SCOTUS Declines to Decide Fate of Classes with Uninjured Members: 8-1 Decision in LabCorp Leaves Unresolved Whether Rule 23 Allows Certification for a Class Containing Members Who Lack Standing
The United States Supreme Court, in an 8-1 decision on June 5, 2025, dismissed the highly anticipated case of Laboratory Corporation of America Holdings v. Davis as “improvidently granted.” Laboratory Corporation of America Holdings, dba Labcorp, v. Luke Davis, et al., No. 22-55873. The decision, or lack thereof, sidesteps a critical question for class action litigation: whether a damages class can be certified under Federal Rule of Civil Procedure 23 when it includes individuals who have not suffered any actual injury.
LabCorp was challenging a Ninth Circuit decision that allowed the certification of a massive class of visually impaired individuals under California’s Unruh Civil Rights Act. Cal. Civ. Code. § 51. The suit alleged LabCorp’s check-in kiosks were inaccessible, triggering statutory damages of $4,000 per violation. With a class size potentially in the hundreds of thousands, the exposure was astronomical—a classic case of “bet the company” litigation.
Background of the Case
LabCorp is a clinical diagnostic laboratory that tests samples collected from patients at its patient service centers. In a suit filed before the U.S. District Court for the Central District of California, a group of legally blind and visually impaired individuals sued LabCorp under the Americans with Disabilities Act (ADA) and the Unruh Civil Rights Act, alleging that the company’s self-service check-in kiosks were inaccessible. The District Court certified a damages class consisted of “[a]ll legally blind individuals in California who visited a LabCorp patient service center in California during the applicable limitations period and were denied full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations due to LabCorp’s failure to make its e-check-in kiosks accessible to legally blind individuals.”
LabCorp filed a petition under Rule 23(f)’s interlocutory appellate procedure, contending that the class encompassed uninjured individuals.
While LabCorp’s petition was pending, the District Court clarified the class definition, explaining that the class included “[a]ll legally blind individuals who . . . , due to their disability, were unable to use” LabCorp kiosks.
Subsequently, the Ninth Circuit granted LabCorp’s Rule 23(f) petition. LabCorp’s key argument was that the class was fatally overly broad and swept in countless individuals who may have never intended to use a kiosk in the first place, and thus suffered no actual injury. The Ninth Circuit relying on its opinion in Olean Wholesale Grocery Coop., Inc. v. Bumble Bee Foods LLC, 31 F.4th 651, 665 (9th Cir. 2022), held that a class can be certified even if it includes “more than a de minimis number of uninjured class members.”
Supreme Court Proceedings
The Supreme Court initially granted certiorari to address the question of “[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.” However, after oral arguments, the Court dismissed the case in a one-line order, without ruling on the merits, stating that the writ of certiorari was “improvidently granted.”
Justice Kavanaugh’s Dissent
Justice Kavanaugh dissented from the dismissal, expressing that the Court should have addressed the merits. He argued (correctly) that certifying a damages class containing uninjured members is inconsistent with Rule 23, which requires that common questions of law or fact predominate in class actions. Notably, Kavanaugh also emphasized the risk from “[c]lasses that are overinflated with uninjured members rais[ing] the stakes for businesses that are the targets of class actions.” He went on to underscore that certifying such classes “can coerce businesses into costly settlements that they sometimes must reluctantly swallow rather than betting the company on the uncertainties of trial.”
“Classes that are overinflated with uninjured members raise the stakes for businesses that are the targets of class actions.”
The Circuit Split
This decision effectively leaves undisturbed the split in authorities that has existed since the Supreme Court’s decision in TransUnion LLC v. Ramirez, 594 U.S. 413, 431 (2021). In TransUnion, while the Supreme Court held that “[e]very class member must have Article III standing in order to recover individual damages,” it did not decide when a class member’s standing must be established and whether a class can be certified if it contains uninjured class members. Subsequently, while some courts have denied class certification if there are uninjured class members, other courts have found it appropriate to address a class member’s standing after certification.
