Georgia Federal Court Denies TRO and Motion to Dismiss in Trade Secrets Case
On March 27, 2025, in Stimlabs LLC v. Griffiths, the U.S. District Court for the Northern District of Georgia ordered a former executive, Sarah Griffiths, to face claims related to her alleged theft of Stimlab’s trade secrets under the Defend Trade Secrets Act (“DTSA”) and the Georgia Trade Secrets Act (“GTSA”) after denying her application for a TRO.
Background. Griffiths, the regenerative medicine company’s former Chief Scientific Officer, allegedly downloaded thousands of documents containing confidential information and trade secrets after the CEO told her the company was interested in negotiating her departure. These documents allegedly contained, among other things, information regarding future potential products, confidential communications with government agencies, data related to product development and information related to “a product made of donated human umbilical cord, which is applied to, and used in, the management of ulcers, wounds, and similar injuries to the body.” Griffiths allegedly was one of thirteen employees who had special access to the company’s purported trade secrets. According to the company, she was required to sign restrictive covenants as part of her employment agreement, follow the employee handbook, attend and comply with the confidentiality training she received, use best efforts to protect Confidential Information and comply with the company’s Information Security Policy.
Rulings. Following a hearing on August 13, 2024, the company’s motion for a temporary restraining order was denied, as the court found that the company had “not introduced evidence that [Griffiths] accessed [Stimlabs’] documents for any purpose other than to do her job at the time, and the case law is very clear that this does not constitute misappropriation.” However, the court still denied Griffith’s motion to dismiss the complaint, finding that the company sufficiently identified 12 specific examples of trade secrets that purportedly were misappropriated, which were sufficient allegations to state a claim for misappropriation. The court emphasized the allegations that Griffith’s actions violated her employment obligations. In denying the motion to dismiss, the court noted that the complaint the TRO was based on had been amended and now included four exhibits including various agreements and policies that Griffith had allegedly violated. The court also decided not to dismiss the company’s breach of contract claim, despite Griffiths’ argument that the company suffered no damages. The court found that discovery was the best avenue to address this issue.
Implications. This case shows that even though an application for immediate injunctive relief may be denied, there still may be ground to develop claims that were raised in the request for injunctive relief application, and thus a motion to dismiss may not be in order. Here, by amending the complaint and identifying the trade secrets that allegedly were misappropriated, the employer was able to survive a motion to dismiss, allowing the case to proceed. We will continue to follow this case as the litigation progresses.
International Students Face Visa Revocations & Status Terminations – What Does that Mean for Higher Education Institutions?
Over the past two weeks, institutions of higher education have been faced with the challenges of notifying members of their campus communities about visa revocations and status terminations, and advising affected international students on what to do next. Unlike more high-profile immigration cases that followed student protest activity, the latest round of visa revocations and status terminations appear to be happening because students are “failing to maintain status.” But what does that mean and how should institutions react?
To understand the impact, the meaning of key terms like “visa” and “status,” have to be understood, because they are distinct concepts in U.S. immigration law. When people speak of how long someone can stay in the United States, they might say “their visa expires in June” or “they have to leave because their visa is expiring,”; such statements are technically incorrect, however, because they confuse a visa with status.
While a visa is a critical immigration document, it does not actually determine how long someone can stay in the United States. A visa is issued by the U.S. government and allows a noncitizen to apply for entry to the country, but does not guarantee that the noncitizen will be actually allowed to enter or remain in the United States. In contrast, a noncitizen’s status determines how long and under what conditions they can stay in the United States. Notably, noncitizens can change status, for example from F-1 student status to H-1B specialty occupation status, without ever leaving the United States.
Most higher education students come to study in the United States. on an F-1 student visa. F-1 visas are issued by the U.S. Department of State. Once students enter the United States., they are granted F-1 student status, and their F-1 status is tracked by the Department of Homeland Security’s Student and Exchange Visitor Program (SEVP). As long as a student continues to maintain their F-1 student status, the requirements of which are set by law, they are permitted to remain in the United States.
While visa revocations have not traditionally been common, they are a tool available to immigration authorities. One of the scenarios that has historically led to visa revocation is an arrest for driving under the influence (DUI) leading to a visa revocation on health-related grounds (on the basis of suspected alcoholism or other substance abuse issues). A visa revocation, while significant, only impacts a person’s ability to return to the United States. following international travel. It does not impact status. An F-1 student can have their F-1 visa revoked, expire or cancelled, but can still remain in the United States with their valid F-1 student status.
Termination of status, however, ends a person’s permission to stay in the United States. A student’s F-1 student status can be terminated if a student “fails to maintain status” or due to an agency “termination of status.” Historically, a student’s failure to maintain their F-1 status was reported by the colleges and universities themselves if, for example, an international student engaged in unauthorized employment, failed to maintain a full course of study, or was convicted of certain crimes. The agency-initiated termination of status is limited by statute.
