How Will Limiting the Scope of the 14th Amendment Impact the EB-5 Financing Market?
As anticipated, the 47th president issued a series of Executive Orders on his first day in office, one of which has caught significant attention within the EB-5 industry. The order, titled “Protecting the Meaning and Value of American Citizenship,” seeks to narrow the citizenship rights granted by the 14th Amendment. The amendment itself begins with the phrase, “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.” In the landmark decision United States v. Wong Kim Ark, decided in 1898, the Supreme Court held that a child born in the United States of Chinese parents who were ineligible to be naturalized themselves was nevertheless a citizen of the United States entitled to all the rights and privileges of citizenship.
In the more than a century since the Wong Kim Ark decision, courts have largely accepted that a child born in the United States of non-United States citizens is a U.S. citizen, with limited exceptions, such as children born of diplomatic representatives of a foreign state. Current data on the number of children born to unauthorized immigrant parents is uncertain, but in 2018, the Pew Research Center released a report indicating that births to unauthorized immigrants generally rose throughout the 1980s, 1990s, and 2000s, before declining with the onset of the Great Recession in 2007. According to the Annie E. Casey Foundation, approximately 24% of births in the United States in 2023 were to foreign-born mothers, though this data does not differentiate between unauthorized immigrant mothers and legally present foreign-born mothers. Moreover, the Center for Immigration Studies, a D.C.-based think tank, alleges that birth tourism results in about 33,000 births to women on tourist visas annually while hundreds of thousands more are born to mothers who are illegal aliens or present on other temporary visas.
The rules by the State Department on the issuance of visas in the “B” nonimmigrant classification for temporary visitors for pleasure state:
Travel to the United States with the primary purpose of obtaining U.S. citizenship for a child by giving birth in the United States is an impermissible basis for the issuance of a B nonimmigrant visa. Consequently, a consular officer shall deny a B nonimmigrant visa to an alien who he or she has reason to believe intends to travel for this primary purpose . . . Permitting short-term visitors with no demonstrable ties to the United States to obtain visas to travel to the United States primarily to obtain U.S. citizenship for a child creates a potential long-term vulnerability for national security.
President Trump’s Executive Order proposes to limit the scope of citizenship under the 14th Amendment by excluding individuals born in the U.S. under the following circumstances:
When the mother was unlawfully present in the U.S. at the time of birth, and the father was neither a U.S. citizen nor a lawful permanent resident; or
When the mother’s presence was lawful but temporary (e.g., under a visa waiver program, student visa, work visa, or tourist visa), and the father was not a U.S. citizen or lawful permanent resident.
The ACLU along with others have already filed lawsuits challenging the order while seeking injunctive relief on the basis that this Executive Order would require a constitutional amendment to take effect, which would need to pass with a two-thirds majority in both the Senate and the House of Representatives, followed by ratification by three-fourths of the states.
The Executive Order does not change any policy related to the EB-5 Program, and any immediate effects on the program remain unclear. However, for those parents who have the means to travel to the United States to have their baby on U.S. soil and allow their child to reap the benefits of birthright citizenship, utilizing their economic means to pursue a green card through the investment and job creation requirements of the EB-5 Program may become a more attractive option. Hence, if birth tourism and other origins of citizenship are prevented through the narrowing of the 14th Amendment, we should see significant increase in EB-5 demand.
Justices Rebuke Appeals Court for Overlooking High Court Precedent on Unduly Prejudicial Evidence – SCOTUS Today
The U.S. Supreme Court’s decision today in Andrew v. White merits at least passing attention. Though a capital murder case—not the sort of case that most of this blog’s readers are ever likely to confront—it provides a useful discussion of how holdings of the Supreme Court, or the fact of the Court’s having no precedent at all, should be applied to lower court proceedings.
In the case at bar, an Oklahoma jury convicted Brenda Andrew of murdering her husband and sentenced her to death. At trial, the state adduced substantial evidence concerning Ms. Andrew’s adulterous sex life and her failings as a wife and mother. In response to a subsequent habeas petition, the state conceded that much of this evidence was irrelevant. Ms. Andrew predictably contended that its admission violated the Due Process Clause. The U.S. Court of Appeals for the Tenth Circuit rejected that claim because it assumed that no holding of the Supreme Court established a general rule that the erroneous admission of prejudicial evidence could violate due process. In a per curiam decision, the Supreme Court held that the circuit court “was wrong. By the time of Andrew’s trial, this Court had made clear that when ‘evidence is introduced that is so unduly prejudicial that it renders the trial fundamentally unfair, the Due Process Clause of the Fourteenth Amendment provides a mechanism for relief.’ Payne v. Tennessee, 501 U. S. 808, 825 (1991).”
