencil or revise noncompliant restrictive covenants, and instead, noncompliant restrictive covenants will be voided.
B2B BLUES: Residential Usage of Business Phone Continues to Trap Marketers
In Ortega v. Sienna 2025 WL 899970 (W.D. Tex. March 4, 2025) a company calling to offer inventory loans to businesses dialed a number that was being “held out” as a business. Yet the Plaintiff suing over those calls claimed the number was residential in nature.
The defendant moved to dismiss but the Court refused to throw out the case crediting the plaintiff’s allegation of residential usage:
At this stage in the litigation where the Court is limited to evaluating the pleadings and does not have an evidentiary record, it would not be proper to decide whether Mr. Ortega’s phone number is a business number or a personal/residential number for TCPA purposes. As the FCC has acknowledged, whether a cell phone is “residential” is a “fact intensive” inquiry. See id. This is a summary-judgment issue
Get it?
Even though Defendant claimed to have evidence of Plaintiff’s use of the number for business purposes that issue cannot be resolved at the pleadings stage. So the case lives on.
Plus although the court suggests a summary judgment might be appropriate here, past cases have found a question of fact where the plaintiff testifies to residential usage but the evidence shows otherwise. This means the issue might end up at trial!
The Court went on to find Plaintiff’s allegations his DNC request was not heeded demonstrated the caller may not have a DNC policy, which is a separate violation.
Last the Court determined a claim had been stated under under Texas Business and Commerce Code § 302.101 and § 305.053. Section 302.101 because the caller was allegedly marketing without a license, as required in Texas.
So there you go.
B2B callers need to heed the TCPA and particular the DNC requirements. Do NOT think you are exempt merely because you’re not calling residences or for a consumer purpose. You are not!
Plus state marketing registration requirements DO apply to you. Don’t get confused!
This Week in 340B: March 25 – 31, 2025
Find this week’s updates on 340B litigation to help you stay in the know on how 340B cases are developing across the country. Each week we comb through the dockets of more than 50 340B cases to provide you with a quick summary of relevant updates from the prior week in this industry-shaping body of litigation.
Issues at Stake: Rebate Model; Contract Pharmacy; Other
In four cases against the Health Resources and Services Administration (HRSA) alleging that HRSA unlawfully refused to approve drug manufacturers’ proposed rebate models, 37 state and regional hospital associates filed an amici brief in support of HRSA.
In a breach of contract case filed by a covered entity against a Medicare Advantage plan, the covered entity dismissed the case in its entirety with prejudice.
In an appealed case challenging a proposed West Virginia law governing contract pharmacy arrangements, plaintiff-appellees filed a brief, and in another similarly appealed case, appellants filed a reply brief.
In a case challenging a proposed state law governing contract pharmacy arrangements in Missouri, plaintiffs filed a notice of appeal with the Eighth Circuit.
AI Patent Law: Navigating the Future of Inventorship
As a patent attorney experienced in transformer-based AI architectures and large language models (LLMs), I want to share insights on the evolving landscape of AI-assisted inventions. This is particularly relevant in view of the 2024 publication of the USPTO’s AI Inventorship Guidance (“Inventorship Guidance for AI-Assisted Inventions,” published February 13, 2024, 89 FR 10043, available at https://www.federalregister.gov/documents/2024/02/13/2024-02623/inventorship-guidance-for-ai-assisted-inventions), which provides guidance to inform practitioners and the public about inventorship for AI-assisted patent claims.
To paraphrase the AI Inventorship Guidance, all patent claims must have significant contribution from a human inventor, with each claim requiring at least one natural person inventor who made a significant contribution to the claimed invention. When AI systems are used in claim drafting, practitioners must be particularly vigilant if the AI introduces alternate embodiments not contemplated by the named inventors, as this requires careful reevaluation of inventorship to ensure proper attribution. Additionally, if any claims are found to lack proper human inventorship, where no natural person made a significant contribution, then those claims must be either canceled or amended to reflect proper inventorship by a human.
Human Contribution to Invention
The USPTO requires that at least one human inventor demonstrates significant involvement in the invention process. This contribution must extend beyond presenting a problem to the AI or merely recognizing the AI’s output.
Compliance with Pannu Factors
To qualify as an inventor, a person must meet the Pannu Factors:
Significant contribution to conception or reduction to practice of the invention.*
Contributions that are not insignificant relative to the entire invention.
