Ethylene Oxide Litigation: Your Company Has Been Sued- Now What?
Ethylene Oxide (EtO) is an industrial solvent widely used as a sterilizing agent for medical and other equipment that cannot otherwise be sterilized by heat/steam. EtO may also be used as a component for producing other chemicals, including glycol and polyglycol ethers, emulsifiers, detergents, and solvents. Allegations that exposure to EtO increases the risk of certain cancers has led to governmental regulation as well as private tort actions against companies that operate sterilization facilities that utilize EtO.
History of EtO Verdicts
There have now been a handful of verdicts in EtO trials and the results have been a mixed bag. We have seen some defense verdicts, but also some multimillion-dollar plaintiff verdicts. As we discussed in a posting last week, the most recent example of the latter was a plaintiff verdict for $20 million handed down last earlier this month in Georgia (punitive damages are still being determined).
The first ethylene oxide case to go to trial was the Kamuda matter, in which an Illinois jury awarded $263 million in September of 2022 against Sterigenics for ethylene oxide exposure from that company’s Willowbrook facility. A subsequent trial in the same jurisdiction against the same defendant resulted in a defense verdict. Ultimately, Sterigenics resolved its pending claims involving the Willowbrook plant in the amount of $408 million. In December of 2024, a Philadelphia Court of Common Pleas jury found the defendant B. Braun Manufacturing Inc. not liable on all counts. The plaintiff had alleged that her husband developed leukemia as a result of working at the defendant’s sterilization plant in Allentown, Pennsylvania for seven years. Notably, unlike the Illinois trials, the Philadelphia trial involved an employee at the sterilization facility as opposed to the Illinois plaintiffs who did not work at the Willowbrook plant but resided nearby.
In March of this year, a Colorado jury rendered a verdict in favor of defendant Terumo BCT Inc. (Isaacks et al. v. Terumo BCT Sterilization Services Inc. et al. in the First Judicial District of Colorado (docket number 2022CV031124). The plaintiffs are appealing. This was a bellwether trial lasting six weeks, and involved four female plaintiffs. The jury determined that the defendant was not negligent in its handling of emissions from its Lakewood plant. The plaintiffs had sought $217 million in damages for their alleged physical impairment and also $7.5 million for past and future medical expenses as well as punitive damages. In light of the fact that the six person jury found the defendant Terumo not negligent, it did not need to consider damages or causation. All of the plaintiffs alleged that they had developed cancer as a result of ethylene oxide emissions from the Terumo facility. One plaintiff alleged breast cancer as a result of 23 years of exposure from the plant, while another alleged breast cancer after almost 35 years of exposure (these two plaintiffs were neighbors). Another plaintiff alleged multiple myeloma while the fourth plaintiff alleged Hodgkin’s lymphoma. Notably, there remain hundreds more pending claims against Terumo in Colorado. In fact, plaintiffs’ counsel filed almost 25 more cases while the trial was in progress
Does Your Insurance Cover EtO Claims?
In light of multi million dollar verdicts in Illinois and Georgia, companies with potential EtO liability should determine if they have adequate coverage for defense and indemnity should they be sued. KCIC recently issued a report on insurance coverage for EtO claims: (kcic.com/trending/feed/eto-an-emerging-and-evolving-risk/#msdynttrid=wne5D5mhUe8x_gvUuI0Hn9FqKuJPpR3wOfwvnUj8MyE). As the article points out, companies facing EtO claims may be able to tap their pollution liability policies or pollution coverage as part of their commercial general liability (CGL) policies. As KCIC notes, one option for companies is to cite to their “permitted emissions” exception which stems from the 1997 Illinois Supreme Court decision in American States Insurance Co. v. Koloms in which the court noted that if the pollution exclusion was too literally interpreted, it could have such limitless applications that it could essentially negate all coverage.
Therefore, Koloms concluded that pollution exclusions be limited to traditional environmental contamination — which includes industrial emissions of pollutants into the environment. In 2011, in Erie Ins. Exch. v. Imperial Marble Corp, the Illinois appellate court cited the Koloms case and found that when the industrial emissions were at levels that were within regulatory permissions, the pollution exclusions are arguably ambiguous and should not negate the duty to defend. The theory was that emissions authorized by law may not constitute traditional environmental pollution, and therefore the court found that the insurer had a duty to defend against claims that arose from permitted emissions. In contrast, though, a recent decision in the federal district in Pennsylvania determined that a pollution exclusion in a CGL policy barred coverage for EtO liabilities under Pennsylvania law (for more detail refer to the KCIC report).