Having erroneously assumed that no relevant, clearly established law existed, the lower court never considered whether the state court’s application of such law was reasonable. Thus, on remand, the Tenth Circuit must initially consider whether a fair-minded jurist could disagree with Andrew that the trial court’s mistaken admission of irrelevant evidence was so “unduly prejudicial” as to render her trial “fundamentally unfair.” See Payne at 825. “The Court of Appeals must ask that question separately for the guilt and sentencing phases. As to each phase, it might consider the relevance of the disputed evidence to the charges or sentencing factors, the degree of prejudice Andrew suffered from its introduction, and whether the trial court provided any mitigating instructions.”
Justice Alito concurred in the judgment “because our case law establishes that a defendant’s due-process rights can be violated when the properly admitted evidence at trial is overwhelmed by a flood of irrelevant and highly prejudicial evidence that renders the trial fundamentally unfair.” He emphasized that he left open the question, to be determined on remand, of whether the high standard for such a conclusion had been met here.
Justice Thomas, joined in dissent by Justice Gorsuch, opined on the question of whether there was, in fact, “clearly established federal law” for the trial court to have applied in this case. He expressed his view that the Court’s “precedent under the Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA) establishes several rules for identifying clearly established federal law. 28 U. S. C. §2254(d)(1),” adding:
We have instructed lower courts to avoid framing our precedents at too high a level of generality; to carefully distinguish holdings from dicta; and to refrain from treating reserved questions as though they have already been answered. The Tenth Circuit followed these rules. The Court today does not. Instead, it summarily vacates the opinion below for failing to elevate to “clearly established” law the broadest possible interpretation of a one-sentence aside in Payne v. Tennessee, 501 U. S. 808 (1991). In doing so, the Court blows past Estelle v. McGuire, 502 U. S. 62 (1991), which, months after Payne, reserved the very question that the Court says Payne resolved. And, worst of all, it redefines “clearly established” law to include debatable interpretations of our precedent. It is this Court, and not the Tenth Circuit, that has deviated from settled law.
One notes that this is a highly contentious view that seven other Justices—across the spectrum of jurisprudential philosophy—have not accepted. However, the dissenters have posited a division that will likely come up in future cases, and not just criminal ones.
Has California Imposed Nationwide Price Controls?
On January 7, 2025, Governor Newsom proclaimed a State of Emergency in Los Angeles and Ventura Counties due to the fire in the Pacific Palisades and windstorm. This proclamation triggered price the application of California Penal Code Section 396, which generally prohibits price increases for specified goods and services for specified periods following an emergency proclamation. The statute sets forth prohibitions of varying time periods depending upon the goods, service or activity. This post focuses on just one of these prohibitions.
Section 396(b) declares it unlawful for any person, business, or other entity, to:
Upon the proclamation of a state of emergency declared by the President of the United States or the Governor, or upon the declaration of a local emergency by an official, board, or other governing body vested with authority to make that declaration in any county, city, or city and county, and for a period of 30 days following that proclamation or declaration, sell or offer to sell any consumer food items or goods, goods or services used for emergency cleanup, emergency supplies, medical supplies, home heating oil, building materials, housing, transportation, freight, and storage services, or gasoline or other motor fuels for a price of more than 10 percent greater than the price charged by that person for those goods or services immediately prior to the proclamation or declaration of emergency, or prior to a date set in the proclamation or declaration. . . . If the person, contractor, business, or other entity did not charge a price for the goods or services immediately prior to the proclamation or declaration of emergency, it may not charge a price that is more than 50 percent greater than the cost thereof to the vendor as “cost” is defined in Section 17026 of the Business and Professions Code.
On January 12, 2025, Governor Newsom issued an executive order extending this period until January 7, 2026.
The breadth of this prohibition is notable in at least two respects. First, it is not limited to persons who sell goods (“goods” are defined in Civil Code Section 1689(c)). On its face, therefore, it applies to all levels of the supply chain – manufacturer, distributor, and retail. Second, the statute includes no geographic limitations on the locations of the seller, buyer, or the transaction. The statute, for example, does not state that it is unlawful for a business in this statenor does the statute state that it is unlawful to sell or offer to sell in this state (c.f., Cal. Corp. Code § 25008 (defining when an offer or sale is made “in this state”). The legislature, however, did express an intention to cover online sales.
