Split D.C. Circuit Panel Rules Trump Can Remove Wilcox from NLRB – NLRB to Stay Without a Quorum
A three-judge panel for the U.S. Court of Appeals issued a favorable ruling for President Trump, staying a recent district court decision that ruled his termination of National Labor Relations Board (“NLRB” or the “Board”) Member Gwynne Wilcox was unlawful. Thus, it appears that the Board again is left without statutory quorum, which under the National Labor Relations Act (“NLRA”) requires at least three members.
Trump Initially Removes Wilcox
By way of background, on January 28, 2025, in one of his first moves in office, President Donald Trump removed Board Member Gwynne Wilcox. President Trump sent an email to Member Wilcox, who began her term in September 2023, stating that he had lost confidence in Wilcox’s ability to lead the Board and that there were no valid constitutional limits on the President’s ability to remove a Board member with or without cause. The email also stated the statutory limitations on removal power were unconstitutional because they are inconsistent with the vesting of the executive power in the President. Marvin Kaplan, who Trump tapped to replace Ms. Wilcox as Board Chair, instructed his direct report to begin Ms. Wilcox’s termination, cut off her access to her accounts, and have Ms. Wilcox clean out her office. Trump’s decision to remove the Democratic appointee left the Board with only two sitting members and without a quorum to hear cases.
D.C. District Judge Then Reinstates Wilcox
Ms. Wilcox then proceeded to challenge her removal and filed a lawsuit alleging Trump violated the NLRA. Under the NLRA, Board Members can only be removed before their term’s end for “malfeasance” or “neglect of duty,” and they also must be given “notice and a hearing.” Ms. Wilcox sought a ruling that her termination was unlawful and void, along with injunctive relief against Board Chair Kaplan so that she may resume her role as a Board member.
As we reported here, on March 6, 2025, U.S. District Judge Beryl A. Howell agreed with Wilcox and determined that she was illegally fired. Judge Howell ordered that Kaplan not prevent Wilcox from doing her job and completing her five-year term, which expires on August 27, 2028. In her decision, Judge Howell relied on Humphrey’s Executor v. U.S., 295 U.S. 602 (1935), a Supreme Court case that outlined the principle for Congress to establish independent, multimember commissions whose members are appointed by the President. In 1935, the Supreme Court in Humphrey’s Executor upheld restrictions on the President’s authority to remove officers of certain types of independent agencies—in that case, a commissioner of the Federal Trade Commission. Humphry’s Executor has historically been applied to the NLRA, limiting the President to only remove Board Members for cause. The district court held that Humphrey’s Executor is still good law, and in effect still allows Congress to insulate the heads of multi-member expert agencies from presidential removal.
D.C. Circuit Now Reverses Course, At Least for the Time Being
Trump immediately appealed the district court’s decision to the U.S. Court of Appeals for the District of Columbia. On March 28, 2025, a panel of the D.C. Circuit, in a 2-1 decision, paused the district court’s ruling and found that restrictions on the President’s power to remove officers of the executive branch are likely unconstitutional.
The two Republican-appointed judges, Judge Justin Walker and Judge Karen Henderson, agreed with Trump’s arguments granting him broader executive power. Judge Walker wrote, “The Supreme Court has said that Congress cannot restrict the President’s removal authority over agencies that ‘wield substantial executive power.’” Democratic-appointed Judge Patricia Millet dissented in a 53-page opinion, criticizing the panel for deciding to “rewrite controlling Supreme Court precedent” in a way that will end up “disabling agencies that Congress created.”
The panel’s decision is not a final decision on the merits, and only stays the district court’s ruling until a final decision on the merits is reached. The panel is scheduled to hear oral arguments on the merits on May16.
However, on April 1, Wilcox filed a petition for initial hearing en banc and for rehearing en banc with the full D.C. Circuit. In court filings, Wilcox told the full D.C. Circuit that the full court should hear her case because the special panel’s opinion rewrote U.S. Supreme Court precedent. According to Wilcox, this “is an extraordinary case justifying initial en banc review of the merits.”
What’s at Stake?
The ongoing legal between Trump and Wilcox raises several constitutional issues. President Trump conceded that his email termination issued to Wilcox violated statutory requirements under the NLRA for removing a Board member. Instead, Trump’s strategy has been to contend that the President’s removal power is fundamentally unrestricted, and therefore the NLRA’s good-cause requirement is unconstitutional. Article I of the Constitution vests all legislative powers in Congress (the Senate and House of Representatives). Article II vests the executive power in the President. Article III vests the judicial power in one Supreme Court and other inferior Courts established by Congress. The ongoing legal battle between President Trump and Wilcox presents a clash between the executive and legislative branches. By terminating Wilcox, President Trump wielded executive power to overcome the NLRA, a statute enacted by Congress. The executive and legislative branches now look to the courts (Article III) to interpret the Constitution, past practice, and judicial precedent to resolve the current conflict.
Takeaways
For now, Trump’s termination of Wilcox stands, leaving the Board without a quorum. But the decision may not last. On April 1, Wilcox asked the full D.C. Circuit to hear her case challenging her termination instead of having a three-judge panel of the court conduct the initial review on the merits.
