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.
Explaining California’s Private Attorneys General Act
Employers in California more than likely have heard of the Private Attorneys General Act, commonly referred to as PAGA. However, understanding what it is, how it functions, and how it can affect them can be challenging.
PAGA is a California statute passed in 2004 to assist the State with its obligation to enforce the California Labor Code. More specifically, PAGA deputizes individuals to file lawsuits against current or former employers to recover civil penalties that were previously only recoverable by the State. PAGA claims are brought as representative actions, meaning that the employees who initiate the lawsuits seek to represent – and recover civil penalties – on behalf of themselves and other purportedly “aggrieved employees,” making a PAGA lawsuit function as a pseudo-class action.
Given the increased number of PAGA notices submitted each year (nearly 2600 so far this year) and the potential exposure employers face in connection with these claims, it is vital for employers to have a firm understanding of PAGA and how a PAGA suit can impact their business.
The PAGA Notice
Before filing a lawsuit under PAGA, employees must first file a notice with the state Labor Workforce Development Agency (LWDA) indicating their intent to bring a civil action. In addition to identifying the employer(s) at issue, the notice must specify the sections of the Labor Code alleged to have been violated and include sufficient facts and legal theories to support each alleged violation.
The notice is submitted online with the LWDA and must also be served on the employer(s) via certified mail. For employers receiving a PAGA notice for the first time, it is easy not to understand what the notice is when it comes in. This is because the notice itself is in the form of a letter directed to the LWDA. As employers have limited time to assess whether to take action to cure or take steps to prevent alleged violations, businesses must train those who receive the mail to identify PAGA notices.
Once notice is filed with the LWDA, the agency decides whether it will investigate the employee’s claims or allow the employee to proceed with a lawsuit. Typically, if the LWDA is not going to investigate, they simply do not respond to the employee’s PAGA notice. If the LWDA has not taken any action after 65 days, the employee may file a private lawsuit under PAGA in court. While the LWDA historically investigated only a tiny percentage of PAGA notices, there appears to be an increased effort to investigate since PAGA was overhauled in June 2024.
Curing Violations Early
PAGA allows employers to address certain violations during the notice period, thereby avoiding PAGA litigation and penalties in connection with those violations. For notices filed on or after June 19, 2024, the PAGA reform legislation broadened the range of violations that can be corrected. Curable violations now include claims related to minimum wage, overtime, meal and rest breaks, business expense reimbursements, and itemized wage statements, among others.
Depending on the size of the employer’s workforce, businesses may be able to submit a cure proposal to the LWDA prior to a lawsuit being filed, regardless of whether the LWDA chooses to investigate. Employer proposals to correct violations are treated as confidential settlement proposals and cannot be used to validate any claim or as an admission of liability. However, if accepted, the employer’s confirmation that the cure was completed, along with additional supporting records and information, must be shared with the employee who filed the PAGA notice.
Alternatively, employers not eligible to submit a pre-lawsuit cure proposal can request an early evaluation conference when making their initial appearance in the case. If granted, the company will be required to submit a confidential statement identifying which alleged violations it intends to cure and dispute (which will be shared with the plaintiff’s counsel), and a neutral evaluator will hold a conference to assess whether any alleged violations occurred and whether any of the plaintiff’s claims can be settled.
While employers can potentially avoid PAGA litigation by curing alleged violations, assessing whether it is in the company’s best interest to submit a cure proposal should not be taken lightly. The PAGA amendments provide strict requirements to successfully cure violations, including the payment of unpaid wages, liquidated damages, and interest, and the decision to submit a cure proposal typically requires a nuanced analysis of employees’ time and payroll records to calculate payments owed to each employee covered by the proposal.
PAGA Lawsuits
Once a lawsuit is filed, the individual plaintiffs are stepping into the shoes of the LWDA. This means the plaintiffs are suing to enforce the California Labor Code on behalf of the State and other alleged aggrieved employees.
A PAGA case is similar to a class action in that you have one or more individual plaintiffs seeking to represent other similarly situated workers, however, there are several differences. For example, while both actions are entitled to broad discovery, plaintiffs in PAGA actions are not required to certify their claims prior to trial as they would in a class action.
Because of the representative nature of the action, if a PAGA lawsuit is resolved, the potential settlement must be submitted to the court for approval in order for the release of PAGA claims to be valid.
