Why the DOJ’s New Whistleblower Program Remains Relevant
On May 12, 2025, the U.S. Department of Justice (DOJ) issued a memorandum outlining the Criminal Division’s enforcement priorities and policies for prosecuting corporate and white-collar crimes in the new Administration. Later that week, Matthew R. Galeotti, head of the DOJ’s Criminal Division, addressed the new policies in a speech at the SIFMA Anti-Money Laundering and Financial Crimes Conference. Galeotti emphasized that the DOJ is “turning a new page on white-collar and corporate enforcement,” with a renewed focus on crimes that pose the greatest risk to U.S. interests. His remarks, coupled with the recent expansion of the DOJ’s Corporate Whistleblower Awards Pilot Program, signal a new era of accountability, transparency, and proactive compliance for portfolio companies operating in high-risk sectors.
Voluntary Self-Disclosure Policy – a Clear Path to Declination
The new policies include revisions to the Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP). The revised CEP is designed to provide clearer guidance on the benefits of cooperation and a more predictable resolution process. Notably, companies that voluntarily self-disclose misconduct (in a “reasonably prompt” manner), fully cooperate, remediate appropriately and promptly, and have no aggravating circumstances will now receive a declination — not merely a presumption of a declination as previously offered. Moreover, a declination is still possible for cases with aggravating circumstances as prosecutors will have discretion to weigh the severity of those aggravating circumstances against the company’s cooperation and remediation efforts. Finally, the policy provides additional flexibility for companies that self-disclose in good faith where the government is already aware of the misconduct — such companies may still qualify for significant benefits, such as reduced fines and the avoidance of compliance monitors.
Expansion of the Whistleblower Pilot Program
While incentivizing self-reporting and cooperation, the new policies significantly broadened the scope of the Corporate Whistleblower Awards Pilot Program, announced in August 2024. Originally limited to violations by financial institutions, foreign and domestic corruption (including FCPA violations), and certain health care frauds, the program now covers a wider array of misconduct, including:
procurement and federal program fraud;
trade, tariff, and customs fraud;
violations of federal immigration law;
violations involving sanctions;
material support of foreign terrorist organizations, or those that facilitate cartels and transnational criminal organizations, including money laundering, narcotics, and Controlled Substances Act violations.
This expansion tracks the newly announced enforcement priorities and reflects the DOJ’s recognition that financial crime is often intertwined with broader threats to national security and global stability.
Competing Incentives for Whistleblowers and Companies
The financial incentives for whistleblowers who provide actionable information remain substantial. If a whistleblower provides information that leads to a successful forfeiture exceeding $1,000,000 in net proceeds, the whistleblower can receive up to 30% of the first $100 million in net forfeitures, and up to 5% of amounts between $100 million and $500 million.
At the same time, the incentives for companies to self-report a whistleblower complaint and still be eligible for a declination remain even stronger. Indeed, the Corporate Whistleblower Awards Pilot Program has an exception — if a whistleblower makes both an internal report to a company and a whistleblower submission to the Department, the company will still qualify for a presumption of a declination of charges under the CEP — even if the whistleblower submits to the Department before the company self discloses — provided that the company: (1) self-reports the conduct to the Department within 120 days after receiving the whistleblower’s internal report; and (2) meets the other requirements for voluntary self-disclosure and presumption of a declination under the policy.
What This Means for Companies
The message to corporate America is clear — compliance is a strategic imperative. Therefore, companies must:
Strengthen Internal Controls: Ensure compliance programs are tailored to the company’s risk profile and are actively monitored and updated.
Encourage Internal Reporting: Foster a culture where employees feel empowered to report concerns internally before going to regulators.
Review Investigation Protocols: Update internal investigation and remediation procedures to align with DOJ expectations.
Act Proactively: Voluntary self-disclosure and cooperation can significantly mitigate penalties and reputational damage.
Key Takeaways
The DOJ’s recent moves — both in policy and tone — reflect a maturing enforcement philosophy. Rather than wielding the stick indiscriminately, the Department is offering a clearer path for companies to do the right thing and receive the full benefits of cooperation. But the stakes remain high. With an expanded whistleblower program and a renewed focus on high-impact crimes, the cost of non-compliance has never been greater.
For portfolio companies willing to invest in integrity and transparency, the DOJ’s evolving framework offers not just protection — but opportunity.
Seetha Ramachandran, Nathan Schuur, Robert Sutton, Jonathan M. Weiss, William D. Dalsen, Adam L. Deming, Adam Farbiarz, and Hena M. Vora contributed to this article
US Easing of Sanctions on Syria Creates Opportunities and Risks
What Happened
On May 23, 2025, the US Department of Treasury Office of Foreign Assets Control (OFAC) issued a general license (GL 25) broadly authorizing financial transactions previously prohibited under the Syrian Sanctions Regulations (found at 31 C.F.R. part 542).
The Bottom Line
Effective immediately, GL 25 allows US persons to engage in certain transactions with the Government of Syria and certain blocked persons following almost 50 years of comprehensive economic sanctions on Syria, most of which were imposed during ex-Syrian President Bashar Assad’s rule. GL 25 represents the first step in lifting US sanctions on Syria. Companies and individuals seeking to do business with or in Syria should carefully consider the scope and limitations of GL 25. Companies should also review internal compliance policies, and sanctions compliance covenants and obligations, to take into account the shifting sanctions landscape with respect to Syria.
Full Story
US sanctions on Syria date from Syria’s 1979 invasion of Lebanon and expanded during Syria’s civil war through a range of legislative actions and executive orders. On January 6, 2025, following the end of President Bashar Assad’s rule, OFAC issued Syria General License 24, which authorized a narrow set of transactions with Syria’s transitional government and energy sector, as well as personal remittances. On May 13, 2025, President Trump announced that the United States would lift sanctions on Syria; on May 23, OFAC issued GL 25.
As described in the press release accompanying the issuance of GL 25, the license is intended to help rebuild Syria’s economy, financial sector and infrastructure; align Syria’s new government with US foreign policy interests; and bring new investment into Syria, signaling opportunity for companies interested in investing in the rebuilding of Syria.
GL 25 authorizes transactions that would otherwise be prohibited under the US economic sanctions on Syria, including new investment in Syria, the provision of financial and other services to Syria and transactions related to Syrian-origin petroleum or petroleum products. GL 25 also authorizes all transactions with the new Government of Syria, and with certain blocked persons identified in a list appended to the license (any transactions with other blocked persons not identified in the annex remain prohibited).
GL 25 represents a significant shift in the US sanctions landscape. For international financial institutions, the reach of US sanctions, especially the secondary sanctions imposed by the Caesar Act of 2019, have been a significant sanctions compliance concern. For nearly five decades, Syria has been viewed as a comprehensively sanctioned country, with the effect that financing and commercial documentation often specifically prohibits doing business in Syria.
The shifting sanctions landscape with respect to Syria introduces new compliance risks for companies seeking to do business there or otherwise take part in rebuilding opportunities. Although GL 25 represents a significant easing of sanctions—such that Syria can no longer be considered a truly “comprehensively” sanctioned country—it is important to note that issuance of the general license is merely an interim step intended to provide immediate relief. While certain sanctions can be lifted by executive order, other sanctions on Syria are imposed by statute and will require Congressional action. Syria’s re-entry into the global financial system may be complicated by this variation in different sanctions authorities as institutions begin to adjust to a post-sanctions Syria.
Financial institutions and companies should carefully review internal compliance policies to take into account the changing scope of sanctions on Syria. Companies and funds seeking to invest in Syria should also consider internal compliance policies with respect to Syria, as well as existing covenants in financing and other agreements that may restrict investment or other business dealings in Syria.
New Jersey Legislature Again Considers Banning Noncompetes
As has become an almost annual tradition, New Jersey legislators have proposed bills that would severely limit noncompete agreements. With the Federal Trade Commission (FTC) no longer seeking to ban noncompetes, the battle has returned to states, and New Jersey is on the front line—and this could be the year a New Jersey noncompete bill passes.
Quick Hits
New Jersey legislators have introduced Senate Bill No. 4385 (S4385) (introduced in the Assembly as Assembly Bill No. 5708), which would prohibit most noncompete agreements and void current ones, except for senior executives under specific conditions.
