In Landmark Ruling, Eastern District of Texas Strikes Down FDA’s Final Rule Regulating Laboratory Developed Tests
In the never-ending saga over the battle to regulate laboratory-developed tests (LDTs), the Eastern District of Texas took the wind out of FDA’s sails on Monday, vacating FDA’s Final Rule that intended to regulate LDTs as medical devices similar to in vitro diagnostic (IVD) tests, which are commercially manufactured and undergo pre-market review by FDA.1 Clinical laboratories can halt their plans, for now, to comply with the Final Rule’s May 6, 2025, deadline to implement certain features of FDA’s medical device quality system regulations.
As summarized in our May 6, 2024, client alert, FDA’s Final Rule was set to dramatically alter the regulatory landscape for LDTs with major regulatory and financial implications to clinical laboratories, patients and health care providers.
Clinical laboratories will see the ruling as a major victory for the laboratory industry. The district court’s ruling also comes as one of the first major checks on FDA’s power in the post-Chevron world following last year’s Supreme Court decision in Loper Bright.
Background and LDT Regulatory Timeline
In 1976, Congress enacted the Medical Device Amendments to the Federal Food, Drug, and Cosmetic Act (FDCA), granting FDA explicit authority to regulate medical devices, which included IVDs developed by manufacturers and sold for commercial purposes to laboratories, health care organizations and consumers.
Separate from FDA’s authority, in 1988 Congress passed the Clinical Laboratory Improvement Amendments (CLIA), creating a statutory framework to certify clinical laboratories through quality, proficiency standards and personnel requirements. The Centers for Medicare and Medicaid Services (CMS) oversees CLIA certification and compliance for most laboratories in the country2 that examine materials derived from the human body for the diagnosis, treatment or prevention of disease or to assess the health of human beings.
For decades, FDA did not attempt to assert authority or regulate laboratories or LDTs, which are defined as IVDs “intended for clinical use and that [are] designed, manufactured and used within a single laboratory that is certified under [CLIA].”3 Starting in 1992, FDA claimed that it could regulate LDTs as medical devices through the issuance of a draft Compliance Policy Guide.4 FDA declined to finalize the guidance, however, and assured laboratories that it did not intend to “routinely” exercise its authority over LDTs.5
FDA next asserted that it had jurisdiction over LDTs in a 1996 preamble to a proposed rule regarding device classification levels for certain active ingredients used for preparing LDTs.6 FDA also recognized in the same preamble that “significant regulatory changes in this area could have negative effects” and that FDA would therefore only focus its oversight on “ingredients . . . that moved in commerce” and other tangible articles. FDA never took any final regulatory action to assert its authority over these tests.
In 2010, FDA held a two-day public meeting soliciting feedback on LDT regulation, hinting that it may consider formally regulating LDTs. Four years later, FDA formally released two draft guidance documents proposing a framework for LDT regulation.7 The guidance documents were not well received by Congress, which criticized FDA for significantly shifting the way LDTs are regulated and directed FDA to suspend any efforts to finalize its guidance documents.8 FDA complied and retreated from enacting any final guidance document.
A few years later, Congress considered two different pieces of legislation — The Verifying Accurate Leading-edge IVCT Development Act (VALID) of 2020 and the Verified Innovative Testing in American Laboratories (VITAL) Act of 2020.9 Both bills proposed different approaches to regulating LDTs that would have created a new regulatory pathway under FDA premarket review or deemed LDTs as “services” to be regulated under CLIA. Both bills failed to pass even after being reintroduced in subsequent Congresses.
With failed attempts to regulate LDTs in Congress, FDA announced its attempt to move forward with regulating virtually all LDTs as medical devices in October 2023, which ultimately led to the Final Rule, effective May 6, 2024.
Shortly after the Final Rule went into effect, the American Clinical Laboratory Association (ACLA) and the Association for Molecular Pathology (AMP) sued FDA in two separate lawsuits challenging that the Final Rule violated the Administrative Procedure Act (APA) because it exceeded FDA’s statutory authority and was arbitrary and capricious. The two cases were consolidated into one.
Summary of Court Ruling
Explaining the storied history of LDT regulation, the district court found no question that Congress had considered the unique regulatory issues raised by clinical laboratories and the tests that they develop and perform, and that Congress chose to regulate these tests as “services” under CLIA. This contrasts with the authority Congress granted FDA to regulate “devices,” which the district court concluded under the FDCA to mean “articles in commerce,” not “services” performed by doctors and laboratories.
Considering the distinct legislative history of medical devices and laboratory services, the district court agreed with the plaintiffs that LDTs are “professional medical services that are qualitatively and categorically different from the tangible goods that FDA may regulate as a ‘device,’” and that medical devices defined under the FDCA only refer to “tangible, physical products.” The district court was further unpersuaded by FDA’s argument that an LDT is an “IVD test system” made up of physical components that meet the definition of a medical device.
Rejecting FDA’s argument on two grounds, the court found that (1) FDA had no statutory authority to alter the definition of a device under the FDCA to expand the definition to include laboratory services, and (2) FDA’s self-created “IVD test system” conflates discrete tangible objects with an assortment of laboratory tools that professionals use to deliver a service. Relying heavily on last year’s Supreme Court decision in Loper Bright, the court closely scrutinized the statute and made it abundantly clear that it was not deferring to FDA’s interpretation of the statute and the authority that FDA was claiming from the statute. The court warned that should it accept FDA’s position, it would lead to limitless implications of FDA oversight on all surgical procedures and physical examinations that use “devices,” giving the term an “extraordinary, expansive meaning with far-reaching consequences.”
The court further noted that, should it accept FDA’s theory that an LDT does in fact meet the definition of a medical device under the FDCA, it would “render[] CLIA largely, if not entirely, pointless.” For these reasons, the court determined that FDA’s “asserted jurisdiction” over LDTs “defies the bedrock principles of statutory interpretation, common sense and longstanding industry practice.” Therefore, the court concluded that the Final Rule exceeds FDA’s authority, is unlawful and should be set aside pursuant to the APA.
Finally, in considering the appropriate remedy, the district court found that the circumstances in this case favor nullifying and revoking the Final Rule instead of remanding the Final Rule back to FDA to modify without vacating. In reaching this conclusion, the court considered the extreme financial impact the Final Rule would have on clinical laboratories as well as the unlikelihood that FDA could justify its decision on remand. Therefore, the Final Rule was vacated in its entirety.
What’s Next?