LabCorp, in its petition for certiorari, addressed the “three camps” of opinions:
Circuits holds that a class may not be certified where it includes members who have suffered no Article III injury (the Second Circuit, Eighth Circuit, and some courts in the Fifth and Sixth Circuits);
Circuits that have strictly applied Rule 23(b)(3)’s predominance requirement to reject classes that contain more than a de minimis number of uninjured members (the D.C. Circuit and the First Circuit); and
Circuits that have held that the presence of uninjured class members should not ordinarily prevent certification (the Ninth Circuit, Seventh Circuit, and Eleventh Circuit).
In light of the majority opinion, this question remains unresolved.
Title VII Lawsuit in Utah Federal District Court Challenges Employee’s Firing After Making Online Posts
An in-house attorney recently sued his former employer in a Utah federal district court for discrimination and retaliation under Title VII of the Civil Rights Act of 1964, alleging he was unlawfully fired after posting social media remarks criticizing gender-affirming care for transgender people and opposing a Utah nonprofit organization that advocates for LGBTQ+ rights.
Quick Hits
A former employee in Utah recently brought a federal lawsuit, claiming he was fired for criticizing on social media a LGBTQ+ rights nonprofit that partnered with his employer.
The gay Christian employee is alleging sex, sexual orientation, and religious discrimination in violation of Title VII of the Civil Rights Act of 1964.
The case is in the U.S. District Court for the District of Utah.
On May 22, 2025, a former employee for a Utah-based software company sued the company for discrimination and retaliation after he was fired a few months after he posted comments on social media criticizing gender-affirming care for transgender people and critical of Equality Utah’s policy positions. Equality Utah is a local nonprofit that supports LGBTQ+ rights.
The plaintiff, a gay Christian man, worked as in-house counsel. He alleged the software company discriminated against him based on his religion, sex, and sexual orientation, and retaliated against him for invoking nondiscrimination protections.
In February 2023, the plaintiff posted remarks on his social media account opposing Equality Utah’s positions regarding gender-affirming care for transgender children. The software company had earned a business equality leader certification from Equality Utah and partnered with the organization for trainings on diversity, equity, and inclusion (DEI). A leader at Equality Utah complained several times to the plaintiff’s employer about his social media comments on the plaintiff’s personal social media account and his account as president of the Utah Log Cabin Republicans.
In October 2023, the company fired the plaintiff, citing poor performance.
The plaintiff’s federal complaint alleges sex discrimination and religious discrimination under Title VII of the Civil Rights Act of 1964, but did not assert a claim under Utah’s Antidiscrimination Act.
Utah’s Antidiscrimination Act prohibits Utah employers from taking adverse employment action against employees for “lawful expression or expressive activity outside of the workplace regarding the [employee’s] religious, political, or personal convictions, including convictions about marriage, family, or sexuality, unless the expression or expressive activity is in direct conflict with the essential business-related interests of the employer.” The state law permits workers to express “religious or moral beliefs and commitments in the workplace in a reasonable, non-disruptive, and non-harassing way.”
The case raises questions about what employers can include in their social media policies and how such policies may be enforced. While the free speech rights in the U.S. Constitution do not give private employees free rein to say whatever they want on their personal social media accounts, other laws such as Title VII and their state law equivalents may provide protection. In some circumstances, employers may lawfully discipline or fire employees for disparaging the employer or using offensive language on social media, particularly if the post includes references to the company name or logo.
But at the same time, under the National Labor Relations Act (NLRA), private employees have the right to discuss wages and the terms and conditions of employment, which may include religious discrimination or sex discrimination in the workplace. This case is also a good reminder that even within a protected category, there may be conflict in viewpoints, and employers may want to be prepared to respond to such disagreements.
Next Steps
Employers may want to develop and distribute to employees a well-crafted social media policy that respects employees’ legal rights, including protections under state and federal law, and that also maintains workplace standards and protects business interests.
Employers that are developing or updating their social media policies may want to consider the following key principles and tips:
Including in the written policy specific examples of acceptable and unacceptable commentary and conduct.
Making it clear that employees must not use the company’s name, branding, or position themselves as speaking on behalf of the company without authorization.
Applying and enforcing the social media policy consistently with all employees in order to prevent claims of discrimination or retaliation.
Periodically reminding employees and managers about the social media policy.
Training supervisors and managers about what constitutes protected activity under the NLRA.
