Federal Court in Florida Clarifies Chapter 93A, Section 11 Claim Pleading Requirements
The United States District Court for the Middle District of Florida recently addressed the pleading requirements for Chapter 93A, Section 11 claims in the case of Liberty Mut. Ins. Co. v. Compex Legal Servs. Liberty sued Compex for allegedly breaching their master services agreement (MSA) by overbilling for services and for unallowable charges, not refunding overbilled or unallowable amounts, failing to honor audit rights, and imposing extracontractual conditions on Liberty.
In addition to common-law claims, Liberty filed a Chapter 93A, Section 11 claim, which Compex moved to dismiss. Compex argued that Liberty failed to plead (1) extortionate conduct, (2) damages beyond the alleged breach of contract, and (3) a factual connection to Massachusetts. The district court was not persuaded by these arguments and denied the motion.
First, the court recognized that an act is unfair under Chapter 93A, Section 2 if it (i) falls “within at least the penumbra of some common-law, statutory, or other established concept of unfairness,” (ii) “is immoral, unethical, oppressive, or unscrupulous” and (iii) “causes substantial injury to consumers [or competitors or other businessmen].” The court noted that conduct generally must have an extortionate quality to transform a breach of contract into an unfair business practice. The court concluded that Liberty adequately alleged this by asserting that Compex had tried to impose its extracontractual conditions on Liberty as a prerequisite for conducting an audit, which was extortionate.
Second, the court disagreed with Compex’s assertion that Massachusetts case law precluded Liberty from proving causation and harm arising from Compex’s alleged extortionate conduct for Rule 12(b)(6) purposes. The case law cited was distinguishable based on Liberty’s complaint and, absent Massachusetts case law requiring Liberty to assert “unique” Chapter 93A damages, the court concluded that Compex did not meet its burden under Rule 12(b)(6) to support its argument.
Third, the court determined that Compex failed to prove that the alleged unfair acts did not occur “primarily and substantially” in Massachusetts, as required by Section 11. Liberty’s complaint did not specify the location of the acts, and Compex did not provide any other facts for consideration. The court ruled that the “primarily and substantially” argument was an affirmative defense not proper to consider under the circumstances, but noted it could be raised in a motion for summary judgment.
This decision underscores the fact-dependent nature of unfairness under Chapter 93A, Section 2, and the “primarily and substantially” requirement for Section 11 claims. The burden of proving unfairness rests with the plaintiff, while the burden of proving location rests with the defendant. While a simple breach of contract does not normally rise to the level of a 93A violation, when that breach is being used to try to extort additional benefits or opportunities, that can result in 93A liability.
Updated Guidance on the Corporate Transparency Act and Beneficial Ownership Information Reporting Requirements
The Corporate Transparency Act (CTA) and the Financial Crimes Enforcement Network’s (FinCEN) enforcement of the CTA’s beneficial ownership information (BOI) reporting requirements have been the subject of numerous pending legal challenges that have affected compliance dates. Following a recent court decision to stay its injunction, FinCEN has updated guidance resuming its enforcement of BOI reporting requirements. Consequently, the vast majority of non-exempt reporting companies must file initial, amended, and/or corrected BOI reports by March 21, 2025, and as set forth below in the FinCEN Guidance:
For the vast majority of reporting companies, the new deadline to file an initial, updated, and/ or corrected BOI report is now March 21, 2025. FinCEN will provide an update before then of any further modification of this deadline, recognizing that reporting companies may need additional time to comply with their BOI reporting obligations once this update is provided.
In addition, reporting companies that previously received a different reporting deadline or are involved with certain ongoing litigation should be aware of the additional FinCEN Guidance below:
Reporting companies that were previously given a reporting deadline later than the March 21, 2025 deadline must file their initial BOI report by that later deadline. For example, if a company’s reporting deadline is in April 2025 because it qualifies for certain disaster relief extensions, it should follow the April deadline, not the March deadline.
As indicated in the Alert titled, “Notice Regarding National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.),” Plaintiffs in National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.) — namely, Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024) — are not currently required to report their beneficial ownership information to FinCEN at this time.
Additionally, moving forward, any new reporting company formed (or foreign reporting company registered) will have 30 days from the date of its formation (or its registration in the case of foreign entities) to file its initial BOI report.
As with past developments, the CTA’s future remains uncertain, and possible Congressional and/or further court actions could delay, change, or eliminate beneficial ownership reporting requirements.
