NIST releases draft Privacy Framework 1.1 to align with Cybersecurity Framework 2.0, address AI risks, and enhance usability; public comments due June 13, 2025.
Interesting one for you today.
Lending Tree–whose incredible general counsel Heather Enlow-Novitsky will be speaking at Law Conference of Champions in just a couple of months– just gained home field advantage in an odd suit arising out of a Lending tree brokered loan.
In Pro REO Settlement Services v. Lending Tree, 2025 WL 1225221 (N.D. Oh. April 28, 2025) the Court elected to enforce a forum selection clause in the parties’ agreements and kicked the case from Ohio to North Carolina where Lending Tree lives. The Court disagreed with Plaintiff’s argument Tree had waived the forum selection clause by failing to respond to an email about the claim and easily determined the forum selection clause should be enforced.
The background here is interesting.
Per the court’s summary of the facts Plaintiffs Pro REO Settlement Services, LLC and Kevin Ra applied for and received a business loan from Headway Capital, LLC and LendingTree, Inc. brokered the loan. (I didn’t even know Lending Tree did that.)
Allegedly Pro REO Settlement Services and Mr. Ra informed LendingTree and Headway Capital that their phone numbers and email addresses should not be shared with third parties for marketing purposes and that they do not consent to receiving any calls other than those required to complete the loan process. (Sounds made up, but ok.)
Since then, Plaintiffs allege that unsolicited telemarketing calls and emails have inundated their phone numbers and email addresses, overwhelming those communication channels and rendering them useless. Pro REO Settlement Services and Mr. Ra contend that this flood of telemarking resulted from LendingTree and Headway Capital sharing their phone numbers and email addresses with third-party marketers, if not engaging in unlawful telemarketing themselves.
Hmmmm.
This is a weird story.
Plaintiffs claim LT brokered a loan and then they got a bunch of marketing calls from third-partied and that, therefore, LT must have shared its information with a bunch of parties. And then the Plaintiffs sue LT–rather than the callers– for TCPA violations.
I feel like there are pieces missing to this story. None of this really adds up. But perhaps we will learn more as the case progresses in North Carolina.
SCOTUS Considers Article III Questions with Significant Implications on Class Action Certification
The Supreme Court of the United States (SCOTUS) heard oral argument this week in Labcorp v. Davis (No. 24-304) to determine “[w]hether a federal court may certify a class action pursuant to Federal Rule of Civil Procedure 23(b)(3) when some members of the proposed class lack any Article III injury.” If the Court’s answer is “no” or some form of “no”, that would support defense counsel’s mechanisms for challenging class certification on the front end of litigation.
There is currently a split among the federal circuit courts on the question. When faced with the issue of how many uninjured persons can be certified within a class without tripping over Article III, courts have taken three general viewpoints. Some circuits hold that Article III bars certification when the class would include any persons who lack standing. Other circuits, viewing the question through Rule 23(b)(3), permit certification if no more than a de minimis portion of the class includes uninjured parties. The third group of circuit courts all but defers the question to post-certification stages of a case, unless it is evident that a “great many” or “large portion” of unnamed class members lack standing.
The Labcorp case comes to SCOTUS out of the Ninth Circuit, one of the handful of circuits that do not impose a material Article III hurdle at the class certification stage. The plaintiffs in the case successfully obtained class certification from the district court for disability discrimination claims, even though there did not seem to be much dispute that the class definition captured an appreciable number of uninjured persons. After the Ninth Circuit affirmed the certification order, Labcorp petitioned and obtained certiorari from SCOTUS, leading to Tuesday’s argument before the Court.
At oral argument, Labcorp principally argued that district courts must address jurisdictional questions of standing (injury) before reaching the merits of a class action—i.e., before certifying a class. Otherwise, defendants are faced with the prospect of defending a large number of claims by parties who independently lack standing, increasing the scope of potential litigation risk in the case and creating monumental settlement pressure. Courts also would be in a position of entering dispositive orders that are binding on unnamed class members who suffered no injury and therefore had no standing to be included in the first place, in violation of Article III. Alternatively, Petitioner addressed that a class certification encompassing uninjured parties would plague litigation with individualized inquiries as to who was actually injured, contrary to Rule 23(b)(3). Labcorp argued that the first issue (Article III standing) can typically be addressed by requiring courts to define the class to only include those individuals who have been injured. But even assuming a class can be redefined to exclude individuals who lack injury, Labcorp argued that a class cannot be certified under Rule 23 unless there is an administrable way to separate non-injured individuals without conducting minitrials as to each. To do so would present clear ‘predominance’ and ‘commonality’ issues under Rule 23(b)(3).
In contrast, Respondents’ counsel argued that courts need not take up all Article III questions at the class certification stage and specifically that absent class members should not be required to demonstrate their standing until the court acts on them as individuals, typically at the relief phase of the case. Respondents’ counsel placed particular emphasis in their briefing on existing precedent, in which the Court suggested that “class certification issues” in some cases are “logically antecedent to Article III concerns” and “should be treated first.”
The Solicitor General of the United States also participated in the argument and focused primarily on Rule 23’s certification requirements. Specifically, the government argued that the Rule 23(b) certification analysis encompasses elements of ‘predominance,’ ‘commonality,’ and the like, that cannot be satisfied when the class includes injured members. The government firmly pressed that Rule 23 requires class members to share a common injury or else the class action mechanism breaks down. Therefore, an individual who has not first suffered an injury should not be part of the class. See U.S. Amicus Brief, Mar. 12, 2025 (“Courts should not certify a class under Rule 23(b)(3)—which permits class actions seeking money damages—when some members of the proposed class lack any Article III injury.”).