So, Will Your Insurer Cover Your EtO Claims?
Well, maybe. This depends on what state’s law controls as well as the language of your policy. If you have existing policies, it is advisable to have them reviewed to determine if there is coverage for EtO claims. Consultation with your broker is advisable. To the extent you will be in the market for new coverage in the near future and you think it possible your company might face EtO claims, discuss this with your broker to make sure that you will be covered. In light of the recent Georgia verdict, coupled with the Illinois verdict from a few years ago, the EtO litigation seems poised to expand to other states. Be prepared.
2nd Circuit Holds Arbitration Treaty Trumps State Insurance Law
On May 8, the Second Circuit held that the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards trumps a Louisiana state law barring arbitration of insurance disputes in a pair of cases, Certain Underwriters at Lloyds, London et al. v. 3131 Veterans Blvd. LLC and Certain Underwriters at Lloyds, London et al. v. Mpire Properties LLC. In doing so the Second Circuit joined the First and Ninth circuits in ruling that the New York Convention’s provision on the enforcement of arbitration agreements is “self-executing” and, thus, preempts state law consistent with the Supreme Court’s decision in Medellín v. Texas.
The underlying dispute involved damage to commercial properties in Louisiana after Hurricane Ida hit the state in 2021. The insurance policies at issue provided for arbitration seated in New York applying New York law. After settlement discussions failed, the insureds filed suit in Louisiana, while the insurers moved to compel arbitration in the Southern District of New York.
Louisiana’s Insurance Code and subsequent jurisprudence bars enforcement of arbitration clauses in insurance policies. The Federal McCarran-Ferguson Act says that state insurance law controls over conflicting “acts of Congress.” Prior to Medellín, the Second Circuit treated federal treaty law, such as the New York Convention, as “acts of Congress” only if it required legislative action to be enforced, i.e., it is not self-executing. Applying these pre-Medellín rules, the district court found that the New York Convention was not self-executing and that Louisiana’s bar on enforcement of arbitration in insurance disputes reverse-preempted the New York Convention and the Federal Arbitration Act, preventing arbitration of the underlying dispute.
However, in Medellín, the Supreme Court established a different test for determining whether a treaty provision should be considered self-executing. “The Supreme Court did not confine its analysis to the narrow question of whether Congress enacted legislation purporting to implement the treaty at issue[.]” Rather the Court implemented a multi-factor test applying to individual provisions of the treaty to determine whether that provision was intended to take immediate effect in domestic courts.
Applying the Medellín factors to the relevant New York Convention provision, the Second Circuit found that Article II, Section 3 of the Convention – the provision related to the enforcement of arbitration agreements – is self-executing and not subject to statutory preemption rules like that in the McCarran-Ferguson Act.
This Court’s holding does not extend to purely domestic arbitrations, but parties to arbitration agreements with a foreign element can no longer escape arbitration of commercial disputes on statutory preemption grounds.
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Affirmative Artificial Intelligence Insurance Coverages Emerge
It was only a matter of time before new insurance coverages targeting the risks posed by artificial intelligence (AI) would hit the market. That time is now.
As the use of AI continues to proliferate, so too does our understanding of the risks presented by this broad and powerful technology. Some risks appear novel in form while others mirror traditional exposures that have long been viewed as insurable causes of loss. AI-related risks are made all the more novel because the meaning of AI itself is not only up for debate, but is constantly evolving as the technology matures. This mixture of old and new has the potential to create coverage gaps in even the most comprehensive insurance programs. Hence the development of specialized, AI-specific insurance solutions. In just the past few weeks, two new affirmative AI coverages have entered the market, signaling an acceleration in this trend.
Armilla’s Affirmative AI Coverage
On April 30, 2025, Armilla Insurance Services launched an AI liability insurance policy underwritten by certain underwriters at Lloyd’s, including Chaucer Group. This product is among the first to offer clear, affirmative coverage for AI-related risks, rather than relying on protections embedded in legacy policies.