With the Final Rule now vacated, FDA’s “phaseout” policy to bring LDTs under the same regulatory scheme as IVDs is also terminated. Once the LDT Final Rule went into effect last year, laboratories were subject to a phaseout policy that would have required companies to begin complying with certain medical device requirements, such as medical device reporting and complaint handling, beginning on May 6, 2025.
While it is possible that FDA could appeal the decision, we do not expect the current Administration to do so. Experts had already predicted that President Trump was likely to order FDA to repeal, or not enforce, the Final Rule, as HHS under the first Trump Administration had revoked FDA’s guidance document claiming authority to regulate LDTs as devices.
In light of the district court’s ruling, it seems less likely that Congress, and in particular the Republican controlled House, will attempt to revive the bipartisan VALID Act.
In a town where we are taught to “never say never,” we will keep a watchful eye on the Administration and Congress’s reaction to the court’s ruling.
[1] American Clinical Laboratory Ass’n v. FDA, Case No. 4:24-cv-00479 (E.D. Tex.).
[2] New York and Washington are exempt from CLIA, as they have their own state law regulatory oversight framework, which is enforced by the applicable state agency.
[3] LDT Final Rule, 89 Fed. Reg. 37286, 37289 (May 6, 2024).
[4] See FDA, Draft Compliance Policy Guide: Commercialization of Unapproved In Vitro Diagnostic Devices Labeled for Research and Investigation (Aug. 1992).
[5] Food & Drug Admin., IVD Policy Will Not Include Exemptions for “Standard of Care” Tests, The Gray Sheet (Oct. 11, 1993).
[6] 61 Fed. Reg. 10,484, 10,485 (Mar. 14, 1996).
[7] Food & Drug Admin., FDA Notification and Medical Device Reporting for Laboratory Developed Tests (LDTs), and Framework for Regulatory Oversight of Laboratory Developed Tests (LDTs) (Oct. 2, 2014).
[8] H.R. Rep. No. 114-531, at 72 (2016).
[9] VALID Act of 2020, H.R. 6102, 116th Cong. (2020); VITAL Act of 2020, S. 3512, 116th Cong. (2020).
PTAB Discretion in Flux: Lessons from Stellar LLC v. Motorola Solutions Inc.
Overview
Following the Patent Trial and Appeal Board’s (PTAB) new guidance on discretionary denials, the PTAB proceeding in Stellar LLC v. Motorola Solutions Inc., IPR2024-01208, presents an early case study for PTAB practitioners navigating discretionary denials under 35 U.S.C. § 314(a).
This decision highlights how the PTAB is now weighing Fintiv factors, including Sotera stipulations, the effort the parties have spent on co-pending litigation and the existence of additional invalidity grounds in the litigation. As such, this case offers a lens into how discretionary standards are shifting in practice following the rescission of the Guidance Memo.
Why This Case Matters
This case is notable for three primary reasons:
It tests the boundaries of Fintiv factor analysis after the USPTO issued a new guidance memo on discretionary denials.
It forces consideration of how Sotera stipulations are weighed when parallel litigation includes invalidity contentions based on grounds that cannot be addressed in inter partes review (IPR).
It underscores the importance of timing, completeness and strategic framing, both at the Petition and Patent Owner Preliminary Response stages.
Key Lessons for Practitioners
Sotera Stipulations Are Still Powerful but Not Bulletproof: Although a Sotera stipulation can reduce overlapping issues, it may not fully mitigate the Director’s concerns if the petitioner raises broader invalidity arguments in district court, including prior use system prior art not covered by the stipulation.
Advanced Parallel Litigation Can Prompt Denial: The Director stressed that when a district court case is far along, especially with substantial resources already invested and a trial date that precedes the projected PTAB final written decision, this factor strongly favors denial.
Stay of Litigation Entered After Institution of IPR Does Not Factor Into Discretionary Denial: The Director acknowledged that the underlying litigation had been stayed pending the outcome of the IPR but dismissed that fact in a footnote suggesting that the Director will not give any weight to a stay entered after the institution of IPR proceedings.
Fintiv Factor Analysis Remains the Primary Consideration: The Director’s memo confirms that the Fintiv factors are still the focus of the analysis but that the weighing of these factors may change going forward. As this decision demonstrates, even if certain factors (like a Sotera stipulation) weigh against denial, other factors (like the significant investment in the parallel proceeding) can tip the scales toward discretionarily denying institution.
This decision highlights the need for petitioners and patent owners to recalibrate their strategies considering the evolving PTAB approach toward discretionary denials. Petitioners must act swiftly, frame petitions comprehensively and understand how Sotera stipulations, while still valuable, may no longer be sufficient in cases involving advanced district court proceedings or broader invalidity issues.
For patent owners, this decision underscores the strategic importance of building a robust litigation record early to fortify the Fintiv-based challenges. As the PTAB’s discretionary standards continue to shift, timing, procedural posture and substantive alignment across forums will be critical to succeed.
Environmental YIR: 2024 Regulatory Legacies and Impacts
This report provides an overview of major federal environmental regulations and court decisions of 2024. Landmark U.S. Supreme Court decisions with lasting consequences for environmental policy include Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024),1 which ended judicial deference to administrative agencies, and Corner Post v. Federal Reserve, 603 U.S. 799 (2024), which opened the doors of federal courts to many more plaintiffs challenging regulations. These decisions have subsequently bolstered efforts to limit or rollback regulatory actions, both by industry and by members of the Trump administration. The Congressional Review Act (CRA), which allows Congress to rescind or invalidate new regulations, has also been used as the basis for invalidating many of the environmental regulations adopted since August 2024.
Click here to read the full article.
Fifth Circuit Court of Appeals Negates Ruling on Federal Contractor Minimum Wage
On March 28, 2025, the Fifth Circuit Court of Appeals vacated its previous ruling that permitted a $15 per hour minimum wage for federal contractors, shortly after President Donald Trump revoked the Biden administration rule setting that wage rate.
Quick Hits
The Fifth Circuit vacated its decision to uphold a $15 per hour minimum wage for federal contractors.
The court acted shortly after President Trump rescinded a Biden administration rule raising the minimum wage for federal contractors to $15 per hour.
An Obama-era rule establishing a $13.30 per hour minimum wage for federal contractors still stands.
On the website for the U.S. Department of Labor, the agency said it is “no longer enforcing” the final rule that raised the minimum wage for federal contractors to $15 per hour with an annual increase depending on inflation.
As of January 1, 2025, the minimum wage for federal contractors was $17.75 per hour, but that rate is no longer in effect. Therefore, an Obama-era executive order setting the minimum wage for federal contractors at $13.30 per hour now remains in force.