During the past two weeks, the U.S. government has changed its practices related to visa revocations and status terminations, and has begun terminating international students’ F-1 student status, either in addition to or instead of revoking their F-1 visas. As a result, F-1 students whose F-1 student status has been terminated no longer have permission to stay in the United States, even if they have a valid F-1visa.
Institutions are finding out about students’ F-1 status terminations by auditing their SEVIS (Student and Exchange Visitor Information System) record. SEVIS is a web-based system that colleges and the Department of Homeland Security use to maintain information about F-1 students. In some cases, students report being unaware that their F-1 status had been terminated until they receive outreach from their school after such audits, because they received no communication from the U.S. government about their status termination.
These changes have caused stress and uncertainty for institutions of higher education and their international students. In light of concerns expressed by higher education clients, we suggest that clients and higher education institutions work closely with in-house counsel, and recommend international student offices to keep abreast of the latest developments in this area. Specifically, colleges and universities should:
Regularly check SEVIS to determine if students’ F-1 status has been terminated and communicate any developments to the affected students as soon as possible.
Prepare to refer international students to immigration lawyers for individualized assistance. Many institutions of higher education have referral lists, but legal clinics available on some campuses are also an option.
Consider options for international students who may choose to leave the United States, specifically how they can continue their studies or transfer to another college or university in their home country. These considerations may be especially important or acute for graduate-level students engaged in fellowships, research, and TA-ships on campus.
Prepare for possible federal immigration enforcement activity on or around campus, including the types of requests for information federal agencies might make, and the institution’s obligations under state and federal law.
Develop and implement a plan to handle campus community and leadership, local community, and political concerns. In addition to planning for internal and external communications, expect that individual immigration cases and class action lawsuits related to F-1 visa revocations and F-1 status terminations may occur.
Recent Decision on Nondiscretionary Performance Bonuses in Pay Calculations Has Wide-Ranging Implications for Illinois Employers
In Illinois, nondiscretionary “performance bonuses,” such as bonuses paid in recognition of employees satisfying certain performance and safety metrics and seniority goals, must be factored into employees’ regular rate of pay when calculating overtime wages, even when those bonuses are not directly tied to the number of hours worked, according to the Illinois Supreme Court’s recent decision in Mercado v. S&C Elec. Co., 2025 IL 129526 (2025).
Background
The employer routinely gave performance bonuses to its non-exempt hourly-paid factory workers. The bonuses were identified as “KPI Incentive,” “MIS bonus,” “Success sharing,” or “Seniority award,” among other descriptors, on employees’ pay stubs. The employer did not factor these bonuses into the employees’ regular rate of pay for purposes of calculating their overtime pay (which, under the Illinois Minimum Wage Law, is one and one-half an employee’s regular rate of pay). It cited the exclusion from the regular rate for “[s]ums paid as gifts such as those made at holidays or other amounts that are not measured by or dependent on hours worked” from the definition of “regular rate.” 56 Ill. Adm. Code 210.410(a).
Court Decision
The Illinois Supreme Court held that the Minimum Wage Law provision provides only one exemption: sums paid as gifts (including gifts “made at holidays” and gifts in the form of “other amounts that are not measured by or dependent on hours worked”).
Because the performance bonuses were not “gifts,” the Court ruled those bonuses were not exempted under this provision, even though the bonuses were not dependent on hours worked.
The Court did not address a separate exclusion under Illinois law for discretionary bonuses “paid in recognition of services performed which are determined at the sole discretion of the employer.”
Implications
This decision has wide-ranging implications for employers in Illinois. Organizations should review all forms of compensation paid to their non-exempt employees to ensure that overtime pay is properly calculated. This is especially important given the Illinois Minimum Wage Law’s steep penalties for underpayment of wages. A prevailing plaintiff may recover triple the amount of the unpaid overtime wages plus five percent of the amount of any such underpayments for each month they remain unpaid, as well as attorneys’ fees and costs.
Massachusetts Court Subjects Nonresident to Income Tax on Gain from Stock Sale
In a decision with troubling potential implications, a Massachusetts appellate court held that a nonresident individual was subject to Commonwealth income tax on capital gain from the sale of his stock in the corporation that he formed and worked for because the court concluded that it related to his trade or business in the Commonwealth. Craig H. Welch v. Comm’r of Rev., No. 24-P-109 (Mass. App. Ct., Apr. 3, 2025).