While the introduction of this new, affirmative coverage should have no impact on the availability of coverage for AI-related losses that meet the terms of coverage under existing insurance policies such as cyber, directors and officers (D&O), or technology errors and omissions (E&O), this new product should address any unique exposures not contemplated under traditional coverages. Risks specifically contemplated under Armilla’s policy include AI hallucinations, deteriorating AI model performance, and mechanical failures or deviations from expected behavior. Armilla’s affirmative coverage may offer greater certainty for policyholders in an increasingly uncertain risk environment.
Google Cloud’s Entry into AI Risk Management
Earlier in 2025, Google took its own significant step into AI-specific risk mitigation by announcing a partnership with insurers Beazley, Chubb, and Munich Re. This collaboration introduces a tailored cyber insurance solution specifically designed to provide affirmative AI coverage that Google Cloud customers can purchase from the insurers Google has partnered with.
Customers that purchase the Google-specific insurance coverage receive a Google policy Endorsement that provides a suite of protections that can include business interruption coverage for failures in Google Cloud services, liability coverage for certain bodily injury or property damage, and protection for trade secret losses linked to malfunctioning AI tools. By embedding insurance directly into its cloud offerings, Google has taken a proactive role in delivering technological innovation, while also managing the associated risks.
Insuring the AI Future
The emergence of affirmative AI insurance products marks a key shift in the industry’s approach to managing AI-driven risks. With companies like Armilla leading the charge, insurers are beginning to address perceived coverage gaps that traditional policies may overlook. As momentum builds, 2025 is likely to bring a continued rollout of AI-specific coverages tailored to this evolving landscape. Collectively, these developments reflect a growing recognition across the industry of the distinct and complex nature of AI-related risk.
By the Book: Navigating Books and Records D&O Coverage (and Other Extensions You May Be Missing)
In recent years, Delaware corporations have seen a significant increase in stockholder books and records demands and follow-on litigation (“Section 220 cases” in Delaware parlance). Directors and officers (D&O) liability insurance may be available to cover the cost to respond to those demands. This article discusses recent trends in Section 220 cases and highlights several types of enhanced D&O coverage—ranging from derivative demand investigation costs to crisis management costs—that companies should evaluate at their next policy placement or renewal to protect against different exposures beyond traditional “Side ABC” claims.
Mindful of the Delaware courts’ prior admonitions to file more developed complaints, the plaintiffs’ bar has increasingly availed itself of books and records inspections before bringing actions against directors and officers for breach of fiduciary duty. What is more, in recent years the Court of Chancery has demonstrated greater willingness to order inspection of records beyond formal documents like board minutes and resolutions, particularly when those records are not kept in the ordinary course of business.
Last March, Section 220 was amended as part of a larger set of legislative revisions to the Delaware General Corporation Law. Among other changes, the amendment defines the scope of books and records, limiting inspection in most instances to formal documents like board materials, minutes, annual financial statements and director independence questionnaires. Although these changes will likely bring clarity and increased predictability to books and records litigation, the number of Section 220 cases may not decrease precipitously.
The amendment still gives the Court of Chancery power to order inspection of a broader array of books and records if the stockholder can demonstrate a “compelling need”—a standard that has yet to be tested in court. Indeed, even after the amendment took effect, a stockholder of one former Delaware corporation sued for access to the company’s books and records, citing concerns that the company’s reincorporation in Nevada was part of a multi-step plan by the company’s controlling stockholder and board of directors to evade accountability and perpetuate control of the company.[1]
Even after giving effect to the recent statutory amendment, responding to books and records demands can be costly and important, both in their own right and as precursors to further stockholder litigation. Companies facing these requests may wonder if their D&O liability policies will respond to defray associated costs in investigating and responding to books and records demands. Although coverage may be available, it is not automatic and, as with most insurance questions, will turn on the specific policy language and coverage negotiated.
1. Books and Records Coverage Is Available
Traditionally, D&O policies have not covered the costs to respond to books and records demands. The reasons are varied—for example, insurers may take the position that the demands do not allege wrongful acts; the costs do not fit within the policy’s definition of defense costs; or simply that responding to stockholder information requests was not the kind of exposure intended to be covered by a D&O policy.