Activities beyond explaining well-known concepts or reiterating prior art.
Substantial Contribution to the Claimed Invention
The human inventor’s input must be meaningful when evaluated against the complete scope of the claimed invention. Examples of substantial contributions include:
Constructing specific AI prompts designed to solve targeted problems.
Expanding on AI-generated outputs to develop a patentable invention.
Designing or training AI systems tailored for specific problem-solving purposes.
What Constitutes Inventorship in AI-Assisted Innovations?
Several activities can establish inventorship in AI-assisted technologies:
Creating detailed prompts intended to generate targeted solutions from AI systems.
Contributing substantively beyond AI outputs to finalize the invention.
Conducting experiments based on AI results in unpredictable fields and recognizing the inventive outcomes.
Designing, building, or training AI systems to address specific challenges.
What Does Not Constitute Inventorship?
Certain activities fail to meet the threshold for inventorship, such as:
Recognizing a problem or presenting a general goal to the AI.
Providing only basic input without significant engagement in problem-solving.
Simply reducing AI-generated outputs to practice.
Claiming inventorship based solely on oversight or ownership of the AI system.
Practical Strategies for Patent Practitioners
Document Human Contributions: Maintain detailed records of human involvement in the invention process to establish inventorship.
Evaluate Claim Scope: Ensure each claimed element is supported by sufficient human input to meet the USPTO’s requirements.
Correct Inventorship Issues Promptly: Address discrepancies in inventorship to protect the patent’s validity and enforceability.
Drawing from my experience guiding AI-assisted innovations through the patent process, I have seen how vital these strategies are for robust IP protection.
* While the Pannu factors do mention reduction to practice, the Federal Register clarifies that “[t]he fact that a human performs a significant contribution to reduction to practice of an invention conceived by another is not enough to constitute inventorship” (https://www.federalregister.gov/documents/2024/02/13/2024-02623/inventorship-guidance-for-ai-assisted-inventions). Reduction to practice without simultaneous conception (such as in unpredictable arts) is insufficient to demonstrate inventorship. Inventorship continues to require human conception of the invention.
SEC Climate Disclosures Rules One Step Closer to the Grave; GHG Emissions Disclosures One Step Closer to Becoming a Multi-State Compliance Issue
The slow death of the Securities and Exchange Commission’s (SEC) climate disclosure rules continued on March 27, 2025, with the SEC Commissioners voting to discontinue the defense of such rules before the Eighth Circuit, Iowa v. SEC, No. 24-1522 (8th Cir.), which is where the numerous complaints challenging the rules were consolidated.[1] The SEC’s action does not withdraw or terminate the rules, but while they remain in place, the SEC’s previous stay of the rules continues. It will be interesting to see if the Democratic attorneys general from a number of states who joined the litigation in support of the rules will continue to defend the rules without the SEC’s support.
While the SEC has made clear that it will not be pursuing its climate disclosure rules[2], companies may still need to comply with climate disclosure laws of other jurisdictions, including the European Union’s Corporate Sustainability Reporting Directive and California’s climate disclosure rules. In addition, legislation similar to California’s “Climate Corporate Data Accountability Act” (CA SB 253)[3] which was later amended by California Senate Bill 219[4] has been introduced in New York[5], Colorado[6], New Jersey[7], and Illinois[8] that would require companies with more than $1 billion in annual revenue and doing business in the particular state to annually report their greenhouse gas (GHG) emissions, similar to what California will require beginning in 2026.
To add to the list of considerations for companies to keep on their radar, U.S. Senator Bill Hagerty recently introduced federal legislation to “prohibit entities integral to the national interests of the United States from participating in any foreign sustainability due diligence regulation, including the Corporate Sustainability Due Diligence Directive of the European Union”.[9] While Senator Hagerty’s bill appears to be symbolic and unlikely to be enacted, it has a private right of action that could prove troublesome if the legislation should be enacted.
[1] See, Press Release 2025-58, Securities and Exchange Commission, “SEC Votes to End Defense of Climate Disclosure Rules” (March 27, 2025), https://www.sec.gov/newsroom/press-releases/2025-58.
[2] Securities and Exchange Commission, Final Rule “The Enhancement and Standardization of Climate-Related Disclosures for Investors,” 17 CFR 210, 229, 230, 232, 239, and 249, adopting release available at https://www.sec.gov/files/rules/final/2024/33-11275.pdf.
[3] Cal. Health & Safety Code § 38532.