Many of the Justices, especially from the more liberal side of the Court, confronted the Petitioner’s Article III positions head on. These included challenges regarding the logistical difficulties district courts would face in sorting out broad Article III inquiries at the class certification stage, as compared to current measures that allow standing to be addressed after all class members come before the court at the relief stage. Some Justices also raised procedural concerns as to whether they could even consider Petitioner’s arguments given the procedural posture from which the case was presented from the Ninth Circuit below. These discussions signaled that the Court may defer or limit its ruling on the Article III and Rule 23(b)(3) questions at issue.
The Court’s ultimate resolution of the case is difficult to predict. For now, the key takeaways are that many Justices appear unprepared to impose a strict Article III requirement applicable to unnamed class members at the certification stage, and the Court may even punt some or all of the meatier constitutional issues for a later day. Given that the Court’s prior class action standing opinions—e.g., Spokeo (2016) and TransUnion (2021)—were rendered as split decisions, it would not be surprising to see a similar outcome here.
Supreme Court Clarifies ERISA Prohibited Transaction Pleading Standards
On April 17, 2025, the U.S. Supreme Court, in a unanimous opinion, resolved a circuit split and established a plaintiff-friendly pleading standard for ERISA prohibited transaction claims in Cunningham v. Cornell University, No. 23-1007.
Background
The plaintiffs in Cunningham accused Cornell’s retirement plans of engaging in prohibited transactions by paying excessive fees for recordkeeping and administrative services, among other claims. The university contended that these transactions were exempt under ERISA Section 408(b)(2), which permits certain transactions with parties in interest if the compensation is reasonable. The Second Circuit had previously affirmed the district court’s dismissal of the participants’ prohibited transaction claims, ruling that plaintiffs must plead and prove the absence of such exemptions to state a claim under ERISA Section 406(a)(1)(C).
Supreme Court’s Ruling
In a decision authored by Justice Sonia Sotomayor, the Supreme Court reversed the Second Circuit’s ruling. The Court held that plaintiffs are not required to preemptively allege that ERISA’s exemptions do not apply. Instead, the burden is on the plan fiduciaries to raise and prove these exemptions as affirmative defenses. The Court reasoned that:
Affirmative defenses, such as the exemptions at issue, must be plead by the defendant seeking to benefit from them.
It is an undue burden to require plaintiffs to plead the non-application of exemptions since these facts are typically within the defendant’s knowledge and control.
Such preemptive requirement could unfairly force plaintiffs to engage in discovery before having the necessary information.
Implications for ERISA Litigation
The Cunningham decision resolved a circuit split and aligned with the Eighth and Ninth Circuits to treat ERISA exemptions as affirmative defenses rather than necessary elements of the claim to be initially plead by plaintiffs. This standard seemingly makes it easier for plaintiffs to state a prohibited transaction claim and may increase the number of lawsuits surviving motions to dismiss, as plaintiffs are no longer required to anticipate and address potential exemptions. An overall uptick in 401(k) fee litigation is also possible.
The Cunningham court acknowledged that defendants may feel increased pressure to engage in expensive discovery and settlement talks — even in cases they believe are meritless — and pointed to tools to help screen meritless claims, including:
Dismissing claims where Plaintiffs do not have Article III standing;
Limiting discovery;
Rule 11 sanctions;
Cost shifting under ERISA Section 1132(g)(1); and
Using Fed. R. Civ. P. 7(a) to order plaintiffs to address exemptions by filing a reply to answers raising this issue.
Justice Alito’s concurrence echoed the importance of such safeguards while highlighting that Rule 7(a) may be the most promising tool. Still, Justice Alito recognized that Rule 7(a)’s reply mechanism is not a “commonly used procedure,” and thus its effective usage “remains to be seen.”
Ultimately, employers and plan fiduciaries should take note of the Supreme Court’s clarified pleading standard for prohibited transaction claims. Employers should review service provider fee arrangements for reasonableness and confirm that policies are in place to maintain detailed records of fiduciary decision-making.
Trade Secret Law Evolution Podcast, Episode 76: Two Circuit Cases on Trade Secret Identification, Proof of Misappropriation and Contractual Damages Waivers [Podcast]
In this episode, Jordan Grotzinger discusses a recent Fifth Circuit case that addressed trade secret identification and proof of misappropriation at trial, and an Eleventh Circuit case addressing whether and how trade secret misappropriation damages can be limited by contract.
FRUSTRATING!: TCPA Defendant Stuck in Class Action Despite No Record of Making Prerecorded Calls
The deck can really be stacked against TCPA defendants in class litigation. Even in seemingly straightforward cases.
For instance in Suarez v. Portfolio Recovery Associates, 2025 WL 1191119 (April 8, 2025) the Plaintiff brought suit over unwanted collection calls.
Usually these cases don’t get very far anymore because courts hold debt collectors do not use an ATDS and, in this case at least, the Defendant had no record of using any prerecorded or artificial voice calling.
So, no marketing. No ATDS. No prerecorded or artificial voice calls.
Seems like a winner for the defense right?
Well, wrong.
The Plaintiff claimed she received prerecorded calls. And despite the fact she had no evidence to that effect– no call recordings, etc.–and despite the fact the defendant had no record of such calls either the issue is going to be sent to the jury.
That’s got to be frustrating for the defense here. But unlike in many cases I do not find fault in anything their lawyers did or didn’t do– this is just how the procedural rules work. If a plaintiff is willing to lie and say they received prerecorded calls–even if they didn’t– a judge is going to have a jury figure that out.
We shall see how this all turns out.