That approach has changed over the years, as insurers trying to stand out in an increasingly competitive marketplace have offered coverage for books and records requests. Coverage is often available in one of two ways.
First, policyholders may be able to obtain an expanded definition of defense costs that includes costs to respond to books and records demands. The second option is to obtain a specific extension tailored toward books and records coverage. The former typically allows access to the full policy limits (usually subject to a retention like any other claim) while the latter is typically subject to a sublimit (often part of the policy’s derivative demand coverage) but may provide first-dollar coverage not subject to a retention.
Policyholders should not be surprised to learn, however, that their “off the shelf” policy may have no or limited coverage for the costs of responding to a books and records demand. The good news is that D&O and similar management liability policies are heavily negotiable, both in terms of adding new coverages and in improving terms for existing coverage.
Working with experienced risk professionals—brokers, consultants, and outside counsel—at each stage of the policy placement and renewal process can put public companies in a stronger position to defray the potentially significant costs associated with responding to books and records demands.
2. Don’t Overlook Other Important Coverage Enhancements
Books and records demands are one of many often overlooked extensions or enhancements to traditional D&O coverage. Beyond Section 220 demands, robust D&O programs can also cover the following:
Derivative Demand Investigation Costs: Often called “Side D” coverage, this extension to traditional “Side ABC” policies provides coverage when the board is required to evaluate a derivative demand made by a stockholder against the company’s officers and directors. Like expansive books and records demands, derivative demand investigations can be costly and should be analyzed closely to assess appropriate sublimits, including through additional limits in excess layers. This coverage is particularly helpful in jurisdictions, like Delaware and Texas, with “universal demand” requirements (i.e., that require stockholders to make a demand before they can file a derivative lawsuit).
Crisis Management: Policies are available with extensions that cover “crisis management” events and associated costs. Covered events range from death of a key executive and public announcement of regulatory proceedings to employee layoffs and bankruptcy filings.
Outside Directorships: Claims against directors challenging their decisions on behalf of the company will be covered, but what if the company asks a director to sit on an external board? D&O policies can include outside director coverage that extends to those risks and avoids “capacity” issues if individuals are wearing multiple hats across affiliated entities.
Dedicated Side A: While “Side A” coverage is a cornerstone of traditional D&O policies to protect individuals from claims not indemnified by the company, procuring dedicated Side A limits reserved exclusively for the benefit of directors and officers can be critical to ensure that sufficient limits are available if the company is unable to advance defense costs or provide indemnification (e.g., in the event of insolvency or prohibitions on indemnification). Such coverage—which can be achieved through either built-in dedicated limits in a Side ABC policy or a separate, standalone Side A-only policy—becomes even more important in bankruptcy when insurance coverage may be the only asset available to protect against personal exposure.
Other Management Liability Coverages: D&O coverage is only one part of a comprehensive management liability program. Even robust D&O policies may exclude losses related to fiduciary, employment, cyber, professional services, and a host of other potential exposures. Purchasing complementary employment practices liability (EPL) and fiduciary coverage alongside D&O or placing separate cyber and errors and omissions (E&O) or professional liability policies can fill those gaps that may not be covered under D&O policies. Taking a comprehensive approach and reviewing programs as a whole, rather than focusing only on D&O in thinking about executive protection, can help avoid surprise denials when claims are shifted to other lines of coverage that may or may not have been purchased.
Books and records demands may remain common, and insurance may be available to defray those significant costs (as well as many other exposures discussed above) and provide additional protection that allows executives to avoid undue concern about managing legal costs.
[1] See Scarantino v. The Trade Desk, Inc., No. 2025-0442-LM (filed Apr. 30, 2025).
Delaware Department of Insurance Launches Exams of Third Party Administrators
Key Takeaways
The Delaware Department of Insurance (Department) is conducting targeted market conduct exams of Third Party Administrators (TPAs) for compliance with state insurance laws and regulations.
Reviews will cover areas such as claims handling, premium collection, disclosures, audits and operational practices, following NAIC guidelines.
The Department will consider each TPAs specific business activities in Delaware and nationally when determining examination requirements.
Recently, the Department began notifying TPAs domiciled in Delaware that they will undergo targeted market conduct examinations.