[4] Senate Bill 219, Greenhouse gases: climate corporate accountability: climate-related financial risk, Cal. Health & Safety Code §§ 38532, 38533, Bill Text available at https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202320240SB219.
[5] New York Senate Bill S3456, “Climate Corporate Accountability Act,” available at https://www.nysenate.gov/legislation/bills/2025/S3456.
[6] Colorado House Bill 25-1119, “A Bill for an Act concerning requiring certain entities to disclose information concerning greenhouse gas emissions,” available at https://leg.colorado.gov/bills/HB25-1119.
[7] New Jersey Senate Bill 4117, “Climate Corporate Data Accountability Act,” available at https://legiscan.com/NJ/text/S4117/2024.
[8] Illinois House Bill, “Climate Corporate Accountability Act,” available at https://www.ilga.gov/legislation/BillStatus.asp?DocNum=3673&GAID=18&DocTypeID=HB&LegId=162463&SessionID=114&GA=104.
[9] Senate Bill 985, 119th Congress (2025-2026), ‘‘Prevent Regulatory Overreach from Turning Essential
Companies into Targets Act of 2025’’ or the ‘‘PROTECT USA Act of 2025,’’ Bill Text available at https://www.hagerty.senate.gov/wp-content/uploads/2025/03/HLA25119.pdf
Alternative Paths: Court Denies Motion to Dismiss Quiet Hours Provision Claim
Many lawsuits in the past few months have claimed violations of 47 C.F.R. § 64.1200(c)(1) and 47 U.S.C. § 227(c)(2) (the “Quiet Hours Provision”) of the TCPA. Previously, the Quiet Hours Provision saw very few filings, meaning there is currently very little case law interpreting this area of law. On March 28, 2025, the District of New Jersey denied a motion to dismiss a Quiet Hours Provision claim—and potentially gave a preview of how the cases will be adjudicated in a practical manner.
In Jubb v. CHW Group Inc., No. 23CV23382 (EP) (MAH), 2025 WL 942961 (D.N.J. Mar. 28, 2025), the court denied a motion to dismiss which argued that the Quiet Hours Provision claim was duplicative of the plaintiff’s Do Not Call (“DNC”) claim. Id. at *7. The defendant in Jubb argued that the Quiet Hours Provision claim should be dismissed as duplicative of the DNC claim, because both claims arise from 47 U.S.C. § 227(c).
There is no doubt that both claims arise out of Section 227(c). Section 227(c)(5) of the TCPA is where we see a lot of claims—this is the DNC provision. The DNC provision provides that, when an individual whose phone number has been registered on the national DNC registry for more than thirty days receives more than one telephone solicitations in a twelve-month period, that individual has a private right of action. See 47 U.S.C. § 227(c)(5). Section 227(c)(2), on the other hand, implements additional regulations, including the Quiet Hours Provision, which provides the same private right of action for telephone solicitations made either before 8 a.m. or after 9 p.m., in the recipient’s local time. See 47 U.S.C. § 227(c)(2); C.F.R. § 64.1200(c)(1).
Ultimately, there is no doubt that post-trial recovery is limited to one violation of Section 227(c) per call, a point which neither party contested. Jubb, 2025 WL 942961, at *6. However, post-trial recovery is not the issue on a motion to dismiss. The Jubb court found that a plaintiff may plead multiple claims in the alternative—then limit recovery at the time of trial. See id.
Pleading alternative claims under Section 227(c) allows a plaintiff to seek certification of two different types of classes, either in the alternative or as part of a subclass, presenting a greater risk of liability for defendants. These alternative claims have always been permitted, even under Section 227(c), for instance with internal DNC list violations and external DNC violations. The Quiet Hours Provision now offers a new option for plaintiffs.
In a silver lining here for defendants, the court seemed to take heed of a recent petition made to the Federal Communications Commission. The Petition for Declaratory Ruling and/or Waiver of the Ecommerce Innovation Alliance and Other Petitioners, CG Docket Nos. 02-278, 21-402 (filed Mar. 3, 2025) seeks a declaratory ruling that the time zone of the recipient’s area code—rather than the recipient’s actual location—should be used to determine which time zone is the “recipient’s local time” under the Quiet Hours Provision.
The Jubb court did not directly cite the petition. However, the court did note that the Plaintiff had an area code that corresponded with the pacific time zone. Jubb, 2025 WL 942961, at *2. This is a much more practical and workable way to determine the recipient’s local time than looking to the recipient’s actual location.
