New York Court of Appeals Holds That Child Victims Act Claims Brought Against the State of New York Must Meet Statutory Substantive Pleading Requirements
In a unanimous ruling, the New York Court of Appeals held that the New York State Legislature did not alter the substantive pleading requirements of Section 11(b) of the Court of Claims Act (the “Act”) for claims brought against the State of New York (the “State”) pursuant to the New York Child Victims Act (“CVA”).
In Chi Bartram Wright v. State of New York, the plaintiff alleged that between 1986 and 1990, when he was twelve to fifteen years old, he was repeatedly sexually assaulted by various men at a state-owned performance arts facility located in Albany, New York. The complaint filed in the Court of Claims failed to identify any of the men who allegedly assaulted plaintiff, the specific months and dates of the alleged assaults, why plaintiff was in the company of the alleged abusers multiple times over a four year period, or what repeatedly brought plaintiff to the performance arts facility. Instead, the complaint generally alleged that during the alleged time period, plaintiff was assaulted by various State employees and members of the general public while on the state-owned premises. Plaintiff sought over $75 million in damages based on various negligence-based causes of action, including negligent hiring, retention, direction, and supervision.
The complaint was filed in 2021 pursuant to the CVA, which temporarily relaxed the statute of limitations for asserting civil claims of childhood sexual abuse and provided a two-year lookback window during which previously time-barred civil actions could be filed.
The Court of Claims granted the State’s motion to dismiss the complaint, agreeing that the CVA had not relaxed the Act’s pleading requirements “and that a claim brought under [section 11(b) of the Act] must plead the date of the underlying conduct with sufficient definiteness to enable the State to promptly investigate its claim and to ascertain its potential liability.”
Plaintiff appealed the Court of Claims’s decision to the Appellate Division for the Third Department, which reversed the Court of Claims and held that the four-year period alleged in the complaint satisfied the Act’s requirements because the alleged acts occurred many decades ago when the plaintiff was a child. The Appellate Division further opined that requiring more specific or exact dates would not better enable the State to investigate the allegations. The Appellate Division further concluded that the general allegations were “sufficient to provide [the State] with an indication of the manner in which [Wright] was injured and how [the State] was negligent.” The Appellate Division granted the State’s motion for leave to appeal to the Court of Appeals.
In its appeal to the Court of Appeals, the State argued that the complaint should be dismissed for lack of subject matter jurisdiction due to its failure to comply with the specific pleading requirements of Section 11(b) of the Act, which requires that a claim “shall state the time when and place where such claim arose, the nature of the same, the items of damage or injuries claimed to have been sustained and . . . the total sum claimed” (Court of Claims Act § 11 [b]). The Court of Appeals agreed, holding that the complaint lacked the sufficient details required by Section 11(b) of the Act and, therefore, must be dismissed.
In rendering its decision, the Court of Appeals stated that the “CVA lacks any indication, let alone a clear expression, that the Legislature intended to exempt CVA claims from [S]ection 11(b)’s conditions; indeed, it does not amend or even mention the Act’s pleading requirements.” The Court further noted that the Legislature’s silence in the CVA as to Section 11(b)’s pleading requirements contrasted “sharply” with the Legislature’s amendment of Section 10 of the Act “by waiving the notice of claim requirement for claims revived by the CVA.” The Court further noted that if the Legislature had wanted to lower the pleading requirements of Section 11 and adjust the conditions on the State’s waiver of sovereign immunity for certain classes of claims, it knew how to do so as evidenced by its adoption of different pleading requirements for claims of unjust conviction and imprisonment. Accordingly, the Court held that Section 11(b)’s pleading requirements must be applied to CVA claims “in the same manner we would apply them to any other claim against the State.”
The Court of Appeals’ decision is a reminder that the suits brought against the State must meet the Act’s heightened pleading requirements. The Court of Appeal’s decision that the CVA does not alter the Act’s pleading requirements could not only have implications for other CVA lawsuits brought against the State that rely on general allegations, but also actions commenced under the Adult Survivors Act, which, like the CVA, temporarily provided a lookback window to allow previously time-barred claims to be filed. Additionally, it remains to be seen whether the Court of Appeal’s holding that the CVA does not create a different pleading standard will impact cases not involving the State that are filed pursuant to the New York CPLR’s notice-based pleading requirements.