The New Alien Registration Requirement: Considerations for Foreign Nationals
The Department of Homeland Security (DHS)’s Alien Registration Requirement, effective April 11, 2025, requires most noncitizens aged 14 and older who remain in the United States for over 30 days, to register and complete biometrics. Parents or guardians are responsible for registering minors under 14, and individuals turning 14 must re-register within 30 days of their birthday. The registration can be completed by filing Form G-325R through an individual USCIS online account. This registration does not grant any immigrant or nonimmigrant status. Once an individual has registered and completes fingerprinting, DHS will issue the proof of registration, which anyone over the age of 18 will be required to carry and keep in their personal possession at all times.
However, many individuals are already considered registered and not required to register, including:
lawful permanent residents;
individuals paroled into the United States under INA 212(d)(5) for urgent humanitarian reasons or significant public benefits, even if the period of parole has expired;
individuals admitted to the United States as nonimmigrants who were issued Form I-94 or I-94W (paper or electronic), even if the period of admission has expired;
all individuals present in the United States who were issued immigrant or nonimmigrant visas in their passports at the U.S. consular posts abroad before their last date of arrival;
individuals placed into removal proceedings;
individuals issued an employment authorization document;
individuals who have applied for lawful permanent residence using Forms I-485, I-687, I-691, I-698, I-700, and provided fingerprints (unless waived), even if the applications were denied; and
individuals issued border crossing cards.
For additional information about the Alien Registration Requirement, please refer to the Q&A section below. According to USCIS:
Q: What is “alien registration”?
A: Alien registration is a federal legal requirement under Section 262 of the Immigration and Nationality Act (INA). It requires most noncitizens who remain in the United States for more than 30 days to register with DHS, provide biometric information (like fingerprints), and carry evidence of registration at all times if age 18 or older.
Q: Why is this being enforced now?
A: On Jan. 20, 2025, President Trump issued Executive Order 14159, directing DHS to ensure that noncitizens comply with the registration requirement and to treat failure to register as a civil and criminal enforcement priority. As of April 11, 2025, DHS began enforcing this process and introduced the online registration process.
Q: Who must register?
A: Anyone who falls into “not registered” category, if:
you are aged 14 or older and have not registered and fingerprinted when applying for a visa to enter the United States and remain in the United States for 30 days or longer;
you entered the United States without inspection or parole;
you were not fingerprinted during your visa application or entry;
you are the parent or guardian of a child under 14 who has not been registered; or
you are a child who just turned 14 and were previously registered by a parent
Q: Who is considered “Not Registered”?
A:
Individuals present in the United States without inspection and admission OR inspection and parole and who have not otherwise registered.
Canadian visitors who entered the United States at land ports of entry and were not issued evidence of registration.
Individuals who were not fingerprinted during a visa application or entry.
Individuals who submitted applications for deferred action or TPS who were not issued evidence of registration.
Q: Who is exempt from registration?
A: You are exempt if you are:
a holder of an A or G visa (diplomatic or international representatives); or
a nonimmigrant who DHS waived from fingerprinting (e.g., diplomats, certain short-term visitors under reciprocal arrangements).
Q: How do I know if I’ve already registered?
A: Anyone who has been issued one of the documents designated as evidence of registration is considered “already registered,” including:
lawful permanent residents;
you filed a qualifying form such as:
Form I-485 (adjustment of status),
you were fingerprinted (biometrics) by USCIS; or
you were issued any of the following:
I-94/I-94W
Green card (I-551)
Employment authorization document (I-766)
Notice to appear (I-862) or other DHS-issued removal notices
Border crossing card (I-185/I-186)
Q: What does not count as registration?
A: The following documents are not considered evidence of registration:
a state driver’s license or ID;
an application for TPS, DACA, or asylum without an approved registration form or DHS fingerprinting; and
entering via land border as a Canadian or Mexican national without receiving DHS documentation.
Q: How do I register if I haven’t already?
A: To register properly, follow these steps:
Create a USCIS online account at https://my.uscis.gov, if not already created. If you are registering a minor child, create an account on their behalf.
Complete Form G-325R (Biographic Information – Registration) online through your USCIS account.
Biometrics Appointment: After submitting the form, you will receive a biometrics appointment notice.
Attend your biometrics appointment at an USCIS Application Support Center.
Download Proof of Registration: Once processed, download your proof of alien registration PDF from your USCIS account.
Note: If you are 18 or older, you must carry this registration at all times.
Q: Is there a fee to register?
A: Currently, there is no fee. The registration is free, including the biometric appointment. DHS is considering a $30 biometric services fee in the future.
Q. What happens if I don’t register?
A: Failure to comply with the register requirement or carry proof of registration may result in:
a misdemeanor charge;
fines up to $5,000;
imprisonment for up to 30 days; and
deportation proceedings under INA § 237 unless an individual can prove that a failure was reasonable, excusable, or was not willful.
Note: False statements during registration may also lead to criminal prosecution and deportation.
Q: What happens if I change my address?
A: You must report a change if address to USCIS within 10 days of moving. This can be completed through your USCIS account by completing Form AR-11 online.
Q: After registering, what else do I need to do?
A: You must:
carry your registration document at all times if you are 18 or older;
file AR-11 with USCIS within 10 days of any address change; and
re-register if you were registered as a child and just turned 14.
Q: Can I use the registration document for work or immigration benefits?
A: No. Alien registration is not an immigration status, does not create an immigration status, establish employment authorization, or provide any other rights, public benefits, or protection from removal.
Supreme Court Establishes Lower Pleading Standard for Prohibited Transaction Claims
In a unanimous decision, the U.S. Supreme Court ruled in Cunningham v. Cornell University that plaintiffs can satisfy the requirements for pleading prohibited party-in interest transactions under ERISA section 406(a) without alleging facts disproving the availability of a statutory exemption for such transactions, such as where no more than reasonable compensation is paid for necessary services. No. 23-1007 (U.S. Apr. 17, 2025). As a result, plaintiffs may be able to withstand motions to dismiss such claims even where the underlying pleadings are found insufficient to sustain a fiduciary breach claim based on the same conduct. Recognizing the risks posed by potentially frivolous claims proceeding into discovery, the Supreme Court coupled its ruling with specific advice as to how district courts can mitigate these risks.