In Utah, taking care not to take adverse action against employees for lawful expression outside the workplace involving religious, political, or personal convictions, including matters such as marriage, family, or sexuality, unless the expression directly conflicts with the employer’s essential, business-related interests.
Ad Restrictions on HFSS Products in the UK to Take Effect on 5 January 2026, with Voluntary Compliance from Advertisers and Broadcasters from 1 October 2025
The UK Government has delayed the implementation of the Advertising (Less Healthy Food Definitions and Exemptions) Regulations 2024 (“Regulations”), which were due to come into force on 1 October 2025, in order to explicitly exempt ‘pure brand’ advertising from the Regulations. The Regulations will now come into force on 5 January 2026. However, despite this delay, advertisers and broadcasters have voluntarily committed to complying with the restrictions from 1 October 2025 (as originally planned).
In a letter addressed to the Government, representatives from the advertising industry stated their commitment not to run ads for specific, identifiable less healthy food or drink products. The letter was signed by key advertising bodies, such as the Advertising Association, ISBA, the IPA and IAB. The letter was also signed by major media organisations and broadcasters, including Channel 4, ITV, Sky and Reach plc, along with the Food and Drink Federation.
The Regulations will impose new restrictions banning ads for “identifiable” food and drinks that are high in fat, salt or sugar (“HFSS”) from being shown on TV before 9pm in the UK or at any time in online paid-for advertising. The aim of the Regulations is to reduce the exposure of HFSS marketing to children by restricting such advertising, with the forthcoming change following numerous governmental commitments regarding HFSS restrictions over the past few years.
What restrictions will be introduced?
The restrictions being introduced include:
a 9pm watershed for “identifiable” less healthy food and drink advertising on TV. This will also include all on-demand programme services (“ODPS”); and
the introduction of a complete ban on paid-for less healthy food and drink advertising online, including on non-Ofcom regulated ODPS.
The Regulations will apply to businesses involved or associated with the manufacture or sale of “less healthy” food or drink with 250 or more employees (which includes franchises) who pay to advertise HFSS products. Only HFSS products that are “identifiable” will be regulated.
Which products are covered by the Regulations?
HFSS products within the scope of the Regulations are those:
falling within one of the 13 product categories in the schedule to the Regulations;[1] and
scoring at least a certain number of points under the relevant Nutrient Profiling Model technical guidance .
To help businesses understand the types of products that may fall outside the scope of the Regulations, Department of Health and Social Care (“DHSC”) guidance provides a list of non-exhaustive exemptions (e.g. neither dried fruit snacks nor garlic bread are HFSS products).
There are also numerous exempt products that are already subject to separate regulations, which include (among others) infant formula, total diet replacement products, meal replacement products (which use an approved health claim) and food for special medical purposes.
Enforcement
The Regulations will be enforced by the Advertising Standards Authority (“ASA”) and Ofcom. Non-compliant businesses could face the following (among others):
enforcement notices and corrective action;
consumer and competitor complaints;
financial penalties where the business makes serious breaches; and/or
reputation damage, which may be incurred as result of the ASA (and the press) publicly reporting on any non-compliance.
Pure brand advertising
‘Pure brand’ advertising refers to advertising that focuses on promoting a brand’s overall identity and recognition, rather than specific product features or promotions. However, the ASA considered that it was not clear whether pure brand advertising was caught within the scope of the restrictions or not.
Following this, the DHSC published a number of statements to clarify its position regarding pure brand advertising. Ashley Dalton, Parliamentary Under-Secretary of State for Public Health and Prevention, stated on 22 May 2025 that “the Government intends to make and lay a Statutory Instrument (SI) to explicitly exempt ‘brand advertising’ from the restrictions. The SI will provide legal clarification on this aspect of the existing policy, as it was understood and agreed by Parliament during the passage of the Health and Care Bill. This will enable the regulators to deliver clear implementation guidance and mean that industry can prepare advertising campaigns with confidence”.
As such, businesses can still promote their brands insofar as any ads do not identify less healthy products and be exempt from the restrictions.