The Facts: In 2003, Craig Welch (“Welch”), a resident of Massachusetts at the time, formed AcadiaSoft, Inc. (“AcadiaSoft”), a Massachusetts-based business that developed and marketed derivative and collateral management solutions to institutional investors. Over more than a decade, Welch worked exclusively for AcadiaSoft in various capacities, including as its President, Chief Executive Officer, and Treasurer, primarily in Massachusetts, and received a salary. Although initially the corporation’s sole stockholder, over time his stock ownership percentage was diluted as outside investors were brought in and additional financing was obtained.
By 2015, however, Welch no longer had an operational role at AcadiaSoft. In June 2015, AcadiaSoft offered to purchase Welch’s stock, and he accepted the offer and submitted his resignation. Later that month, AcadiaSoft purchased Welch’s stock for $4.7 million. Since Welch had a zero cost basis in his stock, the entire sales proceeds were capital gains for federal income tax purposes.
Significantly, on or about April 30, 2015—two months before the sale—Welch and his wife had moved to New Hampshire, and he was no longer a Massachusetts resident.
From 2003 through 2014, Welch and his wife had filed Massachusetts resident income tax returns. No longer a resident after April 30, 2015, Welch filed a Massachusetts nonresident/part year resident tax return for 2015 but did not report the $4.7 million capital gain as Massachusetts source income.
After an audit, the Department of Revenue (“Department”) assessed income tax on the capital gain, treating it as Massachusetts source income. The Massachusetts Appellate Tax Board (“ATB”) upheld the imposition of the tax, ruling that the stock gain “was of a compensatory nature” attributable to Welch’s employment in Massachusetts. This appeal followed.
Taxation of Massachusetts Non-Residents: Like most states, Massachusetts taxes nonresident individuals only on their in-state source income. “Massachusetts source income” is defined to include income “derived from or effectively connected with . . . any trade or business, including any employment carried on by the taxpayer in the commonwealth” and “gain from the sale of a business or of an interest in a business . . ..” Mass. G.L. c. 62, §5A(a).
The Department‘s regulations provide that the taxation of gain from the sale of a business applies to the sale of interests in, for example, sole proprietorships and partnerships, but that this rule “generally does not apply… to the sale of shares of stock in a C corporation or S corporation, to the extent that the income from such gain is characterized for federal income tax purposes as capital gains,” unless it is “connected with the taxpayer’s conduct of a trade or business . . ..” 830 Code Mass. Regs. § 62.5A.1(3)(c)(8).
Welch argued on appeal that it was AcadiaSoft that was conducting a trade or business, not Welch personally, and that his stock was not compensation for his services since he acquired it before AcadiaSoft conducted any business.
The Decision: The Court, applying a deferential standard of review, upheld the taxation of Welch’s capital gain from the stock sale, holding that it was “derived from and was effectively connected with his trade or business or employment.” According to the Court, because Welch obtained the stock soon after founding AcadiaSoft and expected that the value of the stock would appreciate because of his “hard work,” the ATB had substantial evidence for concluding that Welch’s gain “was derived from his employment.”
Observations: The Court’s decision fails to recognize the distinction between AcadiaSoft’s business—for which it filed Massachusetts corporate tax returns and apportioned 100 percent of its income to the Commonwealth—and Welch’s employment with AcadiaSoft for which he received a salary and paid Commonwealth income tax. Also troubling is that the Court failed to apply the Department’s own regulation providing that Massachusetts source income generally does not include gain from the sale of stock in a corporation characterized as capital gains, not compensation for services, for federal tax purposes. The Court emphasized Welch’s desire that his stock appreciate in value because of his efforts, but that can be said about every founder of a business who anticipates that the business will be successful and that the value of the stock will increase over time. If left standing, the decision would make Massachusetts an outlier in taxing founders of corporate businesses who eventually wish to sell their stock and exit the business.
Federal Judge in Pennsylvania Reverses Dismissal of Medical Marijuana Cardholder’s Disability Discrimination Claim
On April 11, 2025, a federal judge for the U.S. Western District of Pennsylvania reversed his recent decision to dismiss a disability discrimination claim from a job applicant with a medical marijuana card who alleged he had a job offer rescinded following a pre-employment drug screen.
Quick Hits
A federal judge reinstated a disability discrimination claim after a job applicant with a medical marijuana card alleged that his job offer was rescinded without proper consideration of reasonable accommodations for his underlying medical conditions.
The judge had previously dismissed the disability discrimination claim after finding that status as a medical marijuana cardholder was not a qualifying disability.
The ruling underscores the legal uncertainty surrounding the protection of employees’ lawful medical marijuana use under the Pennsylvania Human Relations Act.
While considering a motion to certify an appeal, U.S. District Judge Robert J. Colville reversed his March 2025 dismissal of a disability discrimination claim under the Pennsylvania Human Relations Act (PHRA) brought by a job applicant who alleged a construction company failed to accommodate his medical marijuana use.