These omissions will undoubtedly lead to questions about the statute’s application. Suppose, for example, a supplier in Illinois raises its prices nationwide by 15%. Is it in violation of the statute? Does the answer change if one of the supplier’s buyers is located in California? What if a buyer is a retail chain with stores in multiple states? Can that retailer raise its prices at its stores outside of California by more than 10%? Online sales raise similar geographic questions.
These and other questions are all the more problematical because the legislature has specified that the statute is to be “liberally construed”. Consequently, they may lead to constitutional and jurisdictional challenges to the statute.
The statute does provide an exception for increased costs:
However, a greater price increase is not unlawful if that person can prove that the increase in price was directly attributable to additional costs imposed on it by the supplier of the goods, or directly attributable to additional costs for labor or materials used to provide the services, during the state of emergency or local emergency, and the price is no more than 10 percent greater than the total of the cost to the seller plus the markup customarily applied by that seller for that good or service in the usual course of business immediately prior to the onset of the state of emergency or local emergency.
However, the statute makes no allowance for price increases agreed upon before the state of emergency. Clearly, the legislature knew how to include such an exception because it did so in Section 396(e) with respect to rental agreements.
Government price controls are not new. In the fourth century C.E., the Emperor Aurelius Valerius Diocletianus (aka Diocletian) attempted to tame inflation by instituting price controls in the Edictum De Pretiis Venalium (Edict Concerning the Prices of Things Sold).
[S]ed quia una est cupido furoris indomiti nullum communis necessitudinis habere dilectum . . .” (But untamed avarice has one desire – to have no care for the common need).
Diocletian’s edict was not effective and resulted, as price controls always do, in widespread shortages. Sellers hoarded their goods until restrictions were removed. R. Kent, The Edict of Diocletian Fixing Maximum Prices, 69 U. Penn. L. Rev. 35, 40 (1920). Just four years later, Diocletian abdicated.
President Trump Issues Executive Order Limiting Birthright Citizenship
As one of his first acts in office, on January 20, 2025, President Donald Trump issued an executive order titled, “Protecting the Meaning and Value of American Citizenship,” which asserts that citizenship may only be conferred to children with one or more parents who hold U.S. citizenship or lawful permanent resident (LPR) status (i.e., a “green card”). This executive order was one of several sweeping executive orders signed by President Trump mere hours after he took his oath of office.
Quick Hits
The new executive order, “Protecting the Meaning and Value of American Citizenship” encompasses all children born on or after February 19, 2025, on U.S. soil who do not have at least one U.S. citizen or lawful permanent resident parent.
This change in longstanding interpretation of the Fourteenth Amendment will not apply retroactively and will only impact individuals born thirty days after the date of the order.
Several civil rights organizations have jointly filed a lawsuit challenging the constitutionality of the executive order.
This executive order makes it such that infants who are born on or after February 19, 2025, and who do not have at least one parent in possession of LPR status and/or U.S. citizenship at the time of birth would not qualify for so-called birthright citizenship. Encompassed are all nonimmigrant visa holders, including but not limited to participants in the Visa Waiver Program, F-1 students, and B-1, B-2, H-1B, H-4, L-1, L-2, E-1, E-2, E-3, TN, and O-1 visa holders. This order applies regardless of whether the parents have been maintaining status as a nonimmigrant. The order impacts only infants born at least thirty days from January 20, 2025, and does not apply retroactively.
Several organizations have jointly filed a lawsuit challenging the constitutionality of the executive order. The lawsuit states, “[t]he Order straightforwardly violates the Citizenship Clause, as well as the birthright citizenship statute, and should be enjoined.” The Fourteenth Amendment of the U.S. Constitution, ratified in 1868, guarantees citizenship to all children born in the United States, regardless of race, color, or ancestry. The Fourteenth Amendment’s Citizenship Clause states, “[a]ll persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States.” In 1898, the Supreme Court of the United States, in United States v. Wong Kim Ark, affirmed that the Fourteenth Amendment extended to all children born in the United States irrespective of parent citizenship, with extremely narrow exceptions and has remained foundational in interpreting the meaning of the Fourteenth Amendment.