Next steps
With only months until the restrictions are introduced, businesses within the food and drink sector and those supplying them (such as advisors, agencies and consultancies) should familiarise themselves with the new advertising obligations and assess current product compliance using the nutritional scoring to determine how impacted they will be. With the ASA shaping its guidance so regularly, businesses should monitor updates to proactively ensure that they are keeping abreast of any developments. Businesses may also want to consider adapting their marketing strategy to promote healthier products or reformulating certain products so that they are no longer deemed “less healthy” and caught by the restrictions.
[1] These products include (among others): soft drinks (category 1); savoury snacks (category 2); breakfast cereals (category 3); confectionary (category 4); ice cream/lollies (category 5); cakes and cupcakes (category 6); sweet biscuits and bars (category 7); “morning goods”, which includes pastries and pancakes (category 8); desserts and puddings (category 9); sweetened yoghurt (category 10); pizza (category 11); chips and wedges (category 12); and ready meals, products ordered from a menu that are intended to be consumed as complete meal, breaded or battered seafood or meat product and sandwiches (category 13).
The authors wish to thank Royce Clemente for his contribution to this post.
TURNING UP THE HEAT: Summer Vibe Faces Putative Class Action Lawsuit Based on Alleged Violations of the Quiet Hours Provisions
Hi TCPAWorld! The Baroness here and a new TCPA lawsuit was just filed. Just in time for Summer!
Yes, another TCPA lawsuit has just hit the docket, and once again, it’s centered around the increasingly active quiet hours provision. No surprise, this one comes from Jibrael Hindi’s office, which has filed hundreds of these quiet hours cases in recent months.
For those keeping track, the “quiet hours” provision under the TCPA prohibits initiating telephone solicitations before 8:00 a.m. or after 9:00 p.m. local time of the called party. 47 C.F.R. § 64.1200(c)(1). This provision is rapidly becoming a favorite for the plaintiffs’ bar.
In this latest suit, Olivia Lee Pesce, alleges that between April 14, 2023 and November 17, 2023, she received 8 text messages from Summer Vibe Inc. d/b/a Cupshe (yes, the swimwear brand) before the hour of 8 a.m. or after 9 p.m. local time in her location. A screenshot of the text messages are as follows:
As you folks know, the TCPA carries statutory violations of $500 per text and up to $1,500 if they were knowing and willful violations. So at best, Olivia could recover $12,000 ($1,500 x 8 messages) for the texts she received.
But the real exposure lies in the putative class. Olivia isn’t just seeking damages for herself—she’s attempting to certify a nationwide class of individuals who also received marketing texts from Summer Vibe during the quiet hours:
All persons in the United States who from four years prior to the filing of this action through the date of class certification (1) Defendant, or anyone on Defendant’s behalf, (2) placed more than one marketing text message within any 12-month period; (3) where such marketing text messages were initiated before the hour of 8 a.m. or after 9 p.m. (local time at the called party’s location).
So now everyone Summer Vibe texted outside the quiet hours are potentially in the class. Let’s do the math. If just 100 people received similar texts, even at the base statutory amount, the potential liability is already at $50,000—and that number only goes up if willfulness is proven or more class members are found.
While these cases are multiplying, it’s important to remember quiet hours litigation is still a new and evolving area of law. It remains to be seen how far these cases will go.
Companies should keep a close eye on this trend. Hindi is clearly on the prowl.
As this case was just filed, not much has happened yet, but we will definitely keep a close eye on this one to see how it plays out. Pesce v. Summer Vibe Inc., Case No.: 2:25-cv-05042
Oregon Amends Consumer Privacy Act
On May 27, 2025, and June 3, 2025, Oregon Governor Tina Kotek signed into law H.B. 3875 and H.B. 2008, each of which amends the Oregon Consumer Privacy Act (the “Act”).
H.B. 3875 expands the Act’s scope to cover all motor vehicle manufacturers that control or process personal data obtained from consumers’ use of vehicle or any component of a vehicle, by removing car makers and affiliates from an exemption for entities that process the data of fewer than 100,000 consumers or derives 25 percent or more of their revenue from selling data. As a result, drivers have the right to opt out of having their personal information sold or used for advertising by car makers.
H.B. 2008 amends the Act to prohibit the sale of precise geolocation data relating to an individual or their device’s present or past location (within a radius of 1,750 feet), and the sale of personal data of children under age 16.