DOJ Reform on Collision Course: EDNY’s Netflix ‘Evidence’ and FBI Misconduct Under Scrutiny
As the Department of Justice undergoes a seismic shift under the Trump administration, prosecutors in the Eastern District of New York (EDNY) find themselves at the center of controversy over the prosecution of OneTaste co-founder Nicole Daedone and former sales leader Rachel Cherwitz. The case, which invokes human trafficking laws against meditation instructors, is emerging as a key test of the DOJ’s evolving priorities and its commitment to FBI reform.
The government’s attempt to introduce content from a Netflix documentary as trial evidence—journal entries created specifically for the streaming platform’s 2022 production—has already drawn scrutiny, particularly as the film predated the indictment by only a few months. With allegations of FBI misconduct also mounting, this prosecution may soon face the same intense DOJ oversight that recently rocked the Southern District of New York (SDNY).
Mounting Evidence of FBI Misconduct
A formal complaint filed with multiple federal oversight bodies by OneTaste’s legal team—led by former senior DOJ prosecutor Paul Pelletier—alleges a “pervasive pattern of prejudicial investigatory misconduct.” The 36-page document details allegations against FBI Special Agent Elliot McGinnis, including:
Participation in Netflix productions while investigating targets
Instructing witnesses to delete evidence
Using personal email accounts to evade oversight
Filing misleading affidavits
Suppressing Brady material
Illegally obtaining and utilizing attorney-client privileged materials
Despite defense motions for dismissal and requests for an evidentiary hearing into the FBI’s conduct, EDNY trial judge Diane Gujarati has thus far declined to intervene. However, with the expected confirmation of incoming FBI Director Kash Patel, this case could soon find itself under heightened scrutiny. Patel, whose nomination cleared the Senate Judiciary Committee on February 13, has signaled a commitment to rooting out political bias within the bureau. Senator Chuck Grassley, in supporting Patel’s confirmation, characterized the FBI as being “badly infected with political decision-making” and emphasized the need for transparency and accountability.
The SDNY Shake-Up and Its Implications for EDNY
The upheaval in the SDNY provides a stark warning to EDNY prosecutors. On February 10, Acting Deputy Attorney General Emil Bove ordered SDNY to dismiss corruption charges against New York City Mayor Eric Adams, citing two primary concerns: improper interference with Adams’ 2025 reelection campaign and the diversion of prosecutorial resources away from violent crime and immigration violations.
This decision ignited a firestorm within SDNY, culminating in the resignation of Acting U.S. Attorney Danielle Sassoon after she appealed directly to Attorney General Pam Bondi. DOJ officials responded swiftly, accusing Sassoon of pursuing a “politically motivated prosecution” based on “aggressive” legal theories. The Adams case was subsequently reassigned to DOJ headquarters in Washington, D.C., and seven SDNY prosecutors were terminated in the fallout.
SDNY’s long-standing reputation for operating with relative independence—often referred to as the “Sovereign District of New York”—appears to be a thing of the past under the current DOJ. EDNY prosecutors, who have historically enjoyed similar autonomy, now face the prospect of increased oversight as they navigate this high-profile case.
The Human Trafficking Paradox
On February 5, Attorney General Bondi issued directives instructing federal prosecutors to focus on “the most serious, readily provable offenses,” emphasizing illegal immigration, transnational crime, and human trafficking. Yet, as this directive takes effect, EDNY prosecutors continue to invest significant resources in a novel, single-count forced labor conspiracy case against wellness educators under the Trafficking Victims Protection Act (TVPA). The government’s untested theory of “coercive control” as a form of trafficking has drawn criticism from legal experts, who argue that it blurs the distinction between social pressure and criminal coercion.
The case against OneTaste presents a paradox: at a time when the DOJ is pivoting towards dismantling actual human trafficking operations, EDNY’s six-year-long pursuit of this prosecution may soon come under question. The precedent set by the SDNY shake-up suggests that DOJ leadership is willing to intervene aggressively when a prosecution is deemed misaligned with national priorities.
A Trial Under Increasing Pressure
With jury selection set to begin on May 5, 2025, the ground beneath the OneTaste prosecution is shifting rapidly. Judge Gujarati’s refusal to schedule additional pre-trial conferences suggests confidence in the case, but the broader DOJ realignment paints a different picture.
The question now is not just whether this case will proceed to trial, but whether EDNY prosecutors will maintain their current course in the face of growing federal scrutiny. As the DOJ consolidates control over its regional offices and refocuses its priorities, EDNY must weigh its prosecutorial independence against the new realities taking shape in Washington. If SDNY’s recent upheaval serves as any indication, the days of unchecked autonomy for federal prosecutors in New York may be numbered.