Next Steps
A court may grant an injunction of the executive order while the lawsuit challenging the executive order is pending. If the order is not enjoined, the order would take effect on February 19, 2025. Details on exactly how U.S. Citizenship and Immigration Services (USCIS) will execute and implement this order is yet to be determined. As a result of the order, parents on a valid nonimmigrant visa (including the H-1B, L-1, and F-1 visas) would likely need to apply for a dependent visa for their newborn children (i.e., the H-4, L-2, and F-2 visas).
Bondi and Bessent Affirm Support for Whistleblowers in Confirmation Hearings
During their Senate confirmation hearings, both Pam Bondi, nominee for Attorney General, and Scott Bessent, nominee for Treasury secretary, affirmed their support for whistleblowers in response to questions from Senator Chuck Grassley.
Bondi Promises to Defend Constitutionality of False Claims Act
During Bondi’s confirmation hearing on January 15, Senate Grassley asked if she believed that the False Claims Act is constitutional and if she would commit to continuing the Department of Justice’s defense of its constitutionality. Grassley spoke about how, thanks in large part to “patriotic whistleblowers,” the False Claims Act has resulted in over $78 billion in collections for the government since 1986.
“I would defend the constitutionality of course of the False Claims Act,” Bondi stated. “The False Claims Act is so important, especially by what you said with whistleblowers.”
The constitutionality of the False Claims Act’s qui tam provisions have faced challenges recently. In September, the U.S. District Court for the Middle District of Florida ruled that the qui tam provisions are unconstitutional because they violate the Appointments Clause of Article II. The court ruled that by filing a qui tam lawsuit alleging Medicare fraud, whistleblower Clarissa Zafirov was granted “core executive power” without any “proper appointment under the Constitution.”
The U.S. government is urging the Eleventh Circuit to reverse the district judge’s “outlier ruling,” noting in a brief that “other than the district court here, every court to have addressed the constitutionality of the False Claims Act’s qui tam provisions has upheld them.”
Under the False Claims Act’s qui tam provisions, individuals may file lawsuits alleging government contracting fraud on behalf of the United States. The government then has the ability to intervene and take over the case, intervene and dismiss the case, or not intervene and let the whistleblower proceed with the suit. In successful qui tam cases, regardless of whether the government intervenes, whistleblowers are eligible to receive between 15 and 30% of the settlement or judgment.
Since the False Claims Act’s qui tam provisions were amended in 1986, the government has recovered over $78 billion, with more than $55 billion stemming from qui tam whistleblower suits. Striking down the constitutionality of qui tam would thus cripple the most important law protecting taxpayer funds from fraud.
Bessent States He will Support IRS Whistleblower Program
During Bessent’s confirmation hearing on January 16, Senator Grassley brought up the importance of the Internal Revenue Service (IRS) Whistleblower Program, noting that since it was established in 2006 ““it’s brought $6 billion back into the federal treasury.”
“This program could raise billions more if the IRS would use it to its full potential,” Grassley stated. “So I hope I can count on you, if you’re confirmed, to be supportive of this whistleblower program and work to ensure its full use to its full potential.”
“Senator Grassley, we are in complete alignment on this program,” Bessent said in response.
Through the IRS Whistleblower Program, qualified whistleblowers, individuals who voluntarily provide original information that leads to a successful IRS action, are eligible to receive monetary awards of 15-30% of the money collected thanks to their disclosure.
The program, which revolutionized tax enforcement by incentivizing insiders to come forward and disclose hard-to-detect misconduct, has struggled in recent years as delays have grown and payouts to whistleblowers have dropped. While recent administrative reforms have strengthened the program, advocates believe that it has even more potential.
EnforceMintz —Could the Supreme Court’s Decision in Jarkesy Mean the End to HHS Civil Monetary Penalty Authorities as We Know Them?
Last June, the Supreme Court issued its decision in Securities and Exchange Commission v. Jarkesy, which holds that the Seventh Amendment entitles a defendant to a jury trial when the Securities and Exchange Commission (SEC) seeks to impose civil monetary penalties (CMPs) for a securities fraud violation. While the Jarkesy decision focused on the SEC’s administrative process, enforcement actions involving CMPs brought by other federal agencies, such as the Department of Health and Human Services (HHS), also proceed through an agency tribunal as opposed to a jury trial. In particular, the Centers for Medicare & Medicaid Services (CMS), which is part of HHS, has the authority to issue CMPs in countless circumstances.