EDPB Finalizes Guidelines on Data Transfers to Third Country Authorities and Training Materials on AI and Data Protection
Data Transfers to Third Country Authorities
On June 4, 2025, the European Data Protection Board (“EDPB”) published the final version of Guidelines 02/2024 on Article 48 of the GDPR (the “Guidelines”) regarding data transfers to third country authorities.
The predominant focus of the Guidelines is to clarify that judgements or decisions from third country authorities cannot be automatically or directly recognized or enforced in an EU Member State, reaffirming that a request from a foreign authority does not inherently constitute a legal basis for the processing or a ground for the transfer.
The Guidelines highlight that international agreements may provide for both a legal basis and a ground for transfer, although the Guidelines also recognize that other legal bases or grounds for transfer could be considered where no international agreement exists or where such agreement lacks adequate safeguards. However, while other bases under Article 6 may be suitable, the EDPB clarified that Article 6(1)(b), which provides a lawful basis where processing is necessary for the performance of a contract, cannot be relied upon by a private entity in the EU as an appropriate legal basis to answer a request for transfer or disclosure from a third country authority.
For more information on the Guidelines, read our previous blog on the topic.
Training Materials on AI and Data Protection
During its June plenary meeting, the EDPB presented two new Support Pool of Experts projects, Law & Compliance in AI Security and Data Protection (aimed at data privacy officers and privacy professionals) and Fundamentals of Secure AI Systems with Personal Data (aimed at cybersecurity professionals, developers or deployers of high-risk AI systems), to provide training materials on AI and data protection.
The EDPB hopes that the projects will help provide professionals with essential competences in AI and data protection, creating a “more favorable environment for the enforcement of data protection legislation.”
With the reports, the EDPB, factoring in the “very fast evolution of AI,” has launched a one-year pilot project consisting of a modifiable community version of the reports, enabling external contributors to propose changes or add comments to the documents.
BUYING ACTIVITY VS. SELLING ACTIVITY: Court Holds Offers to Buy Houses Are NOT Telephone Solicitations– And Of Course They Aren’t (But this is a BIG WIN Regardless)
The Courts have been pretty consistent that a pure offer to buy a property is not a solicitation, but a an offer to buy tied to a hidden service for which the consumer is charged is a solcitation.
This matters because folks really like to cold call property owners in an effort to buy their properties. But folks also really like to cold call FSPOs and expired listings in an effort to list their properties– which is very different.
Well in Cofey v. Fast Easy Offer, 2025 WL 1591302 (D. Az. June 5, 2025) the Court held calls asking “Have you given up on selling your…property?” were not telephone solicitations because they did not offer to sell or rent anything to the call recipient.
The court thoroughly analyzed the facts and law and determined the calls only related to future selling activity by the Plaintiff, not future buying activity. The fact that the caller would profit from a sale of the Plaintiff’s property was of no moment. The caller wanted to buy the property– not sell something to the Plaintiff.
As the Court summed up its analysis:
The Court is sympathetic to Plaintiff’s skepticism regarding this buying/selling distinction, especially where the end result is the same: Defendants make money off Plaintiff. It is true that, construing Plaintiff’s factual allegations in the most favorable light, were Plaintiff to agree to use FEO’s services to sell her house, Defendants would ultimately benefit from an “effective fee” deducted from the offer price. In that sense, the calls and texts might constitute “solicitations” in the colloquial sense of the word. But even if, in that hypothetical scenario, Plaintiff did not make as much money as she might have made selling her home without FEO’s services, she would still be making money and not spending a cent on purchasing any goods or services from Defendants. The calls and texts therefore cannot constitute “solicitations” within the plain statutory meaning of the term, and it is this statutory meaning that must carry the day. Ultimately, Plaintiff’s “quarrel is with Congress, which did not define” solicitation “as malleably as [she] would have liked.” Cf. Facebook, 592 U.S. at 409. This Court cannot rewrite what Congress wrote simply to make the outcome fairer to Plaintiff.
Bingo.
Great analysis. Great ruling.
Now Keller Williams was involved here as the likely lead buyer so people may get confused. The Court DID NOT hold a real estate agent can call a property owner to offer to list their property. In that instance the consumer is engaging in “buying” activity– they are “buying” help selling their property. Don’t get it twisted and be careful!