Judge Colville said he had “failed to give due consideration” to the allegation the employer did not discuss any reasonable accommodations for the job applicant’s disability other than his medical marijuana use.
The plaintiff, Brian Davis, alleged that Albert M. Higley Company, LLC, rescinded the job offer for a project engineer position following a pre-employment drug screen. Davis alleged that he was diagnosed with anxiety, depression, and attention-deficit/hyperactivity disorder (ADHD) and was certified to use medical marijuana to treat the conditions along with other prescription drugs.
On March 7, 2025, Judge Colville dismissed Davis’s claim for disability discrimination under the PHRA. Still, the judge allowed the suit to continue on a separate claim that the company refused to hire him in violation of Pennsylvania’s Medical Marijuana Act (MMA).
In that ruling, Judge Colville stated he was “constrained” by the 2020 Commonwealth Court of Pennsylvania decision in Harrisburg Area Community College (HACC) v. Pennsylvania Human Rights Commission, which held the PHRA does not require accommodation of an individual’s legal medical marijuana use because it is not a qualified disability.
The ruling was significant in that it was potentially the first instance of a federal court finding that lawful medical marijuana use was not a qualifying disability under the PHRA.
However, in his latest decision, Judge Colville declined to certify the issue for an immediate appeal. Instead, he reinstated the disability discrimination claim “to the extent that it asserts that Defendant failed to engage in the interactive process in good faith by failing to discuss or consider reasonable accommodations other than Plaintiff’s marijuana use.” (Emphasis in the original.)
“To be clear, the Court did not hold that an individual with a disability who is also a medical marijuana user is not entitled to any reasonable accommodation for their disability under the PHRA,” Judge Colville said. “Rather, the Court simply held that continued marijuana use is not a reasonable accommodation under the PHRA.” (Emphasis in the original.)
Notably, the judge said the job applicant had support in a 2020 decision by the U.S. District Court for the Eastern District of Pennsylvania in Hudnell v. Thomas Jefferson University Hospitals, Inc., which had allowed a similar claim to continue where a plaintiff had “alleged a disability apart from her medical marijuana use.”
Judge Colville said that even if the PHRA does not require off-duty marijuana use as an accommodation, the allegations were that the company “summarily rescinded its offer of employment” without exploring various other potential accommodations. Therefore, the company potentially failed to engage in the required interactive process under the PHRA.
“The Court believes that the issue of good faith is a factual question that cannot be resolved at this time,” Judge Colville said.
Next Steps
Judge Colville’s reversal highlights the legal uncertainty around whether employees’ lawful, off-duty medical marijuana use is protected under the PHRA. Several courts have allowed disability discrimination claims for medical marijuana under the PHRA to continue. However, the recent ruling suggests that such claims may only be able to proceed if the medical marijuana use is simply indicative of a separate qualified disability that employers have an obligation to reasonably accommodate. Judge Colville maintained that medical marijuana use itself is not a reasonable accommodation and denied an immediate appeal on that issue.
As such, employers may want to review their drug testing and accommodations policies regarding medical marijuana cardholders in Pennsylvania. Additionally, employers may want to consider engaging in an interactive process with employees who are medical marijuana cardholders, at least to gauge the extent to which there may be another reasonable accommodation for an employee or job applicant with a qualifying disability aside from medical marijuana use.
Update: US Supreme Court Stays Lower Courts’ Orders Reinstating NLRB and MSPB Members, Removing Them Once Again (US)
For the first—but not last—time, the US Supreme Court weighed in on President Donald Trump’s removal of Gwynne Wilcox, a Biden-appointed National Labor Relations Board (NLRB) member (whose removal we discussed in a prior post), and Cathy Harris, a Biden-appointed Merit Systems Protection Board (MSPB) member. Chief Justice Roberts’ April 9 order temporarily stayed the D.C. Circuit’s en banc decision permitting Wilcox and Harris to resume their duties at their respective agencies, effectively re-removing them following their reinstatement by the D.C. Circuit. The most significant consequence of that action is that, once again, the NLRB lacks a quorum, and thus cannot decide cases.
Chief Justice Roberts’ order, which did not address the merits of the case, sets the stage for the Supreme Court to further clarify the scope of the President’s power to remove government officials of multi-member boards like the NLRB and MSPB. Such clarification will almost certainly require the Court to re-examine its 1935 decision in Humphrey’s Executor v. FTC, which held that Congress can impose for-cause removal protections on multi-member boards of independent agencies (in that case, FTC commissioners). The Court reasoned that such removal protections did not unconstitutionally interfere with executive power due to the FTC’s structure (e.g., the FTC’s board was designed to be non-partisan and act with impartiality; the FTC’s duties called for the trained judgment of experts informed by experience; and the commissioners’ staggered terms allowed for the accumulation of technical expertise while avoiding a wholesale change of leadership at any one time). But now, 90 years later, Humphrey’s Executor and its progeny find themselves within the Government’s crosshairs, as the Government insists that the President’s Article II obligation to “take Care that the Laws be faithfully executed” empowers the president to remove, at will, members of multi-member boards such as the NLRB and MSPB, notwithstanding the for-cause removal requirements embedded in the statutes governing those boards.