Currently, the language of the Quiet Hours Provision requires a telemarketer to restrict telephone solicitations to between 8 a.m. and 9 p.m., based on “local time at the called party’s location.” C.F.R. § 64.1200(c)(1). Realistically, there is no way for a telemarketer to know the precise location of the individuals they contact. Even if a telemarketer knows and actively monitors the current physical address of their leads, the recipient could be on vacation or an extended business trip in Taiwan, changing the hours of the recipient’s local time. Using the recipient’s area code rather than their actual, physical location makes the most sense—but there is an argument that this reading is not directly supported by the plain language of the Quiet Hours Provision.
Even if the FCC petition is unsuccessful, the Jubb ruling provides some support for arguing that a recipient’s area code determines the recipient’s time zone, making the Quiet Hours Provision more workable from a compliance perspective.
We have seen many cases around the Quiet Hours Provision and have seen many voluntary dismissals of those same cases since then, likely from settlements. As case law begins to come out in this area, there are sure to be more updates to follow.
Understanding Liability Waivers for Equine Activities in North Carolina
A person’s participation in equine activities, such as horseback riding, training, and competitions, involves certain inherent risk due to the foreseeability of harm that could occur when interacting with a horse.
In North Carolina, as in many states, liability waivers are often used to protect equine activity sponsors, such as individuals, groups, clubs, partnerships, or corporations from legal claims arising from injuries sustained during these activities. However, the enforceability and effectiveness of the waivers depends on compliance with state laws, including the North Carolina Equine Activity Liability Act.
The North Carolina Equine Activity Liability Act
North Carolina has enacted the Equine Activity Liability Act (the “Act”), codified at N.C. Gen. Stat. § 99E-1 to § 99E-5, to limit the liability of equine activity sponsors and equine professionals. The Act recognizes that equine activities come with inherent risks, such as unpredictable animal behavior and the possibility of an equine behaving in ways that may result in injury, harm, or death to the persons around or on them. Under the Act, people who engage in equine activities assume these risks and generally cannot hold equine sponsors or equine professionals liable for injuries resulting from inherent dangers.
However, the statute does not provide blanket immunity. Liability may still arise if:
the equine activity sponsor or equine professional supplies faulty equipment or tack that leads to the injury, damage, or death.
the sponsor or professional provides the equine and fails to make reasonable efforts to determine the participant’s ability to (a) engage safely in the activity or (b) manage the specific equine.
the sponsor or professional has willful or wanton disregard for the safety of the participant that leads to the injury, damage, or death.
The sponsor or professional fails to post the required warning sign in required locations (the sign must include the warning language discussed below).
The Role of Liability Waivers
Liability waivers serve as an additional layer of protection for equine businesses by requiring participants to acknowledge the risks involved and waive their right to sue. While the Act provides statutory protection, a properly drafted waiver reinforces this protection and may be crucial in defending against a lawsuit.
To be enforceable in North Carolina, a liability waiver should:
Be clearly written and unambiguous – Avoid complex legal jargon and ensure the participant understands the rights they are waiving.
Specifically reference equine activities – The waiver should explicitly state that the participant assumes the risks associated with horseback riding and related equine activities.
Be voluntarily signed by an informed participant – An agreement with a minor is voidable so, the minor’s parent or legal guardian should sign the waiver on behalf of the minor. (Nonetheless, a liability waiver may only be enforceable against the minor’s parent or legal guardian and not the minor because a parent cannot bind their minor child to pre-injury liability waivers. There are exceptions for non-commercial activities that are sponsored by non-profits, schools, or other volunteer programs and organizations.)
Include the statutory warning language – North Carolina law requires equine activity sponsors to post and include in contracts the following warning:
“WARNING: Under North Carolina law, an equine activity sponsor or equine professional is not liable for an injury to or the death of a participant in equine activities resulting exclusively from the inherent risks of equine activities. Chapter 99E of the North Carolina General Statutes.”
Common Scenarios Requiring Equine Liability Waivers
Equine liability waivers are essential in a variety of settings where individuals engage with horses. Examples include:
Horseback Riding Lessons – Riding instructors require students (or their guardians) to sign waivers acknowledging the risks of horseback riding.
Trail Riding Businesses – Companies offering guided trail rides need waivers to protect against claims from rider participants.