PANT SAGGIN PROBLEMS?!: FTSA Complaint Alleges Violations of the Caller ID Rules
Hey TCPAWorld!
Just yesterday, the Czar came across a TCPA complaint against a defendant named Pant Saggin LLC (“PSD”), if you can believe it. See Villaverde v. Pant Saggin, LLC, No. 0:25-cv-61117-AHS (S.D. Fla. June 4, 2025), ECF No. 1. And to make matters even better, Pant Saggin LLC sells underwear, which would presumably be advertised if the wearer’s pants were sagging. I really hope they have a good logo…
Anyway, this case was just removed to my home court, the Southern District of Florida, and raises claims under the Florida Telephone Solicitation Act (“FTSA”).
The allegations are simple. The plaintiff, Amanda Villaverde, is a Broward County resident that allegedly received what she dubs “Text Message Sales Calls” from PSD. Though her language is plural, she provides only one message from 91374:
PSD: Don’t settle for only one pair!
Shop PSD 3 Packs to save big on your new favorite underwear!
Cop your 3 Pack now – >
Predictably, when the plaintiff called 91374, the call could not be completed.
Therefore, the plaintiff claims that PSD violated the FTSA’s Caller ID Rules, Fla. Stat. § 501.059(8)(b). This statute dictates that if a telephone number is provided through caller ID because of a telephonic sales call, “the solicitor must ensure that telephone number is capable of receiving telephone calls and must connect the original call recipient, upon calling such number, to the telephone solicitor or to the seller on behalf of which a telephonic sales call was placed.” Id. Accordingly, the plaintiff claims that because she received “PSD Text Message Sales Calls” from a number that was incapable of receiving telephone calls, PSD violated the FTSA.
On these bases, the plaintiff seeks to represent the following class:
All persons and entities that reside in Florida whose caller identification service was transmitted a telephone number that was not capable of receiving telephone calls when PSD Text Message Sales Calls were made to them since July 1, 2021.
That’s right, there is supposedly a whole Pant Saggin class.
There are two key takeaways. First, companies sending outbound text messages to Florida consumers should ensure that the number listed on caller ID is capable of receiving telephone calls and connecting to either the company itself or the agent sending the text on its behalf. And second, pant sagging can be marketing for underwear. Do with that information what you will.
Until next time.
California’s “Auto Renewal Law” Takes Effect on July 1
Amendments to California’s Automatic Renewal Law (ARL) will take effect on July 1, 2025. Enacted in September 2024 through Assembly Bill No. 2863, the amendments expand disclosure, consent, and cancellation obligations for businesses offering subscription or continuous service plans to California consumers.
The amendments impose several new requirements related to consumer consent, cancellation, and disclosures, including:
Affirmative consent. Businesses must obtain a consumer’s express affirmative consent to the renewal terms and retain proof of consent for at least three years or one year after termination, whichever is longer. The law also prohibits contract terms that undermine a consumer’s ability to provide meaningful consent.
Clear and conspicuous disclosures before enrollment. Businesses must disclose key terms—such as renewal conditions, billing frequency, cancellation policies, and pricing changes—clearly, conspicuously, and in proximity to the enrollment request.
Channel-specific cancellation. Businesses must allow cancellation through the same method the consumer used to sign up or typically uses to communicate, such as phone, email, mail, or online.
Click-to-cancel requirement. For online subscriptions, businesses must offer a “click to cancel” option. Businesses may present retention offers only if cancellation remains immediate and unobstructed.
Prohibition on material misrepresentations. The law prohibits misleading statements or omissions about any material aspect of the transaction, including the renewal terms.
Putting It Into Practice: The amended ARL closely tracks the FTC’s Negative Option Rule, particularly in its expanded requirements for disclosure, consent, and cancellation—setting a new compliance benchmark for businesses operating in California. While the CFPB has pulled back in this area, the FTC and state lawmakers continue to advance rulemaking related to unfair or deceptive subscription practices (previously discussed here).