The Court’s resolution of these two conflicting views of presidential power could have sweeping implications. A decision overruling or paring back Humphrey’s Executor could call into question the constitutionality of the structure of even more independent agencies, such as the Federal Reserve and the National Transportation Safety Board. In such a scenario, for example, a win for the Government could give President Trump the green light to remove Jerome Powell, Chair of the Federal Reserve, about whom he recently commented that his “termination cannot come soon enough .”
We are closely monitoring this litigation and will track additional developments as it progresses through the court system.
What Do Employers Need to Know About the New DHS Alien Registration Requirement?
As further implementation of the January 20, 2025 Executive Orders, DHS recently published an interim final rule regarding the requirement that certain non-citizens register with the U.S. Department of Homeland Security (DHS). The new rule went into effect on April 11, 2025.
The rule is intended to encourage registration for non-immigrants who lack legal status in the U.S. The following non-citizens are considered pre-registered and no action is needed: permanent residents, those with Employment Authorization Documents (EADs), those on sponsored work visas who have an I-94, their family members who have a valid I-94, and a few other categories. See our checklist below for more details.
Employers do not need to take any action at this time other than to continue to have an I-9 on file for all new hires and reverify the I-9 of any employee that has expiring work authorization.
Sheppard Mullin Checklist – DHS Alien Registration Requirement (ARR)
Date: Effective April 11, 2025.
Main Purpose: The new online filing is intended primarily to track individuals who entered the U.S. without inspection.
Exempt from the Online Filing: The registration requirement is aimed only at individuals who are not in the country legally and are not otherwise registered with the U.S. Government. Therefore, exempt individuals include non-citizens who are lawful permanent residents (LPRs), those who have an I-94, those who have an EAD work permit, or those who have an EOIR Immigration Court case. These people were “registered” at the time they entered the U.S., received their EAD work permit, or were placed in removal proceedings.
Canadians: Canadians entering by land generally do not receive an I-94 and if they stay more than 30 days, they are subject to the rule.
How to File: Must file online using Form G-325R. The form asks a for detailed biographic history. See: https://www.uscis.gov/alienregistration
Fee: There is no filing fee, as reflected on the G-325R.
No Attorneys: Attorneys cannot use their online account to assist their clients with registering.
Biometrics: Registration will trigger a biometrics appointment, which does not incur a fee at this time.
Children: Parents must register on behalf of children under the age of 14.
Penalty: Failure to register or produce proof of registration can lead to a misdemeanor conviction, with up to six months of imprisonment and/or a civil fine of $5,000.
Change of Address: All non-citizens must update their address whenever they move. This can be done online at https://www.uscis.gov/addresschange. The same penalties that apply to failing to register, also apply to a non-citizen’s failure to update their address upon moving.
All Non-Citizens Must Carry Papers: Non-citizens who are 18 years of age and older and have an I-94 or EAD work permit must carry this proof on their person at all times, in the unlikely event they are asked by a DHS agent for proof of lawful status. While this requirement is not new, it is being enforced more aggressively.
Additional information about the new DHS alien registration requirement can be found on USCIS’s website: https://www.uscis.gov/alienregistration.
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EEOC Is Permanently Enjoined From Enforcing Portions of PWFA Final Regulations and EEOC’s Title VII Guidance On Harassment in the Workplace Against Catholic Employer Organization
On April 15, 2025, the United States District Court for the District of North Dakota issued its decision granting partial summary judgment to the Catholic Benefits Association, on behalf of its members and the Bismarck Diocese (collectively the CBA). The court found that the portions of the PWFA Final Regulations that require employers to reasonably accommodate limitations arising out of infertility, abortions, and in vitro fertilization violate the CBA’s rights under the Religious Freedom Restoration Act (RFRA). The court also found that the EEOC’s Guidance on Harassment in the Workplace violates the CBA’s rights under the RFRA to the extent the EEOC Guidance forces the CBA to “speak or communicate in favor of abortion, fertility treatments, or gender transition when such is contrary to the Catholic faith; refrain from speaking or communicating against the same when such is contrary to the Catholic faith, use pronouns inconsistent with a person’s biological sex; or allow persons to use private spaces reserved for the opposite sex.”