Lower Court Proceedings
As explained in a previous post, the case was brought by participants in two Cornell University retirement plans, who alleged that plan fiduciaries breached their fiduciary duties of prudence and loyalty and caused the plans to engage in prohibited transactions by: (i) offering certain investment products in the plans; (ii) failing to monitor and offer appropriate investment options; and, relevant here, (iii) failing to monitor and control recordkeeping fees paid to a third-party service provider. Plaintiffs’ prohibited transaction claim regarding recordkeeping fees was brought under section 406(a) of ERISA, which provides that a fiduciary may not cause a plan to enter into certain transactions with a party in interest if he knows or should know that the transaction constitutes a furnishing of goods or services. Section 408 of ERISA contains various exemptions for otherwise prohibited transactions, including one in subsection (b)(2) permitting contracts between plans and service providers for necessary services for no more than reasonable compensation.
The district court dismissed or granted summary judgment to defendants on all but one of plaintiffs’ claims, which the parties later resolved through a settlement. The Second Circuit affirmed. With respect to the prohibited transaction claim based on the plans’ recordkeeping fees, the Second Circuit held that to survive a motion to dismiss, plaintiffs must plead that a transaction “was unnecessary or involved unreasonable compensation” such that it was not exempt under ERISA section 408(b)(2). In so holding, the Second Circuit took a position like that of the Third, Seventh, and Tenth Circuits, which all have required plaintiffs to plead something more than the bare elements of a prohibited transaction claim, such as allegations of self-dealing. Its ruling conflicted, however, with a ruling in the Eighth Circuit that the availability of a statutory exemption is an affirmative defense not properly considered at the pleading stage.
The Supreme Court’s Opinion
The Supreme Court, in a unanimous opinion written by Justice Sotomayor, reversed and remanded the Second Circuit’s decision. The Court resolved the existing circuit split by holding that plaintiffs need only plausibly allege the basic elements of a prohibited transaction claim to overcome a motion to dismiss. The Court held that section 406(a)(1)(C)’s prohibition on a furnishing of services between a plan and a party in interest is “categorical,” and does not carve out transactions that are necessary or for reasonable compensation. Relying primarily on ERISA’s structure, the Court found that the statutory exemptions are affirmative defenses for which defendants bear the burden of proof, and thus do not impose any additional pleading requirements. Accordingly, the Court rejected Cornell’s argument (embraced by the Second Circuit) that the exemptions are incorporated into section 406.
In so ruling, the Court took note of the “serious concerns” that requiring plaintiffs to plead merely that the plan contracted with a service provider would lead to “an avalanche of meritless litigation” and subject defendants to costly discovery in every case. But the Court concluded that these concerns could not overcome ERISA’s text and structure, which provide the exemptions in the “orthodox format of an affirmative defense.” The Court stated these concerns could be mitigated by other procedural safeguards, such as: Article III’s injury-in-fact requirement; the district court’s ability to require plaintiffs to reply to an answer under Federal Rule of Civil Procedure 7; and the district court’s ability to impose attorneys’ fees or sanctions. In a concurring opinion joined by Justices Thomas and Kavanaugh, Justice Alito recognized that “untoward practical results” were likely to flow from the Court’s decision, and suggested that the potential requirement of replies to answers under Rule 7 was “[p]erhaps the most promising” of the alternative safeguards available.
Proskauer’s Perspective
As both the Supreme Court’s opinion and the concurrence acknowledged, the pleading bar set in Cunningham gives rise to increased risks of litigation and higher settlement costs to any plan that outsources plan management services to a third-party provider. And, as Justice Alito recognized, it “remains to be seen” whether the Court’s suggested procedural safeguards will “adequately address” these concerns. Until now, Rule 7 has not been commonly invoked in ERISA cases, but the Court’s invitation will likely prompt an increased resort to that procedural device. In the face of this lower pleading standard, courts must be prepared to more aggressively manage litigation so that the ability to plead a bare-boned prohibited transaction claim does not become a cudgel to extract unwarranted settlement payments.
District courts might also wish to consider permitting early, targeted discovery on the reasonableness of the fees paid to service providers, as a means of facilitating early motions for summary judgment. Conceivably, a trend in this direction could work to the advantage of plan sponsors and fiduciaries, in that it could lead to surgical discovery approaches to address other discrete factual issues, such as whether the plaintiffs have satisfied Article III’s injury-in-fact requirement; or whether, notwithstanding any procedural imprudence alleged, there was no basis for a claim because the challenged decisions were objectively prudent.
Litigation & the Dispositive Motion
Litigation in the United States is notoriously slow and expensive — at least that’s its reputation. This is one reason ADR (alternative dispute resolution, i.e., mediation, and arbitration) has become so popular. But if a lawsuit can be resolved with a dispositive motion, then the pain of litigation can be faster and cheaper.
Understanding the Power of Dispositive Motions
In litigation, dispositive motions serve as pivotal tools that can resolve legal disputes without the necessity of a full trial. When granted, these motions effectively ‘dispose’ of either the entire case or specific claims within it. Understanding when and how dispositive motions can be used is important for both attorneys and clients alike.
What Is a Dispositive Motion?
A dispositive motion is a formal request submitted to the court, seeking a ruling that either terminates the entire lawsuit or dismisses particular claims or defenses. The primary objective is to achieve a legal resolution without proceeding to the time-consuming and costly process of a trial. In the United States, the most prevalent types of dispositive motions include:
Motion to Dismiss: Challenges the legal sufficiency of the opposing party’s claims.