U.S. v. Cherwitz, et al., No. 23-cr-146 (DG) (E.D.N.Y.)
https://natlawreview.com/article/netflix-content-becomes-federal-evidence-ednys-onetaste-prosecution-faces-scrutiny
OIG complaint regarding FBI Agent Misconduct
“Claims” Under the FCA, §1983 Claim Denials on Failure-to-Exhaust Grounds, and Limits to FSIA’s Expropriation Exception – SCOTUS Today
The U.S. Supreme Court decided three cases today, with one of particular interest to many readers of this blog. So, let’s start with that one.
Wisconsin Bell v. United States ex rel. Heath is a suit brought by a qui tam relator under the federal False Claims Act (FCA), which imposes civil liability on any person who “knowingly presents, or causes to be presented, a false or fraudulent claim” as statutorily defined. 31 U. S. C. §3729(a)(1)(A). The issue presented is a common one in FCA litigation, namely, what is a claim? More precisely, in the context of the case, the question is what level of participation by the government in the actual payment is required to demonstrate an actionable claim by the United States. The answer, which won’t surprise many FCA practitioners, is “not much.”
The case itself concerned the Schools and Libraries (E-Rate) Program of the Universal Service Fund, established under the Telecommunications Act of 1996, which subsidizes internet and other telecommunication services for schools and libraries throughout the country. The program is financed by payments by telecommunications carriers into a fund that is administered by a private company, which collects and distributes the money pursuant to regulations set forth by the Federal Communications Commission (FCC). Those regulations require that carriers apply a kind of most-favored-nations rule, limiting them to charging the “lowest corresponding price” that would be charged by the carriers to “similarly situated” non-residential customers. Under this regime, a school pays the carrier a discounted price, and the carrier can get reimbursement for the remainder of the base price from the fund. The school could also pay the full, non-discounted price to the carrier itself and be reimbursed by the fund.
The relator, an auditor of telecommunications bills, asserted that Wisconsin Bell defrauded the E-Rate program out of millions of dollars by consistently overcharging schools above the “lowest corresponding price.” He argued that these violations led to reimbursement rates higher than the program should have paid. His contention is that a request for E-Rate reimbursement qualified as a “claim,” a classification that requires the government to have provided some portion of the money sought. Wisconsin Bell moved to dismiss, arguing that there could be no “claim” here because the money at issue all came from private carriers and was administered completely by a private corporation.
Affirming the U.S. District Court for the Eastern District of Wisconsin, the U.S. Court of Appeals for the Seventh Circuit rejected Wisconsin Bell’s argument, holding that there was a viable claim because the government provided all the money as part of establishing the fund. Less metaphysically, it also held that the government actually provided some “portion” of E-Rate funding by depositing more than $100 million directly from the U.S. Treasury into the fund.
Justice Kagan delivered the unanimous opinion of the Supreme Court, affirming the Seventh Circuit on the narrower ground that “the E-Rate reimbursement requests at issue are ‘claims’ under the FCA because the Government ‘provided’(at a minimum) a ‘portion’ of the money applied for by transferring more than $100 million from the Treasury into the Fund.” It is important to recognize that this amount was quite separate from the funds involved in the core program at issue. Instead, it constituted delinquent contributions collected by the FCC and the U.S. Department of the Treasury, as well as civil settlements and criminal restitution payments made to the U.S. Department of Justice in response to wrongdoing in the program. This nonpassive role by the government was enough to satisfy the Court that the money was sought through an actionable “claim.”
Rather blithely, Justice Kagan analogizes these government transfers to “most Government spending: Money usually comes to the Government from private parties, and it then usually goes out to the broader community to fund programs and activities. That conclusion is enough to enable Heath’s FCA suit to proceed.”
This conclusion suggests that quibbling about what constitutes a “claim,” where government participation in payment is peripheral, is unlikely to provide an effective avenue for defending FCA lawsuits. But wait! Before closing the discussion, we must turn to the concurring opinion of Justice Thomas, who was joined by Justice Kavanaugh and, in part, by Justice Alito. They note that the Court has left open the questions of whether the government actually provides the money that requires private carriers to contribute to the E-Rate program and whether the program’s administrator is an agent of the United States. Thomas’s suggestion, in attempting to reconcile various Circuit Court opinions as to the fund, is that an FCA claim must be based upon a clear nexus with government involvement. Thomas then goes on to describe a range of cases where, although the arrangements at issue might be prescribed by the government, the absence of government money would be fatal to holding that there was a justiciable FCA claim. In other words, the kind of government payments into the fund that we see in the instant case are the likely minimum that the Court would countenance.