As of the date of this article, we are not aware of any federal court case that specifically challenges HHS’s administrative CMP process, but parties are starting to assert Jarkesy-based arguments in appealing HHS administrative actions. For example, in November, the HHS Departmental Appeals Board (DAB) issued a decision on an appeal filed by a skilled nursing facility (SNF) that raised Jarkesy-based arguments. The SNF had challenged an administrative law judge’s (ALJ) decision to grant summary judgment in favor of CMS in a case where CMS imposed a CMP of $1,103 per day for 109 days of noncompliance with certain Medicare participation requirements. In pertinent part, the SNF moved for the DAB to remand and refund its CMP. The SNF argued that, based on Jarkesy, the ALJ proceeding to review the imposition of CMPs was “void ab initio,” that the ALJ did not have the constitutional authority to conduct its review, and that the CMP appeal should have been heard before a jury.
Ultimately, the DAB vacated the ALJ’s decision and remanded the matter for further proceedings consistent with the DAB’s decision. Notably, however, the DAB rejected the SNF’s Jarkesy arguments because (i) the SNF’s case concerns “an entirely separate statutory authority and regulatory scheme…as administered by [HHS],” (ii) Jarkesy does not apply to the Medicare administrative appeal regime, and (iii) the Supreme Court did not hold that every agency’s attempt to impose and support CMPs necessarily is a suit at common law that must be adjudicated by an Article III court (a point that was key to the Supreme Court’s decision). The DAB also emphasized that it is not the DAB’s role to invalidate any part of the Social Security Act or its implementing regulations. This point was consistent with the DAB’s longstanding approach that ALJs may not declare a statute or regulation to be unconstitutional or refuse to apply or follow a statute or regulation on that basis.
Surely, this proceeding will not be the last time the agency encounters a Jarkesy-based argument. It is only a matter of time before the question of whether and how Jarkesy applies to HHS’s CMP authorities finds its way before the courts. If such a challenge were to succeed, it could upend the agency’s enforcement process as we know it and lead to seismic shifts in the types of enforcement matters HHS prioritizes and pursues. For now, we imagine that HHS (and other agencies) are likely reviewing their CMP procedures and reliance on ALJs to oversee these proceedings for Jarkesy-related vulnerabilities.
US Supreme Court Clarifies Employer’s Burden of Proof for Showing Exempt Status Under the FLSA (US)
In an increasingly-rare unanimous decision, on January 15 the United States Supreme Court held in E.M.D. Sales, Inc., et al. v. Carrera that employers must prove that an employee is exempt from the minimum wage and overtime pay provisions of the Fair Labor Standard Act by only a preponderance of the evidence, and not by “clear and convincing” evidence.
The FLSA generally requires employers to pay a minimum wage and overtime compensation (at a rate equal to one-and-a-half times the regular rate of pay) to employees, but it also exempts many categories of employees from these requirements. These categories include employees who are paid on a salary basis that exceeds the FLSA’s minimum salary requirements and who perform executive, professional, administrative, outside sales, and certain computer-related duties. When an employee alleges that their employer failed to pay them minimum wage or failed to pay them overtime compensation for hours worked in excess of 40 hours in a workweek in violation of the FLSA, if the employer’s defense is that the employee was exempt from those provisions of the FLSA, the law places the burden on the employer to show that an exemption applies. Prior to the Court’s ruling in E.M.D. Sales, there was a conflict in the federal appellate courts as to what level of proof the employer had to show to prove the exemption: “preponderance of the evidence” – meaning more likely than not – or the more stringent “clear and convincing evidence” standard.
In resolving the circuit split, the Court found the preponderance of the evidence standard applies because it is the “default standard of proof” in civil litigation and none of three bases for requiring a heightened standard of proof applied. The Court explained that the FLSA does not designate a different standard of proof; FLSA claims are not disputes as to which the United States Constitution requires a heightened standard (such as when constitutional claims involving the First Amendment or the Due Process Clause are at issue); and that FLSA cases are not an “uncommon” case in which the government seeks to impose unusual remedies more dramatic than money damages or other conventional relief, such as taking away a person’s citizenship.
In reaching its decision, the Court relied heavily on the fact that the preponderance of evidence standard also applies in Title VII employment discrimination cases. And the Court rejected what it referred to as the employees’ “policy-laden arguments” that employers should have to establish exempt status by clear and convincing evidence due to the public’s interest in guaranteeing fair wages, the fact that FLSA rights are not waivable, and the fact that much of the evidence is under the employer’s control.
Justice Gorsuch and Justice Thomas issued a concurring opinion to note that on occasion, the default standard is a “heightened standard of proof,” depending on the legal backdrop against which Congress passed the law. They concluded, however, that the Court’s decision in E.M.D. Sales was appropriate and consistent with that understanding.