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Texas Extends R&D Credit and Implements Other Tax Changes in 89th Legislative Session
The 89th Texas legislative session—which ran from Jan. 14 through June 2—resulted in significant tax changes. One of the most important changes was the extension of Texas’ Research and Development Credit (R&D Credit). In addition, the session resulted in property tax relief for Texas homeowners and changes to the administrative deference provided by Texas courts.
Texas R&D Credit
Senate Bill 2206, which the governor signed on June 1, extends the R&D credit. The final bill that passed largely mirrors earlier proposals, providing for an extended credit that: (1) keeps the credit alive by extending its current expiration date; (2) repeals the sales tax exemption portions of the R&D Credit (the sales tax and franchise tax R&D Credits were previously mutually exclusive, and taxpayers had to choose one or the other); (3) follows the federal R&D credit more closely; and (4) increases the taxpayer’s allowable research and development expenditures from 5% to 8.722% for franchise tax credit purposes (See prior GT Alert on Texas R&D legislation).
Property Tax Relief
The legislature also approved a property relief package that increases the state’s homestead exemption from $100,000 to $140,000 (and $200,000 for individuals over 65 years of age). In addition, the legislature approved House Bill 9, which provides for an increase in the state’s business personal property tax exemption from $2,500 to $125,000.
Data Processing Changes
Efforts to update Texas’s data processing statutory provisions were stalled. Instead, the Texas comptroller formally amended the data processing regulation (the latest amendments became effective on April 2, 2025).
The amended rule expands the definition of data processing by incorporating an exhaustive list of examples regarding what constitutes “data processing.” The amended rule also replaces the longstanding “essence of the transaction test” with a broader ancillary requirement, which will result in additional taxable activities under the data processing umbrella. It is unclear how Texas courts—who have given their stamp of approval by applying the essence of the transaction test—will view these changes.
Agency Deference
One final bill of note is Senate Bill 14, which eliminates the requirement that Texas courts “give deference to a state agency’s legal determination regarding the construction, validity, or applicability of the law or a rule adopted by the state agency responsible for the rule’s administration, implementation, or other enforcement.” The Texas comptroller is subject to the changes in Senate Bill 14, which will take effect Sept. 1, 2025. Considering the comptroller’s changes to the data processing regulation regarding the essence of the transaction test, Senate Bill 14 may be front and center sooner rather than later.
GT Insights
These changes may bring new developments and incentivize business in the state. While the property tax and franchise tax regimes might see some relief, the comptroller’s updated data processing rule is an expansion of the sales tax base. It remains to be seen how these developments are incorporated.
California SB 690 Passes California’s Senate, Signaling a Major Step in Redefining Privacy Law and Limiting CIPA Litigation for Online Businesses
On June 3, 2025, the California Senate passed Senate Bill 690 (“SB 690”) in a unanimous 35-0 vote, advancing a measure that would significantly limit lawsuits under the California Invasion of Privacy Act (“CIPA”) against businesses using standard online technologies. Notably, the bill was amended prior to passage to remove its retroactivity provision, meaning it will not apply to pending cases. The bill now moves to the Assembly for further consideration.
Over the last several years, CIPA—originally enacted in 1967 to address wiretapping and eavesdropping—has been repurposed by plaintiffs’ attorneys as a powerful tool to target online businesses for their use of common web technologies such as cookies, pixels, chatbots, and session replay tools. This has resulted in a dramatic surge of lawsuits, often class actions, alleging that these technologies constitute illegal “wiretapping” or the use of “pen registers” and “trap and trace” devices under CIPA. The business community, including small and mid-sized ecommerce companies, has faced a wave of demand letters and litigation, with businesses sometimes being coerced to settle rather than risk the threat of statutory damages and protracted legal battles. These lawsuits have been widely criticized as burdensome and predatory, creating significant legal uncertainty and financial risk for companies operating in California. In response, SB 690 was introduced to protect companies that use online tracking technologies for a commercial business purpose from violating CIPA.
Key Provisions and Scope of SB 690
SB 690 proposes to address this problem by introducing exemptions for activities conducted for “commercial business purposes” from several core CIPA provisions. The bill would exempt from liability the interception or recording of communications when done for a commercial business purpose. It also clarifies that the use of pen registers and trap and trace devices for commercial business purposes does not fall within the scope of CIPA’s prohibitions. Perhaps most significantly, SB 690 would bar private lawsuits for the processing of personal information for a commercial business purpose, effectively eliminating the private right of action for a wide range of CIPA claims related to online business activities.