Some federal contracts may be covered by prevailing wage laws, such as the Davis-Bacon Act or the McNamara-O’Hara Service Contract Act. Those prevailing wage laws are still applicable.
Many states have their own minimum wage, and those vary widely.
Background on the Case
In February 2022, Louisiana, Mississippi, and Texas sued the federal government to challenge the Biden-era Executive Order 14026, which directed federal agencies to pay federal contractors a minimum wage of $15 per hour. The states argued the executive order violated the Administrative Procedure Act (APA) and the Federal Property and Administrative Services Act of 1949 (FPASA) because it exceeded the president’s statutory authority. The states also claimed the executive order represented an “unconstitutional exercise of Congress’s spending power.”
On February 4, 2025, the Fifth Circuit Court of Appeals upheld the $15 per hour minimum wage for federal contractors. A three-judge panel ruled that this minimum wage rule was permissible under federal law.
On March 14, 2025, President Trump rescinded the Biden-era executive order that established a $15 per hour minimum wage for federal contractors. In effect, that made the earlier court ruling moot, according to the Fifth Circuit.
Next Steps
Going forward, the Obama-era $13.30 minimum wage rate for federal contractors still stands. Federal contractors operating in multiple states may wish to review their policies and practices to ensure they comply with state minimum wage laws and federal prevailing wage laws. If they use a third-party payroll administrator, they may wish to communicate with the administrator to confirm legal compliance.
Delaware Enacts Sweeping Changes to the Delaware General Corporation Law
On March 25, 2025, the governor of Delaware signed into law Senate Bill 21, over much opposition from the plaintiffs’ bar and some academics. The bill, which amends Sections 144 and Section 220 of the Delaware General Corporation Law, 8 Del. C. (the “DGCL”), seeks to provide clarity for transactional planners in conflicted and controller transactions, and seeks to limit the reach of Section 220 books and records demands. These amendments significantly alter the controller transaction and books and records landscape.
Background
Senate Bill 21 comes in the backdrop of heightened anxiety over whether Delaware will retain its dominance in the corporate law franchise. Businesses have cited a seemingly increased litigious environment in Delaware, and when coupled with a handful of high-profile companies redomesticating or considering redomesticating to other jurisdictions (see our blog article about the Tripadvisor redomestication here), other states such as Texas and Nevada making a strong push to accommodate for new incorporations and redomestications, and a series of opinions out of the Delaware Court of Chancery that were unpopular in certain circles, concern was growing of Delaware falling from its position as the leading jurisdiction for corporate law.
This is not the first time the Delaware legislature has acted to re-instill confidence in Delaware corporate law to the market. Senate Bill 21 also comes less than a year after Senate Bill 313 was signed into law. Senate Bill 313, coined the “market practice” amendments, sought to address the decisions in West Palm Beach Firefighters’ Pension Fund v. Moelis & Company, 311 A.3d 809 (Del. Ch. 2024), Sjunde AP-Fonden v. Activision Blizzard, 124 A.3d 1025 (Del. Ch. 2024), and Crispo v. Musk, 304 A.3d 567 (Del. Ch. 2023), which many found surprising. And perhaps most famously, Section 102(b)(7), the director exculpation clause (now the director and officer exculpation clause following an amendment in 2022), was enacted in the wake of the Delaware Supreme Court’s decision in Smith v. Van Gorkom, 488 A.2d 858 (Del. 1985), which caused shockwaves throughout the corporate law community as well as the director and officer insurance market.
Senate Bill 21 Amendments
Section 144. Section 144 of the DGCL was revamped entirely from being a provision speaking on the voidability of conflicted transactions, into a statutory safe harbor for conflicted and controller transactions. The essence of the new Section 144 is defining what a controlling stockholder is, and providing different safe-harbor frameworks for conflicted transactions, controlling stockholder transactions, and controlling stockholder “go private” transactions for public companies.
Controllers are now statutorily designated as those persons (together with affiliates and associates) that (1) has majority control in voting power, (2) has the right to nominate and elect a majority of the board, or (3) possess the functional equivalent of majority control by having both control of at least one-third in voting power of the outstanding stock entitled to vote generally in the election of directors and the power to exercise managerial authority. The last category will likely be the subject of much litigation in the future, but the defined boundaries will limit a plaintiff’s ability to cast a person as a controller.
Under the new Section 144, controllers (and directors or officers of a controlled company) can shield themselves from a fiduciary claim in a conflicted transaction if (1) a committee of 2 or more disinterested directors that has been empowered to negotiate and reject the transaction, on a fully-informed basis, approve or recommend to approve (by majority approval) the transaction, or (2) it is approved by a fully-informed, uncoerced, affirmative vote of a majority of the votes cast by the disinterested stockholder. And in a “go private” transaction, both (1) and (2) above need to be accomplished. Such actions will grant the transaction “business judgment rule” deference. This is a significant change from recent Delaware Supreme Court precedent under Kahn v. M&F Worldwide Corp., 88 A.3d 635 (Del. 2014) (“MFW”), and its progeny holding that a controller transaction providing a non-ratable benefit to the controller will be reviewed under the discerning “entire fairness” standard unless the transaction is conditioned “ab initio” (i.e., at the outset) on the approval of a majority of fully-informed disinterested director and fully-informed, disinterested and uncoerced stockholders. The legislature has spoken that the spirit and structure of MFW will only apply to “go private” transactions, whereas in a non-“go private” transaction the controller needs to meet just one of the MFW prongs, and a disinterested director cleansing does not have to be “ab initio.” Note also that Section 144 provides that controllers are not liable for monetary damages for breaches of the duty of care.
New Section 144 also creates a new presumption that directors of public corporations that are deemed independent to the company under exchange rules are disinterested directors under Delaware law (and, if the director meets such independence criteria with respect to a controller, the director is presumed disinterested from such controller). To overcome this presumption, there must be “substantial and particularized facts” of a material interest or a material relationship with a person with a material interest in the act or transaction. Note that NYSE and NASDAQ independence is a somewhat different inquiry from director disinterestedness under Delaware corporate law. To qualify as independent for exchange purposes, directors cannot hold management positions at the company, its parents or subsidiaries, and former executives are not considered independent for three years after their departures. See Nasdaq Rule 5605 and NYSE Listed Company Manual 303A.02. A director also does not qualify as independent if the director or their families received more than $120,000 in compensation from the company in any 12-month period in the prior three years. In contrast, disinterestedness of a director under Delaware law has been historically a much more fact-and-circumstances inquiry, where judges have looked to things like co-owning an airplane, personal friendships and other “soft” factors.