Perhaps a bigger storm warning is the additional concurrence of Justice Kavanaugh, joined by Justice Thomas, in noting that today’s opinion is a narrow one. However, the FCA’s qui tam provisions raise substantial questions under Article II of the Constitution. The Court has never ruled squarely as to Article II, though it has upheld qui tam cases as assignments to private parties of claims owned by the government, something like commercial relationships. Two Justices augured that potential unresolved constitutional challenges to the FCA’s qui tam regime necessarily will mean that any competent counsel will raise the point in any future FCA case not brought by the government alone. But note that Justice Alito did not join Kavanaugh’s opinion, though he did in the Thomas concurrence. Nor did any other conservative Justice. It still takes four to grant cert. But the future is a bit hazier, thanks to Justice Kavanaugh.
Justice Kavanaugh finds himself on the opposite side of Justice Thomas in the case of Williams v. Reed. Writing for himself, the Chief Justice, and Justices Sotomayor, Kagan, and Jackson, Justice Kavanaugh ruled in favor of a group of unemployed workers who contended that the Alabama Department of Labor unlawfully delayed processing their state unemployment benefits claims. They had sued in state court under 42 U. S. C. §1983, raising due process and federal statutory arguments, attempting to get their claims processed more quickly. The Alabama Secretary of Labor argued that these claims should be dismissed for lack of jurisdiction because the claimants had not satisfied the state exhaustion of remedies requirements.
Holding against the Secretary, the Court’s majority opined that where a state court’s application of a state exhaustion requirement effectively immunizes state officials from §1983 claims challenging delays in the administrative process, state courts may not deny those §1983 claims on failure-to-exhaust grounds. Citing several analogous precedents, the majority decided what I submit looks like a garden-variety supremacy case. After all, as Kavanaugh notes, the “Court has long held that ‘a state law that immunizes government conduct otherwise subject to suit under §1983 is preempted, even where the federal civil rights litigation takes place in state court.’” See Felder v. Casey, 487 U. S. 131 (1988).
Justice Thomas and his conservative allies didn’t see it that way at all. Quoting himself in dissent in another case, Justice Thomas asserts that “[o]ur federal system gives States ‘plenary authority to decide whether their local courts will have subject-matter jurisdiction over federal causes of action.’ Haywood v. Drown, 556 U. S. 729, 743 (2009) (THOMAS, J., dissenting).” Well, he didn’t persuade a majority then, and he didn’t do so now in this §1983 case.
Finally, in Republic of Hungary v. Simon, a unanimous Court, per Justice Sotomayor, considered the provision of the Foreign Sovereign Immunities Act of 1976 (FSIA) that provides foreign states with presumptive immunity from suit in the United States. 28 U. S. C. §1604. That provision has an expropriation exception that permits claims when “rights in property taken in violation of international law are in issue” and either the property itself or any property “exchanged for” the expropriated property has a commercial nexus to the United States. 28 U. S. C. §1605(a)(3).
The Simon case involved a suit by Jewish survivors of the Hungarian Holocaust and their heirs against Hungary and its national railway, MÁV-csoport, in federal court, seeking damages for property allegedly seized during World War II. They alleged that the expropriated property was liquidated and the proceeds commingled with other government funds that were used in connection with commercial activities in the United States. The lower courts determined that the “commingling theory” satisfied the commercial nexus requirement in §1605(a)(3) and that requiring the plaintiffs to trace the particular funds from the sale of their specific expropriated property to the United States would make the exception a “nullity.”
The Supreme Court didn’t quite agree, holding that alleging the commingling of funds alone cannot satisfy the commercial nexus requirement of the FSIA’s expropriation exception. “Instead, the exception requires plaintiffs to trace either the specific expropriated property itself or ‘any property exchanged for such property’ to the United States (or to the possession of a foreign state instrumentally engaged in United States commercial activity).”
The three cases decided today bring the total decisions of the term to eight. Stay tuned because a torrent might be on the horizon.
Corporate Transparency Act Enforceable Again
On February 18, 2025, the U.S. District Court for the Eastern District of Texas in Smith, et al. v. U.S. Department of the Treasury, et al., 6:24-cv-00336 (E.D. Tex.), stayed the nationwide injunction on enforcement of the Corporate Transparency Act, thereby requiring all reporting companies to file beneficial ownership information (“BOI”) with FinCEN.