Federal Proposal to Rescind ESA’s ‘Harm’ Definition Raises the Stakes for California’s AB 1319
The United States Fish and Wildlife Service and the National Marine Fisheries Service (collectively, Services) proposed last week to rescind the regulatory definition of “harm” under the federal Endangered Species Act (ESA), sparking intense criticism from environmental advocacy groups. If finalized, the rescission would remove a longstanding protection for the habitat of wildlife species listed as threatened or endangered under the ESA, making regulatory compliance easier for many types of projects across the country. But it would also set up a potential collision between the current president’s deregulation efforts and one of several bills that California’s Legislature is considering as a way to compensate for potential “backsliding” of federal environmental protections, with the regulated community in California likely to be among the losers.
Federal Action Would Remove Prohibition on Habitat Modification
Section 9 of the ESA prohibits the “take” of any endangered species, a prohibition extended to many threatened species by regulation. (16 U.S.C. § 1538(a)(1)(B)-(C).) Under the ESA, “take” means to “harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, collect, or attempt to engage in any such conduct.” (16 U.S.C. § 1532(19) [italics added].) Existing regulations further define “harm” as “an act that actually kills or injures fish or wildlife … [including] significant habitat modification or degradation where it actually kills or injures wildlife by significantly impairing essential behavioral patterns, including breeding, feeding or sheltering.” (50 C.F.R. § 17.3 [italics added]; see also § 22.102.)
The Services have proposed to eliminate the regulatory definition of “harm,” leaving only the statutory definition of “take,” which the Services said they interpret as prohibiting only affirmative acts that are intentionally directed toward particular members of a listed wildlife species. Actions that could indirectly harm listed wildlife by modifying their habitat would no longer be prohibited by the ESA, removing a significant source of potential liability for projects that involve clearing, grading, vegetation removal and similar activities. While effects on listed species’ habitat still could trigger a federal agency’s obligation to consult with the Services under Section 7 of the ESA, many projects lacking a federal “handle” such as a federal approval or funding, likely would be able to forgo seeking ESA authorization.
AB 1319 Aims to Combat Federal ‘Backsliding’ Through Emergency State Listings
AB 1319, a bill introduced in the California Assembly in February 2025, would require the California Fish and Game Commission to consider listing under the California Endangered Species Act (CESA) any California-native species that would receive reduced protection as a result of a “federal action” taken under the ESA after January 19, 2025. Such federal actions specifically include, but are not limited to, those relying in whole or in part on amendments to the ESA regulations. The Commission initially would list new species through adoption of an emergency regulation, a process already authorized by the CESA although seldom used, but then would need to promptly evaluate each species for permanent listing under the CESA procedures that apply to “candidate” species.
The California Department of Fish and Wildlife (CDFW) currently identifies 80 wildlife species in California that are ESA-listed but not CESA-listed, nearly all of which could be eligible for emergency listing if AB 1319 becomes law. Adopting emergency regulations to list those species under the CESA may be fairly straightforward, but evaluating the newly listed species as candidates for permanent protection would place an unprecedented workload on the Commission and the Department. The evaluations almost certainly would drag on for years (as many already do), during which time the candidate species would remain subject to the CESA’s take prohibition and permitting requirements, even though an emergency regulation, by law, may remain in effect for no more than 360 days (including conditional extensions).
Far from experiencing regulatory relief, projects in California, even those already fully approved and permitted, would face the prospect of obtaining incidental take permits to cover a slew of species newly listed (or treated as candidates for listing) under the CESA. CDFW, which issues those permits, is already struggling under a workload that reflects the recent addition of two new candidate species that are relatively widespread, the western burrowing owl and the Crotch’s bumble bee. Additional delay for many types of projects is a sure outcome if AB 1319 becomes law.[1] Thus, Governor Newsom will face a difficult choice if AB 1319 clears the Legislature. In 2019, he vetoed a bill containing nearly identical language over concerns about its effects on the state’s water conveyance projects. This year, he will have to choose between his desire to oppose the current federal administration and his need to show that his own administration can deliver the housing, energy, infrastructure and fire preparedness projects that California urgently needs.
FOOTNOTES
[1] AB 1319 is a non-urgency bill; if enacted, it would take effect on January 1, 2026.
Bella Spies also contributed to this post.
Washington State Makes Key Changes to Amend Equal Pay and Opportunities Act
On April 22, 2025, the Washington State Senate passed Substitute Senate Bill 5408, as amended by the House on April 15, 2025 (“Amended SSB 5408”), making substantial changes to the Equal Pay and Opportunities Act related to pay and benefit information in job postings, a law that has resulted in hundreds of class action lawsuits since summer 2023.
Amended SSB 5408 makes significant changes to the law as it relates to procedures and potential damages, but it maintains the pay transparency in job posting requirements.