Because the court granted partial summary judgment and permanently enjoined the EEOC’s enforcement of the PWFA and Guidance On Harassment in the Workplace in this manner, the court declined to address the CBA’s other arguments including that the PWFA final regulations violate the Administrative Procedures Act.
What Does This Mean for Employers?
This ruling, and the court’s injunction, is limited to the CBA and its members. Moreover, the applicability of the court’s reasoning, other than the court’s discussion about whether the CBA had legal standing to bring the case, is limited to RFRA challenges to the PWFA regulations and EEOC Guidance on Harassment in the Workplace. While the EEOC could appeal the decision, it is entirely possible the agency will not do so since the EEOC has indicated its intent to revisit the breadth of the PWFA final regulations once the EEOC regains a quorum of commissioners and the Trump Administration has directed the EEOC to rescind the Guidance on Harassment in the Workplace.
More than half-a-dozen lawsuits have been filed by private employers and a number of states challenging the EEOC’s authority to enact portions of the PWFA Final Regulations. We are continuing to monitor these developments. Please reach out to your Jackson Lewis attorney with any questions about this decision or the other pending cases challenging the PWFA final regulations or the EEOC’s Guidance on Harassment in the Workplace.
High Burden Dooms Intra-District Transfer Request
The US Court of Appeals for the Federal Circuit denied a mandamus petition requesting transfer from the Marshall division to the Sherman division within the US District Court for the Eastern District of Texas, finding that there was lack of clear error and no abuse of discretion in the district court’s decision to deny transfer. In re SAP America, Inc., Case No. 25-118 (Fed. Cir. Apr. 10, 2025) (Dyk, Prost, Chen, JJ.) (per curiam).
Valtrus Innovations and Key Patent Innovations (collectively, Valtrus) filed a patent infringement lawsuit against SAP. SAP moved for an intra-district transfer from the Marshall division, where the case was originally filed, to the Sherman division. In support of the motion, SAP cited the presence of SAP offices, relevant witness residences, and two SAP employees, all located in Sherman. Valtrus opposed the transfer, pointing out that co-pending litigation in Marshall involved the same asserted patents.
The district court denied SAP’s motion, even though the co-pending case had been closed. The district court also pointed out that most of SAP’s witnesses were out of state or international, making either Texas division equally inconvenient for those witnesses. SAP appealed.
The Federal Circuit reviewed the district court’s ruling under the stringent standards for mandamus relief, which are as follows:
There is no other adequate means to attain the desired relief.
There is a clear and indisputable right to relief.
The writ is appropriate under the circumstances.
Under the Federal Circuit’s 2022 decision in In re Volkswagen, there must be “clear abuses of discretion that produce patently erroneous results.”
Under Volkswagen, a court must consider both private and public factors when deciding whether to transfer venue. The private factors are:
The relative ease of access to sources of proof.
The availability of a compulsory process to secure the attendance of witnesses.
The cost of attendance for willing witnesses.
All other practical issues that make trial of a case easy, expeditious, and inexpensive.
The public interest factors are:
The administrative difficulties flowing from court congestion.
The local interest in having localized issues decided at home.
The forum’s familiarity with the law that will govern the case.
The avoidance of unnecessary conflict of laws issues or in the application of foreign law.
The Federal Circuit found that the district court erred in assigning weight to the co-pending litigation in Marshall, which had been closed and had all defendants dismissed by the time the motion to transfer was resolved. The Court added that the district court improperly weighed the court congestion factor against transfer based solely on the case’s smooth progression to trial.
Despite these errors, the Federal Circuit concluded that SAP failed to demonstrate that the denial of transfer was erroneous. The district court had plausibly found the convenience of the two divisions comparable for most potential witnesses who resided outside of Texas, and that SAP had not sufficiently shown that its Sherman-based employees had relevant knowledge or would be trial witnesses. The Court therefore denied SAP’s petition, underscoring the high burden faced by petitioners seeking such extraordinary relief.
Democratic Lawmakers Urge U.S. Department of Labor to Abandon Proposal to Dismantle OFCCP
On April 11, 2025, a group of forty Democratic lawmakers sent a letter to U.S. Secretary of Labor Lori Chavez-DeRemer urging her to “abandon plans to dismantle [the Office of Federal Contract Compliance Programs] and reaffirm the Department’s commitment to protecting equal employment opportunities for federal contract workers.”
Quick Hits
A group of forty lawmakers from the U.S. Senate and U.S. House of Representatives sent a letter to the U.S. Secretary of Labor urging her to abandon proposed plans to drastically reduce and restructure OFCCP.
The lawmakers raised concerns that the cuts could leave federal contractor workers vulnerable to potential discrimination.
The letter comes amidst other OFCCP-related efforts by lawmakers, including the introduction of legislation to codify now-revoked Executive Order 11246.