Some of the most important changes under the 2024 amendments impact the potential civil penalties available under PAGA. The new legislation seeks to level the playing field for employers by reducing penalties for technical violations or where the employer can demonstrate it took “all reasonable steps” to comply with the Labor Code, either before or after a PAGA notice is filed. The amendments also impose stricter standing requirements – by requiring that plaintiffs personally experienced each Labor Code violation they seek to recover penalties for – and expressly grant courts discretion to limit the scope of PAGA claims and evidence presented at trial based on manageability arguments.
PAGA Prevention
Employers can take various steps to mitigate the risks associated with PAGA claims, and the recent amendments incentivize and reward employers for making good faith efforts to comply with the Labor Code both before and after a PAGA notice is filed. Proactive steps include:
Conducting regular audits of time and payroll practices and records to ensure employees are being properly compensated and receiving state-mandated breaks.
Regularly reviewing policies and procedures to ensure compliance with the California Labor Code.
Conducting periodic trainings to educate supervisors and managers about company policies and relevant provisions of the California Labor Code.
Implementing corrective actions if violations occur.
In addition to wage and hour issues, employers should also be mindful of potential PAGA claims based on alleged health and safety violations.
Importantly, given the strict deadlines imposed by the new amendments, an employer should promptly review any PAGA notices it receives to determine whether to utilize PAGA’s newly expanded cure and early evaluation options.
EDNY OneTaste Prosecution Faces Extraordinary Challenge: Defense Goes Over Judge’s Head to Second Circuit
In a dramatic development in the contentious prosecution of OneTaste co-founder Nicole Daedone and former sales leader Rachel Cherwitz in a novel one-count indictment of forced labor conspiracy, defense attorneys have taken the rare step of petitioning the Second Circuit Court of Appeals to intervene directly in the ongoing case before Judge Diane Gujarati in the Eastern District of New York. U.S. v. Cherwitz, et al., No. 23-cr-146 (DG) (E.D.N.Y.).
The extraordinary mandamus petition, filed March 7, 2025, effectively asks the appellate court to overrule Judge Gujarati’s decisions regarding allegedly stolen privileged documents belonging to OneTaste—a move that legal experts describe as both a high-risk strategy and a decisive escalation after repeated unfavorable rulings from the district court.
Mandamus: The “Nuclear Option” of Legal Remedies
A writ of mandamus—Latin for “we command”—represents one of the most drastic remedies in federal court. Reserved for situations where a judge has clearly exceeded authority or failed to perform required duties, successful mandamus petitions are exceedingly rare in criminal proceedings. Legal experts describe mandamus as the procedural equivalent of a judicial emergency brake—pulled only when a lower court has gone so far off the rails that waiting for a normal appeal would be inadequate.
The petition asks the Second Circuit to reverse Judge Gujarati’s September 2024 and February 2025 orders regarding privileged documents, and either dismiss the indictment outright or order an evidentiary hearing on the government’s use of allegedly stolen privileged materials.
Alleged FBI Misconduct Takes Center Stage
The mandamus filing comes on the heels of a heated February 26 court conference, after which defense attorneys Jennifer Bonjean and Celia Cohen held an impromptu press conference on the courthouse steps, directing pointed accusations at FBI Special Agent Elliot McGinnis who has been the subject of over two dozen defense motions. When asked by a reporter about a confrontation in the courtroom, Bonjean stated:
“I would not accuse the prosecutor, or even the law enforcement (agent) of misconduct unless I had the goods. And as for McGinnis, we have the goods, there is a record, and yes, absolutely, it should be investigated for criminal misconduct.”
Bonjean went on to call for direct intervention from the Department of Justice:
“We think the case should be thrown out. We think that if the Department of Justice looks at this case closely–and we hope they are–that this is exactly the type of case where you have extraordinary FBI misconduct. I don’t say that lightly, but THIS is the case they should be looking at…We hope they will and we hope that it will result in a great result, which is dismissal.”
Privileged Documents: The Smoking Gun?
At the heart of the mandamus petition lies a bombshell allegation: FBI agent Elliot McGinnis knowingly used stolen privileged corporate documents to investigate OneTaste and build a case against Daedone and Cherwitz.