We will continue to monitor future developments on our blog. Employers with questions about how the decision affects them should consult experienced labor counsel.
United States: House Committee on Financial Services Urges the SEC to Withdraw Final and Proposed Rules
On 31 March 2025, the House Committee on Financial Services (Committee), in a letter to Acting Chairman of the US Securities and Exchange Commission (SEC), Mark Uyeda, identified a series of proposed and adopted rules that the SEC should withdraw or rescind. The letter notes the Committee’s view that the SEC, under the prior Chair, had lost sight of its mission. The identified proposals and rules represent significant rulemaking efforts on the part of the SEC, many of which were controversial and subject to significant industry opposition. The specific proposals identified are the following:
Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure;
Short Position and Short Activity Reporting by Institutional Investment Managers;
Reporting of Securities Loans;
Pay Versus Performance;
Investment Company Names;
Form N-PORT and Form N-CEN Reporting; Guidance on Open-End Fund Liquidity Risk Management Programs;
Conflicts of Interest Associated with the Use of Predictive Data Analytics by Broker Dealers and Investment Advisers;
Open-End Fund Liquidity Risk Management Programs and Swing Pricing;
Regulation Best Execution;
Order Competition;
Position Reporting of Large Security-Based Swap Positions;
Regulation Systems Compliance and Integrity;
Outsourcing by Investment Advisers; and
Enhanced Disclosures by Certain Investment Advisers and Investment Companies about Environmental, Social, and Governance Investment Practices.
While the Committee does not have the authority to compel the SEC to take action on any if these final or proposed rules, the letter is a strong indication of support for an overall deregulatory environment and could provide a blueprint for SEC regulatory policy once Paul Atkins is confirmed.
EU: New European Consumer Protection Guidelines for Virtual Currencies in Video Games
On March 21, 2025, ahead of a consultation and call for evidence on the EU’s Digital Fairness Act, the Consumer Protection Cooperation (CPC) Network[1] highlighted the pressing need for improved consumer protection in the European Union, particularly regarding virtual currencies in video games. This move comes in response to growing concerns about the impact of gaming practices on consumers, including vulnerable groups such as children. The CPC Network has defined a series of key principles and recommendations aimed at ensuring a fairer and more transparent gaming environment. These recommendations are not binding and without prejudice to applicable European consumer protection laws[2] but they will likely guide and inform the enforcement of consumer protection agencies on national level across the EU.
What Are the Key Recommendations for In-Game Virtual Currency?
The CPC Network’s recommendations are designed to enhance transparency, prevent unfair practices, and protect consumers’ financial well-being. These principles are not exhaustive but cover several crucial areas:
Clear and Transparent Price Indication: The price of in-game content or services must be shown in both in-game currency and real-world money, ensuring players can make informed decisions about their purchases. (Articles 6(1)(d) and 7 of the UCPD, and Article 6 (1) (e) of the CRD)
Avoiding Practices That Obscure Pricing: Game developers should not engage in tactics that obscure the true cost of digital content. This includes practices like mixing different in-game currencies or requiring multiple exchanges to make purchases. The goal is to avoid confusing or misleading players.(Articles 6 (1) (d) and 7 of the UCPD, and Article 6 (1) (e) of the CRD)
No Forced Purchases: Developers should not design games that force consumers to spend more money on in-game currencies than necessary. Players should be able to choose the exact amount of currency they wish to purchase.(Articles 5, 8 and 9 of the UCPD)
Clear Pre-Contractual Information: Prior to purchasing virtual currencies, consumers must be given clear, easy-to-understand information about what they are buying. This is particularly important for ensuring informed choices.(Article 6 of the CRD)
Respecting the Right of Withdrawal: Players must be informed about their right to withdraw from a purchase within 14 days, particularly for unused in-game currency. This is crucial for ensuring consumers’ ability to cancel transactions if they change their mind.(Articles 9 to 16 of the CRD)
Fair and Transparent Contractual Terms: The terms and conditions for purchasing in-game virtual currencies should be written clearly, using plain language to ensure consumers fully understand their rights and obligations.(Article 3 (1) and (3) of the UCTD)
Respect for Consumer Vulnerabilities: Game developers must consider the vulnerabilities of players, particularly minors, and ensure that game design does not exploit these weaknesses. This includes providing parental controls to prevent unauthorized purchases and ensuring that any communication with minors is carefully scrutinized.(Articles 5-8 and Point 28 of Annex I of the UCPD)
These principles reflect the growing concern by European regulators of exploitation of consumers, particularly vulnerable groups such as children, in the gaming world. The European Consumer Organisation (BEUC) has strongly supported these measures, which aim to provide a safer, more transparent gaming experience for players.
Enforcement Actions and Legal Proceedings
On the same day, coordinated by the European Commission the CPC Network initiated legal proceedings against the developer of on online game. This action, driven by a complaint from the Swedish Consumers’ Association, addresses concerns about the company’s marketing practices, particularly those targeting children. Allegations include misleading advertisements urging children to purchase in-game currency, aggressive sales tactics such as time-limited offers, and a failure to provide clear pricing information.