Quick Hits
Under SSB 55408, which amends the Equal Pay and Opportunities Act, Washington employers may now list a fixed pay amount instead of a wage range if only one amount is offered, including for internal transfers; postings that are replicated without employer consent are not considered official job postings.
Between the law’s effective date and July 27, 2027, employers have five business days to correct a noncompliant posting after receiving written notice and can avoid penalties if the posting is timely corrected.
The amended law further defines and clarifies two separate remedies, each of which is exclusive: administrative remedies (civil penalties up to $1,000 and statutory damages between $100 and $5,000 per violation) or remedies via private civil actions, including statutory damages between $100 and $5,000 per violation. Each permits statutory damages and considers factors such as willfulness and employer size.
Key Updates to RCW 49.58.110
The key updates to RCW 49.58.110 follow below.
Wage Scale or Salary Range
The wording of the previous statute appeared to require a “wage scale or salary range,” even if all individuals employed in that position had the same pay or the same starting pay. Amended SSB 5408 permits employers that offer only a fixed amount of pay to list only that fixed amount, and they are not required to provide a wage scale or salary range that does not really exist. This also applies for internal transfers where the employer only offers a fixed wage amount.
Definition of “Posting”
Amended SSB 5408 makes clear that a posting does not include a “solicitation for recruiting job applicants that is digitally replicated and published without an employer’s consent.”
Cure Period
For postings between the effective date of Amended SSB 5408 and July 27, 2027, employers must be given the opportunity to correct a job posting that does not meet the requirements of the law. Under the new law, any person may provide “written notice” to the employer that they believe a posting fails to comply with the job pay transparency requirements, and the employer has five (5) business days from the receipt of the written notice to correct the posting and notify any third-party posting entity to correct the posting. The cure opportunity must be provided before the individual may seek any remedy under the law, and if the posting is timely cured, no damages, penalties, or other relief may be assessed.
Damages/Relief
RCW 49.58.110 previously relied on damages sections that arose from the equal pay law as it existed prior to the job posting wage transparency laws. Amended SSB 5408 now further defines and clarifies two separate remedies, each of which is exclusive.
Administrative remedies. Amended SSB 5408 permits an investigation, encourages conference and conciliation, and, if that fails, permits the director to assess a civil penalty of $500 for a first violation and up to $1,000 for repeat violations, or up to ten percent of the damages. In addition to the civil penalty, costs, and other relief for the affected job applicant or employee, the department may “order the employer to pay each affected job applicant or employee statutory damages of no less than $100 and no more than $5,000 per violation.” Amended SSB 5408 provides factors to be considered when assessing the penalty, including the willfulness of the violation or whether it was a repeated violation; the employer’s size; the amount necessary to deter noncompliance; the purposes of the law; and other factors deemed appropriate.
Private civil action. Amended SSB 5408 leaves in place an affected job applicant or employee’s right to bring a private right of action. The new law, however, provides that an affected job applicant or employee may be “entitled to statutory damages of no less than $100 and no more than $5,000 per violation, plus reasonable attorneys’ fees and costs.” The court, in assessing statutory damages, may consider the same factors as the agency.
Wyoming Joins the List of States Banning Some Noncompete Agreements
On March 19, 2025, Wyoming became one of the latest states to enact legislation banning noncompete agreements.
The new law, which goes into effect July 1, 2025, voids “[a]ny covenant not to compete that restricts the right of any person to receive compensation for performance of skilled or unskilled labor.” The law applies only to contracts entered into on or after July 1, 2025, and specifically states that nothing in the law alters, amends or impairs “any contract or agreement entered into before July 1, 2025.”
The law, as drafted, broadly applies to any agreement containing a noncompete clause, such as an employment agreement, independent contractor agreement, or some other type of agreement. The law does not impact or address non-solicitation agreements.
Though the new law appears on its face to be far-reaching, it contains notable exceptions that effectively narrow the scope of noncompetes impacted by the law, discussed below.
Trade Secret Exception
The Wyoming noncompete ban does not include covenants not to compete “to the extent the covenant provides for the protection of trade secrets as defined by W.S. 6-3-501(a)(xi).” Under W.S. 6-3-501(a)(xi), “trade secret” is broadly defined as:
the whole or a portion or phase of a formula, pattern, device, combination of devices or compilation of information which is for use, or is used in the operation of a business and which provides the business an advantage or an opportunity to obtain an advantage over those who do not know or use it. “Trade secret” includes any scientific, technical or commercial information including any design, process, procedure, list of suppliers, list of customers, business code or improvement thereof. Irrespective of novelty, invention, patentability, the state of the prior art and the level of skill in the business, art or field to which the subject matter pertains, when the owner of a trade secret takes measures to prevent it from becoming available to persons other than those selected by the owner to have access to it for limited purposes, the trade secret is considered to be:
(A) Secret;
(B) Of value;
(C) For use or in use by the business; and
(D) Providing an advantage or an opportunity to obtain an advantage to the business over those who do not know or use it.