According to the mandamus and previous defense filings, a former IT contractor named Mitch Aidelbaum illegally accessed OneTaste servers and stole a large volume of material including privileged OneTaste documents in 2017 after his employment ended. Per defense motions, Agent McGinnis obtained a privileged company legal risk assessment in January 2021 and recognized the privileged nature but failed to pass it to a “taint team” or notify OneTaste that its corporate documents had been stolen. Instead, McGinnis reportedly used the privileged document as a roadmap for the investigation, interviewing 20 witnesses specifically identified in the stolen material.
The government did not disclose these documents until late 2024, prompting defense motions to dismiss the indictment. Judge Gujarati denied these motions, finding the documents non-privileged, ruling that defendants lacked standing to assert privilege, and deeming the motions untimely despite their recent discovery.
Judge Gujarati Under Scrutiny
The mandamus petition places Judge Gujarati, who joined the federal bench in 2020 and has presided over only one criminal trial, in a precarious position. Her consistent pattern of rulings favoring government positions despite mounting evidence of misconduct now faces appellate scrutiny.
Throughout pretrial proceedings, Judge Gujarati has repeatedly denied defense requests to conduct hearings over alleged government misconduct, often citing procedural grounds, like timeliness, rather than addressing substantive concerns. During the February 26 conference, she sharply rebuked defense counsel for suggesting prosecutorial impropriety, despite growing evidence of investigative irregularities.
Legal observers note that judges facing mandamus petitions must choose between defending their rulings to the appellate court or reconsidering them in light of the petition—a particularly uncomfortable position for a relatively new jurist with limited trial experience. Notably, a majority of Gujarati’s rulings have been “from the bench” in oral rather than written arguments. This may increase the odds of review as the appellate court does not have a written argument upon which to evaluate the district court’s decisions.
The Netflix Connection Deepens
New evidence has also emerged regarding the controversial “journals” created for Netflix’s documentary on OneTaste. In a motion for reconsideration filed March 4, defense attorneys revealed that Autymn Blanck—sister of key government witness Ayries Blanck—testified in a civil deposition that she accessed her sister’s hard drive, extracted photos, and sold them to Netflix for $25,000 in 2022.
This testimony directly contradicts the government’s representation that Ayries gave the hard drive to Autymn merely for “safekeeping,” a claim Judge Gujarati relied upon in denying defense access to the drive’s contents. Moreover, it strengthens the defense narrative that evidence, in this case, originated in commercial media production rather than legitimate investigation and that the made-for-Netflix material was used to secure an indictment. In oral argument at the February 26 conference, Jennifer Bonjean referred to the government’s use of an unnecessary search warrant to selectively access the hard drive as an “elaborate construct” to evade Brady and Giglio obligations. In a show of defiance, Bonjean filed a March 4 motion with the court urging Judge Gujarati to reconsider her denial of defense access to the full hard drive.
The government had already withdrawn Ayries Blanck’s journal entries from their case-in-chief after defense challenges to their authenticity, despite previously characterizing them as central evidence. In the February 26 conference, Judge Gujarati repeatedly pressed lead prosecutor Gillian Kassner to declare whether the government believed the journals to be authentic. Unsatisfied with the response, Gujarati ordered the government to put in writing its position on their authenticity. In a bombshell filing on March 12 that left observers aghast, the government admitted the journal entries it had relied upon were fakes. It withdrew Ayries Blanck as a witness along with all previous statements regarding the journals made by the prosecution. Celia Cohen and Michael Roboti acting for Rachel Cherwitz immediately called upon the government to dismiss the case and prosecute Ayries Blanck for falsifying evidence and lying to Federal agents. Reaction elsewhere was swift. The Daily Mail declared the government’s case to be teetering “on the brink of collapse.” In the California civil matter of OneTaste Inc v. Ayries Blanck, the high-profile law firm of Reed Smith filed noticed that it was dropping Blanck as a pro bono client in the wake of the EDNY news.
DOJ Reform on Collision Course with EDNY
The timing of these developments is particularly significant given the Department of Justice’s shifting priorities under the Trump administration. Attorney General Pam Bondi’s February 5 directive instructed prosecutors to focus on “the most serious, readily provable offenses,” including actual human trafficking operations.
President Trump’s January 20 executive order “Ending The Weaponization of The Federal Government” specifically cited another EDNY prosecution—United States v. Douglass Mackey—as an example of prosecutorial overreach. Both Mackey and the OneTaste prosecution involve novel applications of conspiracy charges without substantive crimes, supported heavily by media narratives.