A Safer Gaming Future
This enforcement action, along with the introduction of new principles, is part of the European Commission’s stated objective to ensure better consumer protection within the gaming industry. The Commission aims to emphasize the importance of transparency, fairness, and the protection of minors within gaming platforms.
What Should Video Game Companies and Gambling Operators Do Next?
In light of these new developments, video game companies and gambling operators especially those offering virtual currencies are well advised to review their practices to ensure ongoing compliance with existing EU consumer protection laws.
Failure to align with the above principles does not automatically mean that consumer laws are infringed but as the recent enforcement action shows could result in investigations and enforcement actions under the CPC Regulation or national laws. If gaming content is available across multiple EU countries, a coordinated investigation may be triggered, with the possibility of fines up to 4% of a company’s annual turnover.
To further support the industry, the European Commission is organising a workshop to allow gaming companies to present their strategies for aligning with the new consumer protection standards. This will provide a valuable opportunity for companies to share their plans and address any concerns related to these proposed changes. If you would like to know more, please get in touch.
FOOTNOTES
[1] The CPC Network is formed by national authorities responsible for enforcing EU consumer protection legislation under the coordination of the European Commission.
[2] Reference is made to Directive 2005/29/EC of the European Parliament and of the Council of 11 May 2005 on unfair commercial practices (UCPD); the Directive 2011/83/EU of the European Parliament and of the Council of 25 October 2011 on consumer rights (CRD); the Directive 93/13/EEC of 5 April 1993 on unfair terms in consumer contracts (UCTD).
Confirmation Hearing for SEC Chair Nominee Atkins — Takeaways for Fund Managers
The Senate Banking Committee convened on Thursday to consider the nomination of Paul Atkins, President Trump’s nominee for Chair of the Securities and Exchange Commission, along with the nominees for the Comptroller of the Currency, the Assistant Secretary of the Treasury and the Department of Transportation.
Atkins, a former SEC Commissioner, shared his views on the current regulatory landscape, contending that today’s environment stifles capital formation and indicating a pivot from the SEC’s recent emphasis on aggressive enforcement. Overall, nothing occurred at the hearing that would change the expectation that Atkins will be confirmed. Currently, the SEC only has three members, meaning the Democratic Commissioner in theory could effectively have veto power over actions requiring a vote of the SEC because she can deny a quorum for any action she strongly opposes; if Atkins is confirmed, the Republican majority would no longer need the Democratic Commissioner, so it will be able to begin with formal rulemaking steps.
Key takeaways for fund managers from Atkins’ testimony are below.
Position on Private Funds
Surprisingly, Atkins faced relatively few questions about private funds. Nonetheless, in responding to questions, he noted that investors in private funds are typically sophisticated and have sufficient resources to hire advisers. In response to a question from a Democratic member of the Committee, he conceded that retail investors in registered funds benefit from additional investor protections, such as diversification rules. Atkins confirmed that the SEC would continue to enforce penalties against firms that mislead investors, but he drew a distinction between accredited investors—who he said have the sophistication and means to fend for themselves—and registered fund investors, possibly indicating a less restrictive or more principles-based regulatory and enforcement framework for the private fund industry.
Focus on Disclosure Practices
Atkins expressed concerns about the inefficient disclosures that investors face, stating, “investors are flooded with disclosures that do the opposite of helping them understand the true risks of an investment.” At the same time, he stated that investors should be protected from incorrect or materially misleading private fund disclosures. While his testimony suggests that the SEC would continue scrutinizing firms’ marketing practices, this could signal a willingness to pare back rules that require voluminous disclosure that most investors do not read.
Digital Assets and Cryptocurrency
In his opening statement, Atkins signaled that digital assets and cryptocurrency will be a prominent focus if he is confirmed. He highlighted his experience developing best practices for the digital asset industry since 2017, pointing to what he views as ambiguous or outdated regulations that have led to market uncertainty and inhibited innovation. Atkins stated that a “firm regulatory foundation” for digital assets would be a top priority, emphasizing a “rational, coherent, and principled approach.” Consistent with the work that already has started under the Crypto Task Force, his comments suggest a more measured and predictable environment for market participants, which could foster greater institutional involvement and spur technological developments in the digital asset space. Consistent with his overarching views on regulation expressed throughout the hearing, Atkins stressed the importance of clear rules that encourage capital formation, which believes are critical as the SEC considers its role in overseeing rapidly evolving cryptocurrency markets.
Creating Efficiencies within the SEC
In response to questions regarding how he might work with the Department of Government Efficiency, Atkins indicated general support for seeking greater efficiency in the SEC’s operations. “If there are people who can help with creating efficiencies in the agency or otherwise, I would definitely work with them.” As has been reported elsewhere, more than 12% of the SEC has already taken a voluntary buyout; any further cuts as a result of involvement by DOGE could result in the SEC prioritizing certain types of investment adviser firms for focus from the Division of Examinations. While the SEC’s future staffing levels are not yet known, its future resource allocation is likely to be influenced by any priority given to protecting less sophisticated and less well-resourced investors.