According to the Department, these market conduct examinations are designed to review TPAs’ practices and procedures for compliance with 18 Del Admin Code 1406, Delaware insurance statutes, rules and regulations, and Department of Insurance Bulletins. Additionally, the Department stated that the scope of these market conduct examinations includes all services where a TPA directly or indirectly underwrites, collects charges or premiums, or denies, modifies, adjusts or settles claims on residents of Delaware in connection with health coverage offered or provided by an insurer.
The Department also indicated that the format of the market conduct examination reports will follow the format recommended by the NAIC Market Regulation Handbook and that the functional areas to be reviewed in the exams include:
Company operations and management;
Complaints;
Terminated agreements;
Advertising;
Audits;
Notice to covered individuals;
Disclosure of charges and fees;
Requirements of written agreement;
Payments to the TPA;
Maintenance of information;
Premium collection and payment of claims; and
Delivery of materials to covered individuals.
In our discussions with the Department regarding these examinations, we have learned that the Department will consider the scope of a TPA’s actual business and activities in Delaware and nationally when evaluating the information that will be required during an examination.
HIPAA Compliance for AI in Digital Health: What Privacy Officers Need to Know
Artificial intelligence (AI) is rapidly reshaping the digital health sector, driving advances in patient engagement, diagnostics, and operational efficiency. However, for Privacy Officers, AI’s integration into digital health platforms raises critical concerns around compliance with the Health Insurance Portability and Accountability Act and its implementing regulations (HIPAA). As AI tools process vast amounts of protected health information (PHI), digital health companies must carefully navigate privacy, security, and regulatory obligations.
The HIPAA Framework and Digital Health AI
HIPAA sets national standards for safeguarding PHI. Digital health platforms—whether offering AI-driven telehealth, remote monitoring, or patient portals—are often HIPAA covered entities, business associates, or both. Accordingly, AI systems that process PHI must be able to do so in compliance with the HIPAA Privacy Rule and Security Rule, making it vital for Privacy Officers to understand:
Permissible Purposes: AI tools can only access, use, and disclose PHI as permitted by HIPAA. The introduction of AI does not change the traditional HIPAA rules on permissible uses and disclosures of PHI.
Minimum Necessary Standard: AI tools must be designed to access and use only the PHI strictly necessary for their purpose, even though AI models often seek comprehensive datasets to optimize performance.
De-identification: AI models frequently rely on de-identified data, but digital health companies must ensure that de-identification meets HIPAA’s Safe Harbor or Expert Determination standards—and guard against re-identification risks when datasets are combined.
BAAs with AI Vendors: Any AI vendor processing PHI must be under a robust Business Associate Agreement (BAA) that outlines permissible data use and safeguards—such contractual terms will be key to digital health partnerships.
AI Privacy Challenges in Digital Health
AI’s transformative capabilities introduce specific risks:
Generative AI Risks: Tools like chatbots or virtual assistants may collect PHI in ways that raise unauthorized disclosure concerns, especially if the tools were not designed to safeguard PHI in compliance with HIPAA.
Black Box Models: Digital health AI often lacks transparency, complicating audits and making it difficult for Privacy Officers to validate how PHI is used.
Bias and Health Equity: AI may perpetuate existing biases in health care data, leading to inequitable care—a growing compliance focus for regulators.
Actionable Best Practices
To stay compliant, Privacy Officers should:
Conduct AI-Specific Risk Analyses: Tailor risk analyses to address AI’s dynamic data flows, training processes, and access points.
Enhance Vendor Oversight: Regularly audit AI vendors for HIPAA compliance and consider including AI-specific clauses in BAAs where appropriate.
Build Transparency: Push for explainability in AI outputs and maintain detailed records of data handling and AI logic.
Train Staff: Educate teams on which AI models may be used in the organization, as well as the privacy implications of AI, especially around generative tools and patient-facing technologies.
Monitor Regulatory Trends: Track OCR guidance, FTC actions, and rapidly evolving state privacy laws relevant to AI in digital health.
Looking Ahead
As digital health innovation accelerates, regulators are signaling greater scrutiny of AI’s role in health care privacy. While HIPAA’s core rules remain unchanged, Privacy Officers should expect new guidance and evolving enforcement priorities. Proactively embedding privacy by design into AI solutions—and fostering a culture of continuous compliance—will position digital health companies to innovate responsibly while maintaining patient trust.