Motion for Summary Judgment: Asserts that there are no genuine disputes of material fact, and the movant is entitled to judgment as a matter of law.
Motion for Judgment as a Matter of Law: Contends that no reasonable jury could find for the opposing party based on the presented evidence.
Each of these motions serves distinct purposes and is utilized at various stages of litigation.
Motion To Dismiss: Challenging the Pleadings
A motion to dismiss is typically filed at the onset of litigation, targeting the initial pleadings — usually the plaintiff’s complaint. The defendant asserts that, even if all alleged facts are accepted as true, there is no legal basis for the lawsuit to proceed. Common grounds for filing a motion to dismiss include:
Lack of Subject Matter Jurisdiction: The court does not have the authority to hear cases of this nature.
Lack of Personal Jurisdiction: The court does not have authority over the defendant.
Improper Venue: The location where the lawsuit was filed is not appropriate.
Insufficient Process or Service of Process: Deficiencies in the delivery or content of legal documents.
Failure to State a Claim Upon Which Relief Can Be Granted: The complaint does not allege facts that constitute a legal violation.
For instance, under Rule 12(b)(6) of the Federal Rules of Civil Procedure, a defendant can seek dismissal if the plaintiff’s complaint fails to state a claim upon which relief can be granted. This rule ensures that only claims with legal merit proceed, thereby conserving judicial resources.
According to Jeff Leon, a veteran litigator at the law firm Karon, motions to dismiss can be incredibly effective when used strategically, but they should not be filed reflexively. If the opposing party has the opportunity to amend their complaint and strengthen their case, it may be more beneficial to hold off.
Motion for Summary Judgment: Resolving Cases Without Trial
A motion for summary judgment is filed after the discovery phase, where both parties have exchanged pertinent information. The movant argues that there are no genuine disputes regarding material facts and that they are entitled to judgment as a matter of law. This motion hinges on the premise that even if all evidence is viewed in the light most favorable to the non-moving party, no reasonable jury could find in their favor.
The landmark case Celotex Corp. v. Catrett clarified the standards for summary judgment. The US Supreme Court held that the moving party does not need to provide affirmative evidence negating the opponent’s claim but can simply demonstrate the absence of evidence supporting the non-moving party’s case. This decision emphasized that summary judgment is appropriate when the non-moving party fails to make a sufficient showing on an essential element of their case.
Timothy Pastore, a partner with Montgomery McCracken Walker & Rhoads, notes that summary judgment is not about making a jury decision from the bench but rather about determining whether a trial is necessary. If there are no factual disputes, then the judge can resolve the legal issues without the need for a jury.
In practice, courts grant summary judgment when:
No Genuine Issue of Material Fact Exists: The facts are undisputed and pivotal to the case’s outcome.
Entitlement to Judgment as a Matter of Law: The law unequivocally favors the movant based on the established facts.
It’s important to note that summary judgment is not a mechanism for weighing evidence or assessing witness credibility; instead, it determines whether a trial is necessary to resolve factual disputes.
Motion for Judgment as a Matter of Law: Mid-Trial Resolution
Formerly known as a directed verdict, a motion for judgment as a matter of law is made during or after a trial. The movant contends that the opposing party has insufficient evidence to reasonably support their case, and thus, no reasonable jury could rule in their favor. This motion can be presented:
After the Opposing Party’s Presentation of Evidence: Arguing that the evidence is legally inadequate to sustain a verdict.
After the Jury’s Verdict: Requesting the court to overturn the jury’s decision on the grounds that it lacks evidentiary support.
According to Adam Russ, a partner at Gordon Arata, these motions are particularly important for defense attorneys. It provides one last opportunity to prevent an unfavorable verdict from being entered by highlighting weaknesses in the opposing party’s evidence.
This motion ensures that judgments are grounded in law and evidence, preventing unjust outcomes based on insufficient proof.
Strategic Considerations in Filing Dispositive Motions
The decision to file a dispositive motion requires meticulous consideration, as it can significantly influence the trajectory of a case. Key factors to evaluate include:
Strength of Legal Arguments: Assessing whether the law clearly supports the movant’s position.
Evidentiary Support: Ensuring robust and admissible evidence underpins the motion.
Potential Outcomes: Weighing the benefits of an early resolution against the possibility of an unfavorable ruling.
Judicial Preferences: Considering the presiding judge’s history and inclinations regarding dispositive motions.
Steven Reingold of Saul Ewing cautions that filing a dispositive motion isn’t always the best strategy. It’s important to assess whether an unsuccessful motion might reveal too much about your case strategy or give the opposing party an opportunity to strengthen their claims.
Financial Implications of Dispositive Motions
Beyond their legal impact, dispositive motions carry significant financial implications. For businesses and individuals involved in litigation, these motions can either serve as cost-saving tools or escalate legal expenses. Considerations include:
Cost of Filing and Defending: Drafting and responding to dispositive motions require substantial legal resources, including attorney fees and court filing costs.
Impact on Settlement Negotiations: Successfully dismissing claims can strengthen a party’s bargaining position in settlement discussions.
Potential for Delaying Litigation: While dispositive motions can expedite case resolution, unsuccessful motions may prolong litigation and increase overall costs.
Understanding the cost-benefit analysis of dispositive motions can help companies, particularly those facing frequent litigation, make effective legal and financial planning decisions.
Conclusion
Dispositive motions are powerful litigation tools that can streamline legal proceedings, reduce costs, and achieve early case resolution. However, their effectiveness hinges on strategic deployment, strong evidentiary support, and a deep understanding of procedural rules. Whether seeking to dismiss a case at its outset, obtain judgment without trial, or challenge a jury’s findings, litigants must carefully weigh the risks and benefits associated with these motions.