Section 220. Under Section 220, a stockholder is entitled to examine a corporation’s “books and records” in furtherance of a “proper purpose” reasonably related to the person’s status as a stockholder. The use of this potent tool has proliferated through the years, with stockholders of Delaware corporations becoming increasingly savvy, sophisticated and demanding with their books and records demands to investigate potential corporate wrongdoings before filing suit. Delaware courts have encouraged the use of Section 220, in many cases urging stockholders to use the “tools at hand” ahead of filing suit, presumably with the hope of curtailing bad claims clogging up the docket.
The amended Section 220 limits the universe of what a stockholder may demand under Section 220. Prior to the amendments, a stockholder could pursue materials, even if not “formal board materials,” if they make particularized allegations of the existence of such materials and a showing that an investigation of the suspected wrongdoing was “necessary and essential.” The statute, as amended, limits the ability for stockholders to pursue materials such as personal director or officer emails that may have relevant information, which could be allowed under the prior regime. Under the amended Section 220, if what the stockholder seeks is not part of the nine types of “books and records” spelled out in the statute, the stockholder cannot have access to it in a Section 220 books and records demand.
Questions Going Forward
The amendments to Sections 144 and 220 collide with or directly overturn several Delaware caselaw precedents. The landscape has changed, and we will see how Delaware corporations and its constituents respond. From a transactional planning perspective, the safe-harbors of Section 144 provide much-needed guidance, but with limited caselaw overlay interpreting the boundaries of the safe-harbors, the structuring is not without risk.
Turning back to the backdrop of Senate Bill 21: does this fix the “DExit” concern? Perhaps. But these amendments undoubtedly swing the pendulum to the corporation, controller and management. Whether it is swinging back toward the center is up for debate, but what is not debatable is that preserving the Delaware corporate law franchise depends upon balance. Through the legislative process there were some institutional investors that opposed Senate Bill 21. We will see what kinds of moves, if any, investors of Delaware corporations will make going forward.
Finally, is Section 144 an “opt out” provision? The DGCL is a regime of mandatory statutes, enabling statutes, and default statutes one can opt in or out of. Returning to Section 102(b)(7), this exculpation provision is a well-known example of an opt-in, where a corporation has the option to add that exculpation clause to the company’s certificate of incorporation. Section 203, on the other hand, is an “opt out” statute where a corporation can choose not to have certain restrictions on business combinations with interested stockholders. In the legislative process, several prominent corporate law professors sought to have Senate Bill 21 revised such that it would be a charter “opt-in,” meaning that the default is the status quo, and companies (with stockholder approval) can adopt the controller transaction safe-harbor and books and records limitations in the new Sections 144 and 220. This proposal was ultimately not accepted, but there has been some mention that the text of the new Section 144 suggests it is actually an “opt out” statute. If that is the case, and investors do feel strongly about the Senate Bill 21 amendments, we may see stockholder proposals in the coming years for amendments to the corporate charter to opt out of the new Sections 144 and 220. We will watch the SEC Rule 14a-8 proposals in upcoming proxy cycles to see if this is the case.
Thompson v. United States (No. 23-1095)
William Blake once observed that “a truth that’s told with bad intent, beats all the lies you can invent.” It turns out the Supreme Court agrees, at least for escaping liability under 18 U.S.C. § 1014. In Thompson v. United States (No. 23-1095), a unanimous court held that this statute criminalizes only false statements and not statements that are misleading but literally true.
Patrick Thompson took out three loans from the Washington Federal Bank for Savings at various times. He first borrowed $110,000 in 2011. Then in 2013, he borrowed an additional $20,000. The year after that, he borrowed $89,000 more. These three loans resulted in a total loan balance of $219,000. In 2017, however, the Washington Federal Bank for Savings failed, and the FDIC assumed responsibility for collecting the bank’s outstanding loans. As part of the FDIC’s collection attempts, Planet Home Lending, the FDIC’s loan servicer, sent Thompson an invoice for $269,120.58, reflecting his principal amount plus unpaid interest.
After receiving the invoice, Thompson called Planet Home Lending and professed confusion as to where the $269,120.58 figure came from. On the call (which, unfortunately for our supposedly befuddled borrower, was recorded) Thompson said “I borrowed the money, I owe the money—but I borrowed…I think it was $110,000.” Thompson later received a call from two FDIC contractors, whose notes of the call reflect that Thompson mentioned borrowing $110,000 for home improvement. He later settled his debt with the FDIC for $219,000—an amount that coincidentally reflected the exact principal amount of the loans he had taken out but apparently could not recall.
Any elation he felt over his $50,000 in interest savings was likely cut short, however, when he was indicted on two counts of violating 18 U.S.C. § 1014. That statute prohibits “knowingly mak[ing] any false statement or report . . . for the purpose of influencing in any way the action of . . . the Federal Deposit Insurance Corporation . . . upon any . . . loan.” One count related to his call to Planet Home Lending, and the second to his call with the FDIC contractors. Apparently secure in his belief in his own veracity, Thompson proceeded to trial. But the jury reached a different conclusion regarding his trustworthiness and convicted him of both counts.
He moved for acquittal or a new trial, arguing that a “conviction for false statements cannot be sustained where, as here, the alleged statements are literally true, even if misleading.” Thompson argued that his statements about borrowing $110,000 were literally true because he had in fact borrowed that amount of money from the Bank, even though he later borrowed more. Cf. Mitch Hedberg (“I used to do drugs. I still do, but I used to too.”). The district court denied the motion, finding that “literal falsity” was not required to violate section 1014 under Seventh Circuit precedent. The Seventh Circuit affirmed, holding that “misleading representations” were criminalized by that statute.
In a unanimous opinion by Chief Justice Roberts, the Supreme Court reversed and remanded. In their view, this was a simple case. The plain text of the statute criminalizes “knowingly mak[ing] any false statement or report.” But “false and misleading are two different things” because a “misleading statement can be true.” And because “a true statement is obviously not false,” misleading-but-true statements are outside the scope of the statute.
Much in the case ultimately turned on whether the natural reading of “false” includes a true but misleading statement. As one of many colorful examples of how even true statements can be misleading, Roberts discussed a hypothetical, which the Government conceded at oral argument, that “[i]f a doctor tells a patient, ‘I’ve done a hundred of these surgeries,’ when 99 of those patients died, the statement—even if true—would be misleading because it might lead people to think those surgeries were successful.” (The statement would be equally true—and equally misleading—if all 100 patients had died, but perhaps the Court thought that even its hapless hypothetical surgeon was unlikely to have botched all his operations). With that recognition in mind, Roberts quickly rejected the Government’s argument made with “dictionary in [one] hand” and “thesaurus in the other hand” that false can also simply mean “deceitful” and that “false and misleading have long been considered synonyms.” Unimpressed with the stack of books the Government brought to bear, the Court observed that this argument merely “point[ed] out the substantial overlap between the two terms.”