Virginia Expands Non-Compete Restrictions Beginning July 1, 2025
At the end of March, Governor Glenn Youngkin signed SB 1218, which amends Virginia’s non-compete ban for “low-wage” workers (the “Act”) to include non-exempt employees under the federal Fair Labor Standards Act (the “FLSA”).
The expanded restrictions take effect July 1, 2025.
What’s New?
As we discussed in more detail here, since July 2020, the Act has prohibited Virginia employers from entering into, or enforcing, non-competes with low-wage employees. Prior to the amendment, the Act defined “low-wage employees” as workers whose average weekly earnings were less than the average weekly wage of Virginia, which fluctuates annually and is determined by the Virginia Employment Commission. In 2025, Virginia’s average weekly wage is $1,463.10 per week, or approximately $76,081 annually. “Low-wage employees” also include interns, students, apprentices, trainees, and independent contractors compensated at an hourly rate that is less than Virginia’s median hourly wage for all occupations for the preceding year, as reported by the U.S. Bureau of Labor Statistics. However, employees whose compensation is derived “in whole or in predominant part” from sales commissions, incentives or bonuses are not covered by the law.
Effective July 1, 2025, “low-wage employees” will also include employees who are entitled to overtime pay under the FLSA for any hours worked in excess of 40 hours in any one workweek (“non-exempt employees”), regardless of their average weekly earnings. In other words, the amendment will extend Virginia’s non-compete restrictions to a significantly larger portion of the Commonwealth’s workforce.
A Few Reminders
The amendment does not significantly alter the other requirements under the Act regarding non-competes, including the general notice requirements and ability for a low-wage employee to institute a civil action. Although Virginia employers are not required to give specific notice of a noncompete to individual employees as some other states require, they must display a general notice that includes a copy of the Act in their workplaces. Failing to post a copy of the law or a summary approved by the Virginia Department of Labor and Industry (no such summary has been issued) can result in fines up to $1,000. Therefore, Virginia employers should update their posters to reflect the amended Act by July 1, 2025.
Employees are also still able to bring a civil action against employers or any other person that attempts to enforce an unlawful non-compete. Low-wage employees seeking relief are required to bring an action within two years of (i) the non-competes execution, (ii) the date the employee learned of the noncompete provision, (iii) the employee’s resignation or termination, or (iv) the employer’s action aiming to enforce the non-compete. Upon a successful employee action, courts may void unlawful non-compete agreements, order an injunction, and award lost compensation, liquidated damages, and reasonable attorneys’ fees and costs, along with a $10,000 civil penalty for each violation.
While the law creates steep penalties for non-competes, nothing within the legislation prevents an employer from requiring low-wage employees to enter into non-disclosure or confidentiality agreements.
Takeaways
The amendment emphasizes the importance for Virginia employers to correctly classify their employees as exempt or non-exempt under the FLSA. Additionally, the amendment does not apply retroactively, so it will not affect any non-competes with non-exempt employees that are entered into or renewed prior to July 1, 2025. Nevertheless, enforcing non-compete agreements with non-exempt employees may be more challenging after this summer, so Virginia employers may wish to consider renewing such agreements without non-compete provisions to ensure other provisions can be properly enforced.
EC Begins Public Consultation on Upcoming EU Bioeconomy Strategy
The European Commission (EC) began a public consultation on March 31, 2025, on the upcoming European Union (EU) Bioeconomy Strategy. The EC states in its March 31, 2025, press release that the Strategy “marks a significant step forward in harnessing the opportunities of the bioeconomy to support European businesses and drive progress towards the EU’s environmental, climate and competitiveness objectives.” According to the call for evidence, the Strategy’s main aims include:
Ensuring the long-term competitiveness of the EU bioeconomy and investment security. The Strategy will identify measures to scale up and commercialize existing and emerging biotechnology solutions and biobased products, in particular by tapping into the significant growth potential of biobased materials substituting fossil-based ones (e.g., sources of alternative proteins, biobased materials, or biochemicals). It will entail looking at practical measures to remove unnecessary barriers to biobased manufacturing and bio-innovation and unleash the full opportunities of primary biobased production;
Increasing resource-efficient and circular use of biological resources, by creating an efficient demand. This means transforming how the EU values and uses biomass resources, prioritizing extended high-value applications while encouraging industries and consumers to embrace circular practices that maximize economic returns from each unit of biomass. It might also entail providing targeted support and incentives for higher value added uses of biomass feedstock and by-products in line with the cascading principle;
Securing the competitive and sustainable supply of biomass, both domestically and from outside the EU. The Strategy will strengthen the role of primary producers, generating wealth in rural areas by creating jobs and diversifying incomes for foresters and farmers and rewarding them for the preservation of ecosystems; and
Positioning the EU in the rapidly expanding international market for biobased materials, biomanufacturing, biochemicals, and agri-food and biotechnology sectors. This will be done by steering existing foreign policy mechanisms in the area of the bioeconomy in the context of the EU’s Global Gateways initiative, exploring the need and appropriateness of bringing bioeconomy under international multilateral fora, and promoting green diplomacy on bioeconomy.