The definition of “commercial business purpose” in SB 690 is closely tied to the California Consumer Privacy Act (“CCPA”) and the California Privacy Rights Act (“CPRA”). It encompasses the processing of personal information to further a business purpose as defined in the CCPA, such as operational purposes, auditing, security, marketing, and analytics. It also includes activities subject to a consumer’s opt-out rights under the CCPA and CPRA, such as the sale or sharing of personal information. The bill adopts the CCPA’s definitions of “personal information” and “processing,” ensuring consistency across California’s privacy statutes.
A particularly notable feature of SB 690, as originally proposed, was its retroactive application, which would have applied the bill’s provisions to any case pending as of January 1, 2026. However, this retroactivity provision faced significant opposition during the legislative process. On May 29, 2025, just before the Senate vote, the bill was amended to remove the retroactivity language. As passed by the Senate, SB 690 is now silent on retroactive application and would likely only apply prospectively.
The bill now proceeds to the Assembly, where it will undergo committee reviews, three readings, and a final vote. If both houses pass the bill in the same form, it will be sent to the Governor for approval.
Potential Implications for Businesses
The legislative intent behind SB 690 is clear: CIPA was never meant to regulate the types of routine online data collection and analytics now at issue in many lawsuits. Proponents of the bill argue that the CCPA and CPRA provide a comprehensive, modern framework for regulating online privacy, including robust notice and opt-out rights for consumers. SB 690 is intended to harmonize California’s privacy laws, prevent duplicative and conflicting legal standards, and curb abusive litigation that threatens both large and small businesses. By clarifying that business activities already regulated by the CCPA are not within the scope of CIPA, the bill aims to restore legal certainty and allow businesses to focus on compliance with California’s primary privacy statutes, rather than defending against costly and unpredictable CIPA lawsuits.
If enacted, SB 690 would dramatically reduce the risk of CIPA litigation for businesses that use standard online tracking and analytics technologies in compliance with the CCPA and CPRA. This would provide much-needed relief from the lawsuits that have proliferated in recent years, allowing companies to redirect resources away from legal defense of specious claims.
Conclusion
With the Senate’s passage of SB 690 and the removal of the retroactivity provision, the bill represents a significant potential shift in the legal landscape for online businesses operating in California. Its progress and any further amendments will be closely watched by stakeholders across the technology, ecommerce, and privacy sectors.
DON’T MESS WITH TEXAS: Amendment to the Regulation of Telephone Solicitation Sitting on the Gov Desk Might Make it the Next Hot State for Litigation!
Currently, Governor Abbott out of Texas has bill SB140 on his desk awaiting his signature — which will drastically broader Texas’ telemarketing statute and has an effective date of September 1, 2025.
SB140 aims to amend the Texas Business & Commerce code by:
Broadening the definition of “telephone call” and “telephone solicitation” to include texts, image messages, and other transmissions aimed at selling;
adding clarifying language around a consumer’s ability to recoup damages under the statute multiple times: “[t]he fact that a claimant has recovered under a private action arising from a violation of this chapter more than once may not limit recovery in a future legal proceeding in any manner”; and
Adding a provision that allows for a private right of action under the Texas Deceptive Trade Practices and Consumer Protection (DTPA) for failing to abide by call time hours, failing to register as a telemarketer or not honoring opt out requests.
Notably, the use of an automatic dialing announcing devise — an ADAD — will also be enforceable under the DTPA, bringing consumers additional private right of action for either economic damages or damages for mental anguish. Yikes.
Texas has costly enforcement penalties — even higher than the TCPA which can range anywhere from $500 up to $5,000 per violation!
Texas’ telemarketing registration requirements are already the subject of significant litigation across the state. If this bill passes, Texas could quickly emerge as a new epicenter for TCPA and state-level telemarketing lawsuits—rivaling the previous infamous FTSA cases we saw out Florida.
Need help determining whether your business should be registered in Texas or navigating the nuances of state telemarketing laws, we are always happy to help.
In the meantime, we’ll continue to keep an eye out on this one for you.