The breadth of Wyoming’s statutory definition of “trade secret” arguably leaves employers with a fair amount of leeway to structure their restrictive covenants so that they fall under this exception.
Executive and Management Personnel Exception
The law also excludes noncompete agreements entered into with executive and management personnel and officers and employees who constitute professional staff to executive and management personnel. The law does not define the terms “executive and management personnel” or “officers and employees who constitute professional staff to executive and management personnel,” potentially providing employers relatively wide latitude in determining which employees may fit within this exception.
Physicians
The law also voids covenants not to compete in employment, partnership or corporate agreements between physicians that restrict the rights of a physician to practice medicine as that term is defined under Wyoming’s Medical Practice Act. All other provisions of a physician’s agreement that are “enforceable at law shall remain enforceable.”
Additionally, physicians will be permitted to disclose their “continuing practice of medicine and new professional contact information to any patient with a rare disorder as defined in accordance with the national organization for rare disorders, or a successor organization, to whom the physician was providing consultation or treatment before termination of the employment, partnership or corporate affiliation.” Physicians, and their new employers, shall not be liable for any damages resulting from the disclosure or from the physician’s treatment of the patient following the termination of the agreement or the physician’s employment, partnership or corporate affiliation.
Expense Repayment Provisions
Contractual provisions for recovering the “expense of relocating, educating and training an employee” are also exempt from the new law pursuant to the following statutory repayment provisions based on how long the employee has worked for the employer:
(A) Less than 2 years: Recovery up to 100% of expenses
(B) At least 2 years but less than 3 years: up to 66% of expenses
(C) At least 3 years but less than 4 years: 33% of expenses
(D) 4 or more years: 0% of expenses
Contract for the Purchase and Sale of a Business or Its Assets
Finally, the law also excludes covenants not to compete that are contained in a contract for the purchase and sale of a business or the assets of a business.
Key Takeaways
Employers wishing to enter into noncompete agreements on or after July 1, 2025 may only do so if the noncompete falls within one or more of the law’s specific carveouts. Notably, the law does not provide for any statutory damages or penalties, such as an attorneys’ fee-shifting or “loser pays” penalty, should a party choose to challenge the validity of a noncompete agreement. The law’s lack of a damages or penalties provision could potentially diminish the law’s impact as employers may perceive little risk in asserting a noncompete provision which falls under one or more of the law’s more expansive exceptions, such as the trade secret exception or executive and management personnel exception.
As Wyoming joins the growing list of jurisdictions considering and adopting legislation governing noncompetes, we will continue to report on key legislative updates and trends
EEOC Breaks Silence on 2024 EEO-1 Filing Cycle and Plans Shortened Filing Period
After a long silence, the U.S. Equal Employment Opportunity Commission (EEOC) has taken steps to move forward with the 2024 EEO-1 Component 1 data collection by submitting documents for approval to the White House Office of Management and Budget. The proposed 2024 EEO-1 Component 1 Data Collection Instruction Booklet states that the 2024 EEO-1 filing platform will open on May 20, 2025, and close on June 24, 2025.
Quick Hits
The 2024 EEO-1 data collection is set to open on May 20, 2025, and close at 11:00 p.m. (EDT) on June 24, 2025.
The proposed 2024 Instruction Booklet requires filers to indicate their federal contractor status and requires federal contractor employers with fifty or more employees (but with fewer than one hundred employees) to file EEO-1 reports.
The proposed 2024 Instruction Booklet removes the option to provide information about non-binary employees.
Shortened Reporting Period
The proposed 2024 Instruction Booklet provides for a shortened reporting period—down to five weeks—from the platform opening date of May 20, 2025, to the filing deadline of June 24, 2025.
Changes to Reporting by Sex
The proposed 2024 Instruction Booklet eliminates the option to report non-binary employees, stating that the reporting provides “only binary options (i.e., male or female) for reporting employee counts.” This change is tied to Executive Order 14168, “Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government.”
Reporting Based on EO 11246 Continues
Despite the rescission of Executive Order 11246 on January 21, 2025, the proposed 2024 Instruction Booklet and sample 2024 EEO-1 report provide that federal contractors with fifty or more employees are still required to file EEO-1 reports for the 2024 cycle.