Accordingly, the new deadline to file an initial, updated, or corrected BOI report is now March 21, 2025. However, reporting companies that were previously given a reporting deadline later than the March 21, 2025, deadline must file their initial BOI report by that later deadline. For instance, this exception applies if your reporting company qualifies for certain disaster relief extensions.
In addition, on February 10, 2025, the U.S. House of Representatives passed the Protect Small Businesses from Excess Paperwork Act of 2025 (“H.R. 736”), which would extend the Corporate Transparency Act’s original filing deadline of January 1, 2025, to January 1, 2026. Importantly, the U.S. Senate has not passed H.R. 736. If passed by the U.S. Senate and signed by the President, the new filing deadline will be January 1, 2026.
Given the shifting regulatory landscape, businesses should stay informed and ensure compliance to avoid potential penalties. For a detailed breakdown of the reporting requirements under the Corporate Transparency Act, visit this article.
CTA Reporting Restored: FinCEN Extends Filing Deadlines and Signals Revisions to Reporting Requirements After Federal Court Lifts Stay
On February 18, 2025, the U.S. District Court for the Eastern District of Texas in Smith, et al. v. U.S. Department of the Treasury, et al., 6:24-cv-00336 (E.D. Tex), lifted its order staying the Financial Crimes Enforcement Network (FinCEN) regulations establishing the Beneficial Ownership Information (BOI) reporting requirements under the Corporate Transparency Act (CTA).
Immediately following this action, FinCEN announced an extension of the deadline for companies to file BOI reports by 30 calendar days. Thus, the new deadline for companies to file an initial, updated, and/or corrected BOI report is Friday, March 21, 2025. The March 21 filing deadline applies to:
existing companies that were originally required to file before January 1, 2025;
companies that were formed in 2024 and originally required to file within 60 days of the formation date; and
companies that were formed on or after January 1, 2025, and before February 20, 2025.
Additionally, the U.S. Department of the Treasury has committed, during this 30-day period, to assess its options to further modify deadlines, prioritize reporting for those entities that pose the most significant national security risks, and initiate a process during this year to revise BOI reporting requirements to reduce the burden for lower-risk entities, such as many U.S. small businesses.
The exceptions to the March 21 reporting deadline include the following:
Those companies that were previously given a reporting deadline later than March 21, 2025—e.g., companies having a later reporting deadline because they qualified for certain disaster relief extensions that were previously granted by FinCEN—may file their BOI report based on that later deadline.
Plaintiffs in the case National Small Business United v. Yellen, 5-22-cv-01488 (N.D. Ala.), are not currently required to report BOI information to FinCEN.
FinCEN announced this change in filing requirements through a notice posted on the BOI Beneficial Ownership Information web page titled “Corporate Transparency Act Reporting Requirements Back in Effect with Extended Reporting Deadline; FinCEN Announces Intention to Revise Reporting Rule.
No Business Transaction, No Chapter 93A Claim: Mass. Courts Clarify Requirements
To pursue a Chapter 93A claim, there must be some business, commercial, or transactional relationship between the plaintiff(s) and the defendant(s). An indirect commercial link—such as upstream purchasers—may be sufficient to state a valid claim, but there must ultimately be some commercial connection between the plaintiff and defendant. The District of Massachusetts and the Appeals Court of Massachusetts recently affirmed this requirement in two separate cases.
First, the District of Massachusetts affirmed this principle when it denied plaintiffs’ motion for leave to conduct limited discovery, as the allegations in the complaint only highlighted the commercial relationship between the various defendants and not with the plaintiff. In Courtemanche v. Motorola Sols., Inc., plaintiffs brought a putative class action against a group of commercial defendants and the superintendent of Massachusetts State Police, alleging that the State Police unlawfully recorded conversation content between officers and plaintiffs, and then later used those recordings to pursue criminal charges against plaintiffs. The commercial defendants allegedly willfully assisted the State Police by providing them with intercepting devices and storing the recordings on their servers. The commercial defendants moved to dismiss based on plaintiffs’ failure to allege a business, commercial, or transactional relationship between them and the commercial defendants. Plaintiffs then sought to conduct limited discovery in order to establish such a relationship. The court concluded that allowing even limited discovery on the issue would only amount to an inappropriate fishing expedition and denied the motion.