With the upheaval in the Southern District of New York resulting in the reassignment of Mayor Eric Adams’ case to DOJ headquarters and the termination of numerous SDNY prosecutors, EDNY’s traditionally independent approach may face similar scrutiny.
Trial in Doubt as Clock Ticks
While jury selection remains scheduled for May 5, 2025, the mandamus petition casts considerable doubt on whether the trial will proceed as planned. A stay request filed on March 3 asks the district court to pause proceedings pending resolution of the mandamus petition. Should the Second Circuit grant the petition, it could fundamentally reshape the evidence available at trial or potentially end the prosecution entirely.
The case presents novel legal questions with implications far beyond OneTaste executives: Can the government use stolen privileged corporate material to prosecute executives without company consent? Does such conduct constitute the kind of outrageous government behavior that warrants dismissal of an indictment? And how will the new DOJ administration’s focus on reform affect long-running prosecutions initiated under previous leadership? This case is rapidly becoming a litmus test for whether the DOJ’s new emphasis on reform extends to cases already in the pipeline. The extraordinary step of seeking mandamus relief signals the defense’s belief that normal remedies have failed—and may force a reckoning that extends well beyond this single prosecution.
Texas Supreme Court Declines The Chance To Rule On Whether There Is A Right To A Jury Trial In A Trust Modification Suit
First Appellate Decision. In In re Troy S. Poe Trust, a co-trustee of a trust filed suit to modify the trust to increase the number of trustees and change the method for trustees to vote on issues as well as other modifications, including, incredibly, directing the trustees to ignore duties to remainder beneficiaries. No. 08-18-00074-CV, 2019 Tex. App. LEXIS 7838 (Tex. App.—El Paso August 28, 2019). The trial court denied the defendant co-trustee’s request for a jury trial on underlying fact issues and held a two-day bench trial. After the trial court granted all of the plaintiff’s modifications, the defendant co-trustee appealed and argued that the trial court erred in refusing him a jury trial. The court of appeals held that Texas Property Code did not waive a party’s right to a jury trial regarding a claim to modify a trust, and that the defendant co-trustee had a right to a jury trial on underlying fact questions involved in a trust modification case. The court reversed and remanded for further proceedings.
Second Appellate Decision. In In re Poe Trust, the Texas Supreme Court reversed and remanded the court of appeals. 646 S.W.3d 771 (Tex. 2022). The Court held that parties to trust modification proceedings were not entitled to a jury trial under the Texas Property Code. But the Court remanded for the court of appeals to consider whether the defendant co-trustee had a right to a jury trial under the Texas Constitution:
The Texas Constitution provides “two guarantees of the right to trial by jury” in civil proceedings. The Bill of Rights ensures that the “right of trial by jury shall remain inviolate.” Our cases have said, and the parties here do not dispute, that this provision maintains a jury right for the sorts of actions tried by jury when the Constitution was adopted and, thus, “only applies if, in 1876, a jury would have been allowed to try the action or an analogous action.”
At the time of the Constitution’s adoption, there was no common-law right to a jury trial in equitable actions and, consequently, our courts have held that the Bill of Rights did “not alter the common law tradition eschewing juries in equity.” However, to provide a jury right in equitable actions, “a special clause was introduced.” In our present Constitution, that guarantee is found in Article V, the Judiciary Article. It provides: “In the trial of all causes in the District Courts, the plaintiff or defendant shall, upon application made in open court, have the right of trial by jury; but no jury shall be empaneled in any civil case unless demanded by a party to the case, and a jury fee be paid by the party demanding a jury, for such sum, and with such exceptions as may be prescribed by the Legislature.” We have held, and no party here disputes, that the Judiciary Article “covers all ’causes’ regardless of whether a jury was available in 1876.”
…
The court of appeals confronted none of these constitutional arguments, which were first presented on rehearing. By that time, the court of appeals had concluded that the Trust Code’s incorporation of the Rules of Civil Procedure conferred a right to a jury trial. That holding made in-depth treatment of the constitutional arguments unnecessary. Our holding today, however, changes that… Following our preferred practice, we remand the case to the court of appeals to address petitioners’ constitutional arguments in the first instance. And we echo the concurrence’s view that amici input could greatly aid the court of appeals’ decisional process.
Id.