Conclusion
Based on documents submitted by the EEOC, the 2024 EEO-1 Component 1 data collection site will open on May 20, 2024, and close on June 24, 2025. In addition, the proposed EEO-1 Instruction Booklet eliminates all references to non-binary employees. Due to the shortened filing period, EEO-1 filers may want to consider working now toward gathering the data necessary for the filings.
State Antitrust Enforcement Roundup: New Laws; New Potential Legislation; and New (and Broader) Areas of Focus
The number of U.S. states implementing or considering new antitrust laws (or supplementing existing laws) targeting proposed transactions continues to grow. As detailed in our healthcare merger matrix, many states have focused their attention on the healthcare industry, and that continues to be the case, for example, in New York, where a broad range of proposed transactions involving health care entities could be subject to filing requirements and suspensory rules before they can close.
Moreover, and as detailed below, recently adopted laws and legislation under consideration in certain states are not limited to transactions involving healthcare providers or payors, nor are such developments limited to “blue” (politically more liberal) states, with Arkansas, Texas, Utah, and West Virginia, among others, undergoing or considering substantial expansions of their respective antitrust laws.
Arkansas Adopts Law Banning Pharmacy Benefit Managers from Owning Pharmacies
On April 16, 2025, Governor Sarah Huckabee Sanders signed HB 1150 into law, which will prohibit pharmacy benefit managers (“PBMs”) from owning pharmacies. This Arkansas law is the first of its kind and provides that a pharmacy benefits manager shall not acquire a direct or indirect interest in, or otherwise hold, directly or indirectly, a permit for the retail sale of drugs or medicines as of January 1, 2026.
California Considers Expansive New Antitrust Laws
In 2022, the California Law Review Commission (CLRC) was asked by the California Legislature to consider and recommend revisions to the state’s competition laws, i.e., the Cartwright Act. As a result of its review, the CLRC has recommended substantial revisions to the state’s antitrust regime.
The CLRC’s recommended changes cover the antitrust enforcement waterfront, from single firm conduct (monopolization and attempted monopolization) to concerted action. With respect to mergers, the CLRC found that California should adopt its own, independent merger control regime (today the state may only challenge deals under the federal Clayton Act). Most notably, the CLRC proposed that California become more aggressive when it comes to challenging proposed transactions by adopting a lesser standard to challenge deals than the federal standard, which requires the FTC or DOJ to provide that it is more likely than not that a deal would substantially lessen competition.
Washington State Enacts First-in-the-Nation General Premerger Notification Law; Colorado, D.C., Hawaii, Nevada, Utah, and West Virginia Considering Similar Legislation
The state of Washington became the first state to enact a state-level general premerger requirement. While many states have industry-specific notification laws (e.g., for health care mergers), this is the first general premerger notification requirement for a state. The law is modeled on the Uniform Antitrust Premerger Notification Act. Similar legislation is under consideration in California, Colorado, the District of Columbia, Hawaii, Nevada, Utah and West Virginia.
Starting July 27, 2025, any person that files a federal Hart-Scott-Rodino (“HSR”) filing must also submit contemporaneously a copy of the HSR form to the state if the person meets one of three criteria:
the person’s “principle place of business” is in Washington; or
the person (or a person it controls directly or indirectly) has annual net sales in Washington for the goods or services involved in the proposed transaction that are at least 20% of the Federal HSR size of transaction filing threshold (at present, 20% is $25,280,000); or
the person is a healthcare provider or provider organization in Washington (filing already required under Washington’s existing healthcare transaction law).
All required Washington filers must submit a copy of their federal HSR form to the state. Filers whose principle place of business is in Washington must also file the additional documentary material filed with an HSR form. Notably, the state may, upon request, require any filer to submit the additional documentary material, even if their principle place of business is not in Washington. There is no filing fee for the state filing and it does not trigger a suspensory waiting period. However, failure to file may result in a civil penalty of up to $10,000 per day of noncompliance.
* * * * *
We can now definitively say that the growing state-level interest in becoming active participants in the review process for transactions that impact their state is part of a long-term secular trend. Regardless of political bent, many states are no longer content to sit passively by while the FTC or DOJ make enforcement decisions that can have dramatic impacts at the state level. In the months and years that follow, we expect that more states will enact antitrust or antitrust adjacent laws that are independent of and potentially even more stringent than, the federal antitrust regime. These state regimes, once more of an afterthought, will require the full attention of parties considering transactions that may be captured by these new laws.
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Employment Law This Week Episode – Non-Competes Eased, Anti-DEI Rule Blocked, Contractor Rule in Limbo [Video, Podcast]
This week, we’re covering the relaxation of state-level non-compete rules, the recent block of Executive Order 14173’s diversity, equity, and inclusion (DEI)-related certification requirement, and a federal appeals court’s decision to pause a challenge to the Biden-era independent contractor rule.