AI is a powerful enabler in digital health, but it amplifies privacy challenges. By aligning AI practices with HIPAA, conducting vigilant oversight, and anticipating regulatory developments, Privacy Officers can safeguard sensitive information and promote compliance and innovation in the next era of digital health. Health care data privacy continues to rapidly evolve, and thus HIPAA-regulated entities should closely monitor any new developments and continue to take necessary steps towards compliance.
Connelly v. U.S.: A Reminder About Corporate Owned Life Insurance
Many businesses have used corporate owned life insurance (COLI) and buy-sell agreements as key elements of their succession planning. However, it may be time to consider whether these programs are creating unnecessary risk. Although these programs generally have not been problematic in the past, a recent Supreme Court case has potentially changed the analysis.
COLI is a life insurance policy owned by the company on the life of an employee, with some or all the benefits payable to the company. This life insurance can provide a significant cash benefit at a time when the company may be looking to fund the repurchase of shares from a deceased owner. Historically, practitioners have excluded insurance proceeds from a business’s valuation when those proceeds are contractually designated for repurchasing shares under a buy-sell agreement. This exclusion arises because the buy-sell agreement creates a liability that offsets some or all of the proceeds. Although excluding the value of the insurance proceeds from the value of the business was relatively common, the IRS had sometimes argued that the value of the insurance should be included in the value of the company.
In Connelly v. U.S., the Supreme Court unanimously held that the proceeds from COLI need to be included in some valuations of the company that received the proceeds. When the value of the COLI is added for tax and valuation purposes, there are several possible implications. First, the increased value from including the COLI may have to be reflected in a higher purchase obligation under the buy/sell obligation associated with the COLI than would otherwise be necessary. Second, the value of the COLI may need to be included in company valuations related to deferred and executive compensation payments. Third, the inclusion of COLI proceeds as an asset on the company’s balance sheet may impact the company’s investment or lending agreements. And fourth, the increased value of the company needs to be reflected when valuing the decedent’s company equity for estate tax purposes and in any tax planning for surviving owners.
After Connelly v. U.S., companies and business owners should reassess how COLI and buy-sell agreements interact. If a COLI and a buy-sell agreement are already in place, now is a good time to review them to determine if changes need to be made. If so, make those changes before it’s too late. For companies that do not have COLI and a buy-sell agreement in place, it is a good time to determine if your business should have these arrangements in place now that the Supreme Court has settled the question.
Canada Implements Temporary Employment Insurance Measures Responsive to Economic Impacts of Trade War
Quick Hits
The Canadian government has amended the Employment Insurance Act to temporarily suspend certain repayment rules for severance payments due to job separations occurring between March 30, 2025, and October 11, 2025.
Employees who receive both severance pay and employment insurance benefits during the specified period will not have to repay their employment insurance benefits.
Repayment obligations for employment insurance can still apply to terminations before March 30, 2025, even if severance payments are made after that date.
Of particular interest to employers and employees, the temporary measures suspend certain rules relating to monies paid because of a temporary or permanent separation from employment. These temporary rules will apply to any monies paid as a result of a separation of employment that occurs between March 30, 2025, and October 11, 2025.
The temporary measures outline that severance payments made because of a separation between these dates will no longer trigger repayment obligations where an individual receives both severance pay and employment insurance benefits. Previously, an employee who had received employment insurance payments and later received severance payments would have a repayment obligation. A similar suspension of repayment obligations was implemented in response to the deleterious effects of COVID-19.
Employment insurance repayment obligations can still apply to any termination of employment that occurred before March 30, 2025, even if payments are made after that date.
These changes will certainly be relevant in assessing severance packages and termination settlements, but for the time period outlined above, it appears that employees will be able to keep both employment insurance benefits and termination pay.
FDIC Orders Bank to Pay $1.225 Billion for Alleged Interchange Fee Misclassification
On April 18, the FDIC announced a consent order against a Delaware-based bank alleging that the bank engaged in unsafe and unsound banking practices and violated various federal consumer protection laws, including Section 5 of the FTC Act, the Truth in Lending Act (TILA), and the Servicemembers Civil Relief Act (SCRA).