To learn more about this topic view Litigation Basics / Dispositive Motions. The quoted remarks referenced in this article were made either during this webinar or shortly thereafter during post-webinar interviews with the panelists. Readers may also be interested to read other articles about litigation, including temporary restraining orders and preliminary injunctions.
This article was originally published on here.
©2025. DailyDACTM, LLC d/b/a/ Financial PoiseTM. This article is subject to the disclaimers found here.
Georgia Federal Court Denies TRO and Motion to Dismiss in Trade Secrets Case
On March 27, 2025, in Stimlabs LLC v. Griffiths, the U.S. District Court for the Northern District of Georgia ordered a former executive, Sarah Griffiths, to face claims related to her alleged theft of Stimlab’s trade secrets under the Defend Trade Secrets Act (“DTSA”) and the Georgia Trade Secrets Act (“GTSA”) after denying her application for a TRO.
Background. Griffiths, the regenerative medicine company’s former Chief Scientific Officer, allegedly downloaded thousands of documents containing confidential information and trade secrets after the CEO told her the company was interested in negotiating her departure. These documents allegedly contained, among other things, information regarding future potential products, confidential communications with government agencies, data related to product development and information related to “a product made of donated human umbilical cord, which is applied to, and used in, the management of ulcers, wounds, and similar injuries to the body.” Griffiths allegedly was one of thirteen employees who had special access to the company’s purported trade secrets. According to the company, she was required to sign restrictive covenants as part of her employment agreement, follow the employee handbook, attend and comply with the confidentiality training she received, use best efforts to protect Confidential Information and comply with the company’s Information Security Policy.
Rulings. Following a hearing on August 13, 2024, the company’s motion for a temporary restraining order was denied, as the court found that the company had “not introduced evidence that [Griffiths] accessed [Stimlabs’] documents for any purpose other than to do her job at the time, and the case law is very clear that this does not constitute misappropriation.” However, the court still denied Griffith’s motion to dismiss the complaint, finding that the company sufficiently identified 12 specific examples of trade secrets that purportedly were misappropriated, which were sufficient allegations to state a claim for misappropriation. The court emphasized the allegations that Griffith’s actions violated her employment obligations. In denying the motion to dismiss, the court noted that the complaint the TRO was based on had been amended and now included four exhibits including various agreements and policies that Griffith had allegedly violated. The court also decided not to dismiss the company’s breach of contract claim, despite Griffiths’ argument that the company suffered no damages. The court found that discovery was the best avenue to address this issue.
Implications. This case shows that even though an application for immediate injunctive relief may be denied, there still may be ground to develop claims that were raised in the request for injunctive relief application, and thus a motion to dismiss may not be in order. Here, by amending the complaint and identifying the trade secrets that allegedly were misappropriated, the employer was able to survive a motion to dismiss, allowing the case to proceed. We will continue to follow this case as the litigation progresses.
To Some, It’s About ERISA—to Everyone, It’s About Not Having to Plead Affirmative Defenses – SCOTUS Today
Notwithstanding its mounting backlog, the U.S. Supreme Court resolved only one case today, an unsurprising unanimous decision in Cunningham v. Cornell University.
The case concerns pleading causes of action under the Employee Retirement Income Security Act of 1974 (ERISA), but provides a useful reminder to litigants more generally.
ERISA prohibits plan fiduciaries from causing a plan to engage in certain transactions with parties in interest. 29 U.S.C. §1106. However, another provision, §1108(b)(2)(A), provides an exemption for transactions that involve “[c]ontracting or making reasonable arrangements with a party in interest for office space, or legal, accounting, or other services necessary for the establishment or operation of the plan, if no more than reasonable compensation is paid therefor.”
The question considered by the Court is whether a viable claim under §1106 requires a plaintiff to plead that §1108(b)(2)(A) does not apply to an alleged prohibited transaction. A unanimous Court, led by Justice Sotomayor, held that a plaintiff is not required to do so.
The case involved a suit by present and former employees of Cornell University, claiming that plan fiduciaries caused prohibited transactions for recordkeeping services by paying excessive fees. The U.S. Court of Appeals for the Second Circuit, affirming the dismissal of the suit by the U.S. District Court for the Southern District of New York, had held that §1108(b)(2)(A) is incorporated into §1106(a)’s prohibitions, thus requiring plaintiffs to plead that a transaction was “unnecessary or involved unreasonable compensation.”
Reversing the Second Circuit, the Supreme Court held that “[t]o state a claim under §1106(a)(1)(C), a plaintiff need only plausibly allege the elements contained in that provision itself, without addressing potential §1108 exemptions.”
While Justice Sotomayor wrote for the entire Court, Justice Alito filed a concurring opinion, which Justices Thomas and Kavanaugh joined. Notwithstanding Justice Sotomayor’s lengthy disquisition on the statutory text and its background, I am sympathetic to Justice Alito’s more succinct analysis. Insofar as all the Justices agreed that the statute’s “exemptions” functioned as affirmative defenses, it was useful for Alito to point out that “it is black letter law that a plaintiff need not plead affirmative defenses. . . . Here, . . . §1108 sets out a long list of affirmative defenses, and it would make no sense to require a complaint to anticipate and attempt to refute all the affirmative defenses that a defendant might raise.”
The concurrence also reluctantly predicts that this otherwise proper textual resolution of the case is likely to lead to an unfortunate number of cases in which protracted litigation will be required to dispose of meritless complaints. To counter this (which had also been a concern of the Second Circuit), Justice Alito suggests a potential remedy that might be effectuated by trial court orders at the outset of the case—i.e., a trial court could insist that a plaintiff file a reply to an answer that raises one of the §1108 exemptions as an affirmative defense.