Boarding and Training Facilities – Horse owners boarding their horse(s) or receiving training at a facility sign waivers to release the facility from liability for injuries that occur on the property.
Horse Leasing or Rentals – Individuals leasing or renting horses for personal use, sign waivers acknowledging the risks involved.
Equine Therapy Sessions – Organizations offering equine-assisted therapy often require waivers of participants.
Competitions and Events – Riders entering equestrian events, rodeos, or shows must typically sign waivers as a condition of participation.
Volunteer Work at Stables – Volunteers helping with horse care or barn duties sign waivers recognizing potential injury risks.
Limitations of Liability Waivers
While liability waivers are useful, they do not provide absolute immunity. North Carolina courts will not enforce waivers that are contradictory with state law, gained through unequal bargaining power, or contrary to public policy. Additionally, a waiver cannot protect against gross negligence, willful or wanton disregard, reckless conduct, or intentional harm.
Conclusion
For equine professionals and facility owners in North Carolina, a combination of the Equine Activity Liability Act and a well-drafted liability waiver provides substantial legal protection. However, because waivers must meet specific legal standards to be enforceable, consulting with an attorney experienced in equine law is encouraged. By taking these precautions, equine businesses can mitigate risks while continuing to offer safe and enjoyable experiences for riders and participants.
Can Investors Themselves Be Liable For A Failure To Register The Offer And Sale Of Securities?
Section 12(a)(1) of the Securities Act of 1933 imposes liability on sellers of securities who violate that Act’s registration and prospectus delivery requirements. Because the statute refers to sellers, it seems unlikely that investors themselves might have liability under Section 12(a)(1). Things are not as they seem, however.
Samuels v. Lido Dao, 2024 WL 4815022 (N.D. Cal. Nov. 18, 2024), motion to certify appeal denied, 2025 WL 371797 (N.D. Cal. Feb. 3, 2025) involved a suit by an investor who bought cryptocurrency tokens on an exchange. The tokens were originally issued by an entity called Lido DAO. After losing money, the investor sued, alleging that the tokens were offered and sold without registration under the Securities Act. The defendants included four large institutional investors in Lido—Paradigm Operations, Andreessen Horowitz, Dragonfly Digital Management, and Robot Ventures. The plaintiff’s theory was that Lido was a partnership and the institutional investors were liable under California law for the activities of the partnership—including for Lido’s failure to register its crypto tokens as securities. U.S. District Judge Vince Chhabria concluded:
It’s true that a partner cannot be directly liable for a violation of Section 12 simply by virtue of their being a partner in an entity that violates that provision (as they could be for a violation of Section 11). But the Act clearly defines “person” to include “a partnership.” 15 U.S.C. § 77b(a)(2). And under California law, general partners are jointly and severally liable for the obligations of the partnership. Cal. Corp. Code § 16306(a). So even though a partner cannot be directly liable for a partnership’s violation of Section 12, the partnership can still be a co-obligor, under state law, for the partnership’s liability.
He therefore denied all of the defendants’ motions to dismiss, except Robot’s. He granted Robot Venture’s motion because the plaintiff failed to allege that Robot Ventures was a member of the Lido general partnership.
El-Husseiny v Invest Bank – Expanding Office Holder Claims? (UK)
S423 of the Insolvency Act 1986 (IA 1986) provides a route for office holders to challenge transactions where a person deliberately transfers assets at an undervalue to put them beyond the reach of creditors. The Supreme Court in El-Husseiny and another (Appellants) v Invest Bank PSC (Respondent) [2025] UKSC 4 recently confirmed what is meant by “transaction” in the context of s423 – and that the same meaning should be given to “transactions” caught by s238 and s339 of the IA 1986.
Claims under s423 can be more difficult to establish than claims under s238 of the IA 1986 because although both claims require there to have been a transaction at an undervalue (or for no consideration) s423 also requires an office holder to prove that there was an intention to put assets beyond the reach of creditors. An office holder is therefore more likely to bring a claim under s238 than s423, and for that reason, this judgment is helpful because it broadens the types of transactions that might fall within the definition of “transaction”.
Transaction is defined in s436 to include “a gift, agreement or arrangement” and the Supreme Court was not prepared to restrict the meaning of this and decided that a “transaction” includes assets not directly legally or beneficially owned by the debtor.
It is helpful to know the facts of this case to give some context to the particular transaction the court had to consider.