Third Appellate Decision. In In re Poe Trust, the court of appeals held that the co-trustee defendant did not have a constitutional right to a jury trial in a trust modification case, and then affirmed the trial court’s modification of the trust. 673 S.W.3d 395 (Tex. App.—El Paso, 2023). The court held that there was no right to a jury trial under the Texas Bill of Rights. The court then turned to the Judiciary Article and stated:
[T]he “Judiciary Article” states: “In the trial of all causes in the District Courts, the plaintiff or defendant shall, upon application made in open court, have the right of trial by jury; but no jury shall be empaneled in any civil case unless demanded by a party to the case, and a jury fee be paid by the party demanding a jury, for such sum, and with such exceptions as may be prescribed by the Legislature.” In contrast with the Bill of Rights, this provision expanded the jury-trial right to all “causes” in both law and equity, regardless of whether a jury trial was available for the same in 1876. However, there are differences in opinion regarding how the term “causes” in this provision should be defined.
Id. The court then held that a trust modification proceeding is not a “cause” as that term is used in the Judiciary Article:
Bock, on the other hand, argues that “cause” should include only “ordinary” causes of action, also referred to as “personal” actions, in which a plaintiff is seeking a personal judgment against a defendant based on the defendant’s breach of a duty or other wrongdoing. He posits that a plaintiff must be asserting some “personal right” for which he may obtain a remedy or enforceable judgment against the defendant. And he argues that a trust-modification proceeding lacks the attributes of an ordinary cause of action—it is not brought by a plaintiff seeking a judgment against a defendant, but instead is brought in the interest of the beneficiary and will not result in an enforceable judgment against any of the interested parties.
We conclude that Bock’s approach is the correct one, as it more closely aligns with the 1876 Constitution drafters’ intent in formulating the Judiciary Article’s jury-trial right and best comports with Texas jurisprudence over time.
Id. The court further explained:
Professor Harris later described the proceeding in which a plaintiff sues a defendant seeking a personal judgment against the defendant as the “ordinary cause of action,” which he contrasted with “special civil proceedings” that do not share this key attribute… This interpretation of the term cause as meaning the ordinary cause of action in which a plaintiff seeks recourse against a defendant further comports with the Judiciary Article’s “plaintiff” and “defendant” terminology. During the era in which the 1876 Constitution was adopted, Bouvier’s Law Dictionary defined a plaintiff as a person “who, in a personal action, seeks a remedy for an injury to his rights.” Plaintiff. It defined the term “defendant” in the opposing stance as a “party who is sued in a personal action.” And in turn, it defined a “personal action” as one “brought for the specific goods and chattels; or for damages or other redress for breach of contract or for injuries of every other description; the specific recovery of lands, tenements and hereditaments only excepted.” In other words, a personal action encompasses a situation in which a party seeks a judgment against a defendant as a remedy for a violation of a personal right… [W]e find the ordinary-cause-of-action framework to be the correct framework or test by which to determine whether a proceeding can be considered a Judicial Article cause versus a special proceeding that falls outside its scope.
Id. The court then held that a trust modification proceeding is more of a special proceeding and does not involve an ordinary cause of action:
Utilizing the ordinary-cause-of-action framework, we agree with Bock that a trust-modification proceeding does not have any of the attributes of a cause for which a Judicial Article jury-trial right exists; instead, its nature is that of a special proceeding for which no jury-trial right exists. As Bock points out, in a trust-modification proceeding, there is no plaintiff seeking a right of recovery or a judgment against a defendant who has committed some wrong.
Id. So, the court of appeals affirmed the trial court’s decision to deny the defendant co-trustee’s request for a jury trial. The court then looked at the merits of the trust modification and affirmed it as well. The court essentially rejected the unambiguous intent expressed by the settlor in the trust document and focused on other evidence to modify the trust.
There was a dissenting justice who found that the defendant co-trustee did have a constitutional right to a jury trial. The dissenting justice stated:
In the years when the 1875 Constitution was drafted, Texas law used “cause” broadly… In other words, “cause” was viewed comprehensively as encompassing contested questions before a court… Moreover, as this Court held in our prior decision in this case, the record here establishes that statutory prerequisites include disputed questions of fact. Specifically, this Court concluded that “the predicate questions of whether the trust needed to be modified was a fact question that should have been decided by a jury[.]”We observed in our earlier decision that, “as a general rule, ‘when contested fact issues must be resolved before equitable relief can be determined, a party is entitled to have that resolution made by a jury.’” Because this suit is based on a long recognized equitable cause of action, I would hold it falls squarely within the meaning of “all causes” as included in the Judiciary Article’s terms.