S4385 requires employers to notify employees within thirty days of its passage that their noncompete agreements are no longer enforceable.
Another proposed bill, Senate Bill No. 4386 (S4386), aims to ban noncompetes that restrict employees from engaging in any lawful profession post-employment and prohibit employers from requiring repayment of training or immigration costs.
S4385 would prohibit noncompete agreements except under limited circumstances. Notably, S4385 is retroactive and would void the enforcement of current noncompete agreements. There is a limited carve-out that the bill would not ban retroactive enforcement against “Senior Executives.” If the bill goes into effect, employers would have to notify employees within thirty days of its passage that their noncompete agreements are no longer enforceable. No poach agreements would also be outlawed.
The definition of a noncompete would be: “any agreement arising out of an existing or anticipated employment relationship between an employer and a worker, including an agreement regarding severance pay, to establish a term or condition of employment that prohibits the worker from, penalizes a worker for, or functions to prevent or hinder in any way, the worker from seeking or accepting work with a different employer after the employment relationship ends, or operating a business after the employment relationship ends.” The question, of course, becomes, would a nonsolicit or even a nondisclosure agreement still be enforceable, since either type of agreement may arguably hinder an employee from accepting employment with a different employer or starting his or her own business.
“Senior executive” is defined as “a worker who is in a policy-making position with an employer and is paid total compensation of not less than $151,164 during the year immediately preceding the end of employment, or not less than $151,164 when annualized if the worker was employed during only part of the preceding year.” Here the issue will be that many job categories that employers have traditionally had legitimate needs for noncompetes, such as salespeople, may not be considered in a “policy-making position.”
Noncompetes entered into before the effective date of S4385 would only be viable for senior executives if the following criteria are met:
The employer must provide a written disclosure within thirty days after the effective date of S4385, setting forth the requirements of the law and any revisions to the noncompete agreement that have been made to comply with the bill and any revision must be signed by the employee.
The noncompete must not be broader than necessary to protect the legitimate interests of employers. A noncompete can be presumed necessary if a nondisclosure agreement, nonsolicitation of customers, and/or a nonsolicitation of employees are not sufficient to protect an employer’s interests. Note that this will be a very difficult test for employers to pass.
The noncompete can be no longer than twelve months.
The geographic reach of the noncompete must be limited to the territory where the employee provided services or had a material presence or influence in the two years prior to the termination of employment, and it cannot prohibit the employee from seeking employment outside of New Jersey.
The noncompete shall be limited to the activities and services provided by the employee during the last two years of his or her employment.
The noncompete clause cannot penalize the employee for challenging the validity of the noncompete. This is very important because one of the most effective tools an employer has with a noncompete is an attorneys’ fee provision, but now if the employee challenges the validity of the noncompete—which happens in nearly all noncompete litigation—then that will likely be enough to prevent a court from enforcing the attorneys’ fee provision even if the employer prevails.
No non-New Jersey choice-of-law provision is permitted to attempt to avoid the requirements of S4385.
The noncompete clause shall not restrict an employee from providing service to a customer or client if the employee is not the one who initiates or solicits the customer or client. This would be a huge carve-out and allow employees to claim they did not solicit, but the customer or client simply reached out to them.
The noncompete would be void unless the employer gives the employee notice within ten days of the termination of employment of the employer’s intention to enforce the noncompete. This provision does not apply if the employee was discharged for misconduct.
The employer must pay the employee “garden leave,” including both salary continuation and benefits for the period of the noncompete.
Notably, S4385 does not apply to noncompetes entered into in the sale of a business. Nor does the bill apply to causes of action that accrue prior to the enactment of the bill, meaning any current noncompete litigations are still viable.
The bill also creates a civil cause of action for aggrieved employees, and their potential damages include liquidated damages, compensatory damages, and attorneys’ fees.
Another Senate bill, S4386, would ban noncompetes that prohibit an employee from “engaging in a lawful profession, trade, or business of any kind after the conclusion of the employee’s employment with the employer.” This provision, like the provisions under S4385, would be retroactive. S4386, like S4385, was introduced by Senator Joseph P. Cryan. It is unclear whether S4386 is being viewed as an alternative if S4385 does not pass or is meant to act in tandem with S4385. Notably, S4386 would ban employers from requiring an employee to repay training costs or immigration/visa costs if the employee leaves employment.
With a gubernatorial election in New Jersey this year, there may be a push to pass the legislation before a new governor takes over. Because a number of large New Jersey companies are incorporated in Delaware, switching to a Delaware choice of law provision in noncompete agreements might have been viable, but Delaware has also become less friendly to noncompetes. For now, other than waiting and seeing what happens in the legislature, and potential lobbying efforts, the main thing New Jersey employers may want to consider is whether to bring lawsuits now for violations of noncompetes to preserve the enforcement of existing noncompete agreements, even if S4385 does pass.
The FMC Announces Investigation into Flags of Convenience and Unfavorable Conditions Created by Flagging Practices
The U.S. Federal Maritime Commission (“FMC”) announced on May 21, 2025 that it is initiating a non-adjudicatory investigation into whether the: 1) vessel flagging laws, regulations, and/or practices of certain foreign governments, including the so-called flags of convenience (“FOC” or “open registries”), or 2) competitive methods employed by owners, operators, agents, or masters of foreign-flag vessels, are creating unfavorable shipping conditions in the foreign trade of the United States (the “Notice”).
The investigation includes a 90-day public comment period, which ends on August 20, 2025.
FMC’s “Section 19” Trade Authority
Section 19 of the Merchant Marine Act of 1920, 46 U.S.C. § 42101 et seq., authorizes the FMC to evaluate conditions that affect shipping in the U.S. foreign trade and to issue regulations or take action to address such conditions. Potential remedies include port fees up to one million dollars, limits on voyages to and from U.S. ports or the amount or type of cargo carried, and other trade restrictions.
The FMC exercised this authority frequently in the 1980s and 90s (before the sell-off of the major U.S. liner operators to foreign buyers) to force market-opening concessions and eliminate discriminatory fees and trade barriers that impeded U.S. shipping companies’ competitiveness overseas. However, these powers have been left nearly dormant for the past two decades.
The current investigation does not target particular flag States or propose any remedial measures; rather, it is a non-adjudicatory investigation pursuant to 46 C.F.R. Part 502, Subpart R, which allows the FMC to request information, conduct hearings, issue subpoenas, conduct depositions, and issue reports, at its discretion.
Summary of Investigation
This investigation breaks new ground for the FMC, which traditionally has not had any role concerning vessel registries, marine safety, or the International Maritime Organization (“IMO”) conventions, which set the global framework for vessel regulation. In the Notice, the FMC expressed concern about the conditions created by the wide and uneven range of foreign vessel flagging laws, regulations, and practices. While the Notice indicated that many nations take “great care in creating standards for vessels flagged by their registries,” it also observed that other countries have engaged in a global “race to the bottom” by lowering standards and easing compliance requirements to gain potential competitive edge.
The Notice asserted that FOCs “operate under lax regulatory oversight, leading to lower safety, environmental, and labor standards . . . and FOC vessels exploit lower operational costs through reduced taxes, cheaper labor, and irregular maintenance or safety measures.” But the FMC failed to recognize the quality chasm between industry-leading U.S.-managed international open registries, such as the Marshall Islands and Liberia, versus thinly staffed or sham registries serving non-compliant shadow fleet ships.
The FMC’s Notice discussed other unfavorable flagging practices, including “flag-hopping” or using false flags to avoid regulatory oversight; using fraudulent ship registrations without the knowledge or approval of the relevant maritime administration; and operating in the “shadow fleet,” i.e., outside the regular or official frameworks and often engaging in illegal or illicit activities such as smuggling, sanctions evasion, or the transportation of prohibited goods. The Notice recognized IMO’s policy recommendations and resolutions addressing such practices, but asserted that the IMO’s effort has not led to meaningful change or deterrence.