It is important to note that the Court’s decision does not change the applicable exemptions under the FLSA. Instead, it only clarifies the evidentiary burden imposed on an employer to prove a FLSA exemption applies. Employers who classify employees as FLSA-exempt should take appropriate steps to ensure they would be able to demonstrate – by a preponderance of evidence – that they properly classified each employee who is not paid minimum wage or overtime compensation by ensuring that they have appropriate and sufficient records of their payment on a salary basis and of the nature of the duties the employee performs.
Second Circuit Revives New York Reproductive Health Bias Law’s Notice Requirement for Employee Handbooks
On January 2, 2024, the U.S. Court of Appeals for the Second Circuit reinstated the New York Reproductive Health Bias Law’s requirement that New York State employers include a notice in their employee handbooks regarding the law’s prohibition on discrimination and retaliation based on employees’ reproductive health care choices.
Quick Hits
The Second Circuit has revived a requirement that New York employers include in employee handbooks a notice informing employees of their right to be free from discrimination or retaliation based on their [the employees’] or their dependents’ reproductive health decisions.
The ruling also revived a First Amendment challenge by religious organizations to New York’s Reproductive Health Bias Law (New York Labor Law Section 203-e), impacting how employers may address expressive association claims in the employment context.
In CompassCare v. Hochul, three religious groups—CompassCare, the National Institute of Family and Life Advocates (NIFLA), and First Bible Baptist Church—challenged the constitutionality of New York Labor Law Section 203-e, which went into effect in November 2019.
The law prohibits employers from accessing personal information regarding employees’ or their dependents’ reproductive health decision making without the employees’ “prior informed affirmative written consent.” The law also prohibits employers from discriminating or retaliating against employees based on their reproductive health decisions, “including, but not limited to, a decision to use or access a particular drug, device, or medical service.” Importantly, the law included a notice provision requiring employers to inform employees of their rights and remedies under the law in employee handbooks.
On March 29, 2022, the U.S. District Court for the Northern District of New York entered a permanent injunction blocking the State of New York from enforcing the requirement that employers that issue employee handbooks “include in the handbook notice of employee rights and remedies under [Section 203-e].” The district court found that the notice provision of Section 203-e violated the First Amendment because it compelled speech that was contrary to the religious organizations’ religious beliefs as they related to reproductive choices.
The Second Circuit reversed that permanent injunction, finding the notice requirement “a content-based regulation of speech” that “is subject to … rational basis review.” Under that review, the Second Circuit found that the notice requirement did “not interfere with [the] [p]laintiffs’ greater message and mission” and that “the required disclosure of the existence and basic nature of an otherwise-valid statute” was a simple expression of employee rights, similar to many other required employment rights notices and postings.
Additionally, the Second Circuit remanded the case to the district court for reconsideration in light of the Second Circuit’s 2023 decision in Slattery v. Hochul, which held that an employer may have an associational rights claim if the law “forces [the employer] to employ individuals who act or have acted against the very mission of its organization.” (Emphasis in the original.)
The Second Circuit stated that to sustain such a claim, an employer must show that it does not simply hold particular views or interests but that an association threatens the “very mission” of the employer “in the context of a specific employment decision.” This showing would be based on an assessment of whether (1) a position at issue is client-facing or involves expressing the particular views of the employer, and (2) the conduct or specific attribute of an employee “renders the employment of that person, in that position, a threat to the employer’s mission,” the court stated.
Next Steps
As a result of this ruling, New York employers must immediately comply with the notice provision of Section 203-e. Thus, employers with New York employees that issue employee handbooks must include a notification to employees of their rights and remedies under Section 203-e in their employee handbooks or in an addendum containing New York–specific employment policies.
This requirement includes informing employees of their rights to make reproductive health decisions and not be discriminated against or retaliated against for such decisions.
With respect to the expressive association claim, employers, particularly those with specific missions or religious affiliations, may have grounds to challenge laws that they believe force them to employ individuals whose actions conflict with their organizational missions. However, such claims must be specific and demonstrate how the law threatens the organization’s mission in the context of particular employment decisions.
New York’s Reproductive Health Handbook Notice Requirement Reinstated
Don’t finalize your 2025 handbooks just yet!
On January 2, 2025, the United States Court of Appeals for the Second Circuit vacated a permanent injunction, which had blocked a requirement that New York employers with employee handbooks include a notice against discrimination based on reproductive health care choices. As a result, handbooks covering New York employees must again include such notices.