The majority views a material distinction between the term “cases,” as included in the Constitution of 1869, and the term “causes,” as currently included. Specifically, the majority describes the term “causes,” as “narrower language.” On that point, I disagree. Controlling authorities of the era inform that “all cases of law or equity,” as included in the 1869 version, essentially means the same thing as “all causes,” which was adopted in 1876. Given the historical use of these terms, I see no indication that the voters of that era drew back from the otherwise expanding guarantee of a right to a jury trial.
Additionally, the majority places heavy importance on the use of the terms, “plaintiff” and “defendant,” as appearing in the Judiciary Article. Based in part on these terms, the majority concludes that the term “cause” can only be interpretated as meaning an “ordinary cause of action.” Again, I disagree… First, these same terms, “plaintiff” and “defendant,” appear in the Constitution of 1845, where the jury-trial guarantee was otherwise provided in “all causes in equity.” Second, the terms “plaintiff” and “defendant” are not used as terms of limitation but rather to describe that a jury trial is guaranteed to all participants when “application [is] made in open court.” Third and lastly, I see no indication here of any special circumstance that would cause a jury trial to be prohibitive. On that score, Justice Busby’s concurring opinion in Poe, which is joined by Justice Devine and Justice Young, largely provides the analytical framework for making that determination. Because this modification suit is a statutory substitute for a cause in equity, I would classify it as falling into the second category of Justice Busby’s framework. To that extent, the jury-trial right would extend in part to the disputed issues of fact of this suit while questions of equitable discretion should be decided by the court. Unlike the majority, I would hold that a trust modification proceeding qualifies as “a cause” within the meaning of the Judiciary Article’s guarantee.
Id.
Three Justices Concur in The Decision To Deny The Petition For Review. The defendant co-trustee filed a petition for review in the Texas Supreme Court on both the jury trial right issue and on the trust modification issue. The both issues are of great importance to Texas jurisprudence as they certainly impact trust modifications and many other equitable proceedings under the Trust Code and Estate’s Code.
One would think that the Texas Supreme Court would accept the petition in this case, again, and finally determine whether a party has a constitutional right to a jury trial on underlying fact disputes in these types of proceedings. Alas, the Court denied the petition for review without an explanation. However, three justices issued a concurring opinion that gave some insight on their thinking. In re Poe Trust, No. 23-0729, 2024 Tex. LEXIS 658, 2024 WL 3836556 (Tex. August 16, 2024) (concurring order). The concurring justices stated that they agreed with denying the petition because there was no showing of a fact issue that should have been presented to a jury. That in and of itself is very odd. The trial court held a two day bench trial where both parties introduced evidence to support both sides on the issue of whether the modifications should have been granted on fact specific elements of: “(1) [whether] the purposes of the trust have been fulfilled or have become illegal or impossible to fulfill; (2) because of circumstances not known to or anticipated by the settlor, the order will further the purposes of the trust…” Id. (citing Texas Trust Code Section 112.054(a)(1), (2)). Whether the purposes of the trust have been fulfilled and whether circumstances not known to or anticipated by the settlor justify modification seem to be pretty fact specific issues. The court of appeals first decision clearly thought there was a fact issue because it remanded for a jury trial. The Texas Supreme Court’s first opinion clearly assumed that there was a fact issue because it went into great length in reversing and remanding the court of appeals for an analysis of the co-trustee’s constitutional right to a jury trial. Why would the Court waste its time and resources and the court of appeals’s time and resources, including the parties’ time and resources, if it felt that there was no fact issue?
In any event, the three concurring justices addressed whether the court of appeals correctly analyzed the constitutional right to a jury trial and would find that it did not:
That guarantee, which appears in the Judiciary Article, provides that “[i]n the trial of all causes in the district courts, the plaintiff or defendant shall, upon application made in open court, have the right of trial by jury.” We have held that this guarantee applies, among other things, to “ultimate issues of fact” in “equitable action[s],” analogous actions, and statutory or rule-based substitutes for such actions, as well as when challenging disputed facts addressed in proceedings ancillary to a cause. For example, it applies to contested matters of fact arising from receivership and probate proceedings.