The EC encourages all stakeholders to participate in the online consultation. Comments are due June 23, 2025. Stakeholders can also contribute by participating in targeted sessions on the bioeconomy in upcoming events such as the European Circular Economy Stakeholder Platform (ECESP) Circular Economy Stakeholder Dialogue, taking place on April 10, 2025, and EU Green Week, taking place from June 3 to 5, 2025.
UK Grid Connection Reforms: Breaking the Bottleneck
Go-To Guide:
The UK is transforming its grid connection system to address a backlog of over 739 GW of projects, aiming to streamline access and reduce delays.
New reforms focus on prioritizing projects that are ready for development and essential for grid stability, eliminating the speculative applications.
A structured gate-based queue process would be implemented, requiring projects to meet specific criteria to secure grid connection.
NESO has temporarily paused new grid connection applications pending reform implementation, with certain exceptions.
Investors and lenders may prioritize projects with secured grid access, potentially impacting valuations and project economics.
The UK’s grid connection system is undergoing its most significant transformation in decades. With 739 GW of projects stuck in the queue and over 1,700 new applications in 2023 and 2024 alone, the system has hit a breaking point, clogging the project pipeline and causing years-long delays.
Recognizing the urgency, the National Energy System Operator (NESO) introduced reforms to cut through the backlog and bring order to the chaos. These changes, now under review by the Office of Gas and Electricity Markets (Ofgem), are designed to prioritise viable projects, eliminate speculative applications, and fast-track grid access.
In February 2025, Ofgem gave in-principle approval to the reforms, launching a consultation that closed on 14 March 2025. A final decision is expected by the end of Q1 2025. These reforms would reshape the UK’s energy landscape if implemented, aligning with the government’s Clean Power 2030 Action Plan (CP30 Plan).
What might this mean for businesses? Let’s break it down.
Continue reading the full GT Alert.
For At Least One Employer, Reliance on an Outdated Arbitration Agreement Proved to be a Losing Gamble
As we have reported time and again, California courts have applied extra scrutiny to employee arbitration agreements in recent years, and have not hesitated to deny arbitration where there is a reasonable basis for doing so. This trend demands that employers be vigilant and update arbitration agreements when developments in the law implicate them. In the recent case of Ford v. The Silver F, Inc., Cal. Ct. App. 3rd Dist., No. C099133, a casino operator learned the hard way the consequence of rolling the dice with an outdated agreement.
In the wake of Viking River Cruises, Inc. v. Moriana, 596 U.S. 639 (2022), which ruled that employers may compel the “individual” component of a Private Attorneys General Act (PAGA) claim to arbitration under the Federal Arbitration Act, it has become commonplace for trial courts to compel individual PAGA claims to arbitration and stay the non-individual PAGA claims in the meantime. That was precisely what the employer, Parkwest, attempted to do in Ford. Unfortunately for Parkwest, the relevant arbitration agreement was clearly written in a pre-Viking River world and did not contemplate how the law might develop.
Specifically, the Parkwest arbitration agreement stated that it “does not apply” to “claims for workers’ compensation or unemployment compensation, specified administrative complaints, Employment Retirement Income Security Act (ERISA) claims, or, as relevant here, “representative claims under [PAGA].”
The Court of Appeal affirmed the trial court’s denial of Parkwest’s motion to compel arbitration. It rejected Parkwest’s argument that the agreement should be read as excluding only “non-individual” PAGA claims, holding the carveout for “representative claims under [PAGA]” plainly referred to all PAGA claims—especially considering that the case law distinguishing between “individual” and “non-individual” claims actions did not develop until after the agreement was drafted.
While this decision is unpublished and noncitable, it serves as a critical reminder to employers to be vigilant about keeping their arbitration agreements up to date. If we’ve said it once, we’ve said it a thousand times: an arbitration agreement is not something to be gambled with.
HUD’s Enforcement of the Violence Against Women Act: What Housing Providers Should Know
The Violence Against Women Act (VAWA), enacted in 1994, was most recently amended in 2022. As part of its 2022 reauthorization, the U.S. Department of Housing and Urban Development (HUD) and the Attorney General of the United States are now mandated to implement and enforce the housing provisions of VAWA consistently and in a manner that affords the same rights and remedies as those provided for in the Fair Housing Act (FHA). This is reflected in new forms updated from HUB in February 2025 regarding the protections for victims of domestic violence.
Pursuant to VAWA, anyone who has experienced domestic violence, dating violence, sexual assault, and/or stalking:
Cannot be denied admission to or assistance under a HUD-subsidized or -assisted unit or program because of VAWA violence/abuse.
Cannot be evicted from a HUD-subsidized unit or have their assistance terminated because of VAWA violence/abuse.
Cannot be denied admission, evicted, or have their assistance terminated for reasons related to the VAWA violence/abuse, such as having an eviction record, criminal history, or bad credit history related to the VAWA violence/abuse.
Must have the option to remain in their HUD-subsidized housing, even if there has been criminal activity directly related to the VAWA violence/abuse.
Can request an emergency transfer for safety reasons related to VAWA violence/abuse.