Shortly thereafter, the Massachusetts Appeals Court reversed portions of a consolidated judgment against defendants for Chapter 93A § 11 violations in Flightlevel Norwood, LLC v. Boston Executive Helicopters, LLC. On appeal, the defendants argued, and the Appeals Court agreed, that the trial judge erred in denying their motion for judgment notwithstanding the verdict. The parties both operated businesses at the Norwood Memorial Airport and subleased adjoining parcels of land with a taxiway running along their common border. At trial, plaintiff argued that defendants engaged in unfair acts to exercise dominion and control over plaintiff’s leasehold to advance defendants’ commercial interests and deliberately interfere with plaintiff’s commercial operations. The Appeals Court reiterated that to maintain a Section 11 claim, a business needs to show more than just being harmed by another business’s unfair practices. Instead, plaintiff must prove that it had a significant business deal with the other company, and that the unfair practices occurred as part of the deal. The Appeals Court thus concluded that Chapter 93A § 11 was inapplicable, as there was no business transaction between the parties.
FinCen Announces New Deadline for BOI Reporting Under Corporate Transparency Act
The Financial Crimes Enforcement Network of the U.S. Treasury Department (FinCEN) announced a new deadline for most companies covered by the Corporate Transparency Act (CTA). Such reporting companies now must file Beneficial Ownership Information (BOI) reports no later than March 21, 2025.
FinCEN made its announcement on February 18, 2025, in response to a decision by a federal judge in the U.S. District Court for the Eastern District of Texas lifting the preliminary injunction in Smith v. United States Department of the Treasury. That decision removed the last judicial impediment to the enforcement of the CTA. With limited exceptions for certain reporting companies qualifying for an extension due to disaster relief or who may be subject to an exception as a plaintiff in National Small Business United v. Yellen, reporting companies should file their BOI reports no later than March 21, 2025. As of today, the deadline appears firm and should be considered binding. However, in its announcement, FinCEN left itself the option of extending the deadline if it determines an extension is warranted, indicating that it would provide an update of any modification of the March 21, 2025, deadline prior to that date, recognizing companies impacted by this announcement may need additional time to comply with their BOI reporting obligations.
In light of the March 21, 2025, time frame, companies should take heed of this decision and make every effort to meet this reporting deadline.
BOI is Back: Corporate Transparency Act Reporting Requirements Reinstated
Amid a series of ongoing legal battles, the beneficial ownership information (BOI) reporting requirements under the Corporate Transparency Act (CTA) have been reinstated. In light of the U.S. Supreme Court’s January 23, 2025 order in McHenry v. Texas Top Cop Shop Inc., which granted the government’s request for a stay of a nationwide injunction in a separate case challenging the BOI reporting requirements, on February 17, 2025, the U.S. District Court for the Eastern District of Texas granted the government’s motion to stay the preliminary injunction issued in Smith v. United States Department of the Treasury. As a result, U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) is no longer prohibited from enforcing the CTA’s BOI reporting requirements, and reporting companies’ compliance obligations have resumed. This ruling is pending an appeal to the U.S. Court of Appeals for the Fifth Circuit.
FinCEN has announced a 30-day deadline extension for reporting companies. The new deadline for the majority of reporting companies to file an initial, updated, and/or corrected BOI report is March 21, 2025. FinCEN has also indicated that it will assess the need for further modifications to the reporting deadlines during this 30-day extension period, with a focus on lower-risk entities.
In parallel, BOI reporting requirements are receiving legislative attention. The Protect Small Business from Excessive Paperwork Act of 2025 unanimously passed the U.S. House of Representatives and a companion bill is awaiting action in the Senate. If enacted, reporting companies formed before January 1, 2025 will have until January 1, 2026 to comply with the BOI reporting requirements.
Reporting companies must ensure they are prepared to meet the March 21, 2025 filing deadline. While further adjustments may be forthcoming, companies are advised to remain proactive in their compliance efforts.
Even Privilege Logs Can Be Privileged Under the Fifth Amendment
On January 28, 2025, the U.S. Court of Appeals for the Ninth Circuit issued a significant ruling reinforcing the Fifth Amendment’s protection against self-incrimination and clarifying the attorney-client privilege in the context of grand jury subpoenas.
In In Re Grand Jury Subpoena, 127 F.4th 139 (9th Cir. 2025), the Ninth Circuit held that counsel cannot be compelled to provide a privilege log delineating all documents a client previously sent to counsel for the purpose of obtaining legal advice unless and until the court conducts an in camera review of the documents at issue to determine whether the Fifth Amendment right against self-incrimination, as announced in Fisher v. United States, 425 U.S. 391 (1976), applies.[1]
The decision further defines the limits of government subpoenas in criminal investigations and clarifies when privilege logs themselves may be shielded from disclosure. This ruling has far-reaching implications for attorneys, clients, and government investigations, particularly in white-collar, tax fraud and corporate compliance matters.