The notice requirement originates from a series of legislation intended to protect reproductive health rights enacted on November 8, 2019. As we previously reported, one of the bills (A584/S660) added Section 203-e to the New York labor law, which prohibits employers from discriminating against employees based on an employee’s or their dependents’ sexual and reproductive health choices, including their choice to use or access a particular drug, device, or medical service. The law also prohibits employers from accessing such information without prior consent, and directed New York employers with employee handbooks to include a notice of employee rights and remedies. Although the law took effect immediately upon passage, a second bill (S4413) delayed the effective date of the notice requirement until January 2020.
A little more than two years later, the U.S. District Court for the Northern District of New York blocked the notice requirement. In CompassCare et al. v. Cuomo, several faith-based employers challenged Section 203-e in its entirety as violative of the First Amendment to the United States Constitution. Although the District Court dismissed most of the claims, on March 29, 2022, the court permanently enjoined enforcement of the notice requirement stating that it “would compel [the plaintiffs] to promote a message about conduct contrary to their religious perspectives” as they relate to reproductive health choices, such as birth control and abortion. The court found that, while New York has a compelling interest in protecting employee privacy, the State had not demonstrated that the notice requirement was the least restrictive means of achieving that interest. For example, employers could inform employees of their rights and the remedies under the law in other ways, such as placing posters at the job site, or advertising the statutory provision generally.
On appeal nearly three years later, the Second Circuit vacated the permanent injunction, thus reinstating the handbook notice requirement. The Second Circuit panel found that the requirement is similar to other state and federal laws requiring workplace disclosures and noted that while the policy judgments motivating Section 203-e may be “controversial”, so are those underlying Title VII or minimum wage laws, but that does not make an employer’s obligation to comply controversial. The Second Circuit also stated that the notice requirement does not prevent employers from otherwise communicating to employees, in their handbooks or elsewhere, their political or religious views, including their disagreement with Section 203-e.
In light of the Second Circuit’s decision, New York employers should review and revise their employee handbook to include a notice of employees’ reproductive health rights and remedies as provided by Section 203-e. The law does not provide specific language to include – and New York has not published a model notice or any further guidance on the law to date – thus, employers should consult employment counsel to ensure that their handbook notice satisfies the law’s requirements.
Cookware Association Files Federal Challenge to Minnesota’s Ban on PFAS in Cookware
The Cookware Sustainability Alliance (CSA) announced on January 9, 2025, that it has filed suit in the U.S. District Court for the District of Minnesota, seeking a preliminary injunction of Minnesota’s ban on the sale of cookware containing intentionally added per- and polyfluoroalkyl substances (PFAS). CSA v. Kessler (No. 0:25-cv-00041). According to CSA, the chemical coating on nonstick cookware contains fluoropolymers, which “are fundamentally different compounds from the chemicals that have motivated concerns about PFAS.” CSA claims that Minnesota’s ban violates the U.S. Constitution’s prohibition on individual states regulating interstate commerce and has raised other constitutional challenges to Minnesota’s statute. CSA states that it has offered to work cooperatively with Minnesota “to secure an exemption for fluoropolymer coated nonstick cookware because of their low-risk profile.”
Composition of the Federal Energy Regulatory Commission Under the New Administration
With President-elect Trump poised to take office, some in the energy sector are considering what this means for the composition of the Federal Energy Regulation Commission (FERC).
FERC has five Members. Although frequently FERC does not have its full complement of Members, there are currently five seated FERC Members: three Democrats and two Republicans. The Democrats are Chairman Willie Phillips (term ending June 30, 2026), Commissioner David Rosner (term ending June 30, 2027), and Commissioner Judy Chang (term ending June 30, 2029). The two Republicans are Commissioner Mark Christie (term ending June 30, 2025), and Commissioner Lindsay See (term ending June 30, 2028). Upon expiration of a Member’s term, an individual commissioner may choose to continue at FERC until Congress goes out of session. This occurs frequently.
Neither the FERC Chairman nor any Commissioner is required to resign because a President of the opposite political party is elected. Moreover, the relevant statutory provision, 42 U.S.C. § 7171(b), allows the President to remove a sitting FERC Commissioner only in very limited circumstances. Specifically, the President may remove a sitting FERC Commissioner only for “inefficiency, neglect of duty, or malfeasance in office.” However, if Chairman Phillips voluntarily steps down from his role as FERC Chairman because President-elect Trump takes office, it would not be a novel action among Democrat appointed agency Chairs. Commodity Futures Trading Commission (CFTC) Chairman, Rostin Behnam, very recently announced his intention to step down from his role as CFTC Chairman on January 19th (the day before President-elect Trump’s inauguration), and then resign from the CFTC altogether shortly thereafter on February 7th,prior to the expiration of his term.