Preserve or Perish: The North Carolina Supreme Court Reinforces Rule 50 Specificity in Vanguard Pai Lung v. Moody
In Vanguard Pai Lung, LLC v. Moody, No. 15A24 (N.C. Mar. 21, 2025), the Supreme Court of North Carolina delivered a cautionary message for every trial lawyer: to preserve an issue for a motion for judgment notwithstanding the verdict (JNOV), counsel must first raise that precise issue—specifically—in a motion for directed verdict.
While this requirement is not new, the Court’s decision formally adopts a line of Court of Appeals precedent that enforces this rule with precision, particularly in complex cases involving multiple claims or defenses. The opinion not only raises the stakes for trial counsel at the directed verdict stage, but also underscores the value of involving appellate counsel early to ensure preservation is properly executed.
This article summarizes the decision and offers practical guidance for lawyers who want to protect their clients’ positions in post-trial motions and on appeal.
Background of the Case
The dispute in Vanguard stemmed from a failed business relationship within a textile machinery company. Vanguard Pai Lung, LLC—a North Carolina manufacturer and distributor of circular knitting machines—filed claims against its former CEO, William Moody, and related business entities under his control. The plaintiffs alleged fraudulent misrepresentation, embezzlement, conversion, unfair and deceptive trade practices, and unjust enrichment.
The case proceeded to a jury trial before the North Carolina Business Court. At the close of the evidence, the jury returned a verdict for the plaintiffs on nearly every claim. The defendants moved for JNOV under Rule 50(b), but the trial court denied most of the motion. On appeal, the Supreme Court affirmed, focusing in particular on the defendants’ failure to preserve key arguments at trial.
The Court’s Holding on Preservation
The central issue was whether the defendants had properly preserved the arguments raised in their JNOV motion by articulating those same grounds in their earlier directed verdict motion under Rule 50(a).
The Court held that a Rule 50(b) motion must be made “in accordance with” the earlier Rule 50(a) motion. That means a party may only renew issues it raised with specificity during trial. Citing and formally endorsing Plasma Centers of America, LLC v. Talecris Plasma Resources, Inc., 222 N.C. App. 83 (2012), the Court stated:
“To preserve an issue for use in a motion for JNOV under Rule 50(b), the movant first must have timely moved for a directed verdict based on that same issue.”
The Court emphasized that in cases involving multiple claims, theories of liability, or defenses, general or vague Rule 50 motions fall short. Trial courts and opposing counsel must receive adequate notice of the legal or evidentiary deficiency being asserted—otherwise, the argument is waived.
Application to the Case
In Vanguard, the defendants challenged various elements of the jury’s verdict in their JNOV motion, including whether there was sufficient evidence to support the claims for fraud and conversion. But the Supreme Court concluded that many of these arguments had not been preserved at trial.
For example, in their JNOV motion, the defendants asserted that there was insufficient evidence that Moody personally converted company funds, vehicles, or other assets. But at trial, their directed verdict motion addressed only one narrow point: that Moody had not converted laptops used by his children. As the Court observed, the motion “did not refer to the disputed money, cars, cell phones, and football tickets,” and therefore failed to preserve broader conversion arguments.
Similarly, the defendants challenged the fraud verdict post-trial asserting that plaintiffs had not shown intent to deceive. Yet at the directed verdict stage, they had only contested whether any misrepresentation occurred—ignoring the element of intent. The Court found the distinction dispositive:
“To preserve the argument raised in the JNOV motion, Moody and Nova Trading needed to specifically assert to the business court that they were challenging the sufficiency of the evidence that the alleged misrepresentations were made with an intent to deceive… They did not do so.”
In both instances, the Court reaffirmed that in complex, multi-issue trials, it is not enough to hint at a general deficiency. Counsel must identify each specific ground for relief on the record.
Practical Guidance for Trial Counsel
Vanguard reinforces the critical role of detailed, strategic motion practice at trial. The Court’s holding clarifies that preservation is not a technicality—it is a foundational requirement for post-trial motions and appellate review. These practices can help counsel protect their record:
Be Specific—Even If It Feels Redundant
Direct your motion to the specific claim, the precise element at issue, and the evidentiary deficiency. In lengthy trials, it can be tempting to generalize. Resist that urge. Specificity protects your ability to seek post-verdict relief.
File Written Motions When Possible
Although oral Rule 50(a) motions are permitted, a written motion provides a clear and reliable record. In complex or high-value cases, a written submission ensures no ground is missed or misunderstood.
Renew at the Close of All Evidence
A Rule 50(a) motion must be renewed after all evidence is presented. Failing to do so forfeits even properly articulated grounds. Preservation requires diligence throughout the trial.
Engage Appellate Counsel Early
Appellate counsel can help trial teams craft targeted Rule 50 motions, identifying preservation risks, and protecting key legal theories. In high-stakes litigation, that support can prove decisive.
Avoiding Waiver in Multi-Theory Cases
The Vanguard opinion also clarifies that directed verdict motions must address each theory presented to the jury. For example, if a fraud claim proceeds under two distinct theories and counsel challenges only one, the other remains unchallenged and therefore preserved in the verdict.
The Court summarized this principle clearly:
“In cases involving multiple defenses and theories of liability, it is critical that the movant direct the trial court with specificity to the grounds for its motion for a directed verdict.”
When the plaintiff pleads multiple theories and presents them to the jury, the Rule 50(a) motion must match that complexity. Anything less risks partial preservation—or total waiver.
Conclusion
The Supreme Court’s decision in Vanguard Pai Lung, LLC v. Moody offers both clarification and caution. Preservation under Rule 50 requires more than good intentions or general objections—it demands precision. Trial counsel must identify the exact ground for relief with clarity, or the issue is lost.