Fisher v. United States: Fifth Amendment Protections for Document Production
The Ninth Circuit’s ruling relied upon the Supreme Court’s decision in Fisher v. United States, which laid the foundation of the “act of production” doctrine, governing the Fifth Amendment’s protection against self-incrimination in the context of document production.[2]
In Fisher, the Court held that, while the Fifth Amendment protects against compelled testimonial communication, it does not automatically shield pre-existing documents from disclosure. The Court reasoned that documents voluntarily created before a subpoena is issued are not “compelled testimonial” communication because they were not prepared under government coercion.[3]
The Court also clarified that attorney-client privilege does not extend to pre-existing documents that a client could have been forced to produce had they remained in the client’s possession.[4] Although attorney-client privilege protects confidential communications between a client and their lawyer, it does not transform otherwise discoverable records into privileged material.
However, the Supreme Court recognized that the act of producing documents can be “testimonial” if it forces a person to admit the existence, authenticity, or control of the documents.[5] In such cases, the Fifth Amendment may protect against compelled production, and the attorney-client privilege extends that protection to attorneys who possess documents on behalf of their client. Despite this protection, the Court also introduced the “foregone conclusion” exception, which allows the government to compel the production of documents if it can independently prove their existence, authenticity, and the individual’s possession of them.[6]
The Ninth Circuit’s Decision: When Privilege Logs are Protected
In In Re Grand Jury Subpoena, the Ninth Circuit clarified that Fisher extends beyond the production of documents to the content of privilege logs delineating documents withheld on the basis of privilege.[7]
The case arose from a grand jury investigation into an alleged tax evasion scheme. The government subpoenaed an individual, who declined to testify or produce documents, citing the Fifth Amendment. The government then subpoenaed a law firm that had previously represented the individual in connection with tax matters, demanding that the law firm produce documents related to its representation and prepare a privilege log listing any documents the firm withheld from its production. The law firm refused, asserting that production of the privilege log would violate the client’s Fifth Amendment rights. The district court disagreed and ordered the firm to comply.[8]
On appeal, the Ninth Circuit reversed, holding as a matter of first impression that a privilege log is protected under the Fifth Amendment if its production would confirm incriminating details about the existence, authenticity, or control of the documents.[9] The court reasoned that a privilege log can confirm facts the government cannot independently prove, making it potentially self-incriminating and protected under the Fifth Amendment. Because Fisher shields attorneys from producing documents their clients could not be compelled to provide, the court ruled that a privilege log—which would effectively reveal and confirm the existence and client’s custody of those same documents—may also be protected.[10]
The Ninth Circuit also rejected the government’s argument that the privilege log could be compelled under the “foregone conclusion” exception.[11] The government failed to independently establish the existence, authenticity, and control of the documents, meaning that compelling the privilege log would improperly force the client to provide self-incriminating testimony. To ensure courts properly apply Fisher, the Ninth Circuit further held that a district court must conduct an in camera review—a private judicial examination of the withheld documents—before ordering the production of the privilege log.[12]
Practical Implications
By recognizing that privilege logs can be testimonial, the decision strengthens Fifth Amendment protections and ensures that attorneys cannot be compelled to indirectly confirm the existence of incriminating documents.
The government is prevented from using privilege logs as a backdoor method to obtain knowledge of incriminating evidence that it could not otherwise access.
This case reiterates the importance of closely monitoring attorney-client privilege obligations and potential Fifth Amendment privilege issues when responding to a government subpoena.
ENDNOTES
[1] In Re Grand Jury Subpoena, 127 F.4th 139 (9th Cir. 2025).
[2] Id. at 142–43 (citing Fisher v. United States, 425 U.S. 391, 404–05 (1976).
[3] Fisher, 425 U.S. at 409–10.
[4] Id. at 404–05.
[5] Id. at 410–11.
[6] Id. at 411.
[7] 127 F.4th at 143–44.
[8] Id. at 142.
[9] Id. at 144–45.
[10] Id.
[11] Id.
[12] Id. at 145–46.
Corporate Transparency Act Back in Effect with March 21 Deadline
The Financial Crimes Enforcement Network (FinCEN) issued a notice confirming that beneficial ownership information (BOI) reporting rules are back in effect following a February 18, 2025, ruling in Smith, et al. v. U.S. Department of the Treasury, et al. in the Eastern District of Texas. The Smith Court lifted its injunction following the January 23, 2025, Supreme Court decision in Texas Top Cop Shop, Inc., et al. v. Garland, et al., which we discussed in a previous alert.