Must be allowed to move with continued assistance (if the victim has a Section 8 Housing Choice Voucher).
Must be able to self-certify using the HUD VAWA self-certification form (Form HUD-5382) and not be required to provide additional proof unless the housing provider has conflicting information about the violence/abuse.
Must receive HUD’s Notice of VAWA Housing Rights (Form HUD-5380) and HUD’s VAWA self-certification form (Form HUD-5382) from the housing provider when:
Denied admission to a HUD-subsidized unit or HUD program
Admitted to a HUD-subsidized unit or HUD program and/or
Issued a notice of eviction from a HUD-subsidized unit or a notice of termination from a HUD program.
Has a right to strict confidentiality of information regarding their status as a survivor.
Can request a lease bifurcation from the owner or landlord to remove the perpetrator from the lease or unit.
Cannot be coerced, intimidated, threatened, or retaliated against by HUD-subsidized housing providers for seeking or exercising VAWA protections.
Has the right to seek law enforcement or emergency assistance for themselves or others without being penalized by local laws or policies for these requests or because they were victims of criminal activity.
EnforcementAs such, HUD’s Office of Fair Housing and Equal Opportunity (FHEO) now enforces VAWA by accepting and investigating complaints thereunder using its FHA complaint process. If a housing provider is found by HUD to have violated VAWA and the matter is not settled via HUD’s conciliation process, HUD may refer the matter to the Department of Justice (DOJ) for litigation and/or enforcement.
HUD issued a press release regarding two settlements of VAWA cases pursuant to its enforcement authority under the VAWA Reauthorization Act of 2022 in September of 2023.
THE FIRST CASE involved a tenant in Nevada who requested an emergency transfer after being stalked by a former partner. The complaint alleged that the respondent public housing agency in Nevada and its housing specialist (a) demanded confusing and contradictory documentation from the charging party that it was not permitted to request under VAWA, (b) threatened to revoke the charging party’s Housing Choice Voucher, (c) denied her request to extend her voucher, and (d) stopped paying its portion of the rent when the charging party prepared to move to protect her safety.
HUD found that the housing authority lacked an emergency transfer plan that would allow survivors who qualify to move quickly without losing their assistance. The case settled for an agreement to implement an emergency transfer plan, to hire outside experts to provide VAWA training, and to pay the charging party monetary compensation.
THE SECOND CASE cited in the 2023 press release involved a housing provider and property manager in California who were alleged to have denied the charging party’s application due to a history of violations of previous rental agreements that were allegedly related to her status as a survivor of dating violence. The housing provider maintained that the charging party did not disclose her status as a dating violence survivor, but acknowledged that it failed to provide information about her rights under VAWA or advise her about how she might appeal when it sent her the denial letter.
This settlement agreement involved (a) some monetary amount, (b) placing the charging party on the top of a waitlist for the next available unit at the property or a companion property, (c) a revision of the housing provider’s policies to include a VAWA policy, (d) the establishment of a VAWA Rights Coordinator position, and (e) the requirement that its employees undergo annual VAWA training.
HUD issued press releases regarding two more cases it settled under VAWA in 2024.
THE FIRST CASE addressed claimed violations of VAWA as well as Section 504 of the Rehabilitation Act, which prohibits discrimination in housing for residents in communities that receive federal funding. This matter involved multiple allegations that reasonable accommodation and modification requests were denied by housing providers in Tennessee, as well as allegations of failure to provide requested VAWA transfers. In addition to non-monetary components similar to those in the cases mentioned previously, this case settled for $50,000.
THE SECOND CASE, in June 2024, involved a HUD-negotiated settlement with a Michigan housing provider alleged to have violated VAWA.. That matter involved a landlord who allegedly did not respond to the charging party’s rental application due to her vision impairment and because she disclosed that a previous landlord had terminated her tenancy due to dating violence and stalking. The monetary component of that settlement agreement was $8,500, in addition to VAWA-related training and an agreement to ensure that the housing provider’s policies and procedures complied with VAWA.
TakeawaysAs noted above, housing providers should ensure that their employees are familiar with VAWA requirements and should incorporate these requirements into their regular fair housing training sessions. They also should take advantage of the website HUD released in 2023 to help navigate VAWA’s housing protections, as it features the latest updates, frequently asked questions about VAWA, and VAWA training resources. It appears that HUD’s enforcement of rights of domestic violence victims to housing pursuant to VAWA will continue to grow absent an indication from the new HUD Secretary of a change in this policy, which to date has not been announced.
Attention Department of Labor Contractors and Grantees: A Federal Court Hits Pause on Executive Orders Related to Diversity, Equity, and Inclusion
Federal courts continue to grapple with challenges to President Trump’s executive orders (“EOs”) related to diversity, equity, and inclusion (“DEI”), particularly EO 14151, Ending Radical And Wasteful Government DEI Programs And Preferencing, and EO 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity. As we’ve noted in our coverage of the litigation first filed in the District Court of Maryland, there has been a sense of whiplash among the courts, with the District Court initially issuing a nationwide injunction that was then stayed by the Fourth Circuit Court of Appeals. Now a second federal court has weighed in, issuing a new, nationwide temporary restraining order (“TRO”). This new TRO is more limited than the prior preliminary injunction issued by the District Court of Maryland, in that the new TRO only applies to Department of Labor (“DOL”) contractors and grantees. Nevertheless, the Court’s reasoning could be helpful to the contractors and grantees of other agencies facing renewed demands to execute the DEI Certification.