According to the FDIC, the bank:
Misclassified millions of consumer credit cards as commercial accounts. The misclassification allegedly lasted for approximately 17 years and caused the accounts to be hit with higher interchange fees.
Overcharged merchants by more than $1 billion. The higher interchange rates were passed on to merchants using the bank’s proprietary network, resulting in substantial overcharges.
Violated federal consumer protection laws. The FDIC alleged that the bank’s practices constituted unfair acts or practices under Section 5 of the FTC Act, and also cited violations of TILA, SCRA, and the Electronic Records and Signature Commerce Act.
The Consent Order requires the bank to distribute a minimum of $1.225 billion to adversely affected merchants, merchant acquirers, and other adversely affected parties and $150 million penalty to the U.S. Treasury.
In addition to the monetary penalties, the bank will be required to take extensive corrective actions, including enhancing its board oversight, risk management framework, consumer compliance program, vendor management procedures, and controls surrounding account classification. These measures must be implemented through clearly defined plans, subject to review and non-objection by the FDIC, and are designed to ensure ongoing compliance with consumer protection laws and prevent future harm.
Putting It Into Practice: While the future of CFPB enforcement and regulation remain somewhat unclear under the Trump administration, both federal and state regulators continue to actively pursue enforcement actions to address consumer protection violations (previously discussed here and here). This enforcement action reflects the FDIC’s heightened focus on ensuring that financial institutions maintain robust compliance systems capable of identifying and preventing such violations.
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Tragic House Fire and Explosions in Trenton, NJ: What You Need to Know
In the early hours of Wednesday, April 30, 2025, a devastating house fire in Trenton, New Jersey, left five people injured and caused nearby evacuations after loud explosions were heard from the scene. The fire and subsequent explosions have raised significant concerns about the safety of the neighborhood and the immediate aftermath of such a tragic event. Here’s a closer look at what happened, the aftermath, and the legal options available for victims of such devastating incidents.
The Incident in Trenton
At approximately 1 a.m., neighbors near Boudinot Street and Murray Street were awakened by the sounds of loud explosions and the sight of a blazing fire. Firefighters rushed to the scene to contain the fire, which had started in a duplex home and quickly spread, heavily damaging the neighboring house. According to reports, one male victim suffered severe burns to his face, and four other people were hospitalized, though their injuries were not considered life-threatening.
The explosion, as captured in eyewitness videos, added a frightening element to an already tragic situation. While the exact cause of the fire and explosions remains unclear, the aftermath left neighbors in shock, with some expressing fear that the fire might spread further, fueled by the wind. Fortunately, firefighters were able to contain the blaze before it could cause more widespread damage .
The Impact on the Community
The explosion and fire not only affected the victims directly involved but also caused widespread disruption for the surrounding community. Trenton Police went door-to-door evacuating nearby residents, ensuring their safety from the growing danger posed by the fire. A nearby resident, described his emotional state after the incident, stating, “Emotional still. Scared. I’ve never experienced anything like that.” This testimony highlights the trauma that often accompanies such disasters, not only for the victims but also for the wider community affected by the destruction.
In addition to the physical injuries sustained by the victims, the fire has also caused significant emotional and psychological distress for both the victims and the witnesses. The fear of further explosions, the potential for the fire to spread, and the loss of homes and belongings can all take a long-term toll on the affected individuals.
What Caused the Fire?
As of now, the cause of the fire and the explosions remains under investigation. Various factors, including possible gas leaks or faulty electrical wiring, could have contributed to the blasts heard during the incident. However, until authorities complete their investigation, it’s impossible to say for sure what caused the explosions that escalated the fire so quickly.
While we await further information, it’s crucial for all homeowners and renters to take proactive steps in ensuring their homes are safe from fire hazards. Regular maintenance of electrical systems, heating systems, and gas lines can significantly reduce the risk of house fires. Additionally, ensuring that fire safety measures, such as smoke alarms and fire extinguishers, are in place and working can save lives during such emergencies.