The FMC did not single-out any particular open registry, but it referenced certain recent incidents and inaccurately linked them to certain open registries as a basis for its action (e.g., the Singapore-flag DALI’s allision with the Francis Scott Key Bridge, the Malta-flag APL QINGDAO’s narrowly avoided allision with the Verrazzano Bridge, and the MS MELENIA, currently under the Djibouti flag, where crew were left stranded when the tanker was abandoned for the third time). The Notice offered these incidents as examples, yet failed to provide any analysis linking the performance of the flag State to the events at issue. In fact, the references to the DALI and APL QINGDAO were particularly questionable, as Malta, Marshall Islands, and Singapore are three of the top-performing registries according to the U.S. Coast Guard’s 2024 Annual Port State Control report.
According to the Notice, the FMC launched this investigation for the purpose of identifying “best practices” that contribute to responsible and safe vessel operations and to identify practices that allow or contribute to unsafe conditions that endanger or imperil the reliability and efficiency of ocean shipping.
It appears likely that the current investigation is driven, at least in part, by a growing FMC dialogue with U.S. trade sanctions enforcers in the U.S. Departments of Treasury and State regarding the rapid growth of the “dark fleet” or “shadow fleet,” and the role of flag States in allowing vessels to evade or flout U.S. trade sanctions. FMC Chairman Lou Sola raised this issue in an April 2025 speech, in which he announced: “I have tasked our staff with identifying options on how to address the role flags of convenience play in enabling avoidance of sanctions. Registries hosting outlaw vessels used by reprehensible regimes to facilitate their evasion of international regulations would certainly qualify as conduct warranting the Commission’s attention and action.”
The FMC therefore may be assessing how its unilateral powers (which often are used in tandem with diplomatic approaches by the U.S. Department of State and other agencies) might be used to increase the pressure on the most problematic flag States to adhere to international standards or withdraw from market.
Public Comments due August 20, 2025
Comments may be submitted by all members of the public (including ship owners, operators, and managers, flag States, shippers, carriers, governments, and non-governmental organizations), but the Notice said FMC is particularly interested in receiving input from individuals and organizations with expertise or experience in vessel operations, international trade, international law, and national security, including international standards-setting organizations (e.g., the IMO and International Transport Workers’ Federation), countries with large ship registries, and those with evidence of the burdens and risk created by irresponsible flagging practices. Specifically, the FMC is seeking comments on the following topics:
Specific examples of responsible flagging laws, regulations, practices, and proposals, including how they contribute or would contribute to the efficiency and reliability of the ocean shipping supply chain;
Specific examples of unfavorable flagging laws, regulations, and practices that endanger the efficiency and reliability of the ocean shipping supply chain;
Practices by owners or operators of vessels that undermine the efficiency and reliability of international ocean shipping;
The benefits to international ocean shipping of responsible vessel registration and flagging practices; and
The burdens on foreign nations and vessel operators or owners of irresponsible flagging practices.
Key Takeaways
At this time, the investigation is only informational—FMC has not proposed or threatened any penalties or restrictions. However, the FMC has the power to impose vessel fees similar to what the U.S. Trade Representative has done recently in connection with its Section 301 investigation of China’s targeting of the maritime, logistics, and shipbuilding sectors. See our previous alert. Thus, the information submitted during the investigation comment period likely will help shape the FMC’s next steps.
Interested parties should strongly consider submitting comments on the topics noted above, which are further described with added examples in the Notice.
Big State, Big Scrutiny: Texas Steps into the Foreign Investment Review Arena
On March 13, the Texas House of Representatives introduced HB 5007, along with its companion bill SB 2117. The legislation—“Relating to the establishment of the Texas Committee on Foreign Investment to review certain transactions involving certain foreign entities; creating a civil penalty”—is currently under committee review. If enacted, the Lone Star State would become the first state to establish its own interagency committee to screen foreign investments, modeled in part on the federal Committee on Foreign Investment in the United States (CFIUS).
From our experience navigating CFIUS risks and filing obligations, preparing and submitting notices, negotiating Committee mitigation agreements, and authoring The CFIUS Book, 2nd Edition, we are preparing to support clients should they face a new layer of state-level scrutiny when the proposed Texas Committee on Foreign Investment (TCFI) become law.
A New Sheriff in Town: Texas Proposes Its Own CFIUS
The TCFI would be structured similarly to CFIUS. Just as the CFIUS Committee includes the heads of federal agencies, the TCFI would comprise senior officials from various Texas agencies—including the Attorney General (paralleling DOJ), the Comptroller (Treasury), and the heads of the Department of Public Safety and the Department of Information Resources (Defense analogues). In a move that reflects Texas-specific concerns, the Commissioner of Agriculture would also sit on the committee, highlighting growing attention to foreign ownership of farmland and food security.
Not Their First Rodeo: Texas Tweaks the Rules on Covered Transactions
Like CFIUS, the TCFI would apply to transactions that meet two criteria: (1) a governance threshold and (2) involvement in a sensitive sector. But Texas approaches both criteria differently:
Governance Threshold. While CFIUS uses a qualitative test (focusing on control or access rights rather than ownership percentage), HB 5007 would impose a quantitative test. A transaction would be subject to review if it exceeds a minimum dollar value or ownership percentage—thresholds to be set by the Governor.
Sensitive Sectors. The TCFI would apply to investments in “critical infrastructure” and “sensitive personal data.” These terms are borrowed from federal terminology but redefined under Texas law.
Critical infrastructure would cover a broader range than under CFIUS—extending to commercial facilities, emergency services, dams, food and agriculture, health care, and government buildings. This is significantly wider than both CFIUS definitions and Texas’s existing Lone Star Infrastructure Protection Act.
Sensitive personal data is defined not in terms of identifiability, but in terms of potential risks to public safety if accessed by a foreign entity. Though narrower in scope than CFIUS in some respects, this standard could be applied broadly in practice.
The bill would also add two new categories of covered sectors: Texas agricultural land and any “strategic industry or asset” identified by the Governor, allowing for future expansion.
Filing Deadlines and Legal Spurs: The Process and Enforcement Landscape
The process outlined in HB 5007 differs notably from the federal model. While CFIUS allows for voluntary and mandatory filings and may initiate its own reviews, HB 5007 would require mandatory pre-closing notification to the Texas Attorney General at least 90 days before closing. The Attorney General would then conduct an initial review within 30 days and, if needed, a secondary investigation within 45 days.
The TCFI would not conduct the review itself, but would receive findings and proposed mitigation terms from the Attorney General. If the committee rejects a proposed agreement, the Attorney General would be responsible for presenting a revised version. The Attorney General would also have enforcement authority—including injunctive relief and divestment—though the bill limits civil penalties to $50,000 per violation.
Foreign investors unfamiliar with Texas procedure may find the process deceptively straightforward—but, as any traveler making their way across the state knows, it pays to plan ahead, double-check the route, and occasionally pull off at the beaver for fuel, supplies, and a quick reset. The logistics of navigating parallel state and federal reviews may call for similar recalibration—especially when timelines, procedures, and enforcement mechanisms diverge.
Two-Lane Traffic: CFIUS, TCFI, and the Potential for Overlap
HB 5007 does not address how TCFI and CFIUS might coordinate when both claim jurisdiction—raising practical concerns for investors facing parallel notice and review processes. Navigating two regimes, potentially with different mitigation expectations, could introduce delays, friction, and uncertainty.
It remains to be seen whether future amendments will clarify jurisdictional boundaries, establish coordination mechanisms, or provide safe harbors. In the meantime, companies should be prepared to address both state and federal review obligations—requiring careful planning, aligned timelines, and coordinated strategy.
Trump Administration Files Statement of Interest Supporting State AG Action Against Asset Managers Accused of ESG-related Antitrust Violations
Last week, the Trump Administration’s FTC and DOJ (Antitrust Division) filed a statement of interest in support of a lawsuit filed last November by eleven Republican state attorneys-general against three major asset managers for alleged antitrust violations. This lawsuit is founded upon a novel application of antitrust law; in essence, the state attorneys-general have alleged that, under the guise of responding to environmental concerns, the three asset managers engaged in a scheme to reduce coal output (enabled by their market power–i.e., extensive holdings of stock in coal companies), and so increased the price of electricity (and profits for the coal companies). It is especially unusual as it relies upon collusive efforts by minority shareholders to reduce output across an entire industry in the pursuit of additional profits, rather than an explicit agreement among competitors to reduce competition or increase prices. Nonetheless, the use of antitrust law to pressure ESG-focused investing has been a legal tactic embraced over the past few years by elements of the GOP.