Finally, the Chief turned to context and precedent. Starting with the former, Roberts noted that many other criminal statutes do criminalize both false and misleading statements, including “[m]any other statutes enacted in the same period” as section 1014 (like such stalwarts of the federal code as the Perishable Agricultural Commodities Act). This gave rise to the presumption that Congress’s omission of the term “misleading” from section 1014 was deliberate. And as to precedent, Roberts found support in Williams v. United States (1982), where the Court stated that “a conviction under §1014 requires at least two things: (1) the defendant made a statement, and (2) that statement can be characterized as ‘false’ and not ‘true.’”
Justices Alito and Jackson each filed a brief concurrence. Justice Alito emphasized that “context” is key when assessing whether a misleading statement crosses the line into being false. Justice Jackson wrote separately to note that the jury instructions in Thompson’s case had actually been correct, referencing only false statements while making no mention of misleading statements. In her view, then, there was “little for the Seventh Circuit to do on remand but affirm the District Court’s judgment upholding the jury’s guilty verdict.”
Delligatti v. United States (No. 23-825)
Federal law provides a mandatory minimum sentence of five years for a person who uses or carries a firearm during a “crime of violence.” In Delligatti v. United States (No. 23-825), the Supreme Court addressed whether a crime of omission involves the “use” of physical force, thus subjecting a defendant to the sentencing enhancement. A 7-2 Court held that it does.
Salvatore Delligatti is an associate of the Genovese crime family. Delligatti had been hired by a gas station owner to take out a neighborhood bully and suspected police informant. Delligatti, in turn, recruited a local gang to carry out the job and provided them with a gun and a car. Unfortunately for Delligatti, the job was thwarted twice, once when the gang abandoned the plan because there were too many witnesses present, and second by the police, who had discovered the plot. Delligatti was charged with multiple federal offenses, including one count of using or carrying a firearm during a “crime of violence” pursuant to 18 U.S.C. § 924(c).
Section 924(c) states that an offense qualifies as a crime of violence if it “has as an element the use, attempted use, or threatened use of physical force against a person or property of another.” To determine whether an offense falls within Section 924(c), courts employ the so-called categorical approach, asking whether the offense in question always involves the use, attempted use, or threatened use of force. The Government argued that Delligatti’s offense met this requirement because he had committed attempted second-degree murder under New York law. Before trial, Delligatti moved to dismiss his Section 924(c) charge arguing the Government could not establish a predicate crime of violence. The District Court disagreed, holding that there “can be no serious argument” that attempted murder is not a crime of violence. A jury convicted Delligatitti on all counts and he was sentenced to 25 years of imprisonment.
On appeal to the Second Circuit, Delligatti argued that New York’s second-degree murder statute fell outside Section 924(c)’s elements clause because it could be committed either by an affirmative act or by an omission. But the Second Circuit affirmed his conviction, holding that causing (or attempting to cause) bodily injury necessarily involves the use of physical force, even if the injury is caused by an omission. The Supreme Court granted certiorari to decide whether an individual who knowingly or intentionally causes bodily injury or death by failing to take action uses physical force within the meaning of Section 924(c).
Justice Thomas, writing for the majority, held that precedent, congressional intent, and logic refuted Delligatti’s challenge to his conviction. First precedent: In United States v. Castleman (2014), the Court interpreted a statute that prohibited anyone convicted of misdemeanor domestic-violence crimes, which similarly requires the use of physical force, from owning a firearm. In Castleman, the Court held that it was “impossible to cause bodily injury without applying force,” and that this force can be applied directly or indirectly, such as sprinkling poison in a victim’s drink, even though sprinkling poison does not itself involve force. Put differently: whenever someone knowingly causes physical harm, he uses force for the purposes of the statute. (Indeed, Delligatti had conceded that it was possible to use violent force indirectly, such as “when a person tricks another into eating food that has aged to the point of becoming toxic.”)
Justice Thomas then rebuffed Delligatti’s contention that one does not use physical force against another through deliberate inaction. By way of further example, a car owner makes “use” of the rain to wash a car by leaving it out on the street, or a mother who purposefully kills her child by declining to intervene when the child finds and drinks bleach makes “use” of bleach’s poisonous properties. Thomas thus concluded that crimes of omission qualify as a Section 924(c) crime of violence because intentional murder is the prototypical crime of violence, and it has long been understood that “one could commit murder by refusing to perform a legal duty, like feeding one’s child.” He noted that there is a preference for interpretations of Section 924(c) that encompass prototypical crimes of violence over ones that do not. And, at the time of Section 924(c)’s enactment, the principle that even indirect causation of bodily harm involves the use of violent force was well-established in case law, treatises, and various state laws. This violent force could be accomplished with battery-level force, i.e., force satisfied by “even the slightest offensive touching,” or by deceit or other nonviolent means.
In dissent, Justice Gorsuch, joined by Justice Jackson, continued with the majority’s approach of reasoning by example, only this time concluding that Section 924(c) does not reach crimes of omission. He began by asking the reader to imagine “a lifeguard perched on his chair at the beach who spots a swimmer struggling against the waves. Instead of leaping into action, the lifeguard chooses to settle back in his chair, twirl his whistle, and watch the swimmer slip away. The lifeguard may know that his inaction will cause death. Perhaps the swimmer is the lifeguard’s enemy and the lifeguard even wishes to see him die. Either way, the lifeguard is a bad man.” But while the lifeguard may be guilty of any number of serious crimes for his failure to fulfill his legal duty to help the swimmer, the lifeguard’s inaction does not qualify as a “crime of violence.”
Justice Gorsuch reached this conclusion primarily through statutory interpretation. In his view, when Congress enacted Section 924(c), “to use” meant “to employ,” “to convert to one’s service,” or “to avail one’s self of” something, terms that imply action, not inaction, inertia, or nonactivity. In his view, the physical force needed to commit a crime of violence must be a physical act, as well as one that is violent (extreme and severe, as opposed to “mere touching” consistent with battery). So, in the lifeguard example, by remaining in his chair, the lifeguard does not employ “even the merest touching, let alone violent physical force.” And while Gorsuch acknowledged that crimes of omission can still be serious, he explained that Section 924(c) was not written to reach every felony found in the various state codes, so the Court should not stretch the statute’s terms to reach crimes of inaction, inertia, or nonactivity. He also pointed out that when Congress was considering defining crime of violence to require the use of physical force, a Senate report discussed the hypothetical of the operator of a dam who refused to open floodgates during a flood, thereby placing residents upstream in danger, and concluded that the dam operator would not be committing a crime of violence because he did not use physical force. Finally, Gorsuch pointed out that crimes of omission more naturally fit within another subsection of Section 924(c), which the Court held was unconstitutionally vague in United States v. Davis (2019), showing that Congress has had no difficulty addressing crimes of omission elsewhere.