For most reporting companies,[1] the deadline to file a new, updated, or corrected BOI report is now March 21, 2025. However, FinCEN’s notice states that the agency will use the 30-day period before the deadline to “assess its options to further modify deadlines, while prioritizing reporting for those entities that post the most significant security risks.” According to the notice, FinCEN may also work toward revising the BOI reporting rules to “reduce the burden for lower-risk entities.”
Recent legislation unanimously passed in the U.S. House of Representatives exacerbates the lack of certainty around the new deadline. H.R. 736, Protect Small Businesses From Excessive Paperwork Act of 2025, which is now before the Senate, would extend the deadline for filing BOI reports to January 1, 2026, for companies formed before January 1, 2024.
The Corporate Transparency Act (CTA) contains civil and criminal penalties for noncompliance. Reporting companies that take a “wait and see” approach between now and March 21, 2025, should be prepared to file quickly as the deadline approaches. Given the compressed timeframe and the single deadline for the vast majority of companies, there may be a significant demand on FinCEN’s online portal as we approach March 21.
CTA in the Courts
For those keeping score on the CTA litigation front, both cases mentioned above are currently pending in the U.S. Court of Appeals for the Fifth Circuit, with oral arguments scheduled in Texas Top Cop Shop for April 1, 2025. Other cases on appeal to circuit courts include:
National Small Business United v. Yellen — The U.S. District Court for the Northern District of Alabama issued an injunction preventing enforcement of the CTA against the named plaintiffs. Oral arguments were held on September 27, 2024, in the government’s appeal to the U.S. Court of Appeals for the Eleventh Circuit. No decision has been issued.
Firestone et al v. Yellen et al. — The U.S. District Court for the District of Oregon denied the plaintiffs’ request for a preliminary injunction, and the plaintiffs appealed the decision to the U.S. Court of Appeals for the Ninth Circuit.
Community Associations Institute et al v. U.S. Department of the Treasury et al. — The U.S. District Court for the Eastern District of Virginia denied the plaintiffs’ request for a preliminary injunction, and the plaintiffs appealed the decision to the U.S. Court of Appeals for the Fourth Circuit.
In a noteworthy decision on February 14, 2025, in Boyle v. Bessent, et al., the U.S. District Court for the District of Maine granted the government’s motion for summary judgment, finding the CTA to be a valid exercise of congressional authority.
We will continue to monitor this situation closely and provide updates as needed.
ENDNOTES
[1] Companies that were previously granted an extended deadline later than March 21, 2025, must file by such later deadline. In addition, the injunction in favor of the plaintiffs in National Small Business United v. Yellen remains unaffected by the latest ruling. Companies formed after February 19, 2025, must file within 30 days of formation.
Corporate Transparency Act Returns: New Deadline March 21, 2025
On February 17, 2025, the Eastern District of Texas in Smith v. United States Department of the Treasury lifted the last remaining nationwide preliminary injunction on enforcement of the filing deadline under the Corporate Transparency Act (CTA) in light of the Supreme Court’s stay of the injunction in Texas Top Cop Shop, Inc., et al. v. Merrick Garland, et al., earlier this year. Following the ruling, the Treasury Department stated that it would extend the filing deadline to March 21, 2025.
With the deadline back in effect, newly formed entities will also need to file within 30 days of formation. In addition, any changes to filings already made will need to be updated within 30 days of the change (if, for example, ownership or control of the entity changes, or if a beneficial owner moves to a new residential address).
The Financial Crimes Enforcement Network (FinCEN), tasked with enforcing the CTA, advised that it is undertaking a review of the CTA to determine if lower-risk categories of entities should be excluded from the reach of the filing requirements. FinCEN will make an initial statement on that review prior to the March 21, 2025 deadline. However, unless and until FinCEN makes changes in the applicability of the requirement, all companies subject to the CTA should treat the deadline as enforceable.
FinCEN also announced that it will initiate a longer process this year to revise the reporting rule to reduce the filing burden for lower-risk entities, but it’s currently unclear as to what those modifications might entail.
Passed in the first Trump Administration but implemented during the Biden presidency, the CTA — an anti-money laundering law designed to combat terrorist financing, seize proceeds of drug trafficking, and root out illicit assets of sanctioned parties and foreign criminals in the U.S. — has faced legal challenges around the country, many of which are ongoing despite the lifting of the preliminary injunctions. In addition to district court proceedings, appeals are currently pending before the Fourth, Fifth, Ninth, and Eleventh Circuits.
Please note that if you file or have already filed and the law is ultimately found unconstitutional or otherwise overturned or rescinded, you will not be under any continuing obligation regarding that filing.