Facts and Decision
The s423 claim was brought in this case by Invest Bank in their capacity as a creditor of the appellants’ father, Mr Mohammad El-Husseini (not as an officeholder – but the findings apply equally to office holder claims).
Invest Bank had successfully obtained a judgment against Mr El-Husseini in Abu Dhabi for circa £20m, and they identified UK based assets against which they could enforce the judgment. Invest Bank argued Mr El-Husseini had transferred assets (most notably a property in London) to put them beyond the reach of Invest Bank.
While there were multiple assets caught by the s423 claim, the judgment focused on the transfer of the London property.
Before the London Property was transferred, it was legally and beneficially owned by a Jersey company, Marquee Holdings Limited (“Marquee”). It was worth about £4.5 million. At the time of the transfer, Mr El-Husseini was the beneficial owner of all the shares in Marquee.
Mr El-Husseini arranged with one of his sons, Ziad Ahmad El-Husseiny (“Ziad”), that he would cause Marquee to transfer the legal and beneficial ownership of the London property for no consideration.
In June 2017, Mr El-Husseini caused Marquee to transfer the legal and beneficial title to the London property to Ziad. Ziad did not pay any money or provide any other consideration either to Marquee or to Mr El-Husseini in return for the London Property.
The effect of the transfer was that Mr El-Husseini’s shareholding in Marquee was now significantly reduced, prejudicing Invest Bank’s ability to enforce its judgment against him.
The issue on appeal was whether s423 could apply to a transaction such as this – where a debtor procures a company which he owns to transfer a valuable asset owned by the company for no consideration or at an undervalue which has the effect of reducing or eliminatating the value of the debtor’s shareholding in the company, or whether such a transaction is not caught because the debtor does not personally own the asset.
The court at first instance held that the fact that the London property was not directly owned by Mr El-Husseini did not prevent the arrangement being a “transaction” for the purposes of s423. The point was appealed, and the Court of Appeal agreed with findings of the court at first instance. Ultimately as the issue raised an important point of statutory construction the Supreme Court considered the point and judgment was given.
The Supreme Court upheld the findings of the High Court and the Court of Appeal regarding the meaning of a “transaction”. The language and purpose of s423(1) is not confined to dealing with an asset that is legally or beneficially owned by the debtor but extends to this type of transaction. Restricting transactions to those that directly involve property owned by a debtor would not only require an implied restriction to be read into the provision but doing that would also seriously undermine the purpose of s423.
Concluding Comments
Despite the Bank’s claim not succeeding in this case (it was unable to demonstrate that Mr El- Husseini had the requiste intention when transferring the London property), the decision is nonetheless helpful to insolvency practitioners, as it confirms the wide meaning of the word “transaction” within s423, s238 and s339.
It also helpfully confirms that a debtor does not need to legally or beneficially own an asset for a transaction to be caught under those provisions. The most obvious example where this is likely to be the case is in situations such as those considered in this case – where a debtor owns shares in a company and causes that company to transfer valuable assets thereby reducing the value of the shareholding.
More States Ban Foreign AI Tools on Government Devices
Alabama and Oklahoma have become the latest states to ban from state-owned devices and networks certain AI tools with links to foreign governments.
In a memorandum issued to all state agencies on March 26, 2025, Alabama Governor Kay Ivey announced new policies banning from the state’s IT network and devices the AI platforms DeepSeek and Manus due to “their affiliation with the Chinese government and vast data-collection capabilities.” The Alabama memo also addressed a new framework for identifying and blocking “other harmful software programs and websites,” focusing on protecting state infrastructure from “foreign countr[ies] of concern,” including China (but not Taiwan), Iran, North Korea, and Russia.
Similarly, on March 21, 2025, Oklahoma Governor Kevin Stitt announced a policy banning DeepSeek on all state-owned devices due to concerns regarding security risks, regulatory compliance issues, susceptibility to adversarial manipulation, and lack of robust security safeguards.
These actions are part of a larger trend, with multiple states and agencies having announced similar policies banning or at least limiting the use of DeepSeek on state devices. In addition, 21 state attorneys general recently urged Congress to pass the “No DeepSeek on Government Devices Act.”
As AI technologies continue to evolve, we can expect more government agencies at all levels to conduct further reviews, issue policies or guidance, and/or enact legislation regarding the use of such technologies with potentially harmful or risky affiliations. Likewise, private businesses should consider undertaking similar reviews of their own policies (particularly if they contract with any government agencies) to protect themselves from potential risks.