The sitting President does have statutory authority to designate one of the seated FERC Commissioners as Chairman. See 42 U.S.C. § 7171(b). The expectation is that President Trump will designate Commissioner Christie or Commissioner See as Acting Chair. In that case, Chairman Phillips could remain at FERC as a Commissioner. If Chairman Phillips or one of the Commissioners voluntarily resigns, President Trump would have the opportunity to nominate a candidate of his choosing (presumably a Republican) to become the fifth FERC Commissioner following Senate confirmation and the related processes.
In the context of the National Labor Relations Board (NLRB), some have speculated that once in office, President Trump may use the Unitary Executive Theory to broadly interpret his constitutionally endowed removal powers and replace NLRB Board Members before their terms expire. Although Supreme Court precedent holds that certain removal restrictions on the President do not violate the President’s executive power or the President’s constitutional duty “to take Care that the Laws be faithfully executed,” the Unitary Executive Theory posits that statutory removal restrictions on the President interfere with the President’s constitutional authority. Thus, with the backing of a conservative Court that may be deferential to expansive executive powers, there has been talk that President Trump may seek to replace NLRB Board Members before their terms expire. Although the NLRB is an independent agency similarly situated to FERC in many ways, the statutory removal restriction for FERC has material differences from the statutory removal restriction for the NLRB and FERC’s removal restriction is far less likely to be found unconstitutional (i.e., President Trump is less likely to try to rely on the Unitary Executive Theory to remove FERC Members than to remove NLRB Members).
Government Outlines Qui Tam’s Constitutionality in Detailed Brief to Eleventh Circuit
On January 6, the U.S. federal government filed a brief in U.S. ex rel. Zafirov v. Florida Medical Associates urging the U.S. Court of Appeals for the Eleventh Circuit to reverse a district judge’s ruling in a qui tam whistleblower case. In September, the U.S. District Court for the Middle District of Florida ruled that the False Claims Act’s qui tam provisions are unconstitutional, threatening to undermine the United States’ number one anti-fraud law.
The district court ruling found that the qui tam provisions were unconstitutional because they violated the Appointments Clause of Article II. The court ruled that by filing a qui tam lawsuit alleging Medicare fraud, whistleblower Clarissa Zafirov was granted “core executive power” without any “proper appointment under the Constitution.”
In its brief, the government claims that “other than the district court here, every court to have addressed the constitutionality of the False Claims Act’s qui tam provisions has upheld them.” It therefore urges the Eleventh Circuit to “join that consensus and reverse the district court’s outlier ruling.”
The government points to the Supreme Court decision in the 2000 case Vermont Agency of Natural Resources v. United States ex rel. Stevens, which held that the False Claims Act’s qui tam provisions are consistent with Article III. This decision “makes clear that relators do not exercise Executive power when they sue under the Act,” the brief states. “Rather, they are pursuing a private interest in the money they will obtain if their suit prevails. As private litigants pursuing private interests, relators are not enforcing federal law in a manner inconsistent with the Vesting and Take Care Clauses and need not be appointed in the manner required by the Appointments Clause.”
The brief further clarifies that while a relator’s qui tam suit “may also vindicate a federal interest in remedying and deterring fraud on the United States” “they are distinct from the government’s enforcement efforts even though they can supplement those efforts.”
The government additionally argues that qui tam relators are not government officers; do not exercise significant government authority due in part to the numerous statutory constraints which allow the government to “ensure that qui tam actions are consistent with its own priorities for the enforcement of federal law;” and do not occupy a continuing position since their role “is limited in time and scope, confined to a particular case, and fundamentally personal in nature.’
Further referencing Stevens and the Supreme Court’s emphasis on the long history of qui tam statutes in that decision, the government details “the prevalence of early qui tam statutes and the body of evidence that such statutes were understood to be constitutional.”
“The historical record.. suggests that all three branches of the early American government accepted qui tam statutes as an established feature of the legal system,” the brief states.
Overall, the government provides a detailed and comprehensive overview of the constitutionality of the False Claims Act’s qui tam provisions, rooted in both prior court precedent and the historical record.