We have also explained that the Judiciary Article guarantee was “intended to broaden the right to a jury,” and that the word “cause” had a “broad meaning . . . when our present Constitution was drafted” that included any “suit, litigation, or action” involving a “question . . . litigated or contested before a court” or “legal process . . . to obtain [a] demand” or “seek[] [a] right.” Thus, a “special reason” is necessary to conclude that particular “adversary proceedings” do not “qualify as a ’cause’.” Because we have identified certain special reasons—such as separate constitutional provisions—that some proceedings do not require a jury, “not all adversary proceedings are ’causes’ within the meaning of the Judiciary Article.” …
But on remand, a majority of the court of appeals panel did not examine whether there was a “special reason” of the sort we have held sufficient to exclude such an adversary equitable action from the Judiciary Article guarantee. Instead, the panel majority excluded these claims by disregarding the broader definition of “cause” we endorsed in Credit Bureau and selecting a narrower alternative definition derived from the common law: an “ordinary cause of action” or “personal action” in which a plaintiff alleges that a defendant breached a legal duty or violated a legal right and seeks recourse for that conduct…
Several weaknesses, however, underlie the panel majority’s definition and reasoning. First, the panel’s definition impermissibly departs from the “broad” definition of “cause” we endorsed in Credit Bureau, which was drawn from contemporaneous sources. Indeed, an amicus helpfully points out that Texas cases used the term “cause” in the 1870s to describe a wide variety of proceedings involving trusts. Second, the panel’s definition is based on the common law and thus excludes equitable actions, which we have long held the Judiciary Article guarantee was specifically enacted to include. The panel’s definition would collapse the Judiciary Article guarantee into the Bill of Rights guarantee, rendering the former surplusage…
For this additional reason, the panel majority erred in choosing a different and much narrower common-law definition of “cause,” which led it to depart improperly from several other binding precedents of this Court… Under these and other precedents, the court of appeals erred by adopting a binary view of the options for defining the scope of the Judiciary Article’s jury-trial guarantee and selecting the narrower option. Instead, it should have followed the middle path charted by our cases (hodgepodge though they may be), proceeding to examine whether there is a “special reason” of the kind we have held sufficient to deny a jury trial even though this adversary equitable action otherwise falls within the broad meaning of “cause” in the Judiciary Article guarantee. If any departure from our precedent is warranted, it must come from this Court. I do not analyze either point here, however—whether a “special reason” applies in this context under our existing jurisprudence or whether that jurisprudence is well grounded in the Constitution’s text and history. Because I conclude that there are no disputed questions of material fact in this case for a jury to resolve, those questions must await a future case.
Id. Of course, this order is just three justices’ opinion out of the nine-member Court as to the validity of the court of appeals’ reasoning. The Court could have accepted the case, affirmed the result, but corrected the reasoning of the court of appeals. The Court did not do that. So, as we sit today, the court of appeals’s analysis and narrow reading of “cause” in the constitutional right to a jury trial is the precedent in Texas.
The Nuts & Bolts of a Lift Stay Motion in a Bankruptcy Case
The automatic stay is one of the most powerful protections available to debtors in bankruptcy, immediately halting most collection efforts, foreclosures, and lawsuits. This mechanism provides the debtor with breathing room to reorganize finances and prevents creditors from racing to recover assets.
However, creditors are not without options. They can challenge the stay through a motion for relief, which can lead to enabling them to proceed with foreclosure, repossession, litigation, or other action under certain conditions. Understanding the nuances of this process is crucial for legal and financial professionals working in bankruptcy law.
Understanding the Automatic Stay
The automatic stay takes effect immediately upon the filing of a bankruptcy petition under Section 362(a) of the US Bankruptcy Code. It serves several key functions:
Halting litigation against the debtor
Preventing asset repossession and foreclosure
Stopping debt collection efforts, including garnishments
Maintaining the status quo while the debtor works toward financial rehabilitation
As Matt Christensen of Johnson May explains, the automatic stay applies without any need for a separate court order, meaning that creditors must cease collection efforts as soon as they become aware of the filing. Courts take violations of the stay seriously, and creditors who ignore it risk facing sanctions or penalties.
Grounds for Lifting the Automatic Stay
Creditors may seek to lift the automatic stay under Section 362(d) of the Bankruptcy Code. The most common justifications include:
1. ‘For Cause,’ Including Lack of Adequate Protection
One of the strongest arguments for lifting the stay is that a secured creditor’s interests are not adequately protected. This is especially relevant when a secured asset (such as real estate or equipment) is losing value and the debtor is not making payments or maintaining insurance.