The fact that the FTC and the Antitrust Division have decided to weigh in on a prominent lawsuit is not especially surprising; noteworthy cases attract substantial attention from amici curiae, including the federal government, due to the potential significant of such cases for future litigation or the development of the law. Other prominent organizations, such as SIFMA, have also made filings in the case.
What is perhaps more interesting is how the positions adopted in the legal filing by the federal government are directly tied to the policy priorities of the Trump Administration. Indeed, the press release issued by the DOJ in conjunction with this filing makes that point clear, as it specifically invokes recent executive orders by President Trump concerning energy policy–including Exec. Order 14261, which expressly encouraged increasing domestic coal production–and how this statement of interest was intended to combat efforts “to harm competition under the guise of ESG.” While the fact that the policy priorities of the Trump Administration are guiding legal strategy is not especially surprising, this case provides a noteworthy and concrete example of this broader agenda.
Justice Department and Federal Trade Commission File Statement of Interest on Anticompetitive Uses of Common Shareholdings to Discourage Coal Production Thursday, May 22, 2025 Today, the Justice Department, joined by the Federal Trade Commission (the “Agencies”) filed a statement of interest in the Eastern District of Texas in the case of Texas et al. v. BlackRock, Inc. The States’ lawsuit—led by the Texas Attorney General—alleges that BlackRock, State Street, and Vanguard used their management of stock in competing coal companies to induce reductions in output, resulting in higher energy prices for American consumers. This is the first formal statement by the Agencies in federal court on the antitrust implications of common shareholdings.
www.justice.gov/…
Tariffs & Supply Chains: An English Law Perspective on Contractual Levers You May Have (or Want)
These are challenging times for supply chains. In recent months, the US government has announced, reversed, delayed, adjusted, and enacted a series of tariffs on imports to the United States from a long list of countries; some countries have retaliated, and others are negotiating and beginning to announce trade deals. The supply chain is trying to adapt fast and frequently.
Whether tariffs are imposed for additional tax revenue, to encourage domestic production and consumption, as a geopolitical tool to favour some countries over others, a combination of these or otherwise, they are having significant impact. From increasing material and production costs, to squeezing operating margins, increasing administrative and trade compliance burdens, inflating end-product pricing, and affecting supply and demand cycles with stockpiling in advance of anticipated tariffs or import delays in case tariffs are soon to be removed or reduced.
While supply chain restructuring or diversification may be a medium or longer-term priority, its participants may wish to be agile and respond swiftly in the short-term, but where does the tariff burden lie, how flexible are the contracts, and what contractual levers might be available to mitigate the impact?
We consider below (from an English law perspective – though the comments may have general application) some contractual levers that may help navigate these challenges. One comment of universal application is that: whether any tariff announcement is sufficient to trigger a contractual lever, and the consequences which may flow from it, will be contract clause and context specific.
Where Does the Tariff Burden Lie?
Does the contract contain provisions which allocate the parties’ risks and responsibilities in the event of tariffs? If not, each party may bear the increased costs of performing their respective obligations.
Does a Tariff Trigger Automatic Consequences?
Dynamic pricing provisions may vary the price payable by reference to an underlying index, which may shift in response to a tariff, or they may build-in formulae to adjust prices by reference to an increase in the cost of supply, which could include the imposition of a tariff. These provisions may provide that price adjustments are time limited, subject to a maximum cap, or kick-in only once a cost threshold is exceeded.
What Contractual Levers Are Available?
Does the contract provide opportunities for the parties to require or request variations, to suspend performance, or even to terminate, in the event of tariffs or significant cost increases?
Surcharge
Surcharge pricing may allow a party to apply an additional fee beyond the original contract price, to cover a particular cost. End users will often be expected to pay increased prices for consumer goods affected by tariffs, and a similar principle may apply to business-to-business contracts if a clause permits a party to levy surcharges. As with dynamic pricing provisions mentioned above, these may be subject to threshold and time limits, and they may provide a unilateral right to adjust pricing, or trigger a renegotiation.
Change in Law
The contract may specify the consequences of a change in law after its execution. The clause would need to be examined to assess whether: a tariff could qualify as a change in law; it requires contractual adjustments or triggers a renegotiation; it allocates the consequent burden of additional cost of compliance; it addresses the ramifications of any delays caused, or even perhaps provides a right to terminate. Such a clause may only apply if the change in law requires that the contract be amended (for example, in order for it to remain compliant with the law that has changed), so whether a tariff could be said to require a variation or merely affect the economics of the arrangement could give rise to debate/dispute.
Force Majeure / Frustration
Is often the first thing that comes to mind when a significant event impacts a contract, but circumstances in which such a clause may be successfully utilised can be limited. There is no standalone doctrine of force majeure under English law, so step one is to see if there is such a clause. A force majeure clause is usually composed of two parts: the first lists a series of events considered to trigger the force majeure provisions, and the second determines the consequences, which may for example include a right to suspend performance temporarily and/or to give notice to terminate, if certain circumstances apply. Whether a tariff constitutes a force majeure event will depend on the clause wording.
Even if tariffs are specifically referenced, force majeure clauses can require that the triggering event make it legally or physically impossible to perform, rather than merely more expensive, and English caselaw indicates that such clauses will not generally be construed to extend to changes in economic circumstances. So, force majeure may not be an especially useful lever in respect of tariffs. That said, if the imposition of a tariff has knock-on consequences, such as a key component or ingredient becomes temporarily unavailable rendering it impossible to manufacture a product, there may be better prospects of force majeure responding to assist.
Absent a force majeure clause, parties to English law contracts sometimes consider the doctrine of frustration (discharging a contract when an unforeseen event makes the contract incapable of being performed), though the English courts have consistently held that increased costs or reduced profitability will not be sufficient to frustrate a contract – so unless the impact of a tariff is so extreme as to create impossibility, it is unlikely to assist.
MAC / Hardship
Is there a “material adverse change” (MAC) or a hardship provision? MAC clauses may allow a party (e.g. a buyer in an acquisition) to renegotiate or withdraw from a transaction if a certain event occurs which has a material negative impact. The potential applicability and effect of the clause would need careful consideration in each case. It may list specific triggering events, refer more generally to any matter which has a materially adverse effect, or incorporate carve-outs that may prevent tariffs from being considered a relevant event. What consequences are specified, and does it trigger a renegotiation or provide a right to terminate or withdraw?
Alternatively, there may be an economic hardship clause, permitting a party to trigger a renegotiation if something occurs making performance significantly more difficult / financially onerous (though not impossible). Carefully defining what constitutes “hardship” will be important, as this may be an area ripe for dispute when something drastic occurs. Hardship clauses are not especially common in English law contracts, though sometimes appear in cross-border long-term supply relationships, or where markets may be volatile.
Change Control / Variation
some longer-term or complex contracts may have a prescribed process to propose, evaluate, negotiate in good faith, and implement changes to contract economics following a change to the scope of work or a cost increase for example.
The boilerplate provisions in many contracts incorporate a variation clause expressly permitting contract amendment by agreement between the parties, and parties are generally free to agree and implement variations to their contracts in any event (subject to any express restrictions in the contract).
Their utility can be limited where they do not specify what changes should be made on the occurrence of a triggering event, constitute only an “agreement to agree”, or provide no more than an option to negotiate, though incorporating an obligation to negotiate in good faith may be more helpful than nothing at all. In certain circumstances (such as where the parties have a particularly strong desire to continue working together, or where all parties find themselves similarly impacted by an event), a mutually agreeable change control or variation clause may assist to achieve a commercial resolution. That being said, where a collaborative relationship persists despite challenging circumstances, the parties may elect to vary the underlying agreement regardless of any express variation process. It would be extremely unusual for a commercial agreement to prohibit its parties from amending the agreement in writing executed by all parties.
Termination
If nothing sufficiently reduces the damage that will be done by continuing to perform, looking at contract termination possibilities may be the only option.