The April 11 letter, jointly signed by twenty members of the U.S. Senate and twenty members of the U.S. House of Representatives, raises concerns with the U.S. Department of Labor’s (DOL) proposal to reduce the Office of Federal Contract Compliance Programs (OFCCP) by approximately 90 percent through reducing the number of OFCCP personnel, offices, and regions.
Led by Senator Patty Murray (WA) and Representative Shontel Brown (OH), the legislators urged Secretary Chavez-DeRemer to “abandon” the proposed plans while touting OFCCP’s commitment to federal contract workers.
“For decades, OFCCP has worked effectively to prevent and address unlawful discrimination by investigating individual complaints from workers and by proactively reviewing federal contractors’ employment practices,” the lawmakers said in their letter. “This unique power to proactively review whether employers were complying with the law allowed OFCCP to identify discrimination that might have otherwise gone unreported or undiscovered.”
Further, the lawmakers explained that they believe “[d]rastic cuts to staff and shuttered offices in our communities would leave workers vulnerable to discrimination.”
The April 11 letter is signed by several prominent lawmakers, including Senate Minority Leader Chuck Schumer (NY) and Senator Bernie Sanders (VT), among others. Additionally, prior to leading the April 11 letter, Rep. Brown also led sixty-eight of her colleagues in the House on February 5, 2024, cosponsoring and introducing legislation, H.R. 989, that seeks to codify the now-revoked Executive Order 11246.
In early April, Secretary Chavez-DeRemer renewed offers of deferred resignation and voluntary early retirement to OFCCP personnel, after initially offering them in January 2025. These offers were available until April 14. This move comes after the DOL proposed restructuring OFCCP in late February, before the appointment of Catherine Eschbach as the OFCCP’s new director on March 24.
On April 16, 2025, OFCCP may have taken its first steps towards this proposed restructuring through placing much of OFCCP’s workforce on administrative leave.
Exactly how OFCCP may ultimately be restructured or operates in the future remains to be seen as the Department of Labor moves forward amid congressional calls to abandon those same actions.
ERISA Fiduciary Duties: Compliance Remains Essential
The Employee Retirement Income Security Act of 1974 (ERISA) establishes a comprehensive framework of fiduciary duties for many involved with employee benefit plans. Failure to comply with these strict fiduciary standards can expose fiduciaries to personal and professional liability and penalties. With ERISA litigation on the rise, a new administration, and recent news that the Department of Labor (DOL) is sharing data with ERISA-plaintiff firms, a refresher on fiduciary duty compliance is necessary.
What Plans Are Covered?
ERISA’s fiduciary requirements apply to all ERISA-covered employee benefit plans. This generally includes all employer-sponsored group benefit plans unless an exemption applies, such as governmental and church plans, as well as plans solely maintained to comply with workers’ compensation, unemployment compensation, or disability insurance laws.
Who Is A Fiduciary?
A fiduciary is any individual or entity that does any of the following:
Exercises authority over the management of a plan or the disposition of assets.
Provides investment advice regarding plan assets for a fee.
Has any discretionary authority in the administration of the plan.
Note that fiduciary status is determined by function, what duties an individual performs or has the right to perform, rather than an individual’s title or how they are described in a service agreement. Fiduciaries include named fiduciaries. Those specified in the plan documents are plan trustees, plan administrators, investment committee members, investment managers, and other persons or entities that fall under the functional definition. When determining whether a third-party administrator is a fiduciary, it is important to identify whether their administrative functions are solely ministerial or directed or whether the administrator has discretionary authority.
What Rules Must Fiduciaries Follow?
Fiduciaries must understand and follow the four main fiduciary duties:
Duty of Loyalty: Known as the exclusive benefit rule, fiduciaries are obligated to discharge their duties solely in the interest of plan participants and beneficiaries. Fiduciaries must act to provide benefits to participants and use plan assets only to pay for benefits and reasonable administrative costs.
Duty of Prudence: A fiduciary must act with the same care, skill, prudence, and diligence that a prudent fiduciary would use in similar circumstances. Even when considering experts’ advice, hiring an investment manager, or working with a service provider, a fiduciary must exercise prudence in their selection, evaluation, and monitoring of those functions and providers. This duty extends to procedural policies and plan investment and asset allocation, including evaluation of risk and return.
Duty of Diversification: Fiduciaries must diversify plan investments to minimize the risk of large losses, with limited exceptions for ESOPs.
Duty to Follow Plan Documents and Applicable Law: Fiduciaries must act in accordance with plan documents and ERISA. Plans must be in writing, and a summary plan description of the key plan terms must be provided to participants.
Fiduciaries also have a duty to avoid causing the plan to engage in any prohibited transactions. Prohibited transactions include most transactions between the plan and individuals and entities with a relationship to the plan. Several exceptions exist, including one that permits ongoing provision of reasonable and necessary services.