Non-Competes Eased in Kansas and Virginia
Kansas has enacted a law permitting non-competes while setting requirements for non-solicit provisions. Additionally, effective July 1, 2025, Virginia will prohibit non-compete agreements for non-exempt employees.
Federal Contractor DEI Rule Blocked
In a lawsuit brought by Chicago Women in Trades, a federal judge paused a rule from Executive Order 14173 requiring federal contractors to certify that they don’t operate DEI programs that violate anti-discrimination laws, citing unclear definitions of “illegal” DEI programs.
Independent Contractor Rule in Limbo
The U.S. Court of Appeals for the Fifth Circuit paused a challenge to the 2024 independent contractor rule, allowing the U.S. Department of Labor time to consider revising or replacing it. For now, the Biden-era rule remains in effect.
The Lobby Shop: Reconciliation Reckoning [Podcast]
The Lobby Shop team turns their focus on the ongoing budget reconciliation process in Congress that will shape the Trump administration’s economic agenda. Hosts Josh Zive, Paul Nathanson and Liam Donovan provide a quick update on the latest tariff developments before diving into the reconciliation process and the shifting legislative dynamics between the House and the Senate. Then, Liam does a deep dive on how economic pressures are reshaping political strategy, and what it all means for government funding timelines and the looming debt ceiling. Tune in for a Liam-style breakdown of the often confusing reconciliation process in the next couple of weeks.
What Every Multinational Company Should Know About … Tips and Tricks for Sell-Side Contracts
Assessing Tariff Impacts in Commercial Contracts
With the size and scope of President Trump’s tariffs continuing to shift, this is a critical time for businesses to assess their contracts and determine how increased tariff costs might adversely affect profitability, and whether there are any strategies to mitigate the losses.
Contract Review for Tariff Provisions
Tariffs typically affect profitability in two primary ways:
Increased costs of material or component inputs due to the tariffs, and
Tariffs applied to the final sale price of imported or exported goods.
As indicated below, force majeure and commercial impracticability provisions are blunt instruments, meaning the allocation of tariff-related costs is best addressed in the pricing provisions of commercial contracts. When drafting these provisions, consider the following:
Price Adjustments: Inclusion of a mechanism allowing for equitable price increases in response to rising costs associated with taxes, duties, tariffs, or other expenses resulting from changes in law, regulations, or other agreed-upon reasons can be beneficial to the seller. These types of pricing provisions can mitigate financial strain from tariff hikes.
Tariff Allocation: Tariffs are always paid directly to U.S. Customs by the importer of record, which must be a single party. But Customs does not care if parties reallocate tariff responsibility behind the scenes. Pricing provisions thus can specify how tariff costs are allocated between parties for foreign goods imported into the United States and for goods exported to foreign countries. This allocation can be drafted via express provisions on the topic or through careful use of Incoterms to set forth delivery responsibility. Clarity regarding (a) which party is responsible for paying any tariffs to the applicable government agency; (b) whether the seller, the buyer, or both share responsibility for tariff payments; and (c) what the reimbursement mechanism will be, if any, is essential for cost planning and risk mitigation.
In cases where pricing provisions do not provide adequate protection against tariff-related costs, other contractual clauses should be reviewed. For example:
Termination Rights: Termination provisions may offer an exit strategy if continued performance becomes economically unsustainable. Particular attention should be given to whether termination for convenience is permitted and, if so, what notice requirements apply.
Purchase Order Acceptance/Rejection: Contracts may provide flexibility regarding the acceptance or rejection of purchase orders. In the absence of a fixed quantity commitment or a requirements/output agreement, a seller may be able to reject orders and thereby decline to supply products.
Common Misconceptions Regarding Tariff Relief
Force Majeure/Commercial Impracticability: A frequent misconception is that a force majeure clause or the doctrine of commercial impracticability may apply to excuse performance due to increased tariff costs. While these doctrines are sometimes used strategically to initiate discussions around contract renegotiation, courts often view cost increases as foreseeable business risks that cannot support invoking force majeure or commercial impracticability defenses (unless the cost increase, such as a heightened tariff, is expressly identified as a force majeure event that excuses performance).
Tax Allocation Provision: Another common misconception is that a tax provision, providing the buyer pays all taxes, will permit a U.S. seller to pass along the tariffs on its inputs to a U.S. buyer. Typically, tax provisions are drafted to allocate responsibility for taxes levied on the transaction between the buyer and seller and do not contemplate taxes/tariffs levied on the upstream inputs.