Virginia Expands Non-Compete Restrictions Beginning July 1, 2025
At the end of March, Governor Glenn Youngkin signed SB 1218, which amends Virginia’s non-compete ban for “low-wage” workers (the “Act”) to include non-exempt employees under the federal Fair Labor Standards Act (the “FLSA”).
The expanded restrictions take effect July 1, 2025.
What’s New?
As we discussed in more detail here, since July 2020, the Act has prohibited Virginia employers from entering into, or enforcing, non-competes with low-wage employees. Prior to the amendment, the Act defined “low-wage employees” as workers whose average weekly earnings were less than the average weekly wage of Virginia, which fluctuates annually and is determined by the Virginia Employment Commission. In 2025, Virginia’s average weekly wage is $1,463.10 per week, or approximately $76,081 annually. “Low-wage employees” also include interns, students, apprentices, trainees, and independent contractors compensated at an hourly rate that is less than Virginia’s median hourly wage for all occupations for the preceding year, as reported by the U.S. Bureau of Labor Statistics. However, employees whose compensation is derived “in whole or in predominant part” from sales commissions, incentives or bonuses are not covered by the law.
Effective July 1, 2025, “low-wage employees” will also include employees who are entitled to overtime pay under the FLSA for any hours worked in excess of 40 hours in any one workweek (“non-exempt employees”), regardless of their average weekly earnings. In other words, the amendment will extend Virginia’s non-compete restrictions to a significantly larger portion of the Commonwealth’s workforce.
A Few Reminders
The amendment does not significantly alter the other requirements under the Act regarding non-competes, including the general notice requirements and ability for a low-wage employee to institute a civil action. Although Virginia employers are not required to give specific notice of a noncompete to individual employees as some other states require, they must display a general notice that includes a copy of the Act in their workplaces. Failing to post a copy of the law or a summary approved by the Virginia Department of Labor and Industry (no such summary has been issued) can result in fines up to $1,000. Therefore, Virginia employers should update their posters to reflect the amended Act by July 1, 2025.
Employees are also still able to bring a civil action against employers or any other person that attempts to enforce an unlawful non-compete. Low-wage employees seeking relief are required to bring an action within two years of (i) the non-competes execution, (ii) the date the employee learned of the noncompete provision, (iii) the employee’s resignation or termination, or (iv) the employer’s action aiming to enforce the non-compete. Upon a successful employee action, courts may void unlawful non-compete agreements, order an injunction, and award lost compensation, liquidated damages, and reasonable attorneys’ fees and costs, along with a $10,000 civil penalty for each violation.
While the law creates steep penalties for non-competes, nothing within the legislation prevents an employer from requiring low-wage employees to enter into non-disclosure or confidentiality agreements.
Takeaways
The amendment emphasizes the importance for Virginia employers to correctly classify their employees as exempt or non-exempt under the FLSA. Additionally, the amendment does not apply retroactively, so it will not affect any non-competes with non-exempt employees that are entered into or renewed prior to July 1, 2025. Nevertheless, enforcing non-compete agreements with non-exempt employees may be more challenging after this summer, so Virginia employers may wish to consider renewing such agreements without non-compete provisions to ensure other provisions can be properly enforced.
HUD’s Enforcement of the Violence Against Women Act: What Housing Providers Should Know
The Violence Against Women Act (VAWA), enacted in 1994, was most recently amended in 2022. As part of its 2022 reauthorization, the U.S. Department of Housing and Urban Development (HUD) and the Attorney General of the United States are now mandated to implement and enforce the housing provisions of VAWA consistently and in a manner that affords the same rights and remedies as those provided for in the Fair Housing Act (FHA). This is reflected in new forms updated from HUB in February 2025 regarding the protections for victims of domestic violence.
Pursuant to VAWA, anyone who has experienced domestic violence, dating violence, sexual assault, and/or stalking:
Cannot be denied admission to or assistance under a HUD-subsidized or -assisted unit or program because of VAWA violence/abuse.
Cannot be evicted from a HUD-subsidized unit or have their assistance terminated because of VAWA violence/abuse.
Cannot be denied admission, evicted, or have their assistance terminated for reasons related to the VAWA violence/abuse, such as having an eviction record, criminal history, or bad credit history related to the VAWA violence/abuse.
Must have the option to remain in their HUD-subsidized housing, even if there has been criminal activity directly related to the VAWA violence/abuse.
Can request an emergency transfer for safety reasons related to VAWA violence/abuse.
Must be allowed to move with continued assistance (if the victim has a Section 8 Housing Choice Voucher).
Must be able to self-certify using the HUD VAWA self-certification form (Form HUD-5382) and not be required to provide additional proof unless the housing provider has conflicting information about the violence/abuse.
Must receive HUD’s Notice of VAWA Housing Rights (Form HUD-5380) and HUD’s VAWA self-certification form (Form HUD-5382) from the housing provider when:
Denied admission to a HUD-subsidized unit or HUD program
Admitted to a HUD-subsidized unit or HUD program and/or
Issued a notice of eviction from a HUD-subsidized unit or a notice of termination from a HUD program.
Has a right to strict confidentiality of information regarding their status as a survivor.
Can request a lease bifurcation from the owner or landlord to remove the perpetrator from the lease or unit.
Cannot be coerced, intimidated, threatened, or retaliated against by HUD-subsidized housing providers for seeking or exercising VAWA protections.
Has the right to seek law enforcement or emergency assistance for themselves or others without being penalized by local laws or policies for these requests or because they were victims of criminal activity.
EnforcementAs such, HUD’s Office of Fair Housing and Equal Opportunity (FHEO) now enforces VAWA by accepting and investigating complaints thereunder using its FHA complaint process. If a housing provider is found by HUD to have violated VAWA and the matter is not settled via HUD’s conciliation process, HUD may refer the matter to the Department of Justice (DOJ) for litigation and/or enforcement.
HUD issued a press release regarding two settlements of VAWA cases pursuant to its enforcement authority under the VAWA Reauthorization Act of 2022 in September of 2023.