Liabilities and Penalties
An individual or entity that breaches fiduciary duties and causes a plan to incur losses may be personally liable for undoing the transaction or making the plan whole. Additional penalties, often at a rate of 20% of the amount involved in the violation, may also apply. While criminal penalties are rare, are possible when violations of ERISA are intentional. Causing the plan to engage in prohibited transactions may also result in excise taxes established by the Internal Revenue Code.
To limit potential liability, plan sponsors and fiduciaries should ensure the appropriate allocation of fiduciary responsibilities, develop adequate plan governance policies, and participate in regular training. Plan sponsors may purchase fiduciary liability insurance to cover liability or losses arising under ERISA. In addition, the DOL has established the Voluntary Fiduciary Correction Program (VFCP), which can provide relief from civil liability and excise taxes if ERISA fiduciaries voluntarily report and correct certain transactions that breach their fiduciary duties. The VFCP program was recently updated with expanded provisions for self-correction of errors, which are addressed in a previous advisory.
Ames v. Ohio Department of Youth Services: Reverse Discrimination and Background Circumstances
Recent changing perspectives in employment law have brought other topics to the forefront of employment litigation, and reverse discrimination is one of those topics.
Reverse Discrimination
Reverse discrimination refers to the unfair treatment of members of a majority or dominant group, often resulting from policies or actions intended to remedy past discrimination against minority or historically disadvantaged groups. This type of discrimination is frequently associated with affirmative action programs.
Reverse discrimination cases often arise in contexts where affirmative action policies are implemented. Courts examine whether these policies unfairly disadvantage majority-group members while aiming to promote substantive equality.
The concept of reverse discrimination is very controversial. Proponents of affirmative action argue that affirmative action policies are necessary to address systemic inequalities. Critics, however, state that such policies unfairly penalize majority-group members and undermine the principle of non-discrimination.
The Supreme Court has dealt with various reverse discrimination cases, emphasizing the need for policies to balance the promotion of diversity with the protection of all individuals from unfair treatment. The recent decision in Ames v. Ohio Department of Youth Services attempts to clarify that majority-group plaintiffs do not need to demonstrate “background circumstances” to establish a valid case of discrimination.
The Facts
Marlean Ames, a heterosexual woman, was employed by the Ohio Department of Youth Services (DYS) since 2004 and was promoted to Administrator of the Prison Rape Elimination Act (PREA) in 2014. In 2017, Ames was assigned a new supervisor, Ginine Trim, who is gay. Ames alleged that after Trim became her supervisor, she faced discrimination based on her sexual orientation and sex. In 2019, Ames applied for the position of Bureau Chief of Quality but was not selected. Shortly after, she was demoted from her PREA Administrator position, resulting in a significant pay cut. The position was then given to Alexander Stojsavljevic, a 25-year-old gay man.
Ames filed a lawsuit under Title VII, claiming that she was discriminated against because of her sexual orientation and sex. The district court granted summary judgment in favor of the DYS, stating that Ames lacked evidence of “background circumstances” necessary to establish a prima facie case of discrimination against a majority-group member. The U.S. Court of Appeals for the Sixth Circuit affirmed this decision, emphasizing that Ames did not provide sufficient evidence to prove that the DYS was an unusual employer who discriminates against the majority.
Ames appealed to the Supreme Court, which held oral arguments on February 25, 2025. The main issue before the court is whether or not Ames produced adequate evidence of “background circumstances.”
Background Circumstances
In the context of reverse discrimination, background circumstances refer to specific evidence or appropriate factors that support the suggestion that an employer discriminates against majority-group members. This includes, but is not limited to, past instances where the employer has shown a pattern of discriminating against majority-group members; official policies or statements that indicate a preference for minority-group members over majority-group members; or statistical evidence showing a significant disparity in the treatment of majority-group members compared to minority-group members. The concern with the background circumstances standard is that the burden only applies to so-called majority groups, whereas so-called minority groups do not need to meet that burden. In short, the high court will determine if it is fair to hold people to different standards based on their protected characteristics.
The Circuit Split
To further confound the issue, the circuits are split on the use of background circumstances. This includes the Sixth, Seventh, Eighth, and Tenth Circuits, while other circuits do not. The split occurred due to the lack of Supreme Court guidance on reverse discrimination cases, leaving the circuits to figure it out on their own.
What to Expect Next
Given the recent ruling by the Supreme Court, which eliminated affirmative action in college admissions, the Trump Administration’s dismantling of DEI programs, and a rule that appears not to apply equally to aggrieved parties, the Court will more than likely to set a precedent by removing the background circumstances from reverse discrimination cases. A formal decision is expected by the summer.