Recommended Next Steps
This is an area of law where sophisticated counsel can help identify your working options under current contracts and maximize your company’s ability to take proactive steps to manage future tariff-related risks. Managing the effects of tariffs, or other unexpected governmental actions, requires a tailored approach based on each company’s contractual leverage and commercial relationships. A thorough contract review, coupled with proactive communication with business partners, can provide a solid foundation for addressing tariff challenges.
Congress Overturns IRS Reporting Rules for DeFi Platforms
President Trump has signed into law a bill that repeals Internal Revenue Service (IRS) regulations that required decentralized finance (DeFi) platforms to be treated as brokers for purposes of reporting customer transactions. The former regulations, finalized in December 2024 under the Biden administration, expanded the definition of “digital asset brokers,” to include certain participants that operate within the DeFi industry. Digital asset brokers are subject to tax reporting obligations similar to traditional financial intermediaries. Specifically, these brokers are required to issue IRS Form 1099-DA to both the IRS and their customers, detailing gross proceeds from digital asset transactions, as well as the name and address of each customer. Had the regulations remained in effect, DeFi brokers would have been subject to information reporting requirements for digital asset sales on or after Jan. 1, 2027.
The bill invoked the Congressional Review Act (CRA), a legislative tool allowing Congress to overturn recently enacted federal regulations, particularly those implemented late in an administration’s tenure.
Advocates of the repeal argued that the former regulations were overly burdensome and misaligned with the decentralized nature of DeFi platforms. They contended that forcing DeFi protocols, which often lack a centralized entity, to comply with broker reporting standards is technically infeasible. Critics of the regulations believed it would stifle innovation and push crypto enterprises offshore, undermining U.S. competitiveness in the digital asset sector. The repeal effort was led by Sen. Ted Cruz (R-TX) and Rep. Mike Carey (R-OH).
Opponents of the repeal warned that removing these reporting requirements may create loopholes for tax evasion and illicit financial activities, including money laundering. The Congressional Budget Office, relying on estimates provided by the Joint Committee on Taxation, projected a $4.5 billion increase in the federal deficit through 2035 from passage of the resolution. Critics argued that repealing the rule may allow more cryptocurrency transactions to evade scrutiny, potentially exacerbating financial crimes.
The repeal highlights the growing political influence of the cryptocurrency industry and a broader shift in Washington’s regulatory stance toward digital assets. As the larger debate unfolds, lawmakers and industry leaders will need to navigate the challenges of fostering innovation while maintaining financial security and compliance in the evolving digital economy.
Colorado Passes Bill Banning Most Physician Non-Compete Agreements
Ever since a reference to a “legislative ban on physician non-compete agreements” was made in the Colorado attorney general’s Stipulated Consent Agreement and Judgment with U.S. Anesthesia Partners of Colorado, Inc., filed Feb. 26, 2024, health law practitioners in Colorado have waited to see if the Colorado General Assembly would enact such a ban. On April 21, 2025, the General Assembly made good on the promised legislative ban when it enacted Senate Bill 25-083. If the governor signs it into law, SB 25-083 would broadly impact the use of most restrictive covenants in agreements with physicians, physician assistants, dentists, and advanced practice registered nurses entered or renewed after SB 25-083’s expected effective date of Aug. 6, 2025.
Prior to SB 25-083, subsection (5)(a) of the statute had rendered “void” a restrictive covenant that “restricts the right of a physician to practice medicine,” but permitted enforcement of “provisions that require the payment of damages in an amount that is reasonably related to the injury suffered by reason of termination of the agreement,” including “damages related to competition.” That is, under subsection (5)(a) of the statute prior to SB 25-083’s enactment, it was not possible to obtain an injunction preventing a physician from going to work for a competitor, but it was possible to enforce a damages provision.
SB 25-083 deletes altogether the prior language in subsection (5)(a) of the statute, thereby eliminating the prior exception for physician restrictive covenants. Instead, subsection (5)(a) now provides that “[a] provision of an employment agreement or any other agreement enforceable at law that does not include an unlawful restrictive covenant remains enforceable and subject to any damages or equitable remedy otherwise available at law.”