This decision is an opportunity for trial lawyers to reassess their Rule 50 practices and consider integrating preservation protocols into trial planning—especially in business and commercial disputes where the stakes are high.
Early coordination with appellate counsel can help safeguard the record, refine trial strategy, and ensure that no argument is left behind.
The Third Circuit Orders Another Review in Cornelius v. CVS Pharmacy, Inc.—Resolution Will Wait for Another Day in New Jersey Federal Court, but Not Because of the EFAA
Case law related to the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (“EFAA”) continues to develop.
In late 2024, the Third Circuit seemed poised to bring further clarity as to which claims fall within the EFAA and, therefore, are shielded from pre-dispute arbitration agreements. On April 6, 2025, the Court provided guidance related to the timing of “disputes” as used in the statutory text, but remanded for further consideration of whether an arbitration agreement existed at all under New Jersey law. Cornelius v. CVS Pharmacy, Inc., 2025 WL 980309 (3d Cir. Apr. 2, 2025).
Cornelius was a longtime CVS employee who alleged that she experienced discrimination from her male supervisor. After Cornelius filed numerous internal complaints, CVS terminated her employment in November 2021. She brought a Charge to the EEOC, received a right-to-sue letter, and filed a lawsuit in the U.S. District Court for the District of New Jersey. CVS moved to compel arbitration pursuant to its “Arbitration Policy.” Plaintiff opposed, arguing that the EFAA rendered the arbitration agreement unenforceable as to her claims. The District Court disagreed, ruling that the EFAA did not apply to Cornelius’s claims because “her claims did not constitute a ‘sexual harassment dispute’” within the meaning of the statute, and compelled arbitration. Id. at *2.
The Third Circuit affirmed that the EFAA did not apply to Cornelius’ claims. Emphasizing that “[w]e begin and end with the text,” the Court focused on whether her “dispute” arose before or after the EFAA’s March 3, 2022 effective date. Based on the ordinary meaning of the words used in the statute, “dispute” was distinguishable from “injury” and the Court agreed that the EFAA did not apply, though on alternate grounds. The case, however, was remanded back to the District Court to consider whether discovery was necessary to resolve the motion to compel. Id. at *3-4.
Does the EFAA Apply to These Claims?
Congress codified the EFAA directly into the Federal Arbitration Act. Under 9 U.S.C. § 402: “at the election of the person alleging conduct constituting a sexual harassment dispute . . . no predispute arbitration agreement . . . shall be valid or enforceable with respect to a case which . . . relates to the . . . sexual harassment dispute.” The District Court ruled that Cornelius’ claims did not constitute a “sexual harassment dispute” under the EFAA. Id. at *2.
The statute also states that the EFAA is limited to “any dispute or claim that arises or accrues on or after the date of enactment of this Act,” which was March 3, 2022. Cornelius conceded that her claims accrued before November 2021. Focusing on the text of the statute, the Third Circuit found that a “‘dispute . . . arises’ when an employee registers disagreement—through either an internal complaint, external complaint, or otherwise—with his or her employer, and the employer expressly or constructively opposes that position.” The complaints that Cornelius submitted to CVS during her employment (i.e., prior to November 2021) were rejected (i.e., “disputed”) by CVS. Accordingly, per the Third Circuit, her “dispute arose” well before March 3, 2022, and the EFAA did not apply to her Title VII claim. Id. at *5.
Was Discovery Regarding the Existence of an Arbitration Agreement Required?
Next, the Court considered whether the District Court should have permitted discovery regarding the existence of an arbitration agreement between Cornelius and CVS under New Jersey law. The question arose because, “[w]hile the District Court intended to resolve CVS’s motion [to compel arbitration] under Rule 12(b)(6), which would give no occasion for the District Court to consider whether discovery was warranted, its consideration of materials outside of the Complaint placed its analysis within the realm of Rule 56 and the possible need for discovery.” Id. at *8.
In 2014, CVS rolled out its Arbitration Policy. The Arbitration Policy was presented to employees via a “PowerPoint training course” that included a hyperlink to a separate “Policy Guide.” The Policy Guide provided “a full copy of the Arbitration Policy” and separately explained how employees could accept the Arbitration Policy or opt out. Id. at *2. The employee’s acknowledgment of the Arbitration Policy, with the opt-out instructions, was found at the end of the PowerPoint, not the Policy. Id. The District Court held that there was a valid arbitration agreement between the parties based on information from the training course and Policy Guide. Id. at *6
On appeal, the parties agreed, as did the Third Circuit, that “the District Court applied the Rule 56 summary judgment standard because it considered facts and evidence outside Cornelius’s Complaint.” Id. at *6. Thus, from a procedural standpoint, it remained unresolved if Cornelius was entitled to discovery to support her argument that an arbitration agreement did not exist for these claims. Citing its decision in Young v. Experian Information Solutions, Inc.,119 F.4th 314 (3d Cir. 2024), which was decided after the District Court ruled in Cornelius, the Third Circuit noted that prior rulings should “be read as encouraging factual discovery when such discovery is warranted, which will often be the case,” but that “discovery is not required ‘when no factual dispute exists as to the existence or scope of the arbitration agreement.’” Id. at *6 (quoting Young).
Deferring to the District Court’s “broad discretion to order and control the scope of discovery,” the Third Circuit vacated the lower court’s order and remanded “for consideration of whether discovery into the validity of the arbitration agreement is warranted under Rule 56(d) and for consideration of Cornelius’s legal challenges to the arbitration agreement under New Jersey law.” Id. at *8. Practitioners will need to wait and see how lower courts address the Third Circuit’s latest guidance to evaluate what is needed to enforce—and challenge—a motion to compel arbitration.