Some of the provisions mentioned above may allow notice of termination to be given if certain circumstances have arisen. If not, does the contract permit termination for convenience by giving a period of notice? Where such a right exists, it may however be accompanied by exit costs and these should be balanced against the costs associated with the tariff to ascertain which route makes most economic sense. Or has the imposition of the tariff brought about a breach of the contract sufficiently serious to warrant a termination – for example, if the tariff brings about a failure to supply or a refusal to order, accept delivery or pay – whether under a provision allowing notice of termination to be given in the event of a material breach or under the common law for repudiatory breach?
Comment
Scope for complex contractual disputes abound: contrasting interpretations of contractual provisions; whether they are enforceable; whether a clause encompasses a particular event; whether that event has occurred; can US tariffs be classified as “unforeseen” events when they featured so prominently in the election campaign?; has a force majeure event occurred?; if so, has the obligation become impossible (not just expensive) to perform?; what constitutes a material adverse change or a hardship?; is a party engaging in negotiations in good faith?; has a right to terminate arisen?; whether the tariff has brought about a breach of contract; does a breach give rise to a right to terminate under the contract or English common law? And these are just a number of examples arising from the concepts considered above.
The firm’s Commercial Disputes and International Arbitration lawyers regularly assist clients seeking to rely on, or challenge an opponent’s reliance on, the types of levers discussed above, and with resolving any complex contractual disputes arising. The team works closely with our international trade team, which is advising our global clients in real-time as the trade landscape continues to shift.
We noted above that the availability and utility of these rights and levers will be contract clause and context specific, and the wording of each provision will be very important. Do your supply chain contracts include some or all of the levers you need, and will they operate as you would like?
There is a delicate balance to be struck between incorporating levers for sufficient flexibility and allowing the parties to navigate their business through unexpected and significant disruptive events (such as tariffs), whilst at the same time maintaining levels of contractual certainty that may be required to justify investment in a relationship, and so that everything is not forever up for renegotiation. Our commercial contracts and other lawyers assist clients to assess the context-specific strategic benefits of these levers, advising on the drafting, negotiation and incorporation of such provisions. Ultimately, it is about tailoring the balance between flexibility and certainty to the specific industry and business needs of our clients in order to future proof their commercial relationships.
Tariffs and Alcohol Production Contracts: The New Trade Landscape
Since early 2025, U.S. alcohol manufacturers have found themselves on the frontlines of a fresh wave of trade disruptions. With the “Liberation Day” tariffs, core inputs such as cans, bottles, grain, labels, barrels are seeing their prices rise. For producers using imported goods, relying on contract production, or alternating proprietorship relationships, these cost shifts are no longer theoretical.
Craft alcohol manufacturers operate on thin margins and often lack leverage in global supply chains. For years, flexible terms and handshake understandings filled the gaps. But in today’s trade environment, producers need to tighten up their contracts. This starts with how manufacturers manage tariff risk.
Force Majeure Provisions are Usually Inapplicable
It’s a common misconception that rising costs from tariffs are a “force majeure” event. They’re not. Force majeure covers “acts of God” such as hurricanes, pandemics, and labor strikes; the kinds of events that make performance impossible. Tariffs, by contrast, just make performance more expensive. Courts generally do not excuse a party from paying or performing because of an unfavorable cost shift. Unless your force majeure clause expressly covers tariffs or government duties (and most don’t), you’re on the hook. This is why producers need a different set of tools, and that comes through good contract drafting.
Tighten up Your Contracts
To keep your margins intact and your relationships healthy, you need proactive language that deals with tariffs head-on. Many producers are now reworking their contractual agreements like alternating proprietorships and contract production deals—to include specific language that allows for tariff surcharges. These provisions enable the host producer or manufacturer to pass on new tariffs as a separate line item. Other agreements use broader “change in law” provisions to trigger pricing adjustments if newly enacted duties or government actions materially alter production costs. These mechanisms function quite differently from general hardship or material adverse change (MAC) clauses. While hardship clauses typically permit renegotiation in response to unforeseen circumstances, they often lack enforceable standards. Without clear financial thresholds or defined triggers, a court may still enforce the original pricing. By contrast, tariff surcharges and change-in-law provisions directly allocate costs and give parties a reliable structure for managing increases without creating ambiguity.
Even simple contractual language can go a long way. For instance, a sentence reserving the right to apply a “tariff surcharge equal to any new or increased import duties imposed after the effective date” keeps pricing transparent and ensures both sides know where they stand. Likewise, a well-drafted change-in-law clause can provide a formal mechanism for renegotiating terms in response to legislative or administrative actions—such as executive orders or international trade measures—that impact the cost of inputs.
In the alternating proprietorship and contract brewing contexts, tariff risk deserves even more attention. These agreements often require the host to secure and purchase certain ingredients and materials used in production. That includes imported items like glass, barrels, malt, specialty grains, or fruit. If tariffs are imposed on these goods during the term of the agreement and the contract is silent, the host may be left to “eat” those additional costs. Sometimes these agreements allow only for annual cost increases. Given the volatility of the new tariff policies, that’s not a sustainable model. For this reason, these agreements should explicitly state that the host is permitted to pass along any new or increased import duties associated with ingredients or materials sourced on behalf of the tenant.
Tariffs may go up or down, but what shouldn’t fluctuate is your contract’s ability to handle them. Rather than reaching for force majeure clauses ill-suited to cost increases, producers should plan ahead by including express surcharge rights, price adjustment mechanisms, and change-in-law protections. This way, if tariff rates spike again, your production doesn’t grind to a halt — and neither does your profit margin.
Remember, well-drafted agreements don’t just assign risk; they preserve relationships. When the rules of trade change over a single tweet, the best defense is a well-drafted contract.
Customs Fraud Investigations Will Be a DOJ Area of Focus
On May 12, 2025, Department of Justice (DOJ) Criminal Chief Matthew Galeotti issued a memorandum addressing the “Fight Against White-Collar Crime.” The memorandum lists several priorities for white-collar criminal prosecutions. While the first priority – healthcare fraud and federal program and procurement fraud – is not surprising, the second priority – trade and customs fraud, including tariff evasion – is a new focus.
Emphasizing its new focus on trade and customs fraud, the Criminal Division is also amending the Corporate Whistleblower Awards Pilot Program to add trade, tariff and customs fraud by corporations to the list of subject matters that whistleblowers can report for a potential bounty. Under this program, previously reported here, whistleblowers can recover a percentage of the government’s ultimate forfeiture amount.
Looking at previous trade and customs cases provides insight into both how the DOJ may be planning to pursue them and what whistleblowers are likely to report. The alleged misconduct in tariff evasion cases generally falls in three areas that affect the duties owed: (1) misrepresenting the classification/type of product, (2) undervaluing the product, and (3) misrepresentation of the country of origin and/or transshipment cases. Even well-intentioned companies may find themselves making missteps in these areas because the nuance in the governing regulations makes them surprisingly complicated. Appropriate classification of a product can be challenging, and the country of origin is often unclear when manufacturing occurs in multiple countries.
Civil False Claims Act Cases
As our regular blog readers know, the False Claims Act (FCA) is a federal law that imposes civil liability for submitting false claims to the federal government. The law imposes treble damages and civil penalties on those who submit false claims. In fiscal year 2024, FCA settlements and judgments totaled over $2.9 billion. Under the FCA, whistleblowers (called “relators”) can file cases under seal on behalf of the government. The government then opens an investigation to determine whether they should intervene in the case. Much like they can share in criminal forfeitures through the Corporate Whistleblower Awards Pilot Program discussed above, the relators who bring FCA violations to the government’s attention share in the civil recovery obtained by the government.
International Vitamins Corporation
In January 2023, International Vitamins Corporation (IVC) entered a civil settlement for $22,865,055, admitting that it misclassified 32 of its products imported from China under the HTS as duty-free, over an almost five-year period. IVC also admitted that even after it retained a consultant in 2018 who informed IVC that it had been misclassifying the covered products, IVC failed to implement the correct classifications for over nine months and never remitted duties that it knew it had previously underpaid to the United States because of its misclassification. This case was originally brought as a whistleblower lawsuit by a former financial analyst at IVC (U.S. ex rel. Welin v. International Vitamin Corporation et al., Case No. 19-Civ-9550 (S.D.N.Y.)).