THE FIRST CASE involved a tenant in Nevada who requested an emergency transfer after being stalked by a former partner. The complaint alleged that the respondent public housing agency in Nevada and its housing specialist (a) demanded confusing and contradictory documentation from the charging party that it was not permitted to request under VAWA, (b) threatened to revoke the charging party’s Housing Choice Voucher, (c) denied her request to extend her voucher, and (d) stopped paying its portion of the rent when the charging party prepared to move to protect her safety.
HUD found that the housing authority lacked an emergency transfer plan that would allow survivors who qualify to move quickly without losing their assistance. The case settled for an agreement to implement an emergency transfer plan, to hire outside experts to provide VAWA training, and to pay the charging party monetary compensation.
THE SECOND CASE cited in the 2023 press release involved a housing provider and property manager in California who were alleged to have denied the charging party’s application due to a history of violations of previous rental agreements that were allegedly related to her status as a survivor of dating violence. The housing provider maintained that the charging party did not disclose her status as a dating violence survivor, but acknowledged that it failed to provide information about her rights under VAWA or advise her about how she might appeal when it sent her the denial letter.
This settlement agreement involved (a) some monetary amount, (b) placing the charging party on the top of a waitlist for the next available unit at the property or a companion property, (c) a revision of the housing provider’s policies to include a VAWA policy, (d) the establishment of a VAWA Rights Coordinator position, and (e) the requirement that its employees undergo annual VAWA training.
HUD issued press releases regarding two more cases it settled under VAWA in 2024.
THE FIRST CASE addressed claimed violations of VAWA as well as Section 504 of the Rehabilitation Act, which prohibits discrimination in housing for residents in communities that receive federal funding. This matter involved multiple allegations that reasonable accommodation and modification requests were denied by housing providers in Tennessee, as well as allegations of failure to provide requested VAWA transfers. In addition to non-monetary components similar to those in the cases mentioned previously, this case settled for $50,000.
THE SECOND CASE, in June 2024, involved a HUD-negotiated settlement with a Michigan housing provider alleged to have violated VAWA.. That matter involved a landlord who allegedly did not respond to the charging party’s rental application due to her vision impairment and because she disclosed that a previous landlord had terminated her tenancy due to dating violence and stalking. The monetary component of that settlement agreement was $8,500, in addition to VAWA-related training and an agreement to ensure that the housing provider’s policies and procedures complied with VAWA.
TakeawaysAs noted above, housing providers should ensure that their employees are familiar with VAWA requirements and should incorporate these requirements into their regular fair housing training sessions. They also should take advantage of the website HUD released in 2023 to help navigate VAWA’s housing protections, as it features the latest updates, frequently asked questions about VAWA, and VAWA training resources. It appears that HUD’s enforcement of rights of domestic violence victims to housing pursuant to VAWA will continue to grow absent an indication from the new HUD Secretary of a change in this policy, which to date has not been announced.
NEW HAMPSHIRE DEEPFAKE SCANDAL TCPA LAWSUIT: Court Refuses To Dismiss Claims Against Platforms That Allegedly Aided In Sending The AI/Deepfake Calls Impersonating President Biden
Hi TCPAWorld! Remember last year when that political consultant from Texas hired the New Orleans magician to sound like Joe Biden in order to make calls using AI technology to New Hampshire voters in an attempt to convince them not to vote?
Well, that saga continues!
So for some background here, Steve Kramer, a political consultant, used AI technology to create a deepfake recording of President Joe Biden’s voice. Days before the New Hampshire primary, nearly 10,000 voters received a call in which the AI voice falsely suggested that voting in the primary would harm Democratic efforts in the general election. To further the deception, Kramer spoofed the caller ID to display the phone number of Kathleen Sullivan, a well-known Democratic leader. Voice Broadcasting Corporation and Life Corporation enabled the call campaign, providing the technology and infrastructure necessary to deliver the calls.
Steve Kramer, Voice Broadcasting Corporation, and Life Corporation in the US District Court of New Hampshire were sued on March 14, 2024, for violations of the TCPA (as well as violations of the Voting Rights Act of 1965 and New Hampshire statutes regulating political advertising) by the League of Women Voters of the United States, the League of Women Voters of New Hampshire, and three individuals who received those calls. League of Women Voters of New Hampshire et al v. Steve Kramer et al, No. 24-CV-73-SM-TSM.
Broadcasting Corporation and Life Corporation filed a motion to dismiss arguing 1) they did not “initiate” the at-issue calls and 2) these calls did not violate the TCPA because they were “’political campaign-related calls,’ which are permitted when made to landlines, even without the recipient’s prior consent.”
The court denied their motion on 3/26/25 finding that the plaintiffs adequately alleged a plausible claim for relief under the TCPA. League of Women Voters of New Hampshire et al v. Steve Kramer et al, No. 24-CV-73-SM-TSM, 2025 WL 919897 (D.N.H. Mar. 26, 2025).
The TCPA makes it unlawful “to initiate any telephone call to any residential telephone line using an artificial or prerecorded voice to deliver a message without the prior express consent of the called party.” While the TCPA does not specifically define what it means to “initiate” a call, the FCC has established clear guidance. According to In the Matter of the Joint Petition filed by Dish Network, Federal Communications Commission Declaratory Ruling, 2013 WL 1934349 at para. 26 (May 9, 2013), a party “initiates” a call if it takes the steps necessary to physically place it or is so involved in the process that it should be deemed responsible.
In this case, the court assumed, without deciding, that neither Voice Broadcasting nor Life Corporation physically placed the calls. But that didn’t absolve them. The court turned to the totality of the circumstances to determine whether the companies were sufficiently involved to bear liability.
The allegations were that Voice Broadcasting didn’t merely act as a passive service provider. Instead, it actively collaborated with Kramer to refine the message and even suggested adding a false opt-out mechanism that directed recipients to call Kathleen Sullivan’s personal phone number. Life Corporation, in turn, allegedly facilitated the delivery of thousands of the calls using its telecommunications infrastructure. The court found that these facts were more than enough to justify holding the companies accountable under the TCPA.
Quoting the FCC’s guidance, the court explained that companies providing calling platforms cannot simply “blame their customers” for illegal conduct. Liability attaches to those who “knowingly allow” their systems to be used for unlawful purposes. Voice Broadcasting and Life Corporation had the means to prevent the deepfake calls— but they didn’t. As the court explained, “Even if one were to assume that neither Voice Broadcasting nor Life Corp. actually ‘initiated’ the Deepfake Robocalls, they might still be liable for TCPA violations, depending upon their knowledge of, and involvement in, the scheme to make those illegal calls.”