Case Background
The case is Chicago Women in Trades v. Trump et al., 1:25-cv-02005. It was filed on February 26, 2025, in the U.S. District Court for the Northern District of Illinois by Chicago Women in Trades (“CWIT”), an Illinois-based non-profit and DOL grantee whose mission is to prepare women to enter and remain in high-wage skilled trades, such as carpentry, electrical work, welding, and plumbing.
On March 18, 2025, CWIT filed a Motion for a TRO broadly seeking to preclude “any and all federal agencies” from taking action adverse to a federally funded contract, grant, or other implementing vehicle, where that action is animated by either EO 14151 or EO 14173. Alternatively, CWIT sought an injunction prohibiting only DOL from (1) taking any adverse action animated by EO 14151 or EO 14173 on any of the federal grants by which CWIT receives funding, as either a grant recipient, sub-recipient, or subcontractor; and (2) directing any other grant recipient or contractor under which CWIT operates as a sub-recipient or subcontractor from taking any adverse action on any of those grants on the basis of the anti-diversity EOs. Thus, the Plaintiff essentially offered the Court a choice of whether to fashion broad relief, or narrow relief.
The Executive Orders
We have previously written extensively about the two EOs at issue. The EO provisions that are relevant to the CWIT litigation include (1) the Termination Provision of EO 14151 (requiring the termination of “equity-related” contracts and grants), (2) the Certification Provision of EO 14173 (requiring contractors and grantees to execute a certification that they do not operate DEI programs that run afoul of applicable antidiscrimination laws and stating that compliance with antidiscrimination laws is material to the government’s payment decisions under the False Claims Act (“FCA”)), and (3) the Enforcement Provision of EO 14173 (requiring the Attorney General to prepare a report identifying potential targets for investigation and enforcement related to DEI).
Scope and Effect of the March 27, 2025, TRO
The Termination Provision: Per the terms of the TRO, DOL “shall not pause, freeze, impede, block, cancel, or terminate any awards, contracts or obligations” or “change the terms of” current agreements “with CWIT” on the basis of the Termination Provision in EO 14151. Note that this part of the TRO does not apply to agencies other than DOL or to contractors or grantees other than CWIT.
The Certification Provision: The Court ordered that DOL “shall not require any grantee or contractor to make any ‘certification’ or other representation pursuant to” the Certification Provision of EO 14173. Note that this applies not only to CWIT, but to any and all DOL contractors and grantees. The Court found that a TRO precluding “any enforcement” of the Certification Provision is warranted in order to ensure that CWIT has complete relief, given that CWIT works in conjunction with other organizations that may be deemed to provide DEI-related programming, and because other similarly situated organizations would not need to show different facts to obtain the relief sought by CWIT.
The Enforcement Provision: The Court ordered that the Government shall not initiate any False Claims Act enforcement “against CWIT” pursuant to the Certification Provision of EO 14173.
The main takeaway for the federal contracting and grant community is that DOL cannot ask any of its contractors and grantees to sign the DEI Certification of EO 14173. The rest of the TRO is limited to CWIT. The Northern District of Illinois may have limited the relief available under the TRO due to the Fourth Circuit’s March 14, 2025, ruling to stay a much broader preliminary injunction that was issued by the District Court of Maryland. (According to Judge Rushing of the Fourth Circuit, “[t]he scope of the preliminary injunction alone should raise red flags: the district court purported to enjoin nondefendants from taking action against nonplaintiffs.”)
Conclusion
Although Judge Kennelly of the Northern District of Illinois issued a TRO that applies only to DOL contractors and grantees, his reasoning can serve as a roadmap for the contractors and grantees of other agencies who may receive the EO 14173 DEI Certification. Judge Kennelly expressed concern that the EOs likely violate the First and Fifth Amendments of the Constitution, as well as the Spending Clause and the Separation of Powers. As such, the Northern District of Illinois is now the second federal court to call out both the vagueness of the challenged EOs and the government’s unwillingness to define the EOs’ key concepts, such as “DEI” and “illegal DEI”. Accordingly, contractors and grantees faced with the DEI Certification should increasingly feel that it is reasonable to respond by bringing the ambiguities in the certification language to the attention of the Contracting Officer, while, as we have previously suggested, contemporaneously memorializing the basis for the contractor’s reasonable interpretation of the ambiguous certification, in order to assist in the defense of any potential FCA claim.
The Dealmaking Slowdown: A Time for Startups to Prepare
As the slowdown in dealmaking continues, both buyers and sellers are left to consider their options moving forward during this period of extreme uncertainty and market volatility. To put the current slowdown in perspective, EY had previously forecasted M&A activity to rise by 10% this year.[1] However, they recently adjusted that outlook, saying the M&A market entered a “watchful phase” in February of this year. Their data shows a downturn in the number and total value of deals of more than $100 million. The volume of those deals dropped by 5.9 percent YoY and 19.5 percent from just January of this year, and combined deal value also fell 53 percent YoY and 34 percent from January.