Legal Options for Victims
In the wake of such a tragic event, it’s essential to understand the legal rights of the victims and their families. If you or a loved one has been injured in a house fire or explosion caused by negligence, you may be entitled to compensation for medical bills, pain and suffering, and other related damages. In this case, several legal options may be available to the victims:
1.Personal Injury Lawsuits
Victims who sustain injuries in accidents like house fires and explosions may have the right to file a personal injury lawsuit. Depending on the cause of the fire, the responsible parties could include landlords, utility companies, or other third parties. For instance, if faulty wiring or gas lines caused the fire, the company responsible for installing or maintaining those systems could be held liable.
2.Insurance Claims
In addition to pursuing legal action, victims should also contact their insurance providers to report the damage to their property and personal injuries. Depending on the specifics of the case, homeowners’ insurance or renters’ insurance may cover certain types of damages. However, insurance policies can be complex, and it’s important to understand what is covered and what isn’t.
Top Ten Regulatory and Litigation Risks for Private Funds in 2025
Confession: writing this in May 2025, we cannot predict with confidence what the rest of 2025 will bring. The year has already seen four months of change and upheaval – political, regulatory, and economic. The new US administration has touted a business-friendly regulatory environment, with actual and promised tax cuts and deregulation. However, geopolitical tensions, tariff trade wars and political instability have introduced new risks and created a climate of extreme unpredictability. We should expect 2025 to hold several surprises still, whether that is a breakout of peace or new political themes obtaining prominence in one or more jurisdictions.
Against this backdrop, it can be tempting to adopt the view of legendary film writer William Goldman declaring that “nobody knows anything” and that publishing our annual “Top Ten Litigation and Regulatory Risks for Private Funds” is simply a fool’s errand. We have, after all, already rewritten this introduction multiple times before new developments make it out of date again. However, whatever happens, sponsors with strong foundations and nimble mindsets will be best placed to take advantage of any new opportunities that arise and be able to pivot as needed in new, more promising directions.
We have therefore focused on two sub-themes to support those strong foundations:
Topics to ensure “your house is in order” to give those strong foundations (e.g., how to navigate ESG in 2025, the use of insurance products by sponsors, best practice with MNPI, dealing with whistleblowers and global anti-corruption compliance)
Risks arising now from the trends of 2024 (e.g., risks from the growth of the private credit market, the rise in earn out disputes in portfolio companies and navigation of end-of-life funds)
To complete our list of ten, we will engage in some tentative crystal ball gazing, including the role of the SEC in a non-regulatory environment and outward investment restrictions and tariffs, but will, like our clients and readers, seek to remain “nimble” to ensure we remain relevant.
With this backdrop, we are pleased to present the Top Ten Regulatory and Litigation Risks for Private Funds in 2025.
ESG in 2025: Finding the Sweet Spot in a Complex World
Regulatory Scrutiny on Potential MNPI in the Credit Markets
SEC Regulation in a Non-Regulatory Environment
Global Trade in 2025: Tariffs and Outbound Investment Restriction
Three Risks to Monitor in Private Credit
End Of (Fund) Life Issues and Zombies
Navigating Earn-Out Disputes: Key Considerations for Portfolio Companies
Why the DOJ’s New Whistleblower Program Remains Relevant
Protecting Sponsors from Emerging Portfolio Company Risks through Insurance
FCPA & Anti-Corruption Enforcement: Shifting Global Dynamics in Light of New US Regime
Additional Authors: Dorothy Murray, Joshua M. Newville, Todd J. Ohlms, Robert Pommer, Seetha Ramachandran, Nathan Schuur, Bryan Sillaman, Robert Sutton, John Verwey, Jonathan M. Weiss, William D. Dalsen, Rachel Lowe, Adam L. Deming, Adam Farbiarz and Hena M. Vora
GT Legal Food Talk Episode 28: Insurance and Protecting Your Food, Beverage, and Supplement Business [Podcast]
In this episode of Greenberg Traurig’s Legal Food Talk podcast, host Justin Prochnow sits down for a roundtable discussion with guests Christopher Morey and Chris Strachan, alongside co-host and commercial litigator Stacy Carpenter.
Together, they delve into the critical role of insurance in the food, beverage, and supplement industries, covering everything from general liability and product recall coverage to stock throughput and directors and officers (D&O) insurance.
With real-world anecdotes, practical advice, and a touch of humor, the panel highlights the importance of working with specialized brokers, understanding policy exclusions, and discussing what to do to protect your business from unexpected risks.