Samsung C&T America, Inc. (SCTA)
In February 2023, Samsung C&T America, Inc. (SCTA) resolved a FCA lawsuit that was initially filed by a whistleblower. SCTA admitted that, between May 2016 and December 2018, it misclassified imported footwear under the United States’ Harmonized Tariff Schedule (HTS) and underpaid customs duties. SCTA further admitted that it had reason to know that certain documents provided to its customs brokers inaccurately described the construction and materials of the imported footwear and that SCTA failed to verify the accuracy of this information before providing it to its customs brokers.
SCTA, with its business partner, imported footwear manufactured overseas, including from manufacturers in China and Vietnam. The tariff classifications for footwear depend on the characteristics of the footwear, including the footwear’s materials, construction, and intended use. Depending on the classification of the footwear, the duties varied significantly.
In the settlement agreement, SCTA specifically admitted and accepted responsibility for the following conduct:
As the importer of record (IOR), SCTA was responsible for paying the customs duties on the footwear and providing accurate documents to the United States Customs and Border Protection (CBP) to allow CBP to assess accurate duties.
SCTA and its business partner provided SCTA’s customs brokers with invoices and other documents and information that purportedly reflected the tariff classification of the footwear under the HTS, as well as the corresponding materials and construction of the footwear. SCTA knew that its customs brokers would rely on the documents and information to prepare the entry summaries submitted to CBP, which required classifying the footwear under the HTS, determining the applicable duty rates, and calculating the amount of the customs duties owed on the footwear.
SCTA had reason to know that certain documents provided to its customs brokers, including invoices, inaccurately stated the materials and construction of the footwear. SCTA failed to verify the accuracy of this information before providing it to its customs brokers. Thus, SCTA materially misreported the classification of the footwear under the HTS and misrepresented the true materials and construction of the footwear.
SCTA, through its customs brokers, misclassified the footwear at issue on the associated entry documents filed with CBP and, in many instances, underpaid customs duties on the footwear.
This case makes clear that the company and/or IOR bears responsibility for accurately reporting to CBP and that the government will not allow an importer to pass the blame to the customs broker when it has reason to know that it is providing the customs broker with inaccurate information.
Ford Motor Company
In March 2023, Ford Motor Company (Ford) agreed to pay the United States $365 million to resolve allegations that it violated the Tariff Act of 1930 by misclassifying and understating the value of hundreds of thousands of its Transit Connect vehicles. This settlement is one of the largest recent customs penalty settlements.
While Ford did not admit to any wrongful conduct, the settlement resolves allegations that it devised a scheme to avoid higher duties by misclassifying cargo vans. Specifically, the government alleged that from April 2009 to March 2013, Ford imported Transit Connect cargo vans from Turkey into the United States and presented them to CBP with sham rear seats and other temporary features to make the vans appear to be passenger vehicles. The government alleged that Ford included these seats and features to avoid paying the 25% duty rate applicable to cargo vehicles instead of the 2.5% duty rate applicable to passenger vehicles. The settlement also resolves allegations that Ford avoided paying import duties by under-declaring to CBP the value of certain Transit Connect vehicles.
King Kong Tools LLC (King Kong)
In November 2023, a German company and its American subsidiary agreed to pay $1.9 million to settle allegations of customs fraud under the FCA. The government alleged that King Kong was falsely labelling its tools as “made in Germany” when the tools were really made in China. By misrepresenting the origin of the tools, King Kong avoided paying a 25% tariff.
This case began when a competitor of King Kong filed a whistleblower complaint alleging that King Kong was manufacturing cutting tools in a Chinese factory (U.S. ex rel. China Pacificarbide, Inc. v. King Kong Tools, LLC, et al.,1:19-cv-05405 (ND Ga.) ). The tools were then shipped to Germany, where additional processing was performed on some, but not all, of the tools. The tools were then shipped to the United States and declared to be “German” products.
Homestar North America LLC
In December 2023, Homestar North America LLC (Homestar) agreed to pay $798,334 to resolve allegations that it violated the FCA by failing to pay customs duties owed for furniture imports from China between September 2018 and December 2022. The government alleged that the invoices were created and submitted to the CBP containing false, lower values for the goods. The settlement resolved allegations that Homestar and its Chinese parent company conspired to underreport the value of imports delivered to Homestar following two increases on Section 301 tariffs for certain products manufactured in China under the HTS.
This case was filed by a whistleblower in the Eastern District of Texas under the FCA, and the government subsequently intervened (U.S. ex rel. Larry J. Edwards, Jr. v. Homestar North America, LLC, Cause No. 4:21-cv-00148 (E.D. Tex.)).
Alexis LLC
In August 2024, women’s apparel company Alexis LLC agreed to pay $7,691,999.63 to resolve a FCA case also initially filed by a whistleblower (U.S. ex rel. CABP Ethics and Co. LLC v. Alexis et al., Case No. 1:22-cv-21412-FAM (S.D. Fla.)). The settlement, which was not an admission of liability by Alexis, resolved claims that from 2015 to 2022 Alexis materially misreported the value of imported apparel to CBP and thereby avoided paying the customs duties and fees owed on the imports. Alexis did, however, admit and acknowledge certain errors and omissions regarding the value and information reported on customs forms. Specifically, the errors related to failure to include and apportion the value of certain fabric and garment trims, discrepancies between customs forms and sales-related documentation, misclassifying textiles, and listing incorrect ports of entry.
In negotiating this settlement, Alexis and its senior management received benefits for its cooperation with the government. For example, Alexis voluntarily and timely submitted relevant information and records to the government. These submissions assisted the government in determining the amount of losses. Also, Alexis and its management implemented compliance procedures and employee training to prevent future issues.
Criminal Case
Kenneth Fleming and Akua Mosaics, Inc. (Akua Mosaics)
Kenneth Fleming and Akua Mosaics, Inc. plead guilty to a conspiracy to smuggle goods into the United States under 18 U.S.C. §§371 and 545. According to the plea agreements, from 2021 through June 2022, the defendants conspired to defraud the United States by smuggling and importing porcelain mosaic tiles manufactured in China by falsely representing to the CBP that the merchandise was of Malaysian origin. This was done with the intent to avoid paying antidumping duties of approximately 330.69%, countervailing duties of approximately 358.81%, and other duties of approximately 25%.
Fleming and Akua Mosaics conspired with Shuyi Mo, a citizen and resident of China who was arrested when he was attempting to flee the United States. They caused “Made in Malaysia” labels to be placed on boxes containing tiles manufactured in China and then caused a container with tiles manufactured in China to be shipped from Malaysia to Puerto Rico, misrepresenting the country of origin as Malaysia. The amount of unpaid duties and tariffs on this shipment was approximately $1.09 million. At sentencing, Fleming was ordered to pay restitution of $1.04 million and was sentenced to two years of probation.
Takeaways
Based upon DOJ’s new prioritization of trade and customs fraud, companies that import or export goods should ensure that they have the resources and training for employees working in jobs related to customs. Even simple errors and omissions could have more significant monetary consequences with increased tariffs. Companies should implement compliance programs to properly train employees and to identify and correct any issues as they occur.
Companies should also work with experienced trade counsel to determine if they are following the law. Failure to heed trade counsel’s advice could potentially put a company in a worse situation, like in the IVC matter discussed above.
If there is any indication of a criminal or civil investigation, companies should be proactive in retaining counsel with expertise in this area. Regardless of whether they dispute or settle the matter, experienced counsel is key in reaching a favorable resolution. Counsel can help determine when and how best to cooperate with the government to maximize cooperation credit in any settlement, as discussed above in the Alexis LLC matter.
Finally, companies should be diligent in their employment law practices. That means not only complying with applicable employment law when dealing with whistleblowers, but also ensuring that personnel files are appropriately documented when there are employee issues. FCA whistleblowers are often former, disgruntled employees who were terminated for performance issues. However, the employees’ files often do not reflect their poor performance, which can create unnecessary challenges in defending whistleblower claims. Companies that import or export goods should expect to see more whistleblowers come forward, both as traditional FCA relators and because DOJ has now added trade, tariff, and customs fraud issues to the Criminal Division’s Corporate Whistleblower Awards Pilot Program. All such companies will be best served by being diligent and prepared for DOJ’s new focus in this area.