As for the defendants’ second argument, that the calls were political and therefore exempt from the TCPA’s consent requirements, the court acknowledged that political campaign calls using regulated technology, such as the AI-voice technology used in the alleged calls, to landlines are generally permissible, even without prior express consent. However, this exemption is not a free pass. The calls must comply with other key provisions of the TCPA, including the requirement to provide a functional opt-out mechanism.
Here, instead of providing a legitimate way for recipients to opt-out, the alleged calls instructed the recipients to call Kathleen Sullivan’s personal phone number. This sham opt-out mechanism not only failed to meet TCPA standards but also contributed to the deception. The court had no trouble rejecting the claim that this constituted compliance: “Little more need be said other than to note that such an opt-out mechanism plainly fails to comply with the governing regulations and is not, as defendants suggest, ‘adequate.’”
And in case you are all wondering about Mr. Kramer himself, a default was entered against Kramer on 8/29/24.
The entire story behind these calls has been something to watch. This is definitely a case to keep an eye on!
A Final Rule Bites the Dust: Federal Court Rules FDA Lacks Authority to Regulate LDTs
The order is in, and the LDT Final Rule is out.
In May 2024, the U.S. Food & Drug Administration (“FDA” or the “Agency”) published its Final Rule establishing its regulatory framework over laboratory developed tests (“LDTs”) as medical devices and, in effect, announced the end to decades of enforcement discretion by the Agency. The deadline to comply with the first phase of the Final Rule was set for May 6, 2025. On Monday, March 31, however, a federal judge in the U.S. Eastern District of Texas ordered that “FDA’s final rule exceeds its authority and is unlawful” and that “[t]herefore, consistent with controlling circuit precedent, the proper remedy is vacatur of the final rule and remand to FDA for further consideration in light of this opinion.”
Epstein Becker & Green’s Life Sciences Team is continuing to review and digest this order and its impact on the clinical lab industry, and we plan to release a more fulsome analysis in the coming days.
In the meantime, we draw stakeholders’ attention to a few key takeaways from the order—namely, the judge’s statement that (1) “the [federal Food, Drug, & Cosmetic Act]’s relevant text is unambiguous and cannot support FDA’s interpretation” and (2) “FDA’s asserted jurisdiction over laboratory-developed test services as ‘devices’ under the FDCA defies bedrock principles of statutory interpretation, common sense, and longstanding industry practice.”
These findings—along with other elements of the district court’s legal analysis—arguably leave little to no room for FDA to salvage its effort to regulate LDTs, absent either a successful appeal of the court’s order or congressional action.
Georgia Regulates Third Party Litigation Financing in Senate Bill 69
On February 27, 2025, by a vote of 52 to 0, the Georgia Senate passed Senate Bill 69, titled “Georgia Courts Access and Consumer Protection Act.”
If signed into law, the bill would regulate third-party litigation financing (“TPLF”) practices in Georgia where an individual or entity provides financing to a party to a lawsuit in exchange for a right to receive payment contingent on the lawsuit’s outcome. This bill represents another effort by states to restrain the influence of third-party litigation financiers and increase transparency in litigations.
Senate Bill 69 sets forth several key requirements. First, a person or entity engaging in litigation funding in Georgia must register as a litigation financier with the Department of Banking and Finance and provide specified information, including any affiliation with foreign persons or principals. Such filings are public records subject to disclosure.
Second, the bill restricts the influence of a litigation financier in actions or proceedings where the financier provided funding. For example, a litigation financier cannot direct or make decisions regarding legal representation, expert witnesses, litigation strategy, or settlement, which are reserved only for the parties and their counsel. A litigation financier also cannot pay commissions or referral fees in exchange for a referral of a consumer to the financier, or otherwise accept payment for providing goods or services to a consumer.
Third, the bill renders discoverable the existence, terms, and conditions of a litigation financing agreement in the underlying lawsuit. Although mere disclosure of information about a litigation financing agreement does not make such information automatically admissible as evidence at trial, it opens the door to that possibility.
Fourth, the bill delineates specific requirements for the form of a litigation financing agreement and mandates certain disclosures about the consumer’s rights and the financier’s obligations. A financier’s violation of the bill’s provisions voids and renders unenforceable the litigation financing agreement. Willful violations of the bill’s provisions may even lead to a felony conviction, imprisonment, and a fine of up to $10,000.
Fifth, the bill holds a litigation financier “jointly and severally liable for any award or order imposing or assessing costs or monetary sanctions against a consumer arising from or relating to” an action or proceeding funded by the financier.
According to a Senate press release, Senate President Pro Tempore John F. Kennedy, who sponsored the legislation, lauded the Senate’s passage of the bill as enhancing transparency and protection for consumers. He commented that “[Georgia’s] civil justice system should not be treated as a lottery where litigation financiers can bet on the outcome of a case to get a piece of a plaintiff’s award” and that “SB 69 establishes critical safeguards for an industry that continues to expand each year.” He further stressed the need to “level the playing field and ensure that [Georgia’s] legal system serves the people—not powerful financial interests.” Since passing the Senate, the bill has also proceeded through the House First and Second Readers.
Georgia’s proposed legislation is largely in line with recent proposed or enacted TPLF legislation in other states. In October 2024, the New Jersey Senate Commerce Committee advanced Senate Bill 1475, which similarly requires registration by a consumer legal funding company, restricts the actions and influence of a consumer legal funding company, and mandates certain disclosures in a consumer legal funding contract, among other things. Indiana and Louisiana also enacted TPLF legislation codified respectively at Ind. Code §§ 24-12-11-1 to -5 (2024), and La. Stat. Ann. §§ 9:3580.1 to -.7 and 9.3580.11 to .13 (2024). West Virginia expanded its TPLF laws by enacting legislation codified at W. Va. Code §§ 46A-6N-1, -4, -6, -7, and -9 (2024). But different from these legislations, Georgia’s proposed legislation explicitly provides for the possibility of felony consequences for willful violations of its provisions.
TPLF has also reverberated at the federal level. In October 2024, the United States Supreme Court’s Advisory Committee on Civil Rules reportedly proposed to create a subcommittee to examine TPLF. H.R. 9922, the Litigation Transparency Act of 2024, was also introduced in the United States House of Representatives that same month and would require disclosure of TPLF in civil actions.
But while some argue that TPLF regulation would bring greater transparency and reduce frivolous litigation, others protest that such regulation would harm litigants with less resources. Either way, litigants would be well-served to monitor important developments regarding TPLF at both the state and federal levels.