Tim Anzenberger of Adams and Reese noted that creditors should provide evidence, such as declining property values or unpaid property taxes, to demonstrate that the value of their collateral is at risk. Inadequate protection can be grounds for relief, as courts aim to ensure that secured creditors do not suffer undue losses while the bankruptcy case proceeds.
2. ‘Lack of Equity’ and ‘Non-Essential’ to Reorganization
If a debtor owes more money to a secured creditor whose collateral is worth less than the amount of the debt (i.e., the debtor lacks equity in the collateral), and the asset is not necessary for reorganization, the stay can be lifted to allow the creditor to recover the collateral.The court will weigh whether the asset is essential for the debtor’s long-term viability before deciding on stay relief on this basis.
For example, Ryan Hardy, a partner with Levenfeld Pearlstein, explains that, in the case of a failing business, non-essential equipment or real estate might be subject to foreclosure, especially if liquidation is the likely outcome.
3. Single Asset Real Estate Cases
In single asset real estate (SARE) cases, a special provision applies. If the debtor does not file a reorganization plan or make payments within 90 days, the creditor may automatically seek stay relief. This prevents debtors from using bankruptcy as a mere delay tactic without a legitimate plan for restructuring.
4. Bad Faith Filings
Courts scrutinize bankruptcy cases to prevent abuse of the system. If a debtor files for bankruptcy solely to delay a foreclosure or to frustrate creditors without a valid reorganization plan, the court may find bad faith and lift the stay.
Maria Carr of McDonald Hopkins highlights that repeated filings right before a foreclosure sale are often viewed as a red flag. Creditors can present a history of past filings and delays to demonstrate that the debtor is acting in bad faith, strengthening their case for stay relief.
Procedure for Filing a Motion To Lift the Stay
A motion for relief from the stay follows a structured legal process:
Filing the Motion – The creditor submits a written motion explaining why relief is warranted, citing legal grounds and supporting evidence.
Notice to Interested Parties – The debtor and other affected parties must be formally notified.
Court Hearing – If the debtor objects, a hearing is scheduled where both sides present arguments.
Court Ruling – The judge decides whether to lift, modify, or keep the stay in place.
A contested motion often requires valuation evidence, financial projections, and expert testimony from appraisers or financial analysts.
Conclusion
The automatic stay is a critical component of bankruptcy law, preventing immediate collection actions. Understanding how courts evaluate lift stay motions is essential for attorneys, creditors, and financial professionals involved in bankruptcy litigation. Courts carefully balance debtor protections and creditor rights, weighing the evidence presented.
Filing a motion for relief requires a strategic approach, including valuation analysis and legal justification. By knowing the rules, legal strategies, and key arguments, parties can better protect their interests in Chapter 11 and other bankruptcy cases.
To learn more about this topic, view the webinar The Nuts & Bolts of Chapter 11 (Series I) / The Nuts & Bolts of a Lift Stay Motion. 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 in reading other articles about Chapter 11.
This article was originally published here.
©2025. DailyDACTM, LLC. This article is subject to the disclaimers found here.
Class Action Litigation Newsletter | 4th Quarter 2024
This GT Newsletter summarizes recent class-action decisions from across the United States.
Highlights from this issue include:
First Circuit addresses four questions of first impression relating to CAFA jurisdiction and “home state” and “local controversy” exceptions.
Second Circuit holds class representative’s susceptibility to unique defenses is not a basis for finding lack of adequacy, though it may go to typicality.
Fourth Circuit reverses certification of FLSA class action, finding conclusory allegations of company policies were insufficient to satisfy commonality requirement.
Sixth Circuit vacates class certification based on individualized questions in automotive defect case.
Seventh Circuit affirms decertification of Rule 23(c)(4) issues class for lack of superiority.
Ninth Circuit holds unexecuted damages model sufficient to demonstrate damages are susceptible to common proof at the class certification stage.
Continue reading the full GT Class Action Litigation Newsletter | 4th Quarter 2024
Additional Authors: Richard Tabura, Aaron Van Nostrand, Gregory A. Nylen, David G. Thomas, Angela C. Bunnell, R. Morgan Carpenter, Gina Faldetta, and Gregory Franklin.