Whenever we see this kind of significant pause in dealmaking, buyers typically have the advantage, but not always. There are certain dynamics that can vary based on industry, the nature of the assets, and, of course, macroeconomic factors. Below, we look at the balance of power between buyers and sellers during a slowdown and how each side can best position themselves for success when conditions improve.
Who Has the Upper Hand?
Most of the time, the buyer is going to have the upper hand in this kind of situation. When there are fewer people willing to buy, those who are can often negotiate much more favorable terms. Buyers can also be highly selective, taking their time to conduct thorough due diligence on their targets and consider all options available. When the economy is in turmoil, it can also present an opportunity for buyers to target distressed or capital-constrained businesses.
While sellers are not usually in the driver’s seat when dealmaking is lagging, there are some opportunities for them to still have leverage. This is particularly true if they have an especially unique proposition or a high-performing and proven concept. There are also some areas that tend to be recession-proof or continue to grow despite contributing economic factors. Those startups who might have the best leverage are those who are not under pressure to sell as they can either wait until deal activity picks back up or negotiate more aggressively for more favorable terms.
What Can Sellers Do Now?
When it’s slow out there, sellers should make sure their fundamentals are solid. Focusing on cash flow and operational efficiencies can help to demonstrate a strong foundation to potential buyers, as well as looking at growth strategies that can move the business forward. It is also important for sellers to look at ways they can extend their runway. When mergers and acquisitions slow down, VC funding often follows suit. This means it is critical that startups ensure they have ample capital reserves to wait out the dealmaking doldrums until more favorable market conditions emerge.
Most importantly, sellers must remain consistently deal ready. The global economic and geopolitical factors that are contributing to this downturn are shifting rapidly, and that means that there could be an uptick in deal activity at any time as trade deals are struck, the markets stabilize, or conflicts and tensions are eased. While this will not happen overnight, founders should be ready to make a move when the timing and the buyer are right. Buyers will no doubt be using this time to do their diligence, so they are ready to move fast when conditions improve and look at the kinds of strategic investments that best fit their long-term goals. Founders would be wise to establish the kinds of connections today that will allow them to execute their exit plans once deals start flowing again.
[1] https://sgbonline.com/ey-ma-outlook-signals-cautious-us-deal-market/
Updates on SB 54: CalRecycle to Take a Second Stab at Implementing Regulations
On 7 March 2025, Gov. Gavin Newsom sent the Department of Resources Recycling and Recovery (CalRecycle) back to the drawing board on proposed regulations to implement the state’s Plastic Pollution Prevention and Packaging Producer Responsibility Act (SB 54). Senate Bill (“SB”) 54 is one of many state extended producer responsibility laws that seek to make product manufacturers responsible for the environmental burden associated with single-use packaging and similar materials. Newsom signed SB 54 into law in 2022, and CalRecycle has been working to implement the law since 2023.
SB 54 targets single-use plastic packaging and food service ware (Covered Materials) and has the lofty goals of achieving by 2032 making 100% of Covered Materials recyclable or compostable, reducing the use of Covered Materials by 25%, and actually recycling Covered Materials at a minimum of 65%.
SB 54 mandated CalRecycle to propose permanent regulations for SB 54 by 8 March 2025. The recently rejected proposed regulations were originally released for public comment in February 2024 and underwent two rounds of public comment. After two public comment periods, CalRecycle arrived at the proposed permanent regulations that Newsom declined to accept. Newsom declined to adopt CalRecycle’s proposed regulations due to the unacceptable burdens and costs the proposed regulations would have imposed on businesses. CalRecycle will have to convene another series of stakeholder meetings and develop new regulations, but CalRecycle’s timeline for proposing these new regulations is not yet clear.
In addition to monitoring the updated rulemaking process for California’s SB 54, our firm is keeping up with several other proposed and enacted state regulations impacting food packaging and food-contact material producers, including the following:
Expected release of CalRecycle’s final “material characterization study” required under SB 343 by 4 April 2025; the report will determine what materials are considered “recyclable” for purposes of “chasing arrows” symbols and SB 54.
Introduced 16 January 2025, Minnesota’s Senate File 188/House File 44 would require food-packaging manufacturers and brand owners to test for and report ortho-phthalates. If enacted, the law would take effect 1 July 2026.
On 20 February 2025, California introduced the Safer Food Packing Act of 2025 to regulate antimony trioxide, bisphenols, and ortho-phthalates in food packaging.
Introduced 3 February 2025, Illinois House Bill 2516 will prohibit the sale or distribution of any cookware and food packaging that contains potentially added per- and polyfluoroalkyl substances (PFAS). If passed, this regulation will take effect 1 January 2026.
Introduced 13 February 2025, Hawaii SB 683 will prohibit the sale or distribution of any cookware and food packaging that contains potentially added PFAS. If passed, this regulation will take effect 1 January 2028.