Additionally, prior to SB 25-083, the statute also had permitted restrictive covenants designed to protect trade secrets or to bar solicitation of customers in certain limited circumstances. In SB 25-083, the General Assembly exempted from the trade secret and non-solicitation provisions any “covenant not to compete that restricts the practice of medicine, the practice of advanced practice registered nursing, or the practice of dentistry.” A covenant is “deemed” to be as much if it “prohibits or materially restricts a health-care provider” from disclosing to existing patients prior to the provider’s departure the following information: “(a) the health-care provider’s continuing practice of medicine; (b) the health-care provider’s new professional contact information; or (c) the patient’s right to choose a health-care provider.” As a result, a covenant not to compete that is deemed to restrict the practice of medicine, the practice of advanced practice registered nursing, or the practice of dentistry in the manner SB 25-083 defines cannot instead be labeled and enforced as a provision to protect trade secrets or to bar the solicitation of customers.1
To which types of licensed professionals these provisions would relate is not entirely clear. Although SB 25-083 refers to “a covenant not to compete that restricts the practice of medicine, the practice of advanced practice registered nursing, or the practice of dentistry,” it also defines “health-care provider” to include an individual licensed as a certified midwife. It also defines the “practice of medicine” to include practice as a physician assistant.
Finally, the General Assembly revised and narrowed the portion of the statute permitting a restrictive covenant related to purchasing and selling a business, a direct or indirect ownership share in a business, or all or substantially all of the assets of a business. Specifically, the General Assembly narrowed the duration of years an individual who “owns a minority ownership share of the business and who received their ownership share in the business as equity compensation or otherwise in connection with services rendered” may be subject to a restrictive covenant, according to a specific formula set forth in SB 25-083. Notably, however, the General Assembly did not except from this provision any “covenant not to compete that restricts the practice of medicine, the practice of advanced practice registered nursing, or the practice of dentistry,” as it did with the trade secrets and non-solicitation provisions. Accordingly, a restrictive covenant entered in connection with the sale of a medical or dental practice, or the like, may still be permissible under the statute.
By the terms of SB 25-083, the changes to the statute would apply to only covenants not to compete entered or renewed on or after the bill’s effective date of Aug. 6, 2025. This means that SB 25-083 should not be interpreted to invalidate restrictive covenants in agreements that predate Aug. 6, 2025. However, going forward, Colorado employers using restrictive covenants in their agreements with “health-care providers” should evaluate whether contract templates comply with the new provisions of SB 25-083.
1 Nothing in SB 25-083 authorizes the misappropriation of trade secrets.
Will the Shift from Renewable Energy to Oil and Gas Result in Cheaper Energy Prices?
There is clearly a shift in the Trump Administration’s energy policy from renewable energy to foster and sustain more fossil fuel energy. This shift is being promoted by the auctioning of government oil and gas leases.
Public Land Leases
The Interior Department announced in late March that in the first 3 months of 2025, the federal government brought in nearly $40 million in revenue from oil and gas lease sales on public land.
The leases have a one-decade lifespan and as long thereafter as they produce oil and gas in paying quantities.
The U.S. will hold an oil and gas lease sale in the Gulf of Mexico, as planned by the Biden administration. A proposed notice for the auction will be published in June. The Biden administration had planned for 3 Gulf leases (permitting production and drilling rights), a historically low number that angered the oil and gas industry and drilling states.
The Energy Shift
It is likely that the Trump Administration will expand the number of leases from the 3 proposed by the Biden Administration. Doug Burgum, who heads Trump’s energy council, said that “unleashing U.S. energy will lower gasoline and grocery store prices while boosting national security.” Consistent with the shift in energy policy, the Trump administration removed the U.S. from the Paris Agreement on climate change and aims to slash regulations on planet warming emissions from oil, gas, and coal operations.
Different Outcome?
Will this energy policy shift result in cheaper energy prices for the consumer? Some speculate that many oil companies operating in the Gulf of Mexico will likely continue to do what they’ve done for years, which is sit on hundreds of untapped oil leases on millions of acres. The market is saturated with oil, making energy companies reluctant to spend more money drilling because the added product will likely push prices down, cutting into profits. As stated by Exxon Mobil CEO Darren Woods in the previously cited LA Illuminator article, “So, I don’t know that there’s an opportunity to unleash a lot of production in the near term, because most operators in the U.S. are [already] optimizing their productions today.”
Leases have been sold too quickly and cheaply in recent decades, according to a 2021 report by the U.S. Department of the Interior, which oversees BOEM. This fast and loose approach “shortchanges taxpayers” and encourages speculators to purchase leases with the intent of waiting for increases in resource prices, adding assets to their balance sheets, or even reselling leases as profit rather than attempting to produce oil or gas.
Others argue that if you want to slash energy prices, then renewable energy is the way to go, but we are shipping overseas. Shipping LNG overseas contributes to higher electricity and natural gas prices in the U.S., according to a recent U.S. Department of Energy report.
Only time will tell what the future holds for energy prices. Hopefully we will not have a Horizon Deepwater disaster in the meantime.