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Florida’s CHOICE Act Offers Employers Unprecedented Tools for Non-Compete + Garden Leave Agreements
Takeaways
The Florida Legislature’s recently passed CHOICE Act allows covered non-compete and garden leave agreements to extend for up to four years — double the current amount of enforcement time.
The Act makes it significantly easier for employers to obtain an injunction and enforce covered agreements.
Employers looking to take advantage of the Act will need to comply with its technical requirements.
Article
The Florida Legislature passed the Florida Contracts Honoring Opportunity, Investment, Confidentiality, and Economic Growth (CHOICE) Act on April 24, introducing the most sweeping changes to Florida’s restrictive covenant framework in years and offering employers unprecedented tools to protect their valuable business interests. If enacted, the Act will take effect on July 1, 2025.
Who Does the CHOICE Act Cover?
The CHOICE Act applies to covered employees or independent contractors earning more than twice the annual mean wage in the Florida county where either (i) the covered employer’s principal place of business is located or (ii) where the covered individual resides if the covered employer’s business is located outside of Florida. Therefore, depending upon the Florida county, the compensation threshold could range anywhere from $80,000 to nearly $150,000. Notably, the Act expressly excludes licensed healthcare practitioners as defined in Section 456.001, Florida Statutes, from its scope. But the Act does not prohibit enforcement of — or otherwise render unenforceable — restrictive covenants with healthcare practitioners under existing Florida restrictive covenant law, subject to the exclusions of Section 542.336, Florida Statutes, which prohibits restrictions between physicians who practice a medical specialty and an entity that employs or contracts with all physicians who practice that same specialty within the same Florida county.
Covered Non-Compete Agreements
Under the CHOICE Act, non-compete agreements with covered employees or contractors can extend up to four years post-employment. In contrast, under Florida’s current non-compete statute, employee-based non-competes lasting longer than two years are presumed to be unreasonable and unenforceable. To be enforceable under the CHOICE Act, covered non-compete agreements must:
Be in writing and advise the worker of their right to consult legal counsel, providing at least seven days for review before execution.
Include a written acknowledgment from the worker confirming receipt of confidential information or substantial client relationships during employment.
Specify the non-compete period will be reduced day-for-day by any nonworking portion of a concurrent garden leave period, if applicable.
Covered Garden Leave Agreements
The CHOICE Act also codifies enforcement of certain garden leave arrangements, allowing employers to require covered employees or contractors to provide advance notice — up to four years—before employment or contract termination. During this notice period, employees remain on the employer’s payroll at their base salary and benefits but are not entitled to any discretionary compensation. During the first 90 days of the garden leave period, an employer may require the worker to continue working. But a worker may engage in nonwork activities at any time thereafter.
To be enforceable under the Act, a covered garden leave agreement must:
Be in writing and advise the worker of their right to consult legal counsel, providing at least seven days for review before execution.
Include a written acknowledgment from the worker confirming receipt of confidential information or substantial client relationships during employment.
Not obligate the worker, after the first 90 days of the notice period, to provide any further services to the employer and allow the worker to engage in nonwork activities. (The worker may also work during the remainder of the notice period for another employer so long as the covered employer has provided permission to the worker.)
How Are Covered Agreements Enforced?
The CHOICE Act provides robust remedies for employers seeking to enforce covered agreements. For covered entities, the Act requires strict enforcement and makes it significantly easier for employers to obtain injunctions. Upon application, courts are required to issue preliminary injunctions to enforce a covered agreement unless the employee or contractor can demonstrate, by clear and convincing evidence, the agreement is unenforceable or unnecessary to prevent unfair competition. Further, if an employee or contractor engages in “gross misconduct,” an enforcing employer may reduce the salary or benefits provided to the employee or “take other appropriate action” without such activity constituting a breach of the covered agreement. An employer who prevails in its enforcement action is entitled to recover its monetary damages and attorney’s fees.
What Should Employers Do Now?
The CHOICE Act represents a significant development in Florida’s restrictive covenant law, offering employers enhanced mechanisms to safeguard their business interests through enforceable non-compete and garden leave agreements. Employers seeking to avail themselves of the new Act should take immediate steps to review and modify existing agreements or, if appropriate, draft new agreements.
DOJ Announces Long-Awaited Corporate Enforcement Priorities
On May 12, 2025, the Department of Justice’s (DOJ) Criminal Division issued a much-anticipated memorandum outlining its enforcement priorities and policies for prosecuting corporate and white-collar crimes. The memorandum, issued by Matthew R. Galeotti, Head of the Criminal Division, is a notable realignment of the Criminal Division’s priorities to promote policy goals of the Trump administration, including national security, foreign trade, and market integrity. It instructs prosecutors to “avoid overreach that punishes risk-taking and hinders innovation,” explaining that the Division’s policies are intended to “strike an appropriate balance between the need to effectively identify, investigate, and prosecute corporate and individuals’ criminal wrongdoing while minimizing unnecessary burdens on American enterprise.” The memorandum identifies the administration’s focus areas for white-collar criminal enforcement but also emphasizes its intent to reward corporate cooperation and remediation.
The DOJ’s Ten Focus Areas for Corporate Enforcement
The memorandum directs that the Criminal Division be “laser-focused on the most urgent criminal threats to the country,” seemingly suggesting that the DOJ’s focus during the prior administration was too broad. It identifies ten areas of focus that it asserts significantly impact the harms posed by white-collar crime:
1. Waste, fraud, and abuse, including health care fraud and federal program and procurement fraud that harm the public fisc;
2. Trade and customs fraud, including tariff evasion;
3. Fraud perpetrated through variable interest entities;[1]
4. Fraud that victimizes U.S. investors, individuals, and markets including, but not limited to, Ponzi schemes, investment fraud, elder fraud, servicemember fraud, and fraud that threatens the health and safety of consumers;
5. Conduct that threatens the country’s national security, including threats to the U.S. financial system by gatekeepers, such as financial institutions and their insiders that commit sanctions violations or enable transactions by cartels, transnational criminal organizations (TCOs), hostile nation-states, and/or foreign terrorist organizations;
6. Material support by corporations to foreign terrorist organizations, including recently designated cartels and TCOs;
7. Complex money laundering, including Chinese Money Laundering Organizations, and other organizations involved in laundering funds used in the manufacturing of illegal drugs;
8. Violations of the Controlled Substances Act and the Federal Food, Drug, and Cosmetic Act (FDCA), including the unlawful manufacture and distribution of chemicals and equipment used to create counterfeit pills laced with fentanyl and unlawful distribution of opioids by medical professionals and companies;
9. Bribery and associated money laundering that impact U.S. national interests, undermine U.S. national security, harm the competitiveness of U.S. businesses, and enrich foreign corrupt officials; and
10. As provided by an April 7, 2025 memorandum from the Deputy Attorney General: crimes (1) involving digital assets that victimize investors and consumers; (2) that use digital assets in furtherance of other criminal conduct; and (3) willful violations that facilitate significant criminal activity. Cases impacting victims, involving cartels, TCOs, or terrorist groups, or facilitating drug money laundering or sanctions evasion shall receive the highest priority.
The memorandum also emphasizes that Criminal Division prosecutors will “prioritize efforts to identify and seize assets that are the proceeds of, or involved in, such offenses and, where authorized under law, use forfeited assets to compensate victims of these offenses.”
Revisions to Corporate Enforcement and Voluntary Self-Disclosure Policies
Mr. Galeotti also directed amendments to several corporate enforcement policies. Specifically, the DOJ clarified and enhanced the benefits available to companies that voluntarily self-report, tightened its monitor selection policy, and added four priority areas to its recently announced whistleblower program.
Although the Criminal Division’s Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP) has been applied across the Division since 2018, Mr. Galeotti has directed several significant changes. First, the memorandum states that companies that self-disclose will be entitled to a declination, as opposed to a presumption of a declination. In other words, companies that satisfy the requirements of the CEP (voluntary self-disclosure, full cooperation, and timely remediation without aggravating circumstances) will not be required to enter into a criminal resolution.
The memorandum also directs the Criminal Division’s Fraud Section and the Money Laundering and Asset Recovery Section to “revise the CEP and clarify that additional benefits are available to companies that self-disclose and cooperate, including potential shorter terms.” The memorandum notes that “[i]t is individuals—whether executives, officers, or employees of companies—who commit these crimes, often at the expense of shareholders, workers, and American investors and consumers.” The memorandum also instructs that agreements with companies that cooperate and remediate should last for an appropriate term as necessary but should not be longer than three years “except in exceedingly rare cases.” The memorandum directs the Fraud Section and the Money Laundering and Asset Recovery Section to review the terms of all existing agreements with companies to determine if they should be terminated early.
The memorandum emphasizes its goal of streamlining corporate investigations, which it notes can be “costly and intrusive for businesses, investors, and other stakeholders” and “significantly interfere with day-to-day business operations and cause reputational harm that may at times be unwarranted.” The memorandum, therefore, directs prosecutors to “move expeditiously” when investigating cases and making charging decisions. The DOJ will track investigations to ensure they “do not linger and are swiftly concluded.”
Finally, the memorandum announced an individualized review of all existing independent compliance monitorships and instructed the narrowly tailored use of monitors. Mr. Galleoti announced a new monitor selection memorandum intended to (1) “clarif[y] the factors that prosecutors must consider when determining whether a monitor is appropriate and how those factors should be applied; and (2) ensur[e] that when a monitor is necessary, prosecutors narrowly tailor and scope the monitor’s review and mandate to address the risk of recurrence of the underlying criminal conduct and to reduce unnecessary costs.”
Conclusion
There has been much speculation about how the Trump administration would approach white-collar criminal enforcement while increasing enforcement of immigration and other criminal statutes. The DOJ memo appears to reaffirm a commitment to corporate criminal enforcement and prosecution consistent with the administration’s priorities. We expect the DOJ to continue its focus on fraud, waste, and abuse, specifically concerning health care fraud, federal program fraud, procurement fraud, trade and customs fraud (including tariff evasion), and violations of the FDCA, specifically including the manufacture and distribution of materials used to manufacture fentanyl and other unlawful opioids.
Endnotes
1. The memorandum describes variable interest entities as “typically Chinese-affiliated companies listed on the U.S. exchanges that carry significant risks to the investing public[.]”
Lost in Translation: Key Deal Points in European vs. U.S. M&A Transactions
After two decades practicing law in Silicon Valley and five formative years working on cross-border deals in Europe, I’ve come to appreciate the subtle (and not-so-subtle) differences in how merger and acquisition (M&A) transactions are structured on either side of the Atlantic. For buyers and sellers on opposite sides of the divide, these can be the difference between a smooth closing and a deal that gets lost in translation.
Below, we look at the key distinctions between U.S. M&A deal terms (sourced from SRS Acquiom) and European M&A deal terms (sourced from CMS), personal insights from the trenches, and practical takeaways for buyers and sellers trying to structure and execute cross-border transactions.
The infographic above provides a comprehensive overview of the six key differences in M&A practices between the U.S. and European markets. These points illustrate the fundamental structural variations that deal teams must navigate when working across borders.
1. Purchase Price Adjustments (PPA): Certainty vs. Flexibility
In the U.S., PPAs are nearly universal. Buyers expect to be made whole for gaps in working capital, shortfalls in cash in the bank, and any remaining debt post-closing. It’s a well-oiled machine, and most parties know the drill.
In Europe, it’s a different story. While PPAs are gaining ground (found in less than half of all M&A deals per CMS), many deals still rely on the “locked box” mechanism, where the price is fixed based on a historical balance sheet, and the seller warrants that there has been no leakage in value since the balance sheet date. This approach offers price certainty but requires trust and diligence.
U.S. clients doing deals in Europe should be open to lock box structures, especially in competitive auctions. European clients entering the U.S. should be ready for detailed post-closing adjustments and the accounting gymnastics that come with them.
2. Earn-outs: A Tale of Two Metrics
Earn-outs are common in both markets, making up 33% of U.S. deals and 25% of European ones. But the way they are structured varies widely. In the U.S., revenue-based earn-outs are more common, as opposed to Europe, where EBIT/EBITDA is king.
In tech and healthcare, where future performance is often speculative, earn-outs can bridge valuation gaps. But they are also a breeding ground for disputes.
Defining metrics clearly is table stakes, as is aligning incentives and not underestimating the emotional toll of earn-out negotiations, especially when founders are staying on board.
The chart above quantifies the prevalence of key M&A practices in both markets. Note especially the dramatic difference in MAC clause usage (98% in the U.S. versus just 14% in Europe) and the inverse relationship in arbitration preference (17% U.S. versus 42% Europe). These statistical differences highlight the importance of understanding regional norms when structuring cross-border transactions.
3. Liability Caps: How Much Skin in the Game?
In the U.S., seller liability is often capped at 10% or less of the purchase price, thanks to the widespread use of transactional, or “rep and warranties” insurance (otherwise known as “RWI”). In Europe, caps are higher, often 25% to 50%, though RWI is catching up.
European sellers are more accustomed to bearing risk, while U.S. sellers expect to shift it. This can lead to friction, so aligning expectations early is key.
United States
Europe
Liability Cap Comparison
Liability is typically capped at 10% or less of purchase price
Heavy reliance on representations & warranties insurance
Focus on limiting seller’s post-closing risk
Shorter survival periods for representations
Higher liability caps (25% to 50% of purchase price)
Growing but still lower adoption of W&I insurance
Sellers more accustomed to bearing risk
Longer warranty periods common in certain jurisdictions
Legal Framework Differences
Litigation-focused dispute resolution (83% of deals)
MAC clauses standard (98% of deals)
Common law principles
More extensive due diligence process
Arbitration more common (42% of deals)
MAC clauses rare (14% of deals)
Mix of civil and common law systems
70% of arbitration clauses apply national rules
This interactive comparison illustrates the fundamental differences in liability approaches and legal frameworks between regions. Toggle between the tabs to explore how these differences might impact deal structuring and negotiations. The higher liability caps in Europe (25-50%) versus the U.S. (typically 10% or less) reflect different risk allocation philosophies that must be reconciled in cross-border transactions.
4. MAC Clauses: Rare in Europe, Routine in the U.S.
Material Adverse Change (MAC) clauses are standard in U.S. deals and used in 98% of transactions. The idea is that between signing and closing, the business has not suffered a MAC, and if it has, the buyer does not have to close. Sometimes, it’s worded that the business hasn’t suffered a MAC since the balance sheet date. In Europe, however, they are rarefied air, appearing in only 14% of M&A deals, and often heavily qualified.
This can lead to surprises when U.S. buyers find no MAC clause in a European deal, and European sellers may balk at the broad language typical in U.S. agreements.
5. Dispute Resolution: Courts vs. Arbitration
Dispute resolution is where things really diverge. In the U.S., litigation is the default remedy, with arbitration used in only 17% of deals. In Europe, the use of arbitration is much higher (42% of deals in 2024), especially in cross-border transactions.
But there is a twist. 70% of European arbitration clauses apply national rules, not international ones. That means a “standard” arbitration clause in Germany may look very different from one in France or the UK.
U.S. clients should be prepared for arbitration in Europe and understand the local rules. European clients doing deals in the U.S. should be ready for court proceedings and the discovery process that comes with them.
6. Transactional Insurance: Growing, But Not Yet Global
RWI, or transactional insurance, is a game-changer. It smooths negotiations, caps liability, and speeds up closings. In the U.S., it’s used in 38% of deals. In Europe, it’s at 24%, but rising fast, especially in the UK and Germany.
I have seen RWI insurance unlock deals that would otherwise stall over the scope of representations and warranties, indemnity caps, or escrow mechanics. But it is not a silver bullet, so underwriting diligence still matters.
Bridging the Gaps
Cross-border M&A is never just about the numbers. It’s about culture, expectations, and communication. I have seen deals that were super smart on paper fall apart because the counterparties did not understand each other’s norms. And I have seen unlikely partnerships thrive because they took the time to bridge those gaps.
So, whether you’re a U.S. buyer eyeing a European AI startup, or a European medtech platform bolting on a U.S. target, remember that what is “market” depends on where you are. When in doubt, ask someone who